Voice For Liberty

Tag: Regulation

  • Kansas auto dealers benefit from anti-competitive law

    In Johnson County, a car dealer wants to move its dealership five blocks down the street. Amazingly, this simple act requires regulatory agency approval, and while unlikely in this case, existing auto dealers can block such actions under some circumstances.

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

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

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

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

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

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

    We also have to wonder how it could injure “the public welfare” for people to have more choice in automobile dealers. Competition is the customer’s friend. Competition is always in the public interest. New business firms should not have to petition government regulators for permission to enter a market.

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

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

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

    This law is bad for all Kansans except for one special interest group: those who own automobile dealerships. It ought to be repealed.

  • Five questions with Mike Pompeo

    Originally published in The Washington Times. Below, U.S. Representative Mike Pompeo from Wichita explains his opposition to tax credits for all energy production, the problems with over-regulation of business, and the state of the economic recovery. As Decker notes, Pompeo’s stance against energy tax credits, which includes the production tax credit for wind power, is contrary to that of several Kansas politicians, including Kansas Governor Sam Brownback and U.S. Senator Jerry Moran. These have editorialized in favor of tax expenditures to support the wind power industry.

    5 Questions with Rep. Mike Pompeo: “We can’t spend our way out of this mess”
    By Brett M. Decker
    The Washington Times

    Rep. Mike R. Pompeo was elected in 2010 by the 4th Congressional District of Kansas. A native of Wichita and graduate of the United States Military Academy at West Point, he patrolled the Iron Curtain as an Army officer before the Berlin Wall came down in 1989. After leaving active duty, Mr. Pompeo attended Harvard Law School, where he was as an editor of the Harvard Law Review. Before running for office, he managed two small businesses. He founded Thayer Aerospace, which grew to employ more than 400 workers, and was president of Sentry International, a company that manufactures oilfield equipment. You can find out more about the congressman’s work at: pompeo.house.gov.

    Decker: You have authored a bill to eliminate all energy tax credits. That can’t be popular for a congressman from a corn state. What’s so important about your legislation that it is worth ticking off constituents back home?

    Pompeo: The federal government has been a proven failure in picking winners and losers in the energy sector. Democrats and Republicans alike have used our tax code to reward their favorite energy sources — that is, ones in their home district — with tax loopholes. This causes every American taxpayer to subsidize those industries and causes consumers to pay higher prices for energy. This results in terrible energy policy and even worse tax policy. More importantly, taxpayers are getting hammered both coming (higher taxes) and going (higher energy costs).

    My bill, the Energy Freedom and Economic Prosperity Act (HR 3308), would eliminate all energy tax subsidies from our Internal Revenue Code and turn that savings toward lowering our corporate tax rate to foster job growth here in America. The bill is revenue neutral and supported by every major conservative group, such as: Americans for Prosperity, Americans for Tax Reform, Club for Growth, Council for Citizens Against Government Waste, Freedom Action, Heritage Action, National Taxpayers Union, 60 Plus Association and Taxpayers for Common Sense. It gets rid of every tax credit related to energy; it favors no company, no person and no energy source. It treats them all equally. That is the American way.

    When I’m at home, Kansans tell me they want honest and serious leadership from their elected representatives, not the business-as-usual policies that got us into this economic mess. I am working hard to provide solutions to meet a most pressing goal: preserving our way of life for our kids and grandkids.

    Decker: I understand that you would use savings from the elimination of energy subsidies to lower the corporate tax rate. How would that work and why is it necessary?

    Pompeo: My goal in getting rid of tax loopholes is not to raise taxes. Our problem in Washington, D.C. is not a revenue problem, it is a spending problem. My goal is to make the tax code fairer and flatter and reward energy sources that lower costs for consumers. So, any increase in taxes that occurs because these tax goodies are eliminated will be offset by lower taxes for every single business in America. My bill would mean fewer tax loopholes for the powerful and the connected, and lower tax rates for everyone willing to take risk and engage in American commerce. This is the perfect combination and the way our tax code needs to be reformed. The Energy Freedom and Economic Prosperity Act does this in one small place — the realm of energy tax credits — and it provides a model for the broader tax reform that will set our nation on a prosperous course for decades to come.

    Sen. Jim DeMint [of South Carolina] has sponsored a companion provision which garnered the support of a majority of the Republican Conference, including Minority Leader Mitch McConnell [of Kentucky], during a recent vote on the Senate Floor. In the House, my bill enjoys the support of strong conservatives, including Budget Committee Chairman Paul Ryan [of Wisconsin]. I believe there is a growing consensus that my bill represents a free-market model for how to enact real, comprehensive tax reform.

    Decker: Before coming to Washington last year, you spent your career in the private sector, including building a successful aerospace company from the ground up. I have had many job creators tell me that if they had to start all over again that creating their own company would no longer be worth all the hassle, harassment and heartache. What are the most damaging government hindrances to entrepreneurs today?

    Pompeo: I’d start a business again in a heartbeat. Indeed, I hope that one day I may get the chance to do so when my mission here in Washington, D.C. is complete.

