Voice For Liberty

Tag: Government spending

  • Kansas and Wichita quick takes: Friday December 2, 2011

    Wichita trip to Ghana. KAKE Television reports that Wichita Mayor Carl Brewer believes the recent trip to Africa by him and others may result in sales of beef and airplanes. I wonder, though: don’t marketers of beef and airplanes know about Africa already? And who has the greater motive to sell, not to mention knowledge about the products that might meet African customers’ needs: sales reps for these companies, or politicians? … The most telling indication that this trip is more junket than anything else is that Brewer and Vice Mayor Lavonta Williams (district 1, northeast and east Wichita) paid for their own airfare. If this trip was truly good for the city, the city should pay all expenses for those who go, just as companies pay legitimate travel expenses for their employees.

    Register of Deeds returns funds. At this week’s meeting of the Sedgwick County Commission Register of Deeds Bill Meek returned $200,000 in unspent funds from his office. These unspent funds may be used by other county offices for “equipment or technological services relating to the land or property records filed or maintained by Sedgwick County,” according to the resolution passed by commissioners.

    Transaction fee, or interest? At the same commission meeting, there was discussion on the topic of the county charging extra fees for paying money to the county using credit cards. During the discussion, Commissioner Jim Skelton speculated that, depending on the card you have, there will be “$50 to $250 or more on interest” each month. The commissioner may not have heard that if you pay the entire statement balance each month, there won’t be any interest charges.

    This is a cut? In Republicans Take an Ax to Government, David Boaz writes: “Sort of. Two million dollars. Two million dollars. That’s what the Washington Post sees as ‘shrinking government.’ I’m guessing the Post doesn’t often run a story when a governor does something that “expands government” by $2 million. But Virginia has a reputation for fiscal conservatism. Maybe $2 million is actually a big chunk of the state’s budget. Let’s check the numbers. As it turns out, this week the National Governors Association and the National Association of State Budget Officers put out a report on state finances, and it showed that Virginia’s general fund spending is up 7.1 percent in 2012. And according to Virginia’s own budget, that’s an increase of $1.1 billion in FY2012. That’s not the whole budget, by the way. In addition to the $16 billion in General Fund spending, Virginia will also spend $23 billion in FY2012. ”

    Tax incentives questioned. In a commentary in Site Selection Magazine, Daniel Levine lays out the case that tax incentives that states use to lure or keep jobs are harmful, and the practice should end. In Incentives and the Interstate Competition for Jobs he writes: “Despite overwhelming evidence that state and local tax incentives are having little to no positive effect on promoting real economic growth anywhere in the country, states continue to up the ante with richer and richer incentive programs. … there are real questions as to whether the interstate competition for jobs is a wise use of anyone’s tax dollars and, if not, then what can be done to at least slow down this zero sum game?” As a solution, Levine proposes that the Internal Revenue Service classify some types of incentives as taxable income to the recipient, which would reduce the value and the attractiveness of the offer. Levine also correctly classifies tax credits — like the historical preservation tax credits in Kansas — as spending programs in disguise: “Similarly, when a ‘tax credit’ can be sold or transferred if unutilized it ceases to have a meaningful connection to state tax liability. Instead, in such circumstances the award of tax credit is merely a delivery mechanism for state subsidy.” In the end, the problem — when recognized as such — always lies with the other guy: “Most state policy makers welcome an opportunity to offer large cash incentives to out-of-state companies considering a move to their state but fume with indignation when a neighboring state uses the same techniques against them.”

    Golden geese on the move. Thomas Sowell: “The latest published data from the 2010 census show how people are moving from place to place within the United States. In general, people are voting with their feet against places where the liberal, welfare-state policies favored by the intelligentsia are most deeply entrenched.” Sowell notes that blacks, especially those young and educated, are moving to the South and suburbs. “Among blacks who moved, the proportions who were in their prime — from 20 to 40 years of age — were greater than in the black population at large, and college degrees were more common among them than in the black population at large. In short, with blacks, as with other racial or ethnic groups, those with better prospects are leaving the states that are repelling their most productive citizens in general with liberal policies.” Detroit, he writes is “the most striking example of a once-thriving city ruined by years of liberal social policies.” Finally, a lesson for all states, including Kansas: “Treating businesses and affluent people as prey, rather than assets, often pays off politically in the short run — and elections are held in the short run. Killing the goose that lays the golden egg is a viable political strategy.” (Mass Migration Of America’s Golden Geese.) The migration statistics concerning Kansas are not favorable, although some are trending in a better direction.

