Voice For Liberty

Tag: Sam Brownback

  • Kansas and Wichita quick takes: Thursday March 10, 2011

    Kansas labor report. For January 2011, the Kansas Department of Labor reports: “According to January 2011 estimates, Kansas businesses lost 6,100 jobs over-the-year, a 0.5 percent decrease. … The January 2011 unemployment rate in Kansas was 7.4 percent, up from 6.4 in December 2010 but down from 7.9 percent in January 2010.” Said Labor Secretary Karin Brownlee: “The Great Recession continues to take a tremendous toll on the Kansas economy. The Governor’s focus on creating jobs could not be more timely. The work by the Brownback administration to make Kansas the best place to do business is the focus needed to grow our economy. Improving the tax and regulatory climate will help take some of the sting out of this recession and get Kansans back to work.” … Interestingly, at a time when it is said government is slashing budgets, government employment at all levels in Kansas grow by about 300 jobs from January 2010 to January 2011. In Topeka, about 600 government jobs were gained over that time period, in Wichita 300 jobs, and in Kansas City, 400 jobs.

    Whose money is it? Wisconsin protester: “Why do you have a right to your money?” See video.

    Kansas 2011 budget. Kansas Reporter writes: “Kansas House and Senate negotiators reached a tentative school financing deal Wednesday that may unjam state budget talks that have been stalled for weeks. … In the agreement that began emerging Wednesday, the House negotiators broadly agreed to restore some of the originally proposed special education funding cuts, while Senate negotiators broadly agreed to cut general fund spending for workers’ longevity pay, capital improvement projects and some child care development and insurance plans. Between $12 million and $14 million for those programs would come from special funds outside the state’s basic general fund or would be self funded with internal budget reductions.”

    Green jobs. John Stossel in Washington Examiner: “Anyone who understands basic economics already knows that President Obama’s $2.3 billion green-jobs initiative was snake oil. Now, thanks to Kenneth P. Green, we have statistics as well as theory to prove it. In a new article, ‘The Myth of Green Energy Jobs: The European Experience,’ the environmental scientist and a resident scholar at the American Enterprise Institute writes, ‘Green programs in Spain destroyed 2.2 jobs for every green job created, while the capital needed for one green job in Italy could create almost five jobs in the general economy.’” The article Stossel refers to may be read by clicking on The Myth of Green Energy Jobs: The European Experience. Despite this evidence, Wichita Mayor Carl Brewer promotes manufacturing of wind power machinery as good for Wichita’s economic development, and Kansas Governor Sam Brownback supports renewable energy standards for Kansas.

    America, welfare nation. Investor’s Business Daily: “More than one-third of all wages and salaries in this country are actually government handouts. We should be alarmed that we’ve become a nation of dependents. Using data mined from the Bureau of Economic Analysis, TrimTabs Investment Research has found that 35% of wages and salaries this year will be in the form of a government payment. That’s up sharply from 2000, when it was 21%, which is more than double the rate — 10% — of 1960.” … We should note that 1960 was before the start of the Great Society programs of Lyndon Johnson and of the War on Poverty. 2000 was the year of the election of George W. Bush.

    Politics vs. free markets. Rothbard on the difference between the political means and the economic means: “A second basic reason for the oligarchic rule of the State is its parasitic nature — the fact that it lives coercively off the production of the citizenry. To be successful to its practitioners, the fruits of parasitic exploitation must be confined to a relative minority, otherwise a meaningless plunder of all by all would result in no gains for anyone. Nowhere has the coercive and parasitic nature of the State been more clearly limned than by the great late nineteenth-century German sociologist, Franz Oppenheimer. Oppenheimer pointed out that there are two and only two mutually exclusive means for man to obtain wealth. One, the method of production and voluntary exchange, the method of the free market, Oppenheimer termed the ‘economic means’; the other, the method of robbery by the use of violence, he called the ‘political means.’ The political means is clearly parasitic, for it requires previous production for the exploiters to confiscate, and it subtracts from instead of adding to the total production in society. Oppenheimer then proceeded to define the State as the ‘organization of the political means’ — the systematization of the predatory process over a given territorial area.”