    It is true that President Obama has unleashed a slew of regulations upon small business. I struggled against that regulatory burden firsthand while running a company in Kansas. It is difficult to create jobs when you face an overwhelming tax burden, as well as countless compliance and reporting rules. I’ve been there. I’ve grappled with these issues while keeping the lights on and making payroll. That’s why we need to roll back government interference and grow our economy so people can find jobs. The energy sector is a perfect example where the Obama administration’s actions are harming both businesses and consumers. Having run a small business that provided oil and gas exploration equipment to domestic energy producers, I have seen this firsthand. Why, for example, has this president’s Environmental Protection Agency attacked with intent to destroy the coal industry that provides over 50 percent of all American power? Layer upon layer of regulations aimed at — in the president’s own words — “bankrupting” that industry. Why, for example, has this president put 10 (ten!) agencies on the beat to regulate hydraulic fracturing — a process that has been effectively regulated by states for decades with a tremendous safety record.

    These are the reasons some entrepreneurs are reluctant to start businesses and take risks. We can do better, we can create jobs in America, and I am confident the next administration will.

    Decker: Every time I sit down with a business leader, I get an earful about 2002’s Sarbanes-Oxley Act that dramatically altered federal accounting regulations and 2010’s Dodd-Frank Act to supposedly reform Wall Street. Should these laws be repealed? Why or why not?

    Pompeo: I’ve heard a great deal more about Dodd-Frank than I have Sarbanes-Oxley from Kansans. Both laws have had very significant and negative consequences for our economy. I support the repeal of Dodd-Frank in its entirety. Its goal to protect taxpayers from failures of the nation’s largest financial institutions is not accomplished and, instead, has negatively impacted community and regional banks along with their customers. It has also created yet another “do-good” organization, the Consumer Financial Protection Board. The CFPB will not protect consumers. Instead, it will add to the cost for every hardworking taxpayer who seeks to purchase a home with a mortgage or who wants to engage in other banking activity. Once again, the federal government, in its effort to protect citizens, fails in its mission and instead creates a bureaucracy that eclipses any good that might have been sought.

    Decker: The Obama administration talks an awful lot about an economic recovery, yet the unemployment rate is still sky high, record numbers of Americans are on food stamps and the national debt continues to mount due to runaway federal spending. What does such an anemic recovery say about the real state of our economy?

    Pompeo: This very weak data shows this is not a recovery that will truly provide the jobs and opportunity our nation must have and the next generation deserves. The $831 billion “economic stimulus,” passed into law in 2009, dug the hole deeper and did not accomplish what the president said it would – keeping unemployment below 8 percent. This should come as no surprise. Businesses have no interest in hiring new employees in this environment of higher taxes, regulatory uncertainty and the staggering costs of Obamacare. Republicans were swept into power in 2010 because Americans saw our solutions for recovery: less spending, less government and less regulation. All of these things are what will kick-start our recovery. We can’t spend our way out of this mess. That’s been tried and it failed. The real economy, private-sector job growth, will return when leaders in Washington, D.C. recognize what Kansans already know: The solutions are not to be found in ever-expanding government. The solutions are found through freedom, liberty, innovation and rewarding earned success.

  • Wichita taxicab regulations likely to impede progress

    Tomorrow the Wichita City Council will consider new taxicab regulations that, city hall hopes, will improve tax service in Wichita. But the regulations create high barriers to entry that stifle entrepreneurship and market competition, likely dooming the program to fail.

    The problem is that some feel that Wichita’s taxicab companies are not delivering good service. There have been complaints about both the drivers and the conditions of cabs. Wichita Mayor Carl Brewer said he was tired of hearing complaints about the taxicabs. He has tired slowly, however, as it’s taken eleven years of Brewer as either city council member or mayor for a solution to be proposed.

    In some cities, the permit or medallion to operate a cab costs many thousands of dollars, even hundreds of thousands in New York City and other large cities. Wichita’s proposed fees are not exorbitant: Just $200 annually for a taxicab company and $100 annually per taxicab. (In Wichita there are three taxicab companies, but two have the same ownership.)

    Further, Wichita does not restrict the number of taxicab companies, the number of cabs, or prohibit cruising for fares, as do some cities. This sounds like light-handed regulation, which if so, should induce new entrants to the market for providing taxi service. The market competition thereby created would normally be expected to drive down fares and improve service.

    But Wichita’s regulations create substantial barriers to entering the taxicab market. Some of the most restrictive include these: A central office, staffed at least 40 hours per week; a dispatch system operating 24 hours per day, seven days per week; enough cabs to operate city-wide service, which the city has determined is ten cabs; and a supervisor on duty at all times cabs are operating.

    These requirements, in effect, eliminate the small-time entrepreneur and the solo operator from entering the market. Things like dispatch systems, a central office, a fleet of ten taxicabs, and supervisors sound good. But these are costly, and they aren’t all necessary to get started in the business, or even perhaps to thrive. Since some of the complaints are the lack of available cabs at the airport, we need more cabs, not fewer.

    If a person wanted to simply concentrate on picking up fares from the airport or cruising downtown looking for street hails, a dispatch system is not necessary. Neither is a supervisor or an office.

    Yes, a cab without a dispatch system will miss out on fares that other cabs will be able to service. But the decision as to whether to use a dispatch system should be made by taxicab drivers or owners, not the city. Certainly, for some drivers and companies the economic benefit of such systems will become apparent, and they will invest in them. Others won’t.

