Voice For Liberty

Category: Role of government

  • I, Government

    I, Government
    Published in The Freeman: Ideas on Liberty, October 2002 by D.W. MacKenzie
    Click here to read the article.

    This article illustrates just how large government at all levels has become.

    Do we really want governments so powerful that they can do the things described in this article?

    How have we let this happen? Will we ever be able to shrink the size and intrusiveness of government? Even under a president who labels himself a conservative, government spending has grown rapidly. Even the most modest proposals to take away power from the government and give it back to the people appear to have no chance of success. The proposal for social security private accounts is an example of this.

  • The Invasiveness of Government

    TRACKSIDE
    by John D’Aloia Jr.
    May 31, 2005

    Trackside last discussed the use of the legislative process to feed the insatiable itch for power that overtakes elected officials. This past session a majority of Kansas state senators demonstrated the itch by passing SB45, a bill that would have given local jurisdictions the means to instantly collect past due property taxes by making the delinquency a cause for a court judgement against all the landowner’s resources to settle the tax debt.

    As stated in that Trackside, the ability to condemn or control private property is another route to increasing the power of government. With the Endangered Species Act (ESA), those who covet power found a mighty sword to use against both individual landowners and society. The ESA is infamous for its use as a means not to protect critters but to give government and narrow interest groups power over how citizens use their land and how they spend their money. Examples abound – one of the latest revolves around the endangered Riverside fairy shrimp in California. The Riverside fairy shrimp is a fresh-water shrimp, one-half to one inch long, that lives in mud puddles after it rains. The City of Los Angeles is going to have to remove 1.3 acres of top soil, an estimated 468 tons, using hand trowels, to “transplant” endangered Riverside fairy shrimp eggs from the Los Angeles Municipal Airport (LAX for you frequent flyers) to a preserve being created at the closed El Toro Marine Corps Air Station, said preserve to be maintained by the city. The Federal Aviation Administration refused to allow a reserve for them at LAX because it would have meant having the area covered by water for several months a year, attracting birds that could be sucked into jet engines. The debate has been going on for six years. The cost was not stated. The fairy shrimp has locked up thousands of acres in California, taken it off-limits for development. The shrimp’s only value appears to be as an ecofascist tool for gaining control over private property and the use of tax dollars. This is not a productive use of the nation’s wealth or a rationale for making tax slaves of citizens.

    Not satisfied with the success in using endangered species to gain power, the ecofascists have drummed up another kind of “species” with which to bludgeon landowners. SAFETEA, the acronym for the massive transportation bill working its way through Congress, is, as one would infer by its title and stated purpose, a bill to maintain and enhance the nations transportation infrastructure. Unfortunately, the Senate version of SAFETEA contains provisions more deadly to our freedom than a few million dollars recklessly spent on home-town pork with some remote nexus to transportation, provisions that if enacted will ultimately be expanded to degrade and erode property rights. Would you expect to find new ways in the bill for government to separate you from your property rights and your resources so they could be placed on Gaia’s high altar? Not really, but that is exactly what is buried in the Senate’s SAFETEA, sections that enlarge the already draconian ESA by creating an Invasive Species Act. The title says it all. The full power of the federal government and every law-suit crazed environmentalist will be brought to bear against invasive species and those who harbor them.

    How is invasive defined? Not as gardeners define it – a plant that grows and expands wildly into areas not wanted. (Think kudzu vine.) No, the government definition of invasive is “not native”. While the SAFETEA invasive species provisions may “only” apply to highway projects today (thereby giving environmentalists a tool to shutdown highway construction), the readiness of The Clerks, egged on by interest groups, to expand their jurisdiction – mission creep – is a known phenomenon. Contemplate the implications of this definition. Like to fish for rainbow trout? Better enjoy it while you can. The feds have labeled it an invasive species as it is not native to North America. Own a German Shepard? Not native. Grow Bradford pears? Not native. Grow Kentucky bluegrass, tall fescue, or ryegrass? Not native. Hunt pheasants? Not native. Have goldfish in your pond? Not native. The list goes on and on, every item on it an opportunity for an environmentalist to paint a target on your property rights and your wallet.

    See you Trackside.

