From Americans for Prosperity.

Sorry, Mr. President, the internet isn’t a 19th century railroad

By Kuper Jones

The Golden Spike trans continental railroadThis week, President Obama came out in support of far-reaching new regulations that would grant unprecedented new government control over the internet, threatening the largely free and unfettered market that has allowed our digital economy to flourish. Proclaiming that the web is in need of so-called “net neutrality,” President Obama voiced support for the new rules, which would impose sweeping new regulations in the online world that are based on antiquated laws from the early 1900’s — rules originally intended for telephone and telegraph companies, and before that railroad carriers.

If you are scratching your head, you aren’t alone. Many internet users have expressed concern about the push for the proposed thicket of e-red tape. Rules crafted a century ago are in no way appropriate for an internet which is light-years ahead of anything anyone could have imagined back in the era of Teddy Roosevelt’s famous charge up San Juan Hill. If anything, these regulations would slap consumers with the potentially largest one-time tax increase on the internet, threaten the continued development and expansion of broadband, and open the door to more stringent and expansive government control over the internet that so many Americans enjoy today.

In his address, President Obama painted a rosy picture of what these regulations would mean for the internet — “The idea of net neutrality, has unleashed the power of the internet and given innovators the chance to thrive.”

This couldn’t be further from the truth. The internet experience consumers have enjoyed over the years has been in the absence of Mr. Obama’s “net neutrality.” In reality, the internet has thrived and grown rapidly due to the government taking a hands-off regulatory approach. Instead of continuing to reap these benefits, the Obama Administration wants to reclassify internet service providers as “common carriers” under Title II of the Communications Act of 1934 (you read that correctly — 1934). This move would throw ISPs into the same public utility category as telephone companies and subject them to the same archaic regulations.

Internet as tree tree-200795_1280In fact, these regulations can be traced back later than 1934. Free State Foundation President and former FCC attorney Randolph May has pointed out that the 1934 Act was actually created by copying the language from the Interstate Commerce Act of 1887 — more than a decade before San Juan Hill — which governed railroad monopolies in the 19th century. Instead of railroads, legislators made appropriate language modifications so the law would apply to telephones and telegraphs.

Taking into consideration where technology currently stands, it is safe to say that laws written in the 1880’s and 1930’s are nowhere near appropriate for regulating the internet in our modern age.

If regulating our internet infrastructure like railroads from the 19th century wasn’t bad enough, Title II reclassification would actually subject Americans to the federal Universal Service Contribution Factor — a tax on telecommunications services which was recently increased to 16.1 percent.

While the tax would take approximately $24 billion from consumers over all, wireline broadband providers would have to collect around $89 per household annually while wireless carriers would have to collect approximately $137 per smartphone annually — this is especially bad news for families with more than one smartphone on their phone plans. Even worse is that consumers could also be subject to state and local telecommunications taxes in addition to the federal tax if the lame duck Congress fails to extend the internet tax moratorium which expires on December 11th this year.

President Obama and his allies are attempting to scare Americans into believing that ISPs can decide what websites they visit or what online stores they can shop at. This is completely false. Not only have the President and his supporters failed to point out examples of where this is happening, but they neglect to mention both of these issues can be addressed and enforced by federal agencies — the Federal Communications Commission and the Federal Trade Commission — if consumers are being harmed by such practices.

The President also came out against paid prioritization, also referred to as “fast lanes”, where content providers that clog up ISPs’ servers with traffic — Netflix and YouTube who account for over half of all internet traffic during peak hours — can pay a premium to have their products delivered faster. In reality, such practices have been going on for some time and have had no negative impact on consumers. What the President and his supporters also fail to mention is that reclassifying broadband under Title II would not ban such practices but would actually authorize broadband providers to tariff, or charge content and service providers for using their networks — the exact opposite of what so-called “net neutrality” would seek to accomplish.

Forcing internet providers to comply with heavy-handed and outdated federal regulations will only spell trouble for the future of the internet and consumers. Title II reclassification would give the government authority over the business models of ISPs by dictating how they manage traffic on their networks while also determining the prices they charge consumers for services. This of course is only the tip of the iceberg, as ISPs would be subject to a plethora of other regulations which would ultimately slow or even halt network expansion, and choke competition by making it much harder for new competitors to enter the market.

