Kurt Bouwhuis, Mackinac Center Intern
This video is by Reason Magazine and it is awesome!
UPS vs Fedex
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Tag Archives: government
US National Debt
Kurt Bouwhuis, Mackinac Center Intern
I initially found these graphics (along with many others) here.
The Government Can!!!
Kurt Bouwhuis, Mackinac Center Intern
WOW!
Kurt Bouwhuis, Mackinac Center Intern
Dynamic Interventionism
Kurt Bouwhuis, Mackinac Center Intern
One would have to put forth much effort to find a year in history in which any government lessened in size. A significantly less amount of effort would have to be applied to find any government that increased in size in the same year.
There are several reasons for the steady growth of government – Among them is mans natural pursuit of power, concentrated benefits and dispersed costs, increases dependence on government, politicians tailoring their efforts to please the median voter, etc… One reason that is often overlooked is what I would like to call dynamic interventionism. Dynamic interventionism can be thought of as intervention in market “a” breeding interventions in markets “x,y, and z.”
A simple example from the United States today can help illustrate this point. Suppose I am a politician who advocates free immigration on principle. I may not decide, however, to vote for free immigration under the United States current political structure because immigrants tend to use government benefits and drain taxpayer money. The same benefits that alter my voting pattern on immigration may also make it more difficult to empirically speak of the merits of private charity (as it is being crowded out by government charity).
In short, the more government grows, the more justification there is for government to grow.
Sloppy Krugman
Here’s a letter Don Boudreaux sent to the New York Times:
And these data ignore the fact that Massachusetts’s plan relies in part on subsidies from Uncle Sam.
Don
http://www.cafehayek.com/
http://marketcorrection.powerblogs.com/
…………..
24 July 2009
Editor, The New York Times
620 Eighth Avenue
New York, NY 10018
To the Editor:
I’m surprised that Paul Krugman points to Massachusetts’s three-year-old program for creating universal health-insurance coverage in that state as a model for the national level (“Costs and Compassion,” July 24). Krugman himself admits – in a column devoted to insisting that such government plans will reduce health-care costs – that Massachusetts “is now looking for ways to help control costs.” If Massachusetts’s experience is Mr. Krugman’s best real-world case for how such reform itself controls costs, why are legislators in that state “now looking” – three years later – “for ways to help control costs”?
But control costs they must. A 2008 Kaiser Family Foundation study of this Massachusetts reform finds that “the costs for this program have exceeded previous estimates. The Governor’s budget request of $869 million for 2009 is about $400 million more than that for 2008, and it is believed that this funding level may still fall short.”* And just last month, Cato Institute scholar Michael Tanner reported that “since the program became law, insurance premiums have been increasing by 10 to 12 percent per year, nearly double the national average. On average, health insurance costs $16,897 a year for a family of four in Massachusetts, compared to $12,700 nationally. Meanwhile, total health-care spending in the state has increased by 28 percent.”**
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, VA 22030
How Much is a Trillion Dollars???
Kurt Bouwhuis, Mackinac Center Intern
The Protected Class (Part 2)
This is the continuation of a previous post regarding government emploment benefits:
Not only do government employees have greater job security, they also have quite the compensation package. The government and general public have gone back and forth about the ligitimacy of government salaries, which are on average much higher than those in the private sector. The argument has been made that government work requires more education than the standard private sector job, and therefore salaries for government employees should be higher. The figure below shows the makeup of public and private sector compensation in Michigan with best data availible from the BLS.
This higher education argument does not seem to explain away all of the discrepancy however as the Mackinac Center argues. Mackinac’s “What Price Government” finds government workers earning more than similar private employees in several vocations including food service and corrections. Nonetheless, it is hard to quantify just how much of the difference in salaries is warranted and how much is splurge. A clearer picture can be drawn for benefits on top of wages.
In 2000, Michigan’s classified workforce received benefits worth an additional 37.95 percent of salary each year. By 2008, the figure grew to 58.15 percent. At the same time, Midwest private-sector benefits, the closest estimation for Michigan private-sector benefits available from the BLS, are worth only 43.62 percent of salary — meaning that government rates are 33 percent higher than private ones.
