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Posts Tagged ‘Local government’

During the Obamacare bill-signing ceremony, Vice President Biden had a “hot mic” incident when he was overheard telling Obama that “this is a big f***ing deal.”

And he was telling the truth. It was a big deal (albeit a wrong deal) from a fiscal perspective and a health perspective. And it also was a very costly deal for Democrats, costing them the House in 2010 and the Senate in 2014. But it definitely was consequential.

Well, there’s another “big f***ing deal” in Washington, and it’s what just happened to the state and local tax deduction. It wasn’t totally repealed, as I would have preferred, but there’s now going to be a $10,000 limit on the amount of state and local taxes that can be deducted.

I’ve already explained why this is going to reverberate around the nation, putting pressure on governors and state legislators for better tax policy, and I augment that argument in this clip from a recent interview with Trish Regan.

The bottom line is that high-tax states no longer will be able to jack up taxes, using federal deductibility to spread some of the burden to low-tax states.

Let’s look at what this means, starting with a superb column in today’s Wall Street Journal by Alfredo Ortiz.

The great American migration out of high-tax states like New York and Illinois may be about to accelerate. The tax reform enacted last month caps the deduction for state and local taxes, known as SALT, at $10,000. …between July 1, 2016, and July 1, 2017, …high-tax states like New York, New Jersey, Connecticut, Illinois and Rhode Island either lost residents or stagnated. …When people move, they take their money with them. The five high-tax states listed above have lost more than $200 billion of combined adjusted gross income since 1992… In contrast, Nevada, Washington, Florida and Texas gained roughly the same amount. If politicians in high-tax states want to prevent this migration from becoming a stampede, they will have to deliver fiscal discipline.

Mr. Ortiz shows how some state politicians already seem to realize higher taxes won’t be an easy option anymore.

New Jersey’s Gov.-elect Phil Murphy campaigned on a promise to impose a “millionaires’ tax.” But the Democratic president of the state Senate, Steve Sweeney, said in November that New Jersey needs to “hit the pause button” because “we can’t afford to lose thousands of people.” His next words could have come from a Republican: “You know, 1% of the people in the state of New Jersey pay about 42% of its tax base. And you know, they can leave.” New York City Mayor Bill de Blasio may need to rethink his proposed millionaires’ tax. George Sweeting, deputy director of the city’s Independent Budget Office, told Politico in November that eliminating the SALT deduction would “make it a tougher challenge if the city or the state wanted to raise their taxes.” New York state Comptroller Thomas DiNapoli added: “If you lose that deductibility, I worry about more middle-class families leaving.” …the limit on the SALT deduction is a gift that will keep on giving. In the years to come it will spur additional tax cuts and forestall tax increases at the state and local level.

Though the politicians from high-tax states are definitely whining about the new system.

The Governor of New Jersey is even fantasizing about a lawsuit to reverse reform.

Murphy, a Democrat, said he has spoken with leadership in New York and California and with legal scholars about doing “whatever it takes”… Asked if that included a joint lawsuit with other states, Murphy said “emphatically, yes.” …Murphy said. “This is a complete and utter outrage. And I don’t know how else to say it. We ain’t gonna stand for it.”

Here’s a story from New York Times that warmed my heart last month.

…while Mr. Cuomo and his counterparts from California and New Jersey seemed dead-certain about the tax bill’s intent — Mr. Brown called it “evil in the extreme” — there were still an array of questions about how states would respond. None of the three Democrats offered concrete plans on what action their states might take.

They haven’t offered any concrete plans because the only sensible policy – lower tax rates and streamlined government – is anathema to politicians who like buying votes with other people’s money.

California will be hard-hit, but a columnist for the L.A. Times correctly observes tax reform will serve as a much-need wake-up call for state lawmakers.

…let’s be intellectually honest. There’s no credible justification for the federal government subsidizing California’s highest-in-the-nation state income tax — or, for that matter, any local levy like the property tax. Why should federal tax money from people in other states be spent on partially rebating Californians for their state and local tax payments? Some of those states don’t even have their own income tax, including Nevada and Washington. Neither do Texas and Florida. …federal subsidies just encourage the high-tax states to rake in more money and spend it. And they numb the states’ taxpayers. …Republican state Sen. Jeff Stone of Temecula put it this way after Trump unveiled his proposal last week: “For years, the Democrats who raise our taxes in California have said, ‘Don’t worry. The increase won’t matter all that much because tax increases are deductible.’” Trump’s plan, Stone continued, “seems to finally force states to be transparent about how much they actually tax their own residents.”

He also makes a very wise point about the built-in instability of California’s class-warfare system – similar to a point I made years ago.

Our archaic system is way too volatile. The nonpartisan Legislative Analyst’s Office reported last week that income tax revenue is five times as volatile as personal income itself. The “unpredictable revenue swings complicate budgetary planning and contributed to the state’s boom-and-bust budgeting of the 2000s,” the analyst wrote. During the recession in 2008, for example, a 3.7% dip in the California economy resulted in a 23% nosedive in state revenue. The revenue stream has become unreliable because it depends too heavily on high-income earners, especially their capital gains. During an economic downturn, capital gains go bust and revenue slows to a trickle. In 2015, the top 1% of California earners paid about 48% of the total state income tax while drawing 24% of the taxable income.

Let’s close with some sage analysis from Deroy Murdock.

“Taxes should hurt,” Ronald Reagan once said. He referred to withholding taxes, which empower politicians to siphon workers’ money stealthily, before it reaches their paychecks. Writing the IRS a check each month, like covering the rent, would help taxpayers feel the public sector’s true cost. This would boost demand for tax relief and fuel scrutiny of big government. Like withholding taxes, SALT keeps high state-and-local taxes from hurting. In that sense, SALT is the opiate of the overtaxed masses. The heavy levies that liberal Democrats (and, inexcusably, some statist Republicans) impose from New York’s city hall to statehouses in Albany, Trenton, and Sacramento lack their full sting, since SALT soothes their pain. Just wait: Once social-justice warriors from Malibu to Manhattan feel the entire weight of their Democrat overlords’ yokes around their necks, they will squeal. Some will join the stampede to income-tax-free states, including Texas and Florida. …A conservative, the saying goes, is a liberal who has been mugged by reality. Dumping SALT into the Potomac should inspire a similar epiphany among the Democratic coastal elite.

He’s right. This reform could cause a political shake-up in blue states.

P.S. Since I started this column with some observations about the political consequences of Obamacare, this is a good time to mention some recent academic research about the impact of that law on the 2016 race.

We combine administrative records from the federal health care exchange with aggregate- and individual-level data on vote choice in the 2016 election. We show that personal experiences with the Affordable Care Act informed voting behavior and that these effects could have altered the election outcome in pivotal states… We also offer evidence that consumers purchasing coverage through the exchange were sensitive to premium price hikes publicized shortly before the election… Placebo tests using survey responses collected before the premium information became public suggest that these relationships are indeed causal.

Wow. Obamacare there’s a strong case that Obamacare delivered the House to the GOP, the Senate to the GOP, and also the White House to the GOP. Hopefully the Democrats will be less likely to do something really bad or really crazy the next time they hold power.

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Time for a confession. My left-wing friends are correct. I’m an idiot.

Why?

Because I’m an anti-tax libertarian, yet I keep writing favorably about a provision that will raise my taxes. I’m talking specifically about the provision, currently in both the House and Senate tax plans, to eliminate the deduction for state and local income taxes (and maybe also property taxes, though the House proposal will retain deductibility for the first $10,000).

I think this distortion in the tax code is very bad policy and I hope the loophole is entirely eliminated (including the property tax deduction).

But as I look at all the provisions in both bills and speculate about the contours of a final agreement, it’s highly likely that the net result will be a tax hike on one of my favorite people – me!

Sigh. I’ve joked in the past that “it ain’t easy being libertarian,” but it will definitely hurt to put my money where my mouth is (and it reminded me why GOPers should have made tax reform a tax cut by including some spending restraint).

That being said, let’s remind ourselves why the deduction is a bad idea.

Citing the self-destructive example of a recent tax hike in Illinois, Andrew Wilford of the National Taxpayers Union points out that the deduction enables and encourages state and local politicians to impose higher taxes.

…eliminating SALT would…remove this incentive for local governments to overtax its citizens. … this incentive to hike taxes can prove significant enough to drive state policy. In Illinois, residents were forced to bear the burden of a 32 percent hike on their taxes because of the state’s unwillingness to tackle its growing pension funding problem. Tax increases did not solve this underlying spending problem, but it was politically expedient— in part because state lawmakers knew that the federal government would pick up part of the tab.

It also violates my ethical-bleeding-heart rule, as Brian Riedl explains in the New York Post.

Wealthy families are four times more likely to utilize SALT than other families. Only 24 million of 125 million tax filers earning under $100,000 take the deduction, typically lowering their taxes by $1,000. By contrast, 20 million of the 25 million filers earning over $100,000 take the deduction… In fact, half the savings accrue to the richest 5 percent of taxpayers — and in New York, half of the SALT savings go to families making over $500,000.

But I don’t want today’s column to fixate on the policy argument.

Instead, let’s look at whether voting to get rid of the deduction is electoral suicide for Republicans from high-tax states such as New York and California.

Looking at the situation in the Golden State, that’s certainly the argument from the folks at Vox.

Just three of the 14 California House Republicans went against leadership… Republicans in California clearly ran on cutting taxes — but this tax bill could raise taxes on their constituents. …it also sets up their constituents for more risk. Cutting the state and local tax deduction puts undue burden on the state’s budget… “At this point it looks like California Republicans are eager to lose their seats in 2018,” Tyler Law, a spokesperson for the Democratic Congressional Campaign Committee, said.

Though Kimberly Strassel of the Wall Street Journal has a more upbeat (if you’re a Republican) assessment. She starts by explaining how California GOPers were targeted.

The House GOP passed its tax-reform bill on Thursday, and special medals of valor go to the 11 of 14 California Republicans who voted in support. The lobbyist brigade had joined with Democrats to target the Golden State delegation, seeing it as their best shot at peeling off enough Republicans to kill the bill. The assault was brutal, dishonest and all-out. …Gov. Jerry Brown unleashed on state Republicans, calling them “sheep” for supporting an end to most state and local tax, or SALT, deductions, and sending them letters deploring the tax hit on residents of high-tax California. Minority Leader Nancy Pelosi accused them of “looting” the state. Her Senate counterpart, New York’s Chuck Schumer, warned of “political fallout” that would be “catastrophic.”

They fought back by arguing that the Democrats are the high-tax party.

