Voice For Liberty

Category: Free markets

  • Private enterprise does it better

    While some believe that government is the best provider of services, John Stossel, in the following article, shows us that this is not always the case. In fact, it is rare that government is able to do a better job at lower cost than the private sector.

    One motivating factor that private business has that government does not is profit. Liberals view profit as an extra expense that must be paid to private sector businesses. They say that profit is a cost that can be avoided if government — which has no need for profit — provides a service.

    But as Stossel explains, profit is a powerful motivating factor. It makes private businesses provide products and services that people want, and efficiently, too: “Because if private companies don’t do things efficiently, they lose money and die. Unlike government, they cannot compel payment through the power to tax.”

    We hear, as we do in Wichita now, that government should be operated more like a business. Our city manager speaks of a business model he is developing. But it is folly to speak of operating government like a business. The goal of business is profit — the signal that the business is providing things that customers value.

    But government, as Mises and others have shown, has no ability to calculate profit. It can’t be guided by the same signals that guide the private sector.

    Even streets and highways could be provided in a better way than government does, as Stossel explains.

    Private Enterprise Does It Better

    Why freedom and responsibility triumph over regulation and central planning
    By John Stossel

    In Myths, Lies and Downright Stupidity, I bet my readers $1,000 that they couldn’t name one thing that government does better than the private sector.

    I am yet to pay.

    Free enterprise does everything better.

    Why? Because if private companies don’t do things efficiently, they lose money and die. Unlike government, they cannot compel payment through the power to tax.

    Even when a private company operates a public facility under contract to government, it must perform. If it doesn’t, it will be “fired”—its contract won’t be renewed. Government is never fired.

    Continue reading at Reason Magazine

  • RightOnline in Las Vegas this week

    Later this week the RightOnline Conference takes place in Las Vegas, Nevada.

    This is the third year for this conference. It’s held at the same time — and in the same city — as the Netroots Nation. Or NutRoots, take your pick.

    The event features a lot of training and some great speakers. Michele Bachmann will headline the Friday dinner, and the Saturday general session features speakers like Andrew Napolitano, Mike Pence, Robert McDowell, Herman Cain, Erick Erickson, and John Fund.

    RightOnline is sponsored by the Americans for Prosperity Foundation. Click on Podcast: Erik Telford Previews the RightOnline Conference to hear an interview with AFP’s Erik Telford. To keep up on Twitter, the hasthag is #ro10.

  • Charles and David Koch, supporters of free markets and economic freedom

    Economic freedom and market-based policies create the most opportunity and prosperity for everyone, including the poor and the environment, says Richard Fink, and that’s why Charles and David Koch of Wichita-based Koch Industries, Inc. support these principles and public policy organizations that work to advance them.

    In the following article, Mark Tapscott of The Washington Examiner interviews Richard Fink, president of the Charles G. Koch Charitable Foundation and an executive vice president of Koch Industries, Inc.

    In the article, Tapscott explains that economic freedom and free markets are not the same as big business. Fink explains the role of the Kochs in supporting institutions that promote economic freedom and free markets. He says that the tea party is a positive development of citizens concerned about government growth and spending, and that accusations that it is an “astroturf” movement controlled by corporate sponsorship is nonsense.

    What if all businessmen were as dedicated to free markets as the Kochs?

    By Mark Tapscott

    Among the biggest obstacles to restoring American freedom and prosperity is the fact too many corporate executives are all too happy to play footsie with government bureaucrats, usually in an attempt to gain a competitive advantage over competitors.

    Consumers — and taxpayers — are always the biggest losers when Big Government and Big Business get in bed together.

    One result is that instead of having to put consumers first, the corporations put the bureaucrats first. Prices go up, the quality of service goes down, and not infrequently corruption eventually results (See Enron and cap-and-trade, for example).

    But there are honest leaders in the corporate world who go a different way. Charles and David Koch of the Wichita-based Koch Industries are among the preeminent examples of such men and women.

    They’ve built one of the world’s largest private corporations based on the principles of free markets and competition.

    For more than 40 years, the Kochs have also been aggressive supporters of those principles in the public policy arena, a fact that always flusters critics of economic freedom.

    Continue reading at The Washington Examiner.

