politicalcivility.com Blog

A recent study by the American Council for Capital Formation highlights what the US can do for real economic stimulus versus handing out checks that came as a result of us borrowing more money.  ACCF’s study showed the adverse effect of corporate taxes on investment.  This is significant for the US because has the second highest corporate tax burden in the world, and yet we wonder why jobs are going overseas (hint: it’s not just because the labor is cheaper).

If we really want to turn the economy around, we have to stop punishing businesses for being profitable and allow them to keep their earnings, which they in turn reinvest in growing their businesses and creating new jobs.

Link to the study findings: http://accf.org/publications/newsletter/volumes/jan-feb2008.html#study

I’ve been busy this week with EarthWeek at Sutherland which has kept me from posting more, but I wanted to throw out this question posed by Roy Innis during the first day. 

What’s the balance?  What’s the right balance between development and conservation?  What’s the balance between the principles of stewardship and economic progress?  What’s the balance between the development of ‘alternative’ fuel sources and asking consumers to pay significantly more for life’s basic necessities (food, shelter, warmth/cooling)?

This balance question forces us to start making clear what is the principle and priority framework we are coming from rather than relying on the rhetoric or emotional hysteria that can accompany both sides of the issue.

As I look at the issue of climate change/global warming here are a few of principles/priority frameworks that guide how I look at this debate.

1. Stewardship: As I have stated on this blog before I am a firm believer in being a wise steward of the earth’s resources, but inherent in that belief system is the idea that the resources should be used. 
2. Cost: For me the balance question has to look at cost with a heavy bias toward human cost (this goes back to my post about conservationalist philosophy versus a preservationist worldview).  Human life takes highest priority.  So when millions begin to starve or die because of “green” policy then those policies must change.
3. Government Expansion: This goes back to my belief that any “war” so called on an issue (environmentalism, poverty, terrorism, you fill in the blank) leads to significant government intervention (which leads to greater inefficiency and subsuquent increase use of resources) and loss of freedom.  Also if you want to see how well the a government controlled economy handles the environment look no further than the former USSR and China.  Both stellar examples of clean air and water.
4. Cause & Effect: One of the most glaring issues of the IPCC report is the misuse or lack of use of appropriate cause and effect analysis.  Much of what the IPCC calls “cause” is actually just correlation.  There is a huge difference. So getting this right is critical if we want to really make a difference or know if we really can make a difference.
5. Everything on the Table: If we are to have a serious discussion about environmental problem solving, we must stop arbitrarily removing proven solutions and dismissing legitimate scientific research and inquiry.  Let’s put everything on the table: wind, solar, nuclear, manmade versus natural warming effects and see what is real according to the science and economics and then balance that with the cost to the environment and cost to society to see what makes the most sense.  Then we need to step back and let the market work. 

Just a few of my thoughts.  The floor is now yours.

Here’s a link that gives a nice quick overview of what the Grace Commission found about taxation and governement spending.

http://www.freecanadian.net/articles/grace.html

This is a follow-up on the $55 dollar tow job post.

If I had any lingering thoughts that government should be involved with health care, they went right out the window today.  You might say what does a tow job and government run health care have in common.  Well let’s take a look at why what normally would be a $55 tow job on the regular free market, becomes a $200 tow job under state regulation.

I live in Lehi and last night was one of the most amazing wind storms and drifting I’ve ever seen.  Frankly to watch how powerful mother nature is was pretty awesome notwithstanding the danger it posed on the roadways.  Anyway I got stuck in a drift, like hundreds of others, on my way home and had to abandon my car or else spend a cold night in the old accord.  I choose to walk the mile or so home.  When I went with some neighbors to dig out my car early this morning, we found it had been towed.  I called Vern’s Tow Shop (which is about two miles from where I was towed), and was informed that my towing fee would be $198.  I was blown away, so I had my wife call in and get a quote for our other car from the same place.  We were told it would cost $55.  For those keeping track that is a $143 difference in cost for the same work.

How does this happen?  Well the state legislature thought it would be a good idea to “regulate” towers by setting standard baseline fees for towing companies anytime they towed an abondoned car.  Now either they didn’t care to take a look at market prices or the towing lobby worked some smoke and mirrors, because the base fee to tow a car you have to abadon in a snow storm is $121 plus a fuel surcharge, plus a milage fee, plus a housing fee, etc., etc.

Now let’s look at what this looks like in a government run health care system.  Let’s say for example, that I have a common cold and need to go to the doctor.  With the current market, it probably costs $75-100 depending on if they give you a test or not.  In the government run “price” controlled system, based just on a simple towing example, I (the taxpayers, because government run health care is NOT FREE) would be paying between $270-$360 for the same visit.  So much for “affordable” government health care!

Don’t believe me…may I recommend the book “A Taxpayer Survey of the Grace Commission.”  This book outlines how a Home Depot hammer costs the military several hundred dollars and many more examples of how when government gets involved affordable goes out the window

Okay, now that I’ve complained about the sad state of the UTA, my next question to myself is, “Fine, Lyall, what do you propose?  It does little good to be an armchair quarterback.” 

