Farmers for economic freedom

Updates from the Prairie Centre Policy Institute from Regina, Saskatchewan.

Hot off the press! Don Baron's Jailhouse Justice and
Canada's Great Grain Robbery
are now available at
http://www.ajagra.com/authors_comment/baron/baron.htm

web posted February 24, 2003

High taxes result in lower economic growth

In a speech to the International Taxpayers conference in Kiev, Ukraine, Dr. Richard Vedder noted there is ample evidence demonstrating that high taxes result in lower economic growth. Following are some excerpts from his
comments:

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There are many examples that demonstrate the basic point: high taxes mean low growth.

Two small states in the north-eastern part of the country are New Hampshire and Vermont. They are very similar to each other in terms of geographic features and climate, and are adjacent to each other. In 1929, the total income of citizens of New Hampshire, the larger state, was 43 percent above that in Vermont. By 2000, it was 149 percent larger.

Part of that growing difference is explained by the fact that population grew more in New Hampshire, but the income per person, which was 9 percent lower in Vermont than New Hampshire in 1929, was more than 18 percent lower in Vermont in 2000. Why? New Hampshire is one of America’s lowest tax states, the only state without levies on income or general sales. Vermont, by contrast, has high taxes, particularly on income.

Another two states that are neighbours are Kentucky and Tennessee. Both are hilly states, both make whiskey and many other similar things. In 1929, both total income and income per person were lower in Tennessee than in Kentucky.
Today, Tennessee has 51 percent higher total income, and eight percent higher per capita income compared with its neighbour to the North. Why? Tennessee has no tax on income, while Kentucky has a fairly high tax. Moreover, Tennessee’s tax burden has actually fallen in the last two decades, while Kentucky’s has risen rapidly.

My last example uses two of America’s largest states, California and Florida.
Both are in the Sun Belt, areas popular with older Americans after retirement.
Both attract immigrants from nations to the South, such as Mexico and Cuba.
Both have famous tourist attractions, including Disney resorts. Yet Florida has gained consistently on California economically.

In 1929, total income in Florida was only 14 percent as large as in California; today, it is nearly 41 percent as large. In 1929, the average resident of Florida had less than 53 percent as much income as the citizen of California.
Now that average resident has more than 86 percent as much income. Florida has grown faster economically, because it does not tax income, and it does not tax people when they die, while California does both. In all of these examples, high taxes mean lower growth.

The experience in the United States has been duplicated throughout the world.
In Western Europe, Ireland has the lowest overall tax burden of any major country, and the highest rate of economic growth over the past decade. Great Britain had the lowest growth rate of major European countries in the 1950s and 1960s, yet by the 1980s and 1990s it was growing faster than most of the major continental nations. Why? After 1970, the tax burden rose sharply in Western Europe, but much less so in Great Britain. By 1990, taxes on average were significantly lower in England than in such major continental nations as France, Germany or Italy. Lower taxes meant more capital formation, more entrepreneurship, more output. London has again become clearly the leading commercial city in Europe.

Sweden, by contrast, has declined in a relative economic sense. By virtually every indicator, Sweden was one of the world’s three or four richest countries in 1970. Today it is not in the top 15 countries by any measure, and per capita income is actually falling below the average of the European OECD countries. A crushing tax burden has led to a reduction in capital formation, a decline in hours worked, and general stagnation.

High taxes, low growth.

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Excerpted from “Prosperity or Stagnation? Remarks to the International Taxpayers Conference”, by Dr. Richard Vedder, February 9, 2002. Dr. Vedder is Professor of Economics at Ohio University. This article first appeared in the Frontier Centre for Public Policy’s “Perspectives from the Frontier”.

web posted February 17, 2003

Saskatchewan's future can be bright

The following commentary is excerpted from a report published by the Prairie Centre Policy Institute, entitled, 'This Year Country: Creating Wealth in Saskatchewan'. Written by Dr. Graham Parsons, former chief economist with the province of Saskatchewan, and former Chief Economist for Western Canada with the Canada West Foundation, the report examines the potential for economic growth in Saskatchewan. As noted below, Dr. Parsons' conclusions are very
positive: Saskatchewan has a bright future if it is prepared to make some changes.

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'Next Year Country' has been a well-used phrase that carried Saskatchewan people, its agriculture, much of its economy and its football team the Roughriders, through many difficult years of the 20th century. The Province clearly has the natural ingredients of people, resources, skills, training, technology and entrepreneurship to create increased wealth today and into the future. 'Next Year Country' can become 'This Year Country' when Saskatchewan people choose to act.

