Voice For Liberty

Tag: Regulation

  • Unintended consequences of credit card regulation

    While supporters of 2009 Credit CARD (Card Accountability Responsibility and Disclosure) Act promoted it as good for credit card consumers, actual experience has been different, writes Todd Zywicki in The Wall Street Journal. Limits on how credit card issuers can charge their customers has driven people to payday lenders and pawn shops for credit, the very thing lawmakers wanted to curtail.

    Key points of Zywicki’s article include:

    • For many Americans the law has meant higher interest rates, increases in fees, and reduced credit limits.
    • Unintended consequence number one: If companies can’t raise interest rates on risky borrowers, they raise interest rates on all borrowers, even those with spotless records.
    • Unintended consequence number two: If companies can’t price risk efficiently and rationally, they cut off customers, which pushes them to payday lenders, which are really expensive.
    • Unintended consequence number three: If companies can’t price risk efficiently and rationally, they will reduce their lending, which means credit card limits are lowered.
    • Banks also drop customers altogether: “In his letter to shareholders last spring, Jamie Dimon of J.P. Morgan Chase reported that, ‘In the future, we no longer will be offering credit cards to approximately 15% of the customers to whom we currently offer them. This is mostly because we deem them too risky in light of new regulations restricting our ability to make adjustments over time as the client’s risk profile changes.’” … “Meet the new payday loan customers,” wrote Zywicki.
    • “Nontraditional financial products serve an important role in the marketplace for the millions of consumers who count on them. Even pawn shops and loan sharks are more palatable and less expensive than the bounced checks and utility shut-offs that would result in their absence.”

    Some states are stepping up regulation of payday lenders, which is one of the places people go to for loans if they can’t get a credit card. Montana is such a state, having recently passed — by a citizen ballot measure — a 36 percent interest rate cap on loans. As a result, the Great Falls Tribune reports that nearly all such lenders have closed, with some staying open to collect on existing loans without making new loans.

    Comments left to the Wall Street Journal article wonder where the authors of this bill — Former Connecticut Senator Chris Dodd and Representative Barney Frank of Massachusetts — were aware of these entirely predictable consequences. Or, were they just out for a power grab?

    No matter what the answer, this is yet another of endless examples of where government regulation — whether well intended or not — harms the people it is intended to help, and others along the way.

    Dodd-Frank and the Return of the Loan Shark

    In the name of consumer protection, Congress has pushed more Americans outside the traditional banking system.
    By Todd Zywicki

    The least surprising event of 2010 was that, in the wake of new federal limits on how credit-card issuers can price risk and adjust interest rates, more Americans had to go to payday lenders, pawn shops and local loan sharks in order to get credit. It’s simply the latest installment in the old story of regulators thinking they can wish away the unintended consequences of consumer credit regulation.

    Proponents of the 2009 Credit CARD (Card Accountability Responsibility and Disclosure) Act argued that it would protect Americans from exploitative credit-card companies by limiting penalty fees and interest-rate adjustments. For many Americans, though, the law meant higher interest rates, an increase in other fees, and reduced credit limits.

    Continue reading at The Wall Street Journal (subscription required)

  • Rationing of health care, now and on the horizon

    A Wall Street Journal article explains that — contrary to the promises of President Barack Obama and supporters of his health care plan — rationing of health care is happening and will become more pervasive.

    Citing the story of Avastin (see below), the authors write “The Avastin story is emblematic of the government’s broader agenda to ration care based on cost and politics. Once ObamaCare comes into full force, such rationing will be pervasive. When the government sees insufficient benefit, all but the wealthiest and most politically connected will have to go without.”

    The article explains the doctrine of “comparative effectiveness,” used in England to ration health care, and how the 2009 stimulus bill allocated $1.1 billion to study this.

    Additionally, end-of-life counseling has been revived through regulation, not legislation. This, the authors write, “might coax the elderly away from life-sustaining but expensive treatments.”

    Where I might disagree with the authors is in this passage:

    There’s an enormous difference between government-imposed rationing and treatment decisions in the private sector. When insurance companies deny coverage — for example, on grounds that treatment is “experimental” or not “medically necessary” — they do so based on contract language agreed to in advance by subscribers. If you don’t like what a particular insurer offers, you’re free to shop around.

    The idea that people can shop around for health insurance is not a reality for most people. For those who receive insurance from their employers, they get what the boss offers, maybe with a few choices. Contrast this with the lightly-regulated automobile insurance market, where policies are available with many options, and insurance companies actively compete for customers. Those on Medicare get what the government provides, although many seniors shop around for a supplemental policy that meets their needs.

    If the health insurance market were less regulated, particularly eliminating the perverse practice of insurance being tied to employment, a market would likely develop where customers would be able to shop for or specify policies that meet their needs. If someone wanted a policy that would pay for experimental, cutting-edge treatments, they could pay an additional amount for such a policy. I have no idea how much extra this option would cost, but I imagine we would be surprised at how little it would be.

