MUGGED BY REALITY??
Happy New Year!!! 2011 starts with a number of very hopeful signs. But January 2nd arrived with a development so hell-froze-over radical, that I had to check to see whether the graves had opened and the End of Times were upon us: the Detroit Free Press acknowledged economic reality! Indeed, the Freep recognized the Laffer curve! What’s next? Armageddon? Lions win the Superbowl?
Stephen Henderson, Editorial Page Editor for Michigan’s premiere MainStream Media outlet, self defined “liberal” paper, the Detroit Free Press, writes an editorial that could come from the Wall Street Journal, the Detroit NEWS, or the Michigan View. Titled “Detroit Must Jettison it’s Losing Tax Scheme,” Henderson acknowledges things that the FREEP has traditionally flayed people for advocating.
Intellectual Heresy!!
“Detroit is at an automatic 3-1 financial disadvantage for a family considering the tax bill differences with other cities.” writes Henderson. “And it puts Detroit at a more than a 2-1 comparative disadvantage for any business choosing between the city and another location.”
Amazing!!!! The DFP admitting that high taxes are a disincentive to growth! And conceding taxes that add to the “overhead” costs of doing business are a bad thing. Say what!!! Intellectual heresy! For decades the FREE PRESS’s formula was simple: people had needs, government existed to fulfill those needs, anyone with wealth had a moral obligation to give it to the government, and anybody who disagreed was greedy, selfish, mean-spirited, and probably a racist to boot.
Two Pillars of Wisdom...And He buys them BOTH?
From the late 1970s onward, the DFP reliably opposed conservative economics and free market solutions, slowly becoming a strong de facto sword arm for the liberal wing of the Democratic Party. But today? Mr. Henderson is admitting one of the two pillars of free-market economics: that supply equals demand balanced by price, is an economic law. As for the other:
“Sky-high taxes help drive people and businesses out, yielding less of the revenue needed to deliver quality services, which encourages more people to leave. It's a destructive cycle that's driving the city's livability index into the ground.” Yow! Mr. Henderson is also accepting the second pillar: that economic decisions are made by individuals acting in their own perceived best interests. Holy Hayek!
From "Racist" to Reality.
Not too long ago, the FREEP ascribed every decision to leave Detroit city as motivated by… guess what?…the old reliable: racism. Business decisions to flee were motivated by “greed” and…take a guess!…racism. During the Engler years, charges of greedy greed and racistly racism were hurled in a common narrative from the editorial page through the news and feature columns to the comics.
But today Stephen Henderson writes: “ And because taxes are so high in Detroit, some of them have become self-defeating. The city's income tax, for example, is the highest in the state among municipal levies: 2.5% for residents and 1.25% for non-residents who work in Detroit.
Even the LAFFER CURVE?!?
“In 1999-2000, that tax generated $378 million in revenue. But by the end of the 2010 fiscal year, it was expected to yield just $212 million. As people move out, driven at least in part by high taxes, even sky-high rates can't keep pace to support revenues. It's a dynamic that makes the Laffer Curve, a controversial economic theory positing that higher tax rates inevitably yield lower revenues, seem inarguably true.” Stop the presses: FREE PRESS ACCEPTS LAFFER CURVE!!!
We used to say “a conservative is a liberal who got mugged.” I’d add “mugged by reality.”Maybe the FREE PRESS, with its yearning to see African-America Detroit move forward, has finally seen the bankruptcy of its former dogma. Maybe the FREEP opinion folks discovered the world that FREEP business side folks live in every day. Maybe they started evaluating their pet liberal leaders like J. Granholm, by results, not rhetoric. Maybe the Big D boosters finally got mugged by reality.
Whatever, I would like to personally welcome Free Press Editorial Page Editor Stephen Henderson to reality and the good ship Free Market Economics! I’ll be watching with great interest your editorials in the next few months as Michigan starts to govern according to the consequences of that philosophy. Hopefully, you’ll support folks whose beliefs follow the principles of your newly-revealed insight. In any case, welcome aboard. FREE PRESS accepts conservative economics! Can a Lions championship be far behind?
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