    Rep. Hedke, author of new book, to speak. This Friday (December 2nd) the Wichita Pachyderm Club features Kansas Representative Dennis Hedke speaking on “Energy and environmental policy.” Hedke is the author of the just-published book The Audacity of Freedom, described as an “unequivocal challenge to the Socialist-Marxist-Communist principles being pushed upon freedom loving Americans by entities and individuals both within and outside the United States.” In his forward to the book, Speaker of the Kansas House of Representatives Mike O’Neal writes: “Dennis Hedke’s The Audacity of Freedom is a timely and welcome “from the heart” wake-up call for those who value freedom and America. Unapologetically, Hedke does not mince words in describing the combination of crises that threaten our country. His irrefutable and precise recitation of compelling facts and refreshingly candid faith and patriotism are infectious. He exhorts us not to stand by and suffer any longer the fools who have been insulting our collective intelligence and bringing us dangerously close to a socialistic irrelevance in the world. His book, in short, is important.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On December 9: Beccy Tanner, Kansas history writer and reporter for The Wichita Eagle, speaking on “The Kansas Sesquicentennial (150th) Anniversary.” … On December 16: David Kensinger, Chief of Staff to Kansas Governor Sam Brownback. … On December 23 there will be no meeting. The status of the December 30th meeting is undetermined at this time. … On January 6: Kansas Senator Garrett Love. … On January 13: Speaker of the Kansas House of Representatives Mike O’Neal, speaking on “The untold school finance story.” … on January 20: Sedgwick County Commissioner Karl Peterjohn.

    Economic freedom in America: The decline, and what it means. “The U.S.’s gains in economic freedom made over 20 years have been completely erased in just nine.” Furthermore, our economic freedom is still dropping, to the point where we now rank below Canada. The result is slow growth in the private sector economy and persistent high unemployment. This is perhaps the most important takeaway from a short new video from Economic Freedom Project, which is a project of the Charles Koch Institute. The video explains that faster growth in government spending causes slower growth in the private economy. This in turn has lead to the persistent high unemployment that we are experiencing today. … To view the video at the Economic Freedom Project site, click on Episode Two: Economic Freedom in America Today. Or, click on the YouTube video below.

  • Era of energy subsidies is over

    By U.S. Representatives Mike Pompeo of Kansas and Raul Labrador of Idaho, both Republicans. This is the original editorial. A version appeared in the Washington Times.

    I’m afraid that the title of this op-ed is optimistic. As the authors note, “handouts are hard to give up.” But that’s no reason why we shouldn’t try to eliminate this type of harmful government spending. Pompeo has also introduced H.R. 3090: EDA Elimination Act of 2011 to shut down the Economic Development Administration, another source of wasteful government spending on economic development and business.

    The Era of Energy Subsidies is Over

    By Mike Pompeo and Raul Labrador

    Bill Clinton famously said that “the era of big government is over.” Well, it didn’t work out that way. But something truly remarkable is happening in our national conversation about energy subsidies: outrage, mounting opposition, and, we hope, a swift end. This would be great news for taxpayers and for consumers.

    Subsidy folly has been bipartisan and commonplace. For the past three decades, both parties have intervened in the energy industry. In 1978, a Democrat-controlled Congress and President Jimmy Carter created an Investment Tax Credit for solar, wind and other renewable energy sources. In 1992, a Democrat-controlled Congress and Republican President George H.W. Bush passed the Production Tax Credit for electricity produced from wind and biomass. Then in 2005, a Republican-controlled Congress and President George W. Bush passed the Energy Policy Act of 2005, which included massive tax subsidies for seemingly every energy source under the sun, including alternative vehicles, advanced nuclear power, and of course solar. The latter legislation created the infamous Department of Energy loan guarantee programs that have produced the ongoing Solyndra scandal.

    After three decades, what have we learned? 1) Energy subsidies distort the free market by funneling billions in taxpayer dollars to politically favored energy sources and technologies, preventing market prices from signaling the optimal source for particular energy uses, 2) Subsidizing energy sectors drains the federal fisc and forces the consumption of higher-cost energy sources, 3) Politically allocated capital typically flows to politically connected companies or to large companies that could develop innovative technologies on their own dime. The $535 million Solyndra scandal has reinforced all of these lessons and helped shine a light on the energy subsidy debate, exposing those who maintain government is the solution to our energy needs.

    The good news is, with the support of the American people, politicians are now speaking the truth. At a recent Republican presidential forum, the candidates were in near-unanimous agreement that it is time to end the federal government’s role and allow the free market to bring our nation the next great energy source. Governor Rick Perry said, “I do not think it is the federal government’s business to be picking winners and losers, frankly, in any of our energy sources.” Congresswoman Michelle Bachman had similar remarks: “I want to see a [level] federal playing field. We’ve seen what a disaster it is when the federal government picks winners and losers.” In his economic plan, Governor Mitt Romney said that government “should not be in the business of steering investment toward particular politically favored approaches.” This is progress. Just four years ago almost every candidate in Iowa was afraid to say that subsidizing politically favored energy technologies has been an enormous policy failure.

    Given the shift in the debate, the time is now to end subsidies. This month we introduced the Energy Freedom and Economic Prosperity Act, H.R. 3308, which has garnered support from such conservative organizations as Americans for Prosperity, Americans for Tax Reform, The Club for Growth, The Council for Citizens Against Government Waste, Freedom Action, Heritage Action for America, National Taxpayers Union, and Taxpayers for Common Sense. H.R. 3308 eliminates all energy tax credits, each of which is nothing more than a taxpayer handout to politically favored industries or companies. From solar to wind, from geothermal to biomass and from ethanol to hydrogen, they must all go. It is equal opportunity — not one single solitary tax credit survives this bill. The proposal will then use the savings realized from the repeal of these tax credits to lower the corporate tax rate. This is a perfect model for tax reform — close out politically allocated tax favors and loopholes and lower taxes on every business that competes in America.

