The question that no one seems to be asking is: where would General Motors be without the government-backed unions that have come to dominate its management? The answer, of course, applies to Ford and Chrysler, as well as to General Motors. I’ve singled out General Motors because it’s still the largest of the three and its problems are the most pronounced.
The single most important tax reform of the 1980s was the indexation of the federal income tax to inflation and the reduction of the number of federal income tax brackets from fifteen to three.
Prior to that, ordinary middle class workers were pushed up into higher and higher tax brackets by simply receiving cost-of-living pay increases. The result was that a couple of years of cost-of-living increases actually reduced your standard of living by diminishing your overall take-home pay after taxes while enriching the state.
“But when are you going to get to the economics?” It was the end of my first day volunteering to teach “basic economics” to a group of fifth graders. The teacher looked bemused as she asked the question.
“That’s what I’m doing,” I whispered a little curtly in reply.
Realizing her offense, she quickly explained her meaning: “You know, with all the graphs and big words and stuff.”
For lack of a better term I am dubbing it Woods’s Law: whenever the private sector introduces an innovation that makes the poor better off than they would have been without it, or that offers benefits or terms that no one else is prepared to offer them, someone—in the name of helping the poor—will call for curbing or abolishing it.
Most school kids are left with the impression that the US Constitution was the inevitable followup to the Declaration of Independence and the war with King George. What they miss out on is the exciting debate that took place after the war and before the Constitution, a debate that concerned the dangers of creating a federal government at all.
Entrepreneurs are in a danger zone when their activities are incomprehensible to the general public. People begin to regard unexplained profits as suspicious, and the entrepreneur encounters public hostility. Entrepreneurs who assemble physical objects may find their activities transparent enough to avoid the torch-bearing mob, but beware of those who make a buck off information.
Adapted from the foreword to Principles of Economics, published by the Mises Institute (2007).
I was born on the lower East Side of New York and brought up on the lower West Side. (I bring in these facts as introduction to some ideas that may be of general interest, not as autobiography.) Of my earliest experiences I remember practically nothing.