What proved most effective, however, was the state Republicans’ willingness to go on offense and throw SALT in Gov. Brown’s face. California has the heaviest tax burden in the country and only just implemented a punishing new 12-cent-a-gallon-increase in its gasoline tax. Mr. McCarthy used the occasion to release a video pouncing on that hike and noting that “if Gov. Brown is worried about the tax burden, let’s make cutting [taxes] a federal and state project.” Other state Republicans ran with that message, even more bluntly. “Why punish the rest of the nation because California is stupid?” asked Rep. Duncan Hunter in a local TV interview. Even Rep. Darrell Issa, who voted “no” on Thursday (along with Dana Rohrabacher and Tom McClintock ), zapped a letter back to Gov. Brown, noting that if SALT had become a big issue, it was “a direct result of the tremendous weight that your misguided policies have put on California taxpayers.”

At the risk of sounding like a mealy-mouthed Washington apparatchik, I’m going to agree with both Vox and the Wall Street Journal.

The bottom line is that voting for tax reform probably does endanger GOP lawmakers from high-tax states, which is the message that the leftists at Vox are peddling in hopes of preserving the awful status quo.

But I want to close with the observation that enacting tax reform will improve the electoral outlook for blue-state Republicans even if it’s not necessarily good for current GOP incumbents.

That’s because voters in high-tax states will be much more likely to resist bad state tax policy if there’s no federal deduction to mitigate the burden.

And that means politicians in blue states will be under even greater pressure to lower tax rates rather than increase tax rates. If they don’t do the right thing, more and more taxpayers will escape, as the Wall Street Journal opines.

The liberal tax model is to fleece the rich to finance spending on entitlements and government programs that invariably grow faster than the economy and revenues. IRS data on tax migration show this model is now breaking down in progressive states as the affluent run for cover and the middle class is left paying the bills. Between 2012 and 2015 (the most recent data), a net $8.5 billion in adjusted gross income left New Jersey while $6.2 billion poured out of Connecticut—4% of the latter state’s total income. Illinois lost $13.6 billion. During that period, Florida with no income tax gained $39.3 billion in AGI. …As these state laboratories of Democratic governance show, dunning the rich ultimately hurts people of all incomes by repressing the growth needed to create jobs, boost wages and raise government revenues that fund public services. If the Republican House and Senate tax-reform bills follow through with eliminating all or part of the state and local tax deduction, progressive states will have an even harder time hiding the damage. They should be the next candidates for reform.

Indeed, the mere prospect of tax reform already is causing statists to rethink their approach.

Even in New Jersey.

The Republican tax reform…already it’s having a political impact in at least one high-tax, ill-governed state. Democrat Steve Sweeney, president of the New Jersey Senate, said last week that the GOP decision to eliminate the state and local tax deduction could throw a new tax increase on millionaires into doubt. …Excellent news. Making politicians in Trenton, Albany, Sacramento and Springfield nervous about raising taxes is one desirable outcome of tax reform. These politicians have been passing the burden of their tax-and-spend policies onto taxpayers in other states via the state and local deduction. If that goes away, Democrats will have to rethink their policies lest they drive from their states the affluent taxpayers who finance most of state government. …Here’s a radical idea: Cut taxes and make New Jersey more desirable for people to work and invest. Tax reform in Washington could also spur reform in the states.

If tax reform happens and the deduction for state and local taxes is eliminated, the left’s class-warfare agenda will become much less appealing – and much harder to implement.

And in that kind of environment, it should be much easier for Republican politicians to win votes.

For all intents and purposes, tax reform for Republicans could be like Obamacare for Democrats.

Allow me to explain. When Obamacare was enacted, I worried that it might be a long-term political victory for the left even though it was very painful for Democrats in the short run. Simply stated, voters in the future (and we’re now entering that future) would become more reluctant to vote for Republicans once they were hooked on the heroin of government dependency.

Federal tax reform would have a similar impact, except the GOP will be the long-run winners. Voters in high-tax states will be more reluctant to vote for Democrats once a $100 tax hike (for instance) actually costs $100. Which is why genuine tax reform is a win-win situation.

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I don’t like the income tax that’s been imposed by our overlords in Washington. Indeed, I’ve speculated whether October 3 is the worst day of the year because that’s the date when the Revenue Act of 1913 was signed into law.

I don’t like state income taxes, either.

And, as discussed in this interview about Seattle from last week, I’m also not a fan of local income taxes.

From an economic perspective, I think a local income tax would be suicidally foolish for Seattle. Simply stated, this levy will drive some well-heeled people to live and work outside the city’s borders. And when revenues fall short of projections, Seattle politicians likely will compensate by increasing the tax rate and also extending the tax so it is imposed on those with more modest incomes. And that will drive more people out of the city, which will lead to an even higher rate that hits even more people.

Lather, rinse, repeat.

Though I pointed out that this grim outcome may be averted if the courts rule that Seattle doesn’t have the legal authority to impose an income tax.

But I also explained in the discussion that a genuine belief in federalism means that you should support the right of state and local governments to impose bad policy. I criticize states such as California and Illinois when they expand the burden of government. And I criticize local entities such as Hartford, Connecticut, and Fairfax County, Virginia, when they expand the burden of government.

But I don’t think that Washington should seek to prohibit bad policy. If some sub-national governments want to torment their citizens with excessive government, so be it.

There are limits, however, to this bad version of federalism. State and local governments should not be allowed to impose laws outside their borders. That’s why I’m opposed to the so-called Marketplace Fairness Act. And they shouldn’t seek federal handouts to subsidize bad policy, such as John Kasich’s whining for more Medicaid funding.

Moreover, a state or local government can’t trample basic constitutional freedoms, for instance. If Seattle goes overboard with its anti-gun policies, federal courts presumably (hopefully!) would strike down those infringements against the 2nd Amendment. Likewise, the same thing also would (should) happen if the local government tried to hinder free speech. Or discriminate on the basis on race.

By the way, it’s worth pointing out that these are all examples of the Constitution’s anti-majoritarianism (which helps to explain why the attempted smear of James Buchanan was so misguided).

The bottom line is that I generally support the rights of state and local governments to impose bad policy, so long as they respect constitutional freedoms, don’t impose extra-territorial laws, and don’t ask for handouts.

And I closed the above interview by saying it sometimes helps to have bad examples so the rest of the nation knows what to avoid. Greece and France play that role for the industrialized world. Venezuela stands alone as a symbol of failed statism in developing world. Places like Connecticut and New Jersey are poster children for failed state policy. And now Seattle can join Detroit as a case study of what not to do at the local level.

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Since I’m a fiscal wonk, it’s sometimes tempting to overstate the importance of good tax policy. So I’m always reminding myself that all sorts of other factors matter for a jurisdiction’s competitiveness and success, including regulation and government effectiveness (and, for national governments, policies such as trade and monetary policy).

That being said, taxes are very important. In some cases, you could almost say tax policy is suicidally important.

Here’s some of what the Wall Street Journal reported earlier this week.

Hartford, Connecticut…is edging closer to joining a small club of American municipalities: those that have sought bankruptcy protection. …The city must pay nearly $180 million on debt service, health care, pensions and other fixed costs in the coming fiscal year beginning July 1. That is more than half of the city’s budget, excluding education.

This sounds like a run-of-the-mill story about a city (like Detroit) that has spent itself into fiscal trouble, mostly because of a bloated and over-compensated bureaucracy.

But tax policy is the story behind the story. Here’s the headline that caught my attention.

As I’ve written before, this is the “Fox Butterfield” version of financial reporting (he’s the New York Times reporter who was widely mocked for repeatedly expressing puzzlement that crime rates fell when crooks were locked up).

Simply stated, it would be more accurate to state (just as it was in Detroit) that the city is in trouble “because of” high property taxes, not “despite” those onerous levies.

Imagine being a homeowner or business with this type of burden.

Since 2000, Hartford has increased its property-tax, or millage, rate seven times. The rate is now more than 50% higher than it was in 1998. At the current level, a Hartford resident who owns a home with an assessed value of $300,000 currently pays an annual tax bill of $22,287, at rate of 7.43%. A West Hartford homeowner with a similar house pays $11,853 at a rate of 3.95%.

Wow, you get to pay twice as much tax on your home simply for the “privilege” of subsidizing an inefficient and incompetent city bureaucracy (not to mention the problem of excessive state taxes).

No wonder some major taxpayers are escaping, leaving the city (and state) even more vulnerable.

…the impending departure of one of its biggest employers, Aetna Inc. …Aetna and the other four biggest taxpayers in the city contribute nearly one-fifth of the city’s $280 million of property-tax revenue. Property-tax receipts make up nearly half of the city’s general-fund revenues.

To make matters worse, the city exempts a lot of property owners, which is one of the reasons for higher tax burdens on those that don’t get favored treatment.

Half of the city’s properties are excluded from paying taxes because they are government entities, hospitals and universities. …In Baltimore, about 32% of the property is tax exempt, and in Philadelphia it’s 27%.

Excuse me if I don’t shed a tear of sympathy for Hartford’s politicians. The city is in dire straits because of a perverse combination of excessive taxation and special tax favors. Combined, of course, with lavish remuneration for a gilded bureaucracy.

That’s the worst of all worlds. It’s Detroit all over again. Or you could call it the local-government version of Illinois.

Needless to say, I don’t want my tax dollars involved in any sort of bailout.

P.S. Though it would be amusing if Hartford politicians thought this bailout application form was real rather than satire.

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The federal income tax is corrosive and destructive. It’s almost as if a group of malicious people decided to deliberately design a system that imposes maximum damage while also allowing the most corruption.

The economic damage is not only the result of high tax rates and pervasive double taxation, but also because of loopholes that exist to bribe people into making economically unwise decisions.

These include itemized deductions for mortgages and charitable contributions, as well as the fringe benefits exclusion and the exemption for municipal bond interest. And there are many other corrupt favors sprinkled through a metastasizing tax code.

But there’s a strong case to be made that the worst loophole is the deduction for state and local taxes. Why? For the simple reason that it encourages, enables, and subsidizes bad policy.

Here’s how it works. State and local lawmakers can increase income taxes or property taxes and be partially insulated from political blowback because their taxpayers can deduct those taxes on their federal return.

And it’s a back-door way of giving a special break to upper-income taxpayers because the deduction is more valuable to people in higher tax brackets.

Let’s look at an example that’s currently in the news. Democrats in the Illinois state legislature want a big increase in the personal income tax. If they succeed and boost taxes by an average of $1000, high-income taxpayers who take advantage of the deduction may only suffer a loss of as little as $600 since their federal tax bill may fall by almost $400.

For politicians, this is an ideal racket. They can promise various interest groups $1000 of goodies while reducing take-home pay by a lesser amount.

Let’s review some recent commentary on this topic.

The Wall Street Journal opined on the issue last weekend.

