Voice For Liberty

Tag: Economics

  • Rich States, Poor States released for 2011

    For the most recent version of “Rich States, Poor States” see Rich States, Poor States 2012 edition released.

    This week the American Legislative Exchange Council released the fourth edition of Rich States, Poor States: The ALEC-Laffer Economic Competitiveness Index. This is an important study by authors Arthur B. Laffer, Stephen Moore, and Jonathan Williams that identifies states that use “best practices to enable states to drive economic growth, create jobs, and improve the standard of living for their citizens.”

    Kansas Governor Sam Brownback provided the forward for this year’s edition. In it, he wrote: “It is true that lowering taxes can be politically difficult: even fiscal conservatives start losing their enthusiasm for cutting taxes when special interest groups that consume a state’s tax dollars warn them that tax cuts will have dire consequences. But the consequences of being caught in a spiral of increased taxes and a decreasing rate of return on the tax base are much more dangerous.”

    On the state of states’ finances, the authors write: “it is clear a vast majority of states set themselves up to fail by spending beyond their means and hoping the market will keep up with their spending sprees.” This has been the case in Kansas, as illustrated in Why the Kansas budget is in trouble. In years of rapidly rising tax revenue, the legislature also increased spending just as fast. Instead, Kansas should have saved some tax revenue in a rainy day fund, lowered tax rates, or rebated excess tax revenue back to citizens.

    “Rich States, Poor States” evaluates states on two scales. The first, the Economic Performance Rank, is a “backward looking measure based on a state’s income per capita, absolute domestic migration, and nonfarm payroll employment — each of which is highly influenced by state policy. This ranking details states’ individual performances over the past 10 years based on the economic data.”

    The second measure, the Economic Outlook Rank, is a “forecast based on a state’s current standing in 15 policy variables, each of which is influenced directly by state lawmakers through the legislative process. Generally, states that spend less, especially on income transfer programs, and states that tax less, particularly on productive activities, such as working or investing, experience higher growth rates than states that tax and spend more.”

    For this year, in the “Overall Economic Outlook Rank,” Kansas comes in at number 27. The year before Kansas was number 25, and before that 24 and 29.

    For the “Economic Performance” rank over the years 1999 to 2009, Kansas is number 34. That’s up from number 40 the year before, which covered 1998 to 2008.

    What is it that hurts states? According to the report: “The policy blunders that hurt growth prospects the most are high income tax rates, forced union work rules, heavy regulation, an excessive state workforce, unfunded public pensions and health plans, poorly performing schools, and a litigation system that invites expensive and frivolous lawsuits.” Kansas ranks particularly poorly on two of these factors. We have a very large number of government employees compared to our population, and KPERS, the Kansas Public Employees Retirement System is grossly underfunded.

    Additionally, Kansas needs to fear the rush towards the false promise of “green energy” as economic growth. Some states are implementing new policies in this area that will harm their rankings. One, state based cap-and-trade taxes to address climate change, is not on the radar in Kansas. The other, renewable energy standards (RES) which force utilities to generate a certain level of power from “green energy” methods such as wind, is. As a U.S. Senator, Sam Brownback was in favor of RES, and said so during his campaign for governor. It seems that he has de-emphasized this talk since taking office, however.

    The report mentions several southern states that may soon phase out or eliminate their income tax, and Missouri, too, which would be a severe competitive blow to Kansas.

    Of interest to Kansans, the report notes the passage in one chamber of important tax-related legislation: “Hoping to keep pace with their neighbors to the south, legislators in Kansas recently passed important pro-growth legislation that would automatically phase down personal and corporate income tax rates. Under the proposal — the March to Economic Growth Act — which passed the House but stalled in the Senate, taxpayers would enjoy reduced income tax rates on personal and corporate taxes when state revenue grows.” This is another reminder that there was an election last year for House members and the governor, but not for senators.

  • Kansas and Wichita quick takes: Wednesday June 22, 2011

    RightOnline, Netroots Nation. The past weekend featured two conferences for online activists: Americans for Prosperity Foundation’s RightOnline and Netroots Nation, sponsored by labor unions. I attended and made two presentations at RightOnline, the conference for those in favor of liberty and economic freedom. 1,655 people attended, according to AFP. I saw some events of the Netroots conference on C-SPAN, including a session with President Barack Obama’s White House Communications Director Dan Pfeiffer. In the session, Obama was criticized many times, and at one point the audience booed. More coverage is at A tale of two political conferences, PICKET: Right Online and Netroots conferences wrap up with few run-ins, Digital Conferences, Blue and Red, in Minneapolis

    The Atlantic Magazine’s Lies: Of Breitbarts, Kochs, and RightOnLine. Warner Todd Huston of Publius’ Forum examines a piece in The Atlantic that covered the recent RightOnline conference in Minneapolis and found it to be lacking. He found: “Unfortunately, the whole thing was filled with opinions stated as fact, misconstructions of facts, and outright lies. Sadly, along with the rest of the Old Media, it seems as if the veracity of The Atlantic has taken a hit in this bad Obama economy. … Now, what would have made Dupuy’s piece actually informative would have been a discussion of the real differences between the Nutrooters and RightOnLine. And there are quite a few. Netroots Nation is chock full of some very wonky programs. The lefties drill down to the deepest Internet facts, figures, and capabilities. On the other hand, RightOnLine has since day one sufficed with Twitter 101, blogging 101, and other beginner’s programs meant to help their local activists learn how to use the Internet to further conservative ideas. RightOnLine has not made arcane wonkiness a part of its programs like Netroots Nation has. The fact is the two conferences are very different in character in this respect.” More at The Atlantic Magazine’s Lies: Of Breitbarts, Kochs, and RightOnLine.

