Tag Archives: Regulation

Libby corned beef can

Food labeling act to be heard

A bill sponsored by U.S. Representative Mike Pompeo of Wichita will be heard in committee this week. On his Facebook page, Pompeo wrote:

On December 10 there will be a hearing in the Energy and Commerce Committee to review the Safe and Accurate Food Labeling Act. We will hear testimony from expert scientists and those with a wide variety of experiences. We will also hear from those who produce the safest food in the world here in America.

This legislation will make the following reforms:

  • Ensure that new innovations in food are — and always remain — safe by creating a mandatory process for all genetically engineered crops that requires an FDA safety review prior to their introduction into the food supply;
  • Empower the FDA to specify special labeling if these foods are found to be unsafe in any way, and;
  • Preserve the FDA’s 100-year management of food labeling and prevent a disruptive regulatory patchwork that will significantly increase the cost of food for families.

Following from Voice for Liberty in July, why this legislation should be passed.

For GMOs, a patchwork of state regulations would be a nightmare

A complicated regulatory landscape for genetically modified foods would shift power to large food producers at the expense of small companies and innovative startups.

Have you ever seen a product that displayed a label that states: “This product contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.” And notifying you that you should wash your hands after handling it?

In my case, it was a cable attached to a computer peripheral.

How is that that the State of California “knows” this product is harmful, but none of the other states or the federal government have such knowledge? And why should I — here in Kansas — be discouraged by buying a product and then be scared to use it, just because California believes it is harmful?

The answer is that California has a list of about 900 chemicals that it believes are harmful. If you want to sell a product in California, and if your product contains one of these, you must provide a warning label on your product.

Now, can you imagine the confusion that would result if other states had their own list of chemicals that they believe are harmful. It’s quite likely that each state would have a different list. Complying with the multitude of different harmful lists and labeling requirements would be a burden. It might be impossible — or very costly — to comply.

Today, we have similar potential for regulatory complexity cropping up in the form of state-based label requirements for foods that contain GMOs (Genetically Modified Organisms). Dozens of states are considering their own labeling requirements for food sold within their borders. It’s quite likely that each state would have a different set of labeling requirements. The complexity of complying with such disjointed regulations is costly and forbidding.

To help in this situation, United States Representative Mike Pompeo has introduced legislation that would eliminate the ability of states to require labeling. The bill is H.R. 4432: Safe and Accurate Food Labeling Act of 2014.

The proposed law does not prohibit voluntarily labeling.

What’s interesting is that opponents say this bill will create a new federal bureaucracy to enforce GMO regulations. I suppose that’s true. But it’s either that, or 50 states with 50 sets of regulations, all different. Cities could add regulations, too, further complicating the regulatory landscape.

Another observation: Critics of this bill say its supporters have “sold out” to the large food producer companies, Monsanto being mentioned most prominently. But it is large companies like Monsanto that are best able to cope with complicated regulations. Large companies have fleets of lawyers and compliance officers that can deal with burdensome regulation. And being large, these companies can spread the cost of regulation over a large sales volume.

But small companies, start up companies, and innovators don’t have lots of lawyers and compliance officers. Being small, they can’t spread the cost of regulation over a large sales volume. These are the companies that are most harmed by regulations like those that H.R. 4432 is designed to squelch.

It’s in the interest of large companies to have regulations that create barriers to entry to markets by new competitors. We often see companies lobbying to create such regulations. But H.R. 4432 will create a uniform playing field that is easier and simpler to navigate and obey.

Finally, markets have a remarkable ability to provide the products and information that consumers want. If a food producer senses that consumers want information about the ingredients in a product, they’ll provide it. Their competitors — if they see themselves disadvantaged — will also provide the information that consumers demand. The alternative is relying on 50 sets of government bureaucrats operating in 50 state capitals, plus ambitious city bureaucrats.

Cato Institute: A discussion of net neutrality

From Cato Institute, a discussion of net neutrality.

The debate continues over whether “net neutrality” is the equivalent of old-school utility regulation of telecommunication firms. The President and others are now asking the FCC to treat telecom firms in the same ways telephone companies were treated decades ago. Berin Szoka, president of TechFreedom, comments.

View below, or click here to view at YouTube.

Gary Oborny Fox News 2014-08-25

Wichita man who complained of regulations now asks for your tax dollars

Gary Oborny of Wichita appeared on Fox News in August to explain problems with onerous government regulations. Next week he will ask the Wichita City Council to use laws and regulations to grant him millions of tax dollars. For more, see Union Station TIF provides lessons for Wichita voters.

WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Arrival of Uber a pivotal moment for Wichita

In this excerpt from WichitaLiberty.TV: Now that Uber has started service in Wichita, the city faces a decision. Will Wichita move into the future by embracing Uber, or remain stuck in the past? View below, or click here to view at YouTube. Originally broadcast on September 14, 2014.

For more in this topic, see Arrival of Uber a pivotal moment for Wichita.

Open box 02

Stuck in the box in Wichita, part two

Wichitans are threatened with shutdown of the city’s bus system if voters don’t approve a sales tax. We need out-of-the-box thinking here.

In November Wichita voters will decide whether to create a sales tax of one cent per dollar. Part of the funds would be directed to the Wichita transit system.

In another example of “either/or” thinking, members of the Wichita Transit board floated the idea that if the sales tax doesn’t pass, we’ll shut down the entire system. The Wichita Business Journal reported “The rhetoric surrounding the November sales tax referendum heated up on Friday, when reports surfaced that some Wichita Transit advisory board members think the system should be shuttered if the sales tax fails.”

City hall pushed back. The official city position is that without a sales tax, there would be service reductions of 25 percent. But the shutdown threat was made and reported. It will undoubtedly have an effect on some people.

This is another example of the false choices Wichita city hall presents to Wichitans. Another is either pass the sales tax or we’re going to borrow money for a new water supply and you’ll pay a lot of interest.

Why does city hall give us such a limited range of choices? Why would members of the Wichita Transit board seed rumors that are so far away from the city’s official position?

Uber drivers in Wichita, September 18, 2014, 7:06 pm
Uber drivers in Wichita, September 18, 2014, 7:06 pm
Aren’t there other ways to provide transit in Wichita? One new choice in Wichita is the Uber ridesharing service. Its arrival increases transit options in Wichita. Will city hall allow Uber to stay in Wichita?

In some cities so-called “dollar vans” are operated by private industry in competition with city-owned traditional transit. Would Wichita city hall allow such services here?

Both Uber and “dollar vans” are, in my opinion, not compatible with Wichita’s existing laws and regulations. I fully expect the city to crack down on Uber soon. We’re then left with “big empty buses” and traditional taxi service as our transit choices, and perhaps higher taxes too.

Wichita Transit Center, 2014.

Wichita Transit System and the proposed sales tax

Examining claims made by “Yes Wichita” provides an opportunity to learn about the finances of the Wichita bus transit system.

In November Wichita voters will vote yes or no on a one cent per dollar sales tax. Part of that tax, ten percent, would go to the Wichita Transit system to pay back loans, cover operating deficits, and allow for some service expansion.

Coalition for a Better Wichita, a group that opposes the sales tax, has mentioned that instead of expanding the existing Wichita Transit system, we ought to take a look at private sector alternatives for providing transportation options for Wichitans. An example is the Uber service, which started operations in Wichita last month. (Uber’s arrival is not without controversy. It appears that Uber is not compatible with Wichita’s regulations. I expect that soon the city will clamp down on Uber, which would be a mistake for the city. See Arrival of Uber a pivotal moment for Wichita.)

Yes Wichita Facebook page. Click for larger version.
Yes Wichita Facebook page. Click for larger version.
Regarding Uber, a Facebook user named Michael Ramsey wrote this on his Facebook profile:

Commuting to work every day from the College Hill area costs $1.90 each way and instead of using ONE PENNY from every ten dollars that we spend jumpstarting our transit system the Coalition for Better Wichita has suggested that we use Über instead. HOW DOES THAT SIMPLE MATH WORK??? VoteYes Wichita.

The “Yes Wichita” group that supports the sales tax shared Ramsey’s remarks and added this comment:

Michael Ramsey makes a great point. The simple math shows for Micahel to use public tansit to get to and from work it would cost $998.40 a year, to ride Uber it would cost $3,640 (using the low range estimate). The would cost riders an additional $2,641.60 a year. Simple reasoning shows a one-cent sales tax would be more economical for those in need. #voteyeswichita #yeswichita

Since Wichita voters are urged to consider and use “simple math” and “simple reasoning,” let’s do just that. It will help voters understand some of the finances of public transit.

First, far from “jumpstarting” our transit system, one use of sales tax funds would be to repay $1.2 million in loans the transit system owes to the city. But let’s not quibble about the enthusiasm of those who want to spend more of other people’s money.

The important consideration that needs examination is the idea that a bus ride costs $1.90. (The actual adult fare, according to the Wichita Transit website, is $1.75 or $2.00 with transfer, so I’m not sure where the $1.90 figure comes from.)

Statistics from the Wichita Transit System reveal that the fare that passengers pay is nowhere near the cost of providing the bus ride. I happen to have handy financial figures from 2011 for the Wichita transit system. For that year, total operating funds spent were $13,914,580. Revenue from fares was $1,876,991. This means that considering operating expenses only, 13.5 percent of the cost of a bus trip was paid by the passenger’s fare.

If we include capital expenses of $1,570,175, the portion of the cost of a bus trip that was paid by the passenger’s fare is 12.1 percent. Figures in this neighborhood are common for transit systems in other cities.

So far from costing $1.90 (assuming the author’s data), a bus trip actually costs much more. It’s not bus passengers that pay these costs. It’s taxpayers who pay, most of whom do not use transit.

There are a number of ways to look at the costs of providing bus service. For Wichita in 2011, and considering only the regular bus service and not the more expensive on-demand service, here are cost figures:

Operating expense per passenger mile: $0.97
Operating expense per unlinked passenger trip: $4.79

The 97 cents per mile is not the cost of moving a bus one mile down the road. It’s the cost of moving one passenger one mile. These costs are for operating expenses only and do not include the capital costs of purchasing buses.

Bus transit is very expensive. For the “Yes Wichita” campaign to imply that one-tenth of one cent per dollar sales tax will fix the system ignores the system’s tremendous costs and disrespects the taxpayer subsidy the system already receives.

There’s something else. The Facebook posts seem to imply that someone proposes replacing Wichita bus transit service with Uber. I don’t think that anyone has made that claim. Services like Uber could be a complement to traditional transit. There could be other market-based complementary services.

It’s important to remember that services like Uber generate revenue from people who willingly use and pay for its service. This is very different from Wichita Transit. As shown above, the Wichita bus system receives its revenue primarily from taxes. Money collected in the farebox is a small portion of the system’s revenues. Meeting the needs of customers is not an important factor in determining the revenue the system receives.

Wichita Transit System, showing total operating expense, passenger miles traveled, and cost per passenger mile traveled. This data is for the regular bus service only.
Wichita Transit System, showing total operating expense, passenger miles traveled, and cost per passenger mile traveled. This data is for the regular bus service only.
WichitaLiberty.TV July 2, 2014

WichitaLiberty.TV: Unknown stories of economic development, Uber, Fact-checking Yes Wichita

In this episode of WichitaLiberty.TV: Wichita economic development, one more untold story. The arrival of Uber is a pivotal moment for Wichita. Fact-checking Yes Wichita on paved streets. View below, or click here to view at YouTube. Episode 58, broadcast September 14, 2014.

Arrival of Uber a pivotal moment for Wichita

Now that Uber has started service in Wichita, the city faces a decision. Will Wichita move into the future by embracing Uber, or remain stuck in the past?

Uber is a ridesharing service, although that word doesn’t describe it adequately. Here’s how it works. People apply to be Uber drivers. Uber does background checks to its satisfaction. Drivers must have a relatively late-model car. If Uber accepts drivers, they receive a smartphone with an app, and they’re in business.

Customers who want to use Uber must have a smartphone. Then, customers create an account and make payment arrangements such as credit card, Google Wallet, or PayPal.

Being driven by Uber on the Washington Beltway.
Being driven by Uber on the Washington Beltway.
When customers want a ride, they use the Uber smartphone app to make a request. A driver accepts the request and picks up the passenger. At the end of the ride, payment is made through the Uber app. There is no tipping.

After the ride, passengers rate drivers. (Drivers rate passengers, too.) Passengers receive a receipt via email that shows the route taken on a map.

I’ve used Uber a few times in Washington and was pleased with the experience: No extortion of tips, polite and courteous drivers, clean cars, offers of bottled water, a bowl of wrapped candy on the seat beside me, and magazines in front of me.

People like Uber. Especially the young millennials I know that live in cities where Uber operates. These are people that Wichita is desperately trying to appeal to. So you may be thinking “isn’t it great that Uber has expanded to Wichita?”

Uber in Wichita is good if you value innovation and progress. But not everyone does. There will be a scuffle.