    Or, if someone has signed an advance directive indicating that they do not want extraordinary and expensive care at the end of their life, shouldn’t they be allowed to buy policies that specify this as part of the contract between the insurance company and the insured? That could save a lot of money.

    The rationing of health care has implications for economic development in Wichita. The State of Kansas and Wichita are making a large investment in Center of Innovation for Biomaterials in Orthopaedic Research. This center seeks to make advancements in medical devices, including artificial hips and knees. These types of operations, however, are the type of medical care that we can easily foresee will be restricted as the federal government seeks to control spending on health care.

    ‘Death Panels’ Come Back to Life

    The FDA’s restrictions on the drug Avastin are the beginning of a long slide toward health-care rationing.

    By David B. Rivkin Jr. and Elizabeth Price Foley

    Earlier this month, the Food and Drug Administration banned doctors from prescribing Avastin, a potent but costly drug, to patients with advanced-stage breast cancer. According to the FDA, the drug doesn’t offer “a sufficient benefit in slowing disease progression to outweigh the significant risk to patients.” Yet in some clinical trials Avastin has halted the spread of patients’ cancer for months, providing respite to women and their families wracked by physical and psychological pain.

    Ponder the FDA’s justification—there wasn’t “sufficient” benefit in relation to Avastin’s risks. Sufficient according to whom? For your wife, mother or daughter with terminal breast cancer, how much is an additional month of good-quality life worth? And what costs should be weighed? Like all drugs, Avastin has side effects including bleeding and high blood pressure. But isn’t the real cost to these women a swifter, less dignified death? The FDA made a crude cost calculation; as everyone in Washington knows, it wouldn’t have banned Avastin if the drug cost only $1,000 a year, instead of $90,000.

    Continue reading at The Wall Street Journal or at Rivkin’s site.

  • Kansas and Wichita quick takes: Tuesday December 28, 2010

    Hawker Beechcraft deal breaks new ground. When asked by KAKE Television’s This Week in Kansas host Tim Brown if the Hawker Beechcraft deal was good for Kansas, Wichita State University professor H. Edward Flentje said that while the deal was “great news” in the short term, it raised policy questions in the long term. He said he didn’t think the state has invested in a company that is downsizing, with Hawker shrinking by one-third over the past few years. He added that he believed this is the first time the state has a provision of state law to retain jobs, rather than recruit new jobs. Flentje said that other aircraft companies and other businesses will be looking at this. He didn’t use the word “precedent,” but setting one is what has happened. Flentje has issued similar warnings before when he was interim city manager for Wichita. When Bill Warren, a theater owner, asked the city to make an interest-free loan to him, Flentje warned: “There are in this community much larger businesses with much larger employment who may see this opening as something that will open a door for those businesses to come and say, ‘You’ve done it before, you can do it for us.’”

    TSA as fine literature. He grasped me firmly but gently just above my elbow and guided me into a room, his room. Then he quietly shut the door and we were alone. He approached me soundlessly, from behind, and spoke in a low, reassuring voice close to my ear. “Just relax.” Without warning, he reached down and I felt his strong, callused hands start at my ankles, gently probing, and moving upward along my calves slowly but steadily. My breath caught in my throat. I knew I should be afraid, but somehow I didn’t care. His touch was so experienced, so sure. When his hands moved up onto my thighs, I gave a slight shudder, and partly closed my eyes. My pulse was pounding. I felt his knowing fingers caress my abdomen, my ribcage. And then, as he cupped my firm, full breasts in his hands, I inhaled sharply. Probing, searching, knowing what he wanted, he brought his hands to my shoulders, slid them down my tingling spine and into my private area. … Although I knew nothing about this man, I felt oddly trusting and expectant. This is a man, I thought. A man used to taking charge. A man not used to taking “no” for an answer. A man who would tell me what he wanted. A man who would look into my soul and say … “Okay, ma’am,” said a voice. “All done.” My eyes snapped open and he was standing in front of me, smiling, holding out my purse. “You can board your flight now.” (Source unknown, but obviously a brilliant person.)

    Love, not yet seated in House, moves to Senate. In what must be one of the most rapid political promotions in history, Garrett Love, who just won a position in the Kansas House of Representatives, is selected to fill a vacancy in the Kansas Senate. The Hutchinson News reports. Love defeated incumbent Melvin Neufeld in the August primary election. Neufeld campaigned for the Senate seat, but lost to Love by a vote of 101 to 38. It would have been — unseemly? — for Neufeld to have lost to Love in an election, but yet be promoted instead of Love to what most would consider to be a better position in the legislature. … This action leaves the House position that Love won but never filled vacant. Will Neufeld attempt to win this seat, the one he lost? The precinct committeemen and committeewomen of that district will decide. Kansas House District 115 includes Dodge City and counties to the south and west.

