Voice For Liberty

Category: Free markets

  • Koch executives respond to fraudulent call

    This week a prankster called Wisconsin governor Scott Walker and pretended to be David Koch, who is executive vice president of Koch Industries.

    Responding to the fraudulent call in National Review Online, Koch executives pledged to continue supporting free enterprise, free markets, and economic freedom in spite of opposition generated as part of an “orchestrated campaign” headed by the Obama Administration and groups like Center for American Progress. Bringing in labor groups is an escalation not seen before. The prank call is described as “fraudulent.”

    Koch Executives Speak Out on Wisconsin

    “We will not step back at all.”
    By Robert Costa

    Madison, Wis. — Earlier this week, a blogger impersonating industrialist David Koch spoke with Gov. Scott Walker of Wisconsin, who is attempting to pass a budget-repair bill. The conversation between Walker and the poseur, which was recorded, has received heavy media attention and turned the national spotlight onto the political activities of Koch Industries, a private, Wichita-based company with diverse holdings.

    In interviews with National Review Online, Koch executives responded to the incident and pledged to “not stop” supporting free-enterprise initiatives, even as opponents attempt to sully the Koch name and the groups that brothers David and Charles Koch, the company’s co-owners, support. They also noted that David Koch and the governor have never met or spoken.

    Continue reading at National Review Online.

  • Kansas auto dealers have anti-competitive law on their side

    In Topeka, a new car dealer wants to add the Buick and GMC lines to its dealership. In Wichita, an RV dealer wants to add an additional location. But if a privileged class of people are able to persuade the Kansas director of vehicles, these actions won’t be allowed.

    In Kansas, like many states, existing new car dealers are able to weigh in as to whether competition will be allowed into their market areas. In Kansas, the statue is 8-2430, captioned “Establishment of additional or relocation of existing new vehicle dealer; procedure; relevant market area.”

    Examination of this statute lets us learn of its anti-competitive nature. A person proposing a new dealership must state in writing why the new dealership should be allowed to be formed. The law requires that the applicant provide “a short and plain statement of the evidence the licensee, or proposed licensee, intends to rely upon in meeting the burden of proof for establishing good cause for an additional new vehicle dealer.”

    If the director of vehicles holds a hearing and finds that “good cause has not been established,” the director shall deny the application, according to the statute. The burden of proof is on the applicant for the new license, and must be proved “by a preponderance of the evidence presented.”

    The statute says that in determining whether there is good cause for a new dealer, the director of vehicles shall consider:

    • “permanency of the investment of both the existing and proposed new vehicle dealers”
    • growth in population
    • “effect on the consuming public in the relevant market area”
    • “whether it is injurious or beneficial to the public welfare for an additional new vehicle dealer to be established”
    • whether dealers of the same make of cars are “providing adequate competition and convenient customer care”
    • whether the proposed new dealer would increase competition and if that increased competition would be “in the public interest”
    • the effect of a new dealer on existing dealer(s)

    The decision of the director is not limited to these considerations, says the statute. Some of these factors are so vague and open-ended that they give the director reason to deny a new license virtually at his discretion. Will a new dealer have an effect on an existing dealer? Sure. Licensed denied.

    These laws that restrain trade and competition are harmful to the consumer. In his recent book The Right to Earn a Living: Economic Freedom and the Law, author Timothy Sandefur discusses the Illinois Motor Vehicle Franchise Act, which has language similar to the Kansas law. He writes:

    Although cloaked in the language of public benefit, such laws are really private-interest legislation designed to allow the government to choose each company’s “fair share” of the trade. But the only way of determining what share of the trade is “fair” for any business is its success with consumers who are free to choose. If bureaucrats, rather than consumers, decide what amount of economic success is “fair,” businesses will devote their time not to providing quality products at affordable prices but to wooing government officials to give them special favors. … Consumers, again, are victims of anti-competitive laws of which most of them are not even aware.

    Sandefur cites studies that show that states with laws like Kansas’ have fewer new-car dealerships, and higher prices for new cars. “This price difference means that consumers are forced to pay more for cars without getting any increased value; the extra money is merely transferred into the pockets of politically influential car dealers.”

