Go Lance Go. And Pharmaceutical Research, Too.
Lance Armstrong's victory in the Tour de France this week was in part a testimony to the wonders of pharmaceutical research and market incentives.

David Gratzer, a physician and senior fellow at the Manhattan Institute, reminds us that without profit-driven scientific advances, the cycling Texan would not be claiming a record-setting sixth consecutive victory. Likely, he would be dead.

Armstrong, lest anyone forget, was diagnosed with testicular cancer that had spread to his lungs and brain. Thirty years ago, "such a diagnosis was essentially a death sentence. Today, 96% of Americans survive the illness, just as Armstrong did. The biggest improvement in care? Better drugs," which were an essential part to Armstrong's recovery.

It isn't just Lance who has benefited, of course. Since 1974, the overall survival rate of cancer has increased from 50 percent to 64 percent. New drugs have been a key contributor to that increase.

"But here's the irony," Gratzer says. "While medical progress has saved millions and has the potential to help so many more, politics may end up killing the necessary incentives. Between budgetary concerns and populism, politicians flirt with undermining basic patent rights through various price-control schemes and efforts to assist generic drug makers."

Populists decry the wealthy, and the pursuit of profit. But nowhere is the beneficial nature of profit-seeking behavior more clearly demonstrated than in pharmaceutical research. Drug companies rely on profits to fund their operations, and stay in business. Yet somehow they are considered "evil," simply because drugs are costly and they have what demagogues want to give away free.

Yes, life-saving and enhancing drugs are expensive--now standing at $900 million per drug, up from $130 million 30 years ago. One reason lies with the costs of complying with government regulation. Another reason is that the low-hanging fruit has already been picked; as scientists push back scientific frontiers, success comes less frequently, and takes more resources to find.

Price controls and "reimportation" of price controls from other countries won't just kill the goose that lays the golden egg. It could kill cancer victims across the world. (permalink)

Some Technical Improvements Behind the Scenes.
A lot of computer stuff is "magic" to me. Fortunately, KNF & Associates is lurking in the shadows, available to fix buggy code for RSS feeds and other thing that are beyond my knowledge or competence.

The RSS feed problem is fixed now. You should be able to use newsreaders regardless of whether I use Internet Explorer or (my new favorite) Mozilla to create an entry. Extra line spacing, seen on Mozilla screens, has been eliminated from the template.

Tabbed browsing, by the way, is one of those fine features of Mozilla. It gives something like windows within windows, resulting in much less clutter on the task bar if you're someone who has lots of web sites open at once. (permalink)

Why Defending Simple Economics is So Difficult.
Outsourcing is the latest evil calling for government action.

The excellent blog Out of Control reminds us of the reason that fearmongering over outsourcing has as much political power as it has: "Outsourcing’s benefactors rarely know who they are, but its victims are plain to see." (permalink)

Pork in the Cornfield
Sometimes the best thing that can happen for sound public policy is for a scandal to erupt.

David Hogberg, of the Public Interest Institute, will soon be leaving Iowa for the swamp that is Washington DC. After working and blogging in the cornfields (his blog is currently titled "Cornfield Commentary," after all), he reflects on what might have been.

"My biggest disappointment," he writes, "was not defeating the Grow Iowa Values (GIV) Fund. As far as I’m concerned, the GIV Fund is nothing more than a corporate welfare boondoggle. It is a misguided attempt by the state government to try to 'manage' Iowa’s economy."

I certainly share his disapproval of corporate welfare.

Hogberg speculates that lawmakers may give up on the GIV after they realize it has not lived up to its promises. He's not banking on that, however. "More likely," he says, "the GIV Fund will be involved in some type of scandal. A business that shouldn’t receive a grant will because the business is politically connected to one of the parties involved in the GIV Fund."

Whatever it takes, in this case. Sure, it would be nice if economic logic and the principle that government should not attempt to pick favorites would rule the day. But if that fails, a scandal would be a temporary setback on the way towards the greater good of abolishing at least one "pork" distributor. (permalink)

Economics is for the Insane.
Yesterday's publication of an essay I wrote on offshoring of some services and goods brought a heated response. Hey, at least I get letters.

Without revealing too much about the letter writer's identity, I'm posting selections of his arguments.


This article truly stinks. It is PRO-OFFSHORING propaganda.
----
You quote McKinsey Global Institute. They are an enemy of the United States of America. ... Quoting the enemy (McKinsey) to support the arguments of the enemies of my country is hardly brilliant logic. You do it.
----
Ramblings of the insane.
----
Only an "economist" is dumb enough to make such a statement in public. Only Mackinac Center ... is willing to print such putrid pig sty slop.
----
A mental incompetent ...
----
My anger is white hot and molten.
----
This author's interest is aligned with the treasonous Boston crowd (Forrester Research, Boston Consulting Group, Gartner, ITAA, etc), and it is aligned with "economists" who will always value dollars over American patriotism.
----

And that's just me. There are also a number of choice words for Governor Sonny Perdue, of Georgia, who is "in favor of the despicable anti-American treachery which is referred to as OFFSHORING."

Now, there are certainly some substantive criticisms that can be made (and refuted). Perhaps I'll discuss those later.

UPDATE: Nah. An "argument" that is built on terms such as "treachery" and "treason," not to mention "enemy of the United States" is not worthy of a response. (permalink)

Reading the PolicyGuy Blog with RSS.
The PolicyGuy blog is available to newsreaders, including RSS and Atomizer (from Google/Blogger). MyYahoo! also supports RSS feeds.

I bring this point up because I noticed that the RSS feed hasn't been working since I switched from Internet Explorer to Mozilla for most of my browsing needs. I've gone back with IE to edit an entry created in Mozilla, thinking that would provide the fix, but apparently, it doesn't.

This stuff is beyond my ability or interest, so it's back to IE for a while. PolicyGuy blog readers who use RSS may wish to hit the site again to review the "missing" entries. (permalink)

Anti-Unions Challenge NEA.
While the National Association of Education is the 800-pound gorilla of k-12 education, it's being challenged by organizations that appeal to teachers looking for an alternative to the trade union model.