    Wichita historic preservation board. A governmental entity that few may know much about is the Wichita historic preservation board. The agenda for an upcoming meeting is here. On the agenda, there are many items like this: “HPC2010-00350 415 N Poplar Re-roof on commercial. ENV Johnson Drug Store.” In this case someone wants to put a new roof on their building. But, it is located within the “environs” of a property that is listed either on the National Register of Historic Places or the Register of Historic Kansas Places, so they need the permission of this board. For properties within a city, the “environs” is any property within a distance of 500 feet of the listed historic property. If you want to do much of anything to your property, you’ve got to get the permission of this board if it’s within a stone’s throw of a historic property.

    Bureaucrats will do what Congress doesn’t. Promises from Congress mean little when the bureaucratic state simply does what it wishes — or what the President wants it to do. Thomas Sowell explains: “The Constitution of the United States begins with the words ‘We the people.’ But neither the Constitution nor ‘we the people’ will mean anything if politicians and judges can continue to do end runs around both. Bills passed too fast for anyone to read them are blatant examples of these end runs. But last week, another of these end runs appeared in a different institution when the medical ‘end of life consultations’ rejected by Congress were quietly enacted through bureaucratic fiat by administrators of Medicare.” Portland Progressive Examiner has more: “Oregon Representative Earl Blumenauer, Democrat, is celebrating a quiet victory: Under new health regulations recently issued by the Obama administration, Medicare recipients will be offered voluntary end-of-life planning, and an opportunity to issue advance health care directives.” The New York Times is blunt, starting its story this way: “When a proposal to encourage end-of-life planning touched off a political storm over ‘death panels,’ Democrats dropped it from legislation to overhaul the health care system. But the Obama administration will achieve the same goal by regulation, starting Jan. 1.”

    Brownback to focus on core. Incoming Kansas Governor Sam Brownback says his budget priorities the “core functions of state government,” specifically “Medicaid, K-12 education, higher education and public safety at the top, in that order.” In an interview with Kansas Reporter’s Gene Meyer and Rachel Whitten, Brownback also said consolidation of agencies may be in order, and that repeal of the one cent sales tax that started this year is “not an option.” He also said he wants to defend the school finance lawsuit more aggressively than the last suit.

    Schools sue again, and again. Parents in Johnson County have sued the state asking that the local option budget cap be lifted. Essentially, the plaintiffs are asking for permission to raise their local property taxes so that more money can be raised for schools. But now Schools for Fair Funding, the coalition of school districts that are suing the state for more money, has intervened in that suit, saying it wouldn’t be fair to let the wealthy school districts raise this tax money. Kansas Reporter has coverage.

  • Kansas and Wichita quick takes: Friday December 10, 2010

    This Week in Kansas. On This Week in Kansas guests Rebecca Zepick of State of the State KS, Joe Aistrup of Kansas State University, and myself discuss Kansas House of Representatives leadership, Governor-elect Brownback’s appointments, and voter ID. Tim Brown is the host. This Week in Kansas airs on KAKE TV channel 10, Sunday morning at 9:00 am.

    Cato scholar to speak on economic freedom. Today’s meeting (December 10) of the Wichita Pachyderm Club features noted Cato Institute scholar, Principal Attorney at the Pacific Legal Foundation, and author Timothy Sandefur. He will discuss his recent book The Right to Earn a Living: Economic Freedom and the Law. A description of the book at Amazon.com reads: “America’s founders thought the right to earn a living was so basic and obvious that it didn’t need to be mentioned in the Bill of Rights. Yet today that right is burdened by a wide array of government rules and regulations that play favorites, rewrite contracts, encourage frivolous lawsuits, seize private property, and manipulate economic choices to achieve outcomes that bureaucrats favor. The Right to Earn a Living charts the history of this fundamental human right, from the constitutional system that was designed to protect it by limiting government’s powers, to the Civil War Amendments that expanded protection to all Americans, regardless of race. It then focuses on the Progressive-era judges who began to erode those protections, and concludes with today’s controversies over abusive occupational licensing laws, freedom of speech in advertising, regulatory takings, and much more.” … Of the book, Dick Armey said: “Government today puts so many burdens and restrictions on entrepreneurs and business owners that we’re squandering our most precious resource: the entrepreneurial spirit and drive of our people. Sandefur’s book explains how this problem began, and what steps we can take to ensure that we all enjoy the freedom to pursue the American Dream.” … The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Tea party regional blogs compiled. Phillip Donovan has compiled a list of top tea party-related blogs by region, and Voice for Liberty in Wichita is on the list. Of my blog, Donovan wrote “Bob Weeks has been blogging the perspective of free markets, personal liberty, and limited government since 2004, long before the ‘tea party movement’ was born.”

    Tax rates still a secret. Rhonda Holman’s Wichita Eagle editorial asks the central question about signage requirements warning customers of Community Improvement Districts that they will be paying higher sales tax: “But if transparency about CIDs is bad for business, how can CIDs be good for citizens and the community?”

