Local Matters

John McClaughry from the May 1993 issue

(Page 2 of 2)

Labor unions in the non-governmental sector—now down to about one-eighth of the non-agricultural work force—will continue to dwindle in influence. Joint labor-management work teams, largely prohibited under long obsolete labor law, will increasingly determine workplace conditions independent of contract bargaining. The rise of profit sharing, employee stock ownership plans, and participatory management techniques—all abhorred by most old-line union leaders—will eventually end the labor-management-owner distinctions, with great benefits to the economy and to the participants. The last stronghold of unions, the public sector, will be steadily weakened as taxpayers demand the benefits of privatization of many government functions.

After a disastrous experiment with a bureaucratic, price-controlled national health system during the Clinton presidency, the nation will move to restore individual responsibility in lifestyle and health care. Employer-provided health benefits will cease to be tax free, but individuals and families will be allowed to put tax-deductible dollars into medical-care savings accounts, from which they will purchase catastrophic (high-deductible) coverage. Families that make healthful living choices will see their accounts accumulate over the years, creating a tax-free means to cover their health and retirement-home expenses. Low-income families will, as always, have to be subsidized, but they will take part in the same system as everyone else. Putting consumers back into the health marketplace in place of third-party payers, coupled with effective tort reform, will help curb health-care costs.

The discovery of the merits of the tax-deductible medical care savings account plus the need to generate investment capital formerly supplied by commercial bank reduced to uselessness by heavy-handed federal regulation, will lead to a revolutionary change in the national tax system. Instead of taxing income, the federal government will adopt a cash-flow-style consumption tax. The taxpayer will add up his income; deduct funds devoted to investments, savings, and medical-care account; claim an appropriate subsistence exemption based on family size; and pay tax on the consumed balance. This approach not only encourages investment and frugality, it also puts an end to the complexities and inequities of capital gains and depreciation treatment.

Another serious bout with inflation will give impetus to currency competition. Contracts will be written in terms of the index price of a market basket of internationally traded commodities instead of a fixed amount of Federal Reserve notes, and privately issued currencies will become preferable to unstable and politically manipulated government currencies. Localities will experiment with local currencies as payment for locally produced goods and services.

Throughout this period there will be a remarkable efflorescence of self-help activity in rural areas, suburbs, and inner cities alike. Once governments see that Americans can do remarkably well at solving their own problems if only left alone to do so, there will be a new willingness to dismantle the barriers to self-help. Neighborhood corporations, for instance, will demand the end of such government afflictions as mandated wage scales and nonsensical building and housing codes, zoning rules, and occupational licensing requirements. The opportunity to participate meaningfully in self-directed civic activity will restore real power to citizens seeking to take part in the "little platoons" of a society in which they can once again have confidence and whose progress they can help to shape.

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