    Fed downgrades economic outlook. Wall Street Journal: “Federal Reserve officials downgraded their assessment of the U.S. economy’s performance Wednesday, but gave no indication they intend to take new steps to boost growth and jobs. … The recovery is continuing at a moderate pace, though ‘somewhat more slowly’ than previously expected, officials said in a statement following the Federal Open Market Committee meeting, echoing remarks made by Fed Chairman Ben Bernanke in a speech earlier this month.” Further: “Though the Fed is less comfortable with the economic outlook, it has less leeway to take new steps to fix it. That’s because underlying inflation also has crept up, making the central bank leery of injecting more money into the financial system.”

    Tax the rich. Burton Folsom: “Economist Alan Reynolds has recently called attention to the latest pronouncement from Robert Reich, the former Secretary of Labor. ‘A 70 percent marginal tax rate on the rich’ is Reich’s solution for the cash crunch in the federal government today. Let the rich pick up the tab. That assumes, of course, that the rich will continue to work hard if they have to send almost three-fourths of their earnings to Uncle Sam. They won’t. They never have. And you wouldn’t either.” … Reynolds’ article in the Wall Street Journal is Why 70% Tax Rates Won’t Work. In it, Reynolds writes: “All this nostalgia about the good old days of 70% tax rates makes it sound as though only the highest incomes would face higher tax rates. In reality, there were a dozen tax rates between 48% and 70% during the 1970s. Moreover — and this is what Mr. Reich and his friends always fail to mention — the individual income tax actually brought in less revenue when the highest tax rate was 70% to 91% than it did when the highest tax rate was 28%.”

    Wichita speaker list announced. The Wichita Pachyderm Club has announced its lineup of speakers for July. The club, which is a Republican club, seeks to provide programs that are informative and that provide members with a variety of viewpoints on important contemporary issues, and historical issues, too. Sometimes this leads to controversy, as there are those who believe that only Republicans and those who parrot the “official” party line should speak at Pachyderm. Although I am not a Pachyderm officer or board member, this month features a speaker, Dr. Jon Hauxwell, who is speaking based on my recommendation and invitation, and whose topic is likely to generate controversy again. The speakers for July: On July 8, Dave Trabert, President, Kansas Policy Institute, on “Stabilizing the Kansas Budget.” On July 15, Jon Hauxwell, MD, speaking on “Medicinal Cannabis.” On July 22, U.S. Representative Mike Pompeo of Wichita on “An update from Washington.” On July 29, Dennis Taylor, Secretary, Kansas Department of Administration and “The Repealer” on “An Overview of the Office of the Repealer.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    FairTax meeting in Wichita. This Thursday (June 23) supporters of FairTax will meet in Wichita. According to event organizers, attendees will hear “new information about the status of the FairTax movement at the national level and how it might affect the Presidential race in 2012.” More from organizers: “The FairTax is a unique solution to the urgent need to create jobs and grow the economy. America now has 35 million Americans under employed or unemployed. The economic disaster was unnecessary and can be reversed by completely repealing our horrible and destructive tax system and replace it with the FairTax.” … While I am sympathetic with their cause, I am not enthusiastic about the FairTax — a national sales tax — for one important reason: it doesn’t address the real problem of a government that is too large and collects too much tax revenue. One of the main platforms of Fairtax is that it would collect the same revenue as the existing tax regime: “dollar-for-dollar federal revenue neutrality.” I quote Murray N. Rothbard on this: “But the libertarian must never support any new tax or tax increase. For example, he must not, while advocating a large cut in income taxes, also call for its replacement by a sales or other form of tax. The reduction or, better, the abolition of a tax is always a noncontradictory reduction of State power and a significant step toward liberty; but its replacement by a new or increased tax elsewhere does just the opposite, for it signifies a new and additional imposition of the State on some other front. The imposition of a new or higher tax flatly contradicts and undercuts the libertarian goal itself.” … The meeting is at 7:00 pm Thursday at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is FairTaxKC.org.

    Obama: Technology seen as job killer. “The story goes that Milton Friedman was once taken to see a massive government project somewhere in Asia. Thousands of workers using shovels were building a canal. Friedman was puzzled. Why weren’t there any excavators or any mechanized earth-moving equipment? A government official explained that using shovels created more jobs. Friedman’s response: ‘Then why not use spoons instead of shovels?’ That story came to mind last week when President Obama linked technology to job losses. ‘There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers,’ he said. ‘You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.’ The president calls this a structural issue — we usually call it progress.” … Russell Roberts goes on to explain that productivity — doing more with less, including less labor — leads to lower costs to business. The Left, of course, says this simply means more profits for business. But in competitive markets, businesses will find they must lower their costs, and that means a higher standard of living for consumers. New jobs get created as people now have more money to spend on new products and services that didn’t exist before, or were so expensive that only the rich could afford them. More at Obama vs. ATMs: Why Technology Doesn’t Destroy Jobs.

