Politics

Regulation for the sake of business

by Bob Weeks on April 25, 2012

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

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

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

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

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

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

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

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

How does regulation help big business?

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

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

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

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

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

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

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

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

Tagged as: Capitalism, Economics, Free markets, Minimum wage, Politics, Regulation

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Attacks on ALEC hypocritical and unfair

by Guest Author on April 20, 2012

By Steven Greenhut

SACRAMENTO — A cadre of liberal groups has decided the scourge of the nation is a little-known conservative organization that provides model legislation to state legislators across the country.

Overheated criticisms of the American Legislative Exchange Council have been echoed throughout the media following the Trayvon Martin shooting in Sanford, Fla., because ALEC had advocated the “Stand Your Ground” laws that anti-gun-rights activists blame for the tragic shooting.

The public rap against ALEC is that, as the Atlantic magazine recently explained, “[I]t’s a shadowy back-room arrangement where corporations pay good money to get friendly legislators to introduce pre-packaged bills in state houses across the country.”

Atlantic highlights ALEC Exposed, a group run by a former Justice Department official who created a wiki site spotlighting more than 800 bills that emanated from the supposed ALEC star chamber. Other groups, including a conspiracy-minded outfit that claims ALEC’s efforts to battle voter fraud are designed to keep black people from voting, have been strong-arming corporate sponsors into abandoning ALEC. Given the backbone-challenged nature of corporate America when it comes to political matters, it’s no surprise the scare tactics are working.

Even ALEC this week announced it is backing away from gun rights and social issues and focusing entirely on free-market economic and business issues. I agree with that decision and personally find “Stand Your Ground” laws to be misguided despite my strong support for gun rights, but it’s too bad these reasonable changes — ones that will bolster the organization in the long run — came across as capitulation. That will only embolden ALEC’s enemies. And those enemies have few good arguments, which is why they spin their conspiratorial yarns and try to make it seem as if ALEC is doing something unethical or unconventional. These leftist critics don’t like ALEC simply because ALEC advocates policies they oppose.

ALEC’s structure isn’t that different from the one taken by “mainstream” organizations such as the National Conference of State Legislatures, whose foundation includes donors of at least $25,000 that’s a who’s who of corporate America: AT&T, Walmart, Visa, Time Warner Cable, AstraZeneca Pharmaceuticals. These donors include the National Education Association, which is a prominent labor union.

Even worse, NCSL uses taxpayer dollars to fund many of its activities, which is something ALEC most definitely does not use. NCSL takes positions on issues. It champions itself as a nonpartisan forum for legislators to debate issues, but many critics recognize its left-of-center tilt.

“A number of Utah lawmakers are so upset at the liberal tendencies of the National Conference of State Legislatures they are thinking of picking up their marbles and going home,” wrote the Salt-Lake Tribune’s Paul Rolly in a 2009 column. Delegations from other states expressed similar concerns.

“Between the Senate and the House, the Utah Legislature pays about $100,000 in dues annually to the NCSL,” Rolly added. “Some lawmakers now are saying that money could be better spent. They’re also taking a harder look at the American Legislative Exchange Council (ALEC), as an alternative national association for legislators who traditionally takes conservative and pro-business stands on most issues.”

ALEC clearly has grown as an alternative to this group. As is often the case, so-called mainstream trade associations and organizations almost always tilt in a liberal direction, even while claiming to be fair-minded and nonpartisan. It’s not surprising that government-funded organizations end up promoting more government funding and rarely push for reforms to roll back the size of government.

I find this so often in so many spheres. The National League of Cities and its state chapters instantly jump to mind. They dominate the urban-related agenda in most capitols, but that group’s priorities are skewed hard to the left, as the group favors bigger government, controversial urban redevelopment policies and allowed the massive pension increases of the past decade to explode without complaint. I know of more conservative city officials who have talked about coming up with an alternative that researches and advances free-market-friendly issues rather than jumping on board the big-government status quo. What’s wrong with that? Isn’t that how our system is designed to operate?

Since when is it awful to create a privately funded organization that advances constructive policy ideas? It’s far better to have corporate sponsors voluntarily pay for the group than to force the rest of us to pay for it through our tax dollars, which is how NCSL and many other organizations operate. Why aren’t activists targeting agenda-driven groups that live off of taxpayer dollars? We know the answer — they agree with those groups’ agenda and disagree with the agenda of conservative alternative organizations such as ALEC.