    This law is bad for all Kansans except those who own automobile dealerships. It ought to be repealed.

    Ironically, the notice of the two dealers’ proposals is contained in this week’s issue of the Kansas Register. The very next page holds the text of Kansas Governor Brownback’s Executive Order 11-01, which creates the “Office of the Repealer.” In its preamble, the order recognizes the administration’s priority to promote “growth of liberty and economic opportunities for the citizens of Kansas and for Kansas businesses” and our state’s “mutual interest in a system of government, laws, regulations, and other governing instruments that are reasonable, comprehensible, consistent, predictable, and minimally burdensome.”

    I suggest to the repealer — Dennis Taylor is his name — that we’ve found the law that should be first to go by the wayside.

  • Charles and David Koch v. George Soros: Free markets or not

    Perhaps the best commentary on the recent conference sponsored by Charles and David Koch in California comes from Timothy P. Carney of the Washington Examiner. Titled The Kochs vs. Soros: Free markets vs. state coercion, it explains the difference between advocates of free enterprise and those who believe in using the force of government to achieve their goals.

    At the conference, protests were arranged by the left-wing advocacy group Common Cause. That organization recently launched an attack on Charles Koch, David Koch, and two U.S. Supreme Court Justices that has been found to be baseless and nothing more than a publicity stunt.

    After tracing the source of funding for Common Cause, Carney concluded: “In other words, money from billionaire George Soros and anonymous, well-heeled liberals was funding a protest against rich people’s influence on politics.”

    Liberals, of course, contend that their political donates are good because their causes are the correct causes: “Conservative money is bad, and linked to greed, while liberal money is self-evidently philanthropic.”

    While I don’t want to repeat Carney’s entire piece here — there’s a link to it below — here’s the crux of his argument: “… while Soros money and Koch money are superficially equivalent, there’s a crucial distinction. If we take both sides at their word, Soros and other liberal donors spend in order to impose their preferences on others while the Kochs and other free-market donors spend in an effort to be left alone to buy and sell with willing parties. The moral difference is this: Only one side is trying to compel others to conform to its preferences.”

    Carney has written before about the political left’s presumption — that big business is evil and is always seeking to restrain government interference — being incorrect. In his 2006 book The Big Ripoff: How Big Business and Big Government Steal Your Money , Carney explains:

    The standard assumption seems to be that government action protects ordinary people by restraining big business, which, in turn, wants to be left alone. The facts point in an entirely different direction:

    • Enron was a tireless advocate of strict global energy regulations supported by environmentalists. Enron also used its influence in Washington to keep laissez-faire bureaucrats off the federal commissions that regulate the energy industry.
    • Philip Morris has aggressively supported heightened federal regulation over tobacco and tobacco advertising. Meanwhile, the state governments that sued Big Tobacco are now working to protect those same large cigarette companies from competition and lawsuits.
    • A recent tax increase in Virginia passed because of the tireless support of the state’s business leaders, and big business has a long history of supporting tax hikes.
    • General Motors provided critical support for new stricter clean air rules that boosted the company’s bottom line.

    Most important, in these and hundreds of similar cases, the government action that helps big business hurts consumers, taxpayers, less established businesses, and smaller competitors. Following closely what big business does in Washington reveals a very different story from conventional wisdom.

    While critics of Charles Koch, David Koch, and Koch Industries use the “big business” criticism — Koch Industries is a very large company, after all — there is a difference the critics can’t — or don’t want to — grasp, as Carney explains in the Washington Examiner article: “First off — and this was the point of a talk I gave Sunday at the Koch conference — many of the industrialists in the audience could profit more through regulations and subsidies than they could through the free market. Some oil executives, for example, have supported California’s strict refinery regulations because they kept out competitors. Natural gas companies like Enron have backed cap and trade because it hurt oil and coal. As for bankers — the Wall Street bailouts made it clear that big government is their mother’s milk.” (emphasis added)

    Carney’s book The Big Ripoff is blunt and detailed in its criticism of companies that use government to obtain special favor to enrich themselves. Yet, he spoke at the Koch conference, and has spoken at other similar events in the past.

