Voice For Liberty

Author: Bob Weeks

  • Vincent Dubois, Organ

    On November 8, 2005, young French organist Vincent Dubois played a recital as part of the Rie Bloomfield Organ Series at Wiedemann Recital Hall, Wichita State University.

    I attended his recital last year, and again a most remarkable thing about watching Mr. Dubois play is how effortless he makes it appear. He plays from memory, so there are no scores to fiddle with. He seems totally relaxed, his hands and feet merely skimming and floating over the keys and pedals. Managing the resources of the organ never seems to get in the way of making music, and wonderful music he makes.

    This recital lasted fully two hours including an encore. It was attended by the largest audience I have seen for an organ recital at Wiedemann Recital Hall.

    One piece Mr. Dubois played was the C-sharp minor prelude by Rachmaninoff, transcribed for organ by Louis Vierne. To me, this piece, one of the most famous in the piano repertoire, is so closely associated with that instrument that it was somewhat bizarre to hear it on organ.

    Mr. Dubois played a piece titled Evocation II by the French organist and composer Thierry Escaich. This was an exciting, contemporary, virtuosic piece that prompted an outcry from at least one audience member at its end.

    As the last piece, Mr. Dubois improvised on a theme. The improvisations are amazing. Last year he improvised a prelude and fugue on a submitted theme. This year the improvisation was what I would describe as a prelude.

  • Local economic development in Wichita

    Writing from Memphis, Tennessee

    Today’s Wichita Eagle (November 5, 2005) tells us of a new economic development package that our local governments have given to induce a call center to locate in Wichita. The deal is described as “one of the biggest the two-year-old economic development coalition [Greater Wichita Economic Development Coalition] has landed.”

    There is an interesting academic paper titled “The Failures of Economic Development Incentives,” published in Journal of the American Planning Association, and which can be read here: www.planning.org/japa/pdf/04winterecondev.pdf. A few quotes from the study:

    Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

    On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false.

    The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government — providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.

    On the surface of things, to the average person, it would seem that spending to attract new businesses makes a lot of sense. It’s a win-win deal, backers say. Everyone benefits. This is why it appeals so to politicians. It lets them trumpet their achievements doing something that no one should reasonably disagree with. After all, who could be against jobs and prosperity? But the evidence that these schemes work is lacking, as this article shows.

    Close to Wichita we have the town of Lawrence, which has recently realized that it as been, well, bamboozled? A September 29, 2005 Lawrence Journal-World article (“Firms must earn tax incentives”) tell us: “Even with these generous standards for compliance, to have 13 out of 17 partnerships fail [to live up to promised economic activity levels] indicates that the city has received poor guidance in its economic development activities.” Further: “The most disconcerting fact is that Lawrence would probably have gained nearly all of the jobs generated by these firms without giving away wasteful tax breaks.”

    On November 6, 2005, an article in the Lexington (Kentucky) Herald-Leader said this:

    The Herald-Leader’s investigation, based on a review of more than 15,000 pages of documents and interviews with more than 100 people, reveals a pattern of government giveaways that, all too often, ends in lost jobs, abandoned factories and broken promises.

    The investigation shows:

    Companies that received incentives often did not live up to their promises. In a 10-year period the paper analyzed, at least one in four companies that received assistance from the state’s main cash-grant program did not create the number of jobs projected.

    A tax-incentive program specifically for counties with high unemployment has had little effect in many of those areas. One in five manufacturing companies that received the tax break has since closed.

    There is spotty oversight of state tax incentives. The state sometimes does not attempt to recover incentives, even when companies don’t create jobs as required.

    …

    Unlike some other states, Kentucky makes little information about incentives public. The Cabinet for Economic Development refuses to release much of the information about its dealings with businesses, citing proprietary concerns. The cabinet has never studied its programs’ effectiveness, and it blocked a legislative committee’s effort to do so.

