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Monday, October 18, 2021

OPINION:

People can express displeasure and take action against government policies that they find oppressive or otherwise objectionable without taking to the streets. Many find the COVID-19 vaccination mandates unacceptable for a variety of reasons. Despite threats of employment terminations, some are staging sick-ins or otherwise refusing to show up for work or comply. The consequences of these silent strikes may be a much slower economy or worse.

Silent strikes are underway against high taxes. Eight states have no income taxes: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. According to Americans for Tax Reform, eight other states are moving to end their state income tax: New Hampshire, North Carolina, Louisiana, Mississippi, West Virginia, Wisconsin, Iowa, Arizona, and perhaps Arkansas.


If you live in New York or California, you might wonder why you are required to pay more than a 13 percent marginal state income tax when other large states like Texas and Florida get along perfectly well without a state income tax. New York spends about twice as much per capita as does Texas, Florida, and Tennessee, with no apparent benefit to their citizens.

In a silent strike, a great flood of middle and high-income people are leaving – with their bank accounts – from New York, California, Illinois and moving to Florida and Texas in particular. Many find that the government services are better in the no-income-tax states than in the high-income tax states. It all has to do with government management efficiency. New York, New Jersey, Illinois, and California are all known for hard or soft corruption. They are one-party states (all Democrats) where the Republicans have not challenged lazy, incompetent, and corrupt politicians seriously.

When citizens find it too difficult to vote out the politicians who are destroying their states and cities, many engage in a silent strike and move to less hostile and often very friendly environs where they can do business and have a good life for their families with a minimum of government harassment and destructive incompetence.

The Biden Administration and the Democrat Congress propose significant increases in the corporate tax rate and the capital gains tax, among other destructive taxes. And, Treasury Secretary Yellen, in a fit of mind-boggling meanness and stupidity, has even proposed taxing unrealized capital gains. We know from history that people will engage in silent strikes against high capital gains rates, particularly when effective rates can be over 100 percent because of inflation. People will not invest in things that can be easily explicitly taxed directly through inflation.

The U.S. and much of the rest of the world are suffering from “supply chain” problems. Businesspeople will not expand their stores when they are unsure about their ability to obtain products to put on the shelves. Manufacturers will not expand their factories if they are uncertain if they can get the necessary components – like computer chips – to make their products. And if they think business taxes are going up, they have one more reason to engage in a silent strike against investing in new and more plants and equipment.

The supply chain problems are, for the most part, caused by bad government policies. Shippers do not invest in new container ships when the government has restricted port expansions or greatly added costs through increased regulations and red tape. A silent strike against new investment in shipping is now underway.

Despite near-record oil and gas prices, very little new drilling is underway because new regulations are driving up costs and making it very difficult to get product to market. A government that stops pipeline expansion makes it more difficult to ship by truck or rail and drives up employment costs should not be surprised by a silent strike of oil and gas producers.

Government central bank and finance officials keep expressing surprise that people are buying various forms of cryptocurrencies. But the people see that the central banks are debasing the value of government-issued monies, and at the same time, stripping away all privacy in their use and taxing them on the inflation caused by that very government. By buying alternative financial assets, the people are merely engaged in a silent strike against the theft of their assets by the corrupt political class.

Governments can mandate that workers are vaccinated, but the Constitution does not permit involuntary servitude. And so, if a significant number of key workers will no longer be employed, fewer things are produced, causing prices to rise and the people to be poorer. If the government spends more money on non-worker welfare and medical care – legal or not – either taxes must be raised, or the inflation-producing printing presses will run faster. And in either case, the reasons for silent strikes increase.

The communist empire in Europe and the USSR collapsed three decades ago, not from a violent revolution but from silent strikes of the workers and managers. As they said, “We pretend to work, and they pretend to pay us.” With falling real wages and more welfare, high inflation makes the U.S. increasingly look like the final stages of socialism – little work, investment, innovation, and now empty shelves. It is past time to get off that train.

• Richard W. Rahn is chairman of the Institute for Global Economic Growth and MCon LLC.


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