    Even quicker. Rasmussen: Just 8% Approve of Job Congress Is Doing: “Voter approval of Congress’ job performance has now fallen to a near five-year low.” … How to Run Public Schools in the 21st Century: Our current models are bad for taxpayers — and calamitous for kids. … The dignity of personal choice: Choosing lifesaving care — or not — shouldn’t be left to bureaucrats. … The Fiscal Pledge We Need: Cut, Cap, Balance: Congress has never failed to increase the debt limit. This makes having a debt limit functionally useless. … Initiative and Referendum under attack, says John Fund: “Politicians always claim to support democracy, but they often come up with creative ways to limit the influence of pesky voters. Now members of the political class in several states are going after voters’ most powerful tool.” See Fund: Power to the People? How Déclassé. … A Shovel-Ready Punch Line: “This is a staggering indictment of the president, the team he assembled, and the journalists who accepted this administration’s arrogant assertions that they knew exactly what to do, how to do it, and what would happen as a result.”

  • Kansas and Wichita quick takes: Monday June 13, 2011

    Wichita City Council. This week the Wichita City Council considers these items: The council will deliberate a contract in the amount of $50,000 with the Kansas World Trade Center for economic development services. KWTC’s mission is to “promote and facilitate international trade through education, communication and research.” … The council will be asked to approve cultural funding allocations approved by the Cultural Funding Committee. The source of these funds is the city’s dedicated property tax for the arts, which is estimated to bring in $3,165,897 next year. The best thing the council could do for citizens is to forgo this funding, reduce taxes, and let citizens choose how to allocate their funds based on their own preferences. Instead, we have a committee deciding which arts Wichitans should be taxed to pay for. … The council will be asked to approve spending $194,849 on a contract with a firm to produce the Wichita bicycle master plan. … Another contract to be considered spends $87,253 to produce a transit community outreach and input study. … As always, the agenda packet is available at Wichita city council agendas.

    Arts jobs lost already? The Wichita Eagle’s Rhonda Holman is already bemoaning the lost arts jobs, writing this about Kansas Governor Sam Brownback: “He alone bears the responsibility for five lost jobs today as the Kansas Arts Commission’s funding runs out.” A few of the comments left to the article got the economics right, reminding Holman that these jobs at the Kansas Arts Commission are government jobs, not arts jobs. This is a distinction that is often overlooked by our state’s largest newspaper.

    American politics, viewed from down under. James Paterson, an Australian, writes about the inability of left-wing media to understand a conservative grassroots political movement: “Ever since the rise of the Tea Party in the United States and the community revolt against the Gillard Government’s carbon tax, progressive journalists and commentators have struggled to grapple with the idea of a grassroots political movement that isn’t left wing. More used to anti-war moratoriums and union-led protests for equal pay or refugee rights, many left-leaning journalists appear to be on a mission to uncover the ‘real’ cause of public dissent from their favoured big-government agenda, particularly regarding climate change.” Paterson notes how the media has latched on to Charles and David Koch as the driving force behind this political movement. But, he writes: “But political movements can’t just be conjured up at the behest of billionaire businessmen, media moguls or talk-show hosts. And they certainly can’t be directed exclusively by them to serve their commercial interests. If that were the case, what took them so long? Why did the Koch brothers — who were involved in libertarian activism as early as the 1970s — not ‘create’ the Tea Party to tackle US President Jimmy Carter, or Bill Clinton, decades ago?” A good question, I might add. Concluding: “As much as it might disappoint some commentators, most conservative philanthropists are simply passionate about the philosophy of individual liberty and personal freedom, just as others are committed to human rights or finding a cure for cancer. Surprisingly, even ordinary people can subscribe to these beliefs, and they don’t need to be told by a reclusive billionaire or wacky media personality how to think.”

    California parent trigger attacked. California has a new and innovative school reform law called the “parent trigger.” If a majority of the parents for a school sign a petition calling for the trigger to be invoked, the school must undergo one of several reform measures, such as, as described in Locking the Parent Trigger: “close the school and let the students enroll in a higher-performing campus nearby; convert the school to an independent charter; fire half the teaching staff and replace the administration; extend school hours and revise the curriculum under a federally recommended turnaround plan; or adopt an ‘alternative governance’ model, which could include anything from establishing a school-site council to handing over the school to the local district superintendent.” The City Journal article tells of an effort by the state’s anti-choice education establishment to interfere with and overturn the law.

    Medical board’s powers. Many are not aware of the role of the Independent Payment Advisory Board, or IPAB, which was established by the Patient Protection and Affordable Care Act. This board is charged with holding down the costs of medical care under ObamaCare. In his column Government by the ‘experts’ George Will describes some of this board’s extreme powers, such as the board’s proposals becoming law unless Congress takes action to oppose, and that action requires three-fifths majority vote. He quotes U.S. Supreme Court Justice Antonin Scalia: “I anticipate that Congress will find delegation of its lawmaking powers much more attractive in the future. … I foresee all manner of ‘expert’ bodies, insulated from the political process, to which Congress will delegate various portions of its lawmaking responsibility. How tempting to create an expert Medical Commission … to dispose of such thorny, ‘no-win’ political issues as the withholding of life-support systems in federally funded hospitals.” … This topic of Congress brushing aside its responsibility to make tough decisions came up in my recent interview with U.S. Representative Mike Pompeo of Wichita, in which I reported: “Pompeo said that over the last 25 or 30 years Congress has been unwilling to create ‘substantive markers’ in legislation. Instead, it creates vague laws and funds administrative agencies to implement them. These agencies are less accountable than elected officials, and Congress has handed over much authority to them.”

    Chief Justice to speak in Wichita. This Friday (June 17th) the Wichita Pachyderm Club features Honorable Lawton R. Nuss, Kansas Supreme Court Chief Justice, speaking on the topic “The State of the Kansas Courts.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On June 24, Jim Mason, Naturalist at the Great Plains Nature Center will have a presentation and book signing. Mason is author of Wichita’s Riverside Parks, published in April 2011. On July 1 there will be no meeting due to the Independence Day holiday. On July 8, Dave Trabert, President, Kansas Policy Institute, on “Stabilizing the Kansas Budget.”