    Federal spending oversight. In the U.S. House of Representatives, the actual spending of money happens in the Appropriations Committee, and this committee is a large source of the problems we have with federal spending. The Wall Street Journal column Oversight for the Spenders explains why: “The Members who join the Appropriations subcommittee on, say, agriculture do so precisely because they are advocates of farm spending. They have no interest in subjecting their own programs to greater public scrutiny.” What is the outlook going forward for this committee? Incoming Speaker John Boehner appointed Kentucky’s Hal Rogers as chair. The Journal column says his “spending record rivals that of any free-wheeling Democrat.” A bright spot: reformer Jeff Flake of Arizona is appointed to the committee, but his request to run an investigations subcommittee was not granted. The Journal is not impressed, concluding “Mr. Boehner’s selection of Mr. Rogers is a major disappointment and makes his promises to control spending suspect. If he really wants to change the spending culture, he should unleash Mr. Flake.”

    Slow death for high-speed rail. From Randal O’Toole: “New transportation technologies are successful when they are faster, more convenient, and less expensive than the technologies they replace. High-speed rail is slower than flying, less convenient than driving, and at least five times more expensive than either one. It is only feasible with heavy taxpayer subsidies and even then it will only serve a tiny portion of the nation’s population.”

    Does the New York Times have a double standard? John LaPlante in LaPlante: NY Times leaky double-standard: “Many newspapers in America reprint articles from the New York Times on a regular basis. So their editorial slant is of importance beyond the (direct) readership of the Gray Lady. Compare and contrast how the Times treated two recent leaks: ‘The documents appear to have been acquired illegally and contain all manner of private information and statements that were never intended for the public eye, so they won’t be posted here. — New York Times, on the Climategate emails, Nov. 20, 2009. … ‘The articles published today and in coming days are based on thousands of United States embassy cables, the daily reports from the field intended for the eyes of senior policy makers in Washington. … The Times believes that the documents serve an important public interest, illuminating the goals, successes, compromises and frustrations of American diplomacy in a way that other accounts cannot match.. — New York Times, on the WikiLeaks documents, Nov. 29, 2010.” I’ll let you make the call.

    Wichita Eagle Opinion Line. “The party of the wealthy triumphs again. Congratulations, Republican voters. By extending the handout to the wealthy, you just increased the national debt.” I would say to this writer that action to prevent an increase in income tax from occurring is not a handout. The only way that extending the present tax rates qualifies as a handout is if you believe that the income people earn belongs first to government. This is entirely backwards and violates self-ownership. Further, the national debt — actually the deficit — has two moving parts: the government’s income, and its spending. We choose as a nation to spend more than the government takes in. That is the cause of the deficit.

  • Kansas and Wichita quick takes: Monday December 6, 2010

    Cato scholar to speak on economic freedom. Friday’s meeting (December 10) of the Wichita Pachyderm Club features noted Cato Institute scholar, Principal Attorney at the Pacific Legal Foundation, and author Timothy Sandefur. He will discuss his recent book The Right to Earn a Living: Economic Freedom and the Law. A description of the book at Amazon.com reads: “America’s founders thought the right to earn a living was so basic and obvious that it didn’t need to be mentioned in the Bill of Rights. Yet today that right is burdened by a wide array of government rules and regulations that play favorites, rewrite contracts, encourage frivolous lawsuits, seize private property, and manipulate economic choices to achieve outcomes that bureaucrats favor. The Right to Earn a Living charts the history of this fundamental human right, from the constitutional system that was designed to protect it by limiting government’s powers, to the Civil War Amendments that expanded protection to all Americans, regardless of race. It then focuses on the Progressive-era judges who began to erode those protections, and concludes with today’s controversies over abusive occupational licensing laws, freedom of speech in advertising, regulatory takings, and much more.” … Of the book, Dick Armey said: “Government today puts so many burdens and restrictions on entrepreneurs and business owners that we’re squandering our most precious resource: the entrepreneurial spirit and drive of our people. Sandefur’s book explains how this problem began, and what steps we can take to ensure that we all enjoy the freedom to pursue the American Dream.” … The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Success factor for liberals identified. On last night’s installment of The Right, All Along: The Rise, Fall & Future of Conservatism, economist Arthur Laffer issued this assessment of the presidency of Bill Clinton: “Two groups I love are principled conservatives and unprincipled liberals. And Bill Clinton I viewed as an unprincipled liberal. And he did one of the best jobs — one of the best presidents we’ve ever had.” It’s an interesting observation by Laffer that for liberals to have success, they must be unprincipled.

    Joshua Blick for Wichita City Council. A website for a candidate for Wichita City Council district 4 is up and running. Joshua Blick’s site says: “Joshua Blick is an active leader in District 4; he is the President of his neighborhood association and a local business owner. Joshua also passionately supports the growth and sustainability of new jobs for Wichita, and improving the quality of living for every resident in this great city.” District 4 covers the southwest side of Wichita. The incumbent council member, Paul Gray, may not run again because of term limits.