    The regulations in Wichita make it difficult for new taxicab operators to enter the market, leaving the city’s citizens and visitors served by a near-monopoly of two companies. That hasn’t worked out well, at least according to city officials. A new government regulator with a new set of regulations to enforce isn’t likely to help create a thriving market for taxicabs in Wichita.

    But these market-based considerations and potential solutions, evidently, are not considered by the city. At a workshop on the topic, Council Member Michael O’Donnell (district 4, south and southwest Wichita) noted the near-monopoly of taxicabs companies and asked if the city had looked at ways of creating more competition in the market?

    The presenter of the proposed regulations, a public management fellow in the city manager’s office, said, simply, “we have not, no.” (We’re left to wonder if this proposed regulatory expansion is just an exercise, or make-work, for a recent graduate of the school of public administration at Wichita State University.) City Manager Robert Layton interjected, adding “we are believers in the free market system,” saying that he hoped that the new regulations and fare structure would make it easier to enter the market. I don’t think anyone at the meeting picked up on the irony.

  • Kansas and Wichita quick takes: Wednesday April 25, 2012

    Income growth in Kansas and Sedgwick County. Emily Behlmann of Wichita Business Journal reports: “Personal income in Kansas grew by 2.71 percent from 2009 to 2010, or by 1.76 percent per capita, according to estimates released Wednesday by the U.S. Bureau of Economic Analysis. That’s slower than the national growth rate of 3.7 percent overall, the bureau reports. And as the database below shows, Sedgwick County’s growth rate was slower than both the national and state averages.” (Database: Kansas counties post slower-than-average personal income growth). This is more evidence that our current economic development policies in Wichita and Sedgwick County are failing. See Wichita economic development isn’t working.

    Tax reform is needed in Kansas. A message from Americans for Prosperity, Kansas: “Kansas has the second highest top marginal individual income tax rate amongst neighboring states. Is it any wonder that the state had a net loss of over 17,000 taxpayers between 2000 and 2009? Americans for Prosperity is advocating for aggressive tax reform that includes two key elements: An aggressive and immediate reduction in the individual income tax rate, and a ‘trigger’ that sets aside future state tax revenue growth above three percent to fund future reductions in the income tax. Passage of a tax bill containing these two ingredients will help slow government spending and encourage investment and job-creation. … The economic indicators show that our state needs aggressive tax reform. Key measurements of Kansas’ stagnant growth show: From 2001 to 2010, Kansas ranked 40th in the country in net domestic population migration, representing the smallest growth amongst neighboring states. (Source: U.S. Census Bureau). Kansas lost more than 39,000 private sector jobs from 2001 to 2010. (Source: Bureau of Labor & Statistics). From 2000 to 2009, Kansas ranked 43rd in the United States in taxpayer net migration, resulting in a net loss of 17,574 tax filers. (Source: Bureau of Labor & Statistics). … The longer Kansas waits to enact meaningful tax reform, the further we’ll fall behind. Kansas legislators have a tremendous opportunity to pass a tax bill that lowers the individual income tax burden and establishes a growth trigger to fund future reductions.” AFP has a system to help citizens to contact their legislators by clicking here.

    Protect us from onion prices. Specifically, volatility in onion prices, as according to CNN the onion is the only commodity for which futures trading is banned. Futures contracts are the mechanism by which speculation is accomplished. Tim Cavanaugh explains in How Will Obama Protect Us From Onion Speculators? at Reason.

    Silencing ALEC. Fred Smith of the Competitive Enterprise Institute contributes this letter to the Wall Street Journal, criticizing those who attempt to shut down debate through intimidation, the target being American Legislative Exchange Council (ALEC): “The attack on the American Legislative Exchange Council (ALEC) is part of a broader attack by those seeking to drive all market voices from the marketplace of ideas. (“Shutting Down ALEC,” Review & Outlook, April 18). As the Founders realized, ‘factions’ — what we now call ‘special interests’ — are an unavoidable aspect of democracy. The Founders’ solution was not to suppress factions, but to ‘set faction against faction’ to ensure vigorous debate. The attack on ALEC runs counter to that spirit. It is a concerted effort to silence one faction by driving productive economic voices from the policy debate. … When businesses seek to expose and reduce the harmful consequences of capricious legislation, that is both their right and good for democracy. When market voices are excluded from the policy debate, the only voices left are those motivated purely by ideology. And as history shows, the greatest harm to nations comes from ideologues who believe they know what’s best for everybody. … Our Founders gave us a system based on the battle of ideas. If critics of the free market believe they have a strong case, they should seek to win that battle openly, rather than by silencing the opposition through intimidation. What ALEC’s opponents seek is nothing less than the sabotage of democracy. It is especially unfortunate when businesses retreat from backing free-market groups like ALEC when they come under pressure. America needs more CEOs willing to stand up for free enterprise. Readers who agree should let those CEOs know now.”

