Voice For Liberty

Category: Kansas state government

  • Kansas governor releases economic development plan

    Yesterday Kansas Governor Sam Brownback released his plan for economic growth and development in Kansas. Drawing on free market principles and relying less on government intervention, the plan calls for a departure from present practices, especially the heavy-handed methods cities like Wichita use.

    Brownback’s plan would transform Kansas’ approach to economic development. Currently the approach of the state and most of its cities and counties is to go after the “big deal.” This typically lures a large employer to Kansas through the use of various incentives. Or, as we have seen recently with the Hawker Beechcraft deal, incentives may be used to keep a company from leaving Kansas, even if that company is downsizing.

    This last deal is especially troubling for the state’s future. Wichita State University professor H. Edward Flentje recently sounded a note of caution on deals like Hawker Beechcraft: “The result diverts millions in limited taxpayer funds, primarily state income-tax revenues, from state coffers to a company’s benefit, simply to have an existing business stay put.” Flentje wrote that there are more than 500 Kansas businesses now eligible for state assistance just like Hawker.

    It is breaking this cycle of dependency on the “deal” that the governor’s plan calls for. Instead of the state targeting industries or specific companies, Kansas should seek to establish a strategy that is simple, fair, and of high capacity. I believe that for this strategy to work, Kansas cities and counties will need to follow the plan, too.

    Productivity and growth, not just jobs

    Right away the governor’s plan calls for prosperity through productivity: “A sound economic development process enhances prosperity through enhanced business-sector productivity.” This is in contrast to the economic development efforts of most governments, including that of the City of Wichita. There, the focus is on jobs, with capital investment a lesser factor.

    The plan identifies two fundamental roles for government to play. First, the state should create an environment that “motivates as much risk-taking and competition as possible in the context of a ‘level playing field.’” Second, it must do this effectively and efficiently, leaving as many resources in the private sector as possible.

    Key concepts in the plan are risk taking, economic competition, business experimentation, and trial and error. These activities are important, the plan says, because they will lead to increased economic productivity, which is what produces prosperity for Kansans. This is what the economic development policies of Kansas need to promote, says the plan: “The more that Kansas’ economic development environment motivates each entrepreneur and business to engage in the trial and error process, the more the Kansas economy will generate economic opportunity for Kansas families.”

    But the state’s policies don’t promote this environment: “Yet Kansas economic development policy tends to work as if only a small sub-set of entrepreneurs or businesses matter.” Current policies attempt to find the right technologies and companies for the state to invest economic development resources in. The criteria for determining winners are often job count and wage levels. Winners are rewarded at the expense of non-winners.

    Instead of this approach — which is common in most states and cities — the plan recommends a different policy: “Dedicate human and financial resources to promoting maximum experimentation through volume and diversity.” Also: “Establish stable policies that treat all investments and businesses equally, thereby liberating resources from the costly and economically dubious task of targeting.”

    The plan is critical of selective efforts and in favor of broad-based strategy, especially in taxation: “A more uniform business tax policy that treats all businesses equally rather than the current set of rules and laws that give great benefit to a few (through heavily bureaucratic programs) and zero benefit to many.”

    The plan emphasizes promoting as much diversity as possible. The current strategy of attracting large employers is not wise: “In fact, research indicates that economic development strategies based on the recruitment of large employers tends to have negative effects over the long run. One of the best predictors of future economic growth for metropolitan areas is the average employment size of business establishments: larger average sizes are typically associated with slower future growth.”

    Measures of success of economic development efforts include jobs, although the plan cautions that “job creation is a result that derives from profitable business births and expansions.” Other factors are income growth, population density and migration, productivity growth, capital investment, and gross business starts and expansions.

    The plan creates a council of economic advisers and coordinate the actions of seven different agencies that work in the field of economic development. It also calls for funding of certain university research programs.

    The plan is not totally free-market in its approach. It retains PEAK, which lets companies that meet criteria retain their employees’ withholding taxes. But are we certain we can identify which companies are worthy of this subsidy? There will also be a fund that can be used to “close a deal on a prime economic growth opportunity.” Brownback’s “rural opportunity zones” are also included, which offer income tax breaks and student loan paydowns for people moving into counties that have experienced large population decline.

