Center for Free Enterprise
President Obama has recently decided to make it illegal to buy, sell, or trade ivory that is less than 100 years old. International trade of “blood ivory” has been illegal since 1989. According to unnamed conservationists, illegal poaching and trafficking have exploded in recent years despite scientific studies showing African elephant populations have generally stabilized across the 35 elephant range states in Africa. So, in an attempt to deal a fatal blow to illegal trafficking of ivory, the president decided to take the 1989 restrictions a step further and deal with the contraband at home that feeds a black market internationally. In recent years he has destroyed the supply of all seized ivory and artifacts and is now further restricting its interstate trade.
These sorts of special interest mandates carry wide popular support because they tap into emotion. This is evidenced by the international public outcry over the routine killing of a genetically compromised giraffe at a zoo in Denmark a few weeks ago. It’s the same with Arctic polar bears, tigers, pandas, gorillas, or blue whales. People place higher emotional value on that which is exotic.
Last year’s convention center subsidy proposal is back, and it passed unanimously out of committee yesterday. Remarks made during the discussion make clear our point, once again, that legislators should not be economic developers.
Trained economists who (claim to) understand market trends consistently fail in their predictions. Why, then, do we place any stock in the predictions of politicians who do not have sufficient training and background to even make an educated guess? More importantly, why do we allow them to use the tax base as a slush fund with which to incentivize certain businesses in hopes (yes, mere hope) that their predictions are correct?
“Here I encounter the most popular fallacy of our times. It is not considered sufficient that the law should be just; it must be philanthropic.”—Frederic Bastiat, The Law
This week during debate over HB 96 (to fund preschool programs using a new “post-performance” funding model), Representative Dan McCay asked a prescient question: “is post performance becoming the new way to grow government?”
The question can be answered in the affirmative. In the case of post-performance funding models for government programs, the critical debate is shifted from whether government should be involved in something to whether the program will effectively meet its goals—effectively surrendering the fight over the former by only focusing on the latter. In other words, addressing efficiency and funding sidesteps and thus ignores the underlying question: does the program fall within the proper role of government?
These creative funding models help progressives (as they’re generally called) shift the debate away from the proper role of government to the effectiveness of government programs in solving social ills. For progressives it is unacceptable that government be constrained to a narrow set of activities; such persons believe that public policy must philanthropically help those in need. Thus they seek to change the question from if to how.
Update: The article has been edited to include reference to a second audit conducted.
We have often argued that government agents are not economic developers, though they often engage in the practice. And despite repeated boondoggles and bad policies, the practice continues.
The latest example comes from USTAR—the Utah Science Technology and Research initiative at the University of Utah. Created in 2006, the Utah legislature passed Senate Bill 75 that allocated $179 million to USTAR along with $15 million in ongoing annual funding. Its purpose, in theory at least, is to “enhance Utah’s economy with high-paying jobs and keep the state vibrant and competitive in the Knowledge Age.”
But like many other economic ideas originating from and controlled by the government, this one’s a dud. A recent audit highlighted severe mismanagement and underperformance on USTAR’s part. Here’s just one of many problematic aspects, as reported by the Salt Lake Tribune:
The most well known case in this regard is the ongoing lawsuit by Hobby Lobby against the contraception mandates in the (so-called) Patient Protection and Affordable Care Act. This company is owned by the Green family, who are devout Evangelical Christians who believe that life begins at fertilization. As such, they object to being compelled to offer health insurance plans that offer all forms of contraception—including abortifacients that prevent a fertilized egg from implanting in the uterus.
Three options are available to the Green family: comply with the law and violate their religious beliefs, break the law and face severe fines, or sell or close the business. Thus, the lawsuit.
Let’s get our biases out of the way first: we’re not fans of the Governor’s Office of Economic Development (GOED). While we all want to see new job creation, a healthy economy, and companies choosing to locate in this state, we emphatically reject the idea that these praiseworthy ends justify whatever means are deemed necessary to obtain them.
This article focuses on those means.
Libertas Institute has obtained and analyzed the minutes of GOED’s Board of Directors meetings since its inception in 2005. These minutes document all of the various incentives GOED has offered to private corporations and other organizations, as well as the votes taken on each.