Available Uber drivers on a Sunday morning in Kansas City. There were no Uber drivers available in Wichita at the time.
Available Uber drivers on a Sunday morning in Kansas City. There were no Uber drivers available in Wichita at the time.
In 2012 Wichita passed new taxi regulations. They create substantial barriers to entering the taxicab market. Some of the most restrictive include these: A central office, staffed at least 40 hours per week; a dispatch system operating 24 hours per day, seven days per week; enough cabs to operate city-wide service, which the city has determined is ten cabs; and a supervisor on duty at all times cabs are operating.

These regulations protect Wichita’s existing traditional taxi industry. There are three taxi companies in Wichita, with two having the same ownership. Already one owner is speaking out against Uber. The public agenda for Tuesday’s meeting of the Wichita City Council lists a citizen speaking on the topic “Taxi Cab Insurance.” I imagine this speaker is inspired to speak on this topic due to Uber’s arrival.

The taxi companies that benefit from the restrictive Wichita regulations are likely to fight to keep their competitive barriers in place. The question is this: Does Uber fall under these regulations?

So far, the city’s position is this, according to the Wichita Eagle: “From the government side, interim City Attorney Sharon Dickgrafe said Uber is not a taxi service because the private cars its drivers use aren’t equipped with taxi meters.” (Ride-sharing app begins offering Wichitans a lift, August 28, 2014)

I’ll expect the city’s position to change when the city realizes that Uber cars do have meters. Not clunky old-fashioned meters, but meters running on smartphones that track journeys using GPS. After all, Uber charges for its trips just like traditional cabs: A fee to enter the cab, and then charges based on distance traveled, and in some cases, time. (In Wichita, Uber charges a base fare of $2.00 plus $0.20 per minute and $1.65 per mile, plus $1.00 safe rides fee. There is a $5.00 minimum. When you request a ride, Uber can give you a fare quote.)

The overhaul of Wichita taxi regulations in 2012 was partly inspired by the perception that drivers were not projecting a good image for the city. Now there are regulations in addition to the above that require standards of dress and hygiene, and “knowledge of the geography of the city and the area, and knowledge of local public and tourist destinations and attractions.” Cabbies must take a customer service class delivered by city bureaucrats.

Taxi driver was on sex offender registrySo Wichita has many regulations for the taxi industry. But as I explain in more detail below, the city admitted that it failed to enforce a really important regulation: Convicted sex offenders shouldn’t be taxi drivers. But through the city’s mistake, one such man was granted a taxi driver license. He’s now serving a lengthy prison sentence for raping a passenger.

The standard argument against Uber is that it is unfair because Uber doesn’t have to follow laws and regulations. But Uber is regulated by a very powerful force: The marketplace. Remember, passengers rate Uber drivers. Can you rate your traditional Wichita taxi driver? What if you felt that your traditional taxi driver was padding the fare by taking a roundabout route? Uber trips are monitored by GPS. Passenger receipts have a map that shows the route taken, which can be the basis for a fare review.

The traditional taxi industry complains that Uber doesn’t have to follow follow laws and regulations. That’s nonsense. Uber drivers must follow traffic laws. Uber drivers and passengers must observe the most fundamental of laws: “Don’t hit people, and don’t take their stuff.” Beyond that, the taxi industry laws and regulations are from a bygone era. The traditional taxi industry is comfortable with these laws and regulations. The taxi companies can cope with them, and they make it difficult for competition to form. The purpose of these laws and regulations is not to benefit passengers, in most cases. They exist for the benefit of the taxicab industry.

But there is a transformation underway. Wichita can stop it if it wants to, but that would be a mistake.

The city says it is considering whether this industry — Uber — needs regulation. The question I have is this: Has the City of Wichita earned the right to regulate taxis? The answer is no. The city has created regulations that prop up the near-monopoly of traditional taxi companies and stifle innovation, but failed to protect passengers from being raped by convicted sex offenders.

Beyond that, the city has to decide whether it can back off its heavy-handed regulation and allow market-based innovation to thrive. The city has to decide in favor of customers or the traditional taxi industry and its near-monopoly ownership. It’s a decision that will let us learn a lot about the future direction of Wichita.

Regulation failure leads to tragedy in Wichita

wichita-taxi regulationsWhen the Wichita City Council passed new taxicab regulations in 2012, the focus was on dirty cabs and slovenly drivers who were not acting as goodwill ambassadors for the city. Mayor Carl Brewer said he was “tired” of hearing complaints about drivers.

So the council passed new regulations regarding taxicabs, including the requirement that drivers attend customer service training provided by Go Wichita Convention and Visitors Bureau. Other regulations determine taxicab office staffing levels and level of supervision.

Bryon Scott Spohn, a taxi driver accused of raping a passenger.

But something very important slipped through the cracks. The Wichita Eagle has reported the city didn’t competently enforce regulations designed to protect passenger safety:

A Wichita taxicab driver now in prison for raping a passenger last year shouldn’t have been allowed to operate a taxi in the first place.

That’s because at the time Bryon Scott Spohn applied for a taxi driver’s license in late 2012, he was on a state sex offender registry for possession of child pornography. A city ordinance that went into effect in July 2012 says a taxi driver’s license shall not be issued to anyone who “is now or has ever been registered as a sexual offender with any state, county or local government.”

Spohn shouldn’t have received a taxi license but did because the new change banning registered sex offenders wasn’t communicated to staff members doing background checks on taxi driver applicants, city officials told The Eagle on Friday. The city has fixed the problem that led to the oversight in Spohn’s case, they said. Taxi driver in prison for raping passenger was on sex offender registry, March 3, 2014

The regulations regarding customer service training were implemented. But the really important regulations? Lack of oversight, says the city.

I wonder: Who is regulating the regulators?

U.S. Capitol Dome us-capitol-325341_1280

In Kansas fourth district, fundamental issues of governance arise

The contest in the Kansas fourth district is a choice between principle and political expediency, and between economic freedom and cronyism.

While some news articles and political columns have described the contest for Republican Party nomination for United States House of Representatives between Todd Tiahrt and Mike Pompeo as a yawner, as between two candidates with few and only minor distinguishing positions — there are important differences. The press is starting to notice.

A Crony Capitalist Showdown

In the Wall Street Journal columnist Kimberly Strassel made the case for this contest’s importance as a bellwether of Republican sentiment:

A big decision comes Tuesday in the Kansas GOP primary. The Sunflower State is in the throes of political upheaval, with most of the attention on the fortunes of Gov. Sam Brownback and Sen. Pat Roberts. But the race that may say far more about the direction of the GOP is taking place in Wichita, the state’s Fourth District, in the standoff between Rep. Mike Pompeo and challenger Todd Tiahrt.

The 50-year-old Mr. Pompeo — an Army veteran, Harvard Law grad and businessman — was elected in the 2010 tea party surge, with a particular focus on liberating private enterprise. He’s made a name for himself as a leader in the fight to end corporate welfare and pork, and to cut back on strangling regulations. (Potomac Watch: A Crony Capitalism Showdown, August 1, 2014)

(If the above link does not work for you because you don’t have a subscription to the Wall Street Journal, click here.)

Such principles are preciselyAfter detailing some legislative activity and accomplishment, Strassel notes the difficulty that fighters for economic freedom encounter: “Such principles are precisely what conservative voters claim to demand from their representatives. Yet the antisubsidy line has hardly been an easy one, even in conservative Kansas — which collects its share of federal largess. And Mr. Tiahrt knows it.”

Concluding her column, Strassel outlines the choice that so many writers have failed to realize:

The choice voters fundamentally face on Tuesday is whether they want a congressman who works to get government smaller for everyone and to end corporate welfare, or a congressman who grabs what he can of big government to funnel to his district, and embraces crony capitalism. The latter is a return to the unreformed GOP, a groove plenty of Republicans would happily slide back into — if only voters gave the nod. We’ll see if Kansas conservatives do.

Another example of the difference between the two candidates is the Export-Import Bank. Conservative groups are urging that Congress not reauthorize the bank, a vote that will happen soon. The most common argument is that it harms American jobs, and there are allegations of corruption in its operations.

While in Congress, Pompeo voted against the reauthorization of the bank. He has said he would vote against its reauthorization again unless there is significant reform. Tiahrt, on the other hand, voted in favor of the Export-Import Bank. It’s representative of the type of cronyism he has supported while in office, and would likely support again, especially as his positions tack to the political left.

Finally, Tiahrt has recently criticized Charles Koch and Americans for Prosperity, leading us to wonder if Tiahrt understands or embraces the principles of economic freedom and free markets.

Kansas Farm Scenic Sky Clouds Wheat Farmland kansas-243079_1280

For GMOs, a patchwork of state regulations would be a nightmare

A complicated regulatory landscape for genetically modified foods would shift power to large food producers at the expense of small companies and innovative startups.

Have you ever seen a product that displayed a label that states: “This product contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.” And notifying you that you should wash your hands after handling it?

In my case, it was a cable attached to a computer peripheral.

How is that that the State of California “knows” this product is harmful, but none of the other states or the federal government have such knowledge? And why should I — here in Kansas — be discouraged by buying a product and then be scared to use it, just because California believes it is harmful?

The answer is that California has a list of about 900 chemicals that it believes are harmful. If you want to sell a product in California, and if your product contains one of these, you must provide a warning label on your product.

Now, can you imagine the confusion that would result if other states had their own list of chemicals that they believe are harmful. It’s quite likely that each state would have a different list. Complying with the multitude of different harmful lists and labeling requirements would be a burden. It might be impossible — or very costly — to comply.

Today, we have similar potential for regulatory complexity cropping up in the form of state-based label requirements for foods that contain GMOs (Genetically Modified Organisms). Dozens of states are considering their own labeling requirements for food sold within their borders. It’s quite likely that each state would have a different set of labeling requirements. The complexity of complying with such disjointed regulations is costly and forbidding.

To help in this situation, United States Representative Mike Pompeo has introduced legislation that would eliminate the ability of states to require labeling. The bill is H.R. 4432: Safe and Accurate Food Labeling Act of 2014.

The proposed law does not prohibit voluntarily labeling.

What’s interesting is that opponents say this bill will create a new federal bureaucracy to enforce GMO regulations. I suppose that’s true. But it’s either that, or 50 states with 50 sets of regulations, all different. Cities could add regulations, too, further complicating the regulatory landscape.

Another observation: Critics of this bill say its supporters have “sold out” to the large food producer companies, Monsanto being mentioned most prominently. But it is large companies like Monsanto that are best able to cope with complicated regulations. Large companies have fleets of lawyers and compliance officers that can deal with burdensome regulation. And being large, these companies can spread the cost of regulation over a large sales volume.

But small companies, start up companies, and innovators don’t have lots of lawyers and compliance officers. Being small, they can’t spread the cost of regulation over a large sales volume. These are the companies that are most harmed by regulations like those that H.R. 4432 is designed to squelch.

It’s in the interest of large companies to have regulations that create barriers to entry to markets by new competitors. We often see companies lobbying to create such regulations. But H.R. 4432 will create a uniform playing field that is easier and simpler to navigate and obey.

Finally, markets have a remarkable ability to provide the products and information that consumers want. If a food producer senses that consumers want information about the ingredients in a product, they’ll provide it. Their competitors — if they see themselves disadvantaged — will also provide the information that consumers demand. The alternative is relying on 50 sets of government bureaucrats operating in 50 state capitals, plus ambitious city bureaucrats.

For McGinn, a liberal voting record is a tradition

Based on votes made in the Kansas Senate, the advertising claims of Sedgwick County Commission candidate Carolyn McGinn don’t match her record.

Kansas CapitolIn a radio advertisement, Carolyn McGinn says she is conservative. In a mailer, she touts her “fiscal conservative leadership” in the Kansas Senate.

But voting records don’t match these claims.

Several voting scorecards in recent years show Senator McGinn ranking low in terms of voting for economic freedom issues. These issues generally concern taxation, wasteful spending, and unnecessary regulation. In recent years, a freedom index has been produced by Kansas Policy Institute. In 2012 the Kansas Economic Freedom Index was a joint product of Americans for Prosperity-Kansas, Kansas Policy Institute, and myself. In 2010 I produced an index by myself. All tabulations show McGinn rarely voting in favor of economic freedom.

In the 2014 formulation, McGinn scored 25.8 percent. Four senators (Kansas has 40 senators) had lower scores. Some Wichita-area legislators that had higher scores than McGinn include Senator Oletha Faust-Goudeau and Representatives Ponka-We Victors, Gail Finney, Jim Ward, Tom Sawyer, and Brandon Whipple. All these are Democrats, by the way, and they voted more in favor of economic freedom than did Carolyn McGinn.

In 2013, McGinn scored 40 percent. Eight senators had lower scores.

In 2012 the scores were calculated in a different manner. McGinn scored -6, with 16 senators scoring lower.

There was no index for 2011.

In 2010, on an index that I produced, McGinn scored seven percent. Three other senators had the same score, and one had a lower score.