    The Kochs vs. Soros: Free markets vs. state coercion

    By Timothy P. Carney

    Palm Springs, California — At the front gates of the Rancho Las Palmas resort, a few hundred liberals rallied Sunday against “corporate greed” and polluters. They chanted for the arrest of billionaires Charles and David Koch, and their ire was also directed at the other free market-oriented businessmen invited here by the Koch brothers to discuss free markets and electoral strategies.

    Billionaires poisoning our politics was the central theme of the protests. But nothing is quite as it seems in modern politics: The protest’s organizer, the nonprofit Common Cause, is funded by billionaire George Soros.

    Common Cause has received $2 million from Soros’s Open Society Institute in the past eight years, according to grant data provided by Capital Research Center. Two panelists at Common Cause’s rival conference nearby — President Obama’s former green jobs czar, Van Jones, and blogger Lee Fang — work at the Center for American Progress, which was started and funded by Soros but, as a 501(c)4 nonprofit “think tank,” legally conceals the names of its donors.

    In other words, money from billionaire George Soros and anonymous, well-heeled liberals was funding a protest against rich people’s influence on politics.

    When Politico reporter Ken Vogel pointed out that Soros hosts similar “secret” confabs, CAP’s Fang responded on Twitter: “don’t you think there’s a very serious difference between donors who help the poor vs. donors who fund people to kill government, taxes on rich?”

    In less than 140 characters, Fang had epitomized the myopic liberal view of money in politics: Conservative money is bad, and linked to greed, while liberal money is self-evidently philanthropic.

    Continue reading at the Washington Examiner

  • Koch Industries: Jobs created through market principles

    Now that President Barack Obama has embraced job creation in his 2011 State of the Union Address, he might want to take a look at a company that has been successful in creating both jobs and value for its customers. Wichita-based Koch Industries Inc. has done this through an application of market-based practices as described in The Science of Success: How Market-Based Management Built the World’s Largest Private Company, a 2007 book authored by company CEO Charles G. Koch. Koch’s approach has been successful. Since 1960, the value of Koch Industries Inc. has increased faster than the value of the broad-based S&P index of the 500 largest U.S. companies by a factor of 16 times.

    Charles and David Koch also believe in free markets and economic freedom as the best way to promote prosperity for all people, and they have long supported organizations that work towards this goal.

    But not everyone agrees with Charles and David Koch and their free-market approach to creating jobs, value, and prosperity. Recently they have come under baseless attack by the liberal activist group Common Cause for an alleged attempt to influence two U.S. Supreme Court justices. But as shown in the Wall Street Journal and elsewhere, Common Cause’s complaint is based on incorrect facts, even a total disregard for facts, and is totally groundless. As the Journal notes: “Common Cause’s letter to the Justice Department is just the latest salvo in a long campaign by left-wing groups to intimidate conservative judges, academics and activists.” Fortunately for the cause of freedom, Charles and David Koch do not shrink back from these attacks.

    Recently the Wichita Eagle profiled Koch Industries Inc. and how the company’s growth supports over 50,000 jobs in the U.S. and 17,000 overseas. When ripple effects are counted, the job count is at over 203,000 in the U.S. A reprint of the Eagle article is available at Koch cautious in acquiring other businesses.

  • Government is not business, and can’t be

    As Wichita begins its implementation of the plan for the revitalization of downtown Wichita, stakeholders like to delude themselves that the plan is “market-driven,” that the city will make prudent use of public “investment,” and that the plan’s supporters really do believe in free markets after all. It’s a business-like approach, they say.

    But government is not business. The two institutions are entirely different. Government cannot act as a business does — the incentives and motivations are wrong. But some refuse to accept the distinction between the two, insisting that just because an organization — say the Wichita Downtown Development Corporation — is entirely supported (except for a little private fundraising one year) by taxpayer funds, it’s not the same as a government institution.