By the way, Atlantic and other critics can complain about “pre-packaged conservative legislation,” but interest groups from the left and right often promote model legislation. It’s a good way to get policy preferences in play. This isn’t nefarious. Consider also that lobbyists often write bills on behalf of legislators. We know that members of Congress rarely read the bills they vote upon, even on hugely significant matters such as national health-care policy. What ALEC does is far less nefarious than the standard operating procedure in the U.S. Capitol and state capitols.

Leftists don’t like the policies ALEC promotes, so they are using intimidation tactics to shut it down. It’s that simple. They are within their rights to do this, but let’s at least recognize that it flows not from any problem with how ALEC operates, but from the most transparent political motives.

Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. He is based in Sacramento, Calif.

Tagged as: Free markets, Political Left, Politics

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ALEC should resist liberal pressure groups

by Bob Weeks on April 18, 2012

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

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

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

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

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

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

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

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

Shutting Down ALEC

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

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

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

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

Tagged as: Activism, Capitalism, Free markets, Politics, Regulation

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Thinking beyond stage one in economic development for Wichita

by Bob Weeks on April 9, 2012

Critics of the economic development policies in use by the City of Wichita are often portrayed as not being able to see and appreciate the good things these policies are producing, even though they are unfolding right before our very eyes. The difference is that some look beyond the immediate — what is seen — and ask “And then what will happen?” — looking for the unseen.

Thomas Sowell explains the problem in a passage from the first chapter of Applied economics: thinking beyond stage one:

When we are talking about applied economic policies, we are no longer talking about pure economic principles, but about the interactions of politics and economics. The principles of economics remain the same, but the likelihood of those principles being applied unchanged is considerably reduced, because politics has its own principles and imperatives. It is not just that politicians’ top priority is getting elected and re-elected, or that their time horizon seldom extends beyond the next election. The general public as well behaves differently when making political decisions rather than economic decisions. Virtually no one puts as much time and close attention into deciding whether to vote for one candidate rather than another as is usually put into deciding whether to buy one house rather than another — or perhaps even one car rather than another.

The voter’s political decisions involve having a minute influence on policies which affect many other people, while economic decision-making is about having a major effect on one’s own personal well-being. It should not be surprising that the quantity and quality of thinking going into these very different kinds of decisions differ correspondingly. One of the ways in which these decisions differ is in not thinking through political decisions beyond the immediate consequences. When most voters do not think beyond stage one, many elected officials have no incentive to weigh what the consequences will be in later stages — and considerable incentives to avoid getting beyond what their constituents think and understand, for fear that rival politicians can drive a wedge between them and their constituents by catering to public misconceptions.

The economic decisions made by governing bodies like the Wichita City Council have a large impact on the lives of Wichitans. But as Sowell explains, these decisions are made by politicians for political reasons.

Sowell goes on to explain the danger of stopping the thinking process at stage one:

When I was an undergraduate studying economics under Professor Arthur Smithies of Harvard, he asked me in class one day what policy I favored on a particular issue of the times. Since I had strong feelings on that issue, I proceeded to answer him with enthusiasm, explaining what beneficial consequences I expected from the policy I advocated.

“And then what will happen?” he asked.

The question caught me off guard. However, as I thought about it, it became clear that the situation I described would lead to other economic consequences, which I then began to consider and to spell out.

“And what will happen after that?” Professor Smithies asked.

As I analyzed how the further economic reactions to the policy would unfold, I began to realize that these reactions would lead to consequences much less desirable than those at the first stage, and I began to waver somewhat.

“And then what will happen?” Smithies persisted.

By now I was beginning to see that the economic reverberations of the policy I advocated were likely to be pretty disastrous — and, in fact, much worse than the initial situation that it was designed to improve.

Simple as this little exercise may sound, it goes further than most economic discussions about policies on a wide range of issues. Most thinking stops at stage one.

We see stage one thinking all the time when looking at government. In Wichita, for example, a favorite question of city council members seeking to justify their support for government intervention such as a tax increment financing (TIF) district or some other form of subsidy is “How much more tax does the building pay now?” Or perhaps “How many jobs will (or did) the project create?”

These questions, and the answers to them, are examples of stage one thinking. The answers are easily obtained and cited as evidence of the success of the government program.

But driving by a store or hotel in a TIF district and noticing a building or people working at jobs does not tell the entire story. Using the existence of a building, or the payment of taxes, or jobs created, is stage one thinking, and no more than that.

