Victor Davis Hanson writes about it National Review.
Here in California, students just marched on Sacramento in outrage that state-subsidized tuition at the UC and CSU campuses keeps climbing. It is true that per-unit tuition costs are rising, despite even greater exploitation of poorly paid part-time teachers and graduate-student TAs. But the protests are sort of surreal. The California legislature is overwhelmingly Democratic. The governor is a Democrat. The faculties and administrative classes are largely Democratic. Who then, in the students’ minds, have established these supposedly unfair budget priorities?
Sales, income, and gas taxes are still among the highest in the nation (and are proposed to rise even higher) — prompting one of the largest out-of-state exoduses of upper-income brackets in the nation. The state budget is pretty much entirely committed to K–12 education (whose state-by-state comparative test scores in math and science hover between 45th and 49th in the nation), prisons, social services, and public-employee salaries and pensions. Whom, then, can the students be angry at?
Are students angry at public-union salaries and pensions that are among the highest in the nation? Do they think the many highly compensated retired Highway patrol officers have shorted students at UC Davis? Are they mad at the 50,000 illegal aliens in the California prison system that might have siphoned off scholarship funds from CSU Monterey Bay? Or is the rub the influx of hundreds of thousands of children of illegal aliens who require all sorts of language remediation and extra instruction in the public schools, and so might in theory divert library funds from UC Santa Cruz?
Perhaps the students don’t want billions to be committed to high-speed rail that might rob Berkeley of needed funding, or environmental efforts to introduce salmon into the San Joaquin River, in which the $70 million spent so far in studies and surveys might have come from nearby CSU Fresno? Are they mad at state social services, whose medical expenses have skyrocketed to address the health-care needs of millions of illegal aliens, and thus in theory could curb the choice of classes at CSU Stanislaus? Are they angry that some $10–15 billion a year probably leaves the state as remittances to Mexico?
If one cannot blame the wealthy for “not paying their fair share” (the top 1 percent of Californians now pay about 37 percent of all income-tax revenue — and their numbers have decreased by one-third in recent years, as the state has come to rely on the income tax for half its revenue), or Republican majorities in government, who, then, is left to blame?
Not only do these students have to deal with the sub-par, overpriced education they get from their Democrat-supporting teachers, but they also have to contend with a job market weakened by their Democrat legislators and Democrat government. Government spending on “public works” projects isn’t free. The money has to come from somewhere, and none of the options are good for students who want a quality education followed by a high-paying job.
Economics in One Lesson
Perhaps it is time to review Henry Hazlitt’s book on basic economics “Economics in One Lesson”. Let’s look in chapter 4, which is entitled “Public Works Mean Taxes”.
Excerpt from that chapter:
Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been adiversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.
And consider Chapter 5 as well, entitled “Taxes Discourage Production”.
In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nation’s income; and these income taxes have to be supplemented by taxes of other kinds. These taxes inevitably affect the actions and incentives of those from whom they are taken. When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only fifty-two cents of every dollar it gains, and when it cannot adequately offset its years of losses against its years of gains, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or not as much more as they might have; and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products to the extent that they otherwise would, and that real wages are held down, compared with what they might have been.
There is a similar effect when personal incomes are taxed 50, 60 or 70 percent. People begin to ask themselves why they should work six, eight or nine months of the entire year for the government, and only six, four or three months for themselves and their families. If they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide that it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises. The government spenders create the very problem of unemployment that they profess to solve.
And the results we see today are consistent with the predictions of basic economic theory.