    More ‘Economics in One Lesson.’ Tonight (June 13) Americans For Prosperity Foundation is sponsoring a continuation of the DVD presentation of videos based on Henry Hazlitt’s classic work Economics in One Lesson. The event is Monday (June 13) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event 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.

    Climate change resource launched. The Heartland Institute has launched an online resource dedicated to providing information about climate change and related topics. Titled ClimateWiki, Heartland writes that the website “covers an immensely complicated subject with hard scientific facts, not the scare-mongering and politicization found at Wikipedia, other ‘alarmist’ climate research sites and the mainstream media.” … Heartland will host the International Conference on Climate Change later this month.

  • Rich States, Poor States author to be in Wichita

    Kansas Policy Institute and the Wichita Independent Business Association are hosting a breakfast event featuring Jonathan Williams, one of the authors of Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.

    This annual publication looks at each of the 50 states and evaluates them on several areas of economic competitiveness. Last year, Kansas ranked 40th for “Economic Performance Rank” and 25th for “Economic Outlook Rank.” It is feared that Kansas may fare even worse this year.

    The report is a source of much useful information. For example, did you know that Kansas has 696.3 public employees for each 10,000 people? That ranks us 48th among the states. That’s good news if you’re a public employee union organizer, but bad for everyone else.

    The event is at 7:30 am on Friday June 24th at Pioneer Balloon (5000 E. 29th St. N., across from the WSU Metro Complex). The cost is $10. Click here to RSVP by email, or call 316-201-3264.

  • Kansas and Wichita quick takes: Monday June 6, 2011

    Wichita school superintendent to speak. This Friday’s meeting (June 10) of the Wichita Pachyderm Club features John Allison, Superintendent of USD 259, the Wichita public school district, on “An update from USD 259.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On June 17, The Honorable Lawton R. Nuss, Kansas Supreme Court Chief Justice on “The State of the Kansas Courts.” On June 24, Jim Mason, Naturalist at the Great Plains Nature Center will have a presentation and book signing. Mason is author of Wichita’s Riverside Parks, published in April 2011. On July 1, Jay M. Price, Director of the Public History Program at Wichita State University, speaking on “Classes of Values in Kansas History.” On July 8, Dave Trabert, President, Kansas Policy Institute, on “Stabilizing the Kansas Budget.”

    TIF in California and Kansas. In California’s Secret Government: Redevelopment agencies blight the Golden State Steven Greenhut discusses Redevelopment Agencies (RDAs) in California, which is the way that state implements tax increment financing (TIF). In California RDAs are separate agencies with their own boards. Fortunately, Kansas TIF law doesn’t create these separate agencies. But we have TIF and its wild claims. Greenhut cites the claims of RDA boosters in California: “… agencies explicitly advance various goals beyond blight removal, claiming to boost economic development, provide affordable housing, reenergize downtowns, and create hundreds of thousands of jobs in the process.” But: “Do these lofty growth claims hold water? Redevelopment officials arrive at them by taking credit for every new job and every new economic activity in a redevelopment area. But that isn’t a plausible boast. Crunching the numbers, [Michael] Dardia found that after correcting for local real-estate trends, ‘redevelopment projects do not increase property values by enough to account for the tax increment revenues they receive. Overall, the agencies stimulated enough growth to cover just above half of those tax revenues. The rest resulted from local trends.’” In the follow-up article Proving the Redevelopment Rule: Evidence from Southern California that RDAs don’t work Greenhut discusses eminent domain, or the threat of it. While Kansas has an eminent domain law that seemingly provides protection to property owners who don’t want to sell, the threat of its use is still available. Greenhut cites an attorney who fights these battles, noting “most cities don’t need to use eminent domain, any more than most muggers need to use the handgun pointed at their victims’ heads. Brandishing it usually is enough to convince an owner to give in.” The Wichita City Council, when considering TIF districts and other special tax districts, has been asked to explicitly disavow the use of eminent domain so that this threat is no longer available. But the mayor and council members will not extend that protection to citizens.

    More ‘Economics in One Lesson.’ Next Monday (June 13) Americans For Prosperity Foundation is sponsoring a continuation of the DVD presentation of videos based on Henry Hazlitt’s classic work Economics in One Lesson. The event is Monday (June 13) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event 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.

    ‘Running on Empty’ tour in Kansas. This week Americans for Prosperity Foundation is bringing the Running on Empty tour to Topeka (Thursday June 9th) and Kansas City (Friday June 10th). AFP writes: “Since President Obama took office, gas prices have nearly doubled. The administration refuses to develop American energy sources … American energy sources that could help gas prices, electricity prices, and food prices come down. Americans are running on empty and the administration needs to hear how regulations and restriction to domestic resources are affecting working families who rely on affordable energy to commute to work, go to school activities and shop for family groceries. Join us on the Running on Empty Tour to learn what executive actions the Administration can take to bring down fuel costs and bring stability to the market and send them your gas bill!” For more information on these two area events, click on National Running on Empty Tour to Stop in Topeka & Kansas City.