    Washington is why the economy is not growing. Mark Tapscott of the Washington Examiner runs through the reasons why the economy is not growing: “On every front, the federal government is creating more investment-killing tax uncertainty, issuing endless pages of new bureaucratic regulations on the economy, and preventing firms from taking actions that could create hundreds of thousands of new positions and kick-start a muscular recovery with real legs. … Obama is also tightening the federal bureaucracy’s regulatory straightjacket on economic growth. As the Heritage Foundation reported a week before the election, the hidden tax of regulation costs at least $1.75 trillion annually. … Then there is the Obama Permitorium on energy exploration and production here in the United States, which threatens even greater long-term damage to the economy’s ability to generate new jobs and growth. … Instead, Obama is spending billions of tax dollars to subsidize alternative energy programs that cannot possibly replace the energy produced by oil, coal or natural gas until 2030 at the earliest.” The full article is Mark Tapscott: Washington is why the economy is not growing.

    Rasmussen polls from last week. Current Congress not appreciated: “Most voters continue to give this Congress poor marks in its closing days, and they still don’t believe the national legislature has passed anything to significantly improve life in America.” Full story here. Ability of Congress to substantially cut spending is doubted, especially by Republicans. See Most Voters Don’t Expect Big Spending Cuts From New Congress. About half of Americans believe that lenghty unemployment benefits increase the number of unemployed people. See Americans Question Whether Extended Unemployment Benefits Do More Harm Than Good. Almost half say repeal of Obamacare would be good for the economy. See Health Care Law.

    Kansas Democrats not quite dead. Tim Carpenter of the Topeka Capital-Journal looks at the results of the November election in Kansas and the future for Kansas Democrats. An important process to watch is reapportionment, when new legislative districts will be drawn: “The reapportionment debate is likely to have an urban vs. rural character as districts are reconfigured to correspond with population growth in urban counties, especially Johnson County, and erosion of residents in rural areas of the state. The math isn’t clear yet, but results of the 2010 Census could trigger loss of two rural Senate districts and six rural House districts.” As for the future of Democrats, two observers say “They are back in the Stone Ages” and “We’re seeing a definite balance-of-power shift.” One observer warns that breakdown of the “union of Republican social and economic conservatives” could be an opening for Democrats and moderate Republicans. See KS Dems: Weaker, but not dead.

    Young Republicans group started. Lynda Tyler of Kansans for Liberty is shepherding a new group of young Republicans. Writes Lynda: “Do you know a high school student, child, grandchild in the teen years who is interested in learning more about politics and getting involved? Perhaps you would like to get them involved. Chase Blasi has started the Sedgwick Teen Age Republicans group known as STARS. We are sponsoring them and would like to help the group grow so see below for details on their next meeting.” Lynda is hosting a Christmas Party for this group. Write to her at lyndaty@swbell.net for more information.

  • Wichita trash cooperative: gateway to mandatory recycling?

    Opposition to a proposed trash pickup cooperative in Wichita focuses mostly on two issues: the free market, and specific problems with the program.

    Conservative city council members — Paul Gray and Sue Schlapp in this case — advocate for a free market in trash collection. I appreciate that. But it is confusing to hear them advocate for a free market in trash collection when at the same time they vote for big-spending economic development programs that don’t work.

    Brent Wistrom’s Wichita Eagle article Questions pile up as Wichita eyes trash plan does a fine job of laying out the unanswered questions and issues left to be resolved — if they can be solved.

    These issues are important. But here’s the biggest reason to oppose this plan: it’s a gateway to mandatory recycling in Wichita.

    Recycling, while held up by its supporters as a moral imperative if we care anything about the planet, is a gigantic waste of resources. There are only a few settings in which recycling makes any sense at all. Automobiles and commercial cardboard are two such situations.

    In almost any other area, recycling uses more resources than it saves, despite the claims of its proponents.

    We need to look no farther than economics to learn the true value of an activity or a resource. In the case of recycling — except for the narrow examples mentioned above — most people have to pay to have their recycled goods hauled away. Or, they must incur costs themselves in hauling them somewhere that will accept them.

    Yes, Waste Connections in Wichita has a recycling program that pays people to recycle. Or does it? The program works this way: First, people pay $3.75 per month for recycling bins and their pickup twice monthly. By filling the recycling bin people can earn points which they may redeem for rewards.

    The roundabout approach to paying people to recycle only highlights the unfavorable economics of recycling. Why doesn’t Waste Management simply pay people for their recycled goods? Or why don’t they pick them up for free?

    The fact that Waste Management won’t engage in a straightforward transaction with its recycling customers allows the company to appear to be politically correct towards recycling, while at the same time escaping the fact that household recycling simply does not pay. Here’s Daniel K. Benjamin explaining the economics of curbside recycling in Eight Great Myths of Recycling:

    The numbers I have presented here avoid these problems and make clear that, far from saving resources, curbside recycling typically wastes resources — resources that could be used productively elsewhere in society.