    Cities like Wichita will need to change, adapt

    The governor’s plan calls for economic development strategies very different from what most cities and counties pursue. As an example, at the most recent meeting of the Wichita City Council, the council approved forgivable loan agreements for two companies that are adding jobs. These loans amount to grants of money, providing that the companies meet specified employment goals. The loans were not the only form of subsidy. One company is slated to receive forgiveness from paying property tax for up to ten years, and both received grants and tax credits from the state under existing economic development programs.

    At the meeting, Mayor Carl Brewer offered a defense of the city’s economic development policy (click here for video), saying that if Wichita doesn’t offer targeted incentives, other cities will. “If we don’t stay in the game and do whatever is necessary to be able to protect our jobs, protect our citizens, then we’re going to lose out on this entire thing. Times are changing. 20 years ago individuals weren’t even thinking about providing incentives to various different corporations. And now it appears that every place that we go, we seeing that everyone’s doing it. … That’s a reality of things. The dynamics and the field that we all have to play on is continuing to change.” He urged his critics to look at the larger picture, rather than just the action the council is taking today.

    Council member Janet Miller also defended the city’s policy, saying that companies either qualify for incentives or they don’t, based on established criteria. She cited Wichita State University figures that support the incentives as providing an economic return to the city.

    If cities continue to offer targeted incentives that are at odds with the governor’s plan, what will be the outcome? It doesn’t seem as though the two approaches are compatible. Many of the programs that cities use to offer targeted incentives — industrial revenue bonds (IRB), tax increment financing (TIF), community improvement districts (CID), and others — are creations of the legislature. It and the governor have the power to control their use — if there is political will to do so.

  • Kansas arts funding supporters are misinformed, or worse

    Supporters of Kansas government arts funding are either misinformed or lying about the facts they use to make their case for continuation of taxpayer support of the arts.

    Advocates of Kansas state government funding for arts make the case that if Governor Brownback succeeds in his plan to turn the Kansas Arts Commission into a non-profit organization, Kansas will be the only state without a government arts commission.

    A Wichita Eagle editorial referred to Kansas becoming the “only state in the country without at least a quasigovernmental arts agency,” although writer Rhonda Holman qualified her remarks with “according to arts advocates.”

    In another Wichita Eagle article, Joan Cole repeated this assertion when she wrote “I believe that it is crucial that the Kansas Arts Commission remain a state agency, as exists in every other state.” Cole is vice-chair of the Kansas arts commissioners.

    But Cole and government arts funding advocates are wrong. She and they are either misinformed, or they are lying to advance their cause.

    There is one state with a private arts commission or council, not a state agency. It’s listed on the Kansas Arts Commission page, if Commissioner Cole would care to read it: The Vermont Arts Council. On its website, we learn that “The Vermont Arts Council is the only designated state agency for the arts in the United States that is also a private, not-for-profit, 501(c)3, membership organization.”

    National Endowment for the Arts funding

    While I appreciate the KAC acknowledging what Cole and the Wichita Eagle will not, the KAC is still misinformed. In bold type, it states that if KAC becomes a nonprofit organization, “This entity will not be eligible for funds from The National Endowment of the Arts.”

    Bu the Vermont Arts council — not a state agency, but a nonprofit organization — states: “Our funding comes from the State of Vermont, the National Endowment for the Arts, memberships, and private contributions.”

    There’s another discrepancy.

    Suppose the State of Kansas provides no state funds to an arts agency, which is Brownback’s proposal. Will that rule out receiving NEA funding? Indications are that Kansas officials have asked NEA this question, and NEA hasn’t provided a reason as to why Kansas couldn’t continue to receive funding. Amanda Grosserode, a member of the Kansas House of Representatives, wrote in her newsletter that “enabling legislation for the NEA has also been thoroughly reviewed and no requirement for state funding to match federal funding has been found.”

    In the end, the issue of NEA funding may soon become moot. The National Endowment for the Arts is an example of a federal agency that may be eliminated, or very likely have its budget cut. So there may not be much federal arts funding to worry about.

    In the meantime, Kansans need to ask why government arts supporters are misinformed about simple facts, or they should ask why they are lying to Kansans. Government funding of the arts is bad for two reasons: economic and artistic. Misinformed or lying supporters aren’t helping their cause.

