Voice For Liberty

Tag: Wichita city council

  • Wichita downtown plan to be considered by county commission

    Next week the Sedgwick County Commission will consider its approval of the Goody Clancy plan for the revitalization of downtown Wichita. In December, the plan was passed enthusiastically by the Wichita City Council. There, not even self-styled conservative members like Sue Schlapp, Paul Gray, Jeff Longwell, and Jim Skelton could muster even one tiny bit of doubt as to the wisdom of this plan, with its centralized planning and calls for massive spending of public money.

    At the county commission, things may be different. Here are a few articles commissioners may want to consider as they prepare to endorse — or not — this plan.

    Wichita should reject Goody Clancy plan for downtown. Mr. Mayor, members of this council, there are many reasons why we should reject Project Downtown: The Master Plan for Wichita. I’d like to present just a few. … First, consider the attitudes of Goody Clancy, the Boston planning firm the city hired to lead us through the process. At a presentation in January, some speakers from Goody Clancy revealed condescending attitudes towards those who hold values different from this group of planners. One presenter said “Outside of Manhattan and Chicago, the traditional family household generally looks for a single family detached house with yard, where they think their kids might play, and they never do.” … David Dixon, who leads Goody Clancy’s Planning and Urban Design division and was the principal for this project, revealed his elitist world view when he told how that in the future, Wichitans will be able to “enjoy the kind of social and cultural richness” that is only found at the core. This idea that only downtown people are socially and culturally rich is an elitist attitude that we ought to reject. Click here to read the article.

    In Wichita, who is to plan? In presenting the plan for the revitalization of downtown Wichita, Wichita’s planners routinely make no distinction between government planning and private planning. In their presentations, they will draw analogies between the wisdom of individuals or businesses creating and following a plan and government doing the same. … An example is Wichita Downtown Development Corporation President Jeff Fluhr, who told the Wichita Pachyderm Club that the development of downtown is like the planning of an automobile trip, so that we don’t make major investments that we later regret. … But government and the private sector are very different, facing greatly different constraints, motivations, and access to information. As a result, the two planning processes are entirely different and not compatible. Click here to read the article.

    Tax increment financing: TIF has a cost. Tax increment financing, or TIF districts, is slated to be used as one of the primary means to raise money for the “public investment” portion of the costs of the revitalization of downtown Wichita. Touted by its supporters as being without cost, or good for the entire city, or the only way to get a project started, these arguments make sense only to those who see only the immediate effects of something and are unwilling — or unable — to see the secondary effects of this harmful form of government intervention. Click here to read the article.

    Wichita’s vision, by the urbanist elites. Why are some in Wichita so insistent on pushing their vision of what our city should look like, and why are they willing and eager to use the coercive force of government to achieve their vision? In the article below, Randal O’Toole, using a work by Thomas Sowell, provides much insight into understanding why. Click here to read the article.

    Wichita downtown planning, not trash, is real threat. A recent plan for the City of Wichita to take over the management of residential trash pickup has many citizens advocating for the present free market system. While I agree that a free market in trash pickup is superior to government management of a cooperative, it is, after all, only trash. There are far greater threats to the economic freedom of Wichitans, in particular the planning for the future of downtown Wichita. … While the downtown Wichita planners promote their plan as market-based development, the fact is that we already have market-based development happening all over Wichita. But because this development may not be taking place where some people want it to — downtown is where the visionaries say development should be — they declare a “market failure.” Click here to read the article.

    Government is not business, and can’t be. As Wichita begins its implementation of the plan for the revitalization of downtown Wichita, stakeholders like to delude themselves that the plan is “market-driven,” that the city will make prudent use of public “investment,” and that the plan’s supporters really do believe in free markets after all. It’s a business-like approach, they say. But government is not business. The two institutions are entirely different. Click here to read the article.

    Eminent domain reserved for use in Wichita. As part of the plan for the future of downtown Wichita, the city council was asked to formally disavow the use of eminent domain to take private property for the purpose of economic development. The council would not agree to this restriction. Click here to read the article.

    At Wichita planning commission, downtown plan approved. At last week’s meeting of the Wichita Metropolitan Area Planning Commission, members were asked to approve the Goody Clancy plan for the revitalization of downtown Wichita. I appeared to make sure that commissioners were aware of some of the highly dubious data on which the plan is based. In particular, I presented to the commission the Walk Score data for downtown Wichita, and how Goody Clancy relied on this obviously meaningless data in developing plans for downtown Wichita. Click here to read the article.

    Wichita downtown plan focused on elite values, incorrect assumptions. One of the themes of those planning the future of downtown Wichita is that the suburban areas of Wichita are bad. The people living there are not cultured and sophisticated, the planners say. Suburbanites live wasteful lifestyles. Planners say they use too much energy, emit too much carbon, and gobble up too much land, all for things they’ve been duped into believing they want. It’s an elitist diagnosis, and Wichita’s buying it. Well, we’ve already paid for it, but we can stop the harmful planning process before it’s too late. Click here to read the article.

    Some Goody Clancy Wichita findings not credible. Last week Boston planning firm Goody Clancy presented its master plan for the revitalization of downtown Wichita. As this plan is now part of the political landscape in Wichita, we ought to take a critical look at some of its components. Click here to read the article.