  • Arts supporters make case in Kansas Senate committee

    Last week the Kansas Senate Committee on Federal and State Affairs heard testimony from opponents and proponents of Governor Sam Brownback’s Executive Reorganization Order that would eliminate the Kansas Arts Commission and create the Kansas Arts Foundation to take its place. The plan would also eliminate state funding for the arts after a transition year.

    One of the cases that arts supporters make is that with the Kansas Arts Commission being a state agency receiving government funds, the commission receives addition funds from the National Endowment for the Arts and the Mid-America Arts Alliance. If the KAC is ended and replaced by a non-profit organization (the), arts supporters say Kansas arts organizations could no longer receive these funds.

    Kansas Legislative Research Department made inquiries to the Arts Alliance and the NEA. The answers from both agencies indicate that it is unclear as to whether the new Kansas Arts Foundation would be eligible to receive grants. In particular, the NEA answered, according to Legislative Research, “the potential exists for Kansas to forfeit its ability to receive National Endowment for the Arts funding depending on how the new entity in structured …”

    Senator Roger Reitz, a member of the Senate committee, offered testimony that emphasized the economic development and jobs aspect of arts in Kansas, citing the study produced by Americans for the Arts. This study, which claims huge economic benefit from arts spending, is flawed in the same way of most similar reports.

    Representatives of several arts organizations appeared before the committee to offer testimony on the importance of KAC funding. But as we’ve seen in the case of the Spencer Museum of Art, the case these supporters make is often weak.

    Symphony in the Flint Hills

    An example of the weak case for the necessity of government funding comes from a representative of Symphony in the Flint Hills, Inc., who testified on the importance of KAC funding to that organization, which produces an annual concert. For this year, the tickets to this event cost $72 (plus $3 handling). This year the event sold out — 5,000 tickets — in 30 minutes, according to news reports. That’s $375,000 in revenue, and that’s not all the organization collects as it has many sponsors who make donations.

    Last year the KAC awarded $12,786 to Symphony in the Flint Hills. That’s just 3.4 percent of its revenue from tickets sales, which again are not its only source of revenue. According to the firm’s IRS filings for 2008, its total revenue for that year was $822,864. The KAC funding represents just 1.5 percent of this figure (these figures are not for the same year, but are undoubtedly comparable).

    In fact, Symphony in the Flint Hills, although organized as a 501(c)(3) non-profit organization, is quite profitable. For 2008, its “profit” (the IRS form calls it “excess”) was $109,891. That was added to its starting net assets value of $252,401 to give it a balance of $362,292 going forward.

    Testimony provided by Symphony in the Flint Hills indicated that KAC has provided almost $30,000 in funding over six years. With the success of this organization, and with the cash it has on hand, the taxpayers of the State of Kansas would be grateful if it considered repaying these funds — or at least not beg for more. This organization has proven that it can thrive without state funding.

    As a smaller example, the Western Plains Arts Association offered written testimony that indicated without KAC funding, “we will have to eliminate many of our programs.” A look at the numbers indicates that WPAA received $4,035 from the KAC, while its IRS form 990 indicates total revenue of $80,513. While I’m sure WPAA will not appreciate the loss of this five percent of its revenue, it is inconceivable that it can’t adjust and either cut expenses without cutting programs, or seek a small additional amount of revenue from the people it provides services to.

    Taking arts away

    Advocates of government funding for the arts make claims that without such funding, arts will disappear. They even make claims that the government is proposing to take away arts, as in this which appeared in a Newton Kansan op-ed: “Abolishing or limiting access to the arts by reducing funding and support systems is not prudent.”

    These wild claims make the assumption that arts organizations will not attempt to adjust to the loss of government funding. As we’ve seen in several examples, the KAC funding is often a small portion of total funding. The claims of some that loss of KAC funding amounts to “abolishing” arts is not believable. Or, if the only reason an arts program exists is funding by government, I suggest a real-world test of its value is in order.