    While we are gaining broad public support to end these energy tax credits, the takers of government largesse seldom go quietly. The pro-subsidy lobby pushes to extend its giveaway from Uncle Sam — seeking to extend the production tax credit subsidies for wind, biomass and geothermal every four years. This is the umpteenth-and-never-final request for “just four more years.” But a few more years will just lead to a few more years after that. Even before we introduced the legislation that for the first time provides zero tax credits to any energy source, the American Wind Energy Association howled that Congressman Pompeo “seems to misunderstand how a key federal tax incentive has built a thriving American wind manufacturing sector and tens of thousands of American jobs.” Well, we both understand perfectly — handouts are hard to give up.

    After three decades, the tide on energy subsidies has turned. Our nation has squandered hundreds of billions of dollars with these tax credits and has little to show for it. We hold no ill will to any of these energy sources that currently receive tax credits — some or all of them may well become the next great American energy technology. But having dozens of energy handouts leads companies to spend resources lobbying Washington, D.C. rather than tinkering in their garages and labs. Indeed, we are counting on one of these alternatives to succeed. We just know that we have no idea — nor do any of our peers in Congress — which one consumers will ultimately demand. The winner must be determined the old-fashioned way: hard work, innovation, American moxie and superior skills engaged in competition.

    Let’s put a different twist on the old saying “not invented here” by acknowledging that energy technology never has been invented here, on the Potomac, and do away with energy subsidies once and for all.

  • Kansas and Wichita quick takes: Monday November 28, 2011

    FHA risk. Today a Wall Street Journal Review & Outlook piece notes a government housing agency that has deteriorating finances. From What Housing Risk? The FHA says there’s nothing for taxpayers to worry about. Oh-oh. “Mr. Gyourko notes that while the FHA’s loan exposure has grown to more than $1 trillion this fiscal year from $305 billion at the end of 2007, the agency hasn’t “increased its capital reserves commensurately.” Sure enough, the Department of Housing and Urban Development recently reported that the FHA’s capital reserves are 0.24%, a far cry from the 2% statutory minimum.” The FHA itself disagrees, saying its books are “sound.” … FHA wants to expand into offering prime loans, the mortgages made to people with good credit, and it has been doing that. But this is an area that is served by traditional, private sector lenders, and now a government agency wants to compete. … Concluding, the Journal writes: “Far from making ‘spurious’ claims, Mr. Gyourko is doing a public service by chronicling the FHA’s reckless expansion at a time when the housing market needs less government intervention, not more of it. The fury of the FHA’s response shows that he’s onto something.”

    Boeing in Wichita. The Wichita Eagle runs down the details on the possible exit of Boeing from Wichita in Analysts: Loss of Boeing would hurt city, region. A few points of discussion: Is Boeing raising the possibility of departure as a ploy for economic incentives? … “With looming defense budget cuts, the threat of plant closures makes politicians more aware of what’s at stake, he [aerospace analyst Richard Aboulafia] said. It will help Boeing win allies in Congress working against the cuts.” He also mentioned the “threats of defense cuts.” But we ought to be welcoming cuts in defense spending. It means that resources will be freed for other things that people really want. … I also wonder: Are aerial refueling tankers a relic of a different era of warfare, the Cold War? And is defense spending a good economic development policy for Wichita, or any city?

    Wichita City Council. Wichita City Council will not meet this week, as it is the fifth Tuesday of a month. … Next week’s meeting will take up a proposal by Southfork Investment LLC, a group headed by Jay Maxwell, asking for the formation of a new tax increment financing (TIF) district. … According to city documents, the project is near 47th Street South and I-135. It is planned for 50 acres and one million square feet of retail, hotel, restaurants and office space. For comparison, Towne East Square has slightly less than 1.2 million square feet of space. There will be a medical park on an additional 22 acres. … It appears that all the TIF financing will be pay-as-you go, which is a recent revision to the Kansas TIF law. No bonds would be sold. Instead, the increment in property tax would be refunded to the developer as it is paid. There’s also a joining of TIF and special assessments, where TIF revenue will be used to pay special assessment taxes. … Only a simply majority vote is needed to form the TIF district after the December 6 public hearing. There will have to be redevelopment plans approved after that, and those require a two-thirds majority.

    Harm of public-sector unions. “Mr. Siegel observes that public-sector unions have ‘become a vanguard movement within liberalism. And the reason for that is it’s the public sector that comes closest to the statist ideals of McGovern and post-McGovern liberals. And that is, there’s no connection between effort and reward. You’re guaranteed your job. You’re guaranteed your salary increase. There’s a kind of bureaucratic equality.’ In turn, he continues, ‘this vanguard becomes in the eyes of many liberals the model for the middle class. Public-sector unions are what all workers should be like. Their benefits are the kind of benefits everyone should get.’” … Much more in the Wall Street Journal at The New Tammany Hall: The historian of the American city on what Wall Street and the ‘Occupy’ movement have in common, and how government unions came to dominate state and local politics.

