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The energy and creativity of a people can ride out a storm

Today the front page of the Wall Street Journal leads with a gloomy article, "Credit Crunch Pounds U.K. Economy".

For more than a decade, the U.K. has reaped vast benefits from its role as a hub for the world's capital, building London into a financial center to rival New York. . .But now, amid the deepening credit-market turmoil, the U.K.’s embrace of financial globalization is becoming a liability.

The WSJ pins the problem to the ups and downs of global trade, with which the British people have been familiar for centuries, and blames consumers who have spent beyond their means. It omits key factors that have secretly affected the United Kingdom’s economy in far more unhappy ways.

First there was Chancellor Brown who never saw a tax or a regulation that he did not like, whether it was British or dictated by the EU. Taxes and regulations have costs, mainly in reducing a people’s creativity and energy and their ability to invest their money. The consumer who spends too much is also the taxpayer who is paying too much in taxes, and, judging by dismal reports, not receiving fair value in government services.

By the way, the idea that taxes could be reduced on us and increased on business won't work either. As a famous American once put it, "Well, business is not a taxpayer; it is a tax collector. Business has to pass its tax burden on to the customer as part of the cost of doing business. You and I pay taxes imposed on business every time we go to the store. Only people pay taxes, and it is political demagoguery or economic illiteracy to try and tell us otherwise.”

Another problem is that Gordon Brown has put half a million people on government payrolls. This not only means higher taxes, it means these Brits are not out creating businesses and jobs , but shackled to the state, often busying themselves doing a lot of things their fellow citizens do not need them to do, though hanging on to government CDs with extremely sensitive information does not appear to be one of them.

We have said it before, free the energies of the people, reduce taxes by getting out of the EU and streamlining government, and we will weather this and other global storms.

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