According to calculations based on data from the Bureau of Labor Statistics and figures from the Michigan Civil Service Commission, Michigan’s state and local government full-time employees are getting $5.7 billion more in benefits than they would if their benefits were equal to those of private-sector employees.
Even more surprising is the comparison of Michigan’s benefits to National government averages. While government salaries and benefits are inflated nationwide, Michigan’s are some of the highest. Doing calculations similar to those above, equalizing Michigan state and local government full time employee benefits to the national state and local government average would save the state nearly $1.5 billion annually. How can the higher education argument stand in light of these facts?
Michigan cannot afford to carry these extravagences, especially in light of an imposing $1.6 billion overspending crisis.
Adam Rule – MCPP Intern
The Protected Class (Part 1)
Some of my recent work for the Mackinac Center for Public Policy has been in regards to government employee compensation here in Michigan. As I delved into the topic, I’ve found that Wendell Cox’s assessment is correct; government employees truly are a protected class. Over the next few days I’ll be presenting my own case on this point, looking at both Michigan and National statistics. Some language will be pulled from a MCPP essay I helped write.
Today’s topic: Employment.
According to the BLS, Michigan’s private sector has shed 12.1 percent of its jobs since 2000. The number of jobs lost — 484,200 — is about the size of the total employment in Rhode Island. In fact there are nine states with whole private-sectors smaller than Michigan’s private-sector loss since the start of the decade.
Local government in Michigan on the other hand only shed 6.1 percent of its workforce, while the state government and state enterprises like universities actually expanded their payrolls.
Nationally, similar trends have come to the surface. The nation has grown its private ranks by 3.2 percent since 2000. Not to be outdone, the government expanded by 8.2 percent over the same period. This means that nationally, we have grown government employment over 2.5 times faster than the rest of the country’s workforce.
And these figures are just up to 2008. What will 2009 tell with the increases to AmeriCorps and Obama’s mission to add oversight and regulation left and right?
We cannot continue to add to government ranks that do little to produce wealth, and do much to move around and waste it. But not only are government employees wasting taxpayer money through bureaucracy, they are consuming more than their fair share of it in compensation. Stay tuned…
Adam Rule – MCPP Intern
State Decision Making
Its time to pull the college psychology textbook of the shelf and give it a good dusting. I would advise you brush up on the chapters on behaviorism and re-familiarize yourself with the likes of Pavlov and Skinner. Why pray tell? In the next few years we are going to see work in their field streaming out of Washington, a flow that should be resisted.
During his campaign President Obama consulted with a behavioral dream team to figure out why people make the choices they do. The group included Dan Ariely of MIT as well as the Univeristy of Chicago coauthors of Nudge, Richard Thaler and Cass Sunstein, among others.
The recent buzz about behavior modification has centered on the concept of a choice architecture. Essentially, there is a landscape of costs and benefits people survey when they make decision. The goal is to modify this landscape, to design the choice architecture by introducing unnatural consequences so people make the right decision.
In their book Thaler and Sunsein note examples of etching flies into urinals to reduce spillage, painting smaller parking spots to encourage the use of more fuel efficient vehicles, even government programs that discourage teenage pregnancy by giving teenage mothers a dollar for everyday they avoid becoming pregnant again.
Recent legislation is starting to wander down this path of helping citizens make “right” decisions. The FDA has been authorized to have extreme control over tobacco marketing, and there is discussion in the air of adding a tax to sugary drinks.
Similar action by parents should be applauded. Moving cookies and other unhealthy snacks to out of reach place and laying out fruit instead should be encouraged as good parenting. Even the idea given in Nudge of motivating yourself to reach your goals by agreeing to donate to a charity you detest if you don’t achieve them should be explored privately. Such tactics could have a great effect in improving our choices. But these techniques are not for the government.
In all other cases, changing the choice architecture is done with the consent of those affected. The Sox lover agrees to divert their funds to the Cubs Fan Club if they don’t go for a run three times this week. The government on the other hand may act outside of the will of citizens in trying to help them make the “right” decision.
Also, such a role falls outside the proper scope of government which is to rule or govern between entities, not within them. The government has too much power to be allowed to so aid individuals in decision making. Those who hold the power to use force to achieve their means must be confined to those areas where the use of force is appropriate.