    Rep. Hedke, author of new book, to speak. This Friday (December 2nd) the Wichita Pachyderm Club features Kansas Representative Dennis Hedke speaking on “Energy and environmental policy.” Hedke is the author of the just-published book The Audacity of Freedom, described as an “unequivocal challenge to the Socialist-Marxist-Communist principles being pushed upon freedom loving Americans by entities and individuals both within and outside the United States.” In his forward to the book, Speaker of the Kansas House of Representatives Mike O’Neal writes: “Dennis Hedke’s The Audacity of Freedom is a timely and welcome “from the heart” wake-up call for those who value freedom and America. Unapologetically, Hedke does not mince words in describing the combination of crises that threaten our country. His irrefutable and precise recitation of compelling facts and refreshingly candid faith and patriotism are infectious. He exhorts us not to stand by and suffer any longer the fools who have been insulting our collective intelligence and bringing us dangerously close to a socialistic irrelevance in the world. His book, in short, is important.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers: On December 9: Beccy Tanner, Kansas history writer and reporter for The Wichita Eagle, speaking on “The Kansas Sesquicentennial (150th) Anniversary.” … On December 16: David Kensinger, Chief of Staff to Kansas Governor Sam Brownback. … On December 23 there will be no meeting. The status of the December 30th meeting is undetermined at this time. … On January 6: Kansas Senator Garrett Love. … On January 13: Speaker of the Kansas House of Representatives Mike O’Neal, speaking on “The untold school finance story.” … on January 20: Sedgwick County Commissioner Karl Peterjohn.

    Even quicker. Brownback prepares K-12 funding overhaul … Brownback tweet tattling a national story. Example from CNN: The girl who dared to tweet about Gov. Brownback. … The Chevy Volt: Detroit’s Hottest Car: “Industry watchers are preparing for the Volt to undergo a recall to fix whatever problem the car’s lithium-ion battery pack has that seems to be causing the vehicles to spontaneously burst into flames.” … The Bipartisan War on Liberty: “Liberal and conservative elites agree on one thing: Americans are too free for their own good.” … FDA Considers Mandatory Salt Reductions: “As I noted last month in a Cato podcast with interviewer Caleb Brown, the FDA’s new initiative plunges it deeper into social engineering than it has gone in the past. It’s one thing to limit adulteration or contamination of foods, or the use of mysterious chemical additives; it is another to order the reformulation of recipes to reduce intake of a substance that 1) occurs naturally in virtually all foods; 2) is beneficial to health in many circumstances; and 3) has been sought out and purposely added to the human diet through recorded history.” … Camera experiments to start soon in federal courts in Kansas.

    Myth of spending cuts. Nick Gillespie of Reason says that only by “obscuring and obfuscating basic math” can we be told there will be spending cuts.

  • Supercommittee fails at tiny goal

    With it apparent that the United States Congress Joint Select Committee on Deficit Reduction (the “Supercommittee”) has failed to reach an agreement, we need to step back a moment and realize just what a tiny task the committee was given.

    The committee’s goal was to achieve $1.2 trillion in deficit reduction over the next ten years. That’s $120 billion per year, on average.

    For context, in fiscal year 2011, which ended on September 30th, 2011, federal government expenditures were $3.6 trillion, and deficit was $1.3 trillion.

    This means that the committee’s annual goal of $120 billion is 3.3 percent of last year’s spending, and 9.2 percent of the last year’s deficit.

    This is why the supercommittee’s goal must be described as very small and modest. Yet it could not be achieved. Congress could not agree to reduce spending by 3.3 percent, when the real goal we need to meet is 36 percent, if we ever wanted a balanced budget. This failure has large implications on our future. If we can’t achieve such a modest goal, how will we solve the real problems?

    Since the committee failed, an automatic sequestration, or cutting, process will go into effect. But that won’t happen until 2013 — if it happens at all.

    Spending cuts, or not?

    Besides the failure of the supercommittee to meet such a small goal, we must realize that spending, even if the sequestration takes place, will continue to rise. The cuts that sequestration would impose are cuts not from previous year spending, but cuts from budgeted spending, and that spending is always rising. Veronique de Rugy explains in her article Federal Spending Without & With Sequester Cuts: “When the public hears ‘cut,’ it thinks that spending has been significantly reduced below current levels, not that spending has increased. Thus, calling a reduced growth rate of projected spending a ‘cut’ leads to confusion, a growing deficit, and an ever-larger burden for future generations.”

    Her article contains a chart, presented below, of future federal spending with and without sequestration. There’s not much difference.

  • Unemployment is worse than if there had been no stimulus

    Many people remember that President Barack Obama promised that the unemployment rate would not top eight percent if the stimulus was passed. The actual rate has been around nine percent or higher for the past two years, reaching 10.1 percent in October 2009.

    What’s really telling about the ineffective Obama stimulus — in fact, the futility of his entire economic program — is that unemployment has been worse than what his administration predicted it would be if the stimulus had not been passed.