According to an article in today's Wall Street Journal ("Rise of Nonunion Groups Costs NEA Membership and Clout"), a number of teachers have decided to bypass the nation's largest teachers union. While the NEA still has 2.7 members (and the American Federation of Teachers remains a force with 1.3 million members), "rival nonunion groups have amassed at least 250,000" members. In at least four states, alternative groups claim more members than does the NEA. Growth seems to be limited to states without collective bargaining laws for public school teachers.

The Center for Education Reform has compiled a list of some alternative organizations. The Association of American Educators is an umbrella group that encompasses some of the state groups.

What's driving the move away from the NEA? Says Betsy Rogers, the "National Teacher of the Year" for 2003, the NEA "has been very active in protecting the rights of teachers," but "it hasn't always acted in the best interests of the child."
One reason may also be the NEA's penchant for taking up political causes unrelated to education. Of course it wants more money for schools and teachers. But oddly enough, it supports "reproductive freedom." What does that have to do with education? If anything, nothing good, for by its definition an abortion eliminates a human life that could turn into a student--who may then require a public school teacher. Isn't student population growth in the business interest of teachers? Also on the union's agenda: racial-based reparations for slavery. Says one teacher who declined to join the NEA: "I don't think a teachers union has any business being involved in issues like birth control and gun control."

Despite the slight decay of the NEA's strength, the union remains a powerful force, donating $13 million this election cycle to support favorable candidates and oppose the No Child Left Behind act. And it remains a powerful force within the Democratic Party.

The alternative associations, on the other hand, are not entirely politics free. Groups in Kentucky and Missouri, for example, have endorsed candidates, though, they would say, out of reaction to unfavorable developments.

How will these groups affect K-12 policy? They may help promote increased flexibility and accountability, and thus serve as a force for good. But groups tend to change missions over time. As Samuel Huntington once noted, the YMCA of years ago is no longer limited to young men, nor is it exclusively Christian, and with a fancy facilities in some cities, it resembles a corporation more than a non-profit association.

Even the NEA worked as a professional organization, rather than a union, for 100 years. But eventually it changed, and there's nothing ruling out a change by these alternative groups as well. In the meantime, though, let's hope they are a force for improving our way of schooling.

Labels: Education

(permalink)

Clock Runs out on State of Illinois Mortgage Option.
Govenor Rod Blagojevich’s proposal to sell the Thompson Center was approved by the Illinois Policy Institute (PDF file here) as a "good first step" to deal with the state's fiscal woes. It also offered the possibility of tapping the private sector's expertise in managing buildings. (Chicago is home of some of the country's leading commercial management companies.)

The proposal to sell the building outright gave way to a plan to mortgage the building. Now that has fallen through as well, notes the Institute's director, Greg Blankenship. He cites the administration's "lack of competence" and "penchant for governing by headline."

It's probably just as well that the proposal has fizzed. For one thing, the terms were rather unfavorable for the state. Perhaps out of this wreckage will come the idea of selling the building outright, or using a sale-leaseback arrangement. (permalink)

In Tribute to Those Who Serve.
One "trick" of journalists and anti-war activists is to trade on the grief of families who have lost one of their own in military action. One military father will have none of it.

Writing from Iowa, an unidentified man has this to say to National Review:

"My son is a Ranger who just returned from Iraq where he spent months kicking in doors in targeted raids against terrorists in the worst parts of Iraq. He joined the Army at the end of 2002 when it was clear that the invasion would probably happen. As a former paratrooper myself, I am proud of my only son beyond words.

"When a parent loses a child engaged in some activity such as mountain climbing or skydiving, they always seem to say something like, 'Well, he died doing what he wanted to do.' We accept that. After all, who are we to judge? Well, my son wanted to be a soldier. He wanted to follow a family tradition. He wanted to serve his country. He wanted to do his share. He wanted to be a warrior. He is doing what he wants to do.

"Since my son has actually seen significant combat in Fallujah and ar Ramadi, I have had to contemplate the unthinkable: what if he is killed? It is a horrible thought but one that cannot be avoided. This brings me to [Michael] Moore's stupid question: 'Would you sacrifice your child for Fallujah?' The answer of course is, 'Hell no!' My first thought is to quote Patton, 'The object of war is not to die for your country, but to make the other bastard die for his.' This is, of course, the main point, isn't it?

"Beyond that, I would point out that it was my son's decision to join the Army, the infantry, the paratroopers and the Rangers. He did it on his own because he wanted to. If he - God forbid - is killed doing what he wants, I will say, 'Well, he died doing what he wanted to do.' Why would anyone be less willing to accept that answer from me than from the grieving parents of a child who was killed in the pursuit of mere recreation?

"I guess the relevant point here is that my son is a proud, honorable soldier. He chose that path and am proud of him. He is fighting for what he believes in. Obviously Moore has absolutely no understanding of this type of deep moral commitment. He should not speak for me or my son. He certainly should not exploit the deaths of these heroes for his own gain. And to your point: yes, I loathe him." (permalink)

Milk! It's the Official Beverage of Michigan!
Got milk? At least some in the Michigan legislature hope so. A bill under consideration would make milk the official beverage of Michigan.

If lawmakers can take up their time with stuff like this, perhaps it's time to trim the legislature back to part-time status. (permalink)

State Tax Money Going to Hire Foreigners? No Way!
Way. And it's a good thing, too--if they can save taxpayer dollars. At least that's what I argue in an essay for the Mackinac Center for Public Policy.

"Off-shoring," one of the latest controversies in state politics across the country, is merely an extension of "outsourcing." The results of both: a lesser demand for tax revenue, which benefits the economy as a whole. Cost savings are only one of the benefits. Others benefits include increased innovation and better service. (permalink)

Bloggers Unite.
In downtown Minneapolis a couple nights ago, bloggers united long enough to enjoy some beverages, each other's company, and some discussion about the software, phenomenon, and use of blogging.

Among the bloggers present:
Crazy in the Wright, who gives us some photos of the evening.

