When General Motors purchased EDS from Ross Perot, Mr. Perot became the largest individual G.M. stockholder.Â From experience as an entrepreneur responsible not to some anonymous conglomeration, but to himself and his people, Perot developed very simple and direct attitudes to solve problems.
â€œWhen you see a snake, kill it!â€
It was quite a cultural shock for Perot to find the General Motors procedure to deal with snakes comprised assembling managers (who never even saw the snake) for a sit down meeting where various ideas about dealing with the snake would be bantered about until a consensus was reached where all in session would agree to table the problem and take it up at a future meeting.
Needles to say, the Ross Perot General Motors partnership was no match made in heaven and ended in General Motors paying Ross Perot double the market value for his stock to leave the company, even though the merger was encouraged specifically because Perot could offer a freshness and independence sorely needed by the stodgy old giant.Â
It is a relevant fact of life that entrepreneurs succeed or fail by sharply applying their wit and experience while bureaucracies function and forge ahead purely due to momentum and inertia.Â It is almost impossible to kill a big corporation, although many corporate boards try to do just that all the time.Â The problem is people working within bureaucracies are almost never rewarded for solving problems, but for maintaining the status quo, and promoting more dependence on the bureaucracy.
As bad as this phenomenon can become within large corporations, ultimately, the free-market will reign in these rogue practices when they are applied within the private sector.Â Competition cannot be overruled by corporate bureaucratic authority.
Unfortunately, this cannot be said of government bureaucracies, and the only thing more amazing than incompetent application of bureaucratic authority within government agencies is the ease with which bureaucrats will embrace the most imaginative hare-brained schemes and boondoggles.Â The capacity bureaucrats have to embrace stupidity can even surprise Americaâ€™s most hardened cynics.
OneÂ retarded California initiative that has been discussed by some of our legislators recently was to fit each and every automobile within the state with a device that would track its mileage by satellite and beam this information to some central authority where it could be disseminated and processed.Â Subsequently taxes would be assessed to California citizens based upon the amount of driving which was recorded by these devices.Â The costs which would be introduced into such a system are mind-boggling; it was billions just for the mileage units, to say nothing about the bureaucracy which would manage this scheme, all because collecting tax at the pump is somehow not properly representative…unbelievable!
Most Americans know the dumbest politicians of all reside in California (although New York gives us a run for our money).Â Our Senators are only outdone by the supremely disappointing Arnold Schwarzenegger (he calls himself a Republican and I voted for him, sheeesh!).Â
Itâ€™s bad enough when stupid politicians are relegated to leaders of state government, but when they get into the presidential race we all need to worry.
Governor Huckabeeâ€™s rocket launch into the top tier of Republican candidates makes me wonder if anybody is paying attention.Â His record as a big government taxer is pretty clear; as governor of Arkansas he increased taxes and increased Arkansasâ€™ debt by over a billion dollars.Â The stateâ€™s economy under Huckabee was no better when he left after ten years than when he began, and The Club for Growth reviews his performance as a â€œmixed bagâ€ at best.
Clearly he is not a conservative, but his support of the â€œFair Taxâ€ is the thing that really sets up red flags.Â The old adage, â€œIf you canâ€™t dazzle them with brilliance, baffle them with bullshitâ€, has never erred in appraisal of salesmen or politicians, and Mike Huckabee is full of it.
The Fair Tax is essentially an increase in the sales tax accompanied by eliminating all income taxes to finance government operations, suggesting somehow that this form of tax collection will fairly redistribute the tax burden.Â When politicians say â€œfairâ€ it means â€œget the rich guyâ€, and â€œrich guyâ€ is anyone who makes a little more than minimum wage.
Huckabeeâ€™s suggestion that the fair tax is a preferable system is typical of bureaucratic thinking and it is the kind of thinking you would never see from a fiscally responsible businessman.
How much is it going to cost to completely alter the manner in which we collect taxes?
How are those costs going to manifest themselves in the minutia of bureaucratic incompetence?
Why is this form of taxation â€œFairâ€ while our current system is not?Â
What makes us think â€œRich Guysâ€ are not going to change their behavior when faced with a
30%Â 23% sales tax on that new yacht, and choose to make such purchases out of the country or refrain from such purchases all together?Â Perhaps yacht guy needs a new 2,000 square foot addition to his house, and building contractor guy does it for free in exchange for that million dollar yacht for a hundred grand.Â Even if this scenario isnâ€™t feasible, you get the idea.
Human aversion to taxation is like water, it will always find a preferable path when blocked, and no bureaucrat is any match for a man who has earned his own money.
The unanticipated consequences of such a broad and sweeping policy shift cannot be anticipated, and on top of that, itâ€™s never going to happen.Â Huckabeeâ€™s support of such a policy change is either naÃ¯ve, indicating his lack of readiness for the job, or is a disingenuous political maneuver designed to capture dispirited voters, indicating his lack of readiness for the job.
There is nothing wrong with the way we collect income tax, it is just that the government takes way too much and deliberately penalizes success encouraging our most effective producers to waste loads of time and money in tax avoidance strategies instead of building their businesses providing goods, services, and jobs.
Steve Forbes wrote a great book, The Flat Tax Revolution, where he demonstrated how a fair and equitable tax system has spurred dozens of economies (previously imprisoned behind the iron curtain) which are now free after the Soviet Unionâ€™s disintegration.
Mike Huckabee ought to read it.
Copyright 2008 Jim Pontillo