Chuck Schumer aspires to raise taxes on every rich person in America, save one protected class: coastal progressives. …Like many other Democrats, he’s apoplectic about a plan to end the state and local tax deduction. …One goal of tax reform is to reduce unproductive tax loopholes, and ending the state and local deduction would generate revenue to finance lower rates: The deduction is worth about $100 billion a year… About 88% of the benefits in 2014 flowed to taxpayers who earn more than $100,000, while 1% went to those who earn less than $50,000. California alone reaps nearly 20% of the benefit…and a mere six states get more than half. …The folks underwriting this windfall are in Alaska, South Dakota, Wyoming and other places without a state income tax. …Eliminating the deduction would be a powerful incentive for Governors to cut state taxes on residents who are suddenly exposed to their full liability. …killing the state and local deduction would pay a double dividend: The first is creating a more equitable tax code with a broader base and lower rates. The second is spurring reform in states that are long overdue for a better tax climate.

Writing earlier this year for National Review, Kevin Williamson was characteristically blunt.

It’s time for…blue-state…tax increases that would fall most heavily on upper-income Americans in high-tax progressive states such as California and New York. …eliminate the deduction for state income taxes, a provision that takes some of the sting out of living in a high-tax jurisdiction such as New York City (which has both state and local income taxes) or California, home to the nation’s highest state-tax burden. Do not hold your breath waiting for the inequality warriors to congratulate Republicans for proposing these significant tax increases on the rich. …allowing for the deduction of state taxes against federal tax liabilities creates a subsidy and an incentive for higher state taxes. California in essence is able to capture money that would be federal revenue and use it for its own ends, an option that is not practically available to low-tax (and no-income-tax) states such as Nevada and Florida. It makes sense to allow the states to compete on taxes and services, but the federal tax code biases that competition in favor of high-tax jurisdictions.

And Bob McManus adds his two cents in an article for the Manhattan Institute’s City Journal.

Voters in all heavy-tax, high-spending states have no one to blame for their situation save themselves. At a minimum, it seems clear that deductibility—by softening the impact of federal taxation—encourages outsize state and local spending. States that take advantage of deductibility—mostly in the Northeast and on the West Coast—are in effect subsidized by states that have kept tighter control on their spending. …New York’s top-of-the-charts spending puts the state at the pinnacle…with New Yorkers paying a national high of 12.7 percent of income in state and local levies. Local property taxes in New York are astronomical and not coming down any time soon. …deductibility has powerful friends—among them the public-employee unions… New York and the nation would benefit if deductibility was jettisoned. …end the incentive for the tax-and-spend practices that have been so economically corrosive to big-spending Blue states.

Let’s close with the should-be-obvious point that the goal isn’t to repeal the state and local tax deduction in order to give politicians in Washington more money to spend. Instead, every penny of that revenue should be used to finance pro-growth tax reforms.

That creates a win-win situation of better tax policy in Washington, while also creating pressure for better tax policy at the state and local level.

For what it’s worth, both Trump and House Republicans are proposing to get rid of the deduction.

P.S. I mentioned at the start of this column that it would not be unreasonable to think that the tax code was deliberately designed to maximize economic damage. But even a curmudgeon like me doesn’t think that’s actually the case. Instead, our awful tax system is the result of 104 years of “public choice.”

P.P.S. Itemized deductions and other loopholes create distortions by allowing people to understate their income if they engage in approved behaviors. There are also provisions of the tax code – such as depreciation and worldwide taxation – that force taxpayers to overstate their income.

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While most of my disdain is reserved for the federal government in Washington, I periodically share horror stories about foreign governments and state governments.

And today we’re going to add to our collection of bone-headed policies by local governments.

In some past cases, the examples captured systemic flaws. In other cases, we looked at specific bad examples. Today, we have an interesting mix.

We’ll start with an example of bad policy that is easy to mock. It focuses on the predatory interventions by a town, as illustrated by this story from Alabama.

Teens in Gardendale are in for a rude awakening this summer when it comes to cutting grass. According to the city’s ordinance, you must have a business license. Teenagers have been threatened by officials…to show their city issued license before cutting a person’s lawn for extra summer cash. Cutting grass is often one of the first jobs many have in the summer. But a business license in Gardendale costs $110. And for a job, just for a couple of months, that can be a bit extreme.

What’s really disappointing about this story is that adults are ratting out the teenagers.

I can understand that they’re irked that they pay the license fee while the kids don’t, but that’s still wrong.

“One of the men that cuts several yards made a remark to one of our neighbors, ‘that if he saw her cutting grass again that he was going to call Gardendale because she didn’t have a business license,” said Campbell. …Mayor Stan Hogeland said when operating a business for pay within the city limits, you must have a business license.

Hey, Mr. Mayor, I have a better idea. Get rid of licensing rules and give freedom a try.

If your residents want to freely contract with each other, let them. Whether they’re kids or adults.

Makes me wonder if Gardendale is one of those places that puts the boot of government on the necks of kids who set up – gasp! – unlicensed lemonade stands?

If so, I imagine Daniela Earnest and Julie Murphy can offer the mayor some useful advice.

Now let’s shift to an example of local government abuse that is more troubling. And apparently more systemic.

A column in the Washington Post reveals that local governments try to make families pay if their kids wind up in the legal system, even if they’re ultimately declared not guilty of any offense.

In dozens of one-on-one meetings every week, a lawyer retained by the city of Philadelphia summons parents whose children have just been jailed, pulls out his calculator and hands them more bad news: a bill for their kids’ incarceration. Even if a child is later proved innocent, the parents still must pay a nightly rate for the detention. Bills run up to $1,000 a month… The lawyer, Steven Kaplan…is paid up to $316,000 a year in salary and bonuses, more than any city employee, including the mayor.

I haven’t given any thought to whether families should cough up money if kids are found guilty and then incarcerated.

But I find it to be outrageous that bills are sent to families when the kids are found to be not guilty.

And let’s be honest. Such a policy is not about criminal justice. It’s about figuring out new ways of pillaging people to finance bureaucracy.

To add insult to injury, most of the families are poor, so it’s very difficult to collect revenue. Indeed, very little money is collected after paying the lawyer.

Because these parents are so often from poor communities, even the most aggressive efforts to bill them seldom bring in meaningful revenue. Philadelphia netted $551,261 from parents of delinquent children in fiscal 2016.

And when you look at the consequences for poor families, it’s hard to think this is a good policy. Especially if the kid isn’t convicted of any crime!

When parents fail to pay on time, the state can send collection agencies after them, tack on interest, garnish 50 percent of their wages, seize their bank accounts, intercept their tax refunds, suspend their driver’s licenses or charge them with contempt of court.

Here’s an example from the west coast.

When Mariana Cuevas’s son was released from a California jail, after being locked up in a juvenile hall for more than 300 days for a homicide he did not commit, the boy’s public defender, Jeffrey Landau, thought his work was done. The case had been dismissed; his client was free. But at a celebratory dinner afterward, Cuevas, a Bay Area home cleaner, pulled out a plastic bag full of bills and showed Landau that the state had tried to collect nearly $10,000 for her child’s imprisonment. …In fiscal 2014-2015, Alameda County, which contains Oakland, spent $250,938 collecting $419,830 from parents. An internal county report called that “little financial gain.”

This is astounding. Trying to pillage a poor family for $10,000 when the kid didn’t commit the crime. If you care about decency and justice, this may even be worse than civil asset forfeiture.

Let’s close with another example of easy-to-mock local government.

The New York Post reports that the city is largely incapable of getting rid of incompetent teachers. So they’re paid to sit in a room and do nothing.

In one of the “reassignment centers,” 16 exiled educators sit in a city Department of Education building in Long Island City, Queens, including a dozen packed into one room — where they do virtually no work. They listen to music, do crossword puzzles, chat — and as this exclusive Post photo reveals, doze on the taxpayer’s dime. The rules forbid beach chairs and air mattresses, but not nap time. The teacher sprawled on the floor, pulled a wool hat over his eyes to shut out the fluorescent lights and slept. Others prop up two chairs to recline or just lay their heads on the table. …the city denies the existence of the derided holding pens. “There are no more rubber rooms,” DOE officials told The Post last week, saying reassigned staffers are given “administrative duties.” …The DOE refused to say how many removed teachers and other tenured staffers remain in limbo, but sources estimate 200 to 400 get paid while awaiting disciplinary hearings. Their salaries total $15 million to $20 million a year. …They mainly just kill time to get through a six-hour, 20-minute day. “I’m so exhausted from being in this place doing nothing,” one said. Several teachers on the payroll have been benched for up to five years due to a stunning bureaucratic breakdown.

Yes, this is bureaucratic breakdown.

But if you really want to understand the story behind the story, the real problem is that the unions representing government employee unions give a lot of money to politicians. Those politicians then turn around and “negotiate” contracts that provide excessive pay to regular bureaucrats and absurd protections to bad bureaucrats.

In this case, bad teachers are removed from the classroom, but it’s very difficult to fire them. So they get paid to do nothing.

P.S. Of course, that reminds me of the standard joke that most bureaucrats get paid to do nothing. There’s even a video version of that joke.

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I wrote just yesterday that it’s tough to be a libertarian because “public choice” means never-ending pressure for bigger government.

But the good part of working in public policy as a libertarian is that I never lack for topics. Simply stated, governments do so many foolish things (not just in Washington, but also overseas, as well as state governments and local governments) that I have a target-rich environment for analysis and commentary.

But sometimes there’s a personal motivation. I’m a resident of Fairfax County in Virginia, and my profligate local government levies a very onerous property tax on my house.

And what do I get in exchange? The lion’s share of the county budget goes to government schools, but that doesn’t benefit me since I found those institutions inadequate and put my kids in private schools.

The other major line item in the budget is police and fire protection. I’ve been fortunate to never need those services, but I recognize that they have value. But this still leaves the question of whether I’m overpaying or underpaying for the theoretical benefits I’m receiving.

If this story from the Washington Post is any indication, it’s the former rather than the latter.

One Fairfax County firefighter tripled his salary to more than $270,000 with overtime pay. A county police officer took home $175,000… A fire captain pocketed $163,000 in additional compensation, more than many of his colleagues make in a year. The eye-popping figures have prompted Fairfax County supervisors to review overtime pay and other compensation for employees as the county faces a budget squeeze. …more than 1,700 county employees who are not department heads earned more than $100,000 in 2016, according to county figures.

Needless to say, the unions representing these bureaucrats pushed back.