    The arts are important to our lives, I believe. That’s all the more reason why we need to get government out of art and return supports of the arts to the private sector. The importance of arts is why we need to remove government — which ultimately relies on coercion, a fact seemingly lost on arts supporters — from its funding, control, and management. We’ll have better art as a result.

    The committee passed a resolution opposing Brownback’s ERO. It will now move to the full Senate. If passed there by a simple majority, the ERO is canceled. Either chamber on its own can cancel an ERO, so no action would be required by the House of Representatives if the resolution passes the Senate. If the Senate passes the ERO, the governor can use the line item veto to strike the KAC’s funding, should he desire.

  • Kansas judicial selection should be reformed

    By Karl Peterjohn.

    Removing politics from the Kansas judiciary is about as likely as removing the moo from a cow. In Kansas the there is no transparency and a great deal of discrimination in this back room judicial selection process. Judge Ricard D. Greene’s defense of appellate judge selection (February 24, 2011 Wichita Eagle) in Kansas neglected these odious features in his defense of this terribly flawed system.

    I write this as a second-class Kansan who has been disenfranchised in the process of selecting a majority of this powerful governmental committee that is dominated by the members of the Kansas bar and the group that picks who will become its appellate judges. There is no other government panel in Kansas that empowers one small class of special citizens at the expense of the rest of us. I recently asked the Secretary of State’s office for the election results for selecting this powerful state committee’s lawyer members. I was told that information is not available.

    Five of the nine members of this powerful committee are elected solely by the members of the Kansas bar. The other four are appointed by the governor. While this committee selection process is used in a number of other states, none of them provide for making a majority of its members are lawyers.

    This type of closed door selection process which occurs outside the public’s view is a reason why a few years ago, six of the seven members of the Kansas Supreme Court who had been selected using this process were members of one political party while the seventh who wasn’t, was a friend of the governor (see kansasmeadowlark.com). The latter was judicially reprimanded but that admonishment and the underlying egregious misbehavior that led to this punishment did not keep Lawton Nuss from his current promotion to be the Chief Justice of the Kansas Supreme Court.

    Yeah, there aren’t any politics here. Yeah, only the best and the brightest are being added to the court according to Judge Greene. I must note that none of the Eagle’s news coverage of Nuss during his retention election last year mentioned his reprimand or kept the Eagle’s editorial page from endorsing him despite his ex parte abuse with litigants in the Montoy case.

    Judicial selection is important and decisions will impact state policy. Must the state spend $853 million more for K-12 schooling to comply with the KS Constitution? Yes says the unanimous supreme court in overruling its own earlier decision. Are state owned casinos constitutional? Yes again, despite the fact that there never was a statewide vote on legalized casinos. Was the Kansas death penalty constitutional? The Kansas Supreme Court overruled itself from an earlier case and said no, but then Attorney General Kline took this case to the US Supreme Court. Kline won in Washington and that decision was reversed.

    Today, the politics of the Kansas judiciary are now occurring behind the closed door-back rooms of the bar association. Transparency is non existent when the meetings of the government committee occur behind closed doors and without any public records being recorded from these meetings.

    KU law professor Stephen J. Ware has written that this is an inequality that goes against the “one person, one vote” principle of democracies. The power of a vote of a member of the bar is “infinitely more powerful” than the votes of non-lawyers.

    When comparing the method of judicial selection in Kansas to other states, Ware said that “Kansas is the only state that gives its bar the power to select the majority of its supreme court nominating commission.”

    The Kansas House majority supporting HB 2101 should be praised for eliminating this vestige of elite discrimination by one class of specially empowered citizens. The attorneys and their hand picked judges won’t like this bill, but the politics of judicial selection should be out in public where everyone has a say as well as a clear view, instead of hidden in back rooms. I hope that a majority of the Kansas senate as well as Governor Sam Brownback agree and HB 2101 becomes law as a first step in reforming appellate judicial selection in Kansas.