    Good intentions, and planners, can sap a city’s soul. The following article by Kansas City writer Jack Cashill, courtesy of Ingram’s Magazine, explains some of the problems with city planning of the type Wichita is undertaking at this time. Click here to read the article.

  • Wichita should reform its economic development strategy

    Remarks to the Wichita City Council, February 15, 2011.

    Mayor and members of the council, last week Governor Sam Brownback released his plan for economic development in Kansas. While his plan specifically addressed the state and its activities, the principles apply to local government. In fact, we need to harmonize our strategy with the state’s if we are to succeed.

    Besides reorganizing the state’s economic development agencies, the governor’s plan calls for a shift in economic development strategy. Instead of targeting industries or specific companies, Kansas should seek to establish a strategy that is simple, fair, and of high capacity.

    The governor’s plan seeks to promote an economy where a diversity of companies can thrive, each engaging in entrepreneurship or business experimentation. This is the type of environment that creates the conditions where the next Apple Computer, Google, Microsoft, or Pizza Hut might be launched.

    Can we identify the companies that may be — or may not be — future successes? Will they satisfy the city’s criteria for receiving various forms of economic development assistance? Or being of entrepreneurial mind and spirit, will these young companies even consider coming to city hall for assistance?

    There are those on this council and in city hall who believe we can formulate policies that identify these companies. I don’t think that’s possible, and the governor’s economic development plan doesn’t think it’s possible.

    We need an environment that nurtures these unknown futures success stories, and as many as possible. Not only large success stores, but smaller-scale success, too. That’s what we don’t have, and this is what the governor’s plan seeks to create.

    I mentioned capacity. When each economic development deal must pass through city hall bureaucracy, we can have capacity constraints, not to mention high cost. As an example, last April this applicant company received a forgivable loan from the city of just $15,000. How much effort did it take to process that loan? I would suggest it was a sizable fraction of the loan amount. And the same thing happened across the street at the county commission.

    Mayor, you said in your recent State of the City address that in 2010, economic development efforts saved 745 jobs and created 435 jobs, for a total impact of 1,180 jobs. To place those numbers in context, the U.S. Census Bureau indicates the labor force in Wichita is 191,760 persons. This means that the economic development efforts of the City of Wichita and its agencies affected a number of jobs equivalent to 0.6 percent of the city workforce.

    This small number of jobs impacted — representing less than one percent of the city’s labor force — is overwhelmed by the natural flow of economic events. Yet, to accomplish this, we have a large and costly bureaucracy in place. We increase costs for the numerous young companies that we now know are the engine of job growth.

    Mayor and members of the council, we can start moving towards an environment that promotes diverse economic growth by voting against this item and the other targeted economic development incentives on today’s agenda. But if the council decides to approve each item, I would ask that the council identify specific spending somewhere else to cut, so that the cost of these programs are not spread among all the residents and businesses in the city.

  • Affordable Airfares audit embarrassing to Wichita

    Last week’s release of a report 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. The audit found that economic development claims of the Kansas Affordable Airfares program are significantly overstated. This program pays a subsidy to discount airlines providing service in Kansas, primarily Airtran Airways in Wichita.

    The primary finding of the report is this: “Overall, the program appears to have had the desired effect. Since Wichita’s original affordable airfare program (FairFares) began in 2002, fares have decreased, while the number of passengers and the number of available flights have increased. However, the Regional Economic Area Partnership’s (REAP) annual reports on the program contain numerous inconsistencies and inaccuracies. Further, the economic impact of the program has been significantly overstated. Specifically, the estimated number of jobs created and the State’s return on investment were overstated because of key methodological errors and the use of some inaccurate data. We also found that overall accountability for the State funds is lacking.”

    The audit may be read in its entirety at Affordable Airfares: Reviewing the Benefits Claimed As a Result of State Funding to Lower Airfare. A summary of highlights is here.

    Several news stories provide additional coverage. See Wichita Eagle: Audit: Airfare subsidies’ impact was overstated, Topeka Capital-Journal: Audit: Wichita air subsidy questioned, and Kansas Watchdog: Analysts and Elected Officials Ignored Flaws in Air Subsidy Claims .

    The airline subsidy program in Wichita has a long tradition of overreaching. In 2004, Troy Carlson, who was at the time chairman of Fair Fares, a group that sought to provide a guarantee of business and operating subsidy to a discount airline, wrote that a discount airline’s presence in Wichita had an annual economic impact of $4.8 billion for the state. His claims had their starting point in a WSU CEDBR study, although Carlson extended them in a way I’m sure the study’s authors hadn’t intended.

    In 2005, Sam Williams, who had taken over the role of chairman of Fair Fares from Carlson, testified to the Wichita City Council that Wichita’s leadership in providing subsidies to airlines was just like the role Kansas played when it entered the Union in 1861.

    Fortunately, these ridiculous claims fell by the wayside. Except gullible city council members and legislators believed them.