Earlier this year we reported on a proposal by SLC Mayor Becker to further subsidize public transit. In that article, we noted that “those who ride UTA buses pay 15% of the total cost through their fare, whereas those who ride FrontRunner pay only 5%.” Taxpayers are on the hook for the remainder of the cost.
Becker’s affinity for taxpayer-financed transit is not limited only to that story, however. In October 2007, as a candidate for mayor, Becker announced that a light-rail or trolley route to Sugar House would be a “high priority” under his mayoral administration. That project was made reality due to a 2010 grant in the amount of $26 million. Government central planners, in announcing the disbursement of taxpayer dollars, offered their estimates on how many people would use the system.
According to the Salt Lake Tribune, the expectation was that 3,000 people a day would ride the new streetcar when it opened, but data from the Utah Transit Authority showed that the average during its opening week was just 781 riders per day—only 26% of the estimate.
Seeking to justify their expenditure, government agents have pointed all sorts of fingers—primarily the slow residential and commercial development in the surrounding area, which they claim should pick up as a result of the streetcar’s existence.
But if you listen to those actually using (or not using) the streetcar, other reasons for its apparent failure, at least thus far, become clear. Here is a sampling of the comments on the Tribune article:
Through the First Freedom PAC, Jonathan Johnson has been promoting an amendment to state constitutions, including Utah’s, to legally protect a church’s ability to only marry who its clergy desires to, in accordance with the church’s doctrine and practice. We believe that religious belief and practice is an extension of individual liberty, and therefore “religious liberty,” as it’s usually called, deserves the same attention and support.
This battle, however, is in anticipation for a future that has not yet arrived—and, of course, proponents hope it never will. By strengthening state constitutions in this regard, supporters intend for churches to never face legal repercussions for refusing to marry a homosexual couple, for example, should their doctrine or custom lead them to choose not to. Strategizing in anticipation of future battles has its place, but we must also keep an eye on current skirmishes lest they escalate into open conflict. In several states already, discrimination laws have given legal standing for successful lawsuits against owners of businesses who prefer not to offer their goods and services to another individual. This violation of property rights is a current battle in this country that merits a proactive, defensive response in Utah.
On December 5, 2013, the 18th amendment to the U.S. Constitution was repealed, terminating the federal prohibition on “the manufacture, sale, or transportation of intoxicating liquors.” A failed 13-year experiment on commercial restriction ended, pushing the issue back to the state level. Utah is thought to have been the necessary 36th state to ratify the 21st amendment (that repealed the 18th), but Ohio and Pennsylvania ratified it on the same day, and Maine ratified it the day after. (So even if Utah didn’t vote to repeal, it would have passed.)
It’s worth reviewing some of the effects prohibition had on public policy, as we then address similar policies that remain at the state and local level.
For those who desired to obtain illicit substances during the prohibition era, the black market was readily available. Outlawed products were available, but rather than being cheap, safe to acquire, and legal, they were thrust into the domain of crime, gang warfare, violence, and racketeering. Prohibition directly fueled the rise of organized crime in America, providing a financial foundation upon which this threat could exponentially escalate. A study of 30 major cities during 1920 and 1921 (early years in the prohibition era) shows that crime increased by 24 percent, theft and burglaries by 9 percent, homicide by 12.7 percent, assaults and battery by 13 percent, drug addiction by 44.6 percent, and police department costs by 11.4 percent.
As the annual tradition of Thanksgiving leads us to once more gather with family and friends to share experiences and express gratitude for our possessions and circumstances, it’s important to recognize the central role played by the market.
It’s common for these celebrations to feature a variety of food—turkey, mashed potatoes, stuffing, pies, and other items. For most of us, there are several large grocery stores located nearby, each featuring many options for each needed ingredient. In other words, we are surrounded by abundance and variety, both of which are products of a free market system.
To understand this relationship, consider its inverse: a centrally planned economy overseen and regulated by a government body. Russia under Stalin and North Korea today are clear examples of dangers of suppressing a free market. State Planning Commissions arbitrarily set production goals, prices are fixed, and scarce resources are dedicated only to a select few products and services. As a result, there is rarely any substantial selection of consumer goods. Abundance and variety vanish.