    The City of Wichita suffers from all the problems cited in this excerpt from Central Planning Comes to Main Street by Steven Greenhut, which appeared in the August 2006 issue of The Freeman: Ideas on Liberty. As our city moves away from development based on markets to development based on government planning, and away from a dynamic free market approach to economic development towards political and bureaucratic management of our destiny, we can expect these problems to become more ingrained.

    Problems with Incentives

    By Steven Greenhut

    Most city managers and economic-development officials that I’ve talked to fancy themselves as CEOs of companies, and they argue that what they are doing is no different from what private companies do: maximizing revenues. “Why wouldn’t a libertarian support what we’re doing given that you value private business and understand the importance of profit?” I’ve often been asked.

    The answer is simple. Cities are not businesses. They take the tax dollars of residents and make decisions about land use that are backed by police powers. They do not operate in a market; they do not have voluntary stockholders. Despite the delusions of city managers, the city staff usually is not as sophisticated or as skilled as corporate staff, which means cities often get a poor deal when negotiating with rent-seeking corporations.

    When cities insert themselves into the economic development game, either with carrots or sticks, they:

    • Shift decision-making from individuals to governments;
    • Take money from taxpayers and redistribute it to individuals and companies;
    • Undermine property rights and other freedoms;
    • Encourage a class of rent-seekers, who learn to lobby city officials for favors and special financial benefits;
    • Put unfavored businesses at a competitive disadvantage with those who are favored; and
    • Stifle political dissent, as companies that are dependent on the city for lucrative work become reluctant to speak their minds about any number of city issues.

    Despite what city managers will tell you, the choice is not between economic development and letting a city rot. The choice is between central planning, empowering officials to decide which businesses are worthy of their help, and the good old free market, which lets free people decide which business should succeed or fail.

    City officials like to be “proactive,” as they say, and help with economic development. There is something they can do. They can get out of the way, by lowering tax rates, deregulating, ending zoning restrictions, and eliminating exclusive contracts with utilities and developers. It’s not out of the question. The city of Anaheim is doing just that, with remarkable results.

    Mackinac’s LaFaive puts it well in a 2003 article: “The best business climate is one in which government ‘sticks to its knitting’ and does its particular assignments well, at the lowest possible cost while creating a ‘fair field with no favors’ environment for private enterprise.”

    Not a bad template. Sure beats a world of central planning, where city officials can choose who gets handouts and even who gets driven out of town.

  • Economic freedom at decline, across the U.S. and in Wichita

    Earlier this year Robert Lawson appeared in Wichita to speak about economic freedom throughout the world. While the United States presently ranks well, that is changing. Writing this month in The Freeman, Lawson and his colleagues warn of dangerous trends — particularly the Obama Administration’s response to the recession — that pose a threat to the economic freedom that powers growth and prosperity.

    While the article is focused primarily at the national economy, there are lessons to be learned locally, too. In particular, increasing intervention into the state and local economy leads to compounding the loss of economic freedom.

    As an example, the Wichita City Council has just approved a plan for the revitalization of downtown Wichita that calls for public investment to be made downtown. While the plan is promoted as a market-based plan, it is, instead, a government plan to redirect investment from where people have decided it should be to where politicians, bureaucrats, and their patrons think it should be. These patrons are sometimes called “crony capitalists,” as explained in this passage from the article (James D. Gwartney, Joshua C. Hall and Robert A. Lawson:
    The Decline in Economic Freedom    ):

    It is important to distinguish between market entrepreneurs and crony capitalists. Market entrepreneurs succeed by providing customers with better products, more reliable service, and lower prices than are available elsewhere. They succeed by creating wealth — by producing goods and services that are worth more than the value of the resources required for their production. Crony capitalists are different: They get ahead through subsidies, special tax breaks, regulatory favors, and other forms of political favoritism. Rather than providing consumers with better products at attractive prices, crony capitalists form an alliance with politicians. The crony capitalists provide the politicians with contributions, other political resources, and, in some cases, bribes in exchange for subsidies and regulations that give them an advantage relative to other firms. Rather than create wealth, crony capitalists form a coalition with political officials to plunder wealth from taxpayers and other citizens.