    Future of targeted economic development subsidies

    The big takeaway from the Affordable Airfares audit is that boosters of state-sponsored and funded economic development rely on figures that often vastly overstate the effect of the programs they’re promoting. Having made a large mistake like this, agencies like REAP and CEDBR need to be watched carefully.

    More fundamentally, we need to question the role of targeted economic development subsidies in Kansas. The day after the Affordable Airfares audit was released, Governor Sam Brownback released his economic development plan for Kansas. This plan calls for an end to present practices, especially the heavy-handed methods cities like Wichita use. While the plan and the governor’s budget include continued funding for Affordable Airfares, this decision was made before the audit’s findings were released to the public.

    There is an alternative method of funding the airline subsidy besides taxing everyone in the state, or City of Wichita for that matter. When government provides services that benefit everyone, such as police protection, most people agree that taxes to pay for these services should be broad-based. But we can precisely identify the people who benefit from cheap airfares: the people who buy tickets. Wichita could easily add a charge to tickets for this purpose. The mechanism is already in place.

    The charge wouldn’t have to be very much, either. With 1,549,395 passengers in 2010, and with the Affordable Airfares program costing $6.67 million, the charge would need to be just $4.30 per passenger, or double that for a round trip ticket.

    City and REAP officials will argue that low airfares benefit everyone. But as we’ve seen, these claims are overstated.

  • Kansas and Wichita quick takes: Monday February 14, 2011

    KRA guide to elected officials. The Kansas Republican Assembly has created a guide to Kansas elected officials. Besides contact information, it also holds things like committee membership for legislators. The links to the information are on the right side of KRA’s home page.

    Wichita Eagle voter guide. Click here. You can get a list of the candidates, along with their responses to questions, customized for your address.

    Campaign signs. The placement of political campaign signs can be an issue. Here is a City of Wichita letter describing placement rules, and a diagram. … If you live in a neighborhood with covenants prohibiting campaign signs, the covenants don’t apply at election time. See In Kansas, political signs are okay, despite covenants.

    Rasmussen polls last week. “Most voters continue to strongly favor repeal of the national health care law and they’re evenly divided as to whether the new law will force them to change insurance coverage.” Survey is here. … In a video Scott Rasmussen explains explains that 1954 was the last year that government spending declined from the previous year. Video is here, and an article is here. The article holds a chart that compares the difference between what government spending would be if it grew at the rate of population plus inflation, versus its actual growth. It’s a big difference.

    Organ recital tomorrow. On Tuesday (February 15) Wichita State University’s Lynne Davis presents a faculty organ recital. The event starts at 7:30 pm and has a small admission charge. The location is Wiedemann Recital Hall (map) on the campus of Wichita State University. For more about Davis and WSU’s Great Marcussen Organ, see my story from last year.

    Funny campaign stuff. Funny or sad, you decide. Proofreading always helps. A candidate for city council’s campaign website — right on the front page — reads: “The future of our great city rest in the voter’s hands, your hands.” Another page for this candidate states: “We must realize that things that use to work in our community, may no longer work.” … The Wichita Eagle voter guide has a spot for candidates to list their endorsements. Usually candidates would list prominent people or organizations that are supporting them. But one candidate used this opportunity to list a number of products that he recommends.

    Wichita teachers union contract. Public school teachers want to be treated as professionals. But their union contracts read like something we’d expect to see in a United Auto Workers contract, and we know what that union did to the American automotive industry. Here’s an example from the contract between USD 259, the Wichita public school district, and United Teachers of Wichita: “The ending time of the school day in each building shall be seven (7) hours and ten (10) minutes after the beginning time. The Superintendent and the UTW President will review all requests submitted to extend the school day prior to April 1 of each year. Their joint recommendation shall be subject to Board approval. All requests must be first supported by 80 percent of the affected staff as determined by a secret ballot election conducted by the UTW.”

    What public sector union leaders think. Speaking of public sector unions, here’s a video featuring John Gage, who is president of American Federation of Government Employees, and what he thinks of those who want to control federal spending. It’s not complimentary.

    City council candidates to meet. This week’s (February 18) meeting of the Wichita Pachyderm Club features Wichita city council candidates from district 3. Scheduled to appear are James Clendenin, Clinton D. Coen, Mark S. Gietzen, and Hoyt Hillman. The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Politicians’ Top 10 Promises Gone Wrong. This Monday (February 14) Americans for Prosperity will show the 2010 John Stossel documentary “Politicians’ Top 10 Promises Gone Wrong.” For a preview and interview with Stossel, click here. For my reporting and review of the show, click on Stossel on politicians’ promises. … This event, sponsored by Americans for Prosperity, will be held on Monday, February 14 from 7:00 pm to 8:30 pm at the Lionel D. Alford Library located at 3447 S. Meridian in Wichita. The library is just north of the I-235 exit on Meridian. For more information on this event contact John Todd at john@johntodd.net or 316-312-7335, or Susan Estes, AFP Field Director at sestes@afphq.org or 316-681-4415.

  • Kansas governor releases economic development plan

    Yesterday Kansas Governor Sam Brownback released his plan for economic growth and development in Kansas. Drawing on free market principles and relying less on government intervention, the plan calls for a departure from present practices, especially the heavy-handed methods cities like Wichita use.