Public safety unions and officials strongly pushed back against the idea that overtime pay might be excessive, saying that some employees must work extra hours because of staffing shortages… Some were also rankled because many public safety employees have endured pay freezes in recent years and earn far less than many residents in one of the nation’s most expensive counties. “They are complaining about guys who are working overtime trying to make the median income for the jurisdiction,” said Joseph Woloszyn, president of the Fairfax County chapter of the Police Benevolent Association.

It’s certainly true that Fairfax is a rich county, driven in large part by the overpaid federal workforce, along with the various contractors, lobbyists, cronyists, and other insiders who have their snouts comfortably buried in the federal trough.

Given how all this unearned wealth distorts the local labor market, I have no problem with the idea that cops and firefighters presumably need to be paid more than the national average. After all, employers should pay what’s necessary to attract a sufficient number of qualified individuals to fill appropriate jobs.

This doesn’t mean, however, that 1,700 bureaucrats should be getting six-figure salaries. Or that police and fire departments are the right size.

Though I admit that this excerpt makes me wonder.

…the Fairfax County fire chief…said his department has been dealing with a chronic shortage of firefighters. Currently, he said, the department has 56 vacancies, forcing some to work shifts as long as 48 hours or be recalled to work each day.

In any event, I should count my lucky stars that I don’t live in Orange County, California, where the average firefighter is obscenely overpaid.

The bottom line is that firefighters and cops do real jobs and those jobs involve some danger. But that doesn’t mean they should be over-compensated.

P.S. And if you want good nationwide data on firefighters, here are some jaw-dropping numbers.

…vehicle fires declined 64 percent from 1980 to 2013. Building fires fell 54 percent during that time. When they break out, sprinkler systems almost always extinguish the flames before firefighters can turn on a hose. …as the number of fires has dropped, the ranks of firefighters have continued to grow — significantly. There are half as many fires as there were 30 years ago, but about 50 percent more people are paid to fight them. …Firefighters responded to 487,500 structure fires across the United States in 2013, which means each of the nation’s 30,000 fire departments saw just one every 22 days, on average. And yet, taxpayers are paying more people to staff these departments 24-7. As a result, the amount of money shelled out for local fire services more than doubled from 1987 to 2011, to $44.8 billion, accounting for inflation.

For what it’s worth, I very much suspect that the numbers in Fairfax County would match the nationwide data.

So it’s likely that firefighters (and cops) in Fairfax are overpaid. But it’s even more likely that there are too many of them given the possible dangers.

P.P.S. If you think libertarians are doctrinaire and impractical about firefighting, you’ll like this picture.

P.P.P.S. If you think firefighters are overpaid, you’ll like this video.

P.P.P.P.S. I don’t want to neglect police officers, so here’s some humor about a compassionate Pennsylvania cop and a Texas police exam. And here’s what to do if you need cops in a hurry.

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What word best describes the actions of government? Would it be greed? How about thuggery? Or cronyism?

Writing for Reason, Eric Boehm has a story showing that “all of the above” may be the right answer.

At first it seems like a story about government greed.

When Mats Järlström’s wife got snagged by one of Oregon’s red light cameras in 2013, he challenged the ticket by questioning the timing of the yellow lights at intersections where cameras had been installed. Since then, his research into red light cameras has earned him attention in local and national media—in 2014, he presented his evidence on an episode of “60 Minutes”…on how too-short yellow lights were making money for the state by putting the public’s safety at risk.

Three cheers for Mr. Järlström. Just like Jay Beeber, he’s fighting against local governments that put lives at risk by using red-light cameras as a revenue-raising scam.

But then it became a story about government thuggery.

…the Oregon State Board of Examiners for Engineering and Land Surveying…threatened him. Citing state laws that make it illegal to practice engineering without a license, the board told Järlström that even calling himself an “electronics engineer” and the use of the phrase “I am an engineer” in his letter were enough to “create violations.” Apparently the threats weren’t enough, because the board follow-up in January of this year by officially fining Järlström $500 for the supposed crime of “practicing engineering without being registered.”

Gasp, imagine the horror of having unregistered engineers roaming the state! Though one imagines that the government’s real goal is to punish Järlström for threatening its red-light revenue racket.

But if you continue reading the story, it’s also about cronyism. The Board apparently wants to stifle competition, even if it means trying to prevent people from making true statements.

Järlström is…arguing that it’s unconstitutional to prevent someone from doing math without the government’s permission. …The notion that it’s somehow illegal for Järlström to call himself an engineer is absurd. He has a degree in electrical engineering from Sweden… it’s not the first time the Oregon State Board of Examiners for Engineering and Land Surveying has been overly aggressive…the state board investigated Portland City Commissioner Dan Saltzman in 2014 for publishing a campaign pamphlet that mentioned Saltzman’s background as an “environmental engineer.” Saltzman has a bachelor’s degree in environmental and civil engineering from Cornell University, a master’s degree from MIT’s School of Civil Engineering, and is a membership of the American Society of Civil Engineers

In other words, this is yet another example of how politicians and special interests use “occupational licensing” as a scam.

The politicians get to impose “fees” in exchange for letting people practice a profession.

And the interest groups get to impose barriers that limit competition.

A win-win situation, at least if you’re not a taxpayer or consumer.

Or a poor person who wants to get a job.

Some of the examples of occupational licensing would be funny if it wasn’t for the fact that people are being denied the right to engage in voluntary exchange.

Such as barriers against people who want to help deaf people communicate.

If you want to help a deaf person communicate in Wisconsin, you’ll have to get permission from the state government first. Wisconsin is one of a handful of states to require a license for sign language interpreters, and the state also issues licenses for interior designers, bartenders, and dieticians despite no clear evidence that any of those professions constitute a risk to public health in other states without similar licensing rules. …It’s hard to imagine any health and safety benefits to mandatory licensing for sign language interpreters, which is one of eight licenses highlighted in a new report from Wisconsin Institute of Law and Liberty, a conservative group. …Since 1996, the number of licensed professions in the Badger State has grown from 90 to 166—an increase of 84 percent, according to the report. Licensing cost Wisconsin more than 30,000 jobs over the last 20 years and adds an additional $1.9 billion annually in consumer costs.

Or restricting the economic liberty of dog walkers.

…according to the Colorado government, people who watch pets for money are breaking the law unless if they can get licensed as a commercial kennel—a requirement that is costly and unrealistic for people working out of their homes, often as a side job. This is not simply a case of an outdated law failing to accommodate modern technology. There are more nefarious motives—those of special interests who want to protect their profits by keeping out new competition. …it is time to add “Big Kennel” to the list of special interests that support ridiculous occupational licensing schemes.

Or trying to deny rights, as in the case of horse masseuses.

…an Arizona state licensing board finally backed down from an expensive, unnecessary mandate that nearly forced three women to give up their careers as animal masseuses. …the Arizona State Veterinary Medical Examining Board said it would no longer require animal massage practitioners, who provide therapeutic services to dogs, horses, and other animals, to obtain a veterinary license. Obtaining that license requires years of post-graduate schooling, which can cost as much as $250,000. “All I want is the freedom to do my job, and I have that now,” Celeste Kelly, one of three plaintiffs in the lawsuit, said in a statement. …the state board tried to driver her out of business by threatening her with fines and jail time if she didn’t get a veterinary license.

The good news is that there’s a growing campaign to get rid of these disgusting restrictions of voluntary exchange.

The acting head of the Federal Trade Commission is getting involved. On the right side of the issue!

Maureen K. Ohlhausen, the new acting chair of the Federal Trade Commission, thinks it’s high time that the FTC start giving more than lip service to its traditional mandate of fostering economic liberty. And the first item in her crosshairs is the burgeoning growth in occupational licenses. Over the past several decades, licensing requirements have multiplied like rabbits, she noted. Only 5 percent of the workforce needed a license in 1950, but somewhere between one-quarter and one-third of all American workers need one today. …depending on where you live, you might need a license to be an auctioneer, interior designer, makeup artist, hair braider, potato shipper, massage therapist or manicurist. “The health and safety arguments about why these occupations need to be licensed range from dubious to ridiculous,” Ohlhausen said. “I challenge anyone to explain why the state has a legitimate interest in protecting the public from rogue interior designers carpet-bombing living rooms with ugly throw pillows.”

Hooray for Ms. Ohlhausen. She’s directing the FTC to do something productive, which is a nice change of pace for a bureaucracy that has been infamous in past years for absurd enforcement of counterproductive antitrust laws.

A column in the Wall Street Journal highlights Mississippi’s reforms.

State lawmakers in Mississippi are taking the need for reform to heart. Two weeks ago Gov. Phil Bryant signed into law H.B. 1425, which will significantly rein in licensing boards. …H.B. 1425 explicitly endorses competition and says that the state’s policy is to “use the least restrictive regulation necessary to protect consumers from present, significant and substantiated harms.” Under the law, the governor, the secretary of state, and the attorney general must review and approve all new regulations from professional licensing boards to ensure compliance with the new legal standard. This should be a model for other states. …Mississippi’s law…covers all licensing boards controlled by industry participants, spells out a pro-competition test, and requires new rules to be approved by elected officials accountable to voters. Mississippi has smartly targeted the core problem: Anticompetitive regulations harm the economy, slow job growth, and raise consumer prices.

Here’s some of the national data in the WSJ column.

Keep in mind, as you read these numbers, that poor people disproportionately suffer as a result of these regulatory barriers to work.

In the 1950s only about 1 in 20 American workers needed a license, but now roughly 1 in 4 do. This puts a real burden on the economy. A 2012 study by the Institute for Justice examined 102 low-income and middle-income occupations. The average license cost $209 and required nine months of training and one state exam. …Even the Obama administration saw the problem. A 2015 report from the White House said that licensing can “reduce employment opportunities and lower wages for excluded workers.” In 2011 three academic economists estimated that these barriers have result in 2.85 million fewer jobs nationwide, while costing consumers $203 billion a year thanks to decreased competition.

Professor Tyler Cowen explains in Time that licensing laws explain in part the worrisome decline in mobility in America.

Some of the decline in labor mobility may stem from…the growth of occupational licensure. While once only doctors and medical professionals required licenses to practice, now it is barbers, interior decorators, electricians, and yoga trainers. More and more of these licensing restrictions are added on, but few are ever taken away, in part because the already licensed established professionals lobby for the continuation of the restrictions. In such a world, it is harder to move into a new state and, without preparation and a good deal of investment, set up a new business in a licensed area.

Last but not least, we have a candidate for the Bureaucrat Hall of Fame. Elizabeth Nolan Brown explains for Reason that a paper pusher in Florida managed to use occupational licensing fees as a tool of self-enrichment.