    MRCTV announced. Media Research Center, a conservative media watchdog organization and think tank, has announced MRCTV, a video site. In its announcement, MRC wrote: “Many Conservatives have long felt that YouTube has two sets of rules, one for conservative videos and one for everyone else. Videos that are critical of liberals or present a conservative point of view are often mysteriously removed from YouTube. This is frustrating for everyone, but especially for conservative websites that rely on videos to get their message across. ”

    Kansas census data added. The Institute for Policy & Social Research at KU has added 2010 U.S. Census data. Besides this, the institute holds much other data and resources. Click on Kansas Data.

    Markets: exploitation or empowerment? Do markets lead to a centralization of political and economic power, or do markets decentralize and disseminate wealth? In an eight-minute video from LearnLiberty.org, a project of Institute for Humane Studies, Antony Davies presents evidence and concludes that markets and free trade empower individuals rather than exploit them.

  • Stossel: The state against blacks

    John Stossel’s most recent television program was titled The State Against Blacks, and it dealt with the topics of affirmative action, welfare, and the minimum wage.

    A featured guest on the show was Dr. Walter E. Williams, an economist at George Mason University. His most recent book is on this topic, and it’s titled Race and Economics: How Much Can Be Blamed on Discrimination? A preview of the book is available at that link.

    On welfare, Williams told Stossel: “The welfare state has done to black Americans what slavery could not have done, the harshest Jim Crow laws and racism could not have done — namely, break up the black family. Today, just slightly over 30 percent of black kids live in two-parent families.” He contrasted this with much higher numbers of intact families in the past. A video clip is below.

    In another clip from the show, Williams discusses the war on poverty and how the minimum wage is harmful to those it is meant to help.

    Summarizing at the end of the show, Stossel told the audience that limited government — not an expansive welfare state — is best for everyone, including the poor, immigrants, and minorities:

    There’s no question that in America that blacks, on average, are economically behind whites. Average black household income is about 40 percent less than for whites. Why? Other minorities were once that far behind, but they prospered. In 1910 Chinese immigrants were 10 percent poorer than other Americans. Their grandkids, in 1985, were 35 percent richer than other Americans.

    Other minorities rose out of poverty: Italians, Hungarians, the Irish, and so on. So why not most blacks? Because just at the time that blacks like Walter Williams were lifting themselves out of poverty, President Johnson created a government war on poverty. Trillions of your dollars were spent on welfare programs that unintentionally reward dependency.

    And then came more regulation like licensing rules and minimum wage rules that stifle entrepreneurship. Politicians like Jessie Jackson say racism is why blacks still struggle today. But Walter Williams taught me that’s just nonsense. There is still racism today. But if that’s such an obstacle, explain the success of black immigrants in America. Their skin is just as dark, but they knew well they’d proposer. Immigrants from Jamaica are poorer than the average American, but a few years later their kids are one percent richer than the average American.

    Why? For one reason, it’s harder for immigrants to get government assistance. They don’t grow up in a culture of handouts, so they’re forced to make it on their own. And that makes all the difference. What helps poor people most is limited government, simple rules that everyone understands, that leave newcomers free to braid hair, for example, or drive taxis, or start companies.

    If the state keeps the peace but then gets out of our way, people prosper. I didn’t understand that until Walter Williams taught me. And many Americans still don’t get it.

    Stossel’s column on this topic is Is Government Aid Helping or Hurting Blacks? Video from Williams’ 1985 PBS documentary “State Against Blacks” is available here. Video from the “Good Intentions” series is here.

  • Kansas and Wichita quick takes: Wednesday June 1, 2011

    Transportation planning. It’s been the assumption in America over the last half-century that transportation needs — roads, bridges, buses, subways, etc. — must be planned by government in a top-down fashion. But the Cato Institute’s Randal O’Toole disagrees: “Should transportation be funded and planned from the top down or bottom up? Top-down advocates, such as the Brookings Institution’s Robert Puentes (writing in the May 23, 2011 Wall Street Journal) argue that only central planners can have a ‘clear-cut vision for transportation’ that will allow them to target spending ‘to make sure all those billions of dollars help achieve our economic and environmental goals.’ Advocates of bottom-up funding, such as the Cato Institute, Reason Foundation and Heritage Foundation, respond that public and private transportation providers better serve our needs when they are responsive to the fees people pay for various forms of transportation. In fact, most of the problems with transportation today, from an antiquated air-traffic control system to deteriorating bridges to empty transit buses, are due to top-down planning.” O’Toole goes on to explain the problems with federal funding of local transportation projects, concluding “No matter how well intentioned, top-down transportation planning quickly turns into a combination of social engineering and pork barrel. It is time to return to a bottom-up funding system that rewards transport agencies and companies for reducing costs and increasing mobility.” … In Wichita, the bus transit system is running a deficit, and the city manager has warned that cuts to service may be made. Most people would be surprised that in 2009, the fares paid by passengers covered just 22.5 percent of the bus system’s total cost, according to Michael Vinson, Director of Transit for the City of Wichita. The Wichita Eagle recently reported the figure as just 20 percent. The rest of the cost is covered by a variety of local, state, and federal grants. … Is it a coincidence that Wichita’s bus service is a top-down government-planned service? And what does this foretell for the future of other government-planned and provided transit, which is said by government planners like the Wichita Downtown Development Corporation to be necessary for the revitalization of downtown Wichita