    The following chart from e21 illustrates, showing the predicted path of the unemployment rate with and without the stimulus, and what actually happened. The accompanying article is Revisiting unemployment projections.

  • Kansas and Wichita quick takes: Thursday November 3, 2011

    Energy bill to be introduced today. According to a press release, U.S. Representative Mike Pompeo of Wichita will introduce the “Energy Freedom and Economic Prosperity Act.” This bill would eliminate all tax credits related to energy production. For more, see Pompeo to introduce ‘Energy Freedom and Economic Prosperity Act.’

    Crony capitalism disputed. At yesterday’s meeting of the Sedgwick County Commission, chair Dave Unruh objected to my use of the term “crony capitalism” on the basis of the term having a pejorative connotation. A dictionary definition of “crony” is a “close friend especially of long standing.” Applied to government, the implication is that jobs or favoritism is given based on friendship or patronage. But when talking about capitalism, the term “crony capitalism” the definition is “Government spending on business only aggravates the problem. Too many businesses have successfully lobbied for special favors and treatment by seeking mandates for their products, subsidies (in the form of cash payments from the government), and regulations or tariffs to keep more efficient competitors at bay.” This is the description given by Charles G. Koch in his Wall Street Journal piece Why Koch Industries Is Speaking Out: Crony capitalism and bloated government prevent entrepreneurs from producing the products and services that make people’s lives better. It precisely describes what happened when the county granted a forgivable loan to Johnson Controls. More about this issue is available here.

    Kansans For No Income Tax. The new group Kansans for No Income Tax is, according to its website, “a nonprofit working to educate Kansas taxpayers about the benefits of eliminating the state income tax.” The problem, as the group sees it: “Kansas has the 19th highest state and local tax burden in the country and our economic outlook is ranked 37th in the nation. With this economic environment, it is no surprise that Kansas continues to lose businesses, revenue and its citizens. We cannot continue down the path of reckless spending and policy that includes one year fixes to get us by. We must instead focus on a long-term path to prosperity for our state. This path includes the regulation of our tax base with less volatile taxes paired with a more business friendly regulation environment.” … The groups is conducting a bus trip across Kansas this Friday and Saturday. More information, including locations and times, is in this press release.

    Misguided efforts to improve capitalism. From Eamonn Butler: Ludwig von Mises — A Primer on how efforts by government to intervene in markets fail: Indeed, our efforts to manipulate the market economy, and make it conform to a particular vision, are invariably damaging. Capitalism is superbly good at boosting the general standard of living by encouraging people to specialise and build up the capital goods that raise the productivity of human effort. But when we tax or regulate this system, and make it less worthwhile to invest in and own capital goods, then capitalism can falter. But that is not a “crisis of capitalism,” explains Mises. It is a crisis of interventionism: a failure of policies that are intended to “improve” capitalism but in fact strangle it. One common political ideal, for example, is “economic democracy” — the idea that everyone should count in the production and allocation of economic goods, not just a few capitalist producers. But according to Mises, we already have economic democracy. In competitive markets, producers are necessarily ruled by the wishes of consumers. Unless they satisfy the demands of consumers, they will lose trade and go out of business. If we interfere in this popular choice, we will end up satisfying only the agenda of some particular political group. A more modest notion is that producers’ profits should be taxed so that they can be distributed more widely throughout the population. But while this shares out the rewards of success, says Mises, it leaves business burdened with the whole cost of failure. That is an imbalance that can only depress people’s willingness to take business risks and must thereby depress economic life itself.

    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.

  • Kansas and Wichita quick takes: Thursday October 13, 2011

    Wichita city leaders too cozy with developers? Yesterday I participated in a KAKE Television news story where I explained the need for pay-to-play laws in Wichita and Kansas. These laws generally restrict officeholders from participating in votes or activities that would enrich their campaign contributors. In the story I said “What I, and some of my political allies object to, is what is happening in plain sight: In that there is a relatively small group of people — and their spouses and people who work at their companies — who regularly contribute to a wide variety of city council members, both political liberals and political conservatives, because they know that they are going to be coming to the city council and asking for taxpayer money.” Officeholders and the developers who contribute deny there is a connection between contributions and votes. Curiously, these developers generally don’t make contributions to school board members, county commissioners, state legislators, or federal representatives. Actually, it’s not so curious: It’s primarily the Wichita City Council that is able to vote to give them money. I would say the contributors are acting rationally. … If there is no connection between contributions and votes or consideration, there should be no problem in getting the council to agree to some form of pay-to-pay law for Wichita. An example is a charter provision of the city of Santa Ana, in Orange County, California, which states: “A councilmember shall not participate in, nor use his or her official position to influence, a decision of the City Council if it is reasonably foreseeable that the decision will have a material financial effect, apart from its effect on the public generally or a significant portion thereof, on a recent major campaign contributor.” … KAKE correspondent Deb Farris reported that Wichita Mayor Carl Brewer doesn’t look at the list of campaign contributors. I wonder: does he send thank you letters to his contributors? … Video and story at Wichita City Leaders Too Cozy With Developers?

