By Amos R. McMullian
History does not repeat itself. Human nature repeats itself. It is the nature of humans to stray from the straight and narrow — from sin, and back again; from peace to war and back again; from poverty to prosperity and back to poverty again. It is the nature of humans to forget this, and they need to be reminded. This cycle of human nature goes on in both the people and in their leaders. Sometimes the people are wrong. Sometimes the leadership is wrong. Sometimes both of them are wrong.
Bad public policy causes people to suffer. Our Founding Fathers understood human nature. They understood that incentives matter and they knew that government can destroy wealth and liberty. They knew that when responsible citizens seek security rather than liberty, they lose both; that when people eat their seed corn, they starve; and when citizens become dependent rather than independent, they are more suitable for slavery than citizenship.
There are no increases in a nation’s standard of living without increases in productivity. Excessive regulations stifle productivity by eliminating creativity and innovation. The consumer pays for excessive regulations. We may think it is the businessman who pays — and he does pay — but ultimately it is the consumer and all of society who actually pays the tab.
Our Founding Fathers adopted the principle that government should serve the people. We hear that all of the time today, and we tend to take it for granted. But of all the governments in all of the civilizations since the beginning of time, the concept of having government serve the people was a truly original thought. Ordinarily, the people served the government, either the King, the Church, the dictator or whatever.
Based upon the lessons of history, our Founding Fathers adopted the principle of the rule of law so that no man would be above another, that everyone would have a trial by a jury of their peers, and that the accused were innocent until proven guilty. They also decided that we would have limited government with checks and balances, personal political freedoms, individual responsibilities, and a free enterprise, incentive-based, market-oriented economy or, as Margaret Thatcher puts it, “economic democracy to go with our political democracy.”
These concepts gave us the world’s greatest economy with the highest level of productivity and the greatest standard of living ever known. America became the wealthiest and freest nation on the face of the earth. So much so that I think an objective historian would say that this century was an American century. We faced World War I, the Great Depression, World War II, outer space, the threat of nuclear war and the Cold War. It was Russia against the United States, free enterprise against socialism, and we won. It was without question an American century.
The question now is, will the next century be an American century? There are many ways to destroy a nation. War is just one of them. Misguided policy, confiscatory taxation and excessive regulation will also do the job. Just the other day I read that the Clinton Administration has set a new record by exceeding the Carter Administration in the number of regulations issued. We have a tax system that punishes the producer and rewards the nonproducer. We have a large central government that we did not have when this century began, and a tax system that feeds this government.
Ludwig Von Mises, the great Austrian economics professor, studied socialism and predicted that the Soviet Union would fail. He said socialism was fatally flawed because it was contrary to human nature. Russia subsidized inefficiency and developed a “something for nothing” mentality. As a result, their economy was plagued by absenteeism and alcoholism, and became grossly inefficient. We won the Cold War partly because of our strengths and partly because of their weaknesses. But we paid a price to win.
The first casualty on the list of winning that war was losing the concept of limited government. We were so focused on winning the nuclear war that we are about to lose the economic war. We have the world’s largest economy, but the majority of our citizens don’t have a clue as to how we got there. We are economically ignorant. Can we maintain this economy on that basis?
We have lost a sense of individual responsibility, and between welfare, outrageous settlements from trial lawyers, and lotteries run by our states, we, like the Russians, are developing a something for nothing attitude. Like the Russians, we are subsidizing inefficiency. We’re not dumb enough to do it in the name of the state or equality. No, we do it in the name of compassion. But is there anyone who thinks the results will be any different?
There are people today who would have you believe that mothers can’t raise children, farmers can’t farm, and educators can’t teach . . . without a monthly check from the federal government. I do not care how many times you use the word compassion in a speech on the floor of the United States Congress, you do no man a service to make him dependent. My first Sunday School teacher was my mother and I’m a Sunday School teacher myself, and I understand and believe in the concept of charity. I think that institutionally and individually we ought to do all we can for those who cannot. But this business of doing for people who simply will not is wrong. It’s wrong for the producers and it’s wrong for society as a whole.
The wisdom of the ages has come down to us from the sage Confucius to the prophet Ezekiel to the economist Adam Smith to the historian Arnold Toynbee. All have warned us about the dangers of relying on someone else for our well-being, as opposed to our own individual responsibility. These attitudes have given us a litany of problems.
Thanks to the Tax Foundation, we are aware that the average middle class family pays more in taxes than they do for housing, food and clothing combined, that the government sector is greater than the manufacturing sector of our economy, and that the United States Department of Agriculture is now larger than the United States Marine Corps.
Taxing income is an idea whose time has come and gone. It is counterproductive for anyone who has to compete in the world. It is biased against honest people because the underground economy does not pay income taxes. It’s biased against domestic manufacturers, not foreign companies, and it wastes some of the best brain power in America.