For much of the last century Saskatchewan undertook an experiment in the social and economic engineering of the province. While these experiments may have been appropriate for the times, they are hardly suited to the opportunities, circumstances and competitive realities of the 21st century. New models are required to support the provincial requirement for wealth creation and growth.

Saskatchewan requires an environment to encourage, rather than complicate, private sector investment and job creation. Compliance costs of government have become uncompetitive in such areas as labour legislation, environmental regulation and user pay arrangements for already funded public services.
Subsidized competition from Crown corporations weakens the growth of innovation, technology and the private sector.

Economic policies in Saskatchewan have for too many years been seen in terms of wealth redistribution, rather than wealth creation. Federal equalization, provincial fiscal policies, regulations and pricing have strongly supported redistribution. Social policies and spending have taken priority over economic and infrastructure spending to create wealth.

Wealth creation is a good and noble pursuit in its own right. Profits create incentives, investment capital, employment and taxes. Indeed, without first creating wealth, there is no basis for redistribution. Without sustainable wealth creation social spending is threatened.

Ultimately, it is the ability of the economy to create wealth that finances all other activities in society, including social and health spending, social and economic infrastructure, education and training. Taxable incomes are fully dependent on an independent and viable private sector economy.

Realizing any new economic vision for the province will therefore require a return to understanding the importance of creating the necessary environments to create and sustain wealth.

At the start of the 21st century, Saskatchewan's society is already on the move and its economy is in the middle of a structural reformation. Institutions, policies and approaches developed for the 20th century are no longer efficient or equitable and limit wealth creation. It is time for new approaches.

Saskatchewan people, old and young, have ideals and dreams. They are not tied to the past. The province is full of energetic and entrepreneurial people with vision. New wealth can be created in the province to allow our children and grandchildren to live at home and work from home around the world. More wealth will also provide the sustainable financing required for better public services and to redistribute to those in society most in need. The future can be bright for Saskatchewan.

Dr. Parsons sits on the Prairie Centre Policy Institute's Board of Academic Advisors. His report, 'This Year Country' can be found on the Institute's web site at www.prairiecentre.com.

web posted February 10, 2003

A BIG Land, for BIG People, with BIG Ideas

By Al Scholz

The quote in the title came from Walter Scott, the first Premier of Saskatchewan. He had a vision and a plan for the 20th century. Doubling the population of the Province in the 21st Century is an ambitious target, but common sense would tell us that this is a logical strategy. We need a master plan for growth in the province that extends 30 to 50 years into the future, much like the vision of the pioneers who settled the province.

"Doubling the Population" will be the theme of a SAC Inc. Innovation Saskatchewan Conference scheduled for early June 2003. SAC Inc. has commissioned some preliminary studies to investigate the strategies required to achieve this goal. Initial work indicates that agriculture could be the primary driver of growth. If so, there are three major components to achieve this target.

The first is a macro plan for the development of water including irrigation, municipal water and sustainability of our water shed. Second is a massive immigration strategy. Saskatchewan requires a disproportionate share of immigrants for the next 10-15 years, particularly in the agriculture and agri-value sectors. Third, we need investment capital. We believe this will come with the waves of immigrants and be secured with a macro plan for value-add based on water, the gold of the 21st century.

Alberta doubled their population from 1971 to 2001. Most important is where the growth took place. In 1971 the combined population of Edmonton and Calgary was 50 percent of the provincial population. In 2001 those two cities were still 50 percent of the population. Other rural communities shared in the growth without a concentration to the large urban centers. This did not happen by accident. Alberta had a vision and a plan.

In contrast, the combined population of Saskatoon and Regina was 29 percent in 1971, but 40 percent in 2001. Saskatchewan has concentrated the urban centers and not developed regional communities equally. We need a vision and a plan.

Saskatchewan has huge natural resource advantages. The most underutilized is water. Saskatchewan could increase its current irrigation acres of 250,000 by another 1.0 million acres. Water resources will help "drought-proof" the province, ensure the supply of higher value crops and most importantly, quality water supplies in municipal areas is the key for increased value-added processing. We need a master plan to utilize our substantial water resources in a sustainable way.