At a recent forum, McGinn criticized the concept of a vote index, telling the audience: “The economic freedom index, I just find that interesting. Because it’s based on amendments after we’re out of session, so you can pick and choose what you want for who.”

She’s right, in a way. I don’t know what she meant by “amendments,” but the organizations that construct voting scorecards choose votes that they believe distinguish candidates along some axis. Usually the votes are chosen after they’re made, although sometimes organizations “key vote” an issue. That means they alert legislators in advance of a vote that the vote will be included on their scorecard.

There are organizations that are in favor of more spending, less accountability, and fewer choices for Kansas parents and schoolchildren. They produce scorecards, too. In particular, Kansas Association of School Boards found that McGinn never voted against their position from 2009 to 2012. Kansas National Education Association, while not making a scorecard public, recommended that its members vote for McGinn.

Wichita government prefers rebates to markets

Today the Wichita City Council may decide to revive a program to issue rebates to persons who purchase water-saving appliances. The program was started last summer, but less than half the allocated rebate money was claimed. The city will argue that this program has no cost, as the funds are left over from last year’s program. Except: The city could use the money not spent on rebates to either reduce water rates or retire water system debt. Following is an article from last year on this topic.

Wichita begins rebates and regulation

Instead of relying on market forces, Wichita imposes a new tax and prepares a new regulatory regime.

Equus BedsAt today’s meeting of the Wichita City Council, the city decided to spend up to $1 million this year on rebates to encourage people to buy water-efficient appliances. This will save a vanishingly small amount of water at tremendous cost.

The worst realization from today’s city council meeting is how readily citizens, politicians, and bureaucrats will toss aside economic thinking. The antimarket bias that Bryan Caplan explains in The Myth of the Rational Voter: Why Democracies Choose Bad Policies was in full display — even by the conservative members of the council.

It’s also clear that some council members want to go down the road of austerity rather than abundance.

What did we learn today? Many speakers used the terms “conservation” and “judicious.” Conservation is good. Judicious use is good. But each person applies different meanings to these concepts. A great thing about living in a (relatively) free economy is that each person gets to choose to spend their time and money on the things that are important to them, and in the amounts they want. We make these choices many times each day. Sometimes we’re aware of making them, and sometimes we’re not.

For example: If you’re watching television alone in your home, and you go to the kitchen to get a snack, do you turn off the television for the moment that you’re not watching it? No? Well, isn’t it wasting electricity and contributing to global warming to have a switched-on television that no one is watching, even for just a moment?

Some people may turn off the television in this scenario. But most people probably decide that the effort required to save a minute’s worth of electricity consumption by a television isn’t worth the effort required.

(By the way, the type of television programs you watch each evening: Is it worth burning dirty coal (or running precious water through dams, or splitting our finite supply of uranium atoms, or spoiling landscapes and killing birds with wind turbines) just so you can watch Bill O’Reilly or Rachel Maddow rant? Or prison documentaries? Or celebrity gossip? Reruns of shows you’re already seen? And I’ve seen you fall asleep while watching television! What a monumental waste. We should require sleep sensors on all new televisions and rebates to retrofit old sets.)

But when people leave their homes empty to go to work, almost everyone turns off the television, lights, and other appliances. Many may adjust their thermostats to save energy. People make the choice to do this based on the costs of leaving the lights on all day versus the cost of turning them on and off. No one needs to tell them to do this. The relative prices of things do this.

(You may be noting that children have to be told to turn off televisions and lights. That’s true. It’s true because they generally aren’t aware of the prices of things, as they don’t pay utility bills. But adults do.)

In most areas of life, people use the relative prices of things to make decisions about how to allocate their efforts and consume scarce resources. Wichita could be doing that with water, but it isn’t.

The conservation measures recommended by speakers today all have a cost. Sometimes the cost is money. In some cases the cost is time and convenience. In others the cost is a less attractive city without green lawns and working fountains. In many cases, the cost is shifted to someone else who is unwilling to voluntarily bear the cost, as in the rebate program.

At least we’ll be able to measure the cost of the rebate program. For most of the other costs, we’re pretending they don’t exist.

Instead of relying on economics and markets, Wichita is turning to a regulatory regime. Instead of pricing water rationally and letting each person and family decide how much water to use, politicians and bureaucrats will decide for us.

All city council members and the mayor approved this expansion of regulation and taxation.

(Yes, it’s true that the rebates will be funded from the water department, but that’s a distinction without meaningful difference.)

The motion made by Mayor Carl Brewer contained some provisions that are probably good ideas. But it also contained the appliance rebate measure. Someone on the council could have made a substitute motion that omitted the rebates, and there could have been a vote.

But not a single council member would do this.

It’s strange that we turn over such important functions as our water supply to politicians and bureaucrats, isn’t it?

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WichitaLiberty.TV: Uber not for Wichita, Wichita fails at transparency, and Wichita jobs

In this episode of WichitaLiberty.TV: Uber is an innovative transportation service, but is probably illegal in Wichita. Then, the City of Wichita fails again at basic government transparency. Finally, a look at job growth in Wichita compared to other cities. Episode 45, broadcast June 1, 2014. View below, or click here to view at YouTube.

Requesting an Uber driver.

Uber, not for Wichita

A novel transportation service worked well for me on a recent trip to Washington, but Wichita doesn’t seem ready to embrace such innovation.

Have you heard of Uber and similar services? Uber says it is “… evolving the way the world moves. By seamlessly connecting riders to drivers through our [smartphone] apps, we make cities more accessible, opening up more possibilities for riders and more business for drivers. From our founding in 2009 to our launches in over 70 cities today, Uber’s rapidly expanding global presence continues to bring people and their cities closer.”

Uber works like this: Riders use their smartphones and the Uber app to request a ride. Drivers — who have undergone an application process and background check — acknowledge the request and pick up the rider. When the dropoff is made, payment is handled through the Uber app.

Being driven by Uber on the Washington Beltway.
Being driven by Uber on the Washington Beltway.
My first trip using Uber was from Dulles International Airport to my hotel in downtown Washington, a pretty long trip at nearly 27 miles. My Uber fare was $59.50. While that is expensive, my hotel’s website listed cab fare as $60. A private sedan would be $90, with reservations required.

So it seems like Uber is priced about the same as a regular taxicab. But: There’s a big difference. The Uber fare is all-inclusive. The way I elected to pay with Uber — which I suspect is probably the easiest way — was to store my credit card with the Uber system. As we approached my destination, I asked my driver if I could add a tip through the Uber app. He said no, there’s no need to. As he transferred my luggage to the bellman, it seemed awkward to not offer a tip. But I confirmed with DC natives that’s the way it is with Uber: No tipping.

No tipping! That’s refreshing. I’m tired of cab drivers extorting tips. But you may be asking: What motivates Uber drivers to offer good service? One factor is that customers rate their drivers through the smartphone app. An intriguing factor is that Uber drivers rate their passengers. Also, a customer service representative followed up regarding my trip. Another thing: My drivers seemed to like their job. They took pride in their clean cars and amenities.

And what service it was. There are several levels of Uber service. I used UberX, which is the least expensive. Other Uber services available in some cities include luxury cars or SUVs. The three cars I rode in were a Toyota Prius, a Lexus, and a Volvo. All were impeccably clean — both the cars and the polite drivers. On all three rides I was offered a bottle of water. Two cars had magazines for me to read. One had a bowl of wrapped candy on the seat next to me. Drivers asked if I was comfortable with the setting of the air conditioning. They were not blasting their radios, as has been the case with some of my cab trips.

In short, the service was great. While the Uber fare was the same as what my hotel estimated for a taxi fare, there was an important difference — no tip to the Uber driver. No need for cash, no need for a taxi driver to fumble with an awkward method of accepting credit cards.

A receipt from a trip using Uber. Click for larger version.
A receipt from a trip using Uber. Click for larger version.
And … a neat receipt available on the Uber website or in my email. When I’ve asked a cab driver for a receipt, I’ve received a blank form.

And … I had an estimate of the fare before I requested a driver. In my case, the estimate was $60.00, with the actual fare at $59.50. Remember, no tipping.

Uber in Wichita?

Recently Uber and Lyft (a similar service) started operations in Kansas City, Missouri. Nearly immediately the city council passed additional regulations that make it tougher — or impossible — for these services to operate.

Requesting an Uber driver.
Requesting an Uber driver.
In Wichita, it’s certain that Uber would be in violation of city ordinances. In 2012 the city passed new taxi regulations which erect and enforce substantial barriers to entering the taxicab market. Some of the most restrictive include these: Drivers must work for a company that has a central office staffed at least 40 hours per week; a taxicab company must have a dispatch system operating 24 hours per day, seven days per week; it must have enough cabs to operate city-wide service, which the city has determined is ten cabs; and a supervisor must be on duty at all times cabs are operating.

A dispatch system. That’s 1950s technology. Uber and similar services use smartphones. No dispatcher needed. No central office required. When you request a ride with the Uber app, you see a screen showing the available drivers nearby, along with an estimate of when the driver will arrive. You can watch the driver’s progress towards your pickup location. Can you do that with Wichita’s cab companies with their supervisors and dispatch systems?

Requesting a driver in Wichita using Uber. It's not available.
Requesting a driver in Wichita using Uber. It’s not available.
Wichita has implemented regulations regarding the hygiene and local knowledge of taxi drivers, enforced by bureaucrats. How is Uber regulated? First, there are the customer ratings, a powerful force. Then, provided with Uber receipts is a map of the route the driver took to deliver riders to their destinations. If riders are concerned that drivers are padding fares by taking roundabout routes, that’s easy to see and resolve, and the Uber dashboard lets riders request a fare review. Can you imagine how difficult that would be in Wichita, to prove that your driver padded your fare or extorted a tip?

Regulation by bureaucrats, or regulation by customers. There’s a difference, and Wichita is served by the least effective, thanks to our city council.

To top it off, while Wichita has regulations regarding the personal hygiene of drivers and the cleanliness of their vehicles, the city fell short in protecting drives from something really important, like violent crime. After the city passed the new regulations, a passenger was raped by a driver. The Wichita Eagle reported “[the driver] shouldn’t have received a taxi license but did because the new change banning registered sex offenders wasn’t communicated to staff members doing background checks on taxi driver applicants, city officials told The Eagle on Friday. The city has fixed the problem that led to the oversight in Spohn’s case, they said.” (See Regulation failure leads to tragedy in Wichita.)

wichita-taxi regulationsThe regulations regarding customer service training were implemented. But the really important regulations? Lack of oversight, says the city. Which leads us to wonder: Who is regulating the regulators? If an Uber driver committed such a crime, the company would undoubtedly be held liable and experience a loss of reputation. But how do we hold city bureaucrats accountable for their regulatory failures?

Going forward

Will Wichita consider relaxing taxicab regulations so that Wichitans might be served by a superior service like Uber? Not likely, I would say. The city council is proud of the new and restrictive regulations. The city is served by three taxi companies, two having the same owner. These companies are likely to lobby aggressively against allowing Uber and similar services in Wichita, just as taxi companies have done in other cities.

Recent discussion about the future of transit in Wichita have not included services like Uber. At last week’s city council meeting Council Member Janet Miller (district 6, north central Wichita) spoke about baby boomers who may soon be aging and either can’t drive, or don’t want to drive. Yet, she said, they have disposable income and want to spend it. These are ideal customers for Uber.

Uber and the like might not be a total replacement for traditional city bus transit. But it could help many people, and it could provided needed competition to the city’s taxicab fleet. But it doesn’t seem likely that we’ll see Uber in Wichita soon, if at all.

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WichitaLiberty.TV: Old Town, Economic development incentives, and waste in Wichita

In this episode of WichitaLiberty.TV: A look at a special district proposed for Old Town, the process of granting economic development incentives and a cataloging of the available tools and amounts, and an example of waste in Wichita. Episode 43, broadcast May 18, 2014. View below, or click here to view on YouTube.

Wichita Old Town

Wichita seeks to form entertainment district

A proposed entertainment district in Old Town Wichita benefits a concentrated area but spreads costs across everyone while creating potential for abuse.

Wichita Old TownThis week the Wichita City Council will consider forming an entertainment district covering greater Old Town. The purpose of the new law, according to city documents, is to help control crime in the area. Current law enforcement efforts are not effective, declares the proposed statute: “WHEREAS, the occurrence of criminal activity in the Old Town Entertainment District and areas adjacent thereto continues to occur despite law enforcement’s increased efforts and presence within this district.”

Some of the features of the proposed law are a mandatory fine of $500 for certain crimes if they occur within the Old Town Entertainment District, and the ability to “map” or prohibit offenders from entering the Old Town Entertainment District. The punishment for repeat offenses escalates rapidly. To be able to control the behavior of Wichitans with fine granularity, the proposed ordinance contains definitions of “art,” “fine art,” and “art gallery.” The capacity of a coffee shop cannot be over 100 people. An “Entertainment Establishment” is not a place that holds book readings and storytelling. (Well, I’ve been to a few book readings that were certainly not entertaining.)