    TSA in Wichita, and in general. Wichita meteorologist Mike Smith mentions an incident at the Wichita airport involving TSA handling of a young girl. It’s a nationwide story now. See Latest TSA Outrage — In Wichita This Time . … Speaking of TSA, John Stossel recently had a segment on his television show. Did you know that the security screening at the San Francisco airport is not handled by the TSA? Makes me want to go there. Stossel reports: “A leaked 2007 TSA study found that San Francisco’s private screeners were twice as good at detecting fake bombs as TSA screeners.” More from him at The TSA Just Won’t Let Go: Governments cling to power even when private solutions work best.

    An extra comma. A recent article in the Lawrence Journal-World illustrates the harm of using too many commas, a problem, I fear, I have, myself. The article started with this sentence: “A proposal to reduce the Kansas Earned Income Tax Credit would throw thousands of working families into poverty, religious and social service, advocates said Tuesday.” A literal reading of this sentence would indicate a boom in people participating in “religious” and “social service.” That’s not what happened. The unintended use of the last comma changed the meaning of the sentence.

    If I wanted America to fail. Americans for Limited Government has a new site named FreeMarketAmerica. Its video If I wanted America to fail is being viewed thousands of times, and is the subject of some controversy. I suggest viewing this powerful statement. In a press release, ALG writes: “The success of Free Market America’s launch shows that Americans are still very interested in the ideals of free markets and limited government, and stopping the Big Government environmentalists nationwide. Our video, ‘If I wanted America to fail,’ has more than half a million views on YouTube in just a few days,’ said Bill Wilson, president of Americans for Limited Government. … ‘The widespread success of this project shows that Americans are willing to stand up and fight for freedom and prosperity and against the heavy hand of big government. With many in the conservative media and conservative bloggers spreading this message and taking our content viral, the Big Green agenda will soon be facing an uphill battle.’”

  • Regulation for the sake of business

    There are many examples of how the conventional wisdom regarding regulation is wrong, That wisdom being Republicans and conservatives are in bed with government, seeking to unshackle business from the burden of government regulation. Democrats and liberals, on the other hand, are busily crafting regulations to protect the middle class from the evils of big business. As it turns out, both Democrats and Republicans love creating regulations, and big business loves these regulations. Business often uses government regulation as way to harm its competitors or gain advantage for itself, which is contrary to the principles of free markets and capitalism.

    Holman W. Jenkins., Jr. explains how regulation works in the real world: “When some hear the word “regulation,” they imagine government rushing to the defense of consumers. In the real world, government serves up regulation to those who ask for it, which usually means organized interests seeking to block a competitive threat. This insight, by the way, originated with the left, with historians who went back and reconstructed how railroads in the U.S. concocted federal regulation to protect themselves from price competition. We should also notice that an astonishingly large part of the world has experienced an astonishing degree of stagnation for an astonishingly long time for exactly such reasons.” (Let’s Restart the Green Revolution, Wall Street Journal.)

    Another example of a big business using regulation as a competitive weapon comes from 2005 when Walmart came out in favor of raising the national minimum wage. Providing an example of how regulation is pitched as needed for the common good, Walmart’s CEO said that he was concerned for the plight of working families, and that he thought the minimum wage level of $5.15 per hour was too low. If Walmart — a company the political left loves to hate as much as any other — can be in favor of increased regulation of the workplace, can regulation be a good thing? Had Walmart discovered the joys of big government?

    The answer is yes. Walmart discovered a way of using government regulation as a competitive weapon. This is often the motivation for business support of regulation. In the case of Walmart, it was already paying its employees well over the current minimum wage. At the time, some sources thought that the minimum wage could be raised as much as 50 percent and not cause Walmart any additional cost — its employees already made that much.

    But its competitors didn’t pay wages that high. If the minimum wage rose very much, these competitors to Walmart would be forced to increase their wages. Their costs would rise. Their ability to compete with Walmart would be harmed.

    In short, Walmart supported government regulation as a way to impose higher costs on its competitors. It found a way to compete outside the marketplace. It abandoned principles of free markets and capitalism, and provided a lesson as to the difference between capitalism and business. And it did it while appearing noble.

    Many, particularly liberals and progresives, make no distinction between business and capitalism. But we need to learn to recognize the difference if we are to have a thriving economy based on free-wheeling, competitive markets that foster innovation, or continue our decline into unproductive crony capitalism.

    In the following excerpt from his book The Big Ripoff: How Big Business and Big Government Steal Your Money, author Timothy P. Carney explains that big business is able to use regulation as a blunt and powerful tool against competitors, and also as a way to improve its image, just like Walmart asking for a higher minimum wage.

    How does regulation help big business?

    Excerpt from The Big Ripoff: How Big Business and Big Government Steal Your Money, by Timothy P. Carney

    If regulation is costly, why would big business favor it? Precisely because it is costly.

    Regulation adds to the basic cost of doing business, thus heightening barriers to entry and reducing the number of competitors. Thinning out the competition allows surviving firms to charge higher prices to customers and demand lower prices from suppliers. Overall regulation adds to overhead and is a net boon to those who can afford it — big business.

    Put another way, regulation can stultify the market. If you’re already at the top, stultification is better than the robust dynamism of the free market. And according to Nobel Laureate economist Milton Friedman:

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

    There is an additional systemic reason why regulation will help big business. Congress passes the laws that order new regulations, and executive branch agencies actually construct the regulations. The politicians and government lawyers who write these rules rarely do so without input. Often the rule makers ask for advice and information from labor unions, consumer groups, environmental groups, and industry itself. Among industry the stakeholders (beltway parlance to describe affected parties) who have the most input are those who can hire the most effective and most connective lobbyists. You can guess this isn’t Mom and Pop.