In Palm Beach County, Florida, all topless dancers are required to register with county officials and obtain an Adult Entertainment Work Identification Card (AEIC), at the cost of $75 per year. The regulation is ridiculous for a lot of reasons, but at least applicants—many of whom are paid exclusively in cash—were able to pay the government-ID fee with cash, too, making things a little more convenient and a little less privacy-invading. But not anymore, thanks to the alleged actions of one sticky-fingered government employee. …Pedemy “diverted” at least $28,875 (and possibly an additional $3,305) from county coffers between October 2013 and mid-November 2016. The money came from both adult-entertainer fees—approximately 70 percent of which were paid in cash—and court-ordered payments intended for a crime Victims Services Fund.

At the end of the article, Ms. Brown looks at the bigger issue and asks what possible public purpose is being served by stripper licensing.

Demanding strippers be licensed in the first place is a problem… There’s no legitimate public-safety or consumer-protection element to the requirement—strip club patrons don’t care if the woman wriggling on their laps is properly permitted. Government officials have portrayed the measure as a means to stop human trafficking and the exploitation of minors, but that’s ludicrous; anyone willing to force someone else into sex or labor and circumvent much more serious rules with regard to age limits isn’t going to suddenly take pause over an occupational licensing rule they’ll have to skirt. The only ones truly affected are sex workers and adult-business owners. Not only does the regulation drive up their costs…, it gives Palm Beach regulators a database of anyone who’s ever taken their clothes off for money locally—leaving these records open to FOIA requests or hackers—and gives cops a pretense to check clubs at random to make sure there aren’t any unlicensed dancers. Those found to be dancing without a license can be arrested on a misdemeanor criminal charge.

Though I guess we shouldn’t be too surprised. If you peruse “Sex and Government,” you’ll find that politicians and bureaucrats like to stick their noses in all sorts of inappropriate places. Including the vital state interest of whether topless women should be allowed to cut hair without a license!

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If I had to pick my least-favorite tax loophole, the economist part of my brain would select the healthcare exclusion. After all, that special preference creates a destructive incentive for over-insurance and contributes (along with Medicare, Medicaid, Obamacare, etc) to the third-party payer crisis that is crippling America’s healthcare system.

But if I based my answer on the more visceral, instinctive portion of my brain, I would select the deduction for state and local taxes. As I’ve previously noted, that odious tax break enables higher taxes at the state and local level. Simply stated, greedy politicians in a state like California can boost tax rates and soothe anxious state taxpayers by telling them that they can use their higher payments to Sacramento as a deduction to reduce their payments to Washington.

What’s ironic about this loophole is that it’s basically a write-off for the rich. Only 30 percent of all taxpayers utilize the deduction for state and local taxes. But they’re not evenly distributed by income. Here’s a sobering table from a report by the Tax Foundation.

The beneficiaries also aren’t evenly distributed by geography.

Here’s a map from the Tax Foundation showing in dark blue that only a tiny part of the country benefits from this unfair loophole for high-income taxpayers.

As you can see from the map, the vast majority of the nation deducts less than $2,000 in state and local taxes.

But if you really want to see who benefits, don’t simply look at the dark blue sections. After all, most of those people would happily give up the state and local tax deduction in exchange for some of the other policies that are part of tax reform – particularly lower tax rates and less double taxation.

And I suspect that’s even true for the people who hugely benefit from the deduction. The biggest beneficiaries of this loophole are concentrated in a tiny handful of wealthy counties in New York, California, New Jersey, and Connecticut.

As you can see, they reap enormous advantages from the state and local tax deduction, though I suspect these same people also would benefit if tax rates were lowered and double taxation was reduced.

Regardless of who benefits and loses, there’s a more fundamental question. Should federal tax law be distorted to subsidize high tax burdens at the state and local level?

Kevin Williamson of National Review says no.

…the deduction of state taxes against federal tax liabilities creates a subsidy and an incentive for higher state taxes. California in essence is able to capture money that would be federal revenue and use it for its own ends, an option that is not practically available to low-tax (and no-income-tax) states such as Nevada and Florida. It makes sense to allow the states to compete on taxes and services, but the federal tax code biases that competition in favor of high-tax jurisdictions.

The Governor of New York, by contrast, argues that the tax code should subsidize his profligacy.

It would be “devastating on the state of New York, California, et cetera, if you didn’t allow the people of this state to deduct their state and local taxes,” Cuomo told reporters… State and local governments have been working to preserve the deduction, and they argue that doing away with the preference would hurt states and localities’ flexibility to make tax changes.

By the way, I noticed how the reporter displays bias. Instead of being honest and writing that that the loophole enables higher taxes, she writes that the loss of the preference “would hurt states and localities’ flexibility to make tax changes.”

Gee, anyone want to guess how that “flexibility” is displayed?

Though at least the reporter acknowledged that the deduction is primarily for rich people in blue states.

…the deduction…is viewed as disproportionately benefiting wealthy people. It also tends to be used in areas that lean Democratic.

And that’s confirmed by a 2016 news report from the Wall Street Journal.

Repealing the federal deduction for state and local taxes would make 23.6% of U.S. households pay an average of $2,348 more to the Internal Revenue Service for 2016. But those costs—almost $1.3 trillion over a decade—aren’t evenly spread… Ranked by the average potential tax increase, the top 13 states (including Washington, D.C.), as well as 16 of the top 17, voted twice for President Barack Obama. …And nearly one-third of the cost would be paid by residents of California and New York, two solidly Democratic states. …President Ronald Reagan tried repealing the deduction as part of the tax-code overhaul in 1986, but he was rebuffed by congressional Democrats and state officials. …Republicans argue that the break subsidizes high state taxes, because governors and legislators know they can raise income taxes on their citizens and have the federal government pick up part of the tab. …half the cost of repealing the deduction would be borne by households making $100,000 to $500,000, using a broad definition of income. Another 30% would be borne by households making more than $1 million. Under the GOP plans, residents of high-tax states wouldn’t necessarily pay more in federal taxes than they do now. They would benefit from tax-rate cuts.

Here’s one final image that underscores the unfairness of the deduction.

The Tax Policy Center has a report on the loophole for state and local taxes and they put together this chart showing that rich people are far more likely to take advantage of the deduction. And it’s worth much more for them than it is for lower-income Americans.

How much more? Well, more than 90 percent of taxpayers earning more than $1 million use the deduction and their average tax break is more than $260,000. By contrast, only a small fraction of taxpayers earning less than $50 thousand annually benefit from the deduction and they only get a tax break of about $3,800.

Yet leftists who complain about rich people manipulating the tax system usually defend this tax break.

It’s enough to make you think their real goal is bigger government.

I’ll close by calling attention to the mid-part of this interview. I shared it a couple of days ago as part of a big-picture discussion of Trump’s tax plan. But I specifically address the state and local tax deduction around 3:00 and 4:30 of the discussion.

P.S. In addition to the loophole that encourages higher taxes at the state and local level, there’s also a special tax preference that encourages higher spending at the state and local level. Sigh.

P.P.S. Now, perhaps, people will understand why I want to rip up the current system and replace it with a simple and fair flat tax.

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The real world is like a cold shower for our friends on the left. Everywhere they look, there is evidence that jurisdictions with free markets and small government outperform places with big welfare states and lots of intervention.

That’s true when comparing nations. And it’s also true when comparing states. That must be a source of endless frustration an disappointment for statists.

Speaking of disappointed statists, the real world has led to more bad news. The left-wing Mayor of Baltimore campaigned in favor of a $15 minimum wage, but then decided to veto legislation to impose that mandate. The Wall Street Journal opines on this development.

Mayor Catherine Pugh, a Democrat, has rejected a bill that would raise the city’s minimum wage to $15 an hour by 2022. She did so even though she had campaigned in favor of raising the minimum wage, which shows that economic reality can be a powerful educator. She explained her change of heart by noting that raising the rate above the $8.75 an hour minimum that prevails in the rest of Maryland would send jobs and tax revenue out of Baltimore to surrounding counties. The increase would also have raised the city’s payroll costs by $116 million over the next four years when she’s already coping with a deficit of $130 million in the education budget.

The key thing to notice is that the Mayor recognized that the real-world impact of bad legislation is that economic activity would shrink in the city and expand outside the city.

Writing for Reason, Eric Boehm also points out that the Mayor was constrained by the fact neighboring jurisdictions weren’t making the same mistake.

Pugh said the bill would not be in the best interest of Baltimore’s 76,000 unemployed workers and would drive businesses out of the city to the surrounding counties. …Indeed. Raising the minimum wage would not solve Baltimore’s economic troubles, and would likely only add to them. While support for a $15 minimum wage has become something of a litmus test for progressive politicians, the true test of any politician should be whether he or she is willing to set aside campaign trail rhetoric that flies in the face of economic reality. Signing the bill would have made progressive pols and activists happy—one Baltimore city councilman called Pugh’s decision “beyond disappointing” and a minimum wage activist group said it would remind voters of Pugh’s “broken promise”—but there’s no honor in following through on a promise to do more damage to an already struggling city’s economy. Pugh’s decision to veto a $15 minimum wage bill isn’t disappointing in the least. More politicians should learn from her example of valuing economic reality over populist rhetoric.

The Mayor’s veto is good news, though it remains to be seen whether city legislators will muster enough votes for an override.

Regardless of what happens, notice that the Mayor didn’t do the right thing because she believed in economic liberty and freedom of contract. She also didn’t do the right thing because she recognized that higher minimum wage mandates would lead to more joblessness.

Instead, she felt compelled to do the right thing because of jurisdictional competition. She was forced to acknowledge that bad policy in her city would explicitly backfire since economic activity is mobile. She had to admit that there are no magic boats.

And this underscores why federalism and decentralization are vital features of a good system. Governments are more likely to do bad things when the costs can be imposed on an entire nation (or, even better from their perspective, the entire world). But when bad policy is localized, it becomes very hard to disguise the costs of bad policy.

And, as today’s column illustrates, decentralization stopped the Mayor of Baltimore from a bad policy that would hurt poorly skilled workers. Just as federalism stopped Vermont politicians from imposing a destructive single-payer health system.

Let’s close by circling back to the minimum wage.

Writing in today’s Wall Street Journal, Andy Puzder makes a very timely point about automation.

Entry-level jobs matter—and you don’t have to take my word for it. In a speech last week on workforce development in low-income communities, Federal Reserve Chair Janet Yellen said that “it is crucial for younger workers to establish a solid connection to employment early in their work lives.” Unfortunately, government policies are destroying entry-level jobs by giving businesses an incentive to automate at an accelerated pace. In a survey released last month, the publication Nation’s Restaurant News asked 319 restaurant operators to name their biggest challenge for 2017. Nearly a quarter of them, 24%, said rising minimum wages. …The trend toward automation is particularly pronounced in areas where the local minimum wage is high.

Need more evidence?