    Brownback’s plan would transform Kansas’ approach to economic development. Currently the approach of the state and most of its cities and counties is to go after the “big deal.” This typically lures a large employer to Kansas through the use of various incentives. Or, as we have seen recently with the Hawker Beechcraft deal, incentives may be used to keep a company from leaving Kansas, even if that company is downsizing.

    This last deal is especially troubling for the state’s future. Wichita State University professor H. Edward Flentje recently sounded a note of caution on deals like Hawker Beechcraft: “The result diverts millions in limited taxpayer funds, primarily state income-tax revenues, from state coffers to a company’s benefit, simply to have an existing business stay put.” Flentje wrote that there are more than 500 Kansas businesses now eligible for state assistance just like Hawker.

    It is breaking this cycle of dependency on the “deal” that the governor’s plan calls for. Instead of the state targeting industries or specific companies, Kansas should seek to establish a strategy that is simple, fair, and of high capacity. I believe that for this strategy to work, Kansas cities and counties will need to follow the plan, too.

    Productivity and growth, not just jobs

    Right away the governor’s plan calls for prosperity through productivity: “A sound economic development process enhances prosperity through enhanced business-sector productivity.” This is in contrast to the economic development efforts of most governments, including that of the City of Wichita. There, the focus is on jobs, with capital investment a lesser factor.

    The plan identifies two fundamental roles for government to play. First, the state should create an environment that “motivates as much risk-taking and competition as possible in the context of a ‘level playing field.’” Second, it must do this effectively and efficiently, leaving as many resources in the private sector as possible.

    Key concepts in the plan are risk taking, economic competition, business experimentation, and trial and error. These activities are important, the plan says, because they will lead to increased economic productivity, which is what produces prosperity for Kansans. This is what the economic development policies of Kansas need to promote, says the plan: “The more that Kansas’ economic development environment motivates each entrepreneur and business to engage in the trial and error process, the more the Kansas economy will generate economic opportunity for Kansas families.”

    But the state’s policies don’t promote this environment: “Yet Kansas economic development policy tends to work as if only a small sub-set of entrepreneurs or businesses matter.” Current policies attempt to find the right technologies and companies for the state to invest economic development resources in. The criteria for determining winners are often job count and wage levels. Winners are rewarded at the expense of non-winners.

    Instead of this approach — which is common in most states and cities — the plan recommends a different policy: “Dedicate human and financial resources to promoting maximum experimentation through volume and diversity.” Also: “Establish stable policies that treat all investments and businesses equally, thereby liberating resources from the costly and economically dubious task of targeting.”

    The plan is critical of selective efforts and in favor of broad-based strategy, especially in taxation: “A more uniform business tax policy that treats all businesses equally rather than the current set of rules and laws that give great benefit to a few (through heavily bureaucratic programs) and zero benefit to many.”

    The plan emphasizes promoting as much diversity as possible. The current strategy of attracting large employers is not wise: “In fact, research indicates that economic development strategies based on the recruitment of large employers tends to have negative effects over the long run. One of the best predictors of future economic growth for metropolitan areas is the average employment size of business establishments: larger average sizes are typically associated with slower future growth.”

    Measures of success of economic development efforts include jobs, although the plan cautions that “job creation is a result that derives from profitable business births and expansions.” Other factors are income growth, population density and migration, productivity growth, capital investment, and gross business starts and expansions.

    The plan creates a council of economic advisers and coordinate the actions of seven different agencies that work in the field of economic development. It also calls for funding of certain university research programs.

    The plan is not totally free-market in its approach. It retains PEAK, which lets companies that meet criteria retain their employees’ withholding taxes. But are we certain we can identify which companies are worthy of this subsidy? There will also be a fund that can be used to “close a deal on a prime economic growth opportunity.” Brownback’s “rural opportunity zones” are also included, which offer income tax breaks and student loan paydowns for people moving into counties that have experienced large population decline.

    Cities like Wichita will need to change, adapt

    The governor’s plan calls for economic development strategies very different from what most cities and counties pursue. As an example, at the most recent meeting of the Wichita City Council, the council approved forgivable loan agreements for two companies that are adding jobs. These loans amount to grants of money, providing that the companies meet specified employment goals. The loans were not the only form of subsidy. One company is slated to receive forgiveness from paying property tax for up to ten years, and both received grants and tax credits from the state under existing economic development programs.

    At the meeting, Mayor Carl Brewer offered a defense of the city’s economic development policy (click here for video), saying that if Wichita doesn’t offer targeted incentives, other cities will. “If we don’t stay in the game and do whatever is necessary to be able to protect our jobs, protect our citizens, then we’re going to lose out on this entire thing. Times are changing. 20 years ago individuals weren’t even thinking about providing incentives to various different corporations. And now it appears that every place that we go, we seeing that everyone’s doing it. … That’s a reality of things. The dynamics and the field that we all have to play on is continuing to change.” He urged his critics to look at the larger picture, rather than just the action the council is taking today.

    Council member Janet Miller also defended the city’s policy, saying that companies either qualify for incentives or they don’t, based on established criteria. She cited Wichita State University figures that support the incentives as providing an economic return to the city.