    As a result, the details of the regulation are often carefully crafted to benefit, or at least not hurt, big business. If something does not hurt you, or hurts you a little while seriously hindering your competition, it is a boon, on balance.

    Another reason big business often cries “regulate me!” is the goodwill factor. If a politician or bureaucrat wants to play a role in some industry, and some executive says, “get lost,” he runs the risk of offending this powerful person. That’s bad diplomacy. Bureaucrats, by their nature, do not like to be told to mind their own business. Supporting the idea of regulation but lobbying for particular details is usually better politics.

  • Wichita decides to join sustainable communities planning

    At yesterday’s Wichita City Council meeting, the council took up the issue as to whether the city would participate in the REAP sustainable communities planning process. All council members except Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) voted in favor of participation.

    Critics of government planing processes such as this are worried that the planning process would subject us to additional control by the federal government. These are the so-called strings that are thought to accompany federal grants.

    (For those who are interested in what strings look like, here’s an example of one that is relatively innocuous. A HUD document titled Program Policy Guidance OSHC-2012-01 explains “Applicants that reach a certain qualifying score under the Regional Planning Grant Program or the Community Challenge Grant Program will receive PSS designation. PSS designation provides your entity access to bonus points for selected other HUD grant programs, technical assistance, and other capacity building opportunities that will strengthen future efforts to apply to the program.” REAP has been awarded this status, as it complied with this “string.”)

    James Clendenin (district 3, southeast and south Wichita), asked a series of questions of Joe Yager, chief executive officer of REAP, as to whether these concerns were true. Yager said no, there are no strings accompanying the grant. But what about after the planning process is over in three years? Will the plan be forced upon us, Clendenin asked?

    Yager answered no, that local governing bodies would have to vote to implement any of the ideas or programs that resulted from the plan. Nothing will be forced upon us, nothing is mandated, he said. We wold simply have a “toolkit” of things to use.

    This view or attitude — that local elected officials will protect us from the harmful elements that will emerge from the plan — is dangerously naive. First, in his short time in office, Clendenin has regularly voted for expansions of government planning, power, and spending. He doesn’t stand out from most other council members, not even the Republican members (except for one), as they also regularly vote for these things.

    Second, we know that after the plan is complete there will be the argument that since we have the plan, that since we spent three years and $2.2 million on the process, we might as well go ahead and implement it.

    Then, there will be the future grants and undoubtedly increased local spending required to implement the plan.

    It’s also naive of Clendenin to ask a professional planner like Yager questions about the desirability of planning. What answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

    One of the things Wichita has agreed to do is to provide in-kind services to the planning consortium in the form of staff time. Wichita City Council Member Michael O’Donnell (district 4, south and southwest Wichita) asked a series of questions determining whether some work might go unperformed as staff members devote time to the planning process.

    John Schlegel, Wichita director of planning, assured him no, that no work would go undone as a result of staff members taking on new responsibilities as part of the city’s in-kind contribution.

    Two years ago a similar issue arose in Sedgwick County, where staff time was devoted to the oversight of the Intrust Bank Arena. At the time I reported this: “Sedgwick County Commissioner Dave Unruh told the Wichita Eagle that the county did not hire any new staff to perform work that has an estimated value of $2.6 million. My question is this: Is this evidence that there was $2.6 million of slack time in county employee’s schedules? How were they able to get this vast amount of work accomplished? Perhaps after the arena work that has occupied $2.6 million of staff time is complete, we could hire out this staff to earn revenue for the county, as it seems they will have time on their hands.”

  • ALEC should resist liberal pressure groups

    Today’s Wall Street Journal explains how left-wing activists are using fear of the racism label to shut down free speech and debate. The target of their current smear campaign is American Legislative Exchange Council, or ALEC.

    Liberals can’t stand ALEC because it is a strong and influential advocate for free market and limited government principals in state legislatures. Liberals accuse ALEC of supplying model legislation which may influence the writing of actual state law, or even become state law in some cases. Of course, liberal advocacy groups do this too, but they don’t let that get in the way of their criticism of ALEC.

    The reality is that all sorts of people and special interest groups seek to influence the writing of laws. But for laws to take effect — no matter who proposes them — they must be passed by legislatures and signed by the chief executive (or a veto must be overturned).

    The false charges of racism are particularly troubling, as no one wants to be labeled as such. That’s why scoundrels demonize their opponents with charges of racism, writes the Journal, and it’s become a powerful weapon for left-wing activists: “The ugly, race-baiting anti-ALEC campaign is typical of today’s liberal activism. It’s akin to the campaigns to smear libertarian donors Charles and David Koch and to exploit shareholder proxies to stop companies from giving to political campaigns or even the Chamber of Commerce. The left these days isn’t content merely to fight on the merits in legislatures or during elections. If they lose, they resort to demonizing opponents and trying to shut them down. The business community had better understand that ALEC won’t be the last target.”

    As it turns out, the motivations of some contributors to ALEC are quite narrow. Coca-Cola wanted help from ALEC only in the opposition to soft drink taxes: “So Coke executives are happy to get ALEC’s help in their self-interest but head for the tall grass when ALEC needs a friend.”