  • In Kansas, political signs are okay, despite covenants

    It’s common for neighborhoods to have restrictive covenants that prohibit homeowners from placing any signs in their yard, except for signs advertising homes for sale. But a 2008 Kansas law overrides these restrictive covenants to allow for the placement of small political yard signs starting 45 days before an election. Still, residents of covenant neighborhoods may want to observe their neighborhood’s restrictions, even though they are not valid.

    The bill was the product of then-Senator Phil Journey of Haysville. The bill passed unanimously in both the Kansas House and Senate.

    According to the First Amendment Center, some 50 million people live in neighborhoods with homeowners associations. And laws like the 2008 Kansas law are not without controversy, despite the unanimous vote in the Kansas Legislature.

    While the U.S. Supreme Court has ruled that governmental entities like cities can’t stop homeowners from displaying political yard signs, a homeowners association is not government. Instead, it is a group that people voluntarily enter.

    Generally, when prospective homeowners purchase a home in a neighborhood with restrictive covenants, they are asked to sign a document pledging to comply with the provisions in the covenants. If those covenants prohibit political yard signs, but a Kansas law says these covenants do not apply, what should a homeowner do?

    Practically: Should you display signs in your yard?

    While Kansas law makes it legal for those living in communities with covenants that prohibit political yard signs, residents may want to observe these convents. Here’s why: If neighbors are not aware of this new Kansas law and therefore still believe that the yard signs are not allowed in your neighborhood, they may think residents with signs in their yards are violating the covenants. By extension, this could reflect poorly on the candidates that are being promoted.

    The people who believe the covenants against yard signs are valid are misinformed, but they may vote. Whether to display yard signs in a covenant neighborhood is a judgment that each person will have to make for themselves.

    The Kansas statute

    K.S.A. 58-3820. Restrictive covenants; political yard signs; limitations. (a) On and after the effective date of this act, any provision of a restrictive covenant which prohibits the display of political yard signs, which are less than six square feet, during a period commencing 45 days before an election and ending two days after the election is hereby declared to be against public policy and such provision shall be void and unenforceable.

    (b) The provisions of this section shall apply to any restrictive covenant in existence on the effective date of this act.

    Or, as described in the 2008 Summary of Legislation: “The bill invalidates any provision of a restrictive covenant prohibiting the display of political yard signs, which are less than six square feet, 45 days before an election or two days after the election.”

  • AFP Kansas legislative agenda

    Americans for Prosperity Kansas has released its legislative agenda for the 2011 session of the Kansas Legislature. AFP advocates for limited government and free markets, and its recommendations are aimed at reducing the growth of Kansas state government spending and placing the state’s budget on a fiscally sound footing.

    Regarding the Kansas state budget, AFP Kansas recommends these items:

    • Rainy day fund. “Building reserves during times of revenue increases are crucial to weathering economic downturns.” The passage of last year’s sales tax increase, pitched by former Governor Parkinson as a temporary measure, would not have been necessary if Kansas had such a fund. The danger is that even though the sales tax is designed to be temporary, Kansas has had a temporary sales tax increase in the recent past, and it did not go away as planned. Last year there was a proposal for a rainy day fund, but it did not advance into law.
    • Limit the growth of revenue and spending to the sum of inflation and population growth. This idea makes tremendous sense, and is vigorously opposed by those who thrive on and benefit from state spending. But if we are satisfied with the current level of states services, there is no reason why spending should increase faster than inflation and the growth in the number of people in Kansas.
    • Require local governments (cities, counties and school districts) to participate in KanView, the state’s transparency Web site, with uniform budget reporting.
    • Encourage the state to reduce its debt. Kansas state government debt is now $1,140 per capita.
    • Zero-based budgeting for state agencies. This is a very important reform that could help Kansas identify unnecessary programs and related spending. An example of how this reform would help is this: It is not uncommon for the state to participate in programs where the federal government sends the state funds for a program, on the condition that the state match the federal funds. So the legislature makes an appropriation. Then, in a few years, the federal program may end. But with the current system of budgeting, in which last year’s budget is used as the basis for this year’s, the state appropriation is likely to continue, even through the program is over. Zero-based budget can spot situations like this. There is an increased cost, but the benefits could be large.
    • Allow statutory flexibility to utilize unencumbered cash funds for varying purposes.