The FCC must avoid approving any form of Title II reclassification. Approving such regulations will have adverse effects on innovation and the economy. In the event that reclassification does happen, Congress should take action to prevent the FCC from implementing these regulations in order to protect the internet as well as the consumers who can’t afford to be saddled with more taxes in this down economy.

The day after Wichita voters turned down a city sales tax, Mayor Carl Brewer addresses the press. He and city council members take questions. It’s difficult to find items like this on the city’s official website, so here it is on YouTube. Also, I’ve extracted a few comments from the mayor regarding the city’s community engagement. Do you agree with what the mayor said?

5:40
Brewer: “We’re going to continue community engagement and continue talking to citizens, and we’re asking everyone to give input.”

8:00
Brewer: “The city council wasn’t on the losing side. The reason being, is because we asked for citizens to give us input. They gave us input and identified these are the things that are important to us as a community. And the city council made the decision okay, let’s allow the citizens vote on this. That’s the extent that the city council, and the role they actually played.”

9:58
Brewer: “We did the Facebook and we did the Twitter and all these other different things in asking citizens what would you like to see, and what’s important to you. We did the best we possibly could.”

10:30
Brewer: “As elected officials, it’s our duty and responsibility to listen to citizens each and every day. And certainly any and every thing that they have to say, whether we agree or disagree, is important to each and every one of us. Anytime they are able to provide us that, we should continue to try to reach out and try to find ways to be able to talk to them.”

13:15
Brewer: “We appreciate the engagement process of talking to citizens, finding out what’s important to them. Last night was part of that process.”

18:20
Brewer: “We will certainly be engaging them, the individuals in opposition. As you heard me say, the city of Wichita — the city council members — we represent everyone in the entire city. From that standpoint, everyone’s opinion is important to us. As you heard me say earlier, whether we agree or disagree, or just have a neutral position on whatever issue that may be, it is important to us, and we’re certainly willing to listen, and we certainly want their input.”

Mike Pompeo official photographThis Friday (October 24, 2014) the Wichita Pachyderm Club presents United States Representative Mike Pompeo. His topic is “An Update from Our Congressman.”

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

This Friday (October 10, 2014) the Wichita Pachyderm Club presents United States Senator Tom Coburn, introduced by United States Senator Pat Roberts. His topic is “Pat Roberts vs. Harry Reid.”

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

Laissez-Faire to be topic

This Friday (October 3, 2014) the Wichita Pachyderm Club presents Andrew Bernstein, Ph.D., of The Ayn Rand Institute. He will discuss his book The Capitalist Manifesto: The Historic, Economic, and Philosophical Case for Laissez-Faire. His website is here.

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

From Kansas Policy Institute. Another article on this topic is For Wichita Chamber’s expert, no negatives to economic development incentives.

Opponents should attempt to persuade instead of simply dismiss

By James Franko

I’ve never understood why proponents of a position can hardly deign to engage people with whom they disagree. Easier to stamp the opposition as “nonsense” or claim that public demands for accountability are “over the top” than actually treat others’ arguments as having any merit. Shouldn’t opposition, skepticism, or honest question be greeted as an opportunity to engage and persuade instead of ignore?

The latest confirmation of this near-maxim followed an event KPI hosted on the “jobs fund” portion of the Wichita sales tax proposal. One of the speakers at our event, Jeff Finkle, also spoke to the Wichita Business Journal and dismissed any pushback to the proposal as “nonsense.” A sentiment Mr. Finkle reiterated at our event on Friday. Further in the Business Journal, Mr. Finkle said he couldn’t think of one study saying incentives don’t work.

Mr. Finkle said the following at our event when discussing the transparency and accountability aspects of the “jobs fund” plan: “[The transparency piece of the jobs fund plan] is off the chart. I actually think it’s a little over the top but if that’s what it takes to be acceptable in Wichita, that’s what you should do.” Emphasis added.

He doesn’t say that Wichita shouldn’t be transparent but his belief is quite clear — “it’s over the top.” This mirrors the thrust of his “nonsense” dismissal.

Is it really nonsense that Wichitans want to make sure they understand the proposal? Or see if it offers the returns they’ve been promised? Is it nonsense that many opponents of the proposal can cite multiple studies saying incentives are, at best, a mixed bag? Is it nonsense that others may just have a different opinion than Mr. Finkle? Instead of engaging them on the substance of their arguments, he brushes them aside with a “let them eat cake” assertiveness.