    Liberals accuse ALEC of being a front group for corporations, promoting only legislation that advances the interests of corporations or business at the expense of others. When you examine specific examples of these charges, the proposals being criticized often reduce taxes for everyone or reduce harmful and unnecessary regulations. If ALEC does promote legislation that caters to special interest groups, it should stop doing so.

    Besides services to legislators, ALEC provides a valuable service to the public: The Rich States, Poor States publication that examines why some states perform better in economic growth and opportunity than others. The fifth edition was released last week.

    Recently a city council member from a small town asked me if there were resources to help city council or county commission members understand and apply the principals of free markets and limited government to city and county governments. I looked and asked a few people. The answer is no, there appears to be no such resource. This seems like a growth opportunity for ALEC or a new organization. There are several well-known organizations that strive to advance the size and scope of city and county governments, and these need a counter-balance.

    Shutting Down ALEC

    Playing the race card to silence a free-market policy voice

    Is it suddenly disreputable to advocate free-market policies? That’s the question raised by a remarkable political assault on the American Legislative Exchange Council (ALEC), which promotes reform in the 50 states. Led by former White House aide Van Jones, various left-wing activists and media are bullying big business to cut off ALEC’s funding. So much for free and open debate.

    Founded in 1973, ALEC is a group of state lawmakers who meet to share and spread conservative policy ideas. ALEC’s main focus is fiscal and economic policy, notably at the moment pension and lawsuit reform, tax and spending limitation, and school choice. For years it labored in obscurity, its influence rising or falling with the public mood. But after conservatives made record gains in state legislatures in 2010, the left began to target ALEC for destruction.

    Continue reading at the Wall Street Journal (no subscription required)

  • In Kansas, planning will be captured by special interests

    The government planning process started in south-central Kansas will likely be captured by special interest groups that see ways to benefit from the plan. The public choice school of economics and political science has taught us how special interest groups seek favors from government at enormous costs to society, and we will see this at play again over the next few years.

    This week the Sedgwick County Commission voted to participate in a HUD Sustainable Communities Regional Planning Grant. While some justified their votes in favor of the plan because “it’s only a plan,” once the planning process begins, special interests plot how to benefit themselves at the expense of the general public. Then once the plan is formed, it’s nearly impossible to revise it, no matter how evident the need.

    An example of how much reverence is given to government plans comes right from the U.S. Supreme Court in the decision Kelo v. New London, in which the Court decided that government could use the power of eminent domain to take one person’s property and transfer it to someone else for the purposes of economic development. In his opinion for the Court, Justice Stevens cited the plan: “The City has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” Here we see the importance of the plan and due reverence given to it.

    Stevens followed up, giving even more weight to the plan: “To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that preceded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment.”

    To Stevens, the fact that the plan was comprehensive was a factor in favor of its upholding. The sustainable communities plan, likewise, is nothing but comprehensive, as described by county manager Bill Buchanan in a letter to commissioners: “[the plan will] consist of multi-jurisdictional planning efforts that integrate housing, land use, economic and workforce development, transportation, and infrastructure investments in a manner that empowers jurisdictions to consider the interdependent challenges of economic prosperity, social equity, energy use and climate change, and public health and environmental impact.”

    That pretty much covers it all. When you’re charged with promoting economic prosperity, defending earth against climate change, and promoting public health, there is no limit to the types of laws you might consider.

    Who will plan?

    The American Planning Association praised the Court’s notice of the importance of a plan, writing “This decision underscores the importance for a community to have a comprehensive development plan formulated through a democratic planning process with meaningful public participation by everyone.”

    But these plans are rarely by and for the public. Almost always the government planning process is taken over and captured by special interests. We see this in public schools, where the planning and campaigning for new facilities is taken over by architectural and construction firms that see school building as a way to profit. It does not matter to them whether the schools are needed.

    Our highway planning is hijacked by construction firms that stand to benefit, whether or not new roads are actually needed.

    Our planning process for downtown Wichita is run by special interest groups that believe that downtown has a special moral imperative, and another group that sees downtown as just another way to profit at taxpayer expense. Both believe that taxpayers across Wichita, Kansas, and even the entire country must pay to implement their vision. As shown in Kansas and Wichita need pay-to-play laws the special interests that benefit from public spending on downtown make heavy political campaign contributions to nearly all members of the Wichita City Council. They don’t have a political ideology. They contribute only because they know council members will be voting to give them money.

    In Wichita’s last school bond election, 72 percent of the contributions, both in-kind and cash, was given by contractors, architects, engineering firms and others who directly stand to benefit from new school construction, no matter whether schools are actually needed. The firm of Schaefer Johnson Cox Frey Architecture led the way in making these contributions. It’s not surprising that this firm was awarded a no-bid contract for plan management services for the bond issue valued at $3.7 million. This firm will undoubtedly earn millions more for those projects on which it serves as architect.

    The special interest groups that benefit from highway construction: They formed a group called Economic Lifelines. It says it was formed to “provide the grassroots support for Comprehensive Transportation Programs in Kansas.” Its motto is “Stimulating economic vitality through leadership in infrastructure development.”

