Milton Friedman, gridlock, term limits, federalism, & making politicians behave

Milton Friedman explained that politicians “are in a business… competing with one another to get elected.”  Electing the “right” people, said the renowned economist, “isn’t the way you solve things. The way you solve things is by making it politically profitable for the wrong people to do the right things.”  Or at least make it unprofitable to do the wrong things.

Term limits are one step toward this goal. Term-limited legislators tend to seek office to address issues rather than personal goals, and are more independent of party politics and rent-seeking interest groups. Term limits would create a legislature of, by, and for the people rather than ruling class of career politicians detached from the private sector.  Several states limit legislators’ terms. The 22nd Amendment term-limited the President. U.S. Senators and Representatives should have similar term limits.

Another step is to restrain federal power by restoring state legislators’ influence on the federal government.  For example, repealing the 17th Amendment would allow state legislatures to once again elect Senators.

James Madison noted that having different constituencies electing the House and Senate provides an “additional impediment … against improper acts of legislation.”  As law professor Todd Zywicki notes, the 17th Amendment ushered in the era of legislation benefiting national special-interests at the expense of the people. For example, ObamaCare’s Medicaid expansion threatens to bankrupt states.

Law professor Randy Barnett‘s “Repeal Amendment” is another way to restore checks and balances. It would empower two-thirds of states to repeal any federal law or regulation.

This originally was printed in the Boulder Daily Camera on August 13, 2011.

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Thanks to Amanda Teresi of Liberty on the Rocks for bringing the Friedman quote to my attention. Check out their video, above.

If I had a higher word limit, I would have mentioned making elections more competitive by removing ballot access restrictions and using a type of range or approval voting system.

Debt ceiling & reducing deficit without raising taxes

The Daily Camera asks: Lawmakers in Washington continue to be divided about raising the $14.3 trillion debt ceiling, which faces a deadline of Aug. 2, the day the Treasury Department says it will lose borrowing authority. Meanwhile budget talks regarding possible tax increases and debt reduction continue. What do you think?

My response:

Debt ceiling? What debt ceiling?  ”In the last 10 years, Congress has raised the debt ceiling 10 times,” notes economist Veronique de Rugy.

The real problem is excessive government spending that has created the huge debt. Spending has increased more than 60% in the past ten years.  ”43 cents of every dollar spent is borrowed,” de Rugy estimates.  According to USDebtClock.org, the federal debt exceeds $46,000 per U.S. citizen.

This spending is unsustainable and hazardous. The Congressional Budget Office warns of ” lower income growth” and risk of a “sudden fiscal crisis” that requires “spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”  Taxation and government borrowing crowds out investment in private capital. This diverts “resources that could be used more productively. … U.S. companies are less likely to build new plants, conduct research, and hire people,” de Rugy explains.

As a remedy, Reason magazine suggests a “19 Percent Solution,” which refers to typical levels of tax revenue relative to GDP. The plan would balance the budget without raising taxes by reducing spending by less than 4% annually for ten years.

Since entitlement programs drive much of federal spending, these cuts will be unlikely so long as people see the programs as moral. But as forced charity, these entitlement programs are immoral. Charity can be virtuous, but there’s no virtue in being forced to donate to a charity, or empowering politicians to force others to do so.

This was originally published in the Boulder Daily Camera on July 16 2011.

Red-light cameras can blame drivers for poor traffic engineering

A movement against red light traffic cameras “appears to [be] gaining traction across the country,” reported MSNBC last week. Boulder officials want to add more red light cameras. Is this a good idea?

Say an intersection has an abnormally high rate of red light violations. Using red-light cameras puts blame on the drivers. But this seems unfair, as the same drivers also use safer intersections nearby. It’s more reasonable to first look for deficiencies in signal timing, visibility of signals, signs, and lane markings.

To encourage such solutions, the National Motorists Association offers a “$10,000 Ticket Camera Challenge” for intersections with high red light violations. The NMA guarantees “a minimum 50-percent reduction in red-light violations through the application of engineering solutions” or it will “pay the community $10,000 [for] any traffic safety program or project it chooses.”