To Mr. Finkle’s contention that he “[doesn’t] know of one study that says incentives don’t work,” I’d simply say he, again, needs to treat the opposition with the same amount of respect he would certainly demand for himself. Readers shouldn’t take this as an endorsement of the links below (KPI isn’t taking a position on the sales tax proposal), but numerous studies do, in fact, exist that rather clearly show incentives are not working.

One such study focuses specifically on Kansas and our statewide PEAK program, a flagship incentive program in our state, and was presented on Friday by Nathan Jensen, Ph.D.; sharing a stage with Mr. Finkle. The findings of Dr. Jensen’s paper are quite clear, “The paper’s main finding is that, when comparing firms receiving PEAK incentives to a similar set of ‘control’ firms, PEAK incentives recipients are statistically not more likely to generate new jobs than similar firms not receiving incentives.” It is completely acceptable that Mr. Finkle is unpersuaded by the findings. But, the Wichita Eagle saw fit to report on the study in July with a headline of “Business incentive packages may do more harm than good, economist says” and quoted from an equally skeptical professor of urban and regional planning at the University of Iowa.

There’s more:

  • A 2012 article in International Tax and Public Finance cites two European economists as saying, “…there is little empirical evidence on the effectiveness of tax incentives to attract investment.”
  • On this side of the pond, a 2002 article focusing on Ohio manufacturing recipients of incentives in the Journal of Regional Science concludes, “Our analysis suggests that incentives do not substantially increase, and may even decrease slightly, the amount of employment change in the two years after an establishment launched an expansion. After controlling for other factors, we found that the effect of incentives on establishments that received incentives is a decrease of 10.5 jobs per establishment.”

This is certainly not a comprehensive literature review, but proof nevertheless that studies do indeed exist.

Mr. Finkle waved away these sorts of studies as “nicks” in specific incentive packages that do not amount to an actual refutation of the larger concept, again to the Business Journal. It isn’t that he disagrees with the findings, some in peer-reviewed academic journals, but that he refuses to acknowledge their very existence. Agree with the findings or not but it is impossible to argue that these studies do not exist.

We were happy to have one of the leading advocates for economic development incentives attend our event on Friday and make the case for why Wichitans should support the sales tax. We were equally happy to welcome other well-regarded experts covering differing aspects of what makes a local economy tick. However, reading Mr. Finkle’s remarks in the Business Journal and hearing his comments at our event, I have wonder if he views his trip to “flyover country” as more of an imposition than an opportunity to inform.

This Friday (September 26, 2014) the Wichita Pachyderm Club presents Eliehue Brunson, Chair of Kansas Black Republican Council. His topic is “Why is there a need for a Black Republican Council?”

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

This Friday (September 19, 2014) the Wichita Pachyderm Club presents Dr. Art Hall, who is Executive Director of the Center for Applied Economics at the University of Kansas School of Business. His topic is “Thoughts on Water and Economic Development.” These two topics are of current interest as they represent the two largest items the proposed one cent per dollar Wichita sales tax would be spent on.

Hall is the author of Embracing Dynamism: The Next Phase in Kansas Economic Development Policy.

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

Richard Florida in Los Angeles Times:

The reality is that incentives play little if any role in companies’ location decisions, which are based on more fundamental factors like labor costs, the quality of the workforce, proximity to markets and access to suppliers. But companies have learned to game the process. Once they have decided on the best location, some even create a fictitious competition to extract whatever incentives they can from overzealous governments.

Political scientist Kenneth Thomas, a leading expert on incentives, points out that “companies have learned that the site location decision is a great opportunity to extract rents from immobile governments, and invest considerable resources into doing just that.” …

Virtually all of the published research on the subject shows that most economic development incentives are a senseless waste of taxpayer money. The Lincoln Institute of Land Policy, for example, studied the issue and found that “instead of creating new jobs or spurring employment, the main effect of incentives is simply to deplete a community’s tax base.” Poorer, less advantaged communities often take the biggest hit, being more likely to gamble public funds on the hope of new factory jobs. My own analysis found no connection between incentive dollars spent per capita and such measures of economic success as wages, incomes, human capital levels or unemployment.

Full article is Want to deplete your tax base? Give ‘job creators’ what they want.

This Friday (September 12, 2014) the Wichita Pachyderm Club presents Kansas Governor Sam Brownback speaking on the topic “Leading the Kansas Comeback.”

