Trusted local news leader for Prescott area communities since 1882
Wed, Feb. 26

Letter: Government interference hurts capitalism's success


Alvin Lenik's Feb. 28 letter on taxes can't go unchallenged.

In 1776, two concepts were published that changed the world's view on freedom and economics - The Declaration of Independence and Adam Smith's Wealth of Nations.

The Declaration asserted the concepts that rights come from God, not the King; justice requires equality for all; and man can govern himself.

Adam Smith changed the concept of wealth from treasure stored in the King's castle to being created by one's labor.

Those concepts, in the 1787 Constitution, proved freedom and capitalism create more wealth and better living standards than any other economic system.

Like the tides of the ocean, capitalism is cyclical. Responsible savers enjoy prosperity and deal with slumps. Savings are like canning fruit during its season so you can eat it all year long.

Capitalism regresses only when government interference disrupts the economic cycle, causing chaos. Massive interference (e.g. war, debt, stimulus packages, attempted cap and trade, health care) multiplies economic chaos to earthquake proportions, causing tsunami havoc.

Taxes? Mom-and-pop grocery store gave way to the supermarket when economics proved that lowering expenses/prices increased sales volume, translating into greater profit. That economic model provides the basis for lowering taxes (low taxes equals more consumer wealth, equals more sales, equals more business/jobs, equals expanded tax base, equals more tax revenue).

Reagan's successes were many. Tax revenue substantially increased. It halted Carter's Misery Index, reduced inflation/interest rates, stimulated job growth and ushered in an economic recovery that lasted beyond the Clinton years.

Reagan was the "great communicator," taking his argument to the people, to sway a reluctant Democrat Congress. He wisely ignored anti-capitalist banter by the Leniks of the world.

Congress holds the purse strings, not the president. Reagan's success has been clouded by a Democrat Congress that outspent the revenue. If they had been fiscally responsible, today's economy would be much stronger.

Leon Kremer


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