TRACKSIDE

by John D'Aloia

All too many of the headlines emanating from under the dome are variations on the theme "Looming Budget Shortfalls." Predictably, the proposals to "fix" the situation center on squeezing more tax dollars from a citizenry already staggering from horrendous increases in fuel prices and wrenching restrictions on the personal mobility that our society is based upon.

There is a solution, but it escapes those who could implement it. They are so enamored with the trappings of governance and mantle of power that they are blind to the solution. The solution lies not in throwing more dollars at a problem, or creating new bread-and- circus programs, but in the answer to this question: What is the proper function for state government in our constitutional republic? The answer lies within "The McTigue Solution" of which I wrote four years ago. It is actually timeless.

In 1984, a reform government was elected in New Zealand that effected massive reductions in the size and scope of the government. It really can be done - and in so doing, the Four Horsemen are not loosed on the land as you would think listening to the politicians who curry votes by convincing people they cannot exist without government largess. What was done was described by Maurice P. McTigue in an article entitled "Rolling Back Government: Lessons from New Zealand" printed in the April 2004 edition of Hillsdale College's Imprimis. The administration identified three causes of the sinking New Zealand economy - "too much spending, too much taxing, and too much government." It thereupon established a governance philosophy that questioned every aspect of government and took action based on the answers received. Here is how McTigue described the thought process: "As we started to work through this process, we also asked some fundamental questions of the agencies. The first question was, ˜What are you doing?" The second question was, ˜What should you be doing?" Based on the answers, we then said, ˜Eliminate what you shouldn't be doing that is, if you are doing something that clearly is not a responsibility of the government, stop doing it. Then we asked the final question: "Who should be paying" the taxpayer, the user, the consumer, or the industry? We asked this because, in many instances, the taxpayers were subsidizing things that did not benefit them. And if you take the cost of services away from actual consumers and users, you promote overuse and devalue whatever it is that you'ree doing." [The Third Law of Economics, the Einstein Law: The demand for that which is perceived to be free is infinite.]

What were the results? The Department of Transportation started with 5,600 employees. The department was trimmed down to 53 employees. The Forest Service started with 17,000 employees - it ended up with 17. McTigue was the Minister of Works, having 28,000 employees, but ended up being the only employee in the department. Were all these employees now in food lines and living under bridges? Of course not. The private sector picked up the tasks being done by them and gave them employment.

The New Zealand government decided that many tasks it was doing "simply didn't belong in the government." It sold off about 35 agencies: irrigation schemes, computing services, government printing offices, banks, bus services, agricultural advisory services, and a large passel of other functions. The usual result was that productivity went up, costs went down, and the economy gained yet society was not torn asunder. What had cost taxpayers $1B per year now produced about $1B per year in taxes and revenue.

The program resulted in a 66% reduction in the size of the government. The government's share of Gross Domestic Product dropped from 44% to 27% and tax surpluses were generated, used to pay off debt, cut the income tax in half, and eliminate incidental taxes. As a result of the policies put in motion, tax revenues increased 20%. Ronald Reagan was right on.

If the McTigue Solution is too hard, we could fall back on the Rickover Solution. He told a congressional committee how to reduce the size of the bloated bureaucracy - stand on the steps of government buildings at quitting time and fire every fourth employee who came down the steps. A little chaos can be mind-clearing.

If New Zealand can turn a ravenous Leviathan into a docile servant, certainly a state in a country founded on the principles of limited government and freedom can do it. The Clerks and The Guardians we need not.

See you Trackside.

A timeless article in honor of former Editor John D'Aloia reprinted from the old Eponym site.