While Wichita civic leaders proclaim this ordinance as a step forward, let’s examine some points.

Costs and subsidy

Recall that Old Town was built using millions in taxpayer subsidy, both on and off the books. Although the tax increment financing district has ended, subsidy still flows to Old Town. An example of off-the-books subsidy is the large police presence required to keep Old Town safe. City documents hint at this, as in this excerpt from the agenda report for Tuesday’s city council meeting: “Crime statistics reveal that crime overall has decreased in Old Town due to higher police presence.”

In 2008 Wichita Police Chief Norman Williams was quoted as saying “As Old Town changed from a warehouse district to an entertainment district, it has presented a ‘tremendous challenge’ to public safety.”

In 2006 the Wichita Eagle reported on the level of policing required in Old Town, noting “Beginning Friday night, police will put two officers on horseback in Old Town and have as many as six more officers walking through the entertainment district, he said. Currently, around the bars’ 2 a.m. closing time, about a dozen officers patrol the area.”

The challenges of policing entertainment districts are well known and not unique to Wichita’s Old Town. See Policing Entertainment Districts for a research report. The extra costs of the policing are known, too. Two examples — others are easy to find — are these:

Policing costs exceed Scottsdale bar district’s revenue. “The annual cost for policing downtown Scottsdale’s entertainment district far exceeds the amount of revenue generated from the high concentration of bars in the area, according to city figures.”

Police Asking Bars To Pay Extra For Security. “Faced with a budget deficit, the Hartford Police Department is asking some downtown bars and restaurants to help pay the overtime costs for police officers assigned to maintain order in the city’s entertainment district during the busiest nights of the week, when large crowds of partygoers pose the most risk for public safety threats.”

Despite the extra costs of policing Old Town, at least one of its property owners who has received millions in taxpayer subsidy still thought his taxes were too high. Another Old Town merchant sought and received a no-interest and low-interest loan from the city when his business was failing, despite having already received taxpayer subsidy.

Potential loss of liberties

Special districts like that proposed for Old Town give police more power. With that comes increased potential for abuse. In Kansas City, the Power & Light District has been Power and Light District Kansas City 2009-09-16 39involved in lawsuits alleging racial discrimination as reported in Class-action lawsuit alleges racial discrimination at Power & Light. The dress code there is alleged to be targeted against young urban black men.

In Wichita’s Old Town, Mike Shatz has covered past incidents. On the proposed ordinance, he notes that “Like most of the laws in Old Town that govern the behavior of the patrons, it is expected that these new ordinances, if passed, would be primarily enforced outside the few bars that still cater to a primarily minority crowd.”

On the potential for racially discriminatory application of laws, Shatz writes “Anyone familiar with police activity in [this] district knows it will be the black men who are targeted by these new laws, and the arrest statistics will prove it.” Also: “White people, on the other hand, can actually get into full-on fist fights in front of police officers without repercussion, as I and other activists witnessed outside the Pumphouse (a bar in the district) while investigating Old Town policing activities last year.” See Old Town Association seeks to drive minorities out of the district with new laws

What have we done?

Does the need for special police power and special penalties in Old Town demonstrate that we’ve created something we really don’t want? Will Wichitans across the city be forced to pay for extra police that benefit a concentrated area of town, and it alone?

Along with the establishment of the entertainment district with its special laws, we could also ask that the property owners in that district absorb its extra costs. The district is defined in the proposed statute. It would be a simple matter to identify the properties in the district and add something extra to the property tax bills. Something like this is done to support the Wichita Downtown Development Corporation with funds to promote economic development. If that can be done, it’s not unreasonable for Wichitans to ask that Old Town tax itself to pay for its unique costs.

Public Choice - A PrimerBut laws like the entertainment district ordinance are usually tied to powerful economic interests who lobby the government for special protections. It is a problem identified and studied in public choice economics. As the Wichita City Council routinely votes in favor of special interests as opposed to the public good, we can expect that the council will fully embrace this new exemplar of special laws created for special people and special interest groups.

ALEC Banner

ALEC should stand up to liberal pressure groups

From April 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)

Kansas wind turbines

Renewables portfolio standard bad for Kansas economy, people

Kansas wind turbinesA law that forces Kansans to buy expensive electricity is not good for the state and its people.

A report submitted to the Kansas House Standing Committee on Energy and Environment in 2013 claims the Kansas economy benefits from the state’s Renewables Portfolio Standard, but an economist presented testimony rebutting the key points in the report.

RPS is a law that requires the state’s electricity utilities to generate or purchase a certain portion of their electricity from renewable sources, which in Kansas is almost all wind. An argument in favor of wind energy requirementy from the Polsinelli Shugart law firm is at The Economic Benefits of Kansas Wind Energy.

Michael Head, a Research Economist at Beacon Hill Institute presented a paper that examined each of Polsinell’s key findings. The paper may be read at The Economic Impact of the Kansas Renewable Portfolio Standard and Review of “The Economic Benefits of Kansas Wind Energy” or at the end of this article. An audio recording of Head speaking on this topic is nearby.

Michael Head, Beacon Hill Institute

Here are the five key findings claimed to be economic benefits to the Kansas economy, and portions of Head’s responses.

Key Finding #1: “New Kansas wind generation is cost-effective when compared to other sources of new intermittent or peaking electricity generation.”

The first observation to make from this key finding is that if it were true the state RPS policy is not necessary. If wind power is truly cost-effective compared to other sources of energy, state mandates that wind power be used should be repealed, allowing wind power to compete with other technologies to provide low cost electricity in Kansas.

This point is obvious. The actions of the wind power industry — insisting on mandates and subsidies — lets us know that they don’t believe their own claim.

Key Finding #2: “Wind generation is an important part of a well-designed electricity generation portfolio, and provides a hedge against future cost volatility of fossil fuels.”

Hedging has been, and will continue to be, a useful tool for utilities, and benefits the consumer. But the Kansas state government should not engage in this level of industrial policy by regulating just how much utilities can hedge, all for the sake of requiring wind power production. This is not a benefit in itself. Utilities will attempt to maximize profits by consistently analyzing the energy market and making the best decisions, often through long term purchasing agreements. … In short, hedging is a valuable tool when left to the discretion of the utility, but by utilizing a heavy-handed mandate, state lawmakers are actually constraining the ability of the utilities to make sound business decisions.

Key Finding #3: “Wind generation has created a substantial number of jobs for Kansas citizens.”

This key finding fails to take into consideration opportunity costs, a concept that Bastiat explained in his 1850 essay, and is a prime example of the reviewed paper only considering benefits. If a shopkeeper has a window broken, this creates work for a glazer to replace the window. However, this classic “broken window” fallacy mistakes breaking windows as job creation policy. At this point “The Economic Benefits of Kansas Wind Energy” is correct, wind generation does create jobs, just as a broken window creates jobs. But the report stops at this point and fails to provide a complete analysis of the effect of wind generation on total employment in Kansas.

As Bastiat showed, a consideration must be made to the opportunity cost. How would the shopkeeper have spent his money if he did not need to replace his window? He could use the money on capital investment, further growing his business, hire another worker or make various other purchases. Regardless of what it was, they would have all brought him more benefit, than replacing his window. If not, he would have broken the window himself.

This is one of the most important points: By forcing Kansans to pay for more expensive electricity, we lose the opportunity to use money elsewhere.

Key Finding #4: “Wind generation has created significant positive impact for Kansas landowners and local economics.”

This key finding makes a common mistake by assuming transfer payments are a benefit, a fallacy. The transfers of money via lease payments or property tax payments are not benefits. This transfer of money is a cost to one party and a benefit on the other, and can be illustrated easily.

What if Kansas wind farms vastly overpaid for their land and lease payments were valued at $1 billion a year. This report would place the benefit of wind power leasing this land at $1 billion a year. But the project has not changed, where did these new benefits come from?

In fact, there would not be any change to the net benefit of the project. Landowners would amass benefits equal to $1 billion minus the land value and utilities would amass costs equal to $1 billion minus the land value. These costs would in turn be passed along to rate payers in the form of higher utility costs. This illustrates the point that this policy is industrial policy. By dispersing the costs of a project to all citizens in the state, small, but powerful, groups with strong lobbying efforts are able to gather the rewards.

Key Finding #5 “The Kansas Renewable Portfolio Standard is an important economic development tool for attracting new business to the state.”

This key finding is related closely with the analysis of the job benefits that wind power purportedly conveys. Of course, legally requiring that utilities use specific sources of electricity will attract new business in that sector to the state. But we need to see the whole picture. This policy has costs, which will be borne by state residents and businesses via higher utility prices.

In conclusion, Head asked the obvious question: “With all of these supposed benefits of wind power, why does it require a government mandate and taxpayer funding?”

‘Ten Thousand Commandments’ for 2014 released

Ten Thousand Commandments 2014

By Clyde Wayne Crews

Full Report Available Here

Ten Thousand Commandments is the Competitive Enterprise Institute’s annual survey of the federal regulatory state. Authored by CEI Vice President for Policy Clyde Wayne Crews, it shines a light on the large, growing, and hidden costs of America’s regulatory state.

The scope of federal government spending and deficits is sobering, but federal regulations cost hundreds of billions – perhaps trillions – of dollars annually. Unfortunately, they get little attention in policy debates. Regulatory costs are difficult to quantify because, unlike taxes, they are unbudgeted and often indirect. Ten Thousand Commandments compiles scattered government and private data on the numbers and costs of regulations and about the agencies that issue them, in an attempt to make the regulatory state more comprehensible.

Highlights of the 2014 Edition Include:

  • Combined with $3.454 trillion in federal spending, Washington’s share of the economy now reaches 31 percent.
  • Costs for Americans to comply with federal regulations reached $1.863 trillion in 2013. That is more than the GDPs of Canada or Australia.
  • This is the 21st edition of Ten Thousand Commandments. In that time, 87,282 final rules have been issued. That’s more than 3,500 per year or about nine per day.
  • The “Unconstitutionality Index” is the ratio of regulations issued by agencies compared to legislation passed by Congress and signed into law by the president. The ratio stood at 51 for 2013. That means there were 72 new laws and 3,659 new rules – 51 rules for every law, or a new rule every 2 ½ hours.
  • Regulatory costs amount to an average of $14,974 per household – 23 percent of the average household income of $65,596 and 29 percent of the expenditure budget of $51,442. This exceeds every item in the household budget except housing – more than health care, food, transportation, entertainment, apparel, services, and savings. Some 63 departments, agencies and commissions have regulations in the pipeline.
  • The 2013 Federal Register contains 79,311 pages, the fourth highest ever. The top two all-time totals are 81,405 pages in 2010 and 81,247 in 2011, both under Obama.
  • The top six federal rulemaking agencies account for 49.3 percent of all federal rules. In 2013, these were the Departments of the Treasury, Commerce, Interior, Health and Human Services, and Transportation and the Environmental Protection Agency.
  • Small businesses pay more in per-employee regulatory costs. Firms with fewer than 20 employees pay an average of $10,585 per employee, compared to $7,755 for those with 500 or more employees.

Wayne Crews – Ten Thousand Commandments 2014.pdf

Ten Thousand Commandments 2014 on Scribd

Kansas advanced biofuels plant subject of New York Times story

The New York Times has provided a story on the future of advanced biofuels, using a plant under construction in Kansas as the centerpiece. The plant, near the western Kansas town of Hugoton, produces cellulosic ethanol. Instead of using kernels of corn as input, the plant uses material like corn stalks and wheat straw. When the Hugoton plant starts operations in May, it will be twice as large as the largest plant currently in operation.

A few notes:

The lede of the story: “There is an old joke in the energy business that advanced biofuels are the fuel of the future, and always will be.”

The legislation requiring the use of advanced biofuels (Energy Independence and Security Act of 2007) was the product of a Republican administration.

The executive vice president of Abengoa complains that the government is changing the rules.

Experts are not convinced of the potential of cellulosic ethanol plants to be economically viable.

A Canadian biofuel company wants the EPA to create regulations requiring the use of its product, and to provide incentives.

The Kansas cellulosic plant has received a $134 million loan guarantee from the Energy Department, the same type of benefit the notorious Solyndra company received.

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WichitaLiberty.TV: Kansas school finance and reform, Charles Koch on why he fights for liberty

In this episode of WichitaLiberty.TV: The Kansas legislature passed a school finance bill that contains reform measures that the education establishment doesn’t want. In response, our state’s newspapers uniformly support the system rather than Kansas schoolchildren. Then, in the Wall Street Journal Charles Koch explains why liberty is important, and why he’s fighting for that. Episode 39, broadcast April 20, 2014. View below, or click here to view at YouTube.

polar-bear-400

Are you worried about global warming?

polar-bear-400To the extent that global temperatures are rising, and the extent that mankind is the cause, we should be concerned about global warming. Climate change I meant to say, please excuse me.