    The Herald-Leader’s examination of Kentucky’s business-incentive programs comes when, nationally, questions are mounting about the effectiveness and legality of expensive government job-creation efforts. The U.S. Supreme Court is expected to decide by spring whether trading tax breaks for jobs is legal or whether they amount to discrimination against other companies.

    Meanwhile, states continue engaging in costly economic battles for new jobs, even though research strongly suggests that few business subsidies actually influence where a company sets up shop.

    We might want to be optimistic and hope that our local Wichita and Sedgwick County leaders are smarter than those in Lawrence and Lexington. Evidence shows us, however, that this probably isn’t the case. Our own local Wichita City Council members have shown that they aren’t familiar with even the most basic facts about our economic development programs. How do we know this? Consider the article titled “Tax break triggers call for reform” published in the Wichita Eagle on August 1, 2004:

    Public controversy over the Genesis bond has exposed some glaring flaws in the process used to review industrial revenue bonds and accompanying tax breaks.

    For example, on July 13, Mayans and council members Sharon Fearey, Carl Brewer, Bob Martz and Paul Gray voted in favor of granting Genesis $11.8 million in industrial revenue bond financing for its expansion, along with a 50 percent break on property taxes worth $1.7 million.

    They all said they didn’t know that, with that vote, they were also approving a sales tax exemption, estimated by Genesis to be worth about $375,000.

    It is not like the sales tax exemption that accompanies industrial revenue bonds is a secret. An easily accessible web page on the City of Wichita’s web site explains it.

    But perhaps there is hope. The Wichita Business Journal has recently reported this: “The city and county are getting $2 back for every dollar they spent over the past 18 months on economic development incentives, according to an analysis of GWEDC-supplied data. The report was presented at Thursday’s GWEDC investor luncheon at the Hyatt Regency by Janet Harrah, director of the Center for Economic Development and Business Research at Wichita State University.” Personally, I am skeptical. I have asked to see these figures and how they are calculated, but I have not been able to obtain them.

  • Tax reform and simplification

    Writing from Orlando, Florida

    Two recent Wall Street Journal articles (“A Golden Opportunity” in the November 1, 2005 issue, and “Triple Jeopardy” in the November 2, 2005 issue) make the case for simplification and reform of our current income tax system. In these articles we learn these things:

    “… true reform — changing to a broad-based income or consumption levy that taxes income only once — could yield once-and-for-all annual household income gains of 9%.”

    Our tax system has a bias against saving and investment. That slows capital formation and wage growth.

    “It is the marginal tax rate — the rate on the additional dollar earned from work, saving or entrepreneurship — that sets incentives and governs the pro-growth gains from tax reform.”

    “Eliminating the tax bias altogether in favor of employer-provided insurance is sound tax policy and would increase efficiency in health-care spending.” I have written in the past about how employer-provided health insurance is not good for our economy, or for consumers of insurance.

    “A tax system should generate the government’s required revenue with as little economic distortion as possible, while distributing tax burdens fairly. It should not discourage work, saving or entrepreneurship more than is necessary, and it should not discourage individuals from acquiring the skills and education that will increase their productivity. It should not discourage investment, or favor investments in one asset over those in another. In short, an efficient tax system alters economic decision-making as little as possible.

    “Although many see simplification as the primary goal of tax reform, promoting economic growth is a more important objective. Even in the relatively short run, the economic costs of a tax system that slows growth are likely to exceed compliance costs. U.S. households spend roughly 1% of GDP in complying with the income tax system. Halving the costs of compliance would be equivalent to raising GDP by one half of one percent — no minor accomplishment. The increase in GDP that might result from a tax reform that reduces tax burdens on investment and shifts the tax system toward a consumption tax are much larger.”

