The Steady Growth of Taxation

Posted: May 07, 2001 12:00 AM
Everyone knows the story about the frog. Drop him into a pot of boiling water and he will jump right out again, relatively unscathed. But put the same frog into a pot of cool water and slowly turn up the heat, and he will soon find himself cooked. The purpose of this story is to show how bad things that happen slowly can lead people to accept conditions they would never tolerate if imposed quickly. A good example would be the steady growth of taxation, which today is far higher than anyone imagined when the income tax was imposed in 1913. But the reverse can also be true. Sometimes good things happen slowly, too. The result is that people are unaware of just how much their lives have improved in key ways. It is important to remind them of this from time to time, so we do not become unduly concerned when things temporarily go the wrong way. Focusing too much on small negative movements, while ignoring the larger positive trend, can lead to the adoption of policies that may do more harm than good in the long run. A good example of this is the concern many people have today about the cost of prescription drugs. The long-term trend has been for the cost of such drugs to fall, and for better drugs to replace inferior ones, improving the lives of millions. But excessive attention on high prices for a few new drugs has led to calls for price controls. Such regulations may provide a bit of short-term relief for a few people, but the long-term cost would be disastrous. It would stifle research and development in the drug industry, because companies will not be able to make enough profit to justify the risk of bringing new drugs to market. The result will be pain and suffering by many people who might otherwise have been relieved by drugs that, instead, go undiscovered. Another example is the steady improvement in working conditions, which is the subject of a new report from the Federal Reserve Bank of Dallas. The report notes that not too long ago, working conditions for most workers were little short of horrendous. It cites a 1920 book, "Working Conditions, Wages and Profits," which describes the typical factory worker as routinely suffering from injury, fatigue, strain, excessive temperatures, high humidity, poor ventilation, inadequate sanitation, disease, hazardous chemicals, long hours, rigid schedules, boredom and lack of toilet facilities. Such a description harkens back to early days of the Industrial Revolution, when children stood for 10 or more hours a day, six or even seven days a week, working in textile mills. Apparently, things weren't a whole lot better 100 years later. But the same cannot be said today. Working conditions have improved enormously for virtually all workers. Instead of laboring in dirty factories, doing arduous and even dangerous work, most workers today sit in air conditioned offices, working with their brains instead of their brawn. As recently as the 1950s, 41 percent of all workers worked at manual occupations -- factory workers, laborers and craftsman. These are the types of jobs where workers are most likely to suffer from repetitive motion injuries. Today, just 25 percent of workers are in such jobs. And among manual workers, those with the greatest incidence of repetitive motion injuries -- operators and fabricators -- have fallen from 27 percent of employment to just 14 percent. By contrast, there has been sharp growth in white-collar jobs, where workplace injuries are far less common. Such jobs have risen from 27 percent of total employment in 1950 to 60 percent today. The trend toward fewer employees working in dangerous jobs and more working in those that are safe is likely to continue as the New Economy of computers and the Internet grows. The result will be further improvement in workplace safety. As the Dallas Fed report puts it: "There's less risk of injury while pushing ideas around in the information economy. Workers are more likely to get hurt while engaged in the tasks of the Old Economy -- lifting, cutting, drilling, digging, grinding and handling dangerous materials." It is not just that workers are moving from dangerous jobs to safer ones. Even those who continue to work in dangerous occupations have seen substantial increases in safety. The injury rate in manufacturing has fallen from 153 per thousand in 1973 to 80 in 1999, and from 198 to 84 in construction. And in those industries that were already relatively safe, the safety rate has generally gotten better still. For example, the injury rate among those in finance, insurance and real estate fell from 24 per thousand to 16 between 1973 and 1999. Declining injury rates, of course, are just one measure of the improvement in the workplace environment. The Dallas Fed report cites data showing a decline in stress in almost every industry except mining since 1993. It also notes that increasing numbers of workers now have flexible job schedules and are no longer confined to a rigid 9-to-5 workdays. Telecommuting is increasingly available, so that many workers never even have to leave their homes. Within the workplace itself, the overall work environment continues to improve. Casual dress is now the norm in many businesses, which improves comfort and saves money for many workers that would otherwise be spent on suits, ties and pantyhose. Companies are also improving benefits and workplace amenities, such as day care. They do so not out of the goodness of their hearts, but because they cannot recruit and retain good workers without them. The report concludes that the vast improvement in working conditions has been brought about not because of unions or government regulations, but because the market demanded it and made it possible. Yet the market receives no credit and continues to be blamed for workplace stress and injuries, despite the massive improvement it has brought about. Commenting on earlier critics of the Industrial Revolution, the great historian Thomas Babington Macaulay said this is human nature. The better conditions get, he said, the more loudly people bewail the suffering that remains, however little it may be. *** Chart data: Work-Related Deaths Year ---- Deaths Per 1 Million 1937 ---- 431 1938 ---- 380 1939 ---- 356 1940 ---- 376 1941 ---- 374 1942 ---- 350 1943 ---- 335 1944 ---- 309 1945 ---- 329 1946 ---- 315 1947 ---- 310 1948 ---- 286 1949 ---- 272 1950 ---- 275 1951 ---- 279 1952 ---- 260 1953 ---- 258 1954 ---- 243 1955 ---- 239 1956 ---- 234 1957 ---- 232 1958 ---- 222 1959 ---- 225 1960 ---- 214 1961 ---- 209 162 ---- 210 1963 ---- 215 1964 ---- 210 1965 ---- 202 1966 ---- 200 1967 ---- 190 1968 ---- 186 1969 ---- 181 1970 ---- 178 1971 ---- 175 1972 ---- 172 1973 ---- 170 1974 ---- 157 1975 ---- 153 1976 ---- 142 1977 ---- 141 1978 ---- 137 1979 ---- 132 1980 ---- 134 1981 ---- 125 1982 ---- 120 1983 ---- 117 1984 ---- 110 1985 ---- 108 1986 ---- 102 1987 ---- 101 1988 ---- 96 1989 ---- 93 1990 ---- 87 1991 ---- 84 1992 ---- 42 1993 ---- 42 1994 ---- 43 1995 ---- 40 1996 ---- 40 1997 ---- 39 1998 ---- 38 1999 ---- 38 Source: National Safety Council Note: The Dallas Fed report is available at