DL Tolleson.com

HOW to SAVE AMERICA
DL Tolleson

As I have previously written here: Regardless of whether you are conditioned by circumstance of poverty (need), wealth (guilt), politics (power), ignorance (you don’t know history) or stupidity (you think you are better than history), you have one of two mindsets. You either believe someone else owes you OR you believe that you are the only person responsible for you. If it’s the former, then you promote government that takes other people’s money and freedom on your behalf. If it’s the latter, you’re scared to death of people promoting the former.

That pretty much sums up our country’s opposing ideologies and one of them is the problem. A problem for which there is a definitive solution.

Now, by way of introduction to the solution, consider this question: If there were a proven example of turning our country around—of improving practically everything while at the same time making government less intrusive—would you vote for it?

If you are truly interested in providing the best living conditions for the most people and you are intellectually honest, your answer to the above question depends on evidence, not ideology.

Fortunately there is actual, real-world evidence of such an example that has been demonstratively effective. And it’s a relatively recent example. Prior to the 1950s there was a particular country with a per capita income ranking about third in the entire world. But by the early to mid-1980s it had:

• Sunk to 27th in the world

• Unemployment of 11.6 percent

• 23 years of successive deficits

• Debt at 65 percent of its Gross Domestic Product (GDP)

• A constantly downgraded credit rating

• Government controls and micromanagement throughout the economy

• Price controls on all goods, services, shops and service industries

• Wage controls and freezes (no wage increases or bonuses allowed)

• Controls on goods

• Massive levels of subsidies to industries just to keep them afloat

• 30 percent of its children failing in education

• A mass exodus of the young, upwardly mobile

THE SOLUTION: In 1984 a reform government was elected that identified three problems: Too much spending, taxing and government. So, here’s what they did:

• Stopped allocating money to their government agencies.

• Directors of government agencies were then selected from worldwide searches and given term contracts for five years with potential three-year extensions—removal based solely on lack of performance (civil service appointments were eliminated).

• With the new executives (directors) of those agencies they created purchasing contracts that detailed expectations in return for money.

• The Government then purchased from their agencies policy advice on how to eliminate problems such as hunger and homelessness in such a way as to also eliminate dependence upon government.

• Government put a halt on what the agencies identified as things they should not do.

• Government then identified whether taxpayers, users, consumers or industry were paying for benefits they were receiving: This allowed for the reduction/elimination of taxpayers subsidizing things that did not benefit them.

• The Government sold off telecommunications, airlines, irrigation services, computing services, government printing offices, insurance companies, banks, securities, mortgages, railways, bus services, hotels, shipping lines, agricultural advisory services, etc., etc. And what’s more, for those things sold off and privatized, costs went down while productivity went up. The net effect of these changes was stunning.

• Government agencies were then turned into profit-making and tax-paying enterprises. For example, their air traffic control system was turned into a “stand-alone” company that was required to turn in an “acceptable rate of return” without any investment upon the part of government. Roughly speaking, about 35 government agencies went from costing one billion dollars per year to producing one billion dollars in revenue and taxes per year.

• The Department of Transportation went from regularly requiring licensing renewals to issuing licenses good until age of 74, whereupon annual medical tests ensured drivers remained competent to drive. The Department also went from 5,600 employees to 53.

• The Forest Service went from 17,000 employees to 17.

• The Ministry of Works, responsible for construction and engineering, went from 28,000 employees to 1 employee.

• As measured by employees, government reduced its overall size by 66 percent and reduced its share of GDP from 44 to 27 percent.

• They began running surpluses and used that to pay down government debt from 63 percent to 17 percent of the GDP.

• The remainder of the surplus went into tax relief along with the slashing of tax rates by half and the elimination of incidental taxes. All of that resulted in a revenue increase of 20 percent.

• They eliminated subsidies and thus the systemic dependency such things engender. For example, they did away with the 44 percent of government subsidies received by their sheep farming industry. Before they did this, the industry was receiving a marketplace value of $12.50 per lamb carcass, which the government matched. Within two years of eliminating subsidies, the industry altered its processing methods expanded into new markets and more than doubled their previous $12.50 per carcass income. Things continued to improve and by 1999 the industry was making $115 per carcass. In American restaurants we now pay roughly between $35 and $60 per pound for lamb from this country. They did it without the government paying a single dime to keep the industry afloat.

• The reform government even turned a 120-year-old liability into a success story. Having been plagued by the expense of trying to eradicate an ever-increasing wild deer population, the government allowed the farming community to catch, contain and farm deer within fenced boundaries. From that time onward the country did not spend one penny on the deer problem while becoming the supplier of 40 percent of the world’s market in venison.

• In education the country was failing 30 percent of its children—more so those in lower socio-economic areas. Historically, throwing more money at the problem had resulted in lower results. The reform government hired outside consultants that reported 70 cents of every education dollar was spent on administration.

• In response, they eliminated all Boards of Education in the entire country and turned over that responsibility to the parents and schools. Each school then came under the control of a board of trustees elected by the parents of the children at each school—and nobody else. Based on the number of students at each school the Government issued a sum of money without restrictions. They also arranged to make it possible for privately owned schools to be funded in exactly the same way. Within three years 87 percent of students were going to public schools and education attainment went from 15 percent below their international peers to 15 percent above those same countries.

• The reform government also decided that social services and behavioral modification were not within the purview of taxation and thus imposed lower taxation through only two areas: Income and consumption. The high income tax rate dropped from 66 percent to 33 percent (for high-income earners) and from 38 to 19 percent for low-income earners. The consumption tax rate of 10 percent replaced all other eliminated taxes (capital gains, property, etc). The system was designed to result in a zero change to revenue but instead increased revenue by 20 percent. The increase was the result of willing compliance and the eliminated need for lawyers, accountants and loopholes.

• Statutory law did not escape reform, either. Environmental laws, for example, were rewritten, going from a 25-inch thick code to 348 pages. The tax code, farm codes and Occupation Safety and Health Acts were all scaled back, measured by the yardstick of reduced taxation and regulation.

What an amazing success story! No doubt some people reading this suspect me of leading them down the primrose path of fiction or theory. Rest assured I have not.

Remember the country’s Ministry of Works that went from 28,000 employees to 1 employee? It was that one man who reported all of the above facts.¹ He was a member of the country’s Parliament and their ambassador to Canada. He was involved with their deregulation of transportation, labor markets and the fishing industry. He was a Minister of Employment, Minster of State Owned Enterprises, Minister of Railways, Minister of Labor, and Minister of Immigration. In fact, he has a laundry list of accomplishments and at the time he divulged all of the above was a Visiting Scholar at the Mercatus Center at George Mason University.

His name is Maurice P. McTigue and the country was New Zealand.

Reference

¹ McTigue, Maurice P. “Rolling Back Government: Lessons from New Zealand.” Hillsdale campus. The Conditions of Free-Market Capitalism, 11 Feb. 2004, Hillsdale, MI, https://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2004&month=04, (Retrieved 2010). https://web.archive.org/web/20071012135435/http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2004&month=04 , (Retrieved 2019).