    “Tax reform, as distinct from tax reduction, inevitably involves curtailing some entrenched tax benefits. If reform proposals are dissected by politicians in an attempt to promote provisions that reduce their constituents’ tax liabilities while excising those that increase constituents’ tax liabilities, reform will inevitably fail. But if reform proposals are viewed instead as a collection of provisions that leave most families in a position not very different from their current one, while also shifting the tax system toward a structure that will promote long-term economic growth and reduce the burden of tax compliance, then these proposals can command broad popular support and even enthusiasm. Genuine tax reform is a difficult process that requires commitment to the goal of creating a more efficient, simpler and fairer tax system.”

    With so much to be gained, why isn’t there a rush to implement tax reform and simplification? The primary reason is that there are many special interest groups with a lot of political power that favor the present system. These interests include those industries and companies powerful enough to manipulate the tax system to their benefit. Politicians, of course, enjoy the present system, as it offers many ways to reward those who help them stay in office and increase their power. It also lets them influence the behavior of nearly everyone through manipulation of the activities that the tax code favors with deductions and breaks.

    Sadly, neither promotes economic growth and prosperity, which is what would really benefit the average person. Instead, people cringe at the idea that they might not be able to deduct their home mortgage interest. In reality, the mortgage interest deduction is worth very little to most middle-income families. (I get the feeling sometimes that people think they get to deduct the interest from their tax liability rather than from their taxable income.) Considering today’s low mortgage interest rates, the relatively low marginal income tax rate many people pay, and the fact that the benefit of the deduction is only valuable to the extent it exceeds the standard deduction, many families may not see any benefit from the mortgage interest deduction. But they would probably revolt against any politician who supported its elimination.

  • Taxpayer Bill Of Rights (TABOR) eviscerated

    By Karl Peterjohn

    Governor Bill Owens won a Pyrrhic victory in his campaign to eliminate the Taxpayers Bill Of Rights (TABOR) limits on government growth in Colorado. Owens’ short lived Proposition C victory will lead to a host of long term consequences that are mainly negative for Coloradans looking for a better economic future for themselves and their families. Passage of Proposition C is huge defeat for economic freedom across the country and a setback for fiscal responsibility.

    The passage of Proposition C will mark a key political and public policy turning point that ends Owens’ career as a fiscally conservative Republican. Owens is truly now a political lame-duck who will be known forever more as the individual primarily responsible for the demise of TABOR. Among fiscal conservatives nationwide he is now a political dead-duck. A couple of years ago National Review featured Owens as a potential presidential model for GOP conservatives. Now he is nothing more than another Republican office holder who “grew in office.”

    While it is certainly true that the entire Colorado Democrat Party, their mainstream media allies, and the usual leftie academic types also bear significant responsibility for the outcome of this vote, the face on the evisceration of the Taxpayers Bill of Rights will be, and should be, Governor Bill Owens. Now, TABOR is wounded but it not dead. Here’s what the Left will target next based on the Kansas model.

    The Left’s next step will be to figure out a similar evisceration of TABOR’s provisions affecting local governments spending in Colorado. Naturally, extending the time limit for TABOR’s evisceration at the state level will be needed, but that can wait for a couple of years until Democrats return to running all levers of power in state government in Colorado.

    Owens success November 1 in passing Proposition C and possibly (the preliminary vote indicates a very narrow defeat for Proposition D that a re-count may reverese) Proposition D will lead to a host of long term negative consequences for Colorado. In the short run the state will be free to go on a spending spree. They will.

    The state spending Bacchanalia will be certainly be followed by a fiscal hangover. The spending will be short run stimulative and long run drag on the state. This is not unexpected and in fact, there is a model for this pattern: California. Almost 20 years ago the Gann Amendement that limited state spending growth was a 1970’s (the Gann Amendment was enacted in the wake of Proposition 13) forefather of the Taxpayers Bill of Rights. The spending lobbies in California hated it and roughly a decade after passing it, they succeeded in eliminating Gann.