It’s no wonder that the term global warming has been replaced by climate change. As the following two charts show, the models that are in common use by climate scientists have predicted rising temperatures, but actual observations of temperatures have not conformed to predictions. Temperatures have been level in recent years.

Here’s a simplified chart of the temperatures predicted by climate scientists compared to actual temperatures. A more complicated version follows. Click on either chart for a larger version.

As you can see, actual temperatures have not risen as they should have, if only the Mother Earth would conform to the predictions of climate scientists. Despite this lack of predictive power, global warming alarmists (oops, I meant climate change alarmists) insist we should radically restructure our economy in order to accommodate the predictions of climate models that have been shown to be not very predictive — if we are concerned about accuracy.

Temperatures v Predictions 1976-2013

Temperatures v Predictions 1976-2013 b

wichita-taxi regulations

Regulation failure leads to tragedy in Wichita

wichita-taxi regulations

When the Wichita City Council passed new taxicab regulations in 2012, the focus was on dirty cabs and slovenly drivers who were not acting as goodwill ambassadors for the city. Mayor Carl Brewer said he was “tired” of hearing complaints about drivers.

So the council passed new regulations regarding taxicabs, including the requirement that drivers attend customer service training provided by Go Wichita Convention and Visitors Bureau. Other regulations determine taxicab office staffing levels and level of supervision.

Bryon Scott Spohn, a taxi driver accused of raping a passenger.

But something very important slipped through the cracks. The Wichita Eagle has reported the city didn’t competently enforce regulations designed to protect passenger safety:

A Wichita taxicab driver now in prison for raping a passenger last year shouldn’t have been allowed to operate a taxi in the first place.

That’s because at the time Bryon Scott Spohn applied for a taxi driver’s license in late 2012, he was on a state sex offender registry for possession of child pornography. A city ordinance that went into effect in July 2012 says a taxi driver’s license shall not be issued to anyone who “is now or has ever been registered as a sexual offender with any state, county or local government.”

Spohn shouldn’t have received a taxi license but did because the new change banning registered sex offenders wasn’t communicated to staff members doing background checks on taxi driver applicants, city officials told The Eagle on Friday. The city has fixed the problem that led to the oversight in Spohn’s case, they said. Taxi driver in prison for raping passenger was on sex offender registry, March 3, 2014

The regulations regarding customer service training were implemented. But the really important regulations? Lack of oversight, says the city.

I wonder: Who is regulating the regulators?

magnifying-glass-2

What type of watchdog are you?

magnifying-glass
To help citizens become government watchdogs, the Franklin Center for Government and Public Integrity is providing a new resource. It’s the Watchdog Quiz, and it will help you discover what type of role you will want to fill as a government watchdog.

The quiz takes just a few moments to complete, and answering the questions will help you discover all the things that citizens can do to be involved in government, especially at the local level. My Watchdog type is “Content Creator.” What is yours?

Click here to take the quiz.

Following is some material from Watchful Citizens Follow Founders’ Vision For America.

“The salvation of the state is watchfulness in the citizen.”

This quote inscribed on the state capitol building in Lincoln, Nebraska, has become our North Star here at Watchdog Wire. We believe that citizens can contribute to better and more efficient local government by staying involved in their communities and speaking up when something doesn’t add up.

But what does it mean to be “watchful?”

The answer is different for everyone, and has changed throughout American history. For Thomas Paine and Ben Franklin, staying watchful came in the form of pamphlets and newspaper columns. Later, being watchful was entrusted to elected representatives in Congress. Now, technology has made it easier than ever for citizens to stay informed and hold government accountable.

The medium used is ever-changing but the sentiment of keeping watch remains the same — to ensure the blessing of liberty to ourselves and our posterity.

So where do you fit into the American story? How do you keep watch on government and its expanding role in our lives? Take the Watchdog Quiz to find out.

Continue reading at Watchful Citizens Follow Founders’ Vision For America.

WichitaLiberty.TV.09

WichitaLiberty.TV January 26, 2014

In this episode of WichitaLiberty.TV: The City of Wichita’s performance report holds a forecast for increasing debt in Wichita. Then, the government sector in Kansas has grown faster than the private sector. What does this mean? Finally: What can the story of “Bootleggers and Baptists” teach us about regulation? Episode 29, broadcast January 26, 2014. View below, or click here to view at YouTube.

In Wichita, more tax for more transit?

Wichita City HallIn 2014 it is likely that Wichitans will be asked to pay an increased sales tax, part of which would fund the existing bus transit service, as the system is not sustaining itself. Another part of the increased sales tax might expand the service. Wichitans ought to think twice before voting to spend additional taxpayer funds for either reason. In fact, Wichita ought to consider spending less on public transit, and look to the private sector to provide transit that people want to use, and which meets their real needs.

Transit is expensive. To be more precise, government-provided transit is expensive. I’ve gathered data from the National Transit Database and provided it in a more useful format that that provided by the government. You may click here to use this interactive visualization of operating costs. (This table provides the codes that are used.) As for Wichita, the nearby excerpt (click for a larger version) shows that for 2011, the cost per passenger mile for the “regular” bus service was $0.97. This is not the cost to move a bus one mile. It is the cost to move one passenger one mile. This value is not out of line compared to other cities.

wichita-transit-2014-01

If Wichita were to expand its transit service to offer wider coverage and longer hours of service, the cost per passenger mile probably would not go down. We would still have a system that is very expensive, especially considering the level of service that would still be provided.

Can the private sector do better? One thing we could do is to outsource or privatize the transit system. Government would still pay for the system, but the private sector would operate the buses. This would likely be an improvement, as outsourcing almost always results in lower costs and improved service.

(By the way, many people would be surprised to learn of the fraction of expenses paid for through fares. Considering operating expenses only, the number is 13.5 percent. Considering operating and capital costs, just 12.1 percent comes from fare revenue. The remainder is provided by taxpayers. So when a bus rider puts a dollar in the farebox, taxpayers contribute an additional six dollars to fund the system.)

What Wichita could do to really improve service is to allow private competition to the existing transit system. Here’s an example of what could happen:

Brooklyn’s dollar van fleet is a tantalizing demonstration of how we might supplement mass transit with privately-owned mini-transit entrepreneurs.

America’s 20th largest bus service — hauling 120,000 riders a day — is profitable and also illegal. It’s not really a bus service at all, but a willy-nilly aggregation of 350 licensed and 500 unlicensed privately-owned “dollar vans” that roam the streets of Brooklyn and Queens, picking up passengers from street corners where city buses are either missing or inconvenient. The dollar van fleet is a tantalizing demonstration of how we might supplement mass transit to include privately-owned mini-transit entrepreneurs, giving people alternative ways to get around, and creating jobs. (The (Illegal) Private Bus System That Works, The Atlantic.)

This is not an example of government paying a private-sector company to do a job that government formerly did. Instead, this is allowing the private sector to operate on its own, free to succeed or fail based on how well it provides service. It’s allowing the private sector to be flexible and innovative in ways that government bureaucracy, like our transit system, is not able.

There are other things we could do to help improve transit service in Wichita. On his television show, John Stossel recently had a segment on a system called “Lyft.” This is a system available in about a dozen large cities in America, and there are other similar systems. You might sign up to be a driver. You go through a background check, and if you pass, you’re a driver for Lyft. Then people who need a ride use their smart phone to request a trip. You, as a Lyft driver, can decide if you’d like to provide the ride.

After the driver drops off the rider, the rider — that is the customer — decides how much to pay the driver for the ride. The system makes a suggestion, but other than that it’s up to the customer to decide how much to pay. As you might imagine, the system uses feedback to rate both drivers and customers. People in the Lyft system have an incentive to be good providers of service, and also good consumers of service.

Isn’t that a tremendous contrast to the way government works? Government works through force — through taxation — requiring all of us to pay to support a bus system that very few people use. And few people use the system because — like most government programs — the service is lousy. It’s a self-perpetuating feedback loop. Lousy government service leads to few people using the service, which leads to the need for more subsidy. But in the Lyft system people willingly cooperate, aided by technology.

Could Lyft work in Wichita? Not likely, because government stands in the way. I’m pretty sure Lyft would be illegal in Wichita. The city recently passed taxicab regulations that are quite strict: Taxi companies must have a central office, staffed at least 40 hours per week; a dispatch system operating 24 hours per day, seven days per week; enough cabs to operate city-wide service, which the city has determined is ten cabs; and a supervisor on duty at all times cabs are operating.

These regulations stifle innovation and entrepreneurship. Things like Lyft and the dollar vans aren’t compatible with these regulations. These regulations mean that our present transit and taxi service — which no one seems happy with — is all that we will ever have.

Here’s something else: In the Lyft system, passengers ride in the front seat of the car next to the driver. Total strangers do that! Can you imagine if you asked to sit in the front seat of a taxicab in Wichita? This is the private sector versus government-regulated monopolies.

transit-service-in-wichita

Recently the director of the Wichita transit system made a presentation to Wichita City Council members outlining various possibilities about what Wichita could do with bus service. Was allowing the private sector a role in providing transit a possibility? Not that I heard. It’s just not in the DNA of government bureaucrats and unfortunately, many elected officials, to consider letting the private sector do a job.

Exchange data security breaches don’t require notification

The breach of consumer data at Target has brought the issue of data security in focus. Yesterday a senator called for more protection and accountability for consumers and retailers. The following story from Watchdog.org tells us that government does not want to hold itself to the standards it wants the private sector to observe. There has been legislation proposed. Rep. Diane Black [R-TN6] has introduced H.R. 3731: Federal Exchange Data Breach Notification Act of 2013, whose title is “To require an Exchange established under the Patient Protection and Affordable Care Act to notify individuals in the case that personal information of such individuals is known to have been acquired or accessed as a result of a breach of the security of any system maintained by the Exchange.”

Feds not required to report security breaches of Obamacare exchange website

By 

HACKED OFF: Hackers or careless bureaucrats could cause private information to be spilled across the Internet. But the federal government, unlike most states, don't have to tell users when they have been compromised.

HACKED OFF: Hackers or careless bureaucrats could cause private information to be spilled across the Internet. But the federal government, unlike most states, don’t have to tell users when they have been compromised.

By Eric Boehm | Watchdog.org

Americans who buy health insurance through the federal Obamacare exchange website could have their personal information stolen by hackers and never even know it.

Most of the state-run health exchange websites will be covered by state laws that require notification when government databases are breached by hackers. But there is no law requiring notification when databases run by the federal government are breached, and even though the Department of Health and Human Services was asked to include a notification provision in the rules being drawn up for the new federal exchange, it declined to do so.

Other protections for individuals’ privacy, like the Health Insurance Portability and Accountability Act, or HIPAA, do not apply to the government-run exchange, only to health providers and insurance companies operating within the exchange.

Privacy advocates and cyber-security experts have had concerns about the lack of a federal notification law for years and hope the scrutiny of the Obamacare exchange will finally bringchange.

“The notification requirement is a very important part of overall security,” saidDeven McGraw, director of the Health Privacy Project at the Center for Democracy and Technology. “People should be told when their information is at-risk.”

The lack of a notification requirement is particularly bad for the health insurance exchange website because of all the questions surrounding the site’s security. Poor security, coupled with the website’s high-profile problems, could make it a target for hackers either seeking to steal identities or embarrass the government.

Unfortunately, security is often an afterthought for the government, said David Kennedy, CEO of TrustedSEC, an Ohio-based cyber-security firm. Kennedy has testified before Congress about security threats in the Obamacare exchange and the need for notification laws.

“All we need is something that says if the federal government is breached, all we have to do is alert the public,” he told Watchdog.org. “Healthcare.gov is just one website of hundreds that have had these issues going back through the years.”

Together it creates a possible nightmare scenario. Without strong security on the front end, the hastily built and not fully operational website could become a treasure trove for hackers looking to steal identities. But without any laws requiring that those victims be notified by the federal government users of the Federal health exchange will be in the dark about any potential security breaches of their private data.

When the federal Obamacare exchange was being developed by HHS prior to its troubled launch on Oct. 1, experts told the department that it should include a data-breach provision in its policies for the website even though one was not required under federal law.

The department flatly declined to do so.

The final rules for the exchanges were approved on March 27, 2012, meeting of HHS officials, according to the Federal Register.

At that meeting, two commenters asked HHS to ensure the exchanges would promptly notify affected enrollees in the event of a data breach or unauthorized access to the exchange’s databases. One suggested that a full investigation be launched each time such a breach occurred, with the goal of holding hackers legally and financially accountable for breaking into the website.

The department’s response: “We do not plan to include the specific notification procedures in the final rule. Consistent with this approach, we do not include specific policies for investigation of data breaches in this final rule.”

Since there is no federal notification requirement, breaches of any and all federal databases can occur without the public ever being informed.

The only way to find out a hack has occurred is when the government decides to disclose it — as several federal law enforcement agencies did last month in response to attacks from Anonymous, a group of super-hackers who threatened to take down the FBI website and others.