    Pompeo, Huelskamp ‘no’ on debt limit. U.S. Representative Mike Pompeo, a Wichita Republican serving his first term, voted “no” to increasing the U.S. federal debt limit, which currently is about $14.3 trillion dollars. In a statement, Pompeo said; “I voted no on raising the debt ceiling. No to more debt without a change in behavior. No to increasing the credit card limit when the Obama Administration has zero commitment to reducing the unsustainable rate of spending. No to business as usual in Washington, D.C. … With this debt ceiling vote, my colleagues and I are putting down a marker on behalf of the American people. Americans have rejected the status quo and sent me along with 86 other Republican Freshmen to Congress to reverse course. Earlier this year, the President presented a spending plan to Congress for 2012. Unfortunately, that plan proposed 10 straight years of deficits in excess of $1 trillion. That is a recipe for disaster and one which we cannot accept on behalf of the Americans who sent us here to rein in out-of-control government spending.” … In explaining his intent to vote against the bill, Tim Huelskamp, who represents the Kansas first district, said: “The President’s request to increase the debt limit without cutting spending is irresponsible and fiscally reckless, therefore I plan to vote against it. The acquisition of more debt while failing to deal with Washington’s addiction to spending only sustains Washington’s unhealthy behaviors. It puts the country on the path of Greece. We owe it to the American people and to future generations to deal with overspending once and for all.” Lynn Jenkins and Kevin Yoder, the other representatives from Kansas, also voted against raising the debt limit. … Proponents of federal spending insist that we must increase our debt limit or financial markets will tank and economic activity will come to a halt. The Concord Coalition writes: “Approval of a debt limit increase is necessary to maintain the full faith and credit of the United States government. Failure to approve an increase would not be an act of fiscal responsibility, unless it can be said that deadbeats are fiscally responsible because they refuse to pay their bills. It would result in the United States defaulting on the commitments it has already made, including Social Security, Medicare and veterans benefits, vendor payments, tax refunds, student loans and interest payments on outstanding debt.” The Cato Institute counters: “A temporarily frozen debt limit could instead signal U.S. lawmakers’ resolve to get our fiscal house in order. It may even reassure investors about long-term U.S. economic prospects. … For too long, analysts and politicians have balked at the massive political impediments to reforming the federal budget — especially entitlement programs. Many now concede, actually, that no prudential reforms are likely unless there is an imminent ‘crisis.’ On the other hand, political liberals argue that there is no real ‘crisis’ — and so no need for real reforms. … Indeed, investors should be fearful of the opposite: an increase in the debt limit without a serious challenge from reform-minded lawmakers. This only signals business as usual for U.S. fiscal affairs.”

    This Week in Kansas. Recently the KAKE Television public affairs program This Week in Kansas started placing episodes on its website. On the most recent episode, Malcolm Harris and I join host Tim Brown for a discussion of the Kansas Legislature and economic development topics. Also, Meteorologist Jay Prater contributes a segment on storm preparation.

    Kingman is the first. The office of Kansas Governor Sam Brownback has announced that Kingman County, just to the west of Wichita, is the first county to participate in the new Rural Opportunity Zone student loan repayment program. This program allows residents who move into counties with declining population to escape paying state income taxes for five years. In deciding to participate in the student loan repayment program, the county and the state will participate equally in repaying student loans of up to $15,000 for college graduates who move to Kingman County. … In a statement, the governor said “I am pleased Kingman County commissioners recognize the direct benefit of partnering with the state to attract college graduates to their community. This aggressive policy move is targeted to grow our shrinking rural counties. Like the Homestead Act, ROZ offers opportunity instead of handpicking winners and losers.” While almost all welcome the ROZ program — the legislation passed 102 to 18 in the House and 34 to 5 in the Senate — the nostalgia for the glory days of small-town Kansas may not be in our best interests. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, which has influenced Governor Brownback’s economic policy, Dr. Art Hall wrote that productivity — which should be our ultimate goal — is related to population density: “Productivity growth is the ultimate goal of economic development. Productivity growth — the volume and value of output per worker — drives the growth of wages and wealth. Productivity growth results from a risky trial and error process on the front lines of individual businesses, which is why Kansas economic development strategy should focus on embracing dynamism — a focus virtually indistinguishable from widespread business investment and risk-taking. Productivity growth tends to happen in geographic areas characterized by density. This pattern shows up in Kansas. The dense population centers demonstrate superior productivity growth.”

    Legislature is through for season. Today both the Kansas House of Representatives and Senate met for sine die, a fancy Latin term for its ceremonial last day, although action may be taken. The House made an attempt to override the governor’s line-item veto of funding for the Kansas Arts Commission, but the effort failed by a vote of 50 to 44. Two-thirds, or 84 votes, would be needed to override the veto. The Senate didn’t make an attempt. The next meeting of both chambers of the Kansas Legislature will be on January 9, 2012, although there are many committee meetings during the summer and fall months.

    Stossel looks at energy. In a recent episode of his weekly television show available to view using the free hulu service, John Stossel looks at various forms of energy and asks: Who will keep the lights on? … Early in the show, Stossel argues with Bill O’Reilly over the role of speculators in the run-up of oil prices. O’Reilly favors strict regulation of speculators, believing that the market is rigged. In a discussion with two guests, wild speculation was promoted as the cause of rapidly rising prices, with some trades by traders said to be stoned at the time. But it was mentioned that speculation carries huge risks, and if the speculators are wrong, they lose — and big. For more on speculators, see Speculators selfishly provide a public service.

