Saturday, July 05, 2003

Where Babies Come From and Where Taxes Go

An early ethnographic study reported that the Tully River People, when asked about how a woman becomes pregnant, gave four reasons. The two that I find most interesting are that the pregnant women went hunting and caught a certain kind of bullfrog and that, alternatively, she may have dreamt of having a child put inside her. In any case, W. E. Roth, the ennographer, concluded that the Tully river Blacks were ignorant of the connection between copulation and pregnancy.

Lawrence Simon, “Rationality and Alien Cultures”

Americans, by and large, seem to be ignorant of the connection between taxes and services.

Middle class Americans struggling to save for their children’s education, put money by for a rainy day, and invest for retirement welcome “tax relief.” But tax relief has a cost: with less money to spend, federal, state and local government can’t provide the services to provide or subsidize education, health care and other services of go provide adequate safety nets. There is no free ride: either you kick into the common pot through taxation and get services, benefits and social insurance or you save up and pay out of pocket.

Paying into the common pot is more efficient. It’s less expensive to pay taxes to the City so that it can maintain a police force than it would be if each family hired its own security guard--and the quality of city police is likely to be better. The common pot system also evens out inequities that are a result of dumb luck. People get laid off or hit with big medical bills and their savings for education and retirement can get wiped out. Without safety nets even people who have worked hard, saved, done everything right can get zapped. Of course other people win the lottery.

The problem is that the pay-your-own-way system is itself a lottery. The common pot provides the services and safety nets that people in most other affluent countries take for granted. I always wondered why Americans, seeing the good life in European social democracies didn’t get it.

I used to think that wanted to be high rollers, to have the bucks to take big risks starting dot-coms and to play the unemployment lottery, the education lottery and the cancer lottery rather than pay taxes to support social safety nets, education and health care. Now the dot-coms have collapsed, unemployment is booming, and Americans have become almost as cynical about business as they are about government. Most no longer seriously believe that they can strike it rich on the internet. They want security and a better life but still aren’t willing to pay into the common pot to get it.

So my current hypothesis is that they just don’t see the connection between taxes and services or understand where tax money goes. People have sex, women get pregnant and babies get born but the Tully River People never quite get the connection. Taxes go down, services get cut and the US goes deeper into deficit, but Americans don’t get the connection.

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