Fortunately, there are people who have thought beyond stage one, and some concerning local economic development and TIF districts. And what they’ve found should spur politicians and bureaucrats to find ways to move beyond stage one in their thinking.

An example are economists Richard F. Dye and David F. Merriman, who have studied tax increment financing extensively. Their article Tax Increment Financing: A Tool for Local Economic Development states in its conclusion:

TIF districts grow much faster than other areas in their host municipalities. TIF boosters or naive analysts might point to this as evidence of the success of tax increment financing, but they would be wrong. Observing high growth in an area targeted for development is unremarkable.

So TIFs are good for the favored development that receives the subsidy — not a surprising finding. What about the rest of the city? Continuing from the same study:

If the use of tax increment financing stimulates economic development, there should be a positive relationship between TIF adoption and overall growth in municipalities. This did not occur. If, on the other hand, TIF merely moves capital around within a municipality, there should be no relationship between TIF adoption and growth. What we find, however, is a negative relationship. Municipalities that use TIF do worse.

We find evidence that the non-TIF areas of municipalities that use TIF grow no more rapidly, and perhaps more slowly, than similar municipalities that do not use TIF.

In a different paper (The Effects of Tax Increment Financing on Economic Development), the same economists wrote “We find clear and consistent evidence that municipalities that adopt TIF grow more slowly after adoption than those that do not. … These findings suggest that TIF trades off higher growth in the TIF district for lower growth elsewhere. This hypothesis is bolstered by other empirical findings.”

Here we have an example of thinking beyond stage one. The results are opposite of what one-stage thinking produces.

Some city council members are concerned about creating jobs, and are swayed by the promises of developers that their establishments will employ a certain number of workers. Again, this thinking stops at stage one. But others have looked farther, as has Paul F. Byrne of Washburn University. The title of his recent report is Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth, and in its abstract we find this conclusion regarding the impact of TIF on jobs:

Increasingly, municipal leaders justify their use of tax increment financing (TIF) by touting its role in improving municipal employment. However, empirical studies on TIF have primarily examined TIF’s impact on property values, ignoring the claim that serves as the primary justification for its use. This article addresses the claim by examining the impact of TIF adoption on municipal employment growth in Illinois, looking for both general impact and impact specific to the type of development supported. Results find no general impact of TIF use on employment. However, findings suggest that TIF districts supporting industrial development may have a positive effect on municipal employment, whereas TIF districts supporting retail development have a negative effect on municipal employment. These results are consistent with industrial TIF districts capturing employment that would have otherwise occurred outside of the adopting municipality and retail TIF districts shifting employment within the municipality to more labor-efficient retailers within the TIF district.

While this research might be used to support a TIF district for industrial development, TIF in Wichita is primarily used for retail development. And, when thinking beyond stage one, the effect on employment — considering the entire city — is negative.

It’s hard to think beyond stage one. It requires considering not only the seen, but also the unseen, as Frederic Bastiat taught us in his famous parable of the broken window. But over and over we see how politicians at all levels of government stop thinking at stage one. This is one of the many reasons why we need to return as much decision-making as possible to the private sector, and drastically limit the powers of politicians and governments.

Tagged as: Capitalism, Economic development, Economics, Interventionism, Politics, Subsidy, Tax increment financing, TIF districts, Wichita city council, Wichita city government

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

by Bob Weeks on April 2, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Koch Industries and Koch brothers are assets to state

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

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

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

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

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

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

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

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

Tagged as: Americans For Prosperity, Capitalism, Economic freedom, Free markets, Freedom, Koch Industries, Liberty, Politics, Regulation

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If government ordered your lunch, would you get what you want?

by Bob Weeks on March 23, 2012

Speaking on government making decisions for us, Professor Antony Davies of Duquesne University concludes “Even if it’s benevolent, it fails because it lacks the necessary information to make those decision correctly.”

The motivation of government officials coupled with their lack of information: These are two reasons why we need to remove as much decision-making as possible from the public sphere. Yet we see the rush to do the opposite. From federal government officials making health care decisions to local officials deciding when, how, and where economic development should take place, the benevolence and knowledge of these officials must be questioned.

Some believe that if we only had more altruistic leaders or smarter politicians and bureaucrats, all would be well. But there is simply no way that government can replace the collective wisdom of free people voluntarily trading in free markets, their activities coordinated by something so simple as a price system left free from government interference.