But hacks that happen behind the scenes —potentially stealing everything from Social Security numbers to Department of Homeland Security watch lists — never have to be reported.

“That’s alarming because there could be a number of federal databases that are compromised already and we don’t know about it,” Kennedy said. “The exchange is part of a bigger problem.”

Federal privacy protections contained in HIPAA also do not apply to the databases created by the federal exchange website, McGraw said, even though health insurers doing business through the exchange must be HIPAA compliant.

In other words, the health plan itself is covered by HIPAA and any breaches of security that affect a consumer who has purchased a specific plan would have to be reported. But the process of choosing and purchasing a plan through the federal exchange — along with any information entered into the federal exchange as part of that process — is not subject to HIPAA protections.

“The problem with the exchanges is that they are such new entities, and they are so unique that existing laws don’t really cover them,” McGraw said.

But 48 states have laws on the books requiring that they give notification to individuals who may have had personal information stolen or leaked from a government database. Many states require that government agencies and departments alert the state attorney general so investigations can be launched.

In states that opted to run their own health insurance exchanges, those laws generally cover security breaches of the exchanges, McGraw said, though it depends on the specific wording of each state law.

Those state laws are how data breaches of several state-level health insurance exchange websites have come to light.

In September, Watchdog.org reported on a data breech of the Minnesota health exchange — known as “MNsure” — that potentially affected as many as 2,400 people.

In Florida, concerns about data breaches of the state-run exchange website prompted Gov. Rick Scott to send a letter to Congress saying Floridians would not exchange privacy for insurance.

On the federal exchange, such breaches are possible, maybe even likely, since the site was launched without comprehensive testing of the security controls for the system.

A Sept. 27 memo to Medicare chief Marylin Tavernner said insufficient testing of the website before the Oct. 1 launch “exposed a level of uncertainty that can be deemed a high risk,” the Associated Press reported in October.

Even though the federal government does not have to report any breaches of security, at least a few already have occurred.

The most high-profile case so far is that of Thomas Dougall, a South Carolina lawyer who had his personal information accidentally leaked to another person after using the Obamacare exchange last month.

We logged on and compared some prices,” Dougall later told Fox News’ Greta Van Susteren. “We came home last Friday night to have a young man from a completely different state calling to tell me that when he logged on … he got all my personal information in exchange.

Dougall only found out about that breach of security because the recipient was kind enough to give him a call.  Without a requirement that the exchanges report such problems — whether the result of nefarious hackers or glitches in the programming — it is impossible to tell how many other Americans have had their private information released by the federal exchange.

Kennedy said he would not recommend that anyone use the federal exchange until it is more secure and until breaches of security are reported.

“I would say think twice about it, at least until we get more details,” he said.

Kennedy says he supports universal health care and his criticisms of the website are not rooted in political motivations. But the former U.S. Marine whose firm provides computer security to several Fortune 100 companies says there have been “zero changes” to the security of the health insurance exchange website in the run-up to the much-touted Dec. 1 re-launch.

Congress has debated a federal notification law in each of the past three years, but one has never been passed.

In July, during a hearing of the House Committee on Energy and Commerce, lawmakers heard testimony from a variety of experts who explained the need for a federal breach notification requirement.

David Thaw, a law professor at the University of Connecticut who specializes in cyber-security and the legal framework around it, said data breach notification laws, combined with comprehensive data security, are an essential part of protecting consumers and businesses.

I analogize the effects of breach notification alone to locking the bank or vault door while leaving a back window wide open,” he said.

With the federal health insurance exchange, there are questions about whether the vault door has been adequately locked.

But there is no doubt that the back window is still wide open.

Boehm is a reporter for Watchdog.org and can be reached at EBoehm@Watchdog.org. Follow him on Twitter @EricBoehm87

WichitaLiberty Podcast, episode 2

Voice for Liberty logo with microphone 150In this episode of WichitaLiberty Podcasts: David Boaz, Executive Vice President of the Cato Institute, visits the WichitaLiberty.TV studios and explains the ideas behind libertarianism and its approach to government and society. New figures from the Kansas State Department of Education show that spending on public schools in Kansas is rising, and at a rate higher than the year before. Is Wichita economic development being managed? The problem of overcriminalization. City of Wichita proves Einstein’s definition of insanity. Episode 2, October 25, 2013.

Shownotes

WichitaLiberty.TV October 27, 2013. David Boaz, Executive Vice President of the Cato Institute, visits the WichitaLiberty.TV studios and explains the ideas behind libertarianism and its approach to government and society.
Kansas school spending rises
Wichita economic development not being managed
USA versus You: The problem of overcriminalization
City of Wichita proves Einstein’s definition of insanity

USA versus You: The problem of overcriminalization

Events in recent months have justifiably caused Americans to ask whether a powerful, activist, and interventionist government and bureaucracy is good to have. Those who have been looking at overcriminalization, however, have known that government and regulatory agencies have been targeting and oppressing Americans for a long time. And it’s getting worse.

USA vs. You cover

The new website USAvsYOU.com holds useful information for Americans to know about how law has changed in recent years, compared to how it operated for centuries before. The booklet available for reading is titled USA vs. You: The flood of criminal laws threatening your liberty.

As an example, here is a troubling trend:

In many criminal laws, the “guilty mind” requirement has been removed or weakened. This means people can go to prison regardless of whether they intended to break the law or knew their actions were in violation of the law.

Traditionally, crimes had two components: (l) mens reu (guilty mind), and (2) actus reus (bad act).

Today, many criminal laws and regulations have insufficient or no mens rea (guilty mind) requirement — meaning, a person need not know that his or her conduct is illegal in order to be guilty of the crime.

An example story is the following:

THE CRIME: Rescuing a baby deer

Jeff Counceller, a police officer, and his wife Jennifer spotted an injured baby deer on their neighbor’s porch. Instead of turning a blind eye to the dying fawn, the Councellers took the deer in and nursed it back to health.

An Indiana Conservation Officer spotted the fawn (named Dani) in the Councellers’ yard — and promptly charged the couple with unlawful possession of a deer, a misdemeanor offense. Fortunately for her, the day that “Little Orphan Dani” was to be euthanized by the state, the deer escaped into the wild. Due to public outrage, the government dropped the charges.

The website and booklet is a product of Heritage Foundation and it partners such as the American Civil Liberties Union. Heritage has been covering the issue of overcriminalization here. It describes the problem as this: “Overcriminalization describes the trend to use the criminal law rather than the civil law to solve every problem, to punish every mistake, and to compel compliance with regulatory objectives. Criminal law should be used only if a person intentionally flouts the law or engages in conduct that is morally blameworthy or dangerous.”

We have problems like this in Wichita, believe it or not. An ordinance passed by the Wichita City Council in 2010 might ensnare anyone visiting city hall, if they happen to have a broad-tip marker in their purse or briefcase:

Animated marker

“Possession of Graffiti Implements Prohibited in Public Places. It is unlawful for any person to have in his/her possession any graffiti implement while in, upon or within one hundred (100) feet of any public facility, park, playground, swimming pool, skate park, recreational facility, or other public building owned or operated by the city, county, state, or federal government, or while in, under or within one hundred (100) feet of an underpass, bridge, abutment, storm drain, spillway or similar types of infrastructure unless otherwise authorized.”

“Graffiti implements” are defined broadly earlier in the ordinance.

If you’re thinking about a career in taxicab driving, be advised that the city has ordinances punishing you if you’re found to have violated these standards: “Fail to maintain their personal appearance by being neat and clean in dress and person” and “Fail to keep clothing in good repair, free of rips, tears and stains.”

We could use the shutdown as a teachable moment

The United States government is in the third day of a partial shutdown. It’s quite a coincidence that Chapter 9 of Henry Hazlitt’s book “Economics in One Lesson” talks about government employees right at the time we’re in a government shutdown.

Here, Amanda BillyRock illustrates this chapter of “Economics in One Lesson.” (Click here to view at YouTube.)

You know how on a day when it has snowed or there’s been an ice storm, you hear on the news that “only essential government employees should report to work today.” When I hear that, I’ve wondered “Why do we have non-essential government employees?”

EPA logo

Here’s something that’s a little shocking. I didn’t believe it when I first heard it. The news agency Reuters is reporting that the Environmental Protection Agency — the EPA — has decided that only seven percent of its employees are essential. The others are non-essential. So why do we have them, if they are not essential?

At the Department of Education, only five percent of the employees are considered to be essential and will work during the shutdown. How, I wonder, are we going to educate children during this time?

Do private sector companies have non-essential employees? Of course. But market competition provides a balancing force, a motivation to avoid waste. That’s not present as strongly in government, if at all.

I understand that we depend on government for so many things that during a shutdown — be it partial or whatever — people’s lives will be disrupted. We’re seeing news stories of people showing up at our great national parks, for example, and being turned away because the park is closed. The solution to these problems is to take these products and services away from government and let the private sector operate them.

That’s something that seems very foreign to a lot of people. Take the inspection of airplanes, for example. Right now people are saying that if government inspectors are not available to inspect airplanes, they’re going to crash. Well ask yourself this question. Does an airline strive to operate its airplanes safely only to satisfy government inspectors, or does it wish to protect the lives of its customers and employees, and safeguard its physical assets like the expensive airplanes?

Or consider a meatpacking plant. Does it endeavor to produce safe beef only because inspectors are watching, or because it is concerned for its customers and wants to avoid the terrible publicity and economic harm of a recall?

I’m not saying that beef and airplanes should not be inspected. But they shouldn’t be inspected by government. It’s very difficult to hold government accountable. When we see episodes where government breaks down, such as perhaps government inspectors who might not be doing a good job inspecting beef, the proposed solution is always more money for government. More money for more inspectors and bureaucrats. But, what if we had a private market for inspection services? If there was a failure of inspection, in other words, if a private inspection company was not being thorough, that would become known. The reputation of that company, which is its primary asset, would be harmed. No longer would we trust that company when it says the beef is safe. The company would likely fail, and someone else would provide these services. We can’t really do this with government.

Markets can provide a very strong form of regulation, if we let them work.

To some extent, this happened during the financial crises of 2008. The credit rating services were not owned by government, but they had a government-granted monopoly on providing credit rating services, and many say that their failure to produce accurate assessments of the risks of securities was pivotal in contributing to the collapse. Might it have been different if there was a free market for credit rating services? We don’t really know.

This government shutdown is an opportunity to realize what we really need government to do, what can be better done by the private sector, and maybe even what doesn’t need to be done at all.

Robosquirrel

It’s a tough battle, though. Last week Nancy Pelosi said there was nowhere to cut. How about this: $325,000 was spent on a robotic squirrel named “RoboSquirrel.” This National Science Foundation grant was used to create a realistic-looking robotic squirrel for the purpose of studying how a rattlesnake would react to it. Can’t we cut that? I’m sure Pelosi would say “what would the scientific researchers do if we didn’t fund this program?” As Hazlitt tells us, they’d do something else. Hopefully something else that the market — that is, you and I — value enough to buy it because we want it, not because government taxed us to pay for it. But we can’t see that right now, while we do see robosquirrel. The seen and unseen, again.

I don’t know. Maybe I shouldn’t be so harsh in my criticism. We did learn that a successful rattlesnake attack on a squirrel involves three steps. First, striking and hitting a prey animal, and that’s usually from only about 10 inches away. Then envenomating the prey animal, and the animal may attempt to escape. Then the rattlesnake must relocate the envenomated prey animal after it succumbs to the venom.

Envenomating. I’d never heard that word before. Maybe we really need to get government back to work after all.

ObamaCare chart updated

obamacare-chart

Republicans of the Joint Economic Committee of the U.S. Congress have released an update of a chart to help us navigate ObamaCare. (Click on it for a larger version.) From the July 2010 press release accompanying the original chart: “Four months after U.S. House Speaker Nancy Pelosi famously declared ‘We have to pass the bill so you can find out what’s in it,’ a congressional panel has released the first chart illustrating the 2,801 page health care law President Obama signed into law in March. Developed by the Joint Economic Committee minority, led by U.S Senator Sam Brownback of Kansas and Rep. Kevin Brady of Texas, the detailed organization chart displays a bewildering array of new government agencies, regulations and mandates.”

Read all about it at Health Care Chart — Updated Chart Shows Obamacare’s Bewildering Complexity.

Like it or not, we’re coming to plan for you

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
— H.L. Mencken

thinktomorrowtoday-website-2013-09-16

We’ve learned that the government planners will plan for you, whether or not you want it. Despite having voted against participation, two Kansas counties are still listed as members of a regional planning consortium. Further, a month after the Butler County Commission sent a letter asking that references to its participation be removed, its name still appears.