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

Kansas senator debate

Kansas State Fair, September 6, 2014. pat Roberts, Republican, and Greg Orman, Independent.

Kansas governor debate

Kansas State Fair, September 6, 2014. Sam Brownback, Republican, and Paul Davis, Democrat.

This Friday (September 5, 2014) the Wichita Pachyderm Club presents Stephen Moore, Chief Economist at the Heritage Foundation. Moore will discuss his new book “An Inquiry into the Nature and Causes of the Wealth of States.”

Of this book, Steve Forbes wrote “Wow! This compelling, comprehensive book will be the bible for state and local leaders who truly want rapid economic growth. It will profoundly, positively change politics and economics in America.”

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

At one time it was thought that the Wichita city-owned parking structure in the 400 block of East William Street would house retail shops along the street. But the results should give us reason to be wary of government economic development efforts. The video below explains, or click here to view in HD on YouTube.

By Leigh McIlvaine, Reno Gazette-Journal

As Nevada competes for a new Tesla battery factory, we write to say that tax incentives are not a “game.” Big, long-term decisions about whether Tesla pays taxes and how much will have real and lasting consequences for Nevada’s future economic health.

It was recently argued that tax breaks are necessary to help companies “control costs.” But even the biggest incentive packages have only a minimal impact on business costs. That’s because all state and local taxes combined make up less than 2 percent of the average company’s overall cost structure — a tiny amount compared to expenditures on labor, occupancy, equipment, materials, energy and logistics. The average manufacturing plant spends nearly 75 times more on labor than it does on property taxes.

Continue at McIlvaine: Decisions on incentives have consequences.

If we in Kansas and Wichita wonder why our economic growth is slow and our economic development programs don’t seem to be producing results, there is data to tell us why: Our tax rates are too high.

In 2012 the Tax Foundation released a report that examines the tax costs on business in the states and in selected cities in each state. Location Matters Tax Foundation coverThe news for Kansas is worse than merely bad, as our state couldn’t have performed much worse: Kansas ranks 47th among the states for tax costs for mature business firms, and 48th for new firms.

The report is Location Matters: A Comparative Analysis of State Tax Costs on Business.

The study is unusual in that it looks at the impact of states’ tax burden on mature and new firms. This, according to report authors, “allows us to understand the effects of state tax incentives compared to a state’s core tax system.” In further explanation, the authors write: “The second measure is for the tax burden faced by newly established operations, those that have been in operation less than three years. This represents a state’s competitiveness after we have taken into account the various tax incentive programs it makes available to new investments.”

The report also looks at the tax costs for specific types of business firms. For Kansas, some individual results are better than overall, but still not good. For a mature corporate headquarters, Kansas ranks 30th. For locating a new corporate headquarters — one that would benefit from tax incentive programs — Kansas ranked 42nd. For a mature research and development facility, 46th; while new is ranked 49th. For a mature retail store, 38th, while new is ranked 45th.

There are more categories. Kansas ranks well in none.

The report also looked at two cities in each state, a major city and a mid-size city. For Kansas, the two cities are Wichita and Topeka.

Among the 50 cities chosen, Wichita ranks 30th for a mature corporate headquarters, but 42nd for a new corporate headquarters.

For a mature research and development facility, Wichita ranks 46th, and 49th for a new facility.

For a mature and new retail store, Wichita ranks 38th and 45th, respectively.

For a mature and new call center, Wichita ranks 43rd and 47th, respectively.

Kansas tax cost compared to neighbors

Kansas tax cost compared to neighbors

In its summary for Kansas, the authors note the fecklessness of Kansas economic development incentives: “Kansas offers among the most generous property tax abatements and investment tax credits across most firm types, yet these incentives seem to have little impact on the state’s rankings for new operations.”

It’s also useful to compare Kansas to our neighbors. The comparison is not favorable for Kansas.

The record in Wichita

Earlier this year Greater Wichita Economic Development Coalition issued its annual report on its economic development activities for 2013. Its efforts, in its own words, “represent a projected 1,117 new jobs.”

gwedc-office-operationsThis report shows us that power of government to influence economic development is weak. GWEDC’s information said these jobs were for the geographical area of Sedgwick County. According to the Bureau of Labor Statistics, the labor force in Sedgwick County in 2013 was 242,744 persons. So the jobs created by GWEDC’s actions amounted to 0.46 percent of the labor force. This is a vanishingly small fraction. It is statistical noise. Other economic events overwhelm these efforts.

