Voice For Liberty

Tag: Wichita city council

  • Wichitans mislead on Warren IMAX incentives

    Wichita theater operator Bill Warren may build an IMAX theater in Oklahoma using economic development incentives. The Wichita Business Journal reports that Warren has been offered a sales tax rebate program there as an incentive.

    This is newsworthy because last year Warren received economic development incentives from the City of Wichita based partly on the uniqueness of the proposed theater in the region. At that time Wichita city officials said the Wichita theater would be a “major tourism attraction,” drawing from as far away as Texas. But with another Warren IMAX possibly being built near Oklahoma City, I think we can now acknowledge that we were mislead.

    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.”

    Evidently Mayor Brewer didn’t consider that there could be more than one IMAX theater in the region.

    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.

  • Government can’t be like business

    As Wichita begins its implementation of the plan for the revitalization of downtown Wichita, stakeholders like to delude themselves that the plan is “market-driven,” that the city will make prudent use of public “investment,” and that the plan’s supporters really do believe in free markets after all. It’s a business-like approach, they say.

    But government is not business. The two institutions are entirely different. Government cannot act as a business does — the incentives and motivations are wrong. Furthermore, as Ludwig von Mises taught us, government can’t calculate profit and loss, the essential measure that lets us know if a business is making efficient use of resources.

    But some refuse to accept the distinction between the two, insisting that just because an organization — say the Wichita Downtown Development Corporation — is entirely supported (except for a little private fundraising one year) by taxpayer funds, it’s not the same as a government institution.

    The City of Wichita suffers from all the problems cited in this excerpt from Central Planning Comes to Main Street by Steven Greenhut, which appeared in the August 2006 issue of The Freeman: Ideas on Liberty. As our city moves away from development based on markets to development based on government planning, and away from a dynamic free market approach to economic development towards political and bureaucratic management of our destiny, we can expect these problems to become more ingrained.

    Problems with Incentives

    By Steven Greenhut

    Most city managers and economic-development officials that I’ve talked to fancy themselves as CEOs of companies, and they argue that what they are doing is no different from what private companies do: maximizing revenues. “Why wouldn’t a libertarian support what we’re doing given that you value private business and understand the importance of profit?” I’ve often been asked.

    The answer is simple. Cities are not businesses. They take the tax dollars of residents and make decisions about land use that are backed by police powers. They do not operate in a market; they do not have voluntary stockholders. Despite the delusions of city managers, the city staff usually is not as sophisticated or as skilled as corporate staff, which means cities often get a poor deal when negotiating with rent-seeking corporations.

    When cities insert themselves into the economic development game, either with carrots or sticks, they:

    • Shift decision-making from individuals to governments;
    • Take money from taxpayers and redistribute it to individuals and companies;
    • Undermine property rights and other freedoms;
    • Encourage a class of rent-seekers, who learn to lobby city officials for favors and special financial benefits;
    • Put unfavored businesses at a competitive disadvantage with those who are favored; and
    • Stifle political dissent, as companies that are dependent on the city for lucrative work become reluctant to speak their minds about any number of city issues.

    Despite what city managers will tell you, the choice is not between economic development and letting a city rot. The choice is between central planning, empowering officials to decide which businesses are worthy of their help, and the good old free market, which lets free people decide which business should succeed or fail.

    City officials like to be “proactive,” as they say, and help with economic development. There is something they can do. They can get out of the way, by lowering tax rates, deregulating, ending zoning restrictions, and eliminating exclusive contracts with utilities and developers. It’s not out of the question. The city of Anaheim is doing just that, with remarkable results.

    Mackinac’s LaFaive puts it well in a 2003 article: “The best business climate is one in which government ‘sticks to its knitting’ and does its particular assignments well, at the lowest possible cost while creating a ‘fair field with no favors’ environment for private enterprise.”

    Not a bad template. Sure beats a world of central planning, where city officials can choose who gets handouts and even who gets driven out of town.

  • Kansas and Wichita quick takes: Sunday April 10, 2011

    Local elections, qualifications of Wichita’s elected officials. On today’s edition of the KAKE Television public affairs program This Week in Kansas, Wichita State University’s Ken Ciboski, Chapman Rackaway of Fort Hays State University and myself join host Tim Brown to discuss local elections in Kansas. Mention was made of a recent article I wrote that was critical of the educational attainment of some Wichita City Council members. See Education gap on Wichita City Council.