    On tax policy, AFP Kansas recommends repealing last year’s sales tax increase, requirement of a legislative super-majority to raise taxes, and rejection of all attempts to increase taxes this year.

    AFP recommends reforms to taxpayer-funded lobbying: “Currently, more than 100 lobbyists with more than 60 government entities/associations have been hired by your tax dollars, lobbying for more and more of your money. Taxpayer funded lobbying propagates the cycle of more spending and more programs that call for more spending.”

    On judicial selection, AFP recommends a process of legislative confirmation of judges, Currently Kansas uses a secretive system that gives undue influence to the state’s lawyers.

    AFP also supports “a program, similar to what the federal government uses to decide which military bases to close, to scrutinize every program and agency and root out wasteful spending.” Governor Brownback has made some recommendations along this line.

    A press release is available, and the four-page legislative agenda is located at 2011 Kansas Legislative Agenda: Prosperity for our Future.

  • Arts funding in Kansas

    Arts funding by the State of Kansas has been in the news recently, as Governor Sam Brownback has proposed that the state stop funding the Kansas Arts Commission. This is a good move, as Kansas would be better off without state-funded art for two reasons: economic and artistic.

    The economic case for government art funding

    Supporters of government art funding make the case that government-funded art is good for business and the economy. They have an impressive-looking study titled Arts & Economic Prosperity III: The Economic Impact of the Nonprofit Arts and Culture Industry in the State of Kansas, which makes the case that “communities that invest in the arts reap the additional benefit of jobs, economic growth, and a quality of life that positions those communities to compete in our 21st century creative economy.”

    I read this report in 2007 when it was first used to promote government funding of arts in Wichita. Its single greatest defect is that it selectively ignores the secondary effects of government spending on the arts.

    As an example, the report concludes that the return on dollars spent on the arts is “a spectacular 7-to-1 return on investment that would even thrill Wall Street veterans.” It hardly merits mention that there aren’t legitimate investments that generate this type of return in any short time frame. If these returns were in fact true and valid, we should invest more — not less — in the arts. But as we shall see, these returns are not valid in any meaningful economic sense.

    Where do these fabulous returns come from? Here’s a passage from the report that government art spending promoters rely on:

    A theater company purchases a gallon of paint from the local hardware store for $20, generating the direct economic impact of the expenditure. The hardware store then uses a portion of the aforementioned $20 to pay the sales clerk’s salary; the sales clerk respends some of the money for groceries; the grocery store uses some of the money to pay its cashier; the cashier then spends some for the utility bill; and so on. The subsequent rounds of spending are the indirect economic impacts.

    Thus, the initial expenditure by the theater company was followed by four additional rounds of spending (by the hardware store, sales clerk, grocery store, and the cashier). The effect of the theater company’s initial expenditure is the direct economic impact. The subsequent rounds of spending are all of the indirect impacts. The total impact is the sum of the direct and indirect impacts.

    The fabulous returns erroneously attributed to spending on the arts derive from this chain of spending starting at the hardware store. But there’s a problem with this reasoning. It ignores the secondary effects of economic action. What the authors of this study fail to see is that anyone who buys a gallon of paint for any reason sets off the same chain of economic activity. There is no difference — except that a homeowner buying the paint is doing so voluntarily, while an arts organization using taxpayer-supplied money to buy the paint is using someone else’s money. Money, we might add, that is taken through the government’s power to tax.

    The study also pumps up the return on government spending on arts by noting all the other spending that arts patrons do on things like dinner before and desert after arts events. But if people kept their own money instead of being taxed to support the arts, they would spend this money on other things, and those things might include restaurant meals, too.

    This report — like most of its type that attempt to justify and promote government “investment” in someone’s pet program — focuses only on the benefits without considering secondary consequences or how these benefits are paid for. Henry Hazlitt, in his masterful book Economics in One Lesson explains:

    While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

    It is, as Hazlitt terms it, “the special pleading of selfish interests” that drive much of the desire for government spending on the arts. Government-funded arts advocates can promote their case with economic fallacies all they want, but in the end that’s what their case relies on: “the special pleading of selfish interests.” You can see an example of this type of campaign by visiting the Kansas Arts Commission.

