For those of you considering the possibility of a fall internship with the Show-Me Institute, this is a reminder that applications are due today. We’ll continue to accept applications until Monday, so those who have learned about our internship program just now, from this very blog entry, will have time to put an application together.
If you’re a college student, we’d love to consider you. If you know a college student, be sure to spread the word about this great opportunity.
No, that’s not an oxymoron. Seriously. …
When political units are small and decentralized, competitive pressure can create market-like outcomes. It’s imperfect, because consumers — i.e., citizens — have to purchase bundles of services rather than purchasing each service separately. However, it’s much better than a large, centralized polity. The key is that the cost of switching to a new political jurisdiction is low. The smaller the polity, the smaller the cost when everything else is equal.
The Post-Dispatch reports on this sort of competition at work in Missouri. The small town of Albany has passed an ordinance legalizing the use of golf carts within city limits. Each golf cart must have an attached seven-foot orange flag, and an annual permit costing $15. Why, exactly was this ordinance passed? Well…
City Administrator Derek Brown said several residents asked the city to legalize the use of golf carts, saying the practice would be cheaper than traveling around town in a car.
It seems gas prices have played a large role in this, but the point is that residents asked for it, and got it. Sure, this sort of thing happens on the federal level, too, but the difference in this case is that residents who don’t like it can leave at a much lower cost. If they do leave, the city’s coffers will begin to dwindle, pressuring city officials to change the law — or, perhaps, become a niche city for golf carr lovers.
This sort of system is exactly what the founders had in mind with federalism. A central government is better apt to provide a few things like defense and dispute resolution between the smaller political units. At the same time, smaller competing polities, like states, counties, and municipalities, provide a somewhat competitive market for government. This does a better job of providing each citizen with the bundle of policies they want. The problem seems to be preventing the transfer of political power from state and local governments to the national government.
Prime Buzz reports:
Missouri 6th District congressional candidate Kay Barnes today released a major policy stance on energy, a 5-point plan to deal with rising gas prices.
Naturally, I have a point-by-point response.
The 5 points of her new plan are:
- Increasing domestic drilling, by compelling oil companies to use the leases they currently have to drill on federal lands.
Increasing domestic drilling is a good idea to help alleviate the effects of the high price of gas in the short term. However, compelling oil companies to drill more is the wrong way to go about this. I’m not sure about the details of the leases to these federal lands, but I can suggest one way to structure them: If the leases were tradeable commodities (perhaps they wouldn’t be leases anymore) then we can expect whoever values the lease the most to purchase it — which probably would be whoever is willing to drill now. On the other hand, the oil companies may be betting that there is no end in sight, and holding oil in the ground until the price rises even more. If that is the case, a bit of pain now is much better than extreme pain later.
- Repealing tax breaks and subsidies for big oil companies, or redirect such subsidies toward renewable energy sources such as biofuels.
I’m all for making the tax system less complicated by removing exceptions, and I’m in favor of eliminating subsidies — but redirecting them toward biofuels is a bad idea. The incentive to develop alternatives is already huge, and not likely to be affected by government action. Attempts to manipulate the market may end up doing more harm than good.
- Supporting House-passed legislation directing the Commodity Futures Trading Commission to curb speculation in the energy markets. A so-called “Enron loophole” had previously exempted electronic energy traders from U.S. regulation.
Speculation actually eases the pain of economic change. When speculators bet on future price changes, they either prematurely increase or decrease the price, depending on what they think the future holds. This eases the pain of economic change because it makes price changes more gradual, rather than arriving as sudden shocks. These speculators also probably know more about future price movements than anyone else. After all, they are the ones with money on the line.
- Lowering federal trade and budget deficits, which would strengthen the value of the dollar when buying foreign oil, thus indirectly lowering the cost of oil.
A surefire way to strengthen the value of the dollar would be to raise interest rates by slowing the growth of the money supply. Barnes wouldn’t have control of that, however, so it’s hard to fault her for leaving this out. However, the high price of oil isn’t the only concern when it comes to manipulating exchange rates. A more favorable exchange rate means less foreign investment in the U.S., and fewer exports.
- Increasing fuel economy standards for cars and trucks, something that Congress started doing again for the first time in three decades when it passed higher fuel economy standards six months ago.
This will either be irrelevant or raise the cost of cars for the average consumer. It will most likely be irrelevant, because consumers are voluntarily choosing to buy more fuel-efficient vehicles. It’s amazing how well markets coordinate action.
This policy bundle seems rather questionable to me. There is some merit to at least part of some of the five points, but I have trouble throwing my hat behind any single policy on the list. I wonder what Kay’s opponent, incumbent Sam Graves, is proposing.