    A look at the membership role, however, lets us know whose economic roots are being stimulated. Membership is stocked with names like AFL-CIO, Foley Equipment Company, Heavy Constructors Association of Greater Kansas City, Kansas Aggregate & Concrete Associations, Kansas Asphalt Pavement Association, Kansas Contractors Association, Kansas Society of Professional Engineers, and PCA South Central Cement Promotion Association. Groups and companies like these have an economic interest in building more roads and highways, whether or not the state actually needs them.

    The planners themselves are a special interest group, too. They need jobs. Like most government bureaucrats, they “profit” from increasing their power and influence, and by expansion of their budgets and staffs. So when Sedgwick County Commissioner Jim Skelton asks a professional planner questions about the desirability of planning, what answer does he think he will get? It’s not that the planners are not honest people. But they have a vested economic and professional interest in seeing that we have more government planning, not less.

    And we have evidence that planners watch out for themselves. It is not disputed that this planning grant benefits Regional Economic Area Partnership (REAP). Sedgwick County Commissioner Richard Ranzau says that John Schlegel, Wichita’s Director of Planning, told him that “acceptance of this grant will take REAP to another level, because right now they are struggling, and this will help plot the course for REAP.” He said that REAP, which is housed at the Hugo Wall School of Public Affairs at Wichita State University, needs to expand its role and authority in order to give it “something to do.”

    We see that REAP is another special interest group seeking to benefit itself. In this case, our best hope is that REAP engages in merely make-work, that the plan it produces is put on a shelf and ignored, and that the only harm to us is the $1.5 million cost of the plan.

    By the way, did you know that Sedgwick County Commissioner Dave Unruh, who voted in favor of the plan that benefits REAP, is a board member of REAP, and may become the next chairman? Special interest groups know how to play the political game, that’s for sure.

  • For Koch critics, facts aren’t part of the equation

    A Saturday op-ed in the Lawrence Journal-World begins with: “What is it, or why is it, that the name Koch, particularly here in Lawrence and Kansas, seems to trigger such angry, passionate and negative responses from a certain segment of the community, particularly among some at Kansas University?”

    It’s a good question. When people insert themselves into politics, there will be debate and criticism. I don’t think Charles and David Koch expect a free pass. But some of the online comments written in reaction to this op-ed show, however, that facts and reason won’t stand in the way of those who use demonization of Charles G. Koch and David H. Koch, principals of Wichita-based Koch Industries, to advance their political agendas.

    Simons’ op-ed is generally accurate in its depiction of Charles and David Koch, although the company says Koch has not contributed to FreedomWorks, as is reported. But the reader comments — that’s where things really go off the mark.

    Here’s a comment that is representative of many: “They would use their wealth to suppress innovation and competition. It’s another case of ‘I’ve got mine, and I want to make sure you don’t get yours.’ Why don’t they set up a loan company to encourage small businesses? Why don’t they hire more workers and give their present workers more benefits? Instead they want to buy the government, so they can control things instead of empowering others.”

    As to suppressing innovation and competition: For decades the Kochs have supported free markets and competition through capitalism, which are the engines of innovation, not barriers. Last year Charles Koch, in the Wall Street Journal, strongly advocated for capitalism over cronyism. On the relationship between government and business, he wrote that too many business firms have practiced “crony capitalism”: lobbying for special favors, subsidies, and regulations to keep competitors — who may be more efficient — out of the way.

    While it’s more difficult than practicing cronyism, competing in open markets assures that firms that efficiently provide goods and services that consumers demand are the companies that thrive, Koch added. It is these efficient firms that raise our standard of living. When politically-favored firms are propped up and bailed out, our economy is weakened: “Subsidizing inefficient jobs is costly, wastes resources, and weakens our economy.”

    In the introduction to The Morality of Capitalism, Tom G. Palmer explains further how genuine capitalism is a system of innovation and creativity:

    The term ‘capitalism’ refers not just to markets for the exchange of goods and services, which have existed since time immemorial, but to the system of innovation, wealth creation, and social change that has brought to billions of people prosperity that was unimaginable to earlier generations of human beings. Capitalism refers to a legal, social, economic, and cultural system that embraces equality of rights and ‘careers open to talent’ and that energizes decentralized innovation and processes of trial and error. … Capitalist culture celebrates the entrepreneur, the scientist, the risk-taker, the innovator, the creator. … Far from being an amoral arena for the clash of interests, as capitalism is often portrayed by those who seek to undermine or destroy it, capitalist interaction is highly structured by ethical norms and rules. Indeed, capitalism rests on a rejection of the ethics of loot and grab. … Capitalism puts human creativity to the service of humanity by respecting and encouraging entrepreneurial innovation, that elusive factor that explains the difference between the way we live now and how generation after generation after generation of our ancestors lived prior to the nineteenth century.

    The charge of “I’ve got mine, and I want to make sure you don’t get yours” is often leveled against the wealthy, and for some, that may drive their policies. It’s important to know, though, that the policies of economic freedom that the Kochs have promoted are more important to poor people than the wealthy. A glance at the Economic Freedom of the World reports confirms what history has taught us: Countries with market-based and free, or relatively free, economies become wealthy. Poor countries generally do not have market-based economies and therefore little economic freedom, although the ruling class usually lives well.