    If cities continue to offer targeted incentives that are at odds with the governor’s plan, what will be the outcome? It doesn’t seem as though the two approaches are compatible. Many of the programs that cities use to offer targeted incentives — industrial revenue bonds (IRB), tax increment financing (TIF), community improvement districts (CID), and others — are creations of the legislature. It and the governor have the power to control their use — if there is political will to do so.

  • Kansas and Wichita quick takes: Wednesday February 9, 2011

    ACLU leader to speak in Wichita. On Friday (February 11) the speaker at the meeting of the Wichita Pachyderm Club will be Doug Bonney, who is Chief Council and Legal Director for the American Civil Liberties Union of Kansas and Western Missouri. His topic will be “150 Years of Kansas Liberty.” This speaking invitation has caused a bit of controversy, with some Pachyderm Club members — and non-members — criticizing the selection of a speaker whose group is associated with liberal political causes. But the invitation is in line with the club’s mission of political education, as stated on the national Pachyderm website: “To promote practical political education and the dissemination of information on our political system.” Previous speakers who don’t fit the club’s Republican Party affinity have included Democrats WSU political science professor Dr. Mel Kahn and Kansas school board member Dr. Walt Chappell, and Jack Cole of Law Enforcement Against Prohibition, whose mission is to end the war on drugs. All these speakers provided valuable information and education. The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Information added to KansasOpenGov.org. KansasOpenGov.org, a government transparency initiative provided by the Kansas Policy Institute, has added new sections of data to its offerings. Added this week are checkbook and payroll registers for school districts in Topeka, Wichita, Great Bend, Colby, and Pittsburg. An interesting observation: Wichita has two union stewards on the payroll. The Wichita school district says the cost of compensation, benefits, etc. are reimbursed by the union, but while serving as union employees, they continue to build up seniority and earn credit towards their taxpayer-funded pensions. More information from KPI is at More districts added — taxpayers have new tools.

    “The Citizen” launches. This week a new print newspaper launched covering Kansas City and the states of Kansas and Missouri. It’s available in an online version, too. Named the citizen, it describes itself as “We’re a new monthly newspaper for the Kansas City metro area. Our first issue is available right now. Are we biased? Yes — just like every other newspaper and magazine. Are we different? Yes — because we’re not afraid to admit that things like a love of freedom and a belief in personal responsibility matter, and they inform what we choose to cover. We’re free to readers and ad-supported.”

    Economic development in Wichita explained. Maybe. You be the judge, as Wichita Mayor Carl Brewer and city council member Janet Miller explain. Video here.

    Limits on state agency advertising proposed. Kansas state treasurer Ron Estes has proposed a ban on appearances by elected officials in public service announcements using state resources 60 days before an election. This was an issue before last year’s election in November, mostly for the treasurer and secretary of state contests. Said Estes: “These public service announcements are intended to educate the citizens of Kansas on the programs available by the state to help serve their best interests. They are not intended to serve as a free campaign commercial for an incumbent before an election.” More information is here. After this issue is handled, I propose a next step: reigning in the agency websites, which functioned as campaign billboards for most elected state agency heads.

    Wichita lame ducks to take junket. As The Wichita Eagle’s Rhonda Holman explains, Wichita city council members with less than a month left to serve should not be traveling to conferences whose nominal mission is to help them be better council members. But Paul Gray, Sue Schlapp and Roger Smith will do just that, based on action taken in yesterday’s council meeting. As Holman writes: “All governing boards should curb junkets for members approaching the exits. Taxpayers should not have to subsidize the air travel, hotel rooms and networking and schmoozing of elected officials whose service is all but over.”

  • Wichita again to bet on corporate welfare as economic development

    This week the Wichita City Council will consider three measures that, if adopted, will further establish corporate welfare and rent-seeking as Wichita’s economic development strategy.

    When people are living on welfare, we usually see that as a sad state of affairs. We view it as a failure, both for the individual and for the country. We seek ways to help people get off welfare so that they become self-sufficient. We want to help them contribute to society rather than being a drain on its resources.

    But Wichita’s leaders don’t see corporate welfare as a bad thing. Instead, as these three measures — all of which will likely pass unanimously — illustrate, welfare is good when you’re a business in Wichita. Especially if you can raise speculation that your company might move out of Wichita.

    The term rent, or more precisely, economic rent is somewhat unfortunate, as the common usage of the term — paying someone money for the use of an asset for a period of time — contains no sinister connotation. But economic rent does carry baggage.

    What is rent seeking? Wikipedia defines it like this: “In economics, rent seeking occurs when an individual, organization or firm seeks to earn income by capturing economic rent through manipulation or exploitation of the economic environment, rather than by earning profits through economic transactions and the production of added wealth.”

    This explanation doesn’t do full justice to the term, because it doesn’t mention the role that government and politics usually play. The Concise Encyclopedia of Economics adds this: “The idea is simple but powerful. People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors.”

    The three deals the Wichita City Council will consider tomorrow are both corporate welfare and rent-seeking. All three are harmful to our city.