    California has fiscally struggled ever since this cap on government was terminated. Massive fiscal uncertainty was created and the California fiscal climate clouded up in the wake of this policy change. Next week a very pale imitation of a state spending limit will be voted upon in California as part of the four initiative package promoted there by Governor Schwarzennegger. A narrow, 52-48 percent Colorado majority has decided that California is the fiscal path to follow instead of the tried and true Taxpayers Bill of Rights.

    As the fiscal hangover appears following the Colorado state spending spree in a few years this is will help my state, Kansas, compete with Colorado. The model Governor Owens and his bipartisan spending coalition has adopted is very similar to the pattern of higher spending adopted by Kansas’ nominally Republican Governor Bill Graves and a bipartisan majority of the Kansas legislature during his second term here (1999-2003). Record spending leading to more taxes leading to more economic stagnation leading to more Kansans leaving for states with more fiscally prudent policies. Kansans number one destination state to move to today is Texas according to census figures. The most delicious irony of the anti-TABOR campaign is the fact that the leading TABOR critic touring Kansas these days is Carol Hedges. She is one of many Kansans who have moved to Colorado which has a large number of expatriate Kansans.

    These economic and demographic changes will take years and possibly even decades to fully play out. It is possible that a taxpayers bill of rights will eventually stage a comeback in Colorado, but that is unlikely for the rest of this decade. What is likely is resurrection of the Democratic Party as the Republicans fracture because of Owens’ fiscal apostasy in abandoning TABOR. The next governor of Colorado will be a Democrat.

    In the decade before Coloradan’s adopted the Taxpayers Bill of Rights in 1992 there wasn’t much difference in economic growth between my state of Kansas and Colorado. Both states grew below the national average. Colorado did slightly better than Kansas. That lethargic growth ended in 1992 in Colorado with TABOR’s passage. The growth in Colorado compared to Kansas in the 13 years of TABOR was dramatic and compelling. Soon it will be gone. TABOR will be a memory for Coloradans and that state’s economy will drift back into the tax ‘n spend lethargy that is Kansas today. What a shame.

  • Reports of TABOR’s Demise Have Been Greatly Exaggerated

    by Alan Cobb

    The supporters of Big Government were overjoyed this week when 52 percent of Colorado voters backed an effort to fix a glitch in that state’s hugely successful Taxpayer’s Bill of Rights by allowing the state government to keep an estimated $3.7 billion in scheduled tax relief over the next five years.

    This vote, they claimed, was a sign that the voters of Colorado had rejected their Taxpayer’s Bill of Rights, and that taxpayers across the nation should consider the Colorado vote a reason to oppose similar tax-and-spending limits in their own states.

    On the contrary, what Coloradoans actually did on Tuesday is vote to make their Taxpayer’s Bill of Rights look more like the improved version that is currently being proposed here in Kansas and in more than 20 other states.

    Colorado approved the nation’s first constitutional Taxpayer’s Bill of Rights in 1992. It limits the growth in state spending to the rate of inflation plus population growth, and it requires voter approval before politicians can raise taxes or spend above that limit.

    Since Colorado enacted its Taxpayer’s Bill of Rights, millions of that state’s citizens have reaped the benefits. For example, in the eight years before Colorado voters enacted the Taxpayer’s Bill of Rights (TABOR), the state ranked 43rd nationally in median family income growth. Since then, Colorado is 7th. Before TABOR, Colorado ranked 33rd nationally in job growth. Since then, Colorado is 6th. Before TABOR, Colorado ranked 43rd nationally in economic growth per capita, and since then it ranks 7th. TABOR opponents give the credit for Colorado’s recent economic success to the Rocky Mountains, apparently forgetting that the Rockies didn’t just spring up from the Plains in the 1990s.

    Still, like all first-of-its-kind products, Colorado’s Taxpayers Bill of Rights wasnt perfect. Think of Colorado’s TABOR as the first version of amazing new computer technology that helps millions of people become wealthier and more productive: overwhelmingly positive, a benefit to millions, but with a minor bug or two. In the case of Colorado’s TABOR, the bug is called the ratchet effect.