Behavioral policy in the extreme will lead to a uniformity in people’s choices and actions, all conformed to a proper behavior as defined by the state. This way dystopia lies.
Adam Rule – MCPP Intern
Cars.gov
No, its not the new website of GM.
Cars.gov, launched today by the National Traffic and Highway Safety Administration, gives information about the cash-for-clunkers program signed into law June 19th. Under what is officially being called the Car Allowance Rebate System (CARS), those who trade in an old gas-guzzling car can receive up to $4,500 off the purchase of a new vehicle, compliments of the government.
I’ve already shared my thoughts on the program in a previous post.
In any case, those who want to make use of the program will have to act quickly. All deals are off November 1st. Call now!
Adam Rule – MCPP Intern
Losing Faith (Part 2)
This is the continuation of a previous post in which I showed that living out one’s faith in providing social services has been the root of a 10% better success rate for Faith-Based Organizations (FBOs) than similar non-faith organizations.
Government funding requires FBOs to do the impossible, stay successful and lose their faith. Current law states that organizations receiving government funds cannot perform religious acts at the same time or place as their social services. However, it is the inclusion of faith that makes FBOs successful.
As a result, FBOs have had to do extra accounting to make sure government funds do not go toward their religious activities. Some organizations that are faith-based only by affiliation have chosen drop religious programs altogether. Even those that separate accounts and hold onto their faith elements are prone to mission shift.
In 1974 Catholic Charities USA received 24% of its funds from the government. That figure rose to 52% by 1979, and today has leveled off around two thirds of their total funding. With this increase has come a change in programming and a redefinition of the organization’s mission in secular terms.
As government grants were offered for alcohol and drug treatment programs, Catholic Charities programming followed. In 1995 its Massachusetts office in focused 80% of its funds on substance abuse services that benefited only a quarter of their clients. A 2001 Cato institute report found the St. Francis House in Boston, once staffed largely by Franciscan Brothers, now avoids hiring “overtly religious people” at the same time filling 52% of its budget with state contracts.
Other issues arise from government funding. FBOs are called on to professionalize their staff, who in many cases are former clients. FBOs have found that the best person to rehab a drug addict is a former drug addict who, though not having a masters in counciling, knows the challenges their client will face.
By using this model, and being extremely clear that Jesus is the answer to leaving a life of drugs, Teen Challenge has been extremely successful in its mission to rehabilitate those with drug addictions. Time Magazine and Northwestern University found Teen challenge to have a 70%-80% success rate, a figure dwarfing that of secular organizations. The Northwestern Report concluded that,
The “Jesus Factor” is still the only true answer to the drug problem.
It is faith and local volunteers, not training, not professionalism, and not high salaries that has had the greatest sucess in solving social problems. Government funding pulls down these two pillars of FBO success. Charity should be left up to private citizens who invest in the communities they live in and use everything they believe in when serving others.
Adam Rule – MCPP Intern
Losing Faith (Part 1)
When running for the presidency in 2000, George Bush pushed for the inclusion of faith-based organizations (FBO’s) in the government grant making process. He targeting social programs, arguing that faith allowed these organizations to reach people in a way government simply could not. FBOs had traditionally been excluded from receiving grants because they practiced discriminatory hiring based on faith.
Though legislation in 1994 opened the government’s coffers to FBOs, it took Bush’s 2001 executive order creating the Office of Faith Based and Community Initiatives to get significant money flowing.
In the early months of his presidency, Obama followed Bush’s lead with an executive order of his own, essentially extending Bush’s faith office under the new name of Faith Based and Neighborhood Partnerships.
Community based social organizations are more effective in achieving their ends than larger government programs because they have a vested interest in the area in which they work. If they can decrease local poverty, drug abuse, and criminal activity they will be directly benefitted by a safer, more stable community.
FBOs go a step further. Not only are workers benefitted indirectly through the community, they are also benefited on a more personal level as they serve in response to a call from God. When they help others leave a life of drugs, crime or poverty, FBO workers get the added bonus of obeying God’s command to reach out the downcast and impoverished.