The new website thinktomorrowtoday.org promotes and supports the sustainable communities government planning process in South-Central Kansas. The planning effort has been rebranded as “South Central Kansas Prosperity.”

reap-website-partners-2013-09-16

In the logo, on a map, and in narrative, Butler and Sumner counties are listed as participants. But these newspaper headlines say something else about what the elected officials in these counties thought about joining the plan:

Sumner County isn’t on board with fed’s sustainable communities planning grant

Sumner County isn’t on board with fed’s sustainable communities planning grant (Wichita Eagle, July 30, 2012): “One of the counties served by a sustainable communities planning grant recently declined to be a partner in the effort, expressing concerns about federal intrusion in local government.”

Butler County decides not to support REAP planning grant

Butler County decides not to support REAP planning grant (El Dorado Times, August 23, 2012): “The issue at the center of the Butler County Commission’s discussion about a sustainable communities planning grant was local control.”

I can understand why these counties decided to opt out of the planning process and why two Sedgwick County Commissioners voted against participation.

Cato Institute Senior Fellow Randal O’Toole, in his book The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future, explains the danger and harm of government plans. I remember two passages in particular:

Somewhere in the United States today, government officials are writing a plan that will profoundly affect other people’s lives, incomes, and property. Though it may be written with the best intentions, the plan will go horribly wrong. The costs will be far higher than anticipated, the benefits will prove far smaller, and various unintended consequences will turn out to be worse than even the plan’s critics predicted.

And this:

The worst thing about having a vision is that it confers upon the visionary a moral absolutism: only highly prescriptive regulation can ensure that the vision overcomes an uncaring populace responding to a free market that planners do not really trust. But the more prescriptive the plan, the more likely it is that the plan will be wrong, and such errors will prove extremely costly for the city or region that tries to implement the plan.

We see the vision of moral absolutism on display: Despite two counties voting against participation, their overseers will, nonetheless, create a plan for them.

It’s for their own good, after all.

WichitaLiberty.TV August 4, 2013

WichitaLiberty.TV logo

In this episode of WichitaLiberty.TV, host Bob Weeks explains a complicated economic development mechanism used in Wichita that hides the true business welfare and cronyism taking place. Then Bob notices that the City of Wichita has banished disagreement, and then shows how the unintended consequences of regulation can be deadly. Episode 7, broadcast August 4, 2013.

The real free lunch: Markets and private property

As we approach another birthday of Milton Friedman, here’s his article where he clears up the authorship of a famous aphorism, and explains how to really get a free lunch. Based on remarks at the banquet celebrating the opening of the Cato Institute’s new building, Washington, May 1993.

I am delighted to be here on the occasion of the opening of the Cato headquarters. It is a beautiful building and a real tribute to the intellectual influence of Ed Crane and his associates.

I have sometimes been associated with the aphorism “There’s no such thing as a free lunch,” which I did not invent. I wish more attention were paid to one that I did invent, and that I think is particularly appropriate in this city, “Nobody spends somebody else’s money as carefully as he spends his own.” But all aphorisms are half-truths. One of our favorite family pursuits on long drives is to try to find the opposites of aphorisms. For example, “History never repeats itself,” but “There’s nothing new under the sun.” Or “Look before you leap,” but “He who hesitates is lost.” The opposite of “There’s no such thing as a free lunch” is clearly “The best things in life are free.”

And in the real economic world, there is a free lunch, an extraordinary free lunch, and that free lunch is free markets and private property. Why is it that on one side of an arbitrary line there was East Germany and on the other side there was West Germany with such a different level of prosperity? It was because West Germany had a system of largely free, private markets — a free lunch. The same free lunch explains the difference between Hong Kong and mainland China, and the prosperity of the United States and Great Britain. These free lunches have been the product of a set of invisible institutions that, as F. A. Hayek emphasized, are a product of human action but not of human intention.

At the moment, we in the United States have available to us, if we will take it, something that is about as close to a free lunch as you can have. After the fall of communism, everybody in the world agreed that socialism was a failure. Everybody in the world, more or less, agreed that capitalism was a success. The funny thing is that every capitalist country in the world apparently concluded that therefore what the West needed was more socialism. That’s obviously absurd, so let’s look at the opportunity we now have to get a nearly free lunch. President Clinton has said that what we need is widespread sacrifice and concentrated benefits. What we really need is exactly the opposite. What we need and what we can have — what is the nearest thing to a free lunch — is widespread benefits and concentrated sacrifice. It’s not a wholly free lunch, but it’s close.

Let me give a few examples. The Rural Electrification Administration was established to bring electricity to farms in the 1930s, when about 80 percent of the farms did not have electricity. When 100 percent of the farms had electricity, the REA shifted to telephone service. Now 100 percent of the farms have telephone service, but the REA goes merrily along. Suppose we abolish the REA, which is just making low-interest loans to concentrated interests, mostly electric and telephone companies. The people of the United States would be better off; they’d save a lot of money that could be used for tax reductions. Who would be hurt? A handful of people who have been getting government subsidies at the expense of the rest of the population. I call that pretty nearly a free lunch.

Another example illustrates Parkinson’s law in agriculture. In 1945 there were 10 million people, either family or hired workers, employed on farms, and the Department of Agriculture had 80,000 employees. In 1992 there were 3 million people employed on farms, and the Department of Agriculture had 122,000 employees.

Nearly every item in the federal budget offers a similar opportunity. The Clinton people will tell you that all of those things are in the budget because people want the goodies but are just too stingy to pay for them. That’s utter nonsense. The people don’t want those goodies. Suppose you put to the American people a simple proposition about sugar: We can set things up so that the sugar you buy is produced primarily from beets and cane grown on American farms or so the sugar in addition comes without limit from El Salvador or the Philippines or somewhere else. If we restrict you to home-grown sugar, it will be two or three times as expensive as if we include sugar from abroad. Which do you really think voters would choose? The people don’t want to pay higher prices. A small group of special interests, which reaps concentrated benefits, wants them to, and that is why sugar in the United States costs several times the world price. The people were never consulted. We are not governed by the people; that’s a myth carried over from Abraham Lincoln’s day. We don’t have government of the people, by the people, for the people. We have government of the people, by the bureaucrats, for the bureaucrats.

Consider another myth. President Clinton says he’s the agent of change. That is false. He gets away with saying that because of the tendency to refer to the 12 Reagan-Bush years as if they were one period. They weren’t. We had Reaganomics, then Bushonomics, and now we have Clintonomics. Reaganomics had four simple principles: lower marginal tax rates, less regulation, restrained government spending, noninflationary monetary policy. Though Reagan did not achieve all of his goals, he made good progress. Bush’s policy was exactly the reverse of Reaganomics: higher tax rates, more regulation, more government spending. What is Clinton’s policy? Higher tax rates, more regulation, more government spending. Clintonomics is a continuation of Bushonomics, and we know what the results of reversing Reaganomics were.

On a more fundamental level, our present problems, both economic and noneconomic, arise mainly from the drastic change that has occurred during the past six decades in the relative importance of two different markets for determining who gets what, when, where, and how. Those markets are the economic market operating under the incentive of profit and the political market operating under the incentive of power. In my lifetime the relative importance of the economic market has declined in terms of the fraction of the country’s resources that it is able to use. And the importance of the political, or government, market has greatly expanded. We have been starving the market that has been working and feeding the market that has been failing. That’s essentially the story of the past 60 years.

We Americans are far wealthier today than we were 60 years ago. But we are less free. And we are less secure. When I graduated from high school in 1928, total government spending at all levels in the United States was a little over 10 percent of the national income. Two-thirds of that spending was state and local. Federal government spending was about 3 percent of the national income, or roughly what it had been since the Constitution was adopted a century and a half earlier, except for periods of major war. Half of federal spending was for the army and the navy. State and local government spending was something like 7 to 9 percent, and half of that was for schools and roads. Today, total government spending at all levels is 43 percent of the national income, and two-thirds of that is federal, one-third state and local. The federal portion is 30 percent of national income, or about 10 times what it was in 1928.

That figure understates the fraction of resources being absorbed by the political market. In addition to its own spending, the government mandates that all of us make a great many expenditures, something it never used to do. Mandated spending ranges from the requirement that you pay for antipollution devices on your automobiles, to the Clean Air Bill, to the Aid for Disability Act; you can go down the line. Essentially, the private economy has become an agent of the federal government. Everybody in this room was working for the federal government about a month ago filling out income tax returns. Why shouldn’t you have been paid for being tax collectors for the federal government? So I would estimate that at least 50 percent of the total productive resources of our nation are now being organized through the political market. In that very important sense, we are more than half socialist.

So much for input, what about output? Consider the private market first. There has been an absolutely tremendous increase in our living standards, due almost entirely to the private market. In 1928 radio was in its early stages, television was a futuristic dream, airplanes were all propeller driven, a trip to New York from where my family lived 20 miles away in New Jersey was a great event. Truly, a revolution has occurred in our material standard of living. And that revolution has occurred almost entirely through the private economic market. Government’s contribution was essential but not costly. Its contribution, which it’s not making nearly as well as it did at an earlier time, was to protect private property rights and to provide a mechanism for adjudicating disputes. But the overwhelming bulk of the revolution in our standard of living came through the private market.

Whereas the private market has produced a higher standard of living, the expanded government market has produced mainly problems. The contrast is sharp. Both Rose and I came from families with incomes that by today’s standards would be well below the so-called poverty line. We both went to government schools, and we both thought we got a good education. Today the children of families that have incomes corresponding to what we had then have a much harder time getting a decent education. As children, we were able to walk to school; in fact, we could walk in the streets without fear almost everywhere. In the depth of the Depression, when the number of truly disadvantaged people in great trouble was far larger than it is today, there was nothing like the current concern over personal safety, and there were few panhandlers littering the streets. What you had on the street were people trying to sell apples. There was a sense of self-reliance that, if it hasn’t disappeared, is much less prevalent.

In 1938 you could even find an apartment to rent in New York City. After we got married and moved to New York, we looked in the apartments-available column in the newspaper, chose half a dozen we wanted to look at, did so, and rented one. People used to give up their apartments in the spring, go away for the summer, and come back in the autumn to find new apartments. It was called the moving season. In New York today, the best way to find an apartment is probably to keep track of the obituary columns. What’s produced that difference? Why is New York housing a disaster today? Why does the South Bronx look like parts of Bosnia that have been bombed? Not because of the private market, obviously, but because of rent control.

Despite the current rhetoric, our real problems are not economic. I am inclined to say that our real problems are not economic despite the best efforts of government to make them so. I want to cite one figure. In 1946 government assumed responsibility for producing full employment with the Full Employment Act. In the years since then, unemployment has averaged 5.7 percent. In the years from 1900 to 1929 when government made no pretense of being responsible for employment, unemployment averaged 4.6 percent. So, our unemployment problem too is largely government created. Nonetheless, the economic problems are not the real ones.

Our major problems are social — deteriorating education, lawlessness and crime, homelessness, the collapse of family values, the crisis in medical care, teenage pregnancies. Every one of these problems has been either produced or exacerbated by the well-intentioned efforts of government. It’s easy to document two things: that we’ve been transferring resources from the private market to the government market and that the private market works and the government market doesn’t.

It’s far harder to understand why supposedly intelligent, well-intentioned people have produced these results. One reason, as we all know, that is certainly part of the answer is the power of special interests. But I believe that a more fundamental answer has to do with the difference between the self-interest of individuals when they are engaged in the private market and the self-interest of individuals when they are engaged in the political market. If you’re engaged in a venture in the private market and it begins to fail, the only way you can keep it going is to dig into your own pocket. So you have a strong incentive to shut it down. On the other hand, if you start exactly the same enterprise in the government sector, with exactly the same prospects for failure, and it begins to fail, you have a much better alternative. You can say that your project or program should really have been undertaken on a bigger scale; and you don’t have to dig into your own pocket, you have a much deeper pocket into which to dig, that of the taxpayer. In perfectly good conscience you can try to persuade, and typically succeed in persuading, not the taxpayer, but the congressmen, that yours is really a good project and that all it needs is a little more money. And so, to coin another aphorism, if a private venture fails, it’s closed down. If a government venture fails, it’s expanded.

We sometimes think the solution to our problems is to elect the right people to Congress. I believe that’s false, that if a random sample of the people in this room were to replace the 435 people in the House and the 100 people in the Senate, the results would be much the same. With few exceptions, the people in Congress are decent people who want to do good. They’re not deliberately engaging in activities that they know will do harm. They are simply immersed in an environment in which all the pressures are in one direction, to spend more money.

Recent studies demonstrate that most of the pressure for more spending comes from the government itself. It’s a self-generating monstrosity. In my opinion, the only way we can change it is by changing the incentives under which the people in government operate. If you want people to act differently, you have to make it in their own self-interest to do so. As Armen Alchan always says, there’s one thing you can count on everybody in the world to do, and that’s to put his self-interest above yours.