    We are now in the midst of a great debate between the proponents of limited government and open markets on the one hand and those favoring more collectivism and political direction of the economy on the other. The outcome of this debate will determine the future of both economic freedom and the prosperity of Americans and others throughout the world.

    In Wichita, “those favoring more collectivism and political direction of the economy” are winning. Not only are they winning the actual political votes, they are also winning the battles within their own minds. Astonishingly, many of the crony capitalists in Wichita have deluded themselves into believing that they are supporters of free markets and capitalism. But taxpayer-supported institutions like Wichita Downtown Development Corporation and Visioneering Wichita exist for the very purpose of directing taxpayer funds toward the crony capitalists. Even the Wichita Metro Chamber of Commerce plays a role in the plunder of the taxpayer, with its president nodding in approval as nominally conservative members of the Wichita City Council expressed their support for the collectivist, anti-market vision for downtown Wichita.

    The heads of each of these organizations, along with city council members Sue Schlapp, Paul Gray, Jim Skelton, and Vice Mayor Jeff Longwell consider themselves to be conservatives. Many of these have personally assured me they are in favor of free markets.

    The actions of the council members, not only their enthusiastic embrace of the downtown plan, but their interventions — at nearly every meeting, week after week — that interfere with the market economy and destroy economic freedom, show that none have even a basic understanding of the difference between the economic means and the political means. Writing in his recent book The Science of Success, Koch Industries Chairman and CEO Charles Koch explains the difference:

    The economic means of profiting involves voluntarily exchanging your goods or services for the goods or services of others. Parties will not voluntarily enter into an exchange unless they both believe they will be better off. Therefore, you can only profit over time in a system of voluntary exchange (a market) by making others better off.

    The political means of profiting transfers goods or services from one party to another by force or fraud. A coerced or fraudulent exchange leaves at least one of the parties worse off. Examples are stealing, committing fraud, polluting, using unsafe practices, filing baseless lawsuits, lobbying government to hamper competitors or obtain subsidies and promoting self-serving redistribution programs.

    The economic means creates wealth by making each participant, and, therefore, society as a whole, better off. The political means, at best, merely distributes wealth. As a general system, it causes the overcoming majority of people to be worse off. (emphasis added)

  • Who is Americans For Prosperity?

    By Derrick Sontag, Kansas State Director, Americans for Prosperity. Kansas was one of the first states to have an AFP chapter.

    In recent weeks members of the press and even President Barack Obama have asked, “Who is Americans for Prosperity?” In asking this, many have implied AFP is just a front group for large corporations or as President Obama speculated, perhaps it’s even a “foreign controlled entity.”

    The answer is simple. Americans For Prosperity is a non-partisan, grassroots-driven organization that advocates for limited government and free market principles, principles under constant attack at every level of government today.

    AFP provides a voice for its more than 1.5 million activist members, including 40,000 in Kansas, to counter the powerful big government lobby that hovers on Capitol Hill and in state capitols like ours in Topeka. Being a part of an organization like AFP provides concerned citizens the tools to directly challenge the progressive agenda being advocated for by the multitude of special interest groups that try to influence elected officials on a daily basis.

    Since its inception in 2004, AFP has advocated for personal property rights, lower taxes and fewer government regulations, and to slow down the growth in government spending. Recently, we’ve voiced loud opposition to the numerous bailouts in which the government is picking the winners and losers in the marketplace, an act that threatens the viability of the free market itself. We have been vocal in opposing job-destroying legislation like cap and trade that would dramatically increase consumer prices and drive American businesses to countries with fewer regulations or force them to close up shop altogether. Perhaps most of all, the liberal elite dislikes us because of our opposition to the government takeover of our health care system.

    With a simple yet vitally important agenda like that, it’s no wonder we’re being targeted by members of the liberal elite. President Obama recently said that the “biggest problem we all have across the country right now … is groups like Americans For Prosperity.” Not the near ten percent unemployment rate but rather, the biggest problem according to the president is groups like AFP daring to challenge the progressive policies being put forth across the country.

