Bumper-Sticker Economics; C. E Bohanon and T. N. Van Cott

Similarly, firms facing competition from' 'low fringe-benefit" firms have a private interest in mandated benefits, since such benefits harm their competitors. Practically everyone engaged in the debate over mandated benefits would prefer that all workers have higher wages and more benefits. 267 This is especially true when we address the problems of low-income Americans. However, the main problem of low-income workers is a lack of job skills, which leaves them little choice but to accept low wages and low ben efits. Mandated benefits will do nothing to solve the problems of these workers. Indeed, by wiping out employment opportunities, man dated benefits are counterproductive, especially for the most disadvantaged in labor markets. Mandated benefits will not supplant the welfare state; mandated benefits, instead, will hasten the growth of an even larger welfare state-to take care of those banished from constructive employment. 0 Bumper-Sticker Economics by Cecil E. Bohanon and T. Norman Van Cott E conomies is alive but not well on America's highways. Americans are continually instructed in the nuances of economics via a plethora of bumper stickers of questionable content. Some mobile placards thinly veil people's attempts to increase their incomes by duping others. The United Auto Workers' ludicrous claim that buying a foreign car dooms ten assembly-line workers to a life time of unemployment is such a sticker. Other drivers carry the torch for causes ranging all the way from the National Rifle Association's "God, guts, and guns" theory of American Professors Bohanon and Van Cott teach in the Department of Economics at Ball State University, Muncie, Indiana.

economic development to left-liberal pleas to produce food "for people, not for profit." In this wasteland of economic illiteracy, we have found one sticker that offers more than mere comic relief. America's truck owners, no doubt tired of hearing that their trucks mangle the roads, have retaliated with stickers stating, "This Truck Pays Umpteen Thousand Dollars in Annual Road-Use Taxes." Contrary to others, there is a seed of economic truth in this sticker. The message describes the user-cost mechanism in U.S. highway finance, however imperfect the mechanism may be. At the same time, this back-of-the-truck tax return illustrates a widespread myth about 268 THE FREEMAN • JULY 1988 taxes-a myth that is responsible in part for the sorry condition of public discussion of tax policy. Let us sketch this myth, using as a backdrop the American truckers' attempt at economic education. The Myth The myth is that inanimate objects -like trucks-pay taxes. The truth, of course, is that inanimate objects never pay taxes, only people pay taxes. We enjoy pointing out to our stu dents that when we pay our car license fees at the motor vehicles office, we never wait in line behind trucks. We wait behind people who own trucks. People pay every tax-be it a truck tax, land tax, corporate profit tax, wealth tax, or any other business tax.

One might think that we are belaboring the obvious, if not being simplistic, to point out that only people pay taxes. Note, however, that politicians across the political spectrum contin ually draw a distinction between taxes levied ,'on the people" and taxes levied "on busi ness." The distinction is utterly fallacious. The people who own businesses are legally respon sible to pay business taxes. Nevertheless, politicians of all stripes find it appealing to perpetuate the "people vs. busi ness" tax illusion. By convincing the electorate that people escape "business taxes," it is easier to increase these taxes. Politicians, thereby armed with additional tax revenue, can sell classic "free lunches" - new government programs that no one seems to pay for. A variant of this myth is that the legal re sponsibility for paying taxes is the same as the economic responsibility. Tax laws specify who is legally responsible for remitting tax revenues to the government. However, just because truck owners are legally responsible for paying road-use taxes does not mean they are the ones who actually pay them.

Road-use taxes increase costs for trucking companies, and these costs tend to translate into higher freight rates. This means that con sumers of trucking services "share" in the burden of the tax. Likewise, to the extent road use taxes negatively impact on the size of the trucking industry, truck drivers and truck man ufacturers "participate" in the tax through lower earnings. The precise. apportionment of the tax depends on what economists call the supply-demand conditions of the industry, but what is obvious is that actual tax burdens can be very different·from legal tax burdens. Conclusion Truck owners can help demythologize taxa tion while still venting their anger. May we suggest a sticker along the following lines: "Look Straight into Your Rear-View Mirror, Buddy, and You'll See Who's Really Paying Some of the Umpteen Thousand Dollars This Truck Owner Pays in Road-Use Taxes. " D 269 The Political EconolDY of Protectionism by Thomas J. DiLorenzo D isagreements among economists are legendary, but they are largely of one mind on the issue of free trade. Evi dence of this is a recent survey of the current and past presidents of the American Economic Association - the voice of mainstream eco nomics. The survey found these prominent economists all strongly in favor of free trade, and concluded that "an economist who argues for restricting trade is almost as common today as a physician who favors leeching patients. ' ,1 Mainstream economic thinking on free trade knows no ideological boundaries. Conservative economists Milton and Rose Friedman, for ex ample, write that "ever since Adam Smith there has been virtual unanimity among econo mists . . . that international free trade is in the best interest of the trading countries and the world. "2 Liberal economist Paul Samuelson concurs: "Free trade promotes a mutually prof itable regional division of labor, greatly en hances the potential real national product of all nations, and makes possible higher standards of living all over the globe."3 The case for free trade is not based on any stylized economic theories of "perfect compe tition," "general equilibrium," or "partial equilibrium. " After all, Adam Smith is his tory's most forceful and articulate defender of Dr. DiLorenzo is the Scott L. Probasco, Jr., Professor of Free Enterprise and Director of the Center for Economic Education at the University of Tennessee at Chattanooga.