(The following editorial first appeared in the October 1991 issue of Analog Science Fiction and Fact. Thirty-five others, on a wide range of topics, are collected in the 2002 Tor book Which Way to the Future? A different one (usually one not available in the book) will be posted here a few times a year. And, of course, brand-new ones appear in each issue of Analog.)
I'm not sure when or where I saw the cartoon, except that it was on a recent editorial page of my local newspaper. So I can't quote it to you exactly, or credit the cartoonist by name. What I can do is give you the gist of it, and I think you'll appreciate the point it made.
The first of its four panels, as I recall, showed one character representing the federal government telling another, "Our expenses are bigger than our income. What can we do?"
"No problem," says his colleague. "We'll increase what we take from the states and decrease what we give back to them."
The second panel showed one character representing a state government telling another, "Our expenses are bigger than our income. What can we do?"
"No problem," says his colleague. "We'll increase what we take from the towns and counties and decrease what we give back to them."
The third panel showed one character representing a local government telling another, "Our expenses are bigger than our income. What can we do?"
"No problem," says his colleague. "We'll simply increase the tax rates we charge our citizens."
The fourth and last panel showed a taxpayer standing alone and forlorn, with his empty pockets turned inside out, saying, "Tell me about it!"
Meanwhile, an article in the same paper, close to the same time, described the ongoing efforts of legislators to trim a state budget—while keeping for their own members such perks as multiple luxury cars and luxurious residences "rented" from the state at rates ridiculously lower than the expense of maintaining them.
It's almost enough to make mere mortals want to drop whatever they're doing and go into politics. Governments, after all, have an enormous advantage over everybody else; and the bigger they are, the more pronounced that advantage is. When a government decides it needs more money, all it has to do is announce that it's going to take a bigger percentage of the income of somebody else with less clout—and then take it, by force or at least the implied threat of force.
The individual taxpayer has no such recourse. If his or her expenses are getting beyond his means and he is conscientious enough to be unwilling to sink into debt or go on welfare, he has two choices. He can increase his income, by doing or making something that people are willing to pay more for. Or he can find ways to live more frugally, like doing without some things he might like to have, shopping more carefully, and taking care of things so they'll last longer.
Governments are the only entities which can demand more money whether or not the donors are willing to pay it, or believe that they're getting their money's worth. Furthermore, governments gloss over the exceedingly important distinction between an increase in an absolute quantity of money and an increase in a percentage of an absolute quantity. Of course governments need more money to get by each year. We all do, because inflation we have always with us, to greater or lesser extents. But for most of us, in more or less "normal" times, that increase in need is at least approximately offset by increases in income. Sure, I pay far more for things now than I did twenty years ago; I also earn far more than I did then. The same is probably true for you.
Yes, I know there are exceptions. I've been one of them; I've had spells when my income was not increasing nearly as fast as general inflation, so that for a while my real purchasing power was declining. Over the long term, though, and over the population as a whole, both income and expenditures tend to rise. Since most taxes are based one way or another on percentages of what people earn or spend, this means that governments automatically get more tax revenues—by amounts roughly commensurate with their increased costs—without changing the tax rates expressed as percentages.
When they increase the percentage rates, this gives them a double whammy: they take an increased percentage of an increased amount! And since ultimately that extra increase can come only from the taxpayer's pocket, it tends to offset the increase which allowed him to compensate for inflation. The result is that the individual taxpayer, more than anyone else, finds it harder than he should to keep up with inflation—and the peculiar way taxes are increased is directly responsible.
Say inflation is 5%. If you get a 5% raise and keep the same fraction of it you always did, you're effectively back where you started. You haven't made any real gain, but neither have you lost any ground.
Now suppose that before the inflation and raise you were paying 20% of your income in taxes. If that rate doesn't change, the government gets the customary 20% of your increased income. Both you and the government still break even; you both still have approximately the same purchasing power you did last year.
But if the government increases your tax rate from 20 to 21%, that means that an additional 1% of your total, increased income now goes to the government. Now your real, spendable income has increased by less than the cost of living, while the government's has increased by more. You have most assuredly lost ground, while the government has gained substantially more than it should have needed to keep up with inflation in the same way that you're expected to.
So you have to find ways to live more frugally (or to make people want to pay you more), while governments seem (despite periodic bursts of lip service to the idea) chronically unwilling or unable to do either. (I respectfully submit that allowing legislatures to keep fancy cars and houses at taxpayer expense does not bespeak serious frugality.)
I suggest that the problem is twofold:
- Governments have little incentive to spend frugally, or to provide services that people value so highly they want them even if they cost more, simply because they can get away with not doing so. They have the power and immunity to take pretty much what they want, and they don't have to deal with competition for the services they provide.
- They may literally not know how to do more with less, because they've never had to learn. This may seem a flippant suggestion, but I offer it quite seriously. Again, I acknowledge that there are individual exceptions; but quite often legislators come from well-to-do families and therefore have stood, so to speak, on the shoulders of financial giants. The skills required to live on an inherited fortune are not at all the same as those required to live on an income barely adequate for subsistence.
Changing any of this, of course, would require changing laws. The biggest problem in that is that laws are made by legislators, and it would hardly be surprising for them to prefer things as they are. Nevertheless, just for fun, what changes might be desirable if we could figure out how to make them happen? What might we do differently if we were designing a system from scratch?
I don't plan to say much about Problem (1). Figuring out how to make legislators more accountable (elections help, but not enough) is just a bit more than I feel ready to tackle this morning. The same goes for trying to provide competition, or some other incentive, so that governments have to think harder about the quality of the services they provide for the money they collect. (The same legislature that was keeping its luxury cars and houses proposed deep slashes in funding for frills like education and road maintenance!)
However, I do have a simple, concrete change to propose for Problem (2). I have suggested that the problem is that many legislators lack experience in making good use of limited funds. Therefore, let us require them to have some of that experience, as one of the qualifications for the job. Let's require our lawmakers to have spent a certain number of years living in something at least approximating poverty, without going on welfare or getting in trouble with the law! That, I suggest, would constitute good evidence of ability to use limited resources wisely.
The requirement might be waived, of course, for somebody who started out in poverty and managed to rise above it, through his own efforts and without illegal activities, in less than the stipulated time. That would be evidence of another talent that governments urgently need: the ability to improve one's own income without recourse to forcibly taking it from others less powerful.
What we don't need more of is politicians who have never had to learn to get the most out of limited funds, but are all too adept at simply dipping deeper into the pocket of someone else unable to resist.