Traffic cameras are also legally questionable, as defendants cannot confront their accuser.  A California Superior Court Judge recently struck down eight cases of alleged red light running for these reasons. “Defendants here are entitled to be confronted with the testifying witness at trial,” she wrote.

As for effectiveness, data from the Boulder’s Transportation division shows decreased accidents at intersections after camera installations. But other factors could have been relevant. For example, changes in signal timing, all-red durations, and traffic volume. Further, there was no mention of how accident rates changed at intersections without cameras.

These shortcomings are typical of red light traffic camera studies showing benefits.  A report by the Transportation Research Board states: “In many cases, the flaw in the analysis was the lack of a proper control group.”  In some cities, traffic accidents increased after the addition of cameras, as the NMA’s website documents.

A version of this article was printed in the Boulder Daily Camera on July 2, 2011.

Maintaining Boulder open space trails: user fees & sponsorships should replace taxes

How Boulder County finances its trail maintenance is unjust. The county sales tax forces people to finance hiking trail maintenance, whether or not they use them. Meanwhile, people who don’t shop in Boulder County can use trails without paying.  The County should strive to replace tax-funded trails with user fees and sponsorships.

As a type of user fee, parking fees and annual parking passes for cars registered in other counties are a step in the right direction. The assumption is that a typical hiker coming from outside Boulder County pays less county sales tax than a trail user who resides in the county. The parking fee is an attempt to resolve this difference.

A drawback is that the fee makes some out-of-county hikers “pay twice.” Meanwhile, the sales  tax still forces county residents who do not use trails to fund other people’s recreation. To resolve this, the County should both decrease taxes and extend trailhead parking fees and passes to cars registered in the county.

In addition to user fees, corporate sponsorship of trails is another way to raise revenue through voluntary means. The Continental Divide Trail Alliance does this. Since 2009, REI has contributed more than $15,000, while Home Depot, Salomon, Coleman, and Smartwool have each contributed more than $1,000.  Trailhead maps and direction signs along the trail could identify sponsors: “This trail is maintained by a generous donation by …” and include the sponsor’s logo — tastefully sized of course.

A version of this article was printed in the Boulder Daily Camera on Saturday, June 18, 2011.

Rachel Maddow of MSNBC honors the national debt

Rachel Maddow describes how great projects like the national debt are accomplished. She feels the individual alone is not capable of accomplishing a 14 trillion dollar debt. Government is the only way to accomplish such a large task.

For more, see Mothers Against Debt.

Bin Laden’s capture: should the U.S. military use “scapels” or “sledgehammers”

“Bleeding America to the point of bankruptcy,” was how Bin Laden described his goals.  [As if our elected representatives needed help bankrupting America. But unlike our politicians Bin Laden uses the term "bleeding" literally.]

In a blog post titled “Osama Won,” Reason magazine editor Radley Balko notes that Bin Laden succeeded in his related goals: “to draw the U.S. and the West into a prolonged war—an actual war in Afghanistan, and a broader global war with Islam.” Reuters reports that “the war expense topped $1 trillion in December 2009,” and CostOfWar.com keeps a running tally.

But have costly wars, a large troop presence, and nation building helped capture terrorists?  The operation to apprehend Bin Laden involved about two dozen Navy SEALs and years of surveillance and intelligence gathering.  ”A scalpel, not a sledgehammer, should be our primary counterterrorism tool,” notes Cato Institute policy analyst David Rittgers, a former Special Forces officer in Afghanistan.

The combination of intelligence and precisely-targeted force was also behind capturing 9/11 plotters Khalid Sheik Mohammed and Ramzi Binalshibh. “Most effective counterterrorism techniques do not rely on tens of thousands of troops stationed indefinitely in distant lands,” notes Christopher Preble, author of “The Power Problem: How American Military Dominance Makes Us Less Safe, Less Prosperous, and Less Free.”

Recent calls for pulling troops out of Afghanistan sound reasonable. The number of Al Qaeda members there is “at most … 50 to 100, maybe less,” said CIA director Leon Panetta last summer. Indiana Senator Richard Lugar argues that this does not justify “100,000 American troops and a $100 billion per year cost.”

A version of this was published in the Boulder Daily Camera on May 7, 2011.