The report by the Tax Foundation helps us understand one reason why the economic development efforts of GWEDC, Sedgwick County, and Wichita are not working well: Our tax costs are too high.

While economic development incentives can help reduce the cost of taxes for selected firms, incentives don’t help the many firms that don’t receive them. In fact, the cost of these incentives is harmful to other firms. The Tax Foundation report points to this harm: “While many state officials view tax incentives as a necessary tool in their state’s ability to be competitive, others are beginning to question the cost-benefit of incentives and whether they are fair to mature firms that are paying full freight. Indeed, there is growing animosity among many business owners and executives to the generous tax incentives enjoyed by some of their direct competitors.”

It seems in Wichita that the thinking of our leaders has not reached the level of maturity required to understand that targeted incentives have great cost and damage the business climate. Instead of creating an environment in which all firms have a chance to thrive, government believes it can identify firms that are subsidy-worthy — at the exclusion of others.

But there is one incentive that can be offered to all firms: Reduce tax costs for everyone. The policy of reducing tax costs or granting incentives to the selected few is not working. This “active investor” approach to economic development is what has led companies in Wichita and Kansas to escape hundreds of millions in taxes — taxes that others have to pay. That has a harmful effect on other business, both existing and those that wish to form.

Professor Art Hall of the Center for Applied Economics at the Kansas University School of Business is Embracing Dynamism: The Next Phase in Kansas Economic Development Policycritical of this approach to economic development. In his paper Embracing Dynamism: The Next Phase in Kansas Economic Development Policy, Hall quotes Alan Peters and Peter Fisher: “The most fundamental problem is that many public officials appear to believe that they can influence the course of their state and local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering expectations about their ability to micro-manage economic growth and making the case for a more sensible view of the role of government — providing foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.”

In the same paper, Hall writes this regarding “benchmarking” — the bidding wars for large employers that Wichita and Kansas has been pursuing and Wichita’s leaders want to ramp up: “Kansas can break out of the benchmarking race by developing a strategy built on embracing dynamism. Such a strategy, far from losing opportunity, can distinguish itself by building unique capabilities that create a different mix of value that can enhance the probability of long-term economic success through enhanced opportunity. Embracing dynamism can change how Kansas plays the game.”

In making his argument, Hall cites research on the futility of chasing large employers as an economic development strategy: “Large-employer businesses have no measurable net economic effect on local economies when properly measured. To quote from the most comprehensive study: ‘The primary finding is that the location of a large firm has no measurable net economic effect on local economies when the entire dynamic of location effects is taken into account. Thus, the siting of large firms that are the target of aggressive recruitment efforts fails to create positive private sector gains and likely does not generate significant public revenue gains either.'”

There is also substantial research that is it young firms — distinguished from small business in general — that are the engine of economic growth for the future. We can’t detect which of the young firms will blossom into major success — or even small-scale successes. The only way to nurture them is through economic policies that all companies can benefit from. Reducing tax rates is an example of such a policy. Abating taxes for specific companies through programs like IRBs is an example of precisely the wrong policy.

We need to move away from economic development based on this active investor approach. We need to advocate for policies — at Wichita City Hall, at the Sedgwick County Commission, and at the Kansas Statehouse — that lead to sustainable economic development. We need political leaders who have the wisdom to realize this, and the courage to act appropriately. Which is to say, to not act in most circumstances, except to reduce the cost of government for everyone.

On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well.

Judging the effectiveness of economic development incentives requires looking for the unseen effects as well as what is easily seen. It’s easy to see the groundbreaking and ribbon cutting ceremonies that commemorate government intervention — politicians and bureaucrats are drawn to them, and will spend taxpayer funds to make sure you’re aware. It’s more difficult to see that the harm that government intervention causes.

That’s assuming that the incentives even work as advertised in the first place. Alan Peters and Peter Fisher, in their paper titled The Failures of Economic Development Incentives published in Journal of the American Planning Association, wrote on the effects of incentives. A few quotes from the study, with emphasis added:

Given the weak effects of incentives on the location choices of businesses at the interstate level, state governments and their local governments in the aggregate probably lose far more revenue, by cutting taxes to firms that would have located in that state anyway than they gain from the few firms induced to change location.