Cathy's brother, who writes Three Sheets to the Wind, joined in, along with their father and her husband. Blogging: the new family activity. My introduction to the evening came courtesy of Peggy Kaplan, of What If?

The team of Fraters Libertas, which "organized" the evening, reported that about 60 people showed up. "St. Paul" said afterwards "I dare say this much amateur Internet editorializing talent doesn't exist in any other region of the country." He also provides an extensive (and I'll say "official" list of bloggers here), though Mitch Berg provides lengthy list as well.

Several of the bloggers in attendance, including David Strom, have a radio show. (Come to think of it, I had a radio show once; the station had something like 5 watts of power. The signal travelled from the student union building to dorms within a 3, block radius. Maybe 4 if the skies were blue that day.)

There were also a number of people who were not bloggers (or at least resisted being so called, citing their meager output). Most of these were blogging fans interested in leaning about the mechanics of running a blog. (My short answer: go for it. Sign up at blogspot.com, and advance from there.)

So much for the personalities. How about the topics? Here are a few thoughts from my own conversations.

There was some discussion over the merits of blogger, movable type, and other blogging software programs.

Can blogging bring about religious change? One prospective blogger told me of his efforts to reform a Christian denomination. He thought that blogging might be a way to mobilize and connect grass-roots members who felt disconnected from the changes pushed by the church bureaucracy. (Yes, even religion is not free from the problems of bureaucracy and politics.) He may be on to something. If fax machines and photocopiers were instrumental to the work of Solidarity undermining communist rule in Poland, perhaps blogging can facilitate religious, and not merely political revolutions.

Speaking of movements towards democratic rule, I briefly sat in on a discussion of U.S. foreign policy in Latin America. It might have been a fascinating topic (I used to read extensively on the subject), but such a serious discussion seemed out of place in such a festive occasion, so I soon joined other conversations.

There was, of course, some navel gazing: just what constitutes a blog? One prominent web self-publisher has, I've been told, proclaimed that he is not a blogger because he does not write about politics.

I don't buy that point of view. The PolicyGuy blog is not about politics as much as it is policy, but it certainly is a blog. (Not about politics? Well, yes. It does not, for example, overtly advocate for one candidate or another, nor does it handicap political races.)

One of the most famous (or notorious) blogs of the last three years is the diary of a hip, urban young woman who, as it turns out, was a work of fiction. And lately, some of the most interesting web sites I've found about golf are blogs. So much for blogs being all about politics.

While the PolicyGuy blog spends some significant time discussing reports from various think tanks, a lot can also be learned simply from hanging out and talking with people who can report on the effects of policy on a daily basis.

Transportation planning is an important policy issue in the Twin Cities, so I discussed the oddities of public transportation policy with a man who commutes into downtown Minneapolis. Ordinarily, he would pay north of $100 a month in parking fees. Since he is in a carpool, he gets a parking spot for $20 a month.

Does this subsidy, meant to encourage carpooling, have any effect on local traffic? No. My bloging friend would drive to work in any case. His car pool companion would take the bus if not for the car pool. In other words, one subsidy reduces the number of people using another subsidy.

All in all, it was a fascinating evening. Somewhere in this evening, there's got to be a dissertation in sociology or communications theory.

Labels: Golf

(permalink)

City Contracts Out Library System.
The Buckeye Institute notes that one Ohio city has decided to "privatize" its library.

When I read that the city of Germantown was going to privatize its library, I thought that a non-profit organization was going to take over the library.

Not quite, but it's still an interesting story.

Shelby County voted to phase out $5.6 million in annual appropriations for the city's library needs, and reduce services in the meantime. Within minutes, Germantown's mayor and council voted to extend a contract to a private firm to operate the library for less money, while providing more service.

The timing sounds like a tit-for-tat dispute, especially when you consider that the county refuses to extend an interlibrary loan agreement with the city.

Putting aside the question of whether, in this day, public funds should be spent on library services at all. This episode shows not only the territoriality of bureaucracies, but the benefits of contracting out. (permalink)

Free-Markets AND Environmentalism?
Doesn't environmental protection and our quality of life require all sorts of regulation of business? That dominant paradigm is challenged by the group blog called The Commons, which is going through an upgrade in its design.

As the "About" page says, "The Commons is a collaborative web log dedicated to the principle of promoting environmental quality and human dignity and prosperity through markets and property rights. Put more simply, it’s about free markets protecting the environment." (permalink)

If We Don't Federalize Painting Schemes, the Terrorists Will Win.
The unfortunate centralization of American policy now reaches to the question of "smiley faces" on facilities.

The small town of Ironwood, Michigan (population 6,293) sits on the Michigan-Wisconsin border, in remote Gogebic County. Ironwood wanted to insulate and repaint a water tower. But what to paint on the tower? The question has become a federal case.

Because the town has taken money from the Federal Emergency Management Association for the maintenance task, the Department of Homeland Security wants a say.

You see, the tower has, for a while, sported one of those 70s-era smiley face drawings. The feds say: You want the money, the smilely has to go.

Why? Well, because it would make the tower stick out, and make it more of a terrorist target. At least that's what the feds seem to think.

Now, I suppose this is yet another lesson in "the golden rule" and the danger of taking handouts from central governments.

We'll leave it to the editorial board of the Ironwood Daily Globe, which is not amused, to finish out this story:

We probably shouldn't stop there. The water tower in Trout Creek, which resembles either a golf ball on a tee or a giant cotton swab -- depending on who you talk to -- might also be a potential target, of either terrorists or someone wielding a giant 5-iron.

Water towers have traditionally been a place for a little bit of hometown pride, or at least hometown humor, to shine through. Houghton boasts its multicolored, multi-message water tower, which declares its allegiance to both the Gremlins of Houghton High School and the Huskies of Michigan Tech.

We understand the need to protect the homeland from those who wish to do our nation harm. But it seems to us that ordering the removal of a smiley face from the side of a water tower in a town of less than 10,000 residents fairly far removed from the beaten path is just another example of bureaucracy run amok -- without even the hint of a grin, to boot.