  • Kansas and Wichita quick takes: Friday February 18, 2011

    Wichita-area legislators to meet public. Tomorrow members of the South-Central Kansas Legislative Delegation will meet with the public. Tomorrow’s meeting is in the Sunflower Room of the Sedgwick County Extension Education Center, 21st and Tyler Rd, at 9:00 am. Generally these meetings last for two hours. The first of these meetings, two weeks ago, was focused more on hearing the concerns of citizens rather than allowing legislators to speak a lot. … Two other meetings have been scheduled. One is on March 19th — right before the legislature adjourns for its break — at Derby City Hall, 611 Mulberry Road. Then on April 23 — right before the “wrap-up session” — at the Wichita State University Hughes Metropolitan Complex, 5015 E. 29th Street (at Oliver).

    This Week in Kansas. On This Week in Kansas Joe Aistrup of Kansas State University and co-author of of the new book on Kansas politics Kansas Politics and Government: The Clash of Political Cultures, Richard Schrock of Emporia State University and Education Frontlines, and myself join host Tim Brown to discuss immigration and abortion bills in Kansas, concealed carry on college campus, and public schools medicating students. This Week in Kansas airs on KAKE-TV channel 10 at 9:00 am Sunday.

    Mandatory union political spending questioned. From Derrick Sontag of Americans for Prosperity, Kansas: “It was Thomas Jefferson who said, ‘To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors is sinful and tyrannical.’ On that note the Kansas Legislature is considering House Bill 2130, commonly referred to as ‘paycheck protection.’ Money derived from public employee union membership dues, for example, is often spent on functions outside of bargaining and administrative activity. That’s certainly the prerogative of a union but the problem is in some instances members may not choose to support union political activity, yet their money is going towards just that. … This is not a bill designed to eliminate unions. Rather it provides workers the ability to protect themselves from financially supporting political candidates they otherwise wouldn’t support. The unions that effectively present their case as to why political activity should occur will more than likely earn the financial support of a number of its members. Members of public employee unions should have the right to fully safeguard against their money being spent on political causes and candidates they don’t support.”

    Tom Woods: Rollback. This week I traveled to Kansas State University to attend a lecture by Thomas E. Woods, Jr.. His topic, mostly, was his new book Rollback: Repealing Big Government Before the Coming Fiscal Collapse. Of the book, Woods explains: “The book does two things. First, it lays bare the true fiscal position of the U.S. government, and shows why some kind of default is not merely possible but inevitable. … By far the more central part of the book is this: the critical first step for reversing this mess and checking the seemingly unstoppable federal advance is to stick a dagger through the heart of the myths by which government has secured the confidence and consent of the people. We know these myths by heart. Government acts on behalf of the public good. It keeps us safe. It protects us against monopolies. It provides indispensable services we could not provide for ourselves. Without it, America would be populated by illiterates, half of us would be dead from quack medicine or exploding consumer products, and the other half would lead a feudal existence under the iron fist of private firms that worked them to the bone for a dollar a week. Thus Americans tolerate much government predation because they have bought into the myth that state intervention may be an irritant, but the alternative of a free society would be far worse.”

    $100 million in cuts. It’s two years old, but this video places a proposal by President Barack Obama to cut $100 million from the federal budget in context. As the video explains, the scale of numbers so large — millions, billions, trillions — are often difficult to grasp. … Currently some Republicans in Congress are trying to cut $100 billion (1,000 times as much) from the federal budget, and it’s a difficult process. Even a cut of this size is not enough. As Tom Woods recently wrote in Rollback: Repealing Big Government Before the Coming Fiscal Collapse: “America is staring default in the face, and the boldest proposal we hear is for trimming $100 billion. That’s like taking three dollars off a trip to the moon.”

    Brownback plan ignored in Wichita. At this week’s meeting of the Wichita City Council I explained to council members a few points of Kansas Governor Sam Brownback’s economic development plan and how several actions the council was considering were directly in opposition to that plan. No council member asked a question. No Wichita news media reported on how the council ignored the governor’s plan. Especially troubling is how the Wichita Eagle had two reporters attending the meeting, yet there was no mention in that newspaper as to how the council voted several times against the principles of the Brownback plan. … Especially puzzling are the votes of Sue Schlapp, who held a leadership role in the Brownback campaign. Video and more is here.