    The three deals

    The first item to be considered Tuesday concerns MoJack Distributors, LLC, a company that makes an accessory for riding lawn mowers. It is proposed that the City of Wichita and Sedgwick County each make a forgivable loan of $35,000 to this company. If the company maintains a certain level of employment, the loans do not need to be repaid.

    But this is not the only welfare being given to this company. The city also proposes a 100% Economic Development Exemption (EDX) property tax exemption. The term would be five years, with renewal for another five years if conditions are met. The city’s material on this matter may be read at Approval of Forgivable Loan Agreement, MoJack.

    The company will also receive tax credits and grants under programs offered by the State of Kansas.

    Another company, Apex Engineering International LLC, is proposed to receive forgivable loans of $220,000 each from Wichita and Sedgwick County. The company will also receive grants and tax credits totaling $1,272,000 from the state. Surprisingly, no property tax exemption is mentioned for this company. The city’s material on this matter may be read at Approval of Forgivable Loan Agreement (Apex Engineering International).

    For both companies, there was the threat of moving operations elsewhere, and the incentives offered made the difference.

    The final action of corporate welfare to be considered is a community improvement district (CID) for the Eastgate shopping center at Kellogg and Rock Road. The CID, if approved, would require merchants to add an additional tax of one cent per dollar on all sales. That money, less a five percent fee, would then be given to the shopping center’s owners for their exclusive use. This could be worth as much as $18,528,596 over 22 years, according to city documents.

    The Eastgate item is on the agenda for a second time after being withdrawn in January. At the time, Rhonda Holman of The Wichita Eagle wrote: “As it was, insufficient time had been allowed for staff vetting of the proposals and thorough consideration by the council and public.”

    The action the council is asked to take at tomorrow’s meeting is to accept petitions asking for formation of the CID, and to set March 1st as the date of a public hearing.

    Targeted investment, or welfare

    Government bureaucrats and politicians promote programs like these as targeted investment in our region’s economic future. They believe that they have the ability to select which companies are worthy of public investment, and which are not. It’s a form of centralized planning by city hall that shapes the future direction of Wichita’s economy.

    Arnold King has written about the ability of government experts to decide what investments should be made with public funds. There’s a problem with knowledge and power:

    As Hayek pointed out, knowledge that is important in the economy is dispersed. Consumers understand their own wants and business managers understand their technological opportunities and constraints to a greater degree than they can articulate and to a far greater degree than experts can understand and absorb.

    When knowledge is dispersed but power is concentrated, I call this the knowledge-power discrepancy. Such discrepancies can arise in large firms, where CEOs can fail to appreciate the significance of what is known by some of their subordinates. … With government experts, the knowledge-power discrepancy is particularly acute.

    I emphasized the last sentence to highlight the problem of the dispersed nature of knowledge.

    Yet this week, our Wichita city bureaucrats feel they have the necessary knowledge to recommend to the city council that the citizens of Wichita make investments of public funds in these three instances. Our city council members are gullible enough to believe it.

    One thing is for sure: the city has the power to make these investments. They just don’t have — they can’t have — the knowledge as to whether these are wise.

    We need a dynamic job creation engine

    Furthermore, we have to question the wisdom of investing in these established companies, especially a company involved in aviation, as Wichita always is seeking to diversify its economy away from dependence on aviation.

    Through research conducted by Dr. Art Hall and others, we now know that it is dynamic young companies that are the main drivers of job creation in Kansas. Hall wrote: “Embracing dynamism starts with a change in vision. Simply stated, the state government of Kansas should abandon its prevailing policy vision of the State as an active investor in businesses or industries and instead adopt the policy vision of the State as a caretaker of a competitive “platform” — a platform that seeks to induce as much commercial experimentation as possible.” (While Hall wrote about the State of Kansas, the City of Wichita is playing the same role at a local level.)

    The “active investor” role that the city of Wichita is about to take with regard to these three companies is precisely the wrong role to take. These actions increase the cost of government for the dynamic small companies we need to nurture. Instead these efforts concentrate and focus our economic development efforts in an unproductive way.

    Sales tax increase spreading across Wichita

    These proposed Eastgate shopping center CID, and one still likely to be proposed for Westway shopping center, break new ground in that these shopping centers are not tourist destinations or trendy shops. They’re run-of-the mill shopping centers that have stores that Wichitans visit every day. Some council members like Vice Mayor Jeff Longwell have justified past CIDs on the basis that since they are tourist destinations, much of the tax will be paid by visitors to Wichita. This is not a wise policy, but even it it was, it does not apply to these two shopping centers.

    Instead, these two applications are more indications that soon Wichita — its major retail centers and destinations, at least — is likely to be blanketed with community improvement districts charging up to an extra two cents per dollar sales tax. Currently, merchants in a CID are running the very real risk that once their customers become aware of the extra sales tax, they will shop somewhere else. But as CIDs become more prevalent in Wichita, this competitive disadvantage will disappear.

    Step by step, a sales tax increase is engulfing Wichita, and our city council and mayor are fine with that happening. This is on top of the statewide sales tax increase from last year, which, despite claims of its supporters and opposition by conservatives, is likely a permanent fixture.