This is the essence of economic freedom as defined at EconomicFreedom.org, the producer of this video. “Economic freedom is the key to greater opportunity and an improved quality of life. It’s the freedom to choose how to produce, sell, and use your own resources, while respecting others’ rights to do the same. … Economic freedom is the key to greater opportunity and an improved quality of life. … While a simple concept, economic freedom is an engine that drives prosperity in the world and is the difference between why some societies thrive while others do not.”

Tagged as: Capitalism, Economic freedom, Free markets, Interventionism, Liberty, Politics

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Kansas and Wichita quick takes: Monday March 19, 2012

by Bob Weeks on March 19, 2012

Eisenhower expert to present. This Friday (March 23rd) the Wichita Pachyderm Club features David Nichols, Ph.D. Dr. Nichols is a recognized expert on the Eisenhower presidency and is currently working on his third book on Ike, this one dealing with Senator Joe McCarthy with a focus on Ike’s management techniques. On Friday, Nichols’ topic will be “The Eisenhower Leadership Model: What business people (and even politicians) can learn from Ike.” … The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club. … The club has an exceptional lineup of future speakers as follows: On March 30th: Tom DeWeese, President, American Policy Center, speaking on U.N. Agenda 21: Sustainable Development. … On April 6th: Jordan A. Poland, who will discuss his Master of Arts thesis in Public History at Wichita State University, titled “A case study of Populism in Kansas. The election of Populist Governor Lorenzo Lewelling from Wichita, and the Legislative War of 1893.” … On April 13th: Alvin Sarachek, Ph.D., Geneticist, Distinguished Professor Emeritus of Natural Sciences at Wichita State University, speaking on “Human Genetic Individuality and Confused Public Policy Making.” … On April 20th: Senator Steve Morris, President of the Kansas Senate, speaking on “Legislative update.” … On April 27th: Dr. Malcolm C. Harris, Sr., Professor of Finance, Friends University, speaking on “The Open Minded Roots of American Exceptionalism, and the Decline of America’s Greatness.”

Pompeo town hall meeting. From the congressman’s office: “Kansas Fourth District Congressman Mike Pompeo will host a town hall meeting at the WSU Hughes Metroplex in Wichita on Saturday, March 24 at 11:30 am. Congressman Pompeo will take questions from constituents and discuss issues related to Congress and the federal government. The public and members of the media are welcome and encouraged to attend.” The WSU Hughes Metroplex is located at 5015 East 29th Street North.

Crises of Governments. A new short book from Institute of Economic Affairs is Crises of Governments: The Ongoing Global Financial Crisis and Recession. Barro is Robert Barro is the Paul M. Warburg Professor of Economics at Harvard University; a Senior Fellow of the Hoover Institution of Stanford University; and a Research Associate of the National Bureau of Economic Research. The complete book is available online at no cost. Some highlights from the executive summary include these: “The ‘Great Recession’ has been particularly deep. In the USA, the loss of GDP relative to trend growth has been 9 per cent. The recovery from recession has also been much slower than the recovery from the recessions of the early 1980s and early 1990s. After those recessions, the USA achieved economic growth of 4.3 per cent and 3.6 per cent respectively.” … “One of the major causes of the crash was the boom in securitisation whereby inherently risky loans were packaged together and sold as very low-risk securities. This was strongly encouraged by the government; Fannie Mae and Freddie Mac, the government agencies responsible, should be privatised.” … “In general a fiscal stimulus package might raise output in the very short run but the long-term fiscal multiplier is negative. This leads growth to stall after an initial increase, as is happening at the moment.” … “Spending and welfare programme entitlements grew rapidly under President George W. Bush and that growth has continued under President Obama. In many respects, as far as economic policy is concerned, Bush and Obama are ‘twins’, just as Reagan and Clinton were ‘twins.’” … “The next crisis will be a crisis of government debt. This debt consists of both explicit borrowing and also of entitlements through social security programmes that have been dramatically expanded under Presidents Bush and Obama. This crisis of government debt is not just a US problem.” … “The coming crisis can be addressed in the USA only by reforming entitlement programmes and also by tax reform to reduce ‘tax expenditures’ or special exemptions from taxes for certain types of economic activity. In the EU, fiscal and monetary policy need to be decoupled so that member states do not become responsible for each other’s borrowing.”