    National League of Cities junket defended. Speaking of Schlapp and other city council members, the Wichita Eagle printed a letter from the Executive Director of the National League of Cities defending the value of the conference for city council members. Fair enough. But the problem is that Wichita is sending council members to the conference who will serve less than one month after the conference. These council members — Sue Schlapp, Paul Gray, and Roger Smith — ought to refrain from spending taxpayer money on this trip, which is a junket for lame ducks.

  • Wichita should reform its economic development strategy

    Remarks to the Wichita City Council, February 15, 2011.

    Mayor and members of the council, last week Governor Sam Brownback released his plan for economic development in Kansas. While his plan specifically addressed the state and its activities, the principles apply to local government. In fact, we need to harmonize our strategy with the state’s if we are to succeed.

    Besides reorganizing the state’s economic development agencies, the governor’s plan calls for a shift in economic development strategy. Instead of targeting industries or specific companies, Kansas should seek to establish a strategy that is simple, fair, and of high capacity.

    The governor’s plan seeks to promote an economy where a diversity of companies can thrive, each engaging in entrepreneurship or business experimentation. This is the type of environment that creates the conditions where the next Apple Computer, Google, Microsoft, or Pizza Hut might be launched.

    Can we identify the companies that may be — or may not be — future successes? Will they satisfy the city’s criteria for receiving various forms of economic development assistance? Or being of entrepreneurial mind and spirit, will these young companies even consider coming to city hall for assistance?

    There are those on this council and in city hall who believe we can formulate policies that identify these companies. I don’t think that’s possible, and the governor’s economic development plan doesn’t think it’s possible.

    We need an environment that nurtures these unknown futures success stories, and as many as possible. Not only large success stores, but smaller-scale success, too. That’s what we don’t have, and this is what the governor’s plan seeks to create.

    I mentioned capacity. When each economic development deal must pass through city hall bureaucracy, we can have capacity constraints, not to mention high cost. As an example, last April this applicant company received a forgivable loan from the city of just $15,000. How much effort did it take to process that loan? I would suggest it was a sizable fraction of the loan amount. And the same thing happened across the street at the county commission.

    Mayor, you said in your recent State of the City address that in 2010, economic development efforts saved 745 jobs and created 435 jobs, for a total impact of 1,180 jobs. To place those numbers in context, the U.S. Census Bureau indicates the labor force in Wichita is 191,760 persons. This means that the economic development efforts of the City of Wichita and its agencies affected a number of jobs equivalent to 0.6 percent of the city workforce.

    This small number of jobs impacted — representing less than one percent of the city’s labor force — is overwhelmed by the natural flow of economic events. Yet, to accomplish this, we have a large and costly bureaucracy in place. We increase costs for the numerous young companies that we now know are the engine of job growth.

    Mayor and members of the council, we can start moving towards an environment that promotes diverse economic growth by voting against this item and the other targeted economic development incentives on today’s agenda. But if the council decides to approve each item, I would ask that the council identify specific spending somewhere else to cut, so that the cost of these programs are not spread among all the residents and businesses in the city.

  • Affordable Airfares audit embarrassing to Wichita

    Last week’s release of a report produced by the Kansas Legislative Division of Post Audit is an embarrassment to City of Wichita elected officials and staff, the Kansas Regional Area Economic Partnership, and the Wichita State University Center for Economic Development and Business Research. The audit found that economic development claims of the Kansas Affordable Airfares program are significantly overstated. This program pays a subsidy to discount airlines providing service in Kansas, primarily Airtran Airways in Wichita.

    The primary finding of the report is this: “Overall, the program appears to have had the desired effect. Since Wichita’s original affordable airfare program (FairFares) began in 2002, fares have decreased, while the number of passengers and the number of available flights have increased. However, the Regional Economic Area Partnership’s (REAP) annual reports on the program contain numerous inconsistencies and inaccuracies. Further, the economic impact of the program has been significantly overstated. Specifically, the estimated number of jobs created and the State’s return on investment were overstated because of key methodological errors and the use of some inaccurate data. We also found that overall accountability for the State funds is lacking.”

