2008

8 October 2008: Belief in fairy tale is leading to economic wasteland

Belief in fairy tale is leading to economic wasteland

Regulation: it is the buzz word in the recent Wall St. meltdown. Free marketers, including John McCain who did all he could to deregulate before flip-flopping once again, have worked tirelessly over the past few decades to remove any semblance of oversight of the banking and investment industries.

What holds sway is dogmatic belief in the Unseen Hand of the capitalistic universe.

Deregulation is an article of faith only when it applies to the private sector. In Colorado, regulation is the very thing to do in the public sector. Regulation in this case is the stymieing of the ability of governments, state and local, to effect money management in the form of taxes and expenditure so as to provide what is deemed to be good for the common good, such as roads, bridges, schools, and utilities.

The reality of our economic system is that it has never been an unfettered, free-wheeling enterprise that operated independent of government collusion or interaction; the belief of such is a fairy tale that begins with, “Once upon a time…”

From the laws and policies that were implemented during the period known as the Western Expansion—homesteading, railroad construction, mining, and the like—our economic history has been a story of interaction between the public and private realms.

In Colorado, the most impacting regulatory effort of the public realm is the notorious TABOR amendment that effectively says to government, “Die, baby, die.”

It became law in 1992 after several failing attempts to get it passed by Douglas Bruce, who will be retired from the legislature now that even his far-right constituency has had enough of his antics.

Sixteen years later, 49 other states have looked at the Colorado model and said, “Thanks, but no thanks.”

Undoing the havoc wrought by TABOR will be a generational struggle, but it begins with the recognition that government, while not the end-all solution, is not the cause of our ills as the Great Prophet of Capitalism Ronald Reagan deemed it.

Government is the manifestation of the public hand that should never be unseen, always acting in a transparent manner that should work in areas the private doesn’t suffice.

On our ballot, Amendments 58 and 59 would serve to balance the public with the private.

Amendment 58 would end corporate welfare in the form of the tax subsidy, or bail out, for oil and gas companies and increase badly needed funding for college scholarships.

The measure’s opponents argue that its passage would increase Colorado taxes, but it need not. The extraction industry could pass on its costs to out-of-state consumers or take a pay cut, maybe awarding bronze rather than golden parachutes to its fat-cat gold diggers.

Since 1977, the extraction industry has been the welfare queen of Colorado to the tune of $321 million annually. As such, according to a report in the Denver Post, “The tax break has been so effective that 81 percent of the 8,007 oil and gas taxpayers filing severance-tax returns in 2004 got a tax refund, according to a state auditor’s report.”

Colorado, at 1.9 percent, has the lowest effective severance tax among five Western states, with New Mexico at 9.4 percent and socialistic Wyoming at 11.2 percent. Even if Amendment 58 passes, the effective rate in Colorado would still be less than that of the other two states.

Amendment 59, also known as SAFE or the Savings Account for Education initiative, has been called in a lead Post editorial “a simple path to fiscal sanity.”

The Post states the amendment “would usher in the most sweeping changes to the way Colorado budgets its money since the Taxpayer’s Bill of Rights was approved in 1992.”

“It is not a tax increase,” continues the editorial. “In fact, it perpetuates the constitutional ban on state or local governments raising taxes without a vote of the people.”

Only in Colorado is fiscal insanity carved in stone: the state being mandated to increase certain spending while it limits its ability to secure the revenues needed to do that.

While the meltdown on Wall St. and accompanying efforts at bailing out the screw-ups and our fiscal state may seem not connected, they stem from the same core source: a denial about the real interaction between the public and private sectors.

America never has been a utopian capitalistic paradise in which titans of industry using their entrepreneurial ingenuity led their people, ala Moses, from the depths of poverty to the land of milk and honey.

Belief in that fable has led us to the precipice of a dystopian economic wasteland, a place where people lead dehumanized and fearful lives, from which we are staring into an abyss.

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