On the three major questions — Do economic development incentives create new jobs? Are those jobs taken by targeted populations in targeted places? Are incentives, at worst, only moderately revenue negative? — traditional economic development incentives do not fare well. It is possible that incentives do induce significant new growth, that the beneficiaries of that growth are mainly those who have greatest difficulty in the labor market, and that both states and local governments benefit fiscally from that growth. But after decades of policy experimentation and literally hundreds of scholarly studies, none of these claims is clearly substantiated. Indeed, as we have argued in this article, there is a good chance that all of these claims are false.

The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence. We need to begin by lowering their expectations about their ability to micromanage economic growth and making the case for a more sensible view of the role of government — providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems — and then letting the economy take care of itself.

Following is the full paper, or click here.

Kansas state government collects more tax revenue than most surrounding states. Additionally, severance taxes are a minor contribution to collections, even in Texas.

The United States Census Bureau conducts an Annual Survey of State Government Tax Collections. It’s useful to gather figures for Kansas and some nearby states.

The data considers only tax collections by state government. It does not include cities, counties, school districts, or the many other taxing jurisdictions that states may have formed. I have computed this data on a per-person basis. Data is for 2013.

State tax collections for Kansas and some nearby states. Click for a larger version.

State tax collections for Kansas and some nearby states. Click for a larger version.

Considering total tax collections by state governments, note that Kansas, at $2,633 per person per year, is only slightly below the average for all states. For a group of nearby states, Arkansas and Iowa have higher state tax collections than Kansas. Nebraska, Oklahoma, Colorado, Texas, and Missouri are lower.

In some cases, state tax collections are substantially lower. Texas collects $1,955 per person per year, which is 25.75 percent less than Kansas.

Using the visualization.

Using the visualization.

Of note are severance taxes, which are taxes collected based on the extraction of oil, gas, and sometimes minerals. Kansas has a severance tax that produces, on a per person basis, $26 per year. In Texas the same tax produces $176 per person per year, and in Oklahoma, $134.

I’ve created an interactive visualization of this data that you may use. Click here to open the visualization in a new window.

From June 2014.

Today the Wichita City Council may decide to revive a program to issue rebates to persons who purchase water-saving appliances. The program was started last summer, but less than half the allocated rebate money was claimed. The city will argue that this program has no cost, as the funds are left over from last year’s program. Except: The city could use the money not spent on rebates to either reduce water rates or retire water system debt. Following is an article from last year on this topic.

Wichita begins rebates and regulation

Instead of relying on market forces, Wichita imposes a new tax and prepares a new regulatory regime.

Equus BedsAt today’s meeting of the Wichita City Council, the city decided to spend up to $1 million this year on rebates to encourage people to buy water-efficient appliances. This will save a vanishingly small amount of water at tremendous cost.

The worst realization from today’s city council meeting is how readily citizens, politicians, and bureaucrats will toss aside economic thinking. The antimarket bias that Bryan Caplan explains in The Myth of the Rational Voter: Why Democracies Choose Bad Policies was in full display — even by the conservative members of the council.

It’s also clear that some council members want to go down the road of austerity rather than abundance.

What did we learn today? Many speakers used the terms “conservation” and “judicious.” Conservation is good. Judicious use is good. But each person applies different meanings to these concepts. A great thing about living in a (relatively) free economy is that each person gets to choose to spend their time and money on the things that are important to them, and in the amounts they want. We make these choices many times each day. Sometimes we’re aware of making them, and sometimes we’re not.

For example: If you’re watching television alone in your home, and you go to the kitchen to get a snack, do you turn off the television for the moment that you’re not watching it? No? Well, isn’t it wasting electricity and contributing to global warming to have a switched-on television that no one is watching, even for just a moment?

Some people may turn off the television in this scenario. But most people probably decide that the effort required to save a minute’s worth of electricity consumption by a television isn’t worth the effort required.

(By the way, the type of television programs you watch each evening: Is it worth burning dirty coal (or running precious water through dams, or splitting our finite supply of uranium atoms, or spoiling landscapes and killing birds with wind turbines) just so you can watch Bill O’Reilly or Rachel Maddow rant? Or prison documentaries? Or celebrity gossip? Reruns of shows you’re already seen? And I’ve seen you fall asleep while watching television! What a monumental waste. We should require sleep sensors on all new televisions and rebates to retrofit old sets.)

