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N.J. homeowners are paying more for less than ever before

SabrinM012810_optBY MURRAY SABRIN
COMMENTARY

The screwing of suburbia...continues. Property taxes are increasing in the suburbs. Municipalities are laying off police officers. Schools are increasing class sizes, and in some cases eliminating teaching positions. Skyrocketing health insurance premiums are putting pressure on municipal budgets. In other words, it is crunch time for suburban homeowners. Trenton has reduced state aid because of the fiscal crisis; suburbanites are now paying more for less than ever before.

The Record reports that the "cost" of citizenship — property taxes in the suburbs — is rising sharply, by as much as double digits in some towns, despite the concern of well known economists that "deflation" — falling prices — is a threat to the economy. There is no deflation in taxes, one of the largest items in a family budget.

We are witnessing the failure of "trickle down economic" — the flow of money that is supposed to "trickle down" from Trenton to suburban towns to help pay for municipal services and moderate property tax hikes.

Those on the left assert that trickle down economics is when the government cuts taxes. The money that remains in people's pockets, especially those on upper income individuals and families, "trickle down" to the rest of society. This is a gross distortion of how the economy really works. In a free market, people earn income, spend, save and invest in order to improve the lives. In such an environment, local and state governments provide a few services — most notably education, police services, roads and highways and a social safety net — to meet the needs of the population.

Things have not worked out the way public finance theorists and others have asserted, namely that the government would provide quality services and taxes would be "reasonable" to pay for state and local budgets. In short, ‘trickle down" from Trenton has been a colossal failure. Homeowners, in short, are paying more for less.

In a free market, when businesses do meet the needs of consumers, they shop around for better deals — and usually get them because there are always better and less expensive goods and services entrepreneurs are providing in the marketplace.

A simple idea is behind the current theory of government: people pay taxes so that the government can deliver services that the profit or nonprofit sectors would — or cannot — provide the general population. This assertion is a myth. Entrepreneurs and nonprofit institutions have and do provide every service local and state governments currently deliver. In fact, independent nonprofits schools and security agencies would eliminate the need for expensive government schools and local police departments.

In communities across America, private security companies guard large residential developments, office-building complexes, and malls. In addition, there are thousands of nonprofit social service agencies feeding the needy, healing the sick, sheltering the poor, and counseling young and old alike. In short, America has a vibrant nonprofit sector that delivers services.

To reduce taxes and still have programs that address human needs, let the government continue to provide the roads and highways, but let us get the government out of education, the security business, and social services. There needs to be a transition of no more than five years to get to there from here. Of course, politicians, editorial writers and other defenders of the failed status quo will scream their heads off that there must be government schools, local police monopolies, and a government social safety net. However, they must answer one question. Why?

As Frederic Bastiat observed more than 150 years ago: "Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all."

This is the debate we need to have, especially after the results of last week's election: Who should provide vital services to the people?

Government failure is all around us — high taxes and shrinking services. It is time to end the real trickle-down economics.

Murray Sabrin is professor of finance at Ramapo College. He was the Libertarian Party nominee for governor in 1997 and a Republican candidate for the U.S. Senate in 2000 and 2008. Check www.MurraySabrin.com for more of his writings.

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