    Indeed, a moment’s reflection will suggest why this finding must be true. In the ordinary course of everyday living, we reuse (and sometimes recycle) almost everything that plays a role in our daily consumption activities. The only things that intentionally end up in municipal solid waste — the trash — are both low in value and costly to reuse or recycle. Yet these are the items that municipal recycling programs are targeting, the very things that people have already decided are too worthless or too costly to deal with further. This simple fact that means that the vast bulk of all curbside recycling programs must waste resources: All of the profitable, socially productive, wealth-enhancing opportunities for recycling were long ago co-opted by the private sector.

    Commercial and industrial recycling is a vibrant, profitable market that turns discards and scraps into marketable products. But collecting from consumers is far more costly, and it results in the collection of items that are far less valuable. Only disguised subsidies and accounting tricks can prevent the municipal systems from looking as bad as they are.

    That’s right: The sober assessment of the price system is that in the context of households, recycling is a waste of resources. Although if people want to pursue it as a pastime or hobby, I have no objection.

    Nonetheless, supporters of recycling such as Wichita City Council member Janet Miller still believe in the false moral imperative of recycling. At last week’s workshop on Wichita trash, she said “There is only a finite amount of space on earth to bury stuff. At some point there’s not going to be any more room to bury stuff.”

    The fact is that landfills occupy a minuscule fraction of available space. We have plenty of space for trash.

    But the misinformed or uninformed attitude of Miller and a few others on the council — and maybe some bureaucrats too — is that recycling activity by Wichitans must increase, no matter how much of a waste of time it is.

    Answer this question: once Wichita has a mandatory, city-controlled and city-regulated trash pickup process in place, what’s to stop city hall from mandating that we recycle?

    Nothing, as far as I can tell.

    That’s the best reason for opposing takeover of our trash system by the city.

  • Kansas and Wichita quick takes: Monday November 29, 2010

    Louisville success factor may be gone. The secret sauce behind redevelopment of downtown Louisville, Kentucky may no longer be available to cities attempting to replicate Louisville’s success, such as it is. The Washington Post reports in the article Sen. Mitch McConnell’s earmark power credited for revitalizing Louisville: “The once grand downtown of this city on the Ohio River is shabby, as the nation’s old downtowns tend to be. Magnificent tall cast-iron-fronted buildings sit empty. So do historic brick tobacco warehouses, surrounded in razor wire, tagged with graffiti. But the downtown of Kentucky’s largest city also has a spectacular redeveloped waterfront featuring bike paths and open vistas, the spanking-new KFC Yum Center sports arena, and a medical complex of several hospitals that employ nearly 20,000 people, treat tens of thousands and conduct cutting-edge research. This resurgence is a result of civic vision, pride, tenacity — and the impressive earmark performance of Louisville’s Slugger: Mitch McConnell (R), Kentucky’s longest-serving senator and the powerful Senate minority leader.” … Louisville is cited as a success story by Wichita’s planners. But the earmark money that helped Louisville is probably not available to Wichita in the near term, and may not ever be available again, at least as it has been in the past. Plus, Kansas doesn’t have a senator with the clout of McConnell, and not one that calls Wichita home. McConnell lives in Louisville.

    Loss of earmarks lamented. In the Wichita Eagle article Earmark ban could kill some Kansas projects, well, the title pretty much describes the problem according to some. In particular, the town of Augusta would have had a difficult time affording a levee if not for earmarks. It is mentioned that earmarks are about one percent of the total federal budget. One comment writer, defending the process, wrote “Earmarks return our money to us.” To which we must counter: Why send the money away to Washington in the first place, only to have to fight to get it back?

    “No” to citizen-powered democracy. The Newton Kansas argues that a “practical” state like Kansas shouldn’t let its citizens place propositions on the ballot through the petitions process. The editorial says that the California budget process has led to “serious economic turmoil in that state.” It doesn’t explain why, but the writer is probably referring to the fact that the California budget must be passed by a two-thirds majority of both houses of the legislature, rather than by a simple majority as in Kansas. The editorial also says that ballot measures induce spending by proponents and opponents, and some money may come from out of state. Special interests may get involved, too. And administrative costs of adding “pages” to the ballot must be paid for, too. … I must inform the Newton Kansas that the Kansas statehouse is already overrun by special interests, out-of-state interests already spend a lot on our elections and lobbying, and anyone who has observed our legislative process up close would not use the word “practical” to describe it. … The primary reason the ruling class don’t like the citizen initiative process is that one of the first things citizens may do is impose term limits on their elected officials.