  • Kansas and Wichita quick takes: Tuesday May 31, 2011

    Pachyderm to feature DA Foulston. This Friday (June 3) the Wichita Pachyderm Club features Nola Tedesco Foulston, District Attorney for the Eighteenth Judicial District of Kansas, whose boundaries are coincident with Sedgwick County. Foulston’s topic will be “An office overview and current events at the Eighteenth Judicial District of Kansas District Attorney’s office.” Foulston, a Democrat, was elected to her office in 1988 and has served continuously since then. … Appearances by speakers other than Republicans at Pachyderm often generate controversy, and this week is no exception. Pachyderm is a Republican club, and the mission statement of the national organization reads: “Promote active citizen involvement and education in government and politics through the formation and support of grassroots, Republican clubs across America.” Some feel that an appearance at Pachyderm will bolster Foulston’s re-election prospects, should she decide to run again next year. Others believe that no Democrat should be be a speaker — ever. In my opinion, the sentiment of the Pachyderm board and of many of the club’s regular attendees is that while Pachyderm is indeed Republican and conservative, the club’s mission of political education and civic engagement allows — in fact, encourages — appearances by prominent officeholders of any political party. In any county, the District Attorney is a powerful force in local government, with broad discretion as to the prosecution of criminal cases. This is a speaker that the members of Pachyderm should be encouraged to hear, even though members may not agree with her politics. …. Foulston will likely face several tough questions from the usually spirited Pachyderm audience. … Upcoming speakers: On June 10, John Allison, Superintendent of USD 259, the Wichita public school district, on “An update from USD 259.” On June 17, The Honorable Lawton R. Nuss, Kansas Supreme Court Chief Justice on “The State of the Kansas Courts.” On June 24, Jim Mason, Naturalist at the Great Plains Nature Center will have a presentation and book signing. Mason is author of Wichita’s Riverside Parks, published in April 2011. On July 1, Jay M. Price, Director of the Public History Program at Wichita State University, speaking on “Classes of Values in Kansas History.” On July 8, Dave Trabert, President, Kansas Policy Institute, on “Stabilizing the Kansas Budget.”

    Sedgwick County Commission. In its Wednesday meeting, the Sedgwick County Commission will consider making two forgivable loans for the purposes of economic development. These loans have become popular with economic development officials, and often the City of Wichita and Sedgwick County make loans of equal amount to the same company. … The program works by loaning the company an amount of money, with the entire amount paid out at once. Then, if performance goals are met over a period of time, the loan (and interest) is forgiven. Otherwise, portions of it, with interest, may become due. Often the term of the loan is four or five years, with a portion of the loan forgiven each year if goals are met. The performance goals are usually the number of full-time or equivalent employees. … The Golf Warehouse in northeast Wichita is asking for a $48,000 forgivable loan. It recently received a loan of that amount from the City of Wichita. Mid-Continent Instrument, Inc. is asking for $10,000. … Usually economic development incentives are accompanied by a cost-benefit study performed by Wichita State University Center for Economic Development and Business Research. The county hasn’t supplied such analysis for these two items.

    Kansas budget signed. On Saturday — a holiday weekend day — Kansas Governor Sam Brownback signed the budget bill. He used his line-item veto authority to strike an across-the-board reduction in spending, preferring to make targeted cuts instead. Although the governor had proposed ending funding for public broadcasting, the legislature included funding, and the governor did not veto it. … Most controversial of the governor’s handful of changes to the bill will be his veto of funding for the Kansas Arts Commission. This action was not a surprise, as recently the administration laid off all the commission’s employees. Associated Press reports that the chairman of the commission isn’t ruling out a lawsuit.

    KPERS suit threatened. Changes made by the Kansas Legislature to Kansas Public Employees Retirement System, or KPERS have caused state employee organizations to consider a lawsuit, according to Associated Press reporting. The changes made this year are mild compared to the changes that must be made if KPERS is ever to become self-sustaining. The threat of a lawsuit over these minor changes doesn’t foretell a future of cooperation from state employees in making the much larger reforms that must be made.

    Stimulus jobs — or not. Malcolm Harris calls attention to an analysis of the job-creation performance of the 2009 stimulus bill. The working paper is titled The American Recovery and Reinvestment Act: Public Sector Jobs Saved, Private Sector Jobs Forestalled. Its goal, according to authors Timothy Conley and Bill Dupor, is to “understand the causal effect on employment of the government spending component of the ARRA.” The key finding is this: “Our benchmark point estimates suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs.” That’s a net loss of jobs. … The authors note there is “appreciable estimation uncertainty” in the estimates. Still, they are able to conclude: “However, our estimates are precise enough to state that we find no evidence of large positive private-sector job effects.” … The report includes a section summarizing other researchers’ findings, which usually find that the stimulus program created or save many jobs. The studies that find large job creation usually rely on “fiscal policy multipliers,” a Keynesian economics concept.

    Government doesn’t create jobs. Investor’s Business Daily relies partly on the Conley and Dupor paper in its editorial Government Doesn’t Create Jobs. IBD asks “In a joint op-ed with the British prime minister, President Obama admits that jobs are created by an innovative private sector. So why is he strangling ours with regulations, rules and taxes? We would hope it was a candid admission of the truth rather than just boilerplate rhetoric in an op-ed in the Times of London by President Obama and British Prime Minister David Cameron. But there it was: ‘Governments do not create jobs; bold people and innovative businesses do.’” Continuing: “For once, the president is spot on. Businesses create jobs to fill a need, and their incentive is profit. Businesses invest; governments can only spend. Businesses create wealth, as do their employees. Government consumes wealth and sucks the economic oxygen out of the room. Its employees create paperwork and regulations that restrict economic growth.”