Last week, I was introduced to the Tax Foundation’s Tax Freedom Day report. Aside from being an educational visualization of the confusing tax structure in this country, the report gives a breakdown of total tax burdens by state. A quick look at the map shows that, generally, wealthier states pay more taxes than poorer states. Looking into this relationship, I produced the following chart, comparing the per-capita personal income of each state with the number of days its average resident spends working to pay taxes (click to enlarge):
The relationship between the two inputs is strong, but with a considerable amount of variance and a few outliers. Also, the data itself says nothing of causality. I speculate that richer states are more willing and able to pay higher taxes, although this simplistic chart alone could just as easily suggest (I think incorrectly) that rich states are prosperous because of their higher taxes.
Regardless, the numbers show Missouri’s standing when compared with neighboring states. Residing barely underneath the trend line, Missouri taxpayers make slightly more money than they pay in taxes when compared to all 50 states. Although we spend relatively more in taxes than neighbors Oklahoma and Tennessee, the chart shows healthier proportions than many other nearby states. Missourians should continue striving for a low-tax environment, perhaps looking no further than across state borders for role models.
Sources: Tax Foundation, U.S. Bureau of Economic Analysis and Bureau of the Census
Please note that all data is for 2007. Image created with Microsoft Excel.
Our own David Stokes had an interview yesterday with KQTV Channel 2, based in St. Joesph, discussing the institute’s newly released ethanol study. Here is a synopsis of the the interview; in the meantime, we are working on getting a video link.
It confused people too much.
That was what a Franklin County employee told me when I asked why election results reported in the same format were less detailed in 2007 and 2008 than they had been in 2006 (and earlier years). In 2006, the reports had a figure labeled “times counted.” This was simply the number of ballots cast in a particular race, paired with the total number of registered voters eligible to vote in that race. And it allowed turnout to be calculated. In 2007 and 2008, that figure was missing.
At first, because I’ve seen it so often, I assumed the missing data was caused by a computer error. Even though the format hadn’t changed, I figured it must have been omitted accidentally on the hard copies I was given.
I was wrong.
The answer is corn, which makes ethanol, which leads me to my post, which suggests that gubernatorial candidate Sarah Steelman was listening to the Show-Me Institute …
Yesterday, Steelman held a press conference calling for an end to the notoriously bad ethanol mandate. She cited the mandate as one of the reasons that food and gas prices are at all-time highs, and that it must be repealed because of these unintended consequences. As many of you know, the Show-Me Institute recently produced a case study highlighting the negative effects of the mandate and its cost to Missourians. Initially, Steelman supported the mandate, but thanks to our study (at least, I’d like to think so) Steelman is among the growing list of officials who realize that the mandate was a mistake and have lobbied for its repeal.
Although our study does not focus on food prices, this effect is mentioned — along with the additional taxpayer costs that government subsidies bring. I commend Ms. Steelman for recognizing that the ethanol mandate is a bad deal for taxpayers, and I hope that her fellow politicians follow suit.
The failure of this regulation provides further evidence that such mandates are almost never a good deal for taxpayers, and shouldn’t be implemented in the first place. However, that’s a broader topic for a different day.
“Financial incentive offered for vets to treat cows, not kittens”
That’s the headline from Missourinet, which brings us this detail:
Half a million dollars has been set aside in the state budget to lure six vet students into a large animal practice, an appropriation to get the Large Animal Veterinary Student Loan Program off the ground.
And why do we need this little subsidy? According to the acting state veterinarian, Dr. Taylor Woods:
[…] it would take at least ten years to ease a critical shortage of veterinarians to serve Missouri’s farms as well as its livestock markets.
Assuming that the wages of veterinarians are allowed to freely adjust to market forces, the subsidy is completely unnecessary. In the short term, the vets who are qualified to treat livestock can charge a premium. As a result, anyone who needs this sort of service is encouraged to seek alternatives, and to purchase these services only when they are absolutely necessary. Also, anyone who can provide treatment for livestock is encouraged to spend more time doing just that. In fact, this is exactly what is happening:
Woods says some [livestock markets] are staffed by elderly vets who have come out of retirement to help out.
Elderly vets certainly aren’t a long-term solution, but market forces take care of that, too. Because the shortage of livestock vets raises their wages, it becomes more attractive for people to become trained in the field. As this happens, the price of livestock vet services comes back down.
This isn’t a novel chain of reasoning, of course; it’s merely the operation of supply and demand applied to the caretakers of our animals.
Of course, the vets don’t really want to hear all of this — but you wouldn’t want to hear it either if the government was offering you free money.
From July 10–15, Lindenwood University (over in St. Charles) will be hosting an exciting conference, “The American Decentralist Tradition.” Among the topics of discussion will be the Declaration of Independence, the Kentucky Resolutions, and the Webster-Calhoun Debate (also known as the Webster-Hayne Debate), as well as contemporary issues such as the effect of centralization of political power on corporate structure and the correlation between highly centralized governments and the murder of their citizens. The conference’s very structure will imitate its subject matter, shifting among several unique locations in eastern Missouri, including historic Ste. Genevieve, the St. Louis Cathedral, Daniel Boone Village, and the mounds at Cahokia, Ill. If you are interested, you can get additional details by dropping a line to Prof. Rachel Douchant, who is heading up the conference.