Does Boulder’s 4-20 smoke-out denigrate a CU degree?

Does the 4-20 smoke-out “denigrate” the value of a CU degree “by helping to label CU-Boulder as a party school,” as CU-Boulder Vice Chancellors Frank Bruno and Julie Wong wrote in an e-mail to all students advising them not to attend?

After all, Playboy magazine ranks CU-Boulder as this year’s “top party school,” claiming that “nearly half the university’s 24,000-plus undergrads turn out for the annual 4/20 smoke-out.”  This figure is flimsy — Playboy isn’t known for hardcore scholarship after all. Wikipedia lists the peak attendance as 11,000 in 2008. Further, “University officials estimated that about 75 percent of those in attendance were not affiliated with CU,” reports the Camera.

In any case, recent research by Northwestern Professor Lauren Rivera lends credence to the Vice Chancellors’ claims. Rivera analyzed how elite investment banks, law firms, and management consulting firms “use and interpret educational credentials in real-life hiring decisions.”  She concluded the “that educational credentials were the most common criteria employers used to solicit and screen resumes.” When evaluating resumes, “school prestige was the most commonly used criterion … evaluators privileged candidates from the ‘top’ of ‘the list’ regardless of their grades, coursework, major, area of specialization, or prior work experience.”  When screening resumes, about 75% of recruiters used school prestige, while only 25% used standardized test scores.

So what to do?  One way to deflate 4-20 is to repeal the immoral and authoritarian laws against marijuana sales and use. That’s just one reason that CU Chancellors should support marijuana legalization.

This was originally published in the Boulder Daily Camera on April 23 2011.

See commentary on Rivera’s research at Arnold Kling’s EconLog post.

If low-income Coloradans spend big bucks on booze, candy, & movies, they can afford higher Medicaid copays

Are Colorado Medicaid recipients spending hundreds of dollars on candy, booze, cigarettes, and movies while the state forces taxpayers to fund their medical care?  Yes, suggests the 2009 Consumer Expenditure Survey.

“Colorado faces a deficit of about half a billion for next year,” the Associated Press reports.  Instead of increasing taxes, Colorado legislature should spend taxpayers’ money more wisely. One way is to increase enrollment fees and co-payments for Medicaid and the Children’s Health Plan Plus (CHP+). These programs account for ten percent of the state budget.

Typical Medicaid co-pays are at most $3. CHP+ co-pays are at most $5, and enrolling one child is just $25 annually. The 2009 Expenditure Survey data suggests that some Medicaid recipients and parents with kids in CHP+ can afford more.

On average, the lowest income households, less than $5,000, spend almost $1,900 on sweets, alcohol, tobacco, and entertainment. Oddly, households with incomes between $5,000 and $10,000 spend less on these items – around $1,400. The groups’ non-income demographics are similar: people, wage-earners, children, and retirees per household.

Colorado CHP+ could emulate New Hampshire’s tax-funded “Healthy Kids” program. As in Colorado, parents earning between 185% and 250% of the Federal Poverty Level are eligible, though well above the poverty line. The monthly fee is $32.  Typical co-pays are $10, $100 for ER visits, and between $10 and $30 for prescriptions.

Many parents in this income range buy private insurance for their kids, reports the Congressional Budget Office. Higher fees and co-pays could encourage more parents to follow suit.

The Boulder Daily Camera published this article on March 26, 2011.

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One objection that I’ve seen to higher-copays is that patients or parents of children will forgo treatment, and wait until medical conditions get very serious before seeking treatment. If so, the argument goes, it would cost taxpayers more in the long run.

For sake of argument, let’s say this is true.  Then:

1. This shows one reason that replacing Medicaid with a voucher for  nominally “private” insurance is better. After all, government issues food stamps for food rather than running its own grocery stores.

2. Would you choose to donate to a charity that allows its recipients to spend money on entertainment and leisure while skimping on medical care?   I don’t think so. If Medicaid & CHP+ recipients respond this way to higher co-pays, this reveals a flaw with the programs themselves.  A good private charity would not allow such behavior. Or, if it did, it would quickly lose donations when word got out.