    Steineger, Kansas senator, to address Pachyderms. This Friday (April 15) Kansas Senator Chris Steineger will speak to the members and guests of the Wichita Pachyderm Club on the topic “Using Business Principles to Restructure State and Local Government For Long-Term Efficiency.” Steineger, of Kansas City, has served in the Kansas Senate since 1997 and in December switched his affiliation from the Democratic to Republican party. Steineger has voted with Republicans on fiscal issues for many years. Explaining why he switched parties, he wrote “I am a fiscal hawk who believes Americans have been borrowing, spending, and living beyond their means for too long.” Steineger has spoken at events organized by Americans for Prosperity.

    Washington Monument strategy. At about 11:00 pm Friday night, President Barack Obama spoke on television in front of a window where the Washington Monument could be seen in the background. He said that thanks to the just-struck agreement to continue funding the operations of the federal government, the monument would be open to visitors the next day. This is explicit use of the Washington Monument strategy, in which the response to any proposed cut or slowdown in the growth of government is illustrated in the most painful or visible way. As the Wikipedia entry states: “The most visible and most appreciated service that is provided by that entity is the first to be put on the chopping block.” … The president also said “I would not have made these cuts in better circumstances.”

    Soros conference online. This weekend’s conference of the Institute for New Economic thinking has quite a few papers and videos online at the conference’s website. Surprise: Keynes and his economic theories are revered. Attendees are treated to papers and presentations like this: “It is the interdependence between the rule of law and the production and distribution of goods and services that gives capitalism its unity. The autonomy of the economy is thus an illusion, as is its ability to self-regulate. And we are in the current mess because the scales have tipped slightly too far in favour of this illusion. This shift in the balance represents an inversion of values. Efficiency, it was believed, would be better served if the workings of governments were regulated more tightly (especially in Europe, although the theory originates in America) and if the markets were deregulated to a greater extent. The ingenuity of the financial markets initially, then their blind sightedness, did the rest.” … What?

    Economics in one lesson this Monday. On Monday (April 11), four videos based on Henry Hazlitt’s class work Economics in One Lesson will be shown in Wichita. The four topics included in Monday’s presentation will be The Lesson, The Broken Window, Public Works Means Taxes, and Credit Diverts Production. The event is Monday (April 11) at 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. The event’s sponsor is Americans for Prosperity, Kansas. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

    Wichita City Council this week. On Tuesday, the Wichita City Council considers only consent agenda items. Then, tributes — including video — to outgoing Council Members Paul Gray, Sue Schlapp, and Roger Smith and installation of new members. A new vice mayor will also be selected. … I don’t know if the city will be hosting a luncheon afterward. Two years ago a celebratory luncheon titled “Wichita City Council Changing of the Guard” cost over $1,000.

  • Wichita elections a blow for economic freedom

    Results from yesterday’s elections for Wichita mayor and city council members were in contrast to the message voters have sent in recent state and national races. There, voters expressed a preference for smaller government, less government spending, and less debt. For these Wichita city offices, however, voters — with one exception — voted for those who promised more government intervention and less economic freedom.

    The winning candidates, of course, didn’t mention the loss of economic freedom in their campaign pitches. But their promise to grow government means just that. Yes, they promise to carefully scrutinize city spending and incentives on a case-by-case basis, insisting they are wise enough and knowledgeable enough to determine which projects are worthy of taxpayer support, and which aren’t. They all say that, always.

    The winners in yesterday’s election — besides the officeholders — are those who will benefit from having a compliant and emboldened mayor and like-minded council members in office as they seek to earn their fortunes at city hall at taxpayer expense. We see these people and their names on the campaign donation reports of many of the successful candidates. Their interest is not good government, but personal enrichment. They generally contribute to all city council members regardless of political stance. It’s difficult to see how someone who has a consistent political ideology they believe in could contribute to all city council members. But they do.

    The incumbents who won re-election — Mayor Carl Brewer and council member and Vice Mayor Jeff Longwell — have already proven themselves to be totally captured by these special interests. Now the new council members have a decision to make: Do they stand up for limited government and economic freedom in Wichita, or do they join the mayor and other council members on the side of the crony capitalists?

    I’ll be surprised if any council member — excepting Michael O’Donnell — ever votes against any of the projects our city’s crony capitalists bring forward.

