Voluntarily opting out of “No Child Left Behind?”

Today from Chuck Muth: “Despite unanimous support in the state House for dumping President Bush’s No Child Left Behind law – and likely passage in the Senate – Utah’s Gov. Jon Huntsman bowed to pressure from the White House and delayed action on the bill for another month…during a special session to be called just to address this issue. Uncle Sam really knows how to twist arms and break legs when he wants to. And Utah taxpayers will pick up the tab for the unnecessary special session.
At the heart of the matter is the simple principle that the federal government should be strictly limited and the states should be responsible for matters such as education. What’s amazing, under the circumstances, is this comment yesterday from federal Education Czar Margaret Spellings: ‘Ultimately, education decisions are made at the local level, and that’s how it should be.'”
But consider what was said 10 days ago. Are you surprised?

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Environmental-Production Tradeoffs

Did you see John’s thoughtful opinion piece in Friday’s Albuquerque Journal (subscription)? “The Valle Vidal is a beautiful section of the Carson National Forest. Substantial natural gas production is being obtained from the adjacent and possibly more beautiful Vermejo Park Ranch. It is believed similar production could be obtained from Valle Vidal.”
Why is it that production, such as drilling for oil or gas, seems easily to coexist with “environmental” uses of land in some cases but not in others? The answer lies in who owns the land. When it is owned privately, its owner has incentive to evaluate production-environmental trade offs. The owner does not want to take excessive risk that the land might be spoiled. The owner simply wants to make best use of the land for its value in the enjoyment of natural beauty, its value in energy production and the threat to its value from environmental harm.
When land is owned by the government, however, these tradeoffs are politicized. Environmental interest groups such as the Sierra Club seem totally unwilling to consider alternative uses or magnitude of risk from environmental harm. These same groups permit production on land when they actually own it.
If you are interested in how ownership incentives improve the natural beauty and enjoyment of land while permitting alternative uses and improving the environment look here or here. Look here for an innovative public land management idea being tried in the Land of Enchantment!

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Richardson’s Treatment for Medicaid: More Bleeding

Things that can’t go on forever, won’t.” Unfortunately, the Guv wants more of the same: “‘We’re talking about people (being hurt by the cuts),’ Richardson said at a news conference at the National Press Club. ‘We’re talking about human beings who are the most vulnerable.'”
I wish he would think about the perverse incentives of Medicaid. Why can’t we give these human beings incentive to help themselves? Why does he insist on such inefficient government intervention?

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The actual effects of government intervention and their intended effects

They just don’t get it. Why do they think “the siren song of collectivist solutions” is going to make things better? There is no empirical evidence either specifically (for example, here or here) or generally to support them. Their wandingerous arguments mainly consist of flippant remarks and personal insults.
I think Milton Friedman best sums up John’s points (subscription) in Capitalism and Freedom:
“…conditions have changed. We now have several decades of experience with government intervention. It is no longer necessary to compare the market as it actually operates and government intervention as it ideally might operate. We can compare the actual to the actual. If we do so, it is clear that the difference between the actual operation of the market and its ideal operation – great though it undoubtedly is – is as nothing compared to the difference between the actual effects of government intervention and their intended effects.”
—Milton Friedman, 1962
Whether it be light rail, pre-K or all the other past and current interventions of government, why do they think the actual effects are going to be anywhere near their indended effects. Aren’t they just engaging in wishful thinking?

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Social Security Promises Past

Thanks to Walter Williams:
“After the first three years — that is to say, beginning in 1940 — you will pay, and your employer will pay, 1.5 cents for each dollar you earn, up to $3,000 a year. … Beginning in 1943, you will pay 2 cents, and so will your employer, for every dollar you earn for the next 3 years. … And finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. … That is the most you will ever pay.”
– 1936 government pamphlet on Social Security

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Political Opportunism

Did you notice from this story (subscription) in yesterday’s Albuquerque Journal that Department of Economic Development Staffers are prohibited from visiting the Roundhouse during the session? “Secretary Rick Homans said the intent of the directive was to ‘make sure we don’t start getting our wires crossed. We don’t think legislators like it when they see a lot of state employees hanging around the Roundhouse.’ He also said the governor’s office ‘has been very clear about us being very disciplined in how we communicate with the Legislature.'”
This is good political strategy for an administration that seems bent on dishing out political favors in the form of corporate welfare. Matt clarified some of the losses from the game of political favor seeking yesterday. You can expect more commentary on corporate welfare and seeking of political favors in the near future.

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The Aviator!

I just saw The Aviator. It is every bit as good as you have heard–maybe a little better. The film is being lauded for its historical accuracy. (Though, as is often the case with Hollywood, they left out some of the more interesting aspects of reality. For instance, Hughes’ obsession with germs probably stemmed from his bout with syphilis which was entirely ignored in the movie.)
What I particularly liked about the film was how it portrayed the distressingly all-too accurate relationship that often exists between industry and government. Throughout the film, Hughes competes with Pan American’s Juan Tripp over airline market share. This, of course, would be great for the consumer if the contestants played fair. Instead, Tripp, and to a lesser extent Hughes, compete for unfair assistance from government.
To gain market-share in a free market, firms have to please the consumer–get him to voluntarily choose their product over their rivals’ product. But gaining market share is much easier when you have government on your side. Using government’s legal powers of coercion, firms can force their competitors’ prices up (for instance, with a tariff), or lower their own costs (say, with a subsidy from the taxpayers). In many cases, firms have been able to use government to simply outlaw their competitors by obtaining a legal monopoly. This is more than unfair, it is hugely costly. Intelligent, hard-working people like lawyers, accountants and lobbyists spend their time and money vying for an unfair advantage rather than thinking of new ways to please the consumer.
People often blame the firms and their executives for this unseemly behavior. What The Aviator does so well is to show that this is a government problem not a firm problem. At one point in the film, Howard Hughes is under intense interrogation from Maine’s Senator Owen Brewster. Brewster, known in real life as “the Senator from Pan Am,” had an interest in destroying Hughes’ TWA. Under oral examination, Hughes admits to dolling out gifts to government officials in hopes of gaining their assistance. But as Hughes points out, this is simply the way the government-entwined airline industry works. If you don’t take advantage of government’s unfair help, your competitors will.
The problem is not that business asks for hand-outs. After all, we can’t very well outlaw the desire for wealth. The real problem is that government obliges! This we can outlaw! So, see the movie and learn some economics.

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