    Under the ratchet effect, when state revenue levels dip during a recession, the TABOR limit drops with it, and it cant automatically increase to the pre-recession high-water mark. Colorado’s TABOR also doesnt have any effective “Rainy Day” funds that would smooth out budget shortfalls in the lean years. This ratchet effect, when coupled with a competing constitutional amendment unique to Colorado that mandates large automatic increases in education spending, can create a budget squeeze. Fortunately, this ratchet effect bug in Colorado’s TABOR version 1.0 has been corrected in the TABOR version 2.0 that is now being considered in other states.

    It would obviously be ridiculous to declare the computer age dead or to call for the abolition of laptops because of a minor bug that can and will be fixed in subsequent versions. The cost of doing that would far outweigh the benefits that will come by improving and promoting a very effective and popular product.

    Colorado’s voters did not throw out their Taxpayers Bill of Rights. They used their TABOR-provided right to temporarily suspended scheduled tax relief in an attempt to fix the ratchet effect — essentially trying to make their TABOR look a little more like the improved TABOR version 2.0 that is under consideration in other states.

    To paraphrase Mark Twain, reports of the Taxpayer’s Bill of Rights’ death have been greatly exaggerated. The truth is Colorado’s taxpayers just endorsed the improvements that we’ve proposed, which would help bring tax relief, economic freedom and a generally higher standard of living to millions of Americans, including many Kansans.

    Alan Cobb is the Director of the Kansas chapter of the Americans for Prosperity Foundation.

  • What Is the true state of public education in Kansas?

    On a web page that is part of the National Education Association website, we can read some good news about Kansas schools. Here are some of the headlines to be found on that page:

    Math Scores Are Among the Nation’s Best
    Math Scores Are Up
    Among the Best in the Nation in Students Going on to College
    College Entrance Exams Are Among the Nation’s Best
    Among the Best Gains in the Nation in Students Going to College
    ACT Scores Are Rising
    More Students Are Taking ACTs
    Public School Students Outperform Private School Students on AP Exams
    AP Scores Are Among the Nation’s Best
    More Public Schools Offer AP Courses
    Public School Students Outperform Private School Students on AP Exams
    Among the Best in the Nation in Students Receiving a High Score on AP Calculus Exams

    You can read the entire story here: Good News about Public Schools in Kansas.

    These headlines stand in contrast to what the Kansas Supreme Court has said, and to what we were told this summer during the Kansas Legislature’s special session. We were told that Kansas schools were in grave danger, that Kansas schools were not adequately funded, and that if the legislature didn’t do its job and adequately fund schools, then Kansas schoolchildren were in danger of being outperformed by children in all other states.

    But here we have the teachers union citing much evidence that Kansas schools are among the nation’s best.

    So what is the true state of public education in Kansas? There are many studies and statistics available. Many contradict the conclusions made by others. Constituencies such as the teachers unions and the education establishment tell us they have only the welfare of the children as their concern, but many times they act otherwise. Who is qualified to decide what to do?

    The answer is simple. Ultimately, parents have the responsibility for educating their children. They are the ones in the best position to know what is best for their children. We need to empower parents to be in control of education. The way to do that is to give parents a choice as to where to send their children to school. For most people, that choice doesn’t exist in a meaningful way. School choice through vouchers can give them that choice.

    The teachers union and education establishment say that competition and school choice through vouchers will ruin public education. But if they’re doing as good a job as the headlines above indicate, they should fare well under competition.

  • How one school found a way to spell success

    In the October 14, 2005 Wall Street Journal, Daniel Henninger wrote about an elementary school in Little Rock, Arkansas that experienced a remarkable turnaround in student achievement. This poor school, where 92% of the students live at or below the poverty level, was able to increase its scores on an achievement test by 17% in one year.