    No government art means better art

    Arts organizations need to survive on their own merits. They need to produce a product or service that satisfies their customers and patrons just as any other business or human endeavor must. This is especially true and important with something so personal as art. David Boaz, in his book The Politics of Freedom: Taking on The Left, The Right and Threats to Our Liberties writes this in a chapter titled “The Separation of Art and State”:

    It is precisely because art has power, because it deals with basic human truths, that it must be kept separate from government. Government, as I noted earlier, involves the organization of coercion. In a free society coercion should be reserved only for such essential functions of government as protecting rights and punishing criminals. People should not be forced to contribute money to artistic endeavors that they may not approve, nor should artists be forced to trim their sails to meet government standards.

    Government funding of anything involves government control. That insight, of course, is part of our folk wisdom: “He who pays the piper calls the tune.” “Who takes the king’s shilling sings the king’s song.”

    Government art. Is this not a sterling example of an oxymoron? Must government weasel its way into every aspect of our lives? And the fact that government arts funding means tax dollars taken through coercion — don’t the government arts promoters realize this? How better to crush the human spirit — the same spirit that the arts are meant to uplift and enrich.

    Government arts funding means that artists and arts organizations are distanced from their customers. Instead of having to continuously meet the test of the market, they must please government bureaucrats and politicians to get their funding. Instead of producing what the great unwashed mass of people want, they produce what they think will get government funding.

    Without government funding, organizations that provide culture and art will have to satisfy their customers by providing products that people really want. That is, products that people are willing to pay for themselves, not what people say they want when someone else is paying the bill. With government funding, these organizations don’t have to face the discipline of the market. They can largely ignore what their customers really want. They can provide what they think their customers want, or, as I suspect is the case, what they believe the people of Kansas should want, if only we were as enlightened as the elitists that staff arts commissions.

    Without the discipline of the market, arts organizations will never know how their customers truly value their product. The safety net of government funding allows them to escape this reality. We have seen this many times in Wichita and Sedgwick County, as organizations fail to generate enough revenue to cover their costs, only to be bailed out by the government. Other businesses learn very quickly what their customers really want — that is, what their customers are willing to pay for — or they go out of business. That’s the profit and loss system. It provides all the feedback we need to determine whether an organization is meeting its customers’ desires. The arts are no different.

    Some say that without government support there wouldn’t be any arts or museums. They say that art shouldn’t be subject to the harsh discipline of markets. Personally, I believe there is little doubt that art improves our lives. If we had more art and music, I feel we would have a better state. But asking government commissions to judge how much art and which art we should have is not the way to provide it. Instead, let the people tell us, through the mechanism of markets, what art and culture they really want.

    It might turn out that what people want is different than from what government arts commission members believe the people should want. Would that be a surprise? Not to me. In the name of the people, we should disband government arts councils and government funding and let people decide on their own — without government intervention — how to spend their personal arts budgets on what they really value.

    (The material by David Boaz is from a speech which may be read here: The Separation of Art and State.)

  • Kansas legislative forums should be for citizens

    This week’s meeting of the South-Central Kansas Legislative Delegation with citizens featured a number of speakers who — while citizens, of course — are working for taxpayer-funded agencies. Many of these also have a strong lobbying presence in Topeka. The large-scale presence of these speakers at this meeting was a matter of concern for one legislator who contacted me, suggesting that so many taxpayer-funded speakers crowded out regular citizens, which is who these meetings are designed for.

    Government agencies have their own meeting with legislators each year at this time in Wichita. Furthermore, many government agencies like USD 259, the Wichita public school district, have their own year-round, highly-paid lobbyists to represent them.

    The taxpayer-funded group that stood out the most was United Methodist Youthville, an agency that contracts with the state to provide a variety of child protective care services. Youthville sent six speakers to this meeting, and they, one after another in tag team fashion, presented their case to the legislators.

    One of the speakers for Youthville was Heather Morgan, who is listed at the Secretary of State’s office as a lobbyist for Youthville.

    Undoubtedly part of the reason for Youthville’s large presence was to counter criticism of their operations, which is often a topic at the legislative forums. The Youthville representatives, which spoke very near the start of the meeting, left as soon as they had delivered their message to the legislators.

