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Confession: I’ve never liked reading the cardboard characters of Ayn Rand—I can’t make it more than a few pages into any of her books.  Her philosophy of rational selfishness leaves me cold as well.  But her stories certainly taught the right lessons—one of them being that once the private sector becomes too burdened with regulation and taxes, it will simply stop working.  A recent entry at a reputable econ blog has me wondering if that day isn’t sooner rather than later in Oregon.

It’s just the reprinting of an anonymous email to this economics blog, but if this is true about Oregon, it’s flat out unsustainable, and we’re reaching a breaking point.  The emailer writes that looking at Oregon’s economic numbers, the private sector payroll is at 1997 levels (when I moved here), while supporting a 2010 infrastructure and spending level:

[Oregon] total payroll employment has not grown in 11 years, which is not unlike most of the rest of the US.

However, adjusting for OR population growth, payroll employment is back to the level of the early '90s.

But it's worse than that. Private payrolls are back to the level of '97, and adjusting for population there are fewer private payroll jobs per capita than the late '80s to early '90s.

And gov't payrolls over the past two decades have grown at twice the population/labor force growth rate.

See Here.
 
I can’t place full credence in something that doesn’t come with links to the statistics, so I’m going to ask our friends at Cascade Policy Institute about this.  But the emailer believes that this will lead to “Severe, Life-changing, and Consciousness-Altering State Budget Cuts,” and I can’t see how he’s wrong.  Tax private industry any more and it just doesn’t pay to run a business.

For the result of such a system, see Rome, Decline of:

With the collapse of the money economy, the normal system of taxation also broke down. This forced the state to directly appropriate whatever resources it needed wherever they could be found. Food and cattle, for example, were requisitioned directly from farmers. Other producers were similarly liable for whatever the army might need. The result, of course, was chaos, dubbed "permanent terrorism" by Rostovtzeff (1957: 449). Eventually, the state was forced to compel individuals to continue working and producing.

The result was a system in which individuals were forced to work at their given place of employment and remain in the same occupation, with little freedom to move or change jobs. Farmers were tied to the land, as were their children, and similar demands were made on all other workers, producers, and artisans as well. Even soldiers were required to remain soldiers for life, and their sons compelled to follow them. The remaining members of the upper classes were pressed into providing municipal services, such as tax collection, without pay. And should tax collections fall short of the state's demands, they were required to make up the difference themselves. This led to further efforts to hide whatever wealth remained in the Empire, especially among those who still found ways of becoming rich. Ordinarily, they would have celebrated their new-found wealth; now they made every effort to appear as poor as everyone else, lest they become responsible for providing municipal services out of their own pocket.

See Here.

It’s a long way to go to get that bad, but if tax revenues dry up because employers stop trying to employ people, there are only a few tools in any government’s toolbox.