  • The Rise of Government and the Decline of Morality

    At the time when we have voted on a major issue that was framed in terms of morality, when we have prominent preachers attempting to impose their version of morality on us through the power of government, when we have a mayor who opposes certain businesses for moral reasons, and we have government at all levels spending more and more, we should remember that government is not the basis of morality. In fact, the growth of government has displaced morality. James A. Dorn of The Cato Institute explains why in this article: The Rise of Government and the Decline of Morality.

  • Why government spending is (mostly) bad

    Government spending replaces the judgment of the market with the judgment of politicians. The judgment of the market refers to the billions of decisions that we collectively make each day, decisions that we freely make, that we believe will advance our self-interest. That is to say, the market is characterized by mutual agreement and voluntary consent.

    What about the judgment of politicians? In a free market, in order to effect a transaction with someone, each side has to please the other. But politicians have the tax system, which allows them to take money from us by force. Then, when they decide how to spend money, decisions are often made to satisfy those who seek political favoritism instead of participating in meaningful economic activity. So government spending, then, grossly distorts the free market system.

    The more government makes spending decisions for us, the poorer we become.

    There is a limited set of things that government does well and should spend money to do. At the national level, we know that there are those who wish to do us harm, so we need a national defense. Locally we need police, courts, and prisons to keep us safe from criminals. There may be cases involving infrastructure where government is more efficient than private industry.

    At the federal level, though, about two-thirds of the budget consists of the government taking money from one person and giving it to someone else to whom it does not belong. Both major parties are equally guilty of this. This type of government spending is wrong, no matter who does it. As the economist Walter E. Williams says:

    Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.

  • Martha, I’m Glad You’re Home

    Writing from Newton, Iowa.

    Alan Reynolds, writing for the Cato Institute, wrote in June 2003 this:

    Believe it or not, the government now charges Martha Stewart with “securities fraud” during that same period because she supposedly tried in vain to prop up her own stock by denying that she was guilty of the crime then charged — insider trading. Yet the government now admits she was never guilty of that crime. Instead, she supposedly “obstructed justice” (her own threatened prosecution for a nonexistent crime) and made “false and misleading statements” about her reasons for making a perfectly legal sale of ImClone shares. Any jury of passably sane people would laugh this out of court.

    A link to the full article is here: The Sleazy Political Persecution of Martha.

    To me this seems like being charged for protesting a speeding ticket, when the police concede that you weren’t speeding. Welcome home Martha. I’m sorry you had to endure your imprisonment.

  • End Corporate Welfare, Starting with Industrial Revenue Bonds

    “While corporate welfare has attracted critics from both the left and the right, there is no uniform definition. By TIME’s definition, it is this: any action by local, state or federal government that gives a corporation or an entire industry a benefit not offered to others. It can be an outright subsidy, a grant, real estate, a low-interest loan or a government service. It can also be a tax break — a credit, exemption, deferral or deduction, or a tax rate lower than the one others pay.” (Time Magazine, Nov. 9, 1998)

    States and localities aggressively compete with each other to see which can put together the grandest package of benefits to induce companies to locate there. Or, as becoming increasingly common, a company threatens to move away from a city or state unless it receives incentives. Often these incentives are given in the form of industrial revenue bonds. IRB supporters are quick to remind citizens that the local government is merely helping the company to borrow the money — it is not giving the bond money to the company. Therefore, it doesn’t really cost the taxpayers to offer these IRBs.

    In fact, issuing IRBs does cost local taxpayers. Here’s some information about IRBs in the City of Wichita. Quoting from the City of Wichita’s IRB Overview web page, located at http://www.wichitagov.org/Business/EconomicDevelopment/IRB/IRBOverview.htm:

    “IRB’s [sic] require a governmental entity to act as the ‘Issuer’ of the bonds, who will hold an ownership interest in the property for as long as the IRBs are outstanding. The Issuer leases the property to the business ‘Tenant’ on a triple-net basis for a term that matches the term of the IRBs, with lease payments which are sufficient to pay the principal and interest payments on the IRBs.”

    In my analysis, it is the City of Wichita that owns the financed property for the duration of the bond lifetime. What if the business fails? It appears that the city owns the property then, and is responsible for paying the remainder of the bond balance. So, the taxpayers of the city assume credit risk.

    Continuing from the same page: “The issuer can provide property tax abatement for up to ten years for property financed with IRBs.” The city, county, and state don’t receive property taxes from the business, yet they must provide services such as police and fire protection to the business. The cost of these services is born by the rest of the taxpayers.