With that in mind, I look to principles of good government.  I am not arguing that public transportation does not have a role, but why do we assume that the state government should run the program.  Why not open up the system to the private sector to compete over transportation alongside the UTA?  The UTA, based on the audit, is obviously showing signs of a monopoly.  Prices are going up, service is going down, and a constant stream of red flowing from their balance sheet.

I think we could learn a lot from Indianapolis while under the leadership of Mayor Stephen Goldsmith.  In his book, “The Twenty-first Century City,” he speaks about meaningful ways to introduce competition and thus innovation in to services that local and state governments have performed over the past 50 years.  It is interesting to note that not all of Goldsmith’s city services ended up in the hands of the “private” sector.  He makes an important distinction that privatization is not the end goal.  A private monopoly is just as bad as a public monopoly.  Competition is the key.  It’s time to let the UTA compete with the local entrepreneur to deliver a service that for many of our neighbors in need is a key service.

Final Low Lights:

(4) Subsidized Total Cost per Passenger Boarding

• Bus: 87% or $5.11
• Light Rail: 86% or $3.51
• Vanpool: 75% or $3.53
• Paratransit: 92% or $36.82

In sum, this means that the Utahns are subsidizing public transportation to the tune of $162 Million in 2006.  All this for a service that does little to relieve congestion, adds significant amounts of pollution, and lacks oversight and accountability.

The Utah quarter is finally out, but as Paul Harvey would say…”And now the rest of the story.”

History of Railroad Construction

I find it rather ironic that Utah/Gov. Huntsman choose a symbol that represents one of the worst cases of government waste in US History.  While the “golden” spike put Utah on the map so to speak, the building of the transcontinental railroad should serve as a grave reminder not as a point of celebration.

A Few Facts About The Railroad

1. Paralell Lines: North Pacific (NP) and Central Pacific (CP) were paid for how many miles of track they laid, so the line that built the most rails got the most cash.  For awhile in Utah the two companies were laying and getting paid for tracks that were being built parallel to each other, which of course cost taxpayers additional millions of dollars.
2. Free Land: The two companies were given more than 44,000,000 acres of free land to build the railroad. Assuming and average of $4.00 per acre (the going rate at the time), CP and NP received a $401 Billion (in today’s dollars) land subsidy.  Arguably one of the largest government handouts in the history of America.
3. Huge Loans: CP and NP also received more than $61,000,000 dollars ($139 Billion in today’s dollars).
4. Bloodshed: Competition was so fierce amongst the two railroads that war literally ensued as many lives were lost on account of a series of attacks each company carried out on the other’s employees.
5. Repairs: In the first year alone, repairs for the “newly” built railroad cost the taxpayers in excess of 113 Million (today’s dollars) to repair the line, because CP and NP had built the railroad so poorly.
6. Bankrupt: Despite all the corporate welfare these two companies received, at the end of the building of the railroad, both companies were nearly bankrupt.  The subsidies, during the building, hid the waste and corruption and lack of good management of these two companies.

The list could go on.  Some sources estimate that the building of the transcontinental railroad actually cost 3x the numbers I have listed here.

Now that’s something to be proud about.  Maybe the golden spike should have ended up on the $1,000 bill instead of the quarter.  At least then it would better represent the largesse needed to build our government funded landmark: The Transcontinental Railroad.

—–

Sources:

1. “The Myth of the Robber Barons,” by Burton Folsom.  He gives a lot more detail about how corrupt this process was and also highlights how another rail line in the Northwest was built privately, cost significantly less (even though they used far superior build supplies) and without any government help.  This line also charged less, was more efficient in getting goods from East to West, and paid its shareholders handsomely.
2. http://measuringworth.com/calculators/uscompare/

Realtors and city planners are in love with “smart growth,” but their pet policy project may be one of the two main reasons (in addition to bad lending practices) that have pushed the housing market over the top here in Utah and around the country.

Why smart growth?  Like most governmental restrictions or regulation policies, smart growth creates artificial scarcity and so changes the demand curve for housing.  Don’t believe me.  Take a look at recent article issued by SmartMoney.  In the data chart it lists major metropolitain areas of which 4 Utah areas made the list.

Here’s the data:

• Logan: % overvalued = 17%
• Ogden: % overvalued = 17%
• Provo: % overvalued = 34%
• SLC: % overvalued = 30%
• St. George: % overvalued 53%

These are based off the median home prices as of Q2 2007.  Unfortuately just another example of an interest group partnering with the government to sell Utahns a promise “affordability” and delivering just the opposite.  All the while, realtors make record profits on the backs of hard working Utahns.  I guess it’s just another classic example of what Burton Folsom terms as the political entrepreneurs working the system to line their own pockets, all the while portending to be “true capitalists.” 

Maybe its time Utahns start doing a bit more homework to understand what conservative policy as it pertains to “smart” growth really looks like and start holding reatlors, developers and politicians accountable for the backroom dealing that is undermining a true free market in Utah.