  • Kansas and Wichita quick takes: Thursday February 3, 2011

    Wichita-area legislators to meet with public. From Rep. Jim Ward, South-Central Delegation Chair: “Public comment about the proposed state budget, health care reform, voter eligibility and other major issues will be heard by local legislators at 9:00 am Saturday, Feb. 5, at the Wichita State University Metroplex, 29th and Oliver. The forum is the first of the 2011 legislative session and is hosted by the South-Central State Legislative Delegation. … Delegation members will take written and spoken questions from the public during the two-hour session. ‘Legislators need to hear from the people who are affected by these important issues,’ said Rep. Jim Ward, delegation chair. ‘Better decisions are made when the public participates in the process.’ … For further information, contact Rep. Ward, delegation chairman at 316-210-3609 or jim.ward@house.ks.gov.”

    Fairness issue. A letter in the Topeka Capital-Journal: “The Capital-Journal recently published a lengthy feature, headlined ‘Cuts to arts hit sour note,’ about the Kansas Arts Commission. Abolition of the commission may be a legitimate policy move for budgetary reason. However, there is a caveat. If it’s eliminated for budgetary considerations, all comparable departments, agencies, services, programs, etc., must too be abolished or separated from the state into a nonprofit or for-profit corporation — unfunded by Kansas taxpayers, either directly or indirectly.” After running through a number of agencies, the writer concludes: “Thus, artists pay for their own canvasses, hunters fund their own preserves, tourists find the Flint Hills on their own, students come to college to study, farmers show off their fancy ears of corn in their own barns and concert-goers go to New York for entertainment. Honor dictates that all be treated the same, be it sports or tourism or the arts.” … While the tone of the entire letter is sarcasm, the writer almost has everything correct, if taken literally. But it’s not honor that dictates all the treated the same, it’s morality that requires such treatment.

    Twenty regulations to eliminate. From the Heritage Foundation: “As the new Congress assembles, many legislators are considering how to lessen the regulatory burden on Americans. President Obama, too, now says that he wants to root out unnecessary government rules. With regulatory costs at record levels, relief is sorely needed. But it is not enough to talk about fewer regulations. Policymakers must critically review specific rules and identify those that should be abolished. This paper details 20 unnecessary and harmful regulations that should be eliminated now. … At every level, government intrudes into citizens’ lives with a torrent of do’s and don’ts that place an unsustainable burden on the economy and erode Americans’ most fundamental freedoms. In fiscal year (FY) 2010 alone, the Obama Administration unleashed regulations that will cost more than $26.5 billion annually, and many more are on the way.” The report is available at Rolling Back Red Tape: 20 Regulations to Eliminate.

    Kansas considers major change in state pension plans. “Kansas legislators looking for ways to close a nearly $8 billion gap in state pension plan funding heard how Utah plans to heal its pension wounds by switching to a plan similar to one that most private businesses offer. … Utah state Sens. Dan Liljenquist, of Bountiful, and Curt Bramble, of Provo, both Republicans, outlined to the Kansas House Pensions and Benefits Committee how Utah intends to close a somewhat smaller gap than Kansas’ by switching its traditional defined benefits pension plan to a modified version of a defined contribution 401(k) plan, the predominant retirement savings plan offered by U.S. businesses.” More from Kansas Reporter.

    Politics and city managers to be topic. This Friday (February 4) the Wichita Pachyderm Club features as its speaker H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs, Wichita State University. His topic will be “The Political Roots of City Managers in Kansas.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Funny campaign websites. Steve Harris, a candidate for Wichita City Council district 2, has a post on his website extolling the virtues of government funding for the arts, invoking the words of George Washington, Franklin Roosevelt, and Lyndon Johnson. What’s funny is where he quotes John Adams. The blog post states “John Adams said: ‘Diversity is a good man’s shining time.’ I would argue that we need to reflect on the thoughts of great leaders from the past who faced diversity we can’t even imagine today.” … When Harris quotes Adams, I think he meant to say adversity rather than diversity. Diversity is not something we have to “face” and struggle against. Adversity is. But even then, he gets the quote incorrect. The first word in the quotation from Adams is “Affliction.” … Plus, I don’t think he’s going to get a lot of agreement on LBJ being a great leader.

  • Kansas and Wichita quick takes: Monday January 31, 2011

    Some downtown Wichita properties plummet in value. A strategy of Real Development — the “Minnesota Guys” — in Wichita has been to develop and sell floors of downtown office buildings as condominiums. Some of these floors have been foreclosed upon and have come back on the market. Some once carried mortgages of $400,000 or more, meaning that at one point a bank thought they were worth at least that much. But now four floors in the Broadway Plaza Building, three floors of the Petroleum Building, two floors of Sutton Place, and one floor of the Orpheum Office Center are available for sale at prices not much over $100,000, ranging from $14 to $25 per square foot. Other downtown office buildings — very plain properties — are listed at much higher prices. For example, one downtown property is listed at $82 per square foot. … Some of these floors have had declining appraisals. According to the Sedgwick County Treasurer, the fifth floor of Sutton Place, which is listed for sale at $135,000, was appraised in 2008 for $530,900. In 2009 the appraised value dropped to $215,000.