    School spending advocates made their appearance. Randy Mousley, who is vice-president of United Teachers of Wichita (the teachers union), spoke in favor of more school spending — at least I think so, as his message to the legislators could be interpreted several ways. But the entire goal of the UTW, which is an affiliate of Kansas National Education Association (KNEA), is that there must be more spending on schools, and it lobbies for this quite effectively. Brent Lewis, a board member of UTW, also spoke in favor of government and school spending.

    Other taxpayer-funded entities made their appearance in the persons of Mark McCain, general manager of Wichita Public Radio, and Michele Gors, President of Kansas Public Television. These heads of these at least partially taxpayer-funded organizations made their case for more state government funding.

    These executives have the time and wherewithal to travel to Topeka to lobby legislators. Citizens — especially if they’re not local to Topeka — don’t have the ability to do this. And when they do, their travel is not paid for by their companies or unions.

    As legislators told me, these taxpayer-funded agencies make their case — often at taxpayer expense — very well in Topeka. They shouldn’t be crowding out citizens at legislative forums.

  • Kansas: business-friendly or capitalism-friendly?

    Plans for the Kansas Republican Party to make Kansas government more friendly to business run the risk of creating false, or crony capitalism instead of an environment of genuine growth opportunity for all business.

    An example is the almost universally-praised deal to keep Hawker Beechcraft in Kansas. This deal follows the template of several other deals Kansas struck over the past few years, and outgoing Governor Mark Parkinson is proud of them. Incoming Governor Sam Brownback approved of the Hawker deal, and probably would have approved of the others.

    Locally, the City of Wichita uses heavy-handed intervention in the economy as its primary economic development tool, with several leaders complaining that we don’t have enough “tools in the toolbox” to intervene in even stronger ways.

    The problem is that these deals, along with many of the economic development initiatives at the state and local level in Kansas, create an environment where the benefits of free market capitalism, as well as the discipline of a market-based profit-and-loss system, no longer apply as strongly as they have. John Stossel explains:

    The word “capitalism” is used in two contradictory ways. Sometimes it’s used to mean the free market, or laissez faire. Other times it’s used to mean today’s government-guided economy. Logically, “capitalism” can’t be both things. Either markets are free or government controls them. We can’t have it both ways.

    The truth is that we don’t have a free market — government regulation and management are pervasive — so it’s misleading to say that “capitalism” caused today’s problems. The free market is innocent.

    But it’s fair to say that crony capitalism created the economic mess.

    But wait, you may say: Isn’t business and free-market capitalism the same thing? Here’s what Milton Friedman had to say: “There’s a widespread belief and common conception that somehow or other business and economics are the same, that those people who are in favor of a free market are also in favor of everything that big business does. And those of us who have defended a free market have, over a long period of time, become accustomed to being called apologists for big business. But nothing could be farther from the truth. There’s a real distinction between being in favor of free markets and being in favor of whatever business does.” (emphasis added.)

    Friedman also knew very well of the discipline of free markets and how business will try to avoid it: “The great virtue of free enterprise is that it forces existing businesses to meet the test of the market continuously, to produce products that meet consumer demands at lowest cost, or else be driven from the market. It is a profit-and-loss system. Naturally, existing businesses generally prefer to keep out competitors in other ways. That is why the business community, despite its rhetoric, has so often been a major enemy of truly free enterprise.”

    The danger of Kansas government having a friendly relationship with Kansas business leaders is that these relationships will be used to circumvent free markets and promote crony, or false, capitalism in Kansas. It’s something that we need to be on the watch for, as the relationship between business and government is often not healthy. Appearing on an episode of Stossel Denis Calabrese, who served as Chief of Staff for Majority Leader of the U.S. House of Representatives Congressman Richard Armey, spoke about crony capitalism and its dangers:

    “The American public, I guess, thinks that Congress goes and deliberates serious issues all day and works on major philosophical problems. Really a typical day in Congress is people from the private sector coming and pleading their cases for help. It may be help for a specific company like the [window manufacturing company] example, it may be help for an entire industry, it may be help for United States companies vs. overseas companies.”

