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Archive for December, 2010

The world is a laboratory and different nations are public policy experiments. Not surprisingly, the evidence from these experiments is that nations with more freedom tend to grow faster and enjoy more prosperity. Nations with big governments, by contrast, are more likely to suffer from stagnation.

The same thing happens inside the United States. The 50 states are experiments, and they generate considerable data showing that small government states enjoy better economic performance. But because migration between states is so easy (whereas migration between nations is more complicated), we also get very good evidence based on people “voting with their feet.” Taxation and jobs are two big factors that drive this process.

Looking at the census data and matching migration data with state tax systems, here’s what Michael Barone wrote. He finds (not that anyone should be surprised) that the absence of a state income tax is correlated with faster growth, which attracts people from high-tax states.

…growth tends to be stronger where taxes are lower. Seven of the nine states that do not levy an income tax grew faster than the national average. The other two, South Dakota and New Hampshire, had the fastest growth in their regions, the Midwest and New England. Altogether, 35 percent of the nation’s total population growth occurred in these nine non-taxing states, which accounted for just 19 percent of total population at the beginning of the decade.

And here’s Diana Furtchtgott-Roth, writing for Realclearmarkets.com. She uses the presence of right-to-work laws (which prohibit union membership as a condition of employment) as a proxy for the degree to which big government and big labor are imposing restrictions on efficient employment markets. Not surprisingly, the states that have a market-friendly approach create more jobs and therefore attract more workers.

The American people have been voting with their feet, the Census Bureau announced on Tuesday, leaving states with heavy union influence and choosing to live in “right-to-work” states with higher job growth where they cannot be forced to join a union as a condition of employment. …As a result of geographic shifts in population uncovered by the 2010 Census, nine congressional seats will move to right-to-work states from forced unionization states. Some winners are Texas, Florida, Arizona, Georgia, and South Carolina, while losers include New York, Ohio, Michigan, Illinois, and New Jersey. Over the past 25 years job growth in right-to-work states has been over twice as high as in unionized states.

This leaves us with one perplexing question. If we know that pro-market policies work for states, why does the crowd in Washington push for more statism?

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The contest between the United States and Europe for dumb public policy is always hard to judge. The Europeans tend to make more policy mistakes, though Obama certainly is giving them some stiff competition. America, by contrast, is prone to really inane bouts of political correctness. But perhaps the Europeans are catching up in that area.

Here’s something, for example, that sounds like it could have happened in San Francisco. The European Commission (the über bureaucracy of the European Union) sent out 3 million calendars to kids that mentioned significant holidays for the Muslim, Sikh, and Hindu religions, but omitted Christmas. Here’s an excerpt from the U.K.-based Guardian.

Italy has demanded that the European Commission recall millions of diaries that are being distributed to schoolchildren throughout the EU because they do not mention Christmas but they do give the dates of other religions’ festivals, such as Ramadan, the Islamic month of fasting, and Sikh, Hindu and Chinese feast days. …A Commission spokeswoman said it had “realised the absence of some important European religious holidays, in particular Christmas”. …But she gave no indication that Brussels would accede to Frattini’s demand to recall the diaries, which, according to the Italian daily Corriere della Sera, was contained in a letter to the commission’s president, Jose Manuel Barroso. …Some 3 million copies of the latest edition of the Europe Diary have been sent to schools. The commission’s spokeswoman said its main purpose was “inform young Europeans as consumers and citizens on issues like rights, choices as consumers [and] climate change”. …The commission…spokeswoman said it had cost €5.5m (£4.6m).

Being a fiscal policy wonk, I don’t worry too much about the War on Christmas. Yes, political correctness is nauseating, but it’s not as if the government is actually using coercion to stamp out Christmas. When I read stories like this, what catches my attention instead are disturbing details such as the hefty price tag of $7.2 million. Why is the European Commission squandering so much money on calendars? And once a decision has been made to waste money, why leave out Christmas? And why did they include extraneous material such as global warming propaganda?

Perhaps the moral of this story is that governments – and international bureaucracies such as the EC – have an amazing ability to squander money. Sometimes they waste money for PC reasons, sometimes for vote-buying reasons, and sometimes for corruption. All we know for sure is that taxpayers get lumps of coal in their stockings.

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The Chairman of the Federal Reserve is such a swell guy, but you already would know that if you saw his Facebook page. Well, thanks to his “QE2 plan,” he’s giving the rest of us a very thoughtful Christmas present.

To be fair, I suppose it should be noted that Bernanke’s policy isn’t necessarily a bad idea – but only if you think that there will be future deflation and “quantitative easing” is the way of preventing that from happening. I’m quite skeptical, as explained here, but freely admit that I’m not a monetary policy expert (thanks for catching my mistake, Charlie). But Christmas isn’t the right time for serious discussion, so let’s just enjoy a laugh and keep our fingers crossed that we’re not heading into Jimmy Carter Inflation-land.

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Merry Christmas to all. Let’s hope Santa returns next year, notwithstanding all the hassle of dealing with government.

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This post could be entitled, “So many dumb bureaucrats, so little time,” but let’s have some fun and turn it into a contest. Which bone-headed decision by a local government best exemplifies mindless bureaucracy, politically correct nonsense, and government waste?