Whether you are the United States government or the State of Georgia, you can increase taxes and regulations all you want, but they do not have an impact on our competitors. And who pays for all of this? The consumer and society at large. I think the income tax needs to be eliminated. I don’t think that’s about to happen, but I do think there is a chance for a step just short of eliminating it . . . if we can go to the flat tax. The flat tax would help business by rewarding savings and investment, research and development, and increases in productivity.
One thing is clear: We can’t maintain the status quo. Competition is increasing, and we have to compete or watch our standard of living be reduced to that of a third world country. This situation reminds me of the comment that Ronald Reagan said about status quo. He said, “Status quo — that’s Latin for ‘the mess we’re in.’”
Although we may think all of our problems are in Washington, we’ve got plenty right here in the State of Georgia. We have a record number of people on welfare and food stamps, and yet you can hardly go anywhere in the state without seeing signs that say “Now Hiring,” “Applications Taken,” “Help Wanted” . . . in almost every supermarket, restaurant, convenience store and department store. Some people say, “I don’t want a minimum wage job.” Well, I don’t either, but I have had one, as have most people. Too many people today don’t understand that a minimum wage job is an entry level job to get you in, and then, through either formal education or through on-the-job training, you move higher. You make yourself absolutely invaluable to your employer and that’s how you get away from the minimum wage.
We [Flowers Industries, Inc.] have five plants in the state, with two more under construction. We have thousands of employees in Georgia. Every year the school tax portion of our property taxes goes up, and every year we see the results of our school system do down. So we’ve got a problem. We’re not only failing to turn out the type of students we need, but we’re constantly sending tax rates ever higher.
The next war has already started. It’s not a fighting war with bombs and bullets; it’s an economic war. Whether we like it or not, we’re in a global economy, and this time it’s not going to be our free enterprise system competing against some dictatorship or some socialist system. This time it’s going to be our free enterprise system competing against their free enterprise system.
In the past, people have tended to look for a job where they lived. In the future, we are going to live where we can find the job that suits us. Georgia needs to be careful that we don’t have a brain drain from our state. For example, some members of our state legislature were so busy fighting yesteryears’ wars, they let the big-bank financial center wind up in Charlotte rather than in Atlanta.
We have a problem in Georgia. State spending has grown faster than that of the United States government. If you can outspend the U.S. Congress, that is some testimonial. So we have a problem, and yet we have an opportunity. This block grant challenge being debated in Washington gives Georgia the opportunity to re-engineer its government, not unlike so many businesses that are having to re-engineer themselves today. The world is changing. Government must change also.
I think we will have an opportunity unlike anything I’ve seen in my lifetime to really take a hard look at what we’re doing and ask ourselves the hard questions. During this global challenge, the time will come when government will be every bit as concerned about capital formation, capital allocation and capital recovery as business managers are. Those countries that work in concert with their industry will be formidable competitive forces to our country, where we have an adversarial relationship between government and business.
The world has changed, and if we do not recognize it and change with it, our standard of living will surely diminish. Still, when I look around, I’m encouraged. President Clinton was elected two years ago and he said it was because the people wanted change. The Republicans went into office last November and they said it was because people wanted change. That’s good news. That is encouraging. We need to change.
I’m encouraged because companies like my company, Flowers Industries, are getting more involved in the political process. I see more and more individuals getting involved in the political process. Somebody said to me the other day, “Amos, you really have a passion for politics, don’t you?” I said, “No, I do not. I have a passion for my company and for the chance to build it into the great business enterprise that I think it can be. Politics is a duty. It’s a duty that all of us must address.”
I’m encouraged about our future because I see the work of people like the Tax Foundation, and I’m encouraged because there’s a new organization in our state called the Georgia Public Policy Foundation. Hank McCamish started this organization, and the people of Georgia are going to be indebted to this man. I am honored by my association with this organization. I believe it has the potential to make the greatest difference for the people of this state than any of the vehicles out there today. It has already made a difference. We are held in high esteem by the Georgia General Assembly, on both sides of the aisle, for the work that we do. The Georgia Public Policy Foundation, by studying the issues to illuminate and educate the people and the legislators, is going to make a difference.
This speech was the Keynote Address presented at the 1995 Georgia Tax and Budget Conference on April 5, 1995. Amos McMullian is Chairman and Chief Executive Officer of Flowers Industries, Inc. and a member of the Georgia Public Policy Foundation Board of Governors. The Georgia Public Policy Foundation is an independent, nonpartisan organization dedicated to keeping all Georgians informed about their government and to providing practical ideas on key public policy issues. The Foundation believes in and actively supports private enterprise, limited government and personal responsibility.
Nothing written here is to be construed as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature. Permission is hereby given to reprint this article, with appropriate credit given.