By the way, even the normally left-leaning World Bank has research on the damaging impact of minimum wage mandates.

This paper uses a search-and-matching model to examine the effects of labor regulations that influence the cost of formal labor (notably minimum wages and payroll taxes) on labor market outcomes… The results indicate that these regulations, especially minimum wage policy, contribute to higher unemployment rates and constraint formalization…, especially for youth and women.

The research was about the labor market in Morocco, but the laws of supply and demand are universal.

As I’ve repeatedly stated, when you mandate that workers get paid more than what they’re worth, that’s a recipe for unemployment. And as the World Bank points out, it’s the more vulnerable members of society who pay the highest price.

In an ideal world, there should be no minimum wage mandates. But since that’s not an immediately practical goal, the best way of protecting low-skilled workers is to make sure Washington does not impose a nationwide increase. That won’t stop every state and local government from imposing destructive policies that cause unemployment, but the pressure of jurisdictional competition will

And when those bad policies do occur, that will simply give us more evidence against intervention. Which brings us back to where we started. The real world is a laboratory that shows statism is a bad idea.

P.S. In honor of Equal Pay Day, I can’t resist sharing this tidbit from the Washington Free Beacon.

Oh, you also won’t be surprised to learn that there was also a big pay gap in Hillary Clinton’s Senate office, as well as Obama’s White House. In reality, of course, the market punishes genuine discrimination and the pay gap is basically nonexistent when comparing workers with similar education, experience, and work patterns.

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I focus most of my ire on the federal government because bad policy from Washington is the biggest threat to our nation’s freedom and prosperity.

But we also get plenty of bad policy from other levels of government. I periodically focus on the foibles of states such as California, Illinois, and New York.

Today, though, let’s contemplate the inane policies of local government.

I’ve shared plenty of examples in the post, even to the point of putting together two contests (here and here) to pick the craziest action by a local government.

Politicians and bureaucrats in cities and towns do lots of big things that are bad, such as creating massive unfunded liabilities, providing crappy schools, turning law enforcement into back-door tax collectors, and trying to turn children into wusses.

And they do lots of small things that are bad, such as shutting down children’s lemonade stands, arresting people for saving rafters from drowning, fining people for rescuing children from savage dog attacks, leaving a dead body in a pool for two days, requiring permits to be a bum, poisoning water supplies, and paying bureaucrats not to work for 12 years.

Let’s augment these lists.

As reported by the Chicago Sun-Times, here’s an example of Chicago cronyism.

A real estate venture created by President Barack Obama’s onetime boss and a nephew of former Mayor Richard M. Daley squandered $68 million it was given to invest on behalf of pension plans for Chicago teachers, cops, city employees and transit workers… The five public pension funds haven’t made a dime on the investments they made nearly a decade ago… In fact, the financially troubled pension plans have lost most of the money they gave DV Urban… Though the pension funds lost out, DV Urban and its affiliated companies got about $9 million of the pension money for management fees.

Not that this should be a surprise. Being a Daley relative has commonly been a route to undeserved riches. And the same can be said about being an Obama crony.

Speaking of government greed, here are some excerpts from a very depressing Forbes column about shakedowns of poor people in Los Angeles.

An unbuckled seat belt caused Gloria Mata Alvarado to lose her driver’s license. When her husband was driving Mata to a doctor’s appointment for her gastritis in August 2012, her stomach began hurting. For relief, Mata adjusted her seat belt. But a police officer saw her take off the belt and cited her. …In court, Mata was ordered to pay $712, almost half the monthly income for her and her husband. (Both are on disability.) After telling the judge that she couldn’t pay the fine because of her limited means, a judge graciously reduced the fine—to $600. Unable to pay, her license was ultimately suspended. …In Los Angeles County alone, nearly 200,000 drivers had their licenses suspended simply because they failed to pay fines or appear in court. Statewide, from 2006 to 2013, the California Department of Motor Vehicles suspended more than 4.2 million driver’s licenses for those reasons… Throughout the Golden State, motorists are routinely nickeled-and-dimed in traffic court. Looking to raise revenue, state lawmakers slapped on additional fees and surcharges to the base fines for traffic tickets. For instance, the fine for failing to signal or running a stop sign is $35. But after all the surcharges and fees have been imposed, that fine soars to $238. Likewise, a $20 ticket for using a cell phone while driving balloons to $162, while a $100 traffic ticket for failing to carry proof of car insurance actually costs $490. Even worse, failing to pay can trigger an additional $300 “civil assessment” fee. So for many low-income Angelenos, a $20, $35 or $100 ticket can easily become $462, $538, and $815 respectively. …Notably, the courts themselves receive the collected civil assessment penalties, granting them a strong financial incentive to levy fees.

This sickens me. I hate the thought of poor people having their lives made worse because of venal and greedy government.

Especially when many (probably most) of the infractions are for things that don’t actually promote or protect public safety.

At the very least, the fines (and accompanying fees) should be slashed. Though I recognize this could result in more cities being like Detroit, which actually spends more administering parking tickets than it collects in revenue.

Maybe the answer is to levy fines based on income. If a lot of middle class and rich people suddenly experienced severe financial discomfort like the poor, that might generate enough pressure to shut down these revenue-raising scams.

Let’s now travel up the coast to enjoy a classic case of government incompetence from San Francisco.

last year, SFMTA officials excitedly unveiled the first of sixty brand new electric trolley buses purchased by the city of San Francisco. …these $1.1 million-a-piece vehicles were touted as a crucial investment in a public transit system still running buses 20-plus-years old. There’s just one problem: The 60-foot buses can’t go up San Francisco’s hills. In fact, the buses were never designed to handle our iconic hills — anything over a 10 percent grade wears down motor components. …the New Flyer buses also struggle to meet Muni’s internal acceleration standards on inclines of 5 to 10 percent — sometimes taking double the time during tests to accelerate to required speeds on the slight inclines.

But at least the buses are electric, which means they have zero emissions, so the nitwits in San Francisco can feel virtuous (though it does require them to pretend electricity magically appears from nowhere rather than emissions-producing power plants).

This story reminds me of the streetcar boondoggle in DC.

Now let’s go to another city famous for bad policy.

New York City has been padding its budget by ticketing cars that are parked legally.

As of late 2008, in NYC you can park in front of a sidewalk pedestrian ramp, as long as it’s not connected to a crosswalk. …I’ve got a pedestrian ramp leading to nowhere particular in the middle of my block in Brooklyn, and on occasion I have parked there.  Despite the fact that it is legal, I’ve been ticketed for parking there.  Though I get the tickets dismissed, it’s a waste of everybody’s time. And that got me wondering- How common is it for the police to give tickets to cars legally parked in front of pedestrian ramps?

What the reporter discovered is shocking.

…thanks to NYC’s Open Data portal, I was able to look at the most common parking spots in the City where cars were ticketed for blocking pedestrian ramps. …What I found when I dove into the data surprised me.  To start, I found the top address where this ticket were given: in front of 575 Ocean Avenue in Brooklyn, where over $48,000 in parking fines were issued in the last 2.5 years. … the spot, (or really spots since there are two ramps), are legal, since they are in the middle of the block, with no crosswalk.  $48,000 in tickets at a legally parked spot, and that is just the last 2.5 years.

The next top spots on the list had the same story to tell.

1705 Canton Avenue in Brooklyn, 273 Tickets, $45,045: Legal. 270-05 76 Avenue in Queens, 256 Tickets ($42,440) Legal. 143-49 Cherry Ave, Queens, 246 Tickets, ($40,590).  Legal. …I started to skip down the list.  This spot in Battery Park, ranked #16 on my list and the top spot in Manhattan, had 116 tickets ($19,140) and turned out to be legal. …I started to skip down the list faster and faster.  Take #1000 in my top list, at 1059 Virginia Avenue, where 8 tickets had been given ($1320).  It is a classic T intersection, meaning it’s legal. …I then selected 30 random spots that had received 5 or more tickets over the time period, and based on Google Maps found that all of them appeared to be legal parking spots!

The good news is that this exposé supposedly is forcing the city to stop this type of illegal ticket, so some stories actually do have a happy ending.

The next step hopefully will deal with extortionate fines for the horrible crime of…gasp…idling for more than three minutes!

But not all stories end well.

Here’s a jaw-dropping report of bureaucratic abuse from Sarasota, Florida.

At 90 years old, Marie Louise Sikorski has lived in her house on Webber Street in Sarasota for most of her life… The city found several code violations at her home. Since then, she’s racked up massive fines, which she says add up to about 150,000 dollars. As a widow receiving only 1,000 dollars a month…, she says there’s little she can do. …That’s when 30-year-old Miles came into her life. …As her neighbor, Miles heard about her situation and began to help with repairs around the home, sometimes putting in 16 hour days, all free of charge.

This sounds like a happy ending, right? A greedy local government hits a senior citizen who is too old to maintain her house with massive fines, but a wonderful neighbor steps in to save the day.

You’re probably thinking the local government then waived the absurd fines.

…the City is still not satisfied, and she says she’s still being charged 500 dollars a day. …Sarasota requires much of the work to be done by a “licensed” contractor, something Miles is not.

In other words, we get a sad end to the story because of a mix of two ugly things, routine government greed and oligopolistic government licensing restrictions. Reminds me of the disgusting actions of the local government in Montgomery, Alabama.

Last but not least, let’s close with a classic story of wasteful spending.

A local politician in Portland, Oregon, squandered tax money taking her staff to a luxury spa in Arizona for supposed diversity training.

Commissioner Amanda Fritz says she will close her office next week to take her six staff members to a retreat in Arizona to learn about diversity at a cost of roughly $40,000. Fritz and her staff, about half of whom are people of color, plan to spend at least 3 1/2 days in Tubac, Arizona, near the Mexican border, participating in a diversity workshop put on by a Portland-based company, White Men as Full Diversity Partners. …The program charges $4,750 per person for tuition, lodging, meals and site fees. Fritz’s office will also have to pay for the staffers’ flights to Arizona.

Though, to be fair, Commissioner Fritz is not the only Portland politician to rip off taxpayers for this type of scam.

Former Mayor Charlie Hales drew criticism for spending $56,000 to send 16 white, male city employees to a resort on Mt. Hood in 2014 for another workshop put on by the same organization. The City of Portland has spent more than $126,000 on programs and consulting from White Men as Full Diversity Partners since August 2014, according to city invoice records.

As you might expect, there are some sketchy connections between the city bureaucracy and the contractor.

Office of Neighborhood Involvement Director Amalia Alarcon Morris worked as a paid associate for the diversity organization more than a decade ago… The diversity company still lists Alarcon Morris as a consultant on its website.