What are the limits of democracy? “Imagine if everything in society was determined through a majority vote.” Politics — elections, in particular — is an especially bad way to make decisions. Free markets allow people to get just what they want from an incredibly broad array of choices. In elections, we are usually left to choose between the lesser of two evils on the basis of their campaign promises. And once in office, we learn the worthlessness of promises made on the campaign trail. It is best that we remove decision-making from the public sphere, as much as we can. “Therefore it is important to remember that individual choice, limited government, and free markets are the necessary condition for a free and truly democratic society,” concludes narrator Professor Pavel Yakovlev in this video from LearnLiberty.org, a project of Institute for Humane Studies.

Tagged as: Economics, Elections, Free markets, Kansas fourth district, Mike Pompeo, Politics, Wichita Pachyderm Club

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Stossel on “what is fair?”

by Bob Weeks on March 19, 2012

What is fair? It’s a timely question, as President Barack Obama has made this question a theme of his campaign for re-election. This week John Stossel took up this question in an episode of his weekly television show.

In his closing segment, Stossel summed up what was learned on the show:

The idea that government can make life more fair appeals to people. At least it does until they really think about it. So, I’ll try to help. The president says fairness requires higher taxes. But, is it fair that the richest ten percent of Americans already pay more of the nation’s income tax than the richest ten percent in every other industrial nation, even Sweden?

Is it fair, as Art Laffer said, that American corporations pay the highest corporate tax rate in the world?

And beyond taxes: the president says school vouchers aren’t fair because they’ll take money from government schools. But is it fair that the president sends his daughters to elite private schools, while denying other kids that opportunity? No, I would say.

Clearly the term “fair” can be spun lots of ways. Politicians, for example, like to compare peoples’ incomes. But do equal incomes make life fair?

Think about this. Who’s happier: this good-looking Florida surfer dude? He hangs out at the beach all day. I assume he’s popular with the ladies, but doesn’t make much money. Versus: This computer geek. This is Bill Gates when he was younger. He’s much richer, but he spent hours of his life hunched over a computer screen. I don’t presume to know whose life is better. …

It seems reasonable to want government to make life more fair. But when government takes your money and freedom to try to do that, government makes life worse. It makes everyone poor. And the biggest threat is not just that government makes us poor, it makes us less. As government gets bigger, individuals get smaller. What’s really fair is to have limited government. That means the same rules for everyone. No special favors, no handouts.

Tagged as: Barack Obama, Economics, Free markets, Politics

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For Wichita, no election news is good politics

by Bob Weeks on March 7, 2012

After last week’s election results in Wichita in which voters canceled an ordinance passed by the city council, I noticed there was no mention of the election results on the city’s website. So I dashed off a note to several responsible authorities, writing this:

“I notice that the city’s website carries no news on the results of the February 28th election. Is this oversight unintentional? Or does the city intend to continue spending its taxpayer-funded news producing efforts on stories with headlines like ‘Valentine’s at Mid-Continent Airport,’ ‘Rain Garden Workshops in February,’ and ‘Firefighter Receives Puppy Rescued at Fire Scene’?”

It’s not as though city staff doesn’t have time to produce a story on the election. The city’s public affairs department employs 15 people with an annual budget of some $1.3 million. While some of these employees are neighborhood assistants, there are still plenty of people who could spend an hour or two writing a story announcing the results of the February 28th election.

Except: That doesn’t fit in with the city’s political strategy. That strategy appears to be to ignore the results of the election, or to characterize the election as a narrowly-focused referendum on one obscure economic development tool.

At one time, however, the attitude of city hall was that the election was over the entire future of downtown Wichita. Mayor Carl Brewer said the election would cause “turmoil inside the community, unrest.” Council member Pete Meitzner (district 2, east Wichita) said we needed to have an early election date so “avoid community discourse and debate.” He later backpedaled from these remarks.

But now that city hall and its allies lost the election, the issue is now cast as having been very narrow, after all. Citizens aren’t against economic development incentives, they say. They’re just against hotel guest tax rebates.

This narrow interpretation illustrates — again — that we have a city council, city hall bureaucracy, and allied economic development machinery that is totally captured by special interests. Furthermore, the revealed purpose of the city’s public affairs department, including its television channel, is now seen as the promotion of Wichita city government, not Wichita and its citizens. These are two very different things.

Tagged as: Carl Brewer, Downtown Wichita revitalization, Economic development, Pete Meitzner, Politics, Wichita city council, Wichita city government

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Obama vs. the American Dream

March 4, 2012

Do politics reflect culture, or does culture reflect politics, wonders U.S. Representative Tim Huelskamp of Kansas.

Tagged as: Barack Obama, Kansas first district, Politics, Tim Huelskamp

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