  • More Stossel video to be shown in Wichita

    This Tuesday the Kansas chapter of Americans for Prosperity is sponsoring an event titled “Stossel in the Classroom.” The event will feature a DVD video presentation by John Stossel, followed by group discussion. This is a follow-on to a similar event held last month.

    Stossel’s most recent book is Myths, Lies and Downright Stupidity: Get Out the Shovel — Why Everything You Know is Wrong. His appearance in Wichita last year was reported on by me in John Stossel urges reliance on freedom, not government, in Wichita.

    The event is from 7:00 pm to 8:30 pm on Tuesday, June 15, at the Central Branch Wichita Public Library at 223 S. Main. The event will be held in the patio meeting room.

    For more information, contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

  • AFP Kansas event features Malkin, satirist O’Rourke

    This Wednesday April 28 Americans for Prosperity-Kansas is holding its annual “Day at the Capitol” event in Topeka. This year’s event features nationally-known speakers, as AFP-Kansas State Director Derrick Sontag explained in an email conversation:

    “We’re excited to have Michelle Malkin, P.J. O’Rourke, and many other great speakers join us for our annual Day at the Capitol. This is a year in which it is especially important for our grassroots activists to take time out of their busy schedules to make the trip to Topeka and advocate for a more limited and responsive government. One that doesn’t place the state legislature’s spending problems on the backs of taxpayers by increasing taxes. Activists will receive updates on the prominent federal issues of the day, along with hearing from legislators and experts concerning our state budget and the multitude of tax increase proposals before the Kansas Legislature.”

    Besides Malkin and O’Rourke, AFP Foundation President Tim Phillips and Vice President of Policy Phil Kerpen will speak. The event will end with a rally on the Statehouse steps.

    Registration for the event is $20 and may be done accomplished online by clicking on kscapitolday.eventbrite.com. More information about the event is there, too.

    A free bus trip from Wichita is available. Contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415 to reserve a spot on the bus.

  • Government spending does not create prosperity

    In his op-ed Don’t buy canard about spending, Alan Cobb of Americans for Prosperity writes about the illusion that government spending creates economic growth.

    It’s an important topic, as we’ve just been through nearly a year of Obama stimulus spending, and people are wondering if the effort has paid off. Locally in Kansas, spending advocates argue that reducing Kansas state spending will cause economic growth to suffer. Even more locally in Wichita, city council members and city hall bureaucrats argue that government is responsible for managing economic development in Wichita, some going so far to proclaim that free people and free markets have failed and can’t be trusted.

    In yesterday’s Wichita Eagle, Wichita businessman Fred Berry takes issue with Cobb, and this disagreement provides a useful illustration of the difference between government and private action.

    Cobb wrote this: “If I take $20,000 from my neighbor and hire a gardener, the economy certainly hasn’t grown by $20,000. It’s simply been a shift of money.” Cobb is illustrating the effect of government spending.

    Berry wrote: “But let me use Cobb’s example in a different way. Suppose he and his neighbor decided to share a gardener, because neither needed one full time. Because Cobb’s garden was twice as large as his neighbor’s, he agreed to pay two-thirds of the cost.”

    What’s the difference between the two examples? It’s simple: Cobb is illustrating a government-coerced transaction, while Berry uses a voluntary transaction.

    There’s a world of difference between the two. Voluntary transactions are the way that wealth and prosperity are generated. These transactions happen because both parties believe they will be better off if the transaction takes place.

    This leads to what John Stossel has termed the “weird double thank you moment” when people engage in voluntary trade: One party says “thank you,” and so does the other. This happens at the grocery store and nearly everywhere people are making voluntary exchanges that benefit both parties.

    But when you pay your taxes, do you say “thank you?”

    Milton Friedman has written and lectured extensively on the topic of free markets. Here’s an example from his monumental work Capitalism and Freedom:

    Fundamentally, there are only two ways of co-ordinating the economic activities of millions. One is central direction involving the use of coercion — the technique of the army and of the modern totalitarian state. The other is voluntary co-operation of individuals — the technique of the market place.

    The possibility of co-ordination through voluntary co-operation rests on the elementary — yet frequently denied — proposition that both parties to an economic transaction benefit from it, provided the transaction is bi-laterally voluntary and informed.

    Exchange can therefore bring about co-ordination without coercion. A working model of a society organized through voluntary exchange is a free private enterprise exchange economy — what we have been calling competitive capitalism.