    Obama economic strategy questioned. This year’s Nobel prize in economics went to Thomas J. Sargent of New York University and Stanford University’s Hoover Institution, and Christopher A. Sims of Princeton University. In its reporting, the Wall Street Journal explained (A Nobel for Non-Keynesians: People’s expectations about government policy make it difficult for officials to affect the economy in the ways they intend to): “The Swedish economists announcing the award emphasized, correctly, the importance of Messrs. Sargent’s and Sims’s thinking about the role people’s expectations play in economic decision making and the larger economy. But what they failed to mention is that their work has also offered empirical evidence that the school of thought known as Keynesian economics — which believes that government can turn a flagging economy around with the right combination of fiscal ‘stimulus’ (generally government spending) and monetary policy — is fallible.” In further explanation, the Journal writes: “One of Mr. Sargent’s key early contributions, along with University of Minnesota economist Neil Wallace, was the idea that people’s expectations about government fiscal and monetary policy make it difficult for government officials to affect the economy in the ways they intend to. If, for example, people get used to the Federal Reserve increasing the money supply when unemployment rises, they will expect higher inflation and will adjust their wage demands higher also. The result: The lower unemployment rate that the Fed was trying to achieve with looser monetary policy won’t happen. This conclusion was at odds with the Keynesian model, which dominated economic thinking from the late 1930s to the early 1970s. The Keynesian model posited a stable trade-off between inflation and unemployment.” The 1970s however, saw stagflation — both high unemployment and high inflation at the same time, a danger that some feel will grip us in the near future. Keynesianism, of course, is the basis of the economic policy of President Barack Obama and the reason why the economy has not recovered. … While these economists worked on national economies, does the theory of rational expectations apply to state and local governments, meaning that it is very difficult for local government officials to micro-manage their economies through intervention? I think so.

    Public vs. private. One of the curious statements in Rhonda Holman’s Sunday Wichita Eagle editorial (Say ‘no’ to naysayers, October 9, 2011) was where she wrote of the “crowds increasingly assembling downtown for concerts and events.” Curious because not long ago she begrudgingly realized the cool down at the Intrust Bank Arena, writing: “Intrust Bank Arena’s strong performance during its inaugural year of 2010 couldn’t last. And it didn’t.” (Make case for arena, August 19, 2100 Wichita Eagle) I don’t know if these two editorials are at odds with each other. … I have noticed one downtown Wichita venue that seems to have a lot of concerts, that being the Orpheum Theater. That venue doesn’t suffer from government genesis and ownership as does the arena, although the arena’s management is in the hands of the private sector. As part of its restoration the Orpheum may qualify for historic preservation tax credits, a government spending program that I oppose. That subsidy, if obtained, is quite small compared to the total taxpayer funding of the arena.

    Kansas tax policy. Several news outlets have reported on how hard Kansas state officials are working on crafting a new state tax policy. That worries me. The best tax policy is one that is simple and fair to all. The more tax policy is worked on, the more likely it is to contain measures designed to manage the behavior of people and business firms. This would be a continuation of the conceit that the state can manage economic growth, and contrary to the concepts of economic dynamism for Kansas, where fertile ground is created for all companies.

    Petition drive is on. Last Friday citizen activists started the petition drive to give the people of Wichita a chance to vote on crony capitalism or free markets. See Our Downtown Wichita (motto: “Limited government and free markets in Downtown Wichita benefit everyone. Centralized planning and crony capitalism benefit only a few.”) for more information.

    Kansas education scores mixed. From Kansas Reporter: “Kansas students’ performance on reading and math proficiency improved for the 11th consecutive year, according to Kansas State Department of Education’s latest State Report Card for schools released Tuesday. Some 87.6 percent of the students tested turned in scores in the top three of five performance levels for reading and 84.7 percent achieved similar scores in math. But two other performance yardsticks show different results. Statewide Kansas test scores on ACT college entrance exams, which are averaging 22 points out of a perfect 36, have been flat for the past five years. … Most Kansas statewide reading, writing and math scores on the National Assessment of Educational Progress, or NAEP, tests have changed little since 2000, according to the U.S. Education Department, which counts the test results as the broadest national measure of how school systems compare state by state. ‘Fourth-grade math tests have improved significantly, but that’s about it,; said Arnold Goldstein, program director for the federal Education Department’s National Center for Education Statistics.” Complete story on Kansas Reporter at Kansas education scores proved mixed picture of schools’ success.

    ‘Federalists’ author to appear in Wichita. On October 25th Kansas Family Policy Council is hosting an event in Wichita featuring Joshua Charles, a recent KU graduate who has teamed up with Glenn Beck to write the book The Original Argument: The Federalists Case for the Constitution Adapted for the 21st Century. The book debuted at the top of the New York Times Bestseller List in July. … KFPC says “The event will be at Central Christian Church (2900 North Rock Road in Wichita) on Tuesday October 25th at 7:00 pm. Doors will open at 6:30 pm. This is a free event and dessert will be provided for attendees.” RSVP is requested to 316-993-3900 or contact@kansasfpc.com.