    This is not a happy day for the future of Wichita. While today’s Wichita Eagle editorial wrote of the mayor’s “enthusiasm for Wichita and optimism about its future,” we need to question the assumptions underlying his sentiments. Is it “optimistic” when a city feels it must dish out corporate welfare to any company that hints of leaving town for purportedly greener pastures? Is it “enthusiasm” when a government that doesn’t trust its citizens to build, work, and live where they want — instead pushing through a heavy-handed, taxpayer-funded downtown plan?

    The takeaway is that it’s easy for people to succumb to the mayor’s false promise of economic prosperity through government intervention. The message of economic freedom, of free people conducting their affairs with minimal interference, is more difficult to believe in for many people. Unfortunately, Wichita does not have a newspaper that believes in economic freedom and limited government, preferring instead the big-government approach to managing a city and its economy. Unlike in other recent elections, this time voters largely followed recommendations made by the Wichita Eagle editorial board.

    Going forward, we can expect a proposal for a tax increase of some sort soon. Some desire a citywide sales tax for the purposes of economic development. These ideas, along with any others expanding the reach and power of city government, will probably not face much resistance from the new city council.

  • Kansas and Wichita quick takes: Tuesday April 5, 2011

    Law, liberty, and the market symposium this week. This Friday (April 8) a symposium titled “Freedom, Liberty, and the Human Spirit” is offered in Wichita. The event is from 8:30 am to noon, in Alumni Auditorium in the Davis Administration Building on the campus of Friends University. The presenter is John R. Hays, Jr of Austin, Texas. The three sessions are titled Freedom’s not just another word for nothing left to lose; Who’s directing the show, and how can it possibly work without a director; and Markets, liberty, and economic progress. The event is free and open to the public, and attendees should reserve a seat by calling 316-295-5526. The sponsor for the symposium is the Fred C. and Mary R. Koch Foundation.

    Junket for Wichita lame ducks: the costs. Kim Hynes of KWCH Television reports on the expenses incurred by three lame duck Wichita City Council members to attend a training conference. It’s about $8,000. Particularly amusing — if it weren’t so sad — are the remarks made by Roger Smith as he attempts to justify attending a training conference when he — and the other two lame ducks Paul Gray and Sue Schlapp — will serve less than one month after returning from the conference. … It seems that some council members were not very careful with taxpayer funds when looking for airfares, as Gray spent $772.80 and Schlapp $688.80 on plane tickets. Several made the trip spending less than $400 on their ticket, and one for less than $300. Don’t we have a discount air carrier here in Wichita? … Deb Farris of KAKE Television reports, too. In her story Council Member Lavonta Williams and Mayor Carl Brewer attempt to justify the spending for the lame duck members.

  • Kansas and Wichita quick takes: Monday April 4, 2011

    Google announces Gmail motion. Google announced on Friday: “The mouse and keyboard were invented before the Internet even existed. Since then, countless technological advancements have allowed for much more efficient human computer interaction. Why then do we continue to use outdated technology? Introducing Gmail Motion — now you can control Gmail with your body.” See Gmail motion for more.

    Local elections tomorrow. On Tuesday April 5 voters across Kansas will vote in city and school board elections. For those who haven’t yet voted and haven’t decided who to vote for, here’s the Wichita Eagle voter guide. You can get a list of the candidates, along with their responses to questions, customized for your address.

    Wichita City Council this week. On Tuesday, the Wichita City Council has these items on its agenda: Under the city’s Economic Development Tax Exemption (EDX) program, Cox Machine Inc. seeks forgiveness from paying property taxes on a building addition. … The YMCA seeks permission to issue Industrial Revenue Bonds to finance its new downtown facility. Normally these bonds are used as a vehicle for granting tax exemptions, but as an institution that is already tax exempt, this consideration doesn’t apply in this case. … Pixius, LLC files petitions seeking special assessment financing under the city’s facade improvement program for a downtown building. While this financing is a loan that must be repaid, city documents indicate this is just the first time Pixius will ask the city for money. City documents note that Pixius emerged from bankruptcy in 2006. These documents don’t say that Pixius used bankruptcy to avoid paying back millions to the U.S. Government. … Rupert Investments, LP files petitions seeking to use the same special assessment financing for facade improvements at the buildings occupied by J.P. Weigand & Sons on Market Street. … Two housing developments seek housing tax credits.