I have no magic formula for changing the self-interest of bureaucrats and members of Congress. Constitutional amendments to limit taxes and spending, to rule out monetary manipulation, and to inhibit market distortions would be fine, but we’re not going to get them. The only viable thing on the national horizon is the term-limits movement. A six-year term limit for representatives would not change their basic nature, but it would change drastically the kinds of people who would seek election to Congress and the incentives under which they would operate. I believe that those of us who are interested in trying to reverse the allocation of our resources, to shift more and more to the private market and less and less to the government market, must disabuse ourselves of the notion that all we need to do is elect the right people. At one point we thought electing the right president would do it. We did and it didn’t. We have to turn our attention to changing the incentives under which people operate. The movement for term limits is one way of doing that; it’s an excellent idea, and it’s making real progress. There have to be other movements as well.

Some changes are being made on the state level. Wherever you have initiative, that is, popular referendum, there is an opportunity to change. I don’t believe in pure democracy; nobody believes in pure democracy. Nobody believes that it’s appropriate to kill 49 percent of the population even if 51 percent of the people vote to do so. But we do believe in giving everybody the opportunity to use his own resources as effectively as he can to promote his own values as long as he doesn’t interfere with anybody else. And on the whole, experience has shown that the public at large, through the initiative process, is much more attuned to that objective than are the people they elect to the legislature. So I believe that the referendum process has to be exploited. In California we have been working very hard on an initiative to allow parental choice of schools. Effective parental choice will be on the ballot this fall. Maybe we won’t win it, but we’ve got to keep trying.

We’ve got to keeping trying to change the way Americans think about the role of government. Cato does that by, among other things, documenting in detail the harmful effects of government policies that I’ve swept over in broad generalities. The American public is being taken to the cleaners. As the people come to understand what is going on, the intellectual climate will change, and we may be able to initiate institutional changes that will establish appropriate incentives for the people who control the government purse strings and so large a part of our lives.

Laws that do harm

As we approach another birthday of Milton Friedman, here’s his column from Newsweek in 1982 that explains that despite good intentions, the result of government intervention often harms those it is intended to help.

There is a sure-fire way to predict the consequences of a government social program adopted to achieve worthy ends. Find out what the well-meaning, public-interested persons who advocated its adoption expected it to accomplish. Then reverse those expectations. You will have an accurate prediction of actual results.

To illustrate on the broadest level, idealists from Marx to Lenin and the subsequent fellow travelers claimed that communism would enhance both freedom and prosperity and lead to the “withering away of the state.” We all know the results in the Soviet Union and the People’s Republic of China: misery, slavery and a more powerful and all-encompassing government than the world had ever seen.

Idealists, from Harold Laski to Jawaharlal Nehru, promised the suffering Indian masses that “democratic economic planning” would abolish famines, bring material prosperity, resolve age-old conflicts between the castes and eliminate inequality. The result has been continued deprivation for the masses, continued violence between the castes and widened inequality.

To come down to less sweeping cases rent control has been promoted for millenniums as a way to hold down rents and ensure more housing for the disadvantaged. Wherever it has been adopted, the actual result has been precisely the opposite for all but a few favored tenants. Rent control has encouraged the wasteful use of housing space and has discouraged the building of more housing units. As a result, rents actually paid — whether legally or under the table — by all tenants except those who do not move have skyrocketed. And even the tenants who do not move complain about not being able to.

Over two years ago, when the San Francisco supervisors were contemplating a form of rent control, I republished in a local paper a NEWSWEEK column of mine on rent control, prefacing it with the comment that only a “fool or a knave” could support rent control after examining the massive evidence on its effects. Needless to say, that did not prevent the majority of a board of supervisors, consisting of neither fools nor knaves, from enacting the ordinance I objected to. And the lessons of experience have not prevented the adoption of rent control in other cities — or the repetition of that same experience.

Urban renewal programs were urged to cure “urban blight” and improve the housing available to the poor. The result was a “Federal Bulldozer,” as Martin Anderson titled his searching examination of urban renewal. More dwelling units were torn down than were constructed. The new units constructed were mostly for middle- and upper-income classes. Urban blight was simply shifted and made worse by the still higher density created elsewhere by removing the poor from the “renewed” area.

In education, professionalization, integration, bilingualism, massive doses of federal assistance — all have been promoted to improve the quality of schooling and reduce racial tension and discrimination. The result was predictable: a drastic lowering of educational performance and an increase in actual segregation of races, at least in the North.

President Nixon introduced price controls on Aug. 15, 1971, to eliminate inflation, which at the time was running at about 4 to 5 percent per year. When controls ended in 1974, inflation soared into double digits.

The Interstate Commerce Commission was promoted in the 1880s and 1890s by the Ralph Naders of the day to discipline monopolistic railroads and benefit their customers. One group in today’s Nader conglomerate has published a devastating study of the ICC demonstrating that it strengthened the monopoly power of the railroads, and later of trucking. The users of transportation have had the dubious privilege of paying higher prices for poorer service.

Need I go on? I challenge my readers to name a government social program that has achieved the results promised by its well-meaning and public-interested proponents. I keep repeating “well-meaning and public-interested proponents” because they have generally been the dupes of others who had very clear self-interested motives and often did achieve the results that they intended — the railroads in the 1890s for example.

The amazing thing to me is the continued gullibility of intellectuals and the public. I wish someone would explain that to me. Is it simply because no one has given this widely documented generalization a catchy name – like … (suggestions welcome)?

Wichita airport statistics: the visualization

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.
— Frederic Bastiat

While the program to reduce airfares in Wichita has probably met that goal, there have been consequences.

In particular, the availability of air travel in Wichita is lower than it has been, and the trend is in the wrong direction. In some aspects the Wichita trend mirrors that of the nation and other airports, and in others Wichita is falling farther behind.

wichita-airport-dashboard-2013-07-29

The illustration nearby (click it for a larger version) is a static snapshot of data for the nation as a whole (blue line), Wichita (brown), and a few other airports in cities that Wichita’s Visioneering effort identifies as our peers. For each series, I show the percentage change over time, so that all series operate on the same scale. Data is through the end of 2012.

Of particular concern should be the trend in departures and seats. Both are declining in Wichita, as they are also for the nation. But the gap between Wichita and the nation is widening in recent years.

This trend is an example of unintended consequences of government intervention and regulation. The Affordable Airfares program imposes a rough form of price control on airfares in Wichita. If the program didn’t do that — and it appears it succeeds at this goal — then there would be no point in having the program.

The inevitable effect of price controls is that less is supplied, compared to what would have been supplied. This economic phenomenon is reliable and predictable. While travelers prefer low air fares to high, this is not the only consideration. For those who need to travel on short notice, the availability of flights is very important, and on this measure, Wichita is doing much worse than the nation.

For more about the subsidy programs in use at the Wichita airport, see these articles:

Wichita flight count continues decline. “A program designed to bring low air fares to Wichita appears to meet that goal, but the unintended and inevitable consequences of the program are not being recognized. In particular, the number of flights available at the Wichita airport continues to decline.”

Affordable Airfares audit embarrassing to Wichita. “An audit of Affordable Airfares 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.”

Mixed message on Southwest subsidies. “Now that Southwest Airlines has announced that it will offer service in Wichita, the question is this: Will Southwest tap the subsidy?”

To help you explore this data, I’ve created an interactive visualization. Click here to open the visualization in a new window. You may add or remove any number of airports. Or, if you’d like to watch a video, click on Wichita Airport statistics: The video.

Data is from Research and Innovative Technology Administration (RITA), which is part of the U.S. Department of Transportation. Visualization created by myself using Tableau Public.

WichitaLiberty.TV July 28, 2013

WichitaLiberty.TV logo

In this episode of WichitaLiberty.TV, economist Dr. Russell Sobel joins host Bob Weeks. Topics include local economic development incentives, the environment of favor-seeking, how regulation stifles entrepreneurship, the seen and the unseen, the broken window fallacy, and Dr. Sobel’s research on how intergovernmental grants lead to higher taxes. Episode 6, broadcast July 28, 2013.

Links to material mentioned in this episode:
Dr. Sobel’s page.
Unleashing Capitalism.
Do intergovernmental grants create ratchets in state and local taxes?
Bastiat: What is seen and not seen, and the broken window.

Warning signs still missing

Two weeks after the City of Wichita learned that two prominent downtown hotels are not in compliance with city policy regarding signage, the hotels are still in violation.

Broadview Hotel 2013-07-09 004
Drury Plaza Hotel Broadview

The hotels are located in Community Improvement Districts and are able to collect an extra sales tax that is routed back to the two hotels. Merchants located within a CID are supposed to display a sign. These two hotels — Drury Plaza Hotel Broadview and Fairfield Inn at Waterwalk — aren’t displaying the signage.

For background and photographs, see CID signs missing at some Wichita merchants.

WichitaLiberty.TV July 21, 2013

WichitaLiberty.TV logo

In this episode of WichitaLiberty.TV, host Bob Weeks recommends the Crony Chronicals website and explains the harm of cronyism. Westar, our electric utility, is asking for a rate increase, and cronyism is part of the application. Finally, Wichita Mayor Carl Brewer feels he can’t shop for his personal car in Wichita, but dishes out no-bid contracts and millions in subsidies to his cronies. Episode 5, broadcast July 21, 2013.

Regulations, even well-intentioned, may be dangerous

A regulation intended to save children resulted in many more deaths. The reason is the lulling effect.

Do well-intentioned regulations ever produce the opposite effect? In 1972 the Food and Drug Administration introduced regulations requiring child-resistant bottlecaps for aspirin and some other medications. The goal was to reduce aspirin poisonings among children. Surely this is a laudable goal. If government has the capability to reduce these tragedies, why wouldn’t we implement laws or regulations?

When W. Kip Viscusi looked at data, he found something striking and very sad: After the implementation of the regulations, there was no significant impact on the rate of aspirin poisonings. The intended goal of the regulation was not met.

But here’s the real problem, writes Viscusi: “… there has been an alarming, upward shift in the trend of analgesic ingestion rates since 1972. The source of this pattern appears to be attributable to a general reduction in parental caution with respect to such medicines, which has had an adverse spillover effect on unregulated products. The economic mechanisms involved can be best understood by considering the nature of individuals’ response to regulatory protection.”

Because of the response of people to the regulations, Viscusi estimates an additional 3,500 children died each year. This is a regulation intended to protect children.

The research is presented in The Lulling Effect: The Impact of Child-Resistant Packaging on Aspirin and Analgesic Ingestions. I’ve excerpted from the conclusion:

Analgesic poisoning rates for children under age 5 escalated from 1.1 per 1,000 in 1971 to 1.5 per 1,000 in 1980. Even after taking into account increases in analgesic sales, 47 percent of this increase is attributable to an unexplained upward shift in the analgesic poisoning rate beginning in 1972. The coupling of the absence of any shift in the trend of aspirin poisoning rates with an upsurge in analgesic poisoning rates is consistent with the hypothesis that there is a significant indivisibility in safety precautions. Moreover, absence of a significant effect of safety caps on aspirin poisonings and the 47 percent unexplained shift in analgesic poisonings suggests that the impact of the regulation on balance was counterproductive, leading to 3,500 additional poisonings of children under age 5 annually from analgesics.

It is possible but unlikely that such a strong impact could emerge from fully rational consumer decisions. Moreover, this effect is not only large but reasonably widespread, as I have identified a similar pattern for prescription drugs, and for cleaning and polishing agents. A more likely explanation for these dramatic effects is that consumers have been lulled into a less-safety-conscious mode of behavior by the existence of safety caps. The presumed effectiveness of the technological solution may have induced increased parental irresponsibility.

A variety of regulatory efforts have sought to reduce individual risks through mandated technological changes. These measures will be effective if individual actions remain unchanged. In practice, these regulations will produce a lulling effect on consumer behavior because the perceived need for precautions will decline, potentially producing adverse spillover effects on the safety of other products. The strength of these impacts should highlight the importance of taking individual behavior into account when designing regulations intended to promote safety.

So we see regulations lulling people into assuming safety, assuming that all is well, but danger is actually increased.

Do you remember Bernie Madoff? He operated in the highly-regulated securities investment industry, yet he was able to steal billions from his clients over a long period of time. Did his clients assume that regulations would keep their money safe? I’m sure that many did.

Recently John Stossel has an episode of his television show devoted to the subject of regulations. He said: “America drowns in law. There are 175,000 pages of federal regulations that you must obey, or some lawyer can wreck your life. For every pound of good the regulations do, they do a ton of harm. 175,000 pages alone strangles life.”

Stossesl also recently wrote: “EBay’s business model is also threatened by fraud. How can a buyer trust that, say, a seller will actually deliver a $25 pack of baseball cards and that the cards will be what he claims they are? In theory, you could sue; but in practice, our legal system is too slow and costly for that. So eBay came up with self-regulation: The buyers rate the sellers.”

When we look to government to solve problems, we can end up with systems that actually make the problem worse. When trading baseball cards, that’s not good. When investing for retirement, regulatory failure is very harmful. But when trying to protect children from poisoning, and then actually causing more deaths — that’s a man-made disaster of the highest order.