By the way, I fully expect that a search of campaign finance records would reveal that the owners and managers of White Men as Full Diversity Partners have recycled some of the loot they’ve received into the campaigns of Portland politicians.

The politicians win with campaign contributions. The bureaucrats win with a free vacation. The contractor wins by getting a big check.

The only losers are…you guessed it…the taxpayers!

The moral of the story, as explained by Veronique de Rugy in a column for Reason, is that governments at all levels are venal and incompetent.

What do home Bible study classes, transgender bathrooms, lemonade stands, cat litter, and marijuana have in common? To the blind eye, not much—but in fact, they’re all things state and local governments are actively working to regulate. …it turns out local governments are frequently the worst offenders of all when it comes to petty tyranny. …Dozens of places, including Austin, Texas; Sacramento, California; and Thurston County, Washington, have banned supermarkets, convenience stores, and pharmacies from providing customers with free plastic bags. “Many cities restrict the economic freedom of their residents and potential migrants through minimum wage laws, business licensing, rent control, and zoning restrictions,” Mercatus Center state and local policy expert Adam Millsap explains. And many of these regulations, particularly zoning and occupational licensing laws, place a disproportionate burden on poor people and minorities.

And she points out that decentralization, while theoretically very desirable, won’t generate many benefits if misguided federal policies are replaced by bad local policies.

Many on the political right believe that the devolution of power to lower levels of government can help overcome problems created by centralized authority….In a 2014 paper, George Mason University economist Richard Wagner explored whether federalism really supports liberty. He found that devolving power to lower levels can be good for individual freedom under the right conditions—but it’s far from guaranteed.

P.S. Don’t forget to vote for Veronique in the “most influential libertarian” contest. And you don’t even need to make it a write-in vote. She’s been added to the list by popular demand.

P.P.S. I suspect most people won’t care about what’s happening with my local government, but local politicians and bureaucrats are whining about belt-tightening even though spending has climbed much faster than inflation.

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What do Andy Johnson, Anthony Smelley, the Hammond family, Charlie Engle, Tammy Cooper, Nancy Black, Russ Caswell, Jacques Wajsfelner, Jeff Councelller, Eric Garner, Martha Boneta, James Slatic, Carole Hinders, Salvatore Culosi, and James Lieto, as well as the Sierra Pacific Company and the entire Meitev family have in common?

They are all victims of brutal, unfair, capricious, and evil government actions. And I challenge anyone to read their stories and not feel at least some degree of outrage at their mistreatment.

And now we’re going to add Corey Statham to the list. The New York Times has an all-too-typical report of government greed and callousness.

Corey Statham had $46 in his pockets when he was arrested in Ramsey County, Minn., and charged with disorderly conduct. He was released two days later, and the charges were dismissed. But the county kept $25 of Mr. Statham’s money as a “booking fee.” …He did get a debit card for the remaining $21. But there was no practical way to extract his cash without paying some kind of fee. Among them: $1.50 a week for “maintenance” of the unwanted card, starting after 36 hours; $2.75 for using an A.T.M. to withdraw money; $3 for transferring the balance to a bank account; and $1.50 for checking the balance. …Mr. Statham is represented by Michael A. Carvin, a prominent conservative lawyer who…said the county’s motives were not rooted in solicitude for the people it had arrested. “Revenue-starved local governments are increasingly turning toward fees like Ramsey County’s in order to bridge their budgetary gaps,” he wrote in a Supreme Court brief. …“Providing a profit motive to make arrests,” he said, “gives officers an incentive to make improper arrests.” …$25 is not a lot of money — unless you are poor. It represents almost half a day’s work at the federal minimum wage, a federal judge wrote in a dissent in another case on booking fees.

I have no idea whether Mr. Statham is a sympathetic victim. But even if he’s a total jerk, that doesn’t change the fact that people who interact with the legal system should not be subject to fines or fees without a conviction.

This is yet another example of innocent people victimized by “policing for profit,” which notoriously happens with civil asset forfeiture.

And at the risk of sounding like a closet leftist, it bothers me when poor people and rich people face the same fines. I don’t know Statham’s situation, but there are plenty of low-income people who can suffer severe financial consequences when they have an unfortunate encounter with local law enforcement. Maybe we should be like Switzerland and proportionately adjust fines based on wealth. I don’t suggest that because I want local governments to have more money. Instead, I’m thinking such a policy would both make the law more equal and give the rest of us a strong incentive to fight against thuggish revenue-raising tactics.

P.S. I’m obviously on the side of Statham’s lawyer, but I can’t resist correcting something said by Michael Carvin. I’ve never looked at the numbers for Ramsey County, but, based on nationwide fiscal data for state and local governments, I will say with 99 percent confidence that Ramsey County is not “revenue-starved.” In the interests of accuracy, Mr. Carvin in the future should refer to local politicians as being “revenue-hungry.”

P.P.S. On a separate topic, here’s a nice reminder of the difference between the private sector and the government.

A man in Pomona was upset after a postal carrier was seen on surveillance video throwing a small package on his doorstep, but a surprise hero was also captured on footage. Brian Mundy sent the video to our sister station in Los Angeles using #abc7eyewitness. In it, you see the U.S. Postal Service carrier carelessly tossing the package. Much to Mundy’s surprise, moments later, a FedEx driver – wearing a reindeer hat – is seen gently putting down two packages. That driver even picks up the small box from the USPS carrier and gently puts it on top of the rest.

It’s all on video if you click on the story link. Yes, this is just an anecdote. And, yes, I’m sure there are plenty of bad FedEx employees and wonderful Postal Service employees. I’m mostly sharing the story for amusement value.

But I suspect John Stossel was right when he explained that, as a general rule, the private sector will do a better job.

 

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What are the main problems with government bureaucrats?

Is it that they’re paid too much? Given that they get far more compensation than workers in the economy’s productive sector, that certainly true.

Is it that there are too many of them? Well, we have lots of bureaucracies that shouldn’t exist, such as HUD, Education, Transportation, Agriculture, etc. So that’s true as well.

But there’s another possible answer. People employed by government take advantage of preferential rules in ways that should get all decent people upset.

Writing for Reason, Eric Boehm tells us about a cop who successfully mugged taxpayers in Paterson, New Jersey.

Despite not having to show up for work since June 2007, Manuel Avila received periodic increases in pay, managed to double his monthly pension and qualified for free healthcare for the rest of his life at the expense of city taxpayers. Avila qualified for all those benefits while spending the past nine years on paid leave from the Paterson, New Jersey, police department because he was under investigation for having sex with a female prisoner at the city’s jail.

Wow, go fishing every day, get pay increases, a fat pension, and free healthcare. Where can I sign up for that deal?

Government, of course.

And let’s not overlook sex with a female prisoner, which gives a whole new meaning to the notion of fringe benefits. Reminds me of the Pennsylvania bureaucrat who came up with the clever idea of trading welfare benefits for sex.

But the story is actually more disturbing (at least from the perspective of taxpayers) than you think.

It gets worse, though, because that crime would never have happened if Avila’s bosses hadn’t already been trying to give his retirement benefits a little boost. …Avila—apparently with plenty of help, or at least an abundance of people willing to look the other way—was able to boost his annual pension to about $70,000 from an estimated $32,000 if he had been forced to retire in 2007 when a police psychiatrist recommended removing Avila from the force. “But instead of forcing Avila out of the police department, city law enforcement officials decided to allow him to stay on the job for another six months so he could reach a critical pension milestone of 20 years, the court records show,” the Paterson Press wrote. While there, he was charged with sexually assaulting a female prisoner. Those charges were dropped in 2010 after the city paid an undisclosed amount of money to the accuser as part of a settlement, but Avila remained on paid leave from the department until finally retiring this year.

This is galling. If Mr. Avila misbehaved and was declared unfit, why wasn’t he immediately terminated?

And now that we’ve learned about this scandal, why aren’t the officials who enabled this ripoff being fired?

At the risk of repeating myself, the answer is government.

There are two broader policy lessons from this scandal.

First, the use of “defined benefit” pension systems for bureaucrats should be discontinued. By way of background, these “DB” plans promise workers guaranteed monthly payments based on formulas including factors such as years worked and highest pay levels. There is no reason why DB plans can’t be feasible and successful (indeed, the Netherlands has a private Social Security system based on this model), but politicians at the state and local level repeatedly have demonstrated that they are incapable of operating this type of system, both because they promise lavish benefits (on top of overly generous pay levels) as a means of buying political support (using our money) from government workers and because they then don’t set aside enough money to finance the generous benefits they have promised. That system may be good for getting reelected in the short run, but it’s also why there’s a multi-trillion dollar shortfall that is contributing to deep fiscal problems in states such as Illinois and California. To stop from going deeper in the red, states should switch to “defined contribution” plans, which work similar to the IRAs and 401(k)s that are now prevalent in the private sector.

Second, something needs to be done to curtail the power of government unions. It’s not just that they conspire with politicians to get excessive pay for bureaucrats, but they compound that damage by also insisting on rules that make it very difficult to discipline or terminate problem employees. In the private sector, employees generally work “at will,” which means they can be fired without reason (this is one of the reasons the United States is near the top in the World Bank’s Doing Business ranking. In government, by contrast, slackers, trouble makers, and other undesirable employees are shielded from this discipline. And that results in cases (such as the example discussed above) that are bad for taxpayers and bad for government. I don’t know if this means that unions should be prohibited (as even President Franklin Roosevelt believed), but surely one lesson to be learned is that there needs to be a much tougher approach when contract negotiations take place.

P.S. Let’s shift to a different topic. I’ve written many times about the gap between intentions and results in government. It’s very common to see politicians vote for laws that (at least in some cases) they think will help people, but they fail to recognize the indirect or second-order effects of government intervention.

Now we have another example. Almost all politicians will agree that it’s a good idea to prohibit child labor in poor nations. But what if poor families don’t have any better options? Could it be that government intervention will hurt the people who are supposed to be helped?

According to the World Bank (not normally a hotbed of libertarian thought), the answer is yes.

The study explores the law that increased the minimum employment age from 14 to 16 in Brazil in 1998, and uncovers its impact on time allocated to schooling and work in the short term and on school attainment and labor market outcomes in the long term. The analysis uses cross-sectional data from 1998 to 2014… The estimates show that the ban reduced the incidence of boys in paid work activities by 4 percentage points or 27 percent. …The study follows the same cohort affected by the ban over the years, and finds that the short-term effects persisted until 2003 when the boys turned 18. The study pooled data from 2007 to 2014 to check whether the ban affected individuals’ stock of human capital and labor market outcomes. The estimates suggest that the ban did not have long-term effects for the whole cohort, but found some indication that it did negatively affect the log earnings of individuals at the lower tail of the earnings distribution.