There have been over 40,000 immigrant farmers from Western Europe settle across Canada in the past 4 years, according to Human Resources Development Canada (HRDC), but only 3 percent have settled in Saskatchewan. Why so few when we have many older farmers looking to retire? The creative ideas of immigrants have been a large part of the success formula for agri-value expansion in other provinces in Canada such as Ontario, Manitoba and Alberta. Saskatchewan needs a plan to attract more of these new pioneers to our province.

As for the investment capital, if we can achieve a plan for expanded value-add based on improved water utilization and gain the creative ideas skills that come with immigration, the investment capital will follow. It's a BIG idea and an exciting vision. Let's work on the plan!

Al Scholz is the Executive Director for Saskatchewan Agrivision Corporation (SAC). For more information on SAC, see www.agrivision.sk.ca.

web posted February 3, 2003

Creating wealth: Employment vs. productivity

The economic goal of any nation, as with any person, should be to get the greatest result with the least effort. This is the reason people began putting burdens on the backs of animals instead of their own, and it's the same reason the wheel, the wagon, railroads and trucks were invented.

This idea is so simple you'd think it unnecessary to even talk about, yet politicians and union bosses who promote "full employment" as some kind of a utopian goal never mention productivity. They overlook the fact that productivity is the key to creating wealth. Employment is not the same thing as productivity or wealth creation, and in some cases may even be consuming wealth rather than contributing to its creation.

Part of the process of creating wealth is using technology and work-saving devices so we can be more productive. In the context of a nation, this means our real objective should always be to maximize production. As we do this, or at least as we become better at it, full employment will be the inevitable by-product because we can't have the fullest production without the fullest employment. But we can have full employment without full production.

Consider the fact that the Soviet Union had full employment for decades, yet citizens waited in line to buy food. Primitive tribes are naked and wretchedly fed and housed, yet they don't suffer from unemployment. China and India are much poorer than we are, but the main problem they suffer from is primitive production capacity. This is caused by a shortage of capital and has nothing to do with employment. In reality, nothing is easier to achieve than full employment if it is divorced from the goal of productivity and becomes an end in itself.

On the assumption that there is only a fixed amount of work to be done, some politicians even suggest that a thirty-five hour work week will provide more jobs. This is nonsense.

If we were to consider what some of the impediments to employing more Canadians really are, we'd find that many of the very policies which have been championed by unions and some social activists put people out of work. Minimum wage laws that apply to the youth and people who are untrained and unproductive mean they don't get jobs. Unnecessary regulations and paperwork, employer deductions and related costs are all factors that deter productivity and, in turn, employment. Taxes are perhaps the greatest deterrent to increased productivity and employment.

So, the next time some politician claims he created a bunch of jobs, or say that, if elected, he'll create jobs, be suspicious. He probably doesn't understand the difference between productivity and employment. Governments don't create wealth. They consume it. It is the productive side of the economy the private sector that creates jobs and wealth. It isn't the politicians with the gold plated pensions, fancy suits and bureaucratic programs. In order for politicians to get any wealth to do anything with, they first have to take it away from the people who created it. They tax it away from the wealth producers in the private sector.

Excerpted from, "Prairie Agricultural Digest Wealth Creation" published by the Prairie Centre. Originally adapted from "Economics in One Easy Lesson."

Prairie Centre Policy Institute
#205, 1055 Park Street
Regina, SK
S4N 5H4

Phone: 306-352-3828
Fax: 306-352-5833
Web site: http://www.prairiecentre.org
Email: prairie.centre@sk.sympatico.ca


The CFEN and CFFJ need your help! The battle against the Canada Wheat Board can only continue with your support.

Canadian Farm Enterprise Network
Box 521
Central Butte, Saskatchewan
S0H 0T0
CANADA
Canadian Farmers for Justice
c/o Ron Duffy
R.R. #4
Lacombe, Alberta
T0C 1S0
http://www.farmersforjustice.com/

Write the following and demand free market rights for Western Canadian farmers!

The Canadian Wheat Board
423 Main Street
P.O. Box 816, Stn. M.
Winnipeg, MB
Canada
R3C 2P5

Telephone: (204) 983-0239 / 1-800-ASK-4-CWB
Fax: (204) 983-3841

Email Address: cwb@cwb.ca

Ralph Goodale
Minister Responsible for the Canada Wheat Board
Department of Natural Resources Canada
21 - 580 Booth Street
Ottawa, ON
Canada
K1A 0E4

Telephone: (613)996-2007
Fax Number: (613)996-4516
Email Address: rgoodale@NRCan.gc.ca

 

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