My latest in the American News:
In "The Prince," 16th century Italian philosopher Niccolo Machiavelli has advice for a prince who desires the reputation for generosity. To obtain a reputation for generosity, warns Machiavelli, one must be ostentatious. This ultimately leads to the prince squandering his money. Having impoverished his principality, he must either heavily tax his people or forgo his previous openhandedness. Either way, he now earns the opprobrium of the people.
Machiavelli suggests rather acting like the miser, a miserly prince leaves his people alone, including their pocketbooks. When great things need to be accomplished, he has monetary reserves to accomplish large projects. Because the people learn not to expect much from the prince, they are overly grateful at the few benefits he does bestow. Ironically, the generous prince ultimately gains the reputation of miserliness, while the miserly prince is deemed generous.
One can see these lessons played out as South Dakota's government and the national government respond to economic downturn.
Our state has followed Machiavelli's advice in not invading the people's pocketbooks. Our state's practice of caution and prudence with the public wealth is now serving us well.
South Dakota is 49th in the nation in per-capita tax burden while ranking 48th in per-capita state and local spending. Combining these two statistics, one can fairly say that almost no state taxes or spends less than South Dakota. Thus, in a budget crunch, a modest tax increase should cause little harm, as the state wasn't taking much in the first place. The state has been frugal in spending and has kept reserves, so while having to make tough decisions, South Dakota is not in the dire position of many other states.
This is not to say that we don't face tough calls. The state faces a budget shortfall of more than $100 million over the next 18 months. We cannot balance the state budget without most everyone sacrificing some program that they care about, either through its elimination or a serious cut. The state supporters of the arts rightly disagree with the governor's proposal to eliminate the state arts council. But one could take them much more seriously if they at least acknowledged the seriousness of the budget situation rather than acting like just another lobby demanding the public's money. Everyone who gets government money thinks his program is crucial, whether it is state spending on the arts, early childhood education or political scientists.
This is a problem of government spending. When the government spends, it creates constituencies to perpetuate that funding. Most interest groups do not exist to promote new spending; they exist to defend current programs. Thus it is easy for the government to create new programs while very difficult to eliminate any.
The federal government, already bloated by over-generosity, now struggles in the face of economic downturn. Called on to take on an enormous project of economic stimulus, it finds itself without the money to do so. It is left borrowing from future generations. Would that the feds had followed our state's example of prudent management of public funds, allowing for a more nimble reaction to hard times. Let's hope that our own state continues its practice of being watchful of the people's money, leaving some for what might be a very long rainy day.
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