    He went on to explain that it is wrong — corrupt, he said — for Congress to pick winners and losers in the free enterprise system. Congress wants us to believe that free enterprise will be more successful when government gets involved, but the reverse is true. Then, the failures are used as a basis for criticism of capitalism. “This is an unholy alliance,” he said, and the losers are taxpayers, voters, and stockholders of companies.

    Later in the show Tim Carney said that “A good connection to government is the best asset a company can have, increasingly as government plays a larger role in the economy.”

    Host John Stossel challenged Calabrese, wondering if he was part of the problem — the revolving door between government, lobbyists, and business. Calabrese said that “Every time you see a victim of crony capitalism you’re looking at a potential client of mine, because there’s somebody on the other side of all these abuses. When Congress tries to pick a winner, there are losers, and losers need representation to go tell their story.” He added that he lobbies the American people by telling them the truth, hoping that they apply pressure on Congress to do the right thing.

    He also added that it is nearly impossible to find a single area of the free enterprise system that Congress is not involved in picking winners and losers.

    While the speakers were referring to the U.S. federal government, the same thing happens in statehouses, county courthouses, and city halls across the country — wherever there are politicians and bureaucrats chasing economic development with government as the tool.

    It is difficult to blame businessmen for seeking subsidy and other forms of government largesse. They see their competitors do it. They have a responsibility to shareholders. As Stossel noted in the show, many companies have to hire lobbyists to protect them from harm by the government — defensive lobbying. But as Carney noted, once started, they see how lobbying can be used to their advantage by gaining favors from government.

    The danger that Kansas faces is that under the cover of a conservative governor and legislature, crony capitalism will continue to thrive — even expand — and the people will not notice. The benefits of a dynamic Kansas economy as shown by Dr. Art Hall in his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy may never be achieved unless Kansas government — at all levels — commits to the principles of free market capitalism.

  • In Kansas, prosperity is achievable — if we’re willing to change

    The health of the Kansas economy — past and future — is the subject of some debate, with supporters of big government like the Wichita Eagle’s Rhonda Holman thanking outgoing Governor Mark Parkinson for his promotion of the increase in the statewide sales tax and other forms of economic interventionism. These policies, with the exception of the approval of the expansion of a coal-fired electrical plant, largely carried forward the programs of his predecessor Kathleen Sebelius. As a result, Kansas is in the situation that Dave Trabert of the Kansas Policy Institute describes below.

    Prosperity Is Achievable — If We’re Willing To Change

    By Dave Trabert, President, Kansas Policy Institute

    “The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” — Thomas Sowell, The Hoover Institution, Stanford University

    Sowell’s point about the scarcity of resources is essential to understanding economics, which may be as much about human behavior as supply, demand and other commonly-associated factors. Taxpayers have finite resources, so the more they must pay in taxes, the less they have to spend on goods and services. Accordingly, raising taxes always has a negative impact and especially so when taxes rise faster than the ability to pay.

    Unfortunately, the last ten years were defined by Sowell’s first law of politics. State and local governments in Kansas ignored the implications of finite resources and significantly increased the tax burden. From 2000 to 2009, state and local taxes increased 59 percent but personal income available to pay taxes only rose 44 percent. (The 2010 figures aren’t yet published but last year’s increase in sales, unemployment and property taxes certainly didn’t ease the burden.)

    Predictably, we suffered the consequences.

    Kansas had 18,800 fewer private sector jobs in 2009 than in 2000, a reduction of 1.7 percent. There was job growth prior to the recession but it was well below the national average. From 1998 to 2008 (Kansas employment peaked in April, 2008) private sector jobs increased 7.9 percent nationwide but only 5.2 percent in Kansas. And comparing the performance of low-burden and high-burden states (as ranked by the non-partisan Tax Foundation) makes the implications of defying Sowell’s first law of economics even more clear. The ten states with the highest combined state and local tax burden averaged 6.1 percent private sector job growth, whereas the ten states with the lowest burdens averaged a remarkable 16.5 percent gain.

    Domestic migration (U.S. residents moving in and out of states) is another good measure. Between 2000 and 2009, the ten states with the lowest tax burdens averaged a 3.8 percent population increase from domestic migration; the ten states with the highest burdens lost an average of 3.3 percent. Kansas lost 2.5 percent population from domestic migration.