    Continuing further: “Generally, property and services acquired with the proceeds of IRBs are eligible for sales tax exemption.” Again, the government does not receive tax revenue it would otherwise have received, if not for the IRBs. The remainder of the taxpayers must make up the difference.

    It appears, then, that issuing IRBs costs everyone but the firm that receives the benefits.

    There are other issues with IRBs and other forms of corporate welfare, importantly involving the disruption of the free market allocation of resources. When governments instead of markets act to allocate resources, resources are allocated unproductively. These points come from “Ending Corporate Welfare As We Know It,” a Cato Institute Policy Analysis by by Stephen Moore and Dean Stansel, May 12, 1995, available at this url http://www.cato.org/pubs/pas/pa225.html:

    1. Government is not good at picking winners and losers. “The function of private capital markets is to direct billions of dollars of capital to industries and firms that offer the highest potential rate of return. The capital markets, in effect, are in the business of selecting corporate winners and losers. The underlying premise of federal business subsidies is that the government can direct the limited pool of capital funds more effectively than can venture capitalists and private money managers. But decades of experience prove that government agencies have a much less successful track record than do private money managers of correctly selecting winners.”

    2. Corporate welfare is very expensive considering the few benefits it produces. “Corporate welfare is supposed to offer a positive long-term economic return for taxpayers. But the evidence shows that government “investments” have a low or negative rate of return.”

    3. Corporate welfare rewards those companies who look to government for help, rather than concentrating on satisfying market needs. “Business subsidies, which are often said to be justified because they correct distortions in the marketplace, create huge market distortions of their own. The major effect of corporate subsidies is to divert credit and capital to politically well-connected firms at the expense of their politically less influential competitors. Those subsidies are thus inherently unfair.”

    4. “Corporate welfare fosters an incestuous relationship between business and government.”

    5. Many corporate welfare programs increase the costs to consumers. Trade restrictions do this. Subsidy programs may reduce the cost to a small few at the cost of everyone else. Tax breaks increase the tax burden for those who don’t receive the breaks.

    6. “The most efficient way to promote business in America is to reduce the overall cost and regulatory burden of government. Corporate welfare is predicated on the misguided notion that the best way to enhance business profitability in America is to do so one firm at a time. But a much more effective way to enhance the competitiveness and productivity of American industry is to create a level playing field, which minimizes government interference in the marketplace and substantially reduces tax rates and regulatory burdens.”

    7. “Corporate welfare is anti-capitalist. Corporate welfare converts the American businessman from a capitalist into a lobbyist.” What a sad waste of time and effort — courting politicians instead of developing products and services the market wants.

    I disagree with the Cato analysis on one point. The analysis states: “Nonetheless, we reject the notion that allowing a company to keep its earnings and pay less in taxes is somehow a ‘subsidy.’” I, however, contend that reducing a company’s taxes is the same as giving them money outright, as the impact on the bottom line is the same. I do agree with Cato that it is better if firms and individuals pay less taxes rather than more. But often corporate welfare measures like industrial revenue bonds are given to one company at the exclusion of its competitors. This, whether it is giving money to a company or reducing its taxes, is unfair to the company’s competitors. It is a distortion of the free market allocation of resources.

    Supporters of corporate welfare claim that we in the United States must subsidize our corporations because other countries subsidize theirs. But the more corporate welfare we have, the more we have a socialized economy, and the more we become like European economies. This we do not want.

    Other corporate welfare supporters claim that without incentives, businesses will not invest and create jobs. First, if taxpayers did not have to bear the cost of providing incentives, we would have more money to spend and invest ourselves as we see fit, not as politicians desire. Second, and most important, if a company does not believe in itself strongly enough to invest its own capital in itself, or if the capital markets have decided not to invest in a company, why should the taxpayers then have to invest in the company? It would seem like the taxpayers get to make only the most unproductive investments.

    Finally, if we in Wichita or Kansas were to stop issuing IRBs and other forms of incentives, we would place ourselves at a disadvantage in competing with other states and cities. Therefore, I believe that the leadership to stop these types of corporate welfare incentives must start in Washington, so that it is ended nationwide. Then, localities can compete for jobs in meaningful ways.