Contestant Number One is Sgt Brian Albert of the Baltimore County Natural Resources Police, who fined two men $90 each for the vicious, horrible, nasty crime of …(please don’t faint)… rescuing a deer. Yes, your eyes do not deceive you. Two hardened criminals used an inflatable raft to free a helpless animal, but they flouted the law by not wearing life jackets. Since I already did a blog post about a man being fined for rescuing a wounded deer, I guess the moral of the story is that bureaucrats don’t like Bambi.

Contestant Number Two is the Metro Police in Washington, DC, which has decided to harass random travelers by searching their bags before they board the subway. This is akin to the TSA’s mindless bureaucracy – but even worse. There surely are nut-jobs who would like to blow up Americans, but they could do that on a bus, on a crowded street during rush hour, or any other place where a large number of people are gathered. Heck, they can drive a car into a crowd. Good intelligence by the CIA and FBI is the way to stop these crackpots, not empty security theater that makes life more difficult for law-abiding people.

Contestant Number Three is the St. Paul School District in Minnesota, which has turned all schools into “sweet-free zones.” This ban also applies to salty foods, however that is defined, and deals “a blow to booster clubs and parent organizations, too, which won’t be able to sell hot chocolate, doughnuts, candy bars and cookies at school events.” I actually agree with Michelle Obama that American kids are overweight, but I also know that government intervention isn’t going to solve the problem unless we want a police state that bans video games, TVs, computers, and the other technological developments that are responsible for sedentary kids.

Contestant Number Four is Battlefield High School, in Haymarket, VA, which disciplined 10 unrepentant gang members. What did these thugs do to warrant detention? Brace yourself and make sure no children are looking over your shoulders, because these hoodlums belong to a particularly nasty group called the Christmas Sweater Club and they got in trouble for handing out miniature candy canes. One school administrator (Mrs. Grinch?)  explained that “not everyone wants Christmas cheer,” thus turning Jay Leno’s parody into reality.

So who wins the prize? I’m not technologically advanced enough to include a poll with this question, so the only thing we can really conclude is that governments do dumb things. That’s true at the national level, the state level, and the local level.

I just wish I could write like Dave Barry. He had a hilarious column many years ago that was based on various examples of government stupidity. This post is more likely to make you cry rather than laugh, which is not good at this time of year. Nonetheless, feel free to comment if you think one of these stories stands out.

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Since I’m involuntarily forced to finance National Public Radio, I guess I should be happy that free-market views occasionally are allowed on air. Click here to listen to a segment where I talk about earmarks, “phonemarks,” and special interest corruption in Washington.

The risky part of a pre-recorded interview is that you never know what the journalist will use. If the person interviewing you is biased, they can use a quote out of context to make you appear stupid, or use an incomplete quote to distort the meaning of your words. That did not happen in this case. The NPR interviewer, at least to my ear, was quite fair.

I wish the segment had been longer, however, so I could have explained why even “honest” earmarks are wrong. Let’s say that Congressman Smith or Senator Jones inserts an earmark, or makes a phonemark, to get funding for a sewer system. It’s quite possible that such a request is completely untainted by corruption (other than the run-of-the-mill practice of trying to buy votes with other people’s money).

But that doesn’t make it right. One of the reasons why federalism is such a good idea is that money is much more likely to be spent wisely is if it is raised at the state and local level and people at those levels decide how it should be allocated.

This doesn’t mean there is no corruption, insider deal-making, or special-interest shenanigans. That’s an inevitable part of government. But federalism at least makes it easier for people to monitor how their money is being spent – and to escape if they think their state or local government is going overboard with bad behavior.

In other words, centralization of government is a bad idea. This is why big government in Washington is worse than big government at the state and local level. And it’s why big government from the European Union in Brussels is worse than big government in Rome, Berlin, or Stockholm.

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Nullification occurs when jurors refuse to find a defendant guilty because the underlying law is unjust (visit the Fully Informed Jury Association if you want more details). And if I ever wind up on a jury and the government was trying to throw someone in jail for a victimless crime, I certainly hope I would do the right thing and refuse to declare the person guilty.

The good people of western Montana certainly have the right attitude about victimless crimes. A jury pool in Missoula County basically told a court that they would not be willing to convict a defendant for possessing a tiny amount of marijuana.

Wouldn’t it be wonderful if this happened all over the country and politicians were forced to stop the war on drugs? That would be a Christmas present for the entire nation.

While we’re waiting for that to happen, let’s celebrate what happened in Montana. Here’s an excerpt from the Billings Gazette.

A funny thing happened on the way to a trial in Missoula County District Court last week. Jurors – well, potential jurors – staged a revolt. They took the law into their own hands, as it were, and made it clear they weren’t about to convict anybody for having a couple of buds of marijuana. Never mind that the defendant in question also faced a felony charge of criminal distribution of dangerous drugs. The tiny amount of marijuana police found while searching Touray Cornell’s home on April 23 became a huge issue for some members of the jury panel. No, they said, one after the other. No way would they convict somebody for having a 16th of an ounce. In fact, one juror wondered why the county was wasting time and money prosecuting the case at all, said a flummoxed Deputy Missoula County Attorney Andrew Paul. …“Public opinion, as revealed by the reaction of a substantial portion of the members of the jury called to try the charges on Dec. 16, 2010, is not supportive of the state’s marijuana law and appeared to prevent any conviction from being obtained simply because an unbiased jury did not appear available under any circumstances,” according to the plea memorandum filed by his attorney.

(h/t Jason Kuznicki)

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