    It’s surprising to me that a businessman — here I specifically do not use the word “capitalist” — like Fred Berry would fail to recognize the distinction between free markets and government coercion. I guess I should not be surprised, as Berry made large campaign contributions to the Wichita school bond campaign in 2008, and the public schools are definitely unfriendly to capitalism. In addition, he has made contributions to enemies of capitalism like Wichita Mayor Carl Brewer and city council member Janet Miller.

    For more explanation of how free markets work from Milton Friedman, view the video below.

  • Don’t buy canard about spending

    By Alan Cobb

    “Canard” is a funny word.

    It keeps popping into my head anytime I read another self-anointed do-gooder who claims that government spending leads to economic growth.

    “Canard” means a false report — and we’ve got lots and lots of them about these claims.

    If I take $20,000 from my neighbor and hire a gardener, the economy certainly hasn’t grown by $20,000. It’s simply been a shift of money. Rearranging the furniture in your living room doesn’t increase the number of easy chairs or TVs.

    That’s what happens when your taxes pay for someone else’s salary, build a government building or pave a road.

    We value good roads and good government. But that doesn’t mean those things cause economic growth. Arguments otherwise are either deceitful or horribly misinformed.

    Many say that we don’t need to do anything but spend more government money and — voila — a land of milk and honey.

    Given the Kansas highway lobby’s assertions, Kansas should do nothing but build roads and the Sunflower State will become the promised land.

    Oh, if it were so.

    As Margaret Thatcher said, big government doesn’t work because eventually you run out of other people’s money.

    There’s also something never discussed by those wanting to line their pockets with what used to be in your pocket. The money doesn’t drop from the sky and it isn’t in your grandmother’s basement. It’s our money, and we taxpayers might do something more productive with it — though that is never measured. The citizens of Kansas might spend the billions the road lobby wants to spend on more roads (in a slow-growing state with great roads already) on something else, like starting new businesses, which would lead to growth.

    The multipliers used by those pushing the canard, cooked up in a fantasy lab, make it look even better. Multiply the $20,000 gardener salary by three — sprinkled with fairy dust — and all of the sudden the transfer of $20,000 magically becomes $60,000. So anything is justified. Want $3 million in economic growth? Just raise taxes by $1 million. You don’t need Billy Mays to sell this stuff.

    Add up all the multiplier studies and poof! Kansas’ economy is the size of Texas’.

    In a recent Wall Street Journal commentary, a Stanford University economics professor dismissed this notion and said the government-spending multipliers are actually negative. Outlays by the government crowd out private spending and require future taxes.

    Measuring the economic value of shorter commutes and fewer car repairs, accidents and fatalities is doable, but never done. Similarly measurable are the benefits of an educated populace, but the benefit is not the sum of teachers’ salaries plus the cost of the bricks in a school addition. Taking the input (tax dollars) and applying a castle-in-the-sky multiplier is not magical; it’s wrong.

    Saying the Pizza Hut that moved from downtown to the new bypass outside town is “growth” is equally wrong — and dishonest. But that’s what we hear from those pushing the canard that government spending is growth.

    There’s that word again.

  • In Wichita, Free Market Economics 101 to be held

    On Monday, the Wichita Chapter of Americans For Prosperity is holding an informative meeting to learn more about free market economics and its application.

    The program is:

    A trade exercise
    A private property exercise
    Group discussions of
    “I, Pencil” by Leonard Reed
    “The Law” by Frederic Bastiat
    The Platinum Triangle Redevelopment Project
    “Seven Principles of Sound Public Policy” By Lawrence Reed

    A group discussion and question answering period will follow.

    This event is on Monday, November 30, 2009, from 7:00 pm to 9:30 pm. The location is:

    Belford Electric Inc. Meeting Room
    800 East Third Street
    Wichita, Kansas

    This is at the corner of Mead St. and Third St. North in Old Town. Click here for a Google map.

    The meeting room is limited to 24 participants. Please RSVP to John Todd at john@johntodd.net, 316-312-7335 or Susan Estes at sestes@afphq.org, 316-269-4170.

  • ‘Political capitalism’ explained in Wichita

    In Wichita this Monday, Robert L. Bradley, Jr. explained the state of capitalism in America today, using his experience working in a high-level position at the failed energy conglomerate Enron as a backdrop.