A similar benefit is given to FBO clients, who through these programs respond to God’s call to leave drugs, crime and injustice toward others. There is an extra motivation to succeed when one believes that by doing so, they will be pleasing God.
This extra benefit of faith comes to the tune of a 10% higher success rate for FBOs than community based organizations not based on faith.
But what has government funding done to this structure? Look for part two in the next few days.
Adam Rule – MCPP Intern
Don’t Be Hasty
President Obama is starting to echo John Keating’s quote from The Dead Poet’s Society,
Now I want you to rip out that page. Go on, rip out the entire page. You heard me, rip it out. Rip it out!
But this isn’t the introduction to a poetry book he’s asking us deface, no this would be the tomes of American law that we are to disregard. The fate of American investment now sits before the highest court in the land to determine if the destruction will go unchecked.
Just over a month ago, Chrysler was forced into bankruptcy by our president, and the whole structure of stakeholders was shaken. What was once a 20% Daimler and 80% Cerberus enterprise is now slated to be 2% Canadian Government, 8% US Government, 35% Fiat, and 55% UAW. A number of secured creditors, who should have been the first in line to receive funds or a stake in the reorganized Chrysler have been left out of the deal entirely.
As a result, several Indiana funds have brought their case before the Supreme Court. While the bankruptcy of Chrysler has moved at an alarming rate, Chrysler, Fiat, and the US Justice Department have each filed a brief with the Supreme Court encouraging it to keep the ball rolling. The briefs collectively urge the court to hurry to a decision as the fate of Chrysler is uncertain past June 15th when Fiat is to close with Chrysler. If Chrysler is not sold on this date, Fiat can withdraw from the deal.
The argument of Chrysler’s continued loss each day the court delays should be countered with the fact that the court is being asked to shake the economy to its core. If the court should establish that the Indiana funds do not have a right to a stake in or funds from Chrysler before the government, investment as we know it will cease to exist. Such a ruling would set the precedent that the rules of investment are subordinate to political wants. President Obama has said of the creditors,
They were hoping that everybody else would make sacrifices, and they would have to make none,
Mr. President, what you ask for is the sacrifice of freedom, and in its place, government rule. How can you ask us to do that?
Adam Rule – MCPP Intern
We Value Your Opinion
I got excited when I saw this line at the top of a Michigan government page.
Public input also to be sought on what services state government should provide.
Governor Granholm, in her 2009 State of the State address charged Lt. Governor John D. Cherry with the task of determining how the state might improve its services and reduce its burden on taxpayers. In response, Cherry and a workgroup convened for the streamlining task have returned the following seven core functions of state government.
- Public safety. Protecting people’s personal safety is paramount. People should feel safe in their homes, workplaces and communities.- Education. From early childhood through all stages of adulthood, Michigan citizens expect a public education system to provide them the skills and abilities necessary for good jobs.- Public systems. State government, in partnership with federal and local government, should build and maintain a physical infrastructure that supports public transportation, water and waste management systems, public utilities, information technology, public recreation and other public facilities.- Well-being. People should be free from hunger and have access to medical care and safe shelter.- Sustainability. State government should steward Michigan’s land, air, ecosystems and water resources in a sustainable manner.- Economic opportunity and prosperity. The state should encourage job creation, stimulate entrepreneurship and promote the state’s existing and emerging industries.- Efficiency and effectiveness. State government should be efficient, deliver services effectively, and be transparent in decision-making and spending.
You started off well Mr. Lt. Governor. Government oversight of law, education, and transport systems such as roads goes far toward promoting well-being and economic growth. Look to privatization to help you economize in regards to education.
Sustainability, economic opportunity and prosperity are better left to the free market. It is not the government’s job to create jobs or combat scarcity, that is the role of the market. The best thing the government can do in respect to the market is to refrain. Reduce taxes, refuse to subsidize, fight involuntary unionism, and promote the first three items on your list. As for well-being and government efficiency and effectiveness, those will follow from a healthy market and a government focused on a few critical tasks.
The Mackinac Center for Public Policy has a wonderful article specifically detailing how the government should promote economic growth.
Adam Rule – MCPP Intern