UPDATE:
Ironwood can keep its smilely after all, as this news account tells. How, I'm not sure. Either the town is paying for the new paint job itself (and letting the feds pay for other work), or they managed to prevail upon someone in the federal bureaucracy. (permalink)

Here's Something to Keep in Mind When Reading Blogs.
Some blogs allow readers to post comments on articles. Sometimes those comments are useful. Sometimes they aren't.

Little Green Footballs, which focuses on foreign policy questions, has "the LGF prayer" visible near the entry point for comments. It's worth remembering.

"Lord, grant me the serenity to ignore the trolls,
the courage to debate with honest opponents,
and the wisdom to know the difference." (permalink)

Lobbying: The Next Growth Industry
Why does the number of lobbyists in state capitols continue to increase? Because that's where the money is.

Writing for the Wisconsin Policy Research Institute, Jeff Mayers looks at the last decade of lobbying in Wisconsin. (His 6-page report, in PDF, is available here.)

The account offers some obvious truths (when there's money to be spent, people will take an interest) that sometimes descend to the level of "duh." (A good government outfit studied the numbers and found that groups give money to politicians who agree with them, not to those who oppose them).

Still, there are some items of note in Mayer's account. (The graphics are great, too: pull up the article and if your Internet connection is the right speed, you will see rabbits multiplying on the screen.)

From 1991 through 2003, the amount of money spent on lobbying increased 58 percent, hitting just over $26 million in 2003. The number of organizations employing lobbyists grew slowly, at a rate of 6 percent (from 648 groups to 684) while the number of lobbyists themselves rose 17 percent (an ominous 666 to a semipatriotic number of 776).

This has been accompanied by (allegedly) an increased professionalization of the business: fewer nights on the town and more face-to-face meetings in legislative offices.

Though business is often thought of as being, well, big business with loads of money to pass around, the Wisconsin Manufacturers & Commerce (WMC) association was only the second biggest spender in 2003. True enough, the third largest spender was also a business group--Wisconsin Independent businesses, Inc. It should be noted that small businesses and large businesses often do not share the same agenda, with large businesses more willing able to go along to get along when it comes to regulation.

The WMC employed 11 lobbyists in 2003, making it the top group in terms of personnel. It was matched, though, by the teachers union, the Wisconsin Education Association Council (WEAC), which outspent the WMC by a ration of 1.7 to 1. The WEAC, of course, was helped by the fact that its budget comes from mandatory dues, while the WMC must get voluntary contributions.

Writing to the Wall Street Journal yesterday, a teacher made this offer: "Teachers will get out of politics when the politicians get out of the schools."

Hey, that sounds like a good idea. Let parents decide how to spend the money. School choice for all!

Labels: School choice

(permalink)

Attorneys General Sue Power Companies over Global Warming
Seven attorneys general have filed suit against several power companies, claiming damages caused by global warming, allegedly linked with the companies' emissions.

The Aspiring Governors range from eight states, including California, New York,and Wisconsin. "The action calls on the companies to reduce their pollution, and does not seek monetary damages."

Next thing you know, they'll be suing ...

On wait. Better stop before they get even more ideas. (permalink)

State Budget Crises Over--For Now
The National Conference of State Legislatures ended its annual meeting on an upbeat note--of sort.

Summing up the fiscal report that has gotten the most press, the Indianapolis Star said that "States wound up the fiscal year in June with a collective ending balance of more than $6 billion more than this time last year."

Still, not all is well. As the Star reports, for example, the state of Indiana has a deficit approaching $2 billion.

There's also a big problem with missing data in the NCSL account: "The six states not included in the report because they have not passed fiscal year 2005 budgets yet -- California, Illinois, Kentucky, Michigan, New York and North Carolina -- account for about a third of the national state budget picture."

The Salt Lake City Tribune account points out that the collective budget gap, though down from last year's number ($84 billion) is still significant ($36 billion)--and again, this without the missing states.

The press release from the NCSL itself is here. (permalink)

Governments: I Love Tobacco, I Love it Not. I Love Tobacco ...
Governments rail against the evils of Big Tobacco, which hooks people on nicotine, even as they are hooked on Big Tobacco's money.

In today's lead editorial (available only to subscribers), the Wall Street Journal takes Congress to task for putting tobacco under the authority of the FDA and promising $13 billion of your money to buy out tobacco farmers. (Pay me before I plant again!)

If you think that the nation's largest seller of smokes would be unhappy at this turn of events--FDA regulation, for example--you'd be wrong. Says the editorial: "Our guess is that Philip Morris is so giddy because it sees what its smaller competitors also see: the makings of a new public utility that will lock into place competitive advantages for the cigarette industry's biggest company and give government a rooting interest in its long-term survival. Meet the new Marlboro Man: Uncle Sam."

How does this benefit Phil Mo? The move will likely place even further restrictions on advertising and marketing, which put smaller competitors at a government-imposed disadvantage in the search for a shrinking number of people willing to take up cancer sticks.

Meanwhile, politicians at both national and state levels benefit from lawsuits, past and present, against the industry.

Continues the Journal editorial, this time on a federal suit: "But then this suit is by now no more about tobacco companies behaving badly than it once was about recouping medical costs. This is about politicians trying to raise $280 billion by litigating what would amount to a tax hike on smokers. By funneling this tax hike through the courts instead of the legislature, the government gets the benefit of more revenue without elected officials having to risk the political costs of voting for higher cigarette prices."

Settlement money has certainly come in handy. According to a report early this year by the GAO, only 17 percent of the money states will collect from their tobacco settlements this year will be spent on health-related concerns (the alleged reason for the lawsuits). Over half of the $11.4 billion the states will collect this year will be used simply to met general obligations. In other words, it allows states to continue on the same-old, same-old course, without making as many fundamental changes in the operation, scope, and depth of government.

The Journal editorial, by the way, follows on the heels of yesterday's article about the implementation of "appeals-bond caps." In most states, a company that loses a lawsuit must post a bond equal to the judgment against it it if loses a case.

If the bond is too high, however, it could force the company into bankruptcy--even before the legal disputes are resolved.