    The audit may be read in its entirety at Affordable Airfares: Reviewing the Benefits Claimed As a Result of State Funding to Lower Airfare. A summary of highlights is here.

    Several news stories provide additional coverage. See Wichita Eagle: Audit: Airfare subsidies’ impact was overstated, Topeka Capital-Journal: Audit: Wichita air subsidy questioned, and Kansas Watchdog: Analysts and Elected Officials Ignored Flaws in Air Subsidy Claims .

    The airline subsidy program in Wichita has a long tradition of overreaching. In 2004, Troy Carlson, who was at the time chairman of Fair Fares, a group that sought to provide a guarantee of business and operating subsidy to a discount airline, wrote that a discount airline’s presence in Wichita had an annual economic impact of $4.8 billion for the state. His claims had their starting point in a WSU CEDBR study, although Carlson extended them in a way I’m sure the study’s authors hadn’t intended.

    In 2005, Sam Williams, who had taken over the role of chairman of Fair Fares from Carlson, testified to the Wichita City Council that Wichita’s leadership in providing subsidies to airlines was just like the role Kansas played when it entered the Union in 1861.

    Fortunately, these ridiculous claims fell by the wayside. Except gullible city council members and legislators believed them.

    Future of targeted economic development subsidies

    The big takeaway from the Affordable Airfares audit is that boosters of state-sponsored and funded economic development rely on figures that often vastly overstate the effect of the programs they’re promoting. Having made a large mistake like this, agencies like REAP and CEDBR need to be watched carefully.

    More fundamentally, we need to question the role of targeted economic development subsidies in Kansas. The day after the Affordable Airfares audit was released, Governor Sam Brownback released his economic development plan for Kansas. This plan calls for an end to present practices, especially the heavy-handed methods cities like Wichita use. While the plan and the governor’s budget include continued funding for Affordable Airfares, this decision was made before the audit’s findings were released to the public.

    There is an alternative method of funding the airline subsidy besides taxing everyone in the state, or City of Wichita for that matter. When government provides services that benefit everyone, such as police protection, most people agree that taxes to pay for these services should be broad-based. But we can precisely identify the people who benefit from cheap airfares: the people who buy tickets. Wichita could easily add a charge to tickets for this purpose. The mechanism is already in place.

    The charge wouldn’t have to be very much, either. With 1,549,395 passengers in 2010, and with the Affordable Airfares program costing $6.67 million, the charge would need to be just $4.30 per passenger, or double that for a round trip ticket.

    City and REAP officials will argue that low airfares benefit everyone. But as we’ve seen, these claims are overstated.

  • Kansas governor releases economic development plan

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

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

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

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

    Productivity and growth, not just jobs

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

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

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

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

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

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

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

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

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

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

    Cities like Wichita will need to change, adapt

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

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

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

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

  • Kansas auto dealers have anti-competitive law on their side

    In Topeka, a new car dealer wants to add the Buick and GMC lines to its dealership. In Wichita, an RV dealer wants to add an additional location. But if a privileged class of people are able to persuade the Kansas director of vehicles, these actions won’t be allowed.

    In Kansas, like many states, existing new car dealers are able to weigh in 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 lets us learn of 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 open-ended 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.

    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 those who own automobile dealerships. It ought to be repealed.

    Ironically, the notice of the two dealers’ proposals is contained in this week’s issue of the Kansas Register. The very next page holds the text of Kansas Governor Brownback’s Executive Order 11-01, which creates the “Office of the Repealer.” In its preamble, the order recognizes the administration’s priority to promote “growth of liberty and economic opportunities for the citizens of Kansas and for Kansas businesses” and our state’s “mutual interest in a system of government, laws, regulations, and other governing instruments that are reasonable, comprehensible, consistent, predictable, and minimally burdensome.”

    I suggest to the repealer — Dennis Taylor is his name — that we’ve found the law that should be first to go by the wayside.

  • Kansas arts funding supporters are misinformed, or worse

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

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

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

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

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

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

    National Endowment for the Arts funding

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

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

    There’s another discrepancy.

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

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

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