But when people leave their homes empty to go to work, almost everyone turns off the television, lights, and other appliances. Many may adjust their thermostats to save energy. People make the choice to do this based on the costs of leaving the lights on all day versus the cost of turning them on and off. No one needs to tell them to do this. The relative prices of things do this.

(You may be noting that children have to be told to turn off televisions and lights. That’s true. It’s true because they generally aren’t aware of the prices of things, as they don’t pay utility bills. But adults do.)

In most areas of life, people use the relative prices of things to make decisions about how to allocate their efforts and consume scarce resources. Wichita could be doing that with water, but it isn’t.

The conservation measures recommended by speakers today all have a cost. Sometimes the cost is money. In some cases the cost is time and convenience. In others the cost is a less attractive city without green lawns and working fountains. In many cases, the cost is shifted to someone else who is unwilling to voluntarily bear the cost, as in the rebate program.

At least we’ll be able to measure the cost of the rebate program. For most of the other costs, we’re pretending they don’t exist.

Instead of relying on economics and markets, Wichita is turning to a regulatory regime. Instead of pricing water rationally and letting each person and family decide how much water to use, politicians and bureaucrats will decide for us.

All city council members and the mayor approved this expansion of regulation and taxation.

(Yes, it’s true that the rebates will be funded from the water department, but that’s a distinction without meaningful difference.)

The motion made by Mayor Carl Brewer contained some provisions that are probably good ideas. But it also contained the appliance rebate measure. Someone on the council could have made a substitute motion that omitted the rebates, and there could have been a vote.

But not a single council member would do this.

It’s strange that we turn over such important functions as our water supply to politicians and bureaucrats, isn’t it?

August 29, 2014
Dr. Malcolm Harris, Sr., Professor of Finance, Division of Business and Information Technology, Friends University. “Five Things to Get the American Economy Moving Again”

September 5, 2014
Stephen Moore, Chief Economist at the Heritage Foundation and former member of The Wall Street Journal’s editorial board, discussing his new book “An Inquiry into the Nature and Causes of the Wealth of States.”

September 12, 2014
Kansas Governor Sam Brownback. “Leading the Kansas Comeback”

September 19, 2014
Dr. Art Hall, Executive Director, Center for Applied Economics, University of Kansas School of Business. Thoughts on Water and Economic Development”

September 26, 2014
Eliehue Brunson, Chair, Kansas Black Republican Council. “Why is there a need for a Black Republican Council?”

October 3, 2014
Andrew Bernstein, Ph.D., The Ayn Rand Institute. “The Capitalist Manifesto and Objectivism in One Lesson”

October 10, 2014
Marlee Carpenter and Natalie Bright, Bright and Carpenter Consulting. “Political Landscape in the 2014 Elections”

October 17, 2014
Program to be announced.

October 24, 2014
Congressman Mike Pompeo.

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.

From Cato Institute.

Crony capitalism, corporate welfare or corporatism. Whatever you call it, Ralph Nader believes he can assemble a coalition to end it. In his new book, Unstoppable, he tries to signal to libertarians, conservatives and progressives that there is broad agreement on protecting civil liberties, preventing wars and ending handouts to corporations.

From LearnLiberty.org, a project of Institute for Humane Studies.

Dirty Laws? That’s the confusing part of EPA regulations. While intended to do good, they end up doing quite the opposite. When a corporation dumps its toxic waste a few miles upstream from your tomato farm — sure, you can go to the EPA, but odds are the offending party has filed all the right permits that allow them to do their dirtiest and you’re screwed. Join Law and Economics Prof. Roger Meiners in this Learn Liberty video as he shows how an age-old, British, free-market concept called “Common Law” may be the best remedy — without bureaucratic trash to stink things up.

Dr. Malcolm C. Harris

Dr. Malcolm C. Harris

This Friday (August 29, 2014) the Wichita Pachyderm Club presents Dr. Malcolm C. Harris, Sr. He is Professor of Finance at Friends University. His topic will be “Five Things to Get the American Economy Moving Again.” His blog is Mammon Among Friends.

The public is welcome and encouraged to attend Wichita Pachyderm Club meetings. Meetings are held almost every Friday in the Wichita Petroleum Club on the top floor of the Bank of America Building at 100 N. Broadway. The program starts at noon, and it is suggested that guests arrive by 11:45 am in order to get their lunch before the program starts. The meeting costs $12, which includes a delicious buffet lunch and beverage. For more information click on Wichita Pachyderm Club.