Thirty states have placed caps on the level of such bonds. The reasonable case can be made for or against caps. But it's interesting that 11 of the states that have imposed caps have limited them to tobacco companies. In those states, everyone else is subject to the old rules.

Why the disparity? There may just be 11.4 billion reasons .... (permalink)

Laffer Laughs Last.
Raise taxes by cutting tax rates? Whaddya mean?

Arthur B. Laffer defends the Laffer Curve in this essay for the Heritage Foundation.

The basic idea stems from a simple observation: if government imposes no tax, it will collect no tax revenue. If it imposes a 100 percent tax rate, it will have (close to) zero revenue, because people will find ways to escape the tax.

While the idea has often been discussed with reference to national economies--and Laffer himself discusses the positive effects of the tax rate cuts proposed by presidents Harding, Kennedy, and Reagan--it applies to state economies as well.

Laffer calculated tax burden-and-incentive rank for the states over the last 10 years, using current and recent tax rates. He then divided the states into the "10 best states" and the "10 worst" states based on that index.

Over 10 years (November 1993 through November 2003), you could draw a simple and powerful correlation: a state's ranking on measures of growth was related to how attractive its tax system was.

Over 10 years, the "10 best" states had the best 10-year average personal income growth, the best 10-year-employment growth, and best 10-year population growth of all 50 states. In other words, they beat the average, and handily. On the flip side, the 10 states that had the highest or fastest-rising rates scored below the rates for the 10-best states, and below the numbers for the national average as well.

(numbers rounded to the nearest whole percent)

Personal income growth
10 best states: 67 percent
50 states average: 64 percent
10 worst states: 60
ADVANTAGE: Low-tax states

Employment growth
10 best states: 18 percent
50 states average: 16 percent
10 worst states: 15
ADVANTAGE: Low-tax states

Population growth
10 best states: 16
50 states average: 13 percent
10 worst states: 10
ADVANTAGE: Low-tax states

Actually, the absolute level of taxation is not a strong bar to growth, if the trend is in the right direction. Connecticut, Hawaii, and Massachusetts, for example, get credit for improving their positions vis-a-vis other states. (permalink)

So Much for Alabama Needing a Huge Tax Increase.
Remember the born-again governor of Alabama who became a newly-born tax-hiker?

Gary Palmer, head of the the Alabama Policy Institute, and vigorous opponent of the tax increase reviews the months that have passed since the "Jesus tax" proposal. (It failed at the ballot.)

This time last year we heard how bad the economy was and how if we didn't pass a $1.2 billion tax increase Alabama would be shutting down schools, prisons and nursing homes. What a difference a year can make.

The economy is on track for the best growth rate in 20 years and Alabama's revenues are up by a whopping 8 percent with nary a school, prison or nursing home being shut down.

The rest is at What a Difference a Year Can Make. (permalink)

Why "Economic Development" Programs Fail.
Economic development is best fostered through the unspectacular but vital work of government. But it's more attractive to focus on specific projects that get attention.

Michael LaFaive, of the Mackinac Center for Public Policy, explains why government actions to encourage specific businesses, industries, or regions, usually fail.

First, no public planner can have sufficient information about the economy to arrange things in such a way that they would be better than had he simply done nothing.

Second, money taken by A from B and given to C will be poorly spent. The most carefully spent money will be spent will be A's money spent on A, B's money spent on B, and so forth.

Third, tax money spent on subsidies and other government directed incentives is simply money taken from Peter to pay Paul. In other words, no net increase in economic activity results. And it's unfair to boot.

Fourth, the government administration required for "economic development" programs is itself a drain on the economy.

Moving from theory, LaFaive points out that various studies that reveal a non-existent (or even negative) relationship between the money a state spends on economic development efforts and the size of its economy. (permalink)

You'd Better Not Speak Your Mind.
Giving offense through religious speech is an imprisonable offense. At least in otherwise democratic Sweden.

Here's the story from the Salt Lake City Tribune:
"A Swedish court has sentenced a pastor belonging to the Pentecostal movement in Sweden, Ake Green, to a month in prison, under a law against incitement, after he was found guilty of having offended homosexuals in a 2003 sermon. Green had described homosexuality as "abnormal, a horrible cancerous tumor in the body of society." Soren Andersson, the president of the Swedish federation for lesbian, gay, bisexual and transgender rights (RFSL), said on hearing Green's jail sentence that religious freedom could never be used as a reason to offend people."

So much wrong here, so little time to write about it. (permalink)

Does Your State Have the Conditions for Success?
The Beacon Hill Institute has the answers--or at least a ranking of states and metropolitan areas.

The State and Metropolitan Competitive Index (available in PDF) compiles a "competitive index" for states and metropolitan areas.

The index measures long-term competitiveness, which the institute defines as a state that "has in place the policies and conditions that ensure and sustain a high level of per capita income and its continued growth."

The index is composed of 9 subindexes:

• government and fiscal policy
  
• security
  
• infrastructure
  
• human resources
  
• techology
  
• finance
  
• openness
  
• domestic competition
  
• environmental policy

The top ten states:

• Delaware
  
• Massachusetts
  
• Wyoming
  
• Utah
  
• Washington
  
• Vermont
  
• Minnesota
  
• New Hampshire
  
• Connecticut
  
• South Dakota

Interestingly, there's no necessary connection between the state and local tax burden of a state and its place on the final competitive index.

The top 10 on the competitive index include high-tax states Minnesota, Connecticut, and Utah. (They are ranked #3, #5, and #9, according to the Tax Foundation's ranking "State and Local Tax Burdens, Calendar Year 2003," which is table 25 of their publication "Facts and Figures.")

But the top 10 competitive states also include low-tax states of South Dakota (#42), Wyoming (#43), and Delaware (#48). (permalink)

Detroit Schools: Enrollment is Down, Employment is Up.
When Microsoft gets the heavy treatment of the law for its alleged monopoly, why does the inept, monopolistic Detroit school district get a pass?

Writing for the Mackinac Center, education scholar Andrew J. Coulson examines the plight of the Detroit schools.