    Public defender to present. This Friday’s meeting of the Wichita Pachyderm Club features Jama Mitchell, Deputy Public Defender, 18th Judicial District, speaking on the topic “Justice in Sedgwick County From a Defense Perspective.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … Upcoming speakers include Kansas Senator Chris Steineger on April 15, Friends University Associate Professor of Political Science Russell Arben Fox on April 22, and Wichita State University Political Scientist Ken Ciboski on April 29.

    What it means to be a libertarian. A video from LearnLiberty.org: “What does it mean to be a libertarian? According to Dr. Jeffrey Miron, libertarians have respect for individual decisions. Libertarians are different from Republicans and Democrats, because both of those groups attempt to use government to advance their ideas of how people should act or behave, while libertarians think that individuals should be able to live their own lives as they see fit.” … Miron’s most recent book is Libertarianism, from A to Z, described as an “encyclopedic exposition of libertarian thought.” An interview with Miron by Reason.tv’s Nick Gillespie is at Libertarianism From A to Z With Jeffrey Miron. This video is available on YouTube through LearnLiberty.org, a site which has many other informative videos.

    Profits and prices. In the June 1963 issue of The Freeman, Leonard E. Read explains the role of profits and prices: Let us reduce this debate to manageable proportions and reflect on what, for example, motivates a person to put his savings into a hamburger stand. The answer comes clear: to make as good a living as possible. We know from daily observations that it is the hope of profit, not humanitarian concern about the meatless diet of the population, which is responsible for the venture. Observe, however, that a large profit — the enterpriser’s aim — signifies customer approval. By keeping his eye on his own gain, he assures that others are well served. Their repeated purchases, leading to the enterpriser’s profit, prove this. Imagine how different this situation would be were the hamburger man to concentrate not on his own gain but only on the good of others! … Humanitarian? Yes, indeed: Assume that a surgeon has discovered how to do a brain surgery, that he can do only one a month that 1,000 persons a year need such an operation if they are to survive. How is the surgeon’s scarce resource to be allocated? Charge whatever price is necessary to adjust supply to demand, say $50,000! “For shame,” some will cry. “Your market system will save only wealthy people.” For the moment, yes. But soon there will be hundreds of surgeons who will acquire the same skill; and, as in the case of the once scarce and expensive “miracle drugs,” the price then will be within the reach of all. … Look to the improvement of your own position if you would be most considerate of others! And this is sound advice whether one’s business consists of earning profit or doing basic research or practicing medicine or saving souls or whatever. The best charity is to set an example by which others may learn to help themselves.

  • Education gap on Wichita City Council

    Before Jim Skelton left the council in January, none of the four men serving on the Wichita City Council had completed a college degree. The three women serving on the council set a better example, with all three holding college degrees.

    Of the candidates running in next week’s election for four council seats and the office of mayor, less than half hold college degrees.

    Is it necessary to complete college in order to serve in an office like mayor or city council? Apparently none of the four men who held these offices without a degree thought so. The two running to retain their present positions — Mayor Carl Brewer and council member Jeff Longwell (district 5, west and northwest Wichita) — evidently don’t think so, or they would not be running again.

    But we tell young people that college holds the key to success. We encourage schoolchildren to consider college and to take a rigorous high school curriculum in order to prepare for it. We encourage families to save for college. Our region’s economic development agency promotes the number of people with college or advanced degrees. We promote our colleges and universities as a factor that distinguishes Wichita. We hope that our elected officials will set an example we want young people to follow.

    Once in office, we ask our city elected officials to attempt to grasp and understand complex sets of financial data, working with a budget of about half a billion dollars for the City of Wichita. We hope that they will be able to consider large and weighty issues such as the role of government in a free society. Members of the professional management staff — bureaucrats — that manage the city, county, and state are generally required to hold college degrees.

    The irony is that elected officials often are highly reliant on the bureaucratic staff for information, data, and advice, and this professional bureaucracy is often highly educated. Does this imbalance create problems?

    Elected officials compared to regular people

    Amazingly, it turns out that elected officials, as a group, are less knowledgeable about civics than the general population. That’s the finding of Intercollegiate Studies Institute, which surveyed Americans and their knowledge of civics in 2008. After analyzing the data, ISI concluded: “Simply put, the more you know about American government, history, and economics the less likely you are to pursue and win elective office.”

    Related: Local elections, qualifications of Wichita’s elected officials.

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

    Wichita Eagle endorsements. Yesterday the Wichita Eagle released its endorsements for Mayor, Wichita City Council, and Wichita school board. It is no surprise that in each case the newspaper editorial board recommended that voters select the candidate most likely to support the board’s big-government interventionist policies, thereby (unwittingly?) providing a guide as to who not to vote for, if you value limited government and economic freedom.