    Kansas Days. The primary news made at this year’s Kansas Days gathering was the election of Todd Tiahrt to replace Mike Pompeo as national committeeman. Otherwise, there was a large turnout in Topeka with many receptions and meals that provided opportunities to meet officeholders and new friends, and to reacquaint with old friends from across the state. Plus, I got to sample the “Brownback” beer. It’s pretty good.

    Williams named to national economic development committee. From Wichita Business Journal: “Wichita City Council member Lavonta Williams has been named to a National League of Cities steering committee on Community and Economic Development Policy and Advocacy.” Undoubtedly for her unfailing support of any form of corporate welfare that comes before the Wichita City Council.

    Mises University this summer. If you’re a college student and would like to receive instruction in Austrian Economics — “a rigorous and logical approach to economics that gives free markets their due and takes full account of the reality of human choice” — I suggest applying to the Ludwig von Mises Institute to attend Mises University this summer. I attended as a member observer in 2007, and it was a wonderful and very intense week. For more information, click on Mises University 2011. Scholarships are available.

    A Rosa Parks moment for education. Kevin Huffman in the Washington Post: “Last week, 40-year-old Ohio mother Kelley Williams-Bolar was released after serving nine days in jail on a felony conviction for tampering with records. Williams-Bolar’s offense? Lying about her address so her two daughters, zoned to the lousy Akron city schools, could attend better schools in the neighboring Copley-Fairlawn district. … In this country, if you are middle or upper class, you have school choice. You can, and probably do, choose your home based on the quality of local schools. Or you can opt out of the system by scraping together the funds for a parochial school. But if you are poor, you’re out of luck, subject to the generally anti-choice bureaucracy.” Kansas has no school choice programs to speak of, and so far Kansas Governor Sam Brownback has not expressed advocacy for school choice.

    The state against blacks. The Wall Street Journal’s Jason L. Riley interviews economist Walter E. Williams on the occasion of the publication of his most recent book Up from the Projects: An Autobiography. The reason for the article’s title: “‘The welfare state has done to black Americans what slavery couldn’t do, what Jim Crow couldn’t do, what the harshest racism couldn’t do,’ Mr. Williams says. ‘And that is to destroy the black family.’” … On economics and why it is important, Riley writes: “Over the decades, Mr. Williams’s writings have sought to highlight ‘the moral superiority of individual liberty and free markets,’ as he puts it. ‘I try to write so that economics is understandable to the ordinary person without an economics background.’ His motivation? ‘I think it’s important for people to understand the ideas of scarcity and decision-making in everyday life so that they won’t be ripped off by politicians,’ he says. ‘Politicians exploit economic illiteracy.’” … On the current state of politics: “Mr. Williams says he hopes that the tea party has staying power, but ‘liberty and limited government is the unusual state of human affairs. The normal state throughout mankind’s history is for him to be subject to arbitrary abuse and control by government..”

    Professor Cornpone. From The Wall Street Journal Review & Outlook: “The last time these columns were lambasted by a presidential candidate in Iowa, he was Democrat Richard Gephardt and the year was 1988. The Missouri populist won the state caucuses in part on the rallying cry that ‘we’ve got to stop listening to the editorial writers and the establishment,’ especially about ethanol and trade. Imagine our amusement to find Republican Newt Gingrich joining such company. The former Speaker blew through Des Moines last Tuesday for the Renewable Fuels Association summit, and his keynote speech to the ethanol lobby was as pious a tribute to the fuel made from corn and tax dollars as we’ve ever heard. Mr. Gingrich explained that ‘the big-city attacks’ on ethanol subsidies are really attempts to deny prosperity to rural America … Yet today this now-mature industry enjoys far more than cash handouts, including tariffs on foreign competitors and a mandate to buy its product. Supporters are always inventing new reasons for these dispensations, like carbon benefits (nonexistent, according to the greens and most scientific evidence) and replacing foreign oil (imports are up). … Given that Mr. Gingrich aspires to be President, his ethanol lobbying raises larger questions about his convictions and judgment.” Another advocate for the ethanol boondoggle, and perhaps again a presidential candidate, is Kansas Governor Sam Brownback.

    Politics and city managers to be topic. This Friday (February 4) the Wichita Pachyderm Club features as its speaker H. Edward Flentje, Professor at the Hugo Wall School of Urban and Public Affairs, Wichita State University. His topic will be “The Political Roots of City Managers in Kansas.” The public is welcome and encouraged to attend Wichita Pachyderm meetings. For more information click on Wichita Pachyderm Club.

    Wednesdays in Wiedemann this week. Wednesday (February 2) Wichita State University’s Lynne Davis presents an organ recital as part of the “Wednesdays in Wiedemann” series. These recitals, which have no admission charge, start at 5:30 pm and last about 30 minutes. The location is Wiedemann Recital Hall (map) on the campus of Wichita State University. For more about Davis and WSU’s Great Marcussen Organ, see my story from earlier this year.

    Government bird chirping. American Majority’s Beka Romm wonders about the wisdom of a mayor’s plan to broadcast bird songs on the city’s streets, and how we can decide whether government should be doing things like this.