Among the specific complaints: "the Detroit Public School system is now employing 1,723 more people to teach an estimated 35,000 fewer children."

Because of an unnecessary build-up in staff, 3,200 employees may face dismissal in an attempt to balance the district budget.

Labels: Education

(permalink)

Higher ed "Top 10 Percent" Plan Panned.
Texas law gives priority in university admissions to the top 10 percent of each high school place. But as is usually the case, the intentions of the law and the results of the law are two different matters entirely.

Writing for the Texas Public Policy Foundation, Ronald Trowbridge argues that "admission to public Texas colleges is now based primarily on the inequalities of school location and class ranking, rather than on a consistent, equal standard of academic merit."

Labels: Education

(permalink)

District Court Invalidates Minnesota Conceal-Carry Law.
Arguing that the conceal-carry law violates a single-subject requirement for state laws, a district court judge has declared Minnesota's conceal-carry law unconstitutional.

The state's attorney general says that "Tuesday's ruling would have little effect on handgun permits issued since the law went into effect" earlier in mid-2003.

According to the AP account, over 22,000 permit have been issued--double the annual number before the law took effect, but far fewer than projected.

A number of churches have been opposed to the idea, and were instrumental in the case decided yesterday. (Should this be a problem for the "separation of church and state" absolutists?)

Meanwhile, St. Paul-based blogger Mitch Berg and his readers contemplate the fallout. One interesting point: "Christmas tree" legislation is passed all the time, but it's only selectively challenged.

One thing's likely: the state supreme court will eventually hear the case. As a supporter of the law, I don't have high hopes, given the leanings of the court. (permalink)

Thank Markets and Greed for Medical Progress.
The ever-useful Manhattan Institute has a new web magazine devoted to markets and medical progress.

Medical Progress Today, as the site is known, is "a web magazine devoted to chronicling the connection between private sector investment and biomedical innovation, market friendly public policies, and medical progress."

Private sector investment, of course, would be driven by hopes of making a profit, turning a buck. In other words, "greedy" companies, inventors, medical professionals, and so forth, play a vital role in improving medical knowledge.

The web site brings together information from a number of organizations and publications, including the National Bureau of Economic Research, newspaper articles and op-eds, the Manhattan Institute, the AEI-Brookings Joint Center for Regulatory Studies, and Health Affairs.

If you're interested in health care policy, it's worth a look. (permalink)

Trimming the Fat in Higher Education.
Higher-education funding is one of the most visible discretionary budget areas for most states. According to a former university system administrator, there's plenty of room for efficiencies.

In the Spring 2004 edition of its membership newsletter, the American Council of Trustees and Alumni provides some excerpts of an op-ed that James Carlin, the former chairman of the Massachusetts board of higher education, wrote for the Boston Globe:

"Before we kill our students and their families with increased tuitions, room and board charges, and fees of all sizes and descriptions, let's take an honest look at operating costs and productivity.

Twenty percent-plus of our freshmen require some form of very costly remedial help. Our four-year institutions must stop accepting students who are clearly not prepared for four-year college work.

Colleges are really open for serious business about 30 weeks per year.

Let's get our schools operating at full capacity 48 weeks per year, five days per week from 7:30 to 6:30 p.m., and Saturdays until noon.

Only about 30 percent of US college students graduate in four years. It is important that the lack of required course offerings not be an excuse for students completing college in four years. Let's give undergraduate students who graduate in four years or less a tuition rebate and assess a surcharge on full-time students who take more than five years.

For over twenty years, tuition increases have risen at about double the rate of inflation. Isn't it time trustees did something about it?" (permalink)

A Milestone: Going into Four Figures
If the Blogger statistics can be believed, this is entry number 1,000 in the PolicyGuy blog, for what that's worth. (permalink)

Another Reason for Tax Simpflication.
"Mr. Edwards is right that there really are two Americas. The people who work for their money and want to keep more of their own paychecks. And wealthy politicians who want to raise taxes on the middle class secure in the knowledge that they won't have to pay."

So concludes the Wall Street Journal, in this editorial (freely available on OpinionJournal.com). (permalink)

Cities that Cry Poverty Should Shed Nonessential Services
Northern and especially northwest Michigan is home to some of the best ski areas in the Great Lakes state. So why is Traverse City running deficits to operate a municipal ski area?

Nearly 9 percent of the city's current operating deficit comes from a taxpayer-owned ski area.

I've got more details at the Mackinac Center's current comment. (permalink)

Is Market Failure Responsible for the Lack of "New Urbanism?"
Why do new urban settlements, with front porches, housing within walking distance to shops, etc., lag far behind the "big house on a big plot of land, gotta drive everywhere" style when it comes to recent housing developments?

Stuart Buck asks, if these sorts of settlements carry such a high price to buy into (signaling willing consumer demand), why aren't there more of them? Perhaps, he wonders, there is market failure at work.

Among the other possibilities: insufficient regional population, consumer choice (should be an obvious candidate), and zoning laws. People like to visit "charming" mixed-use settlements, but they (a) those who actually live there want to keep outsiders out (no expansion) or (b) those who don't live there approach such places with a "nice place to visit, but don't want to live there" attitude, or (c) they operate under a NIMBY mindset. (permalink)

Before Orwell, there was Dickens.
Doubtless you know of the official abuse of the language in George Orwell's novel, 1984 ("freedom is slavery," etc.) But did you know that Dickens offered a related critique nearly 100 before Orwell published his classic?

As Bibliomania explains, Little Dorrit, by Charles Dickens, was serialized between 1855 and 1857. It " contains numerous subtle criticisms of the government and society of Dickens? time." (Orwell's most famous works, Animal Farm and 1984, were published in the 1940s.)
One feature of Little Dorrit was the "Circumlocution Office," which the Webster-dictionary.org defines as "a term of ridicule for a governmental office where business is delayed by passing through the hands of different officials."

In chapter 10, Dickens describes the Circumlocution Office as an agency whose paperwork responsibilities must not be shirked, even in the rescue of human life.