    Wichita City Council this week. As it is the fifth Tuesday of the month, the Wichita City Council will not meet. While some might say the mayor and council members need to get to work and do their jobs, I’m more aligned with Will Rogers when he quipped: “Be thankful we’re not getting all the government we’re paying for.”

    Sedgwick County commission this week. At Wednesday’s meeting, the Sedgwick County Commission has two economic development incentives to consider. These are forgivable loans, essentially grants of money, to be made to MoJack Distributors, LLC and Apex Engineering International LLC. Each has already received a forgivable loan from the City of Wichita, as well as other subsidy of various forms from governments state and local. More discussion is at Wichita again to bet on corporate welfare as economic development. The commission’s agenda is available at Board of Sedgwick County Commissioners, March 30, 2011.

    Kansas judicial selection. A legislative maneuver could force the Kansas Senate to debate and possibly vote on the method of selecting judges for the Kansas Court of Appeals. This is despite the efforts of Senator Tim Owens, an attorney and Republican from Overland Park, to block the bill in his committee. See Method of choosing judges could see debate.

    Kansas Department of Labor computer system. From Kansas Reporter: “A $50 million, six year project to upgrade unemployment claims technology within the Kansas Department of Labor was grossly mismanaged, resulting in massive system flaws according to Labor Secretary Karin Brownlee.” Brownlee took office earlier this year after being appointed by Kansas Governor Sam Brownback. More at Massive waste, inefficiency in Labor Department technology upgrade, secretary says .

    General Electric: no taxes for me. Competitive Enterprise Institute explains how General Electric, one of the largest companies in the world, earns large profits and manages to pay no income tax.

    Freeloaders come in all types. This weekend John Stossel had an hour-long special show that focused on freeloaders. Not just panhandlers, although Stossel did work in disguise as a panhandler and discovered he could make over $90 a day. Tax free, he added. One segment of the show uncovered farmers who received $50,000 because they were discriminated against by lenders. But — some of these farmers merely grew potted plants or fertilized their lawn to qualify as a farmer. Another reported on homeowners who stopped paying their mortgages on advice of a website. The homeowners and the website operator said there is no moral obligation to pay their mortgage loans. Corporate freeloaders didn’t escape, as General Electric was mentioned as a large recipient of government handouts. And, they won’t pay taxes: “Despite billions in profit, they’ll pay no taxes this year,” reported Stossel. … The severe poverty of American Indian tribes that live on government-managed reservations and living on government handouts is contrasted with a tribe that accepts no handouts and has no casinos. … Stossel covered his own beach house, which was covered by low-cost subsidized federal fund insurance. It suffered losses twice. … Standing in front of the U.S. Capitol, Stossel said “We rich people freeload off you taxpayers all the time, because the over-promisers in there keep churning out special deals for politically-favored groups. And they tend to be rich people, because the rich can afford lobbyists. … Think about how much money we could save if these guys just didn’t pass so many laws that encourage freeloading. But they do, year after year. They micromanage life with subsidies. And the winners are not so much the needy, but people like Bon Jovi, Ted Turner, Maurice Wilder, and — me. So let’s hope for an end to all this freeloading.”

    New York City may seek waiver from ObamaCare. One of the strongest advocates for ObamaCare may seek an exemption for the city he represents. Politico reports in Anthony Weiner: Waiver might work for New York. … So far over 1,000 waviers have been issued, exempting businesses, labor groups and a handful of states from at least some of the requirements of the Affordable Health Care Act.

    Economic freedom and a better life. Economics professor Josh Hall explains that economic freedom leads to greater human well-being. If we look at average income, life expectancy, income of the poorest 10%, and other factors, we see that when governments let citizens make economic decisions for themselves, this leads to greater human flourishing. This video refers to the Economic Freedom of the World index, which was the subject of a lecture delivered last year in Wichita by Robert Lawson. In that lecture, Lawson warned of the path of the United States in terms of economic freedom, as I reported: “Speaking about the United States, Lawson said that the numbers are likely to go down in the future. While the U.S. ranks above the world average, its measurement of freedom has been declining since 2000. At the same time, the rest of the world is on an upward trend. ‘It’s no longer accurate to say the United States is among the very top tier in the economic freedom index,’ Lawson said, adding that he blames George Bush for this. The decline is partly due to the increasing size of government, but the largest cause of the decline is in the area of property rights. This area is measured largely by surveys asking people how they feel about property rights in America. The perception, Lawson, said, is that the security of property rights are on the decline.”

