'Matter of Laugh or Death,' the award-winning humor column

By Bill Dunn

Interesting observations on this thing we call life

(appearing each week in the Republican-American newspaper, Waterbury, CT)

KEY PRINCIPLES ABOUT ECONOMICS AND GOVERNMENT SPENDING

I heard about a recent economic survey. The results were interesting. A vast majority of the respondents said they think the government should do three things: lower taxes, balance the budget, and increase benefit payouts.

This survey means either (1) the money the government spends on its many programs actually comes from the magical Cash Fairy and her bottomless sack of thousand-dollar bills, or (2) the average American citizen understands economic theory about as well as a hamster understands algebra.

I’m leaning toward explanation number two. Which is not to say the average American is stupid. It’s just that the average American’s primary source of economic information comes from political campaign commercials. Which is to say, then, the average American truly believes the magical Cash Fairy is real.

With this in mind, I’d like to offer some basic financial principles, so people can better understand the reality of economics, taxation, and government spending.

Principle number one: The government doesn’t make money, it takes money. Well, actually the government does make money, in the form of the Treasury Dept. printing the bills. What I mean is, the government doesn’t make wealth. (News flash: in other words, there is no magical Cash Fairy.) Only working people and companies can create wealth. Every dollar the government spends it first took from some hard-working individual or company.

Principle number two: Just because the government pays for something, doesn’t mean nobody has to pay for it. During the debate about the new prescription drug entitlement for senior citizens, one elderly woman was featured on a news report. She said, “My medication costs $300 per month. The government should pay for it because then it won’t cost anything.” Yes, Grandma, it won’t cost anything—to you. But the 300 bucks will still have to come out of somebody’s pocket. (See principle number one and the news flash about the magical Cash Fairy.)

Principle number three: Government overhead skims a huge percentage right off the top. Many people say they don’t mind paying taxes because the money is used for important services. It’s true there are services the government should and must provide. But for every dollar sent to the government, we’re lucky if 25 cents is actually used for the specific service. Overhead eats up the rest: salaries, benefits, office buildings, vehicles, furniture, computers, phones, union dues, and those amazing lifetime government pensions, which most employees are eligible to receive after working the required amount of time—often upwards of nine whole months.

Principle number four: When the government spends money, efficiency doesn’t exist. Monopolies are never efficient—it’s a simple fact. When there’s no competition, there’s no incentive to improve procedures or spend money wisely. Ask yourself this question: if the Justice Dept. tried to break up Microsoft because its monopolistic practices were bad for consumers, why is it a good thing that all government programs, especially public education, are pure monopolies?

Principle number five: The government does not save money; it spends every nickel it receives as soon as it receives it (sometimes sooner). Social Security is a perfect example. Many people think the money they contribute during their working years gets socked away in a Trust Fund savings account. Not true. The money paid in is immediately paid out to beneficiaries—minus overhead, of course. The Social Security Trust Fund is nothing more than an accounting ledger filled with IOUs. It is true that many states have set up “rainy day funds.” But on the day those funds were established, it seems the Weather Channel called for steady downpours, so the politicians were compelled to spend the money immediately.

You may think I’m being unduly harsh on the government. Not true. Our government has some very important responsibilities and a sacred obligation to assist those who need help. Which brings us, finally, to principle number six: The minute I become a senior citizen and retire, the first five principles no longer apply, and the magical Cash Fairy had better start sending me money every month.

©2003