"If another Gunpowder Plot had been discovered half an hour before the lighting of the match, nobody would have been justified in saving the parliament until there had been half a score of boards, half a bushel of minutes, several sacks of official memoranda, and a family-vault full of ungrammatical correspondence, on the part of the Circumlocution Office."

[The Bibliomania works may not be stable; simply look for Charles Dickens, and then the work Little Dorrit.] (permalink)

How Cool is a "Cool Cities" Plan?
Writing in Governing magazine, Otis White comments on the "cool cities" fad/initiative of Michigan's governor, Jennifer Granholm.

It doesn't look like a permanent link to the Urban Notebook is available, so I'll liberally excerpt portions of White's remarks.

What makes for a "cool city?" Now, White says, we know: "Granholm recently chose 20 projects from among 151 applying for state grants, and it turns out that what’s considered cool in Michigan would be called streetscaping, building rehab and facade improvements elsewhere."

In other words, some cosmetic surgery.

The logic behind it all is yet another stab at urban renewal, an attempt to attract the "creative class" to selected cities with urban eye candy.

The Mackinac Center dismisses the initiative as merely shifting money around: "The small [initial] grant is a negligible inducement, and the hip artists and creative young people they hope to draw are not going to make investments on the mere promise of extra goodies.” Besides, “Coolness created in Detroit is coolness destroyed in Ishpeming or whatever city doesn’t get the favor."

Another person quoted by White, a worker in Detroit, gets it half-right. The theme of this criticism: the state is diverting money that should be spent on K-12 education instead. "In other words," the sarcastic note proceeds, "it’s OK to be dumb as long as we’re cool."

True enough, it is folly to try to be both dumb and cool. It's a case of misplaced priorities to create "cool" (something beyond government's ability anyway), when the education system needs so much improvement. That improvement, it should be repeated, will not come merely through throwing more money into the status quote of K-12 education.

That's both dumb and un-cool.

Thanks to Chip Taylor for the tip.

Labels: Cool cities fad

(permalink)

Da Coach for Da Senate?
The PolicyGuy doesn't normally comment on political races, but here's something so remarkable it calls for some attention.

The Republican Party in Illinois, in melt-down, could end up putting a celebrity candidate on the fall ballot at the last minute. Call it the (bad) luck of the Irish. Ryan #1 (George) declines to seek a second term a governor in the midst of charges of corruption. Ryan #2 (Jim) attempts fo fill the job, but is defeated at the ballot box--the first party official to lose a gubernatorial election since the early 1970s. Ryan #3 (Jack) withdraws from a race for the U.S. Senate after embarassing details of a failed marriage become public.

So who will be the new Republican candidate for Senate? I have no idea. But some people think that Mike Ditka--former player for and (more importantly) coach of the Chicago Bears--would make a fine candidate.

Former pro sports players can go on to serve in elected office, even the U.S. Senate (Bill Bradley and Steve Largent, to pick a bipartisan pair). But this Draft Ditka movement is clearly a Hail Mary pass. (permalink)

For Pharamaceutical Companies, No Good Deed Goes Unpunished.
Lost in the midst of debates of the prices of prescription drugs is the fact that many pharma companies have offered discount programs for the uninsured.

Derok Murdock notes that Pfizer has launched a new version of such a program. He applauds the company for its short-run actions, but wonders if this move will backfire in the long-run.

"While this program will help today's uninsured, it also fuels the notion that the pharmaceutical industry is part of the philanthropic world, and Pfizer is really just the Salvation Army with test tubes."

He closes with a quote from Fred Smith, of the Competitive Enterprise Institute, who defends the fact that some people pay more for a given drug while others pay less. "What you want to do is have differential pricing for a differentiated world. And unless some people fly business class, nobody can fly coach. The best way we can insure that the whole world has a mediocre health system is to allow everyone to fly coach." (permalink)

Whither School Choice in Wisconsin?
Wisconsin has been home to one of the country's leading programs in school choice, the Milwaukee voucher program. But the future is murky.

Writes Charles J. Sykes, "At both the state and local level, key positions that had once been held by supporters of choice and charter schools are now controlled by opponents of education reform." (His essay is available in PDF).

The increased political challenge comes even as the case for choice is increasingly validated by research. Not only have test scores increased, but economic development has been spurred by the schools of choice program.

The choice model has been dealt a blow by the malfeasance of a handful of school operators--coupled by inaction by the state's education department.

Here was a case in which government regulation could have made a positive difference. The state education department, when notified of the egregious problems with one school in particular, refused to act, even to the point of making a public statement that parents should avoid the school: "Instead of taking action against Alex’s, the DPI threw up its hands, claiming it was powerless to act." Inasmuch as the school in question appears to have been engaging in fradulent activity, it would seem appropriate for the education department to step in.

Instead of using the power it already had, the department called for increased restrictions on schools of choice. The teachers union, meanwhile, is using the few wrong-doers as a way of tarring the entire idea of school choice.

Meanwhile, the choice program runs the risk of being too successful; it could soon reach its enrollment cap.

Labels: Charter schools, Education, School choice

(permalink)

Spending Bias Distorts Revenue Projections.
Projecting tax revenues can be a difficult exercise, especially if the forecast raises hopes that are later dashed when the money doesn't come in.

The Wisconsin Policy Research Institute notes that "since 1989, the [Wisconsin's] revenue forecasts show an error rate of 41%."

Among the reasons for these errors: "the proclivity of the state to spend every dollar in the budget process." The result: "even small forecasting errors can have sizeable effects."

This is especially true given the lack of a budget reserve in Wisconsin, says Scott Niederjohn, who wrote the report (PDF viewer required) State Revenue Forecasting in Wisconsin. (permalink)

Accountability Comes from the Freedom to Fail.
A charter school in Michigan was recently shut down by the state for its poor performance. Pity the children who put up with that experience. But many like them suffer through schools that won't be closed.

Says Brian L. Carpenter, of the Mackinac Center, "Envision a local public school that misappropriates federal grant monies, posts abysmal [test] scores and carries an operating deficit on its books. After eight years, the state finally shuts it down.