    Jobs and people naturally gravitate toward low-burden states where they get to keep more of their hard-earned, finite resources. The next ten years must therefore be defined by Sowell’s first law of economics or Kansas will continue to suffer the consequences. In order to compete for jobs and attract new residents, the state and local tax burden must be reduced — and that means government must spend less.

    Fortunately, there are many ways to reduce spending and still provide essential services. Ineffective and unnecessary programs have to go and government must operate much more efficiently.

    Change won’t be easy but the choice is simple — reduce the tax burden and create an environment that attracts jobs and new taxpayers or preserve big government and continue to suffer the consequences.

  • In Kansas, everything is okay — not

    A few weeks ago Kansas University political science professor Burdett Loomis had an opinion piece in The Wichita Eagle. Commenting on it at the time, I wrote “Overall, Loomis presents an argument for the status quo in Kansas government, and the potential for change in the direction of restraining its growth has Loomis — in his own words — ‘concerned — worried, even.’” Now Alan Cobb of Topeka, who is vice president of state operations at Americans for Prosperity Foundation, comments. Following is the unabridged version of Cobb’s op-ed that appeared in today’s Wichita Eagle.

    A few weeks ago, noted KU political science professor and nice guy, Burdett Loomis, commented that everything is fine here in Kansas, so why would anyone want to lower taxes or change anything?

    Where to start? If you compare Kansas to much of the world, yes, we are okay. Hot water comes out of the hot water tap, you can watch your favorite college team on TV, and you have about two dozen different road combinations to make it to Grandma’s house for the Holidays. (We don’t need that many options, but that is another editorial.)

    If you compare Kansas to places more similar to Kansas than Bhutan or Belarus, we have a bit different story.

    One of the simplest ways to measure economic growth is population growth. People go where there is economic opportunity.

    Over the last decade, Kansas’ population increased 6.1 percent while Colorado increased 16.9 percent, (remember tax and spending limits decimating Colorado?) Missouri 7 percent, Oklahoma 8.7 percent, and Nebraska 6.7 percent. Maybe the most sobering statistic is South Dakota’s growth of 7.86 percent, an astonishing rate of nearly 30 percent higher than Kansas. South Dakota has a lot of fine attributes. But there is no reason that Kansas can’t at least equal that, is there? Or maybe come closer? Or if we really put on our thinking caps, maybe even we can beat South Dakota.

    Kansas’ population growth is because our birth rate exceeds our mortality rate. We aren’t attracting folks from out of state. We still have more people moving out of Kansas than moving in. And the folks moving out have a higher annual income than those moving in and they are leaving Kansas on some of the best roads in America. Oh, South Dakota is a net importer of residents and South Dakota doesn’t have an income tax.

    One can think about this stuff until the cows come home, or until one tries to do Chinese math with a liberal arts mind, but it is really pretty simple. People live in and move to where they think they can improve their lives.

    There are a few parts of Kansas that are growing, though I can’t say that is improvement, at least not with a straight face. During the last decade, the number of Kansas government employees has increased by 15,000 jobs while private sector employment has decreased by 35,000. The size of today’s private sector workforce in Kansas smaller than it was in 2000. Oh, but everything is fine, really.

    To make the dwindling private sector worker feel even better, the average annual salary for a State government worker in Kansas is $46,000 while the private sector is $38,500. Of course that doesn’t include the generous health and retirement benefits rarely seen in the private sector.

    Though some are satisfied with the status quo, I and the 40,000 members of AFP are not.

    The final point to address is Bird’s kind of lame back handed swipe at AFP as if we represent only wealthy interests. I’ve been with AFP-Kansas since the beginning. I’ve attended hundreds and hundreds of AFP events and meetings. I’ve been to Pittsburg, Liberal, Leavenworth, Goodland and many towns in between. Bird would have been awed by the vast amounts of wealth present at the Big Cheese Pizza in Independence, at Spears Cafeteria in Wichita, the Liberal Train Depot or the Topeka Public Library.

    But, I’ve never seen Bird attend any of those meetings.

    I am sure that among that 40,000 members of AFP in Kansas there are some rich folks. But their interests are the same as all AFP members: personal liberty, economic freedom and growth, and debate based on facts.