    Wichita IMAX may not be exclusive. In another installment of his series of love letters to Wichita theater operator Bill Warren, Wichita Eagle reporter Bill Wilson reports on the construction of Warren’s new theater in west Wichita. On Warren’s plans for his theaters in Moore, Oklahoma (part of the Oklahoma City metropolitan area), Wilson’s article reports: “IMAX? ‘Possibly, and a few other surprises down there,’ Warren said.” … Earlier this year when Warren applied to the Wichita City Council for favored tax treatment for this theater, he implied that without the city’s largesse, he’d take his IMAX theater elsewhere. In his remarks at the council meeting where the tax favoritism was approved, Wichita Mayor Carl Brewer bought into the myth that there can be only one Warren IMAX theater when he said: “A lot of other cities want this IMAX … they’re on the internet watching this city council meeting to see what we’re going to do because they’re going to make a bid for this IMAX.” … City officials said the theater would be a tourist draw from as far away as Texas. … With another Warren IMAX possibly being built nearby, Wichitans and the mayor ought to agree that we were mislead, and Wilson ought to report this in the pages of the Wichita Eagle. This entire episode is more evidence that the Wichita City Council will believe almost anything told to them, as long as it involves the possibility of economic development and jobs.

    Sheriff to address Pachyderms, guide tour. This Friday (December 3) the Wichita Pachyderm Club features Sedgwick County Sheriff Robert Hinshaw as the presenter. His topic will be “An overview of the duties of the office of sheriff.” Then, from 2:00 pm to 3:00 pm Sheriff Hinshaw will guide Pachyderm Club members on a tour of the Sedgwick County jail. I’ve had the sheriff’s tour before, and it is very interesting. The public is welcome at Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Wichita City Council this week. As this Tuesday is the fifth Tuesday of a month, the Wichita City Council will not meet. Also, the Sedgwick County Commission will not meet this week.

    No free market for health care. A letter in today’s Wichita Eagle claims love for the free-market economy, but not for the provision of health care. The writer claims that free markets for medical services cannot work, because the transactions are one-sided, in that the patient does not have freedom of choice. The writer also cites government success in providing military and education that “improve our society’s overall well-being,” so government should provide health care, too. … I might suggest to the letter writer that we first attempt a free market in health care before we decide it doesn’t work. Most health care is paid for by someone else, and many people who have health insurance through their employers don’t have a choice in the matter. It is this regulation that causes many of the problems in the market, such as it is, and it is nothing resembling “free.” … Citing success of government education and military may not be persuasive to those who see performance of American schools on a long downward slide compared to other countries.

  • Wichita downtown plan focused on elite values, incorrect assumptions

    One of the themes of those planning the future of downtown Wichita is that the suburban areas of Wichita are bad. The people living there are not cultured and sophisticated, the planners say. Suburbanites live wasteful lifestyles. Planners say they use too much energy, emit too much carbon, and gobble up too much land, all for things they’ve been duped into believing they want.

    It’s an elitist diagnosis, and Wichita’s buying it. Well, we’ve already paid for it, but we can stop the harmful planning process before it’s too late.

    Consider the attitudes of Goody Clancy, the Boston planning firm the city hired to lead us through the process. At a presentation in January, some speakers from Goody Clancy revealed condescending attitudes towards those who hold values different from this group of planners. One presenter said “Outside of Manhattan and Chicago, the traditional family household generally looks for a single family detached house with yard, where they think their kids might play, and they never do.”

    David Dixon, the Goody Clancy principal for this project, revealed his elitist world view when he told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is only found at the core. “Have dinner someplace, pass a cool shop, go to a great national music act at the arena, and then go to a bar, and if we’re lucky, stumble home.”

    These attitudes reflect those of most of the planning profession — that people can’t be relied on to choose what’s best for them. Instead they believe that only they — like the planners at Goody Clancy — are equipped to make choices for people. It’s an elitism that Wichita ought to reject.

    Besides this, many of the assumptions that planners rely on are wrong, like the purported demographic shifts planners rely on. Consider the recent article Urban Legends: Why Suburbs, Not Dense Cities, are the Future by journalist and geographer Joel Kotkin. While Kotkin’s article focuses a lot on mega-cities like Mumbai and Mexico City, there’s a lot to be learned by smaller cities like Wichita.

    One of the issues Kotkin addresses is the effort of cities to appeal to the “creative class.” This is a hot issue in Wichita, where it is thought that we can’t attract young urbanites and their energy and upward economic mobility. Therefore, we must invest in arts, culture, and “hipness.” Kotkin responds:

    The hipper the city, the mantra goes, the richer and more successful it will be — and a number of declining American industrial hubs have tried to rebrand themselves as “creative class” hot spots accordingly. But this argument, or at least many applications of it, gets things backward. Arts and culture generally do not fuel economic growth by themselves; rather, economic growth tends to create the preconditions for their development. … Sadly, cities desperate to reverse their slides have been quick to buy into the simplistic idea that by merely branding themselves “creative” they can renew their dying economies; think of Cleveland’s Rock and Roll Hall of Fame, Michigan’s bid to market Detroit as a “cool city.” … Culture, media, and other “creative” industries, important as they are for a city’s continued prosperity, simply do not spark an economy on their own. It turns out to be the comparatively boring, old-fashioned industries, such as trade in goods, manufacturing, energy, and agriculture, that drive the world’s fastest-rising cities.”