Government shouldn’t force taxpayers to donate to a specific charity, or any charity. But if government “must” force donations, at least it’s better to allow taxpayers to choose the charity. For more, see: <a href="http://www.huffingtonpost.com/brian-t-schwartz/questioning-your-compassi_b_574030.html”>Questioning your “compassionate” politics.

Repeal the federal gas tax, regardless of oil prices

The sharp increase in oil prices does not bode well for our finances. It’s not just higher gasoline prices. Spikes in oil prices are correlated with recessions. “All but one of the 11 postwar recessions were associated with an increase in the price of oil,” writes economist James Hamilton.

One way to decrease gasoline prices is to suspend, decrease, or eliminate the federal gasoline tax of 18 cents per gallon.  Enacted in 1932 as a temporary deficit reduction measure, it validates Milton Friedman’s maxim: “Nothing is so permanent as a temporary government program.”

A gas tax is proper to the degree that it acts a user fee. The gas tax you pay should go toward maintaining the roads you use, or are likely to use. Boulder drivers shouldn’t be taxed to finance roads in Flagstaff.  But we are. We’re “gas tax losers,” says the Environmental Working Group. Send a gas tax dollar to DC, and the Denver-metro area gets only 86 cents back. But Flagstaff, to pick a “winner” city, gets $2.30 back.

To make matters worse, many gas tax dollars don’t support roads – anywhere. As Transportation Secretary, Mary Peters told PBS that “only about 60 percent of the gas tax money … actually goes into highway and bridge construction.”  A Heritage Foundation study concurs, concluding that “as much as 40 percent of fuel tax revenues” fund costly, inefficient, and underutilized “mass-transit” boondoggles.

Eliminate the federal gas tax so drivers pay to maintain roads they actually use.

This article was printed in the Boulder Daily Camera on March 12, 2011.

http://www.cato.org/multimedia/embed/2898

Thanks to Tad DeHaven for some of my talking points, which I got from his appearance on CNBC’s Streeet Signs. Not only does he make good points, but he handles the snarky comments by Jim Pethokoukis. Pethokoukis has a bit of a fit at the end at the suggestion that government planning inevitably fails.

See also:

Street Smart: Competition, Entrepreneurship, and the Future of Roads

Sell the Streets, by Benjamin Powell

Public-sector unions: Two wolves & a sheep vote on what’s for lunch

“Two wolves and a sheep voting on what to have for dinner.” James Bovard’s critique of democracy also applies to public-sector unions. Unions and union-backed politicians are the wolves. Taxpayers are the sheep.

Public-sector union representatives “will often be on both sides of the collective bargaining table,” explains law professor Stephen Bainbridge. Union leaders are on one side; their “bought and paid for politicians” are on the other.  Unions fund politicians’ campaigns, and the politicians reciprocate by facilitating extravagant union wages, benefits, and protections.

The “process of collective bargaining … cannot be transplanted into the public service.” warned the pro-union Franklin Delano Roosevelt. Time columnist Joe Klein adds: “Industrial unions are organized against the might and greed of ownership. Public employees unions are organized against the might and greed…of the public?”

Public-sector unions are organized against the tax-paying public. A unionized private-sector firm risks losing customers if its union successfully strikes, protects lazy workers, resists labor-saving technologies, abuses pension policies, secures excessive job security, or demands exorbitant compensation. Not so with public-sector unions. Taxpayers are stuck paying for expensive government services.

How expensive? Wages for unionized local and state government employees exceed their nonunion counterparts by more than 11%, concludes labor economist James Sherk.  They are also more likely to receive pensions and have their employers pay all of their medical insurance premiums. It’s no surprise that highly unionized governments burden taxpayers with more debt, as Cato Institute policy analyst Chris Edwards notes.

With public-sector unions, taxpayers just get fleeced.

The Boulder Daily Camera published this article on February 26, 2011.

See also:

• Chris Edwards, Public-Sector Unions,” Cato Tax & Budget Bulletin, March 2010. (3 pages, good place to start, many good references to follow.)
• Chris Edwards, “Public Sector Unions and the Rising Costs of Employee Compensation,” Cato Journal, Winter 2010. (29 pages)
• Rand Simberg, Who’s Been Overreaching, Again? (many great points & links), via his article in Pajamas Media.