    With this apparent coordinated attack on AFP and its limited government and free market oriented platform, one could easily conclude there are some in this country who fear that our message is resonating with the American people.

  • New York Times’ criticism of Koch Industries

    The anti-human agenda of the New York Times is on full display in its criticism of Charles Koch, David Koch, and Koch Industries regarding a contribution to the campaign against the AB32 ballot measure in California.

    To the Times, the question of man-made global warming and its purported harm is fully settled. Anyone who questions this is labeled a crank — or worse.

    Slowly but surely, the contradictions of the global warming alarmists are being revealed. Writing in the Washington Times, Richard Rahn points out the conflict of interest inherent in many of the global warming alarmists:

    It is also true that more environmental scientists say that global warming is a problem than not. But if you omit from your sample all of those environmental scientists who are on a government tab — salary or research grant — and those relatively few environmental scientists who are on the tab of an oil company or some other vested private industry, you are likely to have a much smaller ratio between those who agree versus those who disagree about global warming. If you are a professor at a state university and write a research paper showing that global warming is not a problem, how long do you think your government funding will remain?

    In the case of the New York Times, a crusade against energy fits right in with its hatred of capitalism and the freedom that inexpensive energy gives to millions of Americans with modest incomes. If you’re the typical Times reader, you don’t have to worry much about the cost of energy. But for most Americans, the cost of energy is very important.

    Inexpensive energy — which the Times opposes — is essential to our standard of living and its continued advancement. As economist George Reisman has written, we need to consider “the comparative valuation attached to retaining industrial civilization versus avoiding global warming.” This is a balance that global warming alarmists don’t consider. Or if they do, they come out against human progress in favor of something else.

    The types of carbon emission controls and reductions advocated by the Times would lead to — in Reisman’s words again — “the end of further economic progress and the onset of economic retrogression.” Summing up, he writes: “Global warming is not a threat. But environmentalism’s response to it is.”

    This is why we should be thankful that Charles and David Koch have been active in the global warming debate. Koch Industries‘ position on this issue is given on their website KochFacts.com:

    A free society and the scientific method require an open, honest airing of all sides, not demonizing and silencing those with whom you disagree. We’ve strived to encourage an intellectually honest debate on the scientific basis for claims of harm from greenhouse gases. Because it’s crucial to understand whether proposed initiatives to reduce greenhouse gases will achieve desired environmental goals and what effects they would likely have on the global economy, we have tried to help highlight the facts of the potential effectiveness and costs of policies proposed.

  • Media only mind when donors are conservatives

    Today’s Washington Times carries an editorial that points out — as others have — the bias evident in the mainstream media treatment of Charles Koch, David Koch, and Koch Industries.

    The major points made in this piece are:

    • The Koch brothers are accused of “self-dealing” because they believe in free enterprise. But economic freedom generates prosperity that is good for everyone, rich and poor.
    • George Soros, the Left’s favorite and prodigious donor made his money betting on economic failure.
    • The government funds many climate scientists who push global warming alarmism.
    • The MSNBC television network, which strongly supports the Obama administration and its big-government policies, has been owned by General Electric, one of the nation’s largest government contractors.

    There’s more in the article.

    Conflict-of-interest bugaboo

    Media only mind when donors are conservatives
    By Richard W. Rahn

    What is the most corrupting institution in society? Quite simply, it is government, because it controls and distributes more money to more people and institutions than any other single entity and it has the power to coerce and punish or reward that dwarfs what any private party might be capable of doing.

    Now that we are in the midst of the political season, we are constantly being warned by the establishment media about the dangers of businesses donating to political candidates either directly or indirectly. In recent weeks, there have been at least two major hits in the New Yorker and New York magazine on businessmen Charles and David Koch and their roles in supporting candidates who oppose the policies of President Obama and the Democrats, as well as for supporting free-market think tanks and grass-roots organizations. Yet, at the same time, the articles note that the brothers have given far more to cultural institutions and events than they have to their political causes. Through factual errors, exaggerations and insinuations, the Koch brothers are portrayed as a great danger to the “progressives.” Ah, if only it were more true.

    Continue reading at The Washington Times