Accountability to this extent never happens, of course, in conventional public schools in which problems like the above often constitute business as usual. But not so for Walter French Academy, in East Lansing, Michigan, which on June 30th, became the fifteenth charter school in Michigan to be shut down by its authorizer since 1993 — and rightly so."

He then asks, when "will conventional public schools be as accountable as charter schools?"

Labels: Charter schools, Education

(permalink)

Why the Lure of Private Rail?
What's so attractive about light rail, especially considering its relative ineffectiveness in dealing with traffic congestion?

The Federal Reserve Bank of St. Louis asks (and answers) the question. "One economic reason is that the benefits of light rail are highly concentrated, while the costs are widely dispersed."

To paraphrase your Momma's words, the squeaky wheels get their light rail cars.

On the other hand, the costs of light rail are small enough on a per-person basis ($6 in St. Louis), that it's hard for folks to get worked up about it. Says the Fed, once again, "Even if these benefits are exaggerated and the taxpayer realizes the cost-ineffectiveness of light rail, it is probably not worth the $6 for that person to spend significant time lobbying against light rail."

Thanks to Out of Control for the tip. The group blog is a blogroll item for anyone interested in government performance and effectiveness.

Labels: Transportation

(permalink)

Is "Above Average" Good Enough?
Government-run schools in Kansas turn out students with above-average test scores. But that's because the country is graded on a curve.

When you look at how students achieved not against each other but against what they should be learning, the picture isn't as pretty.

I cover this in a policy brief for the Flint Hills Center for Public Policy. (permalink)

Public Financing of Elections: Makes No Difference.
Arizona has publicly financed elections. Does that state's "Clean Election" money make for better government?

Not according to the Goldwater Institute, which is releasing an op-ed on the subject.

According to Mark Brnovich,

• the Arizona system has failed to entice more people to run for public office
• voting record analysis shows that party affiliation, not source of funding, makes the difference in how legislators vote
• has failed to increase voter turnout, as promised by boosters of the plan

Opponents of public financing of political campaign activities will take their case to the voters in the fall election. (permalink)

More on Detroit's Decline.
The Detroit News provides another look at the sad state of Detroit.

Even as the city lost approximately 36,000 people since 2000, Detroit has "added new housing last year at its fastest pace in more than two decades."

That's not entirely encouraging news, because there is still little sign that people are choosing the city for the next generation. "Demographers say while families with children continue to abandon Detroit neighborhoods, many of the new lofts and condominiums downtown have been filled by single people or couples without kids."

This points out, again, the need to improve the range of school choice as a key to urban revitalization. People aren't going to stay in a city if the only schools can afford are the third-rate government schools.

Labels: School choice

(permalink)

A New Model of College Tuition.
Miami University is a state university in Ohio. It's moving to a "high-list price, high discount" model of tuition that makes state subsidies transparent.

This resembles a proposal put forth by the Independence Institute. Writing for the institute, Barry Poulson concluded that "The only 'reform' that would increase efficiency and equity is 'privatization', in which direct subsidies are replaced by vouchers that students could use to offset tuition at either private or public higher education institutions."

Meanwhile, Chip Taylor says that the Miami plan may lead to more wealthy families sending their children to private colleges.

"If you reduce the number of students from wealthier families who use in-state colleges, you reduce the number paying the higher tuition that is used to provide the aid to other families. Reduce those numbers enough and the system falls apart. Further, if you encourage more high-income families to use private or out-of-state schools, you may well erode political support for the taxpayer subsidy.

On the other hand, if enough states moved to this model you might pick up enough out-of-state students to offset your own defectors, as it were." On balance, Taylor says, "I like it."
So do I. Subsidies, if they are to exist, should be as transparent as possible. That way, any that do exist can be made more effective, and honest.

Labels: Education

(permalink)

Minneapolis Light Rail Causes Traffic Problems
Sold as a way to alleviate traffic congestion, Minnesota's $715 million light rail system is instead causing traffic tie-ups.

Traffic light synchronization for the Hiawatha line is required, since the line uses surface streets. According to reports in the St. Paul Pioneer-Press (registration required), some automobile drivers are experiencing longer commutes as a result of having to wait for the two-car train.

Another complaint: riders are parking on neighborhood streets near the line, making life difficult for local residents. So far, the project has only one-fourth of the park-and-ride lots normally found for such systems.

Labels: Transportation

(permalink)

Number of Self-Employed Underestimated
By the end of this year, the number of small-business credit cards will have soared to over 12 million, from only 4 million in 2000. So says an article in today's Wall Street Journal, quoting the Nilson Report.

With the number of cards going up, so has spending from these cards--from $35 billion in 2000 to $111 billion this year.

While some of this activity comes from business owners shifting their spending from personal cards to business cards, an undetermined amount stems from a more significant economic trend, a growth in self-employment.

There are two political lessons from this growth. One is that the industrial paternalism of the mid-20th century (corporate pensions, Social Security, lifetime employment), may be on its way out. Will this lead to a decreased demand for the welfare state in all its forms? Perhaps, if an increasing number of people learn to accept risk and manage things in the marketplace. Equally possible, though, is an increasing demand for welfare systems (though perhaps of new and different forms) to shield the self-employed from new uncertainties.

A second political lesson is that those who expect government to ameliorate every problem will be disappointed, if for no other reason that government always acts on imperfect data.
One of my professors in graduate school, a utopian sort, predicted that with the rise of transnational interest groups, globalization, and the like, the nation-state would in time cease to be very significant. In fact, he said (only half in jest, I think) that the last useful function of the nation-state would be to serve as a container of data. That is, it would serve as the unit of measurement for all sorts of statistics.

Spend some time looking at economic data, and you'll find a conflict between employment-related data that comes from households and that which comes from businesses. Add in the under-reporting of self-employment income, as well as a horde of people selling stuff on eBay, or cashing in stocks, and so forth, and you'll find government officials can't manage the economy nearly as well as they would think. For one thing, it's hard to manage something you don't understand.

Labels: Economic freedom

(permalink)