  • Kansas and Wichita quick takes: Friday May 27, 2011

    Valuing teachers. Writing in Education Next, Eric A. Hanushek explains the importance of academic achievement of schoolchildren, the low achievement of American schools relative to the world, and the huge impact this poor performance has on our economic future. It’s very important, he writes: “From studying the historical relationship, we can estimate that closing just half of the performance gap with Finland, one of the top international performers in terms of student achievement, could add more than $50 trillion to our gross domestic product between 2010 and 2090. By way of comparison, the drop in economic output over the course of the last recession is believed to be less than $3 trillion. Thus the achievement gap between the U.S. and the world’s top-performing countries can be said to be causing the equivalent of a permanent recession.” … Teacher effectiveness is one factor that is under control of schools, and is more important than many other factors also under control of schools: “The quality of the teachers in our schools is paramount: no other measured aspect of schools is nearly as important in determining student achievement. The initiatives we have emphasized in policy discussions — class-size reduction, curriculum revamping, reorganization of school schedule, investment in technology — all fall far short of the impact that good teachers can have in the classroom. Moreover, many of these interventions can be very costly.” … Reforms: “better recruitment so that ineffective or poor teachers do not make it into our schools.” We can also work to improve poor teachers, but Hanushek says this is often not effective, as “there is no substantial evidence that certification, in-service training, master’s degrees, or mentoring programs systematically make a difference in whether teachers are in fact effective at driving student achievement.” … There is also the possibility of a “clearer evaluation and retention strategy for teachers.” This means better evaluation systems to identify the best and worst teachers, but Hanushek calls current evaluation systems dysfunctional. Currently, salaries are based on longevity and earned credentials, which he warns are “factors that are at best weakly related to productivity.” … Of note: it is the teachers unions which support the current failing system, and which block any attempt at meaningful reform. In Kansas this year, tinkering with the teacher tenure formula is all that has been accomplished this year regarding school reform. This is in a state that ranks very low among the states in policies relating to teacher effectiveness, according to the National Council on Teacher Quality.

    Job recovery is slow. USA Today: “Nearly two years after the economic recovery officially began, job creation continues to stagger at the slowest post-recession rate since the Great Depression. The nation has 5% fewer jobs today — a loss of 7 million — than it did when the recession began in December 2007. That is by far the worst performance of job generation following any of the dozen recessions since the 1930s. In the past, the economy recovered lost jobs 13 months on average after a recession. If this were a typical recovery, nearly 10 million more people would be working today than when the recession officially ended in June 2009.”

    Obamacare waivers. Michael Barone: “If Obamacare is so great, why do so many people want to get out from under it?” Barone cites the high concentration of waivers granted to labor unions, which are a big source of political support for Obama. Then there’s the recent revelation of the large number of waivers to companies in Nancy Pelosi’s district. This is harmful, writes Barone: “One basic principle of the rule of law is that laws apply to everybody. If the sign says ‘No Parking,’ you’re not supposed to park there even if you’re a pal of the alderman. Another principle of the rule of law is that government can’t make up new rules to help its cronies and hurt its adversaries except through due process, such as getting a legislature to pass a new law. The Obamacare waiver process appears to violate that first rule. Two other recent Obama administration actions appear to violate the second.”

    Tax increment financing. From Randal O’Toole: “Tax-increment financing (TIF) costs taxpayers around $10 billion per year and is growing as fast as 10 percent per year, according to a new report, Crony Capitalism and Social Engineering: The Case against Tax-Increment Financing published by the Cato Institute. Though originally created to help renew “blighted” neighborhoods, TIF today is used primarily as an economic development tool for areas that are often far from blighted. The report argues that TIF does not actually generate economic development. At best, it moves development that would have taken place somewhere else in a community to the TIF district. That means it generates no net tax revenues, so the TIF district effectively takes taxes from schools and other tax entities. At worst, TIF actually slows economic development, both by putting a larger burden on taxpayers and by discouraging other developers from making investments unless they are also supported by TIF.” … Tax increment financing — TIF districts — are expected to be a major source of revenue for the revitalization of downtown Wichita — and the accompanying social engineering directed from Wichita city hall. Wichita has also shown itself to be totally incapable of turning away from crony capitalism.

    Assumptions about capitalism. Burton W. Folsom in The Myth of the Robber Barons: “This shallow conclusion dovetails with another set of assumptions: First, that the free market, with its economic uncertainty, competitive stress, and constant potential for failure, needs the steadying hand of government regulation; second, that businessmen tend to be unscrupulous, reflecting the classic cliché image of the ‘robber baron,’ eager to seize any opportunity to steal from the public; and third, that because government can mobilize a wide array of forces across the political and business landscape, government programs therefore can move the economy more effectively than can the varied and often conflicting efforts of private enterprise. But the closer we look at public-sector economic initiatives, the more difficult it becomes to defend government as a wellspring of progress. Indeed, an honest examination of our economic history — going back long before the twentieth century — reveals that, more often than not, when government programs and individual enterprise have gone head to head, the private sector has achieved more progress at less cost with greater benefit to consumers and the economy at large.” … Folsom goes on to give examples from the history of steamships, railroads, and the steel and oil industries that show how our true economic history has been distorted. Concluding, he writes: “Time and again, experience has shown that while private enterprise, carried on in an environment of open competition, delivers the best products and services at the best price, government intervention stifles initiative, subsidizes inefficiency, and raises costs. But if we have difficulty learning from history, it is often because our true economic history is largely hidden from us. We would be hard pressed to find anything about Vanderbilt’s success or Collins’s government-backed failure in the steamship business by examining the conventional history textbooks or taking a history course at most colleges or universities. The information simply isn’t included.” … Folsom’s book on this topic is The Myth of the Robber Barons: A New Look at the Rise of Big Business in America.