    Kansas gas wells appraisals. Some Kansas counties use different methods of gas well valuation for tax purposes, writes Paul Soutar in Kansas Watchdog: “The method used to appraise the tax value of gas wells in Stevens County is ‘not correct or appropriate’ according to a report commissioned for Stevens County and released at their latest meeting. The method is or has been used for at least nine years, possibly since the early 1990s, in nine Southwest Kansas counties covering much of the Hugoton gas field, the ninth highest producing field in the U.S. in 2010.” … The complete investigate report is at Report Says Gas Well Appraisal Method ‘Not Correct or Appropriate’.

    Lieutenant Governor in Wichita. This week’s meeting (October 14th) of the Wichita Pachyderm Club features Lieutenant Governor Jeff Colyer, M.D. speaking on “An update on the Brownback Administration’s ‘Roadmap for Kansas’ — Medicaid Reform” … Upcoming speakers: On October 21st: N. Trip Shawver, Attorney/Mediator, on “The magic of mediation, its uses and benefits.” … On October 28th: U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, speaking on “Spending battles in Washington, D.C.” … On November 4th: Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” … On November 11th: Sedgwick County Commission Members Richard Ranzau and James Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?”

    Urban renewal. “The goal was to replace chaotic old neighborhoods with planned communities.” Planned by government, that is, with all the negatives that accompany. The fascinating video from Reason.tv is titled The Tragedy of Urban Renewal: The destruction and survival of a New York City neighborhood. Its introduction reads: “In 1949, President Harry Truman signed the Housing Act, which gave federal, state, and local governments unprecedented power to shape residential life. One of the Housing Act’s main initiatives — “urban renewal” — destroyed about 2,000 communities in the 1950s and ’60s and forced more than 300,000 families from their homes. Overall, about half of urban renewal’s victims were black, a reality that led to James Baldwin’s famous quip that “urban renewal means Negro removal. … The city sold the land for a token sum to a group of well-connected Democratic pols to build a middle-class housing development. Then came the often repeated bulldoze-and-abandon phenomenon: With little financial skin in the game, the developers let the demolished land sit vacant for years.”

  • Economic freedom in America: The decline, and what it means

    “The U.S.’s gains in economic freedom made over 20 years have been completely erased in just nine.” Furthermore, our economic freedom is still dropping, to the point where we now rank below Canada. The result is slow growth in the private sector economy and persistent high unemployment.

    This is perhaps the most important takeaway from a short new video from Economic Freedom Project, which is a project of the Charles Koch Institute.

    What are the components or properties of economic freedom? These are the factors:

    • The size of government based on expenditures and taxes.
    • Whether property rights are protected under an impartial rule of law.
    • Whether there is a sound national currency, so that peoples’ money keeps its value.
    • Whether people are free to trade with others, both within and outside the country.
    • The regulation of credit, labor, and business.

    Economic freedom is associated with longer lifespans and a higher standard of living, says the video. Excessive government spending and unnecessary regulation are two primary causes for the decline in economic freedom.

    A press release accompanying the video explains the harm government is causes when it destroys economic freedom: “The video illustrates how excessive government spending and regulations are eroding economic freedom in the United States, hampering the growth of the economy and leading to record-breaking unemployment. To make this relationship more tangible to viewers, the video translates current statistics into concrete effects that have a direct impact on viewers’ lives. For example, the video notes the fact that it costs U.S. businesses $1.75 trillion to comply with government regulations and that this money would be enough to hire 43 million workers — more than one-quarter of the U.S. work force.”

    The video explains that faster growth in government spending causes slower growth in the private economy. This in turn has lead to the persistent high unemployment that we are experiencing today.

    This is the second video that the Economic Freedom Project has produced. For coverage of the first, see Economic freedom leads to better lives for all, says video.

    To view the video at the Economic Freedom Project site, click on Episode Two: Economic Freedom in America Today. Or, click on the YouTube video below.

  • Kansas and Wichita quick takes: Monday October 10, 2011

    AFP meeting features former Congressman Tiahrt. Tonight’s (October 10th) meeting of Americans for Prosperity, Kansas features former United States Representative Todd Tiahrt speaking on “How regulations affect our economy.” There will be a presentation followed by a group discussion. Tiahrt represented the fourth district of Kansas from 1995 to 2011. He is presently our states Republican National Committeeman. … This free meeting is from 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.

    Government planning. In an address from 1995, Gerald P. O’Driscoll Jr. spoke on Friedrich Hayek and his ideas on government interventionism. His conclusion should be a caution to those — such as Wichita City Council members and city hall bureaucrats — who believe they can guide the economic future of Wichita through interventions such as TIF districts, grants, forgivable loans, tax credits, tax abatements, sweetheart lease deals, eminent domain, zoning, and other measures: “In all his work, Hayek focused on the self-ordering forces in society. Hayek’s fellow Nobel laureate Kenneth Arrow has suggested that ‘the notion that through the workings of an entire system effects may be very different from, and even opposed to, intentions is surely the most important intellectual contribution that economic thought has made to the general understanding of social processes.’ The Arrovian formulation echoes Adam Smith’s observation that, as a consequence of the interaction of conflicting interests, man is ‘led by an invisible hand to promote an end which was no part of his intention.’ The classic Hayekian statement visualizes economics as analyzing ‘the results of human action but not of human design.’ The economic conception of society is an affront to the conceit of those who would impose order from above. Economic forces defy the will of authoritarians seeking to mold social outcomes. Human beings respond to each government intervention by rearranging their lives so as to minimize its disruptive effects. The resulting outcome may thus be different from and even opposed to the intention of the intervention.” The full lecture is at The Meaning of Hayek.