    The things the Wichita plan is designed to foster: increased density, increased real estate values, decreased use of the automobile, and prescription by cultural elites of what may be built in which locations — these things drive away many people, Kotkin says: “Nor is the much-vaunted ‘urban core’ the only game in town. Innovators of all kinds seek to avoid the high property prices, overcrowding, and often harsh anti-business climates of the city center.”

    The sprawl and the alleged unsustainable lifestyle of the suburbs that elites like the Goody Clancy planners clearly disdain — here’s what Kotkin says: “Consider the environment. We tend to associate suburbia with carbon dioxide-producing sprawl and urban areas with sustainability and green living. But though it’s true that urban residents use less gas to get to work than their suburban or rural counterparts, when it comes to overall energy use the picture gets more complicated.” He cites examples in the article.

    But the planning process might not be all bad, Kotkin concedes, noting that “To their credit, talented new urbanists have had moderate success in turning smaller cities like Chattanooga and Hamburg into marginally more pleasant places to live.” Chattanooga is one place that Wichita planners and their acolytes have visited recently.

  • Downtown Wichita demographics not favorable

    “Uber-geographer” Joel Kotkin wrote in the Wall Street Journal recently: “Pundits, planners and urban visionaries — citing everything from changing demographics, soaring energy prices, the rise of the so-called ‘creative class,’ and the need to battle global warming — have been predicting for years that America’s love affair with the suburbs will soon be over.”

    As Wichita considers adoption of the plan for the revitalization of its downtown, urban planners — both local and out-of-town — tell us that there’s a big demand for downtown living. People are tired of suburban living, they say. Presentations by the city’s planning firm Goody Clancy have contained bullet points like “who favor living and working in vibrant downtowns” and “and they are part of broad demographic trends that are much more ‘downtown friendly’ …e.g., almost two-thirds of Wichita’s households include just one or two people.”

    This purported shift from suburban to urban lifestyles is one of the primary underlying memes for the downtown Wichita planners. Is this shift in preference real?

    Not according to Kotkin: “But the great migration back to the city hasn’t occurred.”

    Kotkin cites some figures showing the decline in the market for downtown condos in a few cities, and concludes “Behind the condo bust is a simple error: people’s stated preferences.” He shows some figures that support his contention that “Demographic trends, including an oft-predicted tsunami of Baby Boom ’empty nesters’ to urban cores, have been misread.”

    These demographic trends are behind the analysis that Goody Clancy uses to promote its vision for downtown Wichita. Kotkin’s research ought to give us concern that downtown visionaries are leading Wichita down a path that really isn’t there.

    Kotkin issues a note of caution for urban planners: “The condo bust should provide a cautionary tale for developers, planners and the urban political class, particularly those political ‘progressives’ who favor using regulatory and fiscal tools to promote urban densification. It is simply delusional to try forcing a market beyond proven demand.”

    What does this mean for Wichita? Wichita’s planners and leaders are promoting a light-handed approach to downtown development, saying, for example, that public financing will be only for public purposes. But Wichita has a history of heavy-handed interventionism using economic development tools of all types. They wish for more. And as the mayor said at a council meeting earlier this year, he’s recently learned of new types of incentive programs that other cities are using. Other council members and some city staff believe that Wichita doesn’t have enough “tools in the toolbox” for shoveling incentives on companies for economic development purposes.

    So I think Wichita’s leaders definitely will use the “regulatory and fiscal tools” that Kotkin warns of. It’s only without government intervention that we’ll know whether Wichitans really prefer suburban, downtown, or other forms of living. Urban planners and city hall bureaucrats can’t tell us that.

    The Myth of the Back-to-the-City Migration

    The condo bust should lay to rest the notion that the American love affair with suburbia is over.

    Pundits, planners and urban visionaries—citing everything from changing demographics, soaring energy prices, the rise of the so-called “creative class,” and the need to battle global warming—have been predicting for years that America’s love affair with the suburbs will soon be over. Their voices have grown louder since the onset of the housing crisis. Suburban neighborhoods, as the Atlantic magazine put it in March 2008, would morph into “the new slums” as people trek back to dense urban spaces.

    But the great migration back to the city hasn’t occurred. Over the past decade the percentage of Americans living in suburbs and single-family homes has increased. Meanwhile, demographer Wendell Cox’s analysis of census figures show that a much-celebrated rise in the percentage of multifamily housing peaked at 40% of all new housing permits in 2008, and it has since fallen to below 20% of the total, slightly lower than in 2000.

    Continue reading at the Wall Street Journal (subscription required) or at Kotkin’s website.