    There is concern that economic freedom is on the decline in America, and that our future is threatened by this.

    When the writer asks “Why don’t they set up a loan company to encourage small businesses?” I wold refer them to Koch Ventures and Koch Genesis, two companies that do this.

    Finally — for this writer — comes the allegation that Charles and David Koch want to buy government “so they can control things instead of empowering others.” This charge is not supported by facts and what the Kochs have actually done for decades. Institutions founded or supported by the Kochs such as Cato Institute, Mercatus Center at George Mason University, and Americans for Prosperity Foundation are dedicated to limited government and personal liberty. This, along with their support of capitalism — which, as Palmer explained above, leads to freedom, creativity, and individual empowerment for everyone.

    Another comment contained “In their ‘ideal’ libertarian world they could do what they want and pollute whenever they want.” This is yet another ridiculous charge.

    A statement on the KochFacts website states “recent critics have also claimed that Koch is one of the nation’s top 10 polluters. This study confuses pollution with permitted emissions, which are carefully regulated by the U.S. EPA and other agencies. The index labels as ‘polluters’ Ford Motor, General Motors, GE, Pfizer, Eastman Kodak, Sony, Honeywell, Berkshire Hathaway, Kimberly Clark, Anheuser Busch and Goodyear — corporations, like Koch companies, with significant manufacturing in the U.S. Emissions, a necessary by-product of manufacturing, are strictly monitored and legally permitted by federal, state and local governments.”

    Wait a minute: Didn’t the federal government take over General Motors? And GE and Berkshire Hathaway: Aren’t those run by personal friends of Barack Obama?

    The reality is that if we want the things these companies make for us, we must accept some emissions — pollution, if you will. The good news, however, is that manufacturing has become much more efficient with regards to emissions, and Koch Industries companies have lead the way. One report from the company illustrates such progress: “Over the last three years, Koch Carbon has spent $10 million to enhance environmental performance, including $5 million for dust abatement at one of its petroleum coke handling facilities. These investments have paid off. In 2008, Koch Carbon’s reportable emissions were 6.5 percent less than in 2000, while throughput increased 10.4 percent.”

    Even when Koch Industries does not agree with the need for specific regulations, the company, nonetheless, complies. Writing about an increase in regulation in the 2007 book The Science of Success: How Market-Based Management Built the World’s Largest Private Company, Charles Koch explained the importance of regulatory compliance: “This reality required is to make a cultural change. We needed to be uncompromising, to expect 100 percent of our employees to comply 100 percent of the time with complex and ever-changing government mandates. Striving to comply with every law does not mean agreeing with every law. But, even when faced with laws we think are counter-productive, we must first comply. Only then, from a credible position, can we enter into a dialogue with regulatory agencies to determine alternatives that are more beneficial. If these efforts fail, we can then join with others in using education and/or political efforts to change the law.”

    Koch companies have taken leadership roles in environmental compliance, explains another KochFacts page: “In 2000, EPA recognized Koch Petroleum Group for being ‘the first petroleum company to step forward’ to reach a comprehensive Clean Air Act agreement involving EPA and state regulatory agencies in Minnesota and Texas. Despite fundamental policy disagreements, then-EPA Administrator Carol Browner acknowledged Koch’s cooperation. She characterized the agreement as ‘innovative and comprehensive’ and praised the ‘unprecedented cooperation’ of Koch in stepping forward ahead of its industry peers.” Browner was no friend of industry, and had a “record as a strict enforcer of environmental laws during the Clinton years,” according to the New York Times.

    These types of facts are not relevant to many of those who left comments to the Journal-World piece. To the political left, the facts must not be allowed get in the way of a useful political narrative.

    Koch Industries and Koch brothers are assets to state

    By Dolph C. Simons, Jr., Lawrence Journal-World.

    What is it, or why is it, that the name Koch, particularly here in Lawrence and Kansas, seems to trigger such angry, passionate and negative responses from a certain segment of the community, particularly among some at Kansas University?

    … The answer to the question at the beginning of this column is that the Kochs are conservatives, some would say “ultra conservatives.” They support organizations such as the Cato Institute, Citizens for a Sound Economy, Americans for Prosperity and Freedom Works. Their critics have been quick to try to fault them for supposedly funneling money to the tea party movement. Some say the brothers have given more than $100 million to these conservative organizations.

    Charles and David Koch have been the lightning rods for liberal, anti-conservative forces in this country, and it is that likely liberal-leaning faculty members and administrators at KU, as well as at many other universities, have been critical of the Kochs in order to keep peace with their staffs.

    The sad, phony or hard-to-understand part of this situation is that the two Koch brothers attribute the success of their family-owned business to the guiding principles espoused by their market-based management philosophy.

    … Charles and David Koch have championed limited government, economic freedom and personal liberty and they have challenged excessive government spending. Their financial giving efforts — political and charitable, both personal and through their company and foundations — all have been lawful.

    This being the case, it would seem KU officials, as well as other state officials, should be trying to work with Koch Industries, Charles and David Koch and their foundations on ways to benefit the university and the state. They should be trying to embrace the Kochs rather than acting as if they were pariahs.

    Continue reading at Koch Industries and Koch brothers are assets to state.