    Government investment specialty. Gene Callahan, in his book Economics for Real People: An Introduction to the Austrian School, explains some of the problems inherent in government acting as investor. Writing about a plan to build a sports stadium in Hartford: “The Public Choice School has pointed out another force weakening that incentive, indeed, in most cases, completely negating it. Strong incentives exist for politicians to favor special-interest groups at the expense of the general public. Those upon whom benefits are concentrated are motivated to campaign hard for those benefits. As the costs of most political actions are spread across the public as a whole, the average person has little motivation to become involved. In the context of the stadium project, we can see that, even at a total cost of $374 million, the cost to each Connecticut resident is only about $100. It is simply not worth much of any individual citizen’s time to become devoted to the cause of stopping the stadium. However, for the construction companies who hope to get work on the stadium and the owners of businesses and land nearby, the potential benefits are enormous. They have a strong incentive to lobby hard for the project, to donate to the campaigns of politicians who support it, and to sponsor studies that will make the project look good. In fact, if there were a profit to be made in some particular investment, private investors would be likely to act quickly to take advantage of the opportunity with their own funds. … Private investors will turn to the risky business of lobbying the government to support a project only when it is not clear to them that it is profitable without taxpayer subsidies. Thus, the government is likely to specialize in money-losing projects.”

  • Kansas loses chance to improve tax climate

    Legislation that would have improved the tax climate in Kansas over time appears dead this year. It’s something that we need in Kansas, but Kansas Senate leadership is not in favor of the bill.

    The bill, named the March to Economic Growth, would have used increases in Kansas revenue to reduce state personal and corporate income tax rates. This is something that is needed, as new rankings published by the Tax Foundation indicate that the business tax climate in Kansas is poor. Kansas ranks 35th among the 50 states, just 15 spots from the bottom. In last year’s ranking, Kansas placed 32nd, so our state is slipping relative to other states.

    The economic development strategy of Kansas and Wichita has been to offer tax abatements as an inventive to lure or retain industry. The study authors note the problem with this: “State lawmakers are always mindful of their states’ business tax climates but they are often tempted to lure business with lucrative tax incentives and subsidies instead of broad-based tax reform. … Lawmakers create these deals under the banner of job creation and economic development, but the truth is that if a state needs to offer such packages, it is most likely covering for a woeful business tax climate. A far more effective approach is to systematically improve the business tax climate for the long term so as to improve the state’s competitiveness.”

    New Kansas Governor Sam Brownback has an economic development plan that includes parts of Dr. Art Hall’s “embracing dynamism” strategy. This strategy recognizes the futility of bureaucrats attempting to dish out economic development incentives, and recommends a strategy of creating an environment favorable to all businesses of all sizes. In particular, research has shown that it is new, young firms that are the dynamic driver of growth and innovation, but economic development policies are slanted towards old, established firms.

    While it is refreshing to see the governor’s plan recognize the need for an environment that promotes dynamism, the plan still contains mechanisms for targeted economic development, including incentives to retain companies that threaten to leave Kansas. As for Wichita, city council members and bureaucrats yearn for “more tools in the toolbox.” The governor’s message hasn’t quite reached them.

    Are taxes and tax policy important? After a review of the literature, the Tax Foundation report concludes: “… the general consensus of the literature has progressed to the view that taxes are a substantial factor in the decision-making process for businesses.” But there are some authors who disagree.

    The state business climate index considers these factors: corporate taxes, individual income taxes, sales tax, unemployment tax, and property taxes. Kansas performs best on unemployment taxes, ranking 7th among the states. Our worst raking is 41st in property taxes. In sales tax, Kansas ranks 32nd, and this does take into account the statewide sales tax increase of one cent per dollar that started July 1.

    The report recognizes that taxes are only one of many factors that companies use when deciding where to locate facilities. Kansas’ low ranking means we can make large improvements in this area. If we don’t, we are likely to have to keep up our ad hoc approach to economic development, were we craft special deals under the conceited belief that we know which deals to make.

    The full report is available at the Tax Foundation by clicking on 2011 State Business Tax Climate Index. An introductory article is at Background paper: 2011 State Business Tax Climate Index (Eighth Edition).