    Longwell joins Democrats to defeat Republicans. While Wichita city council members are officially non-partisan — meaning they don’t run for election as members of political parties — most members are closely identified with a party. Some, like Jeff Longwell (district 5, west and northwest Wichita), see themselves as leaders in their parties, the Republican Party in this case. Last week, however, Longwell joined with the three Democrats on the Wichita City Council to oppose the votes of three Republicans. (There was a nuance to that vote, but nonetheless Longwell voted with the Democrats.) On Sunday he teamed with left-wing Council Member Janet Miller (district 6, north central Wichita) to write an op-ed that appeared in The Wichita Eagle (Grant helps region). The piece approved increased federal government spending, increased federal government control, and increased centralized planning.

    Optimal size of government. Is government too large? Yes, and trying to determine an optimum size for government is impossible. So says a new policy briefing paper from the Center for Global Liberty and Prosperity, a project of the Cato Institute.

    Can We Determine the Optimal Size of Government? by James A. Kahn. In the executive summary, we can read this: “The massive spending programs and new regulations adopted by many countries around the world in response to the economic crisis of 2008 have drawn renewed attention to the role of government in the economy. Studies of the relationship between government size and economic growth have come up with a wide range of estimates of the ‘optimal’ or growth-maximizing size of government, ranging anywhere between 15 and 30 percent of gross domestic product (GDP).

    This paper argues that such an exercise is ill conceived. Modern growth economics suggests, first, that government policies leave their long-term impact primarily on the level of economic activity, not the growth rate; and, second, that the sources of this impact are multi-dimensional and not necessarily well measured by conventional measures of ‘size,’ such as the share of government spending in GDP.

    In fact, measures of economic freedom more closely relate to per capita GDP than do simple measures of government spending. The evidence shows that governments are generally larger than optimal, but because the available data include primarily countries whose governments are too large, it cannot plausibly say what the ideal size of government is. The data can realistically only say that smaller governments are better, and suggest that the optimal size of government is smaller than what we observe today.”

    Steve Jobs. What is his legacy? From Richard A. Viguerie: “Steve Jobs, Apple Computer’s late founder and CEO, gave the vast majority of his hundreds of thousands of dollars in political contributions to liberal Democrats, such as Nancy Pelosi, Ted Kennedy and California Governor Jerry Brown. Yet it is hard to think of a 21st Century entrepreneur who has done more to empower individuals and free them from the demands of the liberal collective than Steve Jobs did through the invention of the iPod, and iPad and the popularization of personal computing. Through the innovative products Apple brought to market, Jobs proved the collectivist premise of John Kenneth Galbraith’s The Affluent Society to be both absolutely true and utterly wrong.” … More at Steve Jobs’ Conservative Legacy.

    Lieutenant Governor in Wichita. This week’s meeting (October 14th) of the Wichita Pachyderm Club features Lieutenant Governor Jeff Colyer, M.D. speaking on “An update on the Brownback Administration’s ‘Roadmap for Kansas’ — Medicaid Reform” … Upcoming speakers: On October 21st: N. Trip Shawver, Attorney/Mediator, on “The magic of mediation, its uses and benefits.” … On October 28th: U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, speaking on “Spending battles in Washington, D.C.” … On November 4th: Chris Spencer, Vice President, Regional Sales Manager Oppenheimer Funds, speaking on “Goliath vs Goliath — The global battle of economic superpowers.” … On November 11th: Sedgwick County Commission Members Richard Ranzau and James Skelton, speaking on “What its like to be a new member of the Sedgwick County Board of County commissioners?” … On November 18th: Delores Craig-Moreland, Ph.D., Wichita State University, speaking on “Systemic reasons why our country has one of the highest jail and prison incarceration rates in the world? Are all criminals created equal?”

    When governments cut spending. Advocates of government spending argue that if it is cut, the economy will suffer. Is this true? Is government spending necessary to keep the economy functioning? “There is no historical credence to this very popular idea that cutting spending now will actually slow down the economy and actually lead to a double dip recession or an increase in economic stagnation.” This is the conclusion of Dr. Stephen Davies in a short video. As one example — he cites others — Davies explains that there was fear in the United States that the end to massive government spending during World War II would lead to a return of the Great Depression. “In fact, as we know, exactly the opposite happened. As the defense spending of the war years was wound down, and as government was pulled back in other ways as well under the Truman and Eisenhower administrations, the result was an enormous period of sustained growth in the United States and other countries that went through a similar process.” Davies says that economic growth accelerates when government reduces its spending. Reasons include the greater productivity of private sector spending as compared to government spending, and increased confidence of private sector investors. … The video is from LearnLiberty.org, a project of Institute for Humane Studies.