    What did Meadowcliff Elementary School do? Did it build new buildings and hire new teachers to reduce class size? Did it implement new curriculum? Did the local board of education hire an extra assistant superintendent to oversee the school? Did it increase teacher pay?

    It’s the last that the school did, although not in the way the teachers unions would dictate. Instead, the school was able to implement a bonus system, whereby teachers would earn extra money based on student performance. Mr. Henninger reports the results: “Twelve teachers received performance bonuses ranging from $1,800 to $8,600. The rest of the school’s staff also shared in the bonus pool. That included the cafeteria ladies, who started eating with the students rather than in a nearby lounge, and the custodian, who the students saw taking books out of Carter’s Corner, the ‘library’ outside the principal’s office. Total cost: $134,800. The tests cost about $10,000.”

    The bonuses were funded by a private donor, which allowed the school to bypass the teachers union. The teachers union opposed the second year of the bonus program because it was to be paid from the school district’s regular budget. The union insisted that the teachers at Meadowcliff vote for a contract waiver, and 100% of the teacher voted for the waiver. The fact that the teachers union would oppose something that was demonstrably beneficial for the students gives us another clue as to the union’s true constituency.

    This experience shows that sometimes little, simple things can make a huge difference.

    More information: PEF Announces Student Achievement and Teacher Reward Project, LR elementary scores bonuses for test gains.

  • The Tipping Point: How Little Things Can Make a Big Difference

    Book Review: The Tipping Point: How Little Things Can Make a Big Difference
    Malcolm Gladwell
    Little, Brown and Company, 2000

    Writing from Lexington, Kentucky

    (I picked up the book from the library because in a hurry, I thought it might be about my ragdoll cat whose name is Tippy. But I decided to read it anyway.)

    This is an interesting book that tells us that often the way to affect change is not through heavy-handed techniques, but by paying attention to small things that can make all the difference. Mr. Gladwell tells us about the Law of the Few (connectors, mavens, and salesmen), which means that the personal characteristics of people make a big difference. The Stickiness Factor explains how small changes in the presentation or characteristics of something can make a huge difference in its effectiveness. The Power of Context tells us how seemingly small changes like the vigilant effort to remove graffiti in New York City subway cars led to a larger reduction in serious crime in the subways.

    I think this book has some good ideas and can be helpful for anyone who wants to influence others. Many interesting examples are used to illustrate the lessons of this book. Author’s website for this book.

  • How government destroys self-reliance

    Writing from Lexington, Kentucky

    There is a problem when government interferes with what people should be doing for themselves. Government can destroy the incentive to provide for yourself and your family.

    For the families of victims of the September 11, 2001 terrorists attack on New York, a board determined how much the family should receive in compensation based on a variety of factors, including the age and earning potential of the deceased. Then, the award was reduced by the amount of any life insurance the deceased had. We should ask what is the message given when government does this? What is the incentive to forgo current spending in order to buy life insurance, when the government may take the benefit that you paid for away from you? That’s exactly what happened to the people who had their own life insurance. The government took it from them, and they were worse off for having it. Conversely, for those who did not provide their own insurance, the government provided it for them, at no cost.

    For those who suffered losses due to floods from hurricane Katrina in Mississippi, that state’s attorney general is suing insurance companies to force them to pay for flood damage, even though the usual homeowner’s policy fairly shouts that flood damage isn’t covered. If Mississippi succeeds in forcing insurance companies to pay for flood damage, what message does that send to those who sought to protect and provide for themselves by paying flood insurance premiums for years? At minimum, the government ought to refund the premiums they paid, if government is to give the same benefit to those who paid no premiums.

    These two examples illustrate how, in an effort to appear compassionate and help unfortunate victims of tragedy, government destroys the incentive to provide for one’s own self and family. When government forces the same outcome for everyone, the same result for those who sacrificed and prepared and for those who didn’t, we might ask why even bother preparing?