    Bradley asked: What happened to business prudence? What has happened to capitalism? The answer is that what we have today is not free market capitalism. Rather, it’s a very different type of capitalism: political capitalism.

    A common question today is has capitalism failed? Problems are automatically blamed on greed, self-interest, and profit maximization — in other words capitalism.

    Historically, robber barons have been condemned as examples of capitalism out of control. But many “robber barons” such as Rockefeller made money through voluntary transactions with their customers, Some, however, lived off special government favor such as tariffs. That’s political capitalism.

    Then during the Great Depression capitalism was blamed again. At that time, however, the Federal Reserve Bank was already in control, and this era saw the rise of other forms of government interventionism.

    Today our problems are commonly blamed on self-interest and capitalism rather than government.

    What is real capitalism vs. American-style political capitalism — the mixed economy where government intervenes heavily in business and the economy?

    Enron is still the premier example of political capitalism. But not many knew the full extent of Enron’s activities, or they though it was okay: “Enron was everyone’s favorite company.”

    But the company that everyone thought was the best turned out to be the worst.

    Bradley said the moral of Enron is deeper. There was a systemic failure surrounding Enron. All the gatekeepers — regulators, auditors, legal counsel, the business press, credit rating agencies, business professors — all failed at the same time.

    Many critics said that Enron refutes all that is good about free markets. Bradley quoted one business ethics professor: “The Enron value set was an extreme laissez faire ideology of absolutely free unregulated markets.”

    Bradley disagrees with this assessment, however. Enron was all about Ken Lay, “a master political capitalist.” Lay was a PhD. economist with a lot of Washington experience. His business model for Enron was regulatory change. If Enron could direct the change, it could gain the “first mover” advantage.

    Bradlet quoted a definition of political capitalism as “The utilization of political outlets to obtain conditions of stability, predictability, and security to allow corporations to make reasonable profits over the long run.”

    Socialists, he said, believe that when there is private property, its owners will be in bed with politicians in order to gain special favors.

    Enron’s profit centers had to do with regulatory change. Enron was the first major United States company to proclaim that the climate was in crisis and that government intervention was needed to reduce greenhouse gases.

    But it was a self-interested position. Enron rescued the domestic wind power industry by purchasing a company in that industry, and getting a mandate from the Texas legislature for renewable power mandate.

    Today, the Obama energy plan has a lot to do with Enron’s public policy thrust.

    Enron also gamed regulatory systems. By manipulating accounting rules, Enron could show accounting profits where there were no true economic profits.

    In the tax department, Enron used boutique accounting and legal firms to find niches in the tax code that could be exploited.

    The lesson is that these regulations may not be providing investors useful information and protection, although there may be an illusion created. A corporate report from the 1930s of just three pages gave investors more useful information, and held the firm more accountable, than did Enron’s last corporate report of 56 pages. The lesson, Bradley said, is “simple rules for a complex world.”

    So how did someone like Ken Lay get to the top of the business world? How did he fool everyone and bring down all the gatekeepers with him? Bradley said the government side of the mixed economy was the factor that created an environment that could be exploited.

    The lesson is that the rise and fall of Enron discredits the mixed economy and political capitalism.

    A question was asked: What should we do? Bradley said we should support public policies that are market-oriented, instead of supporting government intervention. But given the mixed economy, we need to watch out for artificial incentives.

    Afterwards, I asked Bradley about government intervention at a local level, such as in Wichita. Specifically, what about TIF districts and tax abatements? Are these examples of political capitalism? Bradley said yes, these are. A side effect is that a tax abatement does leave money in the private sector instead of the government public sector. But a special favor means an artificial stimulus that encourages malinvestment.

    I asked if we need more regulation to protect us, or is our current regulatory regime sufficient? Bradley mentioned that in the Bernie Madoff scandal, the defrauded investors are as mad, or more mad at the Securities and Exchange Commission, that they are at Madoff himself. Many figured that the SEC, with its thousands of regulators, had done their homework for them, and that Madoff’s company was safe. This represents a major unintended consequence of regulation.

    Much more information about this topic can be found at Bradley’s website Political Capitalism. His recent book is Capitalism at Work: Business, Government and Energy.