So the bottom line is that lower-skilled workers missed a chance to earn money when they were young and they then suffered income losses over time as well.

Bastiat certainly wouldn’t be surprised by this outcome. And if the lower-skilled workers understood how they were hurt, I’m sure that they wouldn’t feel very grateful to politicians for their “compassion.”

P.P.S. This reminds me of the “sweatshop” controversy. The left wants to ban factory work in the developing world because they don’t understand or appreciate that such jobs are a great opportunity when nations are at a certain stage of development.

P.P.P.S. This isn’t the first time that the World Bank has produced good research. In 2014, the bureaucrats released a good study showing how high tax rates facilitate corruption. And in 2012, they issued a study explaining how large public sectors undermine prosperity.

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I’ve written (some would say excessively) about the fact that America has too many bureaucrats and that they’re paid too much.

That’s true in Washington. That’s true at the state level. And it’s true for local governments.

But since I’m a big believer in beating a dead horse, let’s revisit this issue. We’ll narrow our focus today and look solely at the issue of retirement benefits for state and local bureaucrats.

Why? Because, as explained by Andrew Biggs of the American Enterprise Institute, the unfunded liability for these schemes has mushroomed into a giant $5 trillion problem.

If the Actuarial Standards Board enacts recommendations from its Pension Task Force, actuarial valuations for state and local government pensions will report unfunded liabilities of over $5 trillion and funding ratios of just 39 percent. The public pensions industry will hate it, but those figures are the best available measures of the costs of public employee retirement plans. …That $5.2 trillion is the number most economists would think is most relevant to considering the costs of public sector pensions. …The simple reality is that public pension underfunding is a significant problem that can only really be addressed by increasing contributions or by lower pension benefits, choices that pretty much everyone involved in the pension world would prefer to avoid.

You won’t be surprised to learn that some states are more irresponsible than others.

CNBC reports that Nebraska is the most prudent and Alaska is the worst (politicians can’t resist squandering oil revenue). Several blue states rank poorly (think Illinois, Connecticut, California, and New Jersey), but there also are red states (such as Louisiana and Kentucky) that have made very foolish promises.

In Nebraska, for example, the pension liability amounts to about $386 per person, the lowest in the nation. That compares with Alaska ($19,394 per person: the highest in the country), Illinois ($15,158 per person) and Connecticut ($14,769). The average pension shortfall in 2014 amounted to $4,383.

The Wall Street Journal has an interactive table that allows readers to see which states have the biggest shortfall.

Meanwhile, Governing has an interactive map showing which states have the biggest gaps.

In other words, state and local bureaucrats have been promised a lot of money when they retire.

Much more money than is available.

And when you add Social Security benefits to the mix, as Andrew Biggs has calculated, you wind up having lots of bureaucrats enjoying very lavish levels of retirement income.

I tabulated the pension benefits paid to full-career “regular” state government employees (meaning, non-public safety) retiring in 2012. For states in which public employees participated in Social Security, I estimated the Social Security benefit the retiree would be eligible to receive. And finally, I compared total retirement benefits to the worker’s earnings immediately preceding retirement. …Mississippi paying the lowest replacement rate of 54% of final earnings. …West Virginia paid the most generous benefits, equal to 115% of final earnings, followed by New Mexico (113%), Oregon (105%), California (102%) and, yes, conservative Texas (101%).

Here’s a map that accompanied the article.

But maybe big numbers, maps and tables are too abstract.

To give some examples of how this is leading to a fiscal crisis, consider these recent news reports.

A story from the Las Vegas Review-Journal:

Nevadans should brace for reduced services, higher taxes or both — the necessary consequence of the Public Employee Retirement System of Nevada (PERS) having badly missed its investment target last year…PERS has now missed its target over the past five, 10, 15, 20 and 25 years — suggesting that another taxpayer-rate hike is on its way. Remarkably, this shortfall has occurred even though markets have nearly tripled from their 2009 lows, and currently sit at or near all-time highs. Nevada’s soaring pension costs — ranked third-highest in the nation at 9.8 percent of own-source revenue, according to 2013 data from the Public Plans Database — aren’t just due to overly optimistic investment assumptions, however. Another factor is the extraordinarily generous nature of the benefits.

A column from the Orange County Register:

…in the world of public sector pensions – among the biggest institutional investors in global markets – politicians…pretend they can count on big investment returns every year, while disregarding warning signs, mounting debts and increasingly unsustainable pension systems. We’re seeing the latest pension fund returns come in, and almost uniformly, it was a terrible year for states – and thus taxpayers. The California Public Employees’ Retirement System, the largest U.S. public pension fund, logged a paltry annual return of 0.6 percent. …CalPERS is currently only 76 percent funded, a figure that will inevitably drop given the latest weak returns.

A report from the Portland Tribune:

Oregon’s major business groups want lawmakers to start dealing with rising public pension costs as early as the session that opens Feb. 1. Although those costs start to kick in with the 2017-19 budget cycle — 18 months away — advocates say it’s not too early to whittle down an unfunded liability projected at $18 billion over the next few decades. …projected increases in contributions to PERS, which covers about 95 percent of Oregon’s public workers, will eat deeply into what they can spend over the next several two-year budget cycles. Cheri Helt, co-chair of the Bend-La Pine School Board, says pension costs will jump from the current 16 percent of payroll to 20 percent in 2017-19, and to 25 percent in the cycle afterward. …Jamie Moffitt, vice president and chief financial officer for the University of Oregon, says rising pension costs will eat up 40 percent — about 2 percentage points — of the 5.5 percent average annual increase in tuition.

An editorial about New Jersey in the Wall Street Journal:

New Jersey’s Senate president is in a Brando-like fight with government unions that he says are trying to extort or bribe legislators into doing their bidding. …At issue is the woefully underfunded state pension system. The teachers union wants to put a measure on the November ballot to amend the state constitution to require quarterly state pension payments of increasing amounts. …government unions have so much political sway over politicians that they often call the shots on their own pensions and benefits. …New Jersey’s public pensions are underfunded to the tune of $82 billion. Thomas Healey of the state’s bipartisan Pension and Health Benefit Study Commission notes that pensions and health care now eat up 11% of New Jersey’s budget, and without reform this will grow to 28% by 2025. …The pension commission has proposed reforms—including a shift to a hybrid retirement plan that includes features more akin to a 401(k)—but unions have blocked them. They now want voters to rewrite the state constitution so pension reform would be all but impossible.

A column about the corrupt system in Illinois:

Illinois’s government, says [Gov.] Rauner, “is run for the benefit of its employees.” Increasingly, it is run for their benefit when they retire. Pension promises [are] unfunded by at least $113 billion… The government is so thoroughly unionized (22 unions represent almost all government employees), that “I can’t,” Rauner says, “turn on a light switch without permission.” He exaggerates, somewhat, but the process of trying to fire someone is a career, not an option. …high-tax Illinois will continue bleeding population and businesses, but with one contented cohort — the Democratic political class, for whom the system is working quite well.

The crux of the problem is that most state and local governments have “defined-benefit” plans for bureaucrats, which means that taxpayers are on the hook to provide retiring bureaucrats a specific amount of benefits (not just retirement income, but other goodies such as health care) based on formulas that count years in the workforce, highest salary levels, and other factors. That may not sound totally unreasonable, but politicians realize they can buy votes by cutting deals with government unions and providing retirement benefits that are extremely generous, especially compared to what’s available for workers in the private sector.

But that’s simply one part of the problem. The other part of the problem is the employers with defined-benefit plans (usually referred to as “DB plans”) are supposed to set aside money in investment funds so that there’s a growing pool of assets that can be used to pay for the lavish benefits promised to the bureaucracy. But as we’ve already learned, politicians often are reluctant to take this step. They like committing lots of future money to bureaucrats, but when putting together annual budgets, they generally can buy more votes by allocating money to things like schools and roads rather than depositing money into a pension fund.

So the net result is that there’s a big unfunded liability, meaning that the amount that politicians have promised to give bureaucrats is larger than what’s set aside in the pension funds. And to make matters worse, the pension funds usually have dodgy accounting (they assume the investments will earn more money than is realistic). Which is why the actual shortfall is about $5.2 trillion, as noted above.

Given this ticking time bomb, some of you may be wondering why the title says there’s a libertarian quandary. Surely the answer is to cauterize this fiscal wound with immediate cuts and to avoid an even bigger long-run disaster by shifting newly hired bureaucrats to a defined-contribution system such as IRAs or 401(k)s. This type of reform automatically eliminates any liability for taxpayers since retirement benefits for bureaucrats would be solely a function of contributions to retirement accounts and the investment performance of those funds (most state and local bureaucrats also are part of the Social Security system).

Yes, that is the answer, but the quandary (to add to my collection) is whether the federal government should force, or even encourage, this type of reform. Don’t state and local governments, after all, have the right to make stupid decisions?

Writing for the Wall Street Journal, Ed Bachrach argues that Uncle Sam should limit these suicidal policies.

The pensions of states and local governments are, collectively, trillions of dollars in the hole. This debt is crippling budgets and will dump an enormous burden on future generations. Yet state and local politicians have proven that they cannot, or will not, solve the problem. The federal government ought to step in. But how? Instead of bailing out these pensions, Congress should pass a law allowing states and local governments to reduce promised benefits—something that is now illegal under some states’ statutes or constitutions. …Many pensions allow retirement at age 55; states and local governments could mandate that benefits cannot be drawn until age 65. Payments could be capped at 150% of the median income in the local jurisdiction. Automatic cost-of-living increases that now exceed expected inflation could instead be tied to increases in the median income. …Local governments must also be required to terminate their defined-benefit plans. These should be replaced with defined-contribution plans, like 401(k)s or 403(b)s… Rep. Devin Nunes (R., Calif.) proposed withholding federal aid to government entities that don’t accurately report pension funding. That would be a step forward but would not solve the problem of underfunding.

I obviously agree that there should be no bailouts, but I’m still not convinced that Washington should mandate good policy by state and local governments.

Federalism means the freedom to adopt good policy…but also the leeway to commit fiscal suicide.

Though Andrew Biggs points out that the part about accurate reporting certainly sounds reasonable.

Congress has a tremendous opportunity to require state and local government employee pension plans to accurately disclose their multi-trillion dollar unfunded liabilities. …For years, economists and government agencies like the Congressional Budget Office have called for so-called “fair market valuation,” which both more accurately calculates the value of public pension liabilities and accurately tells those plans that taking more investment risk doesn’t make their plans cheaper. …there’s legislative language already written: Rep. Devin Nunes’s Public Employee Pension Transparency Act (PEPTA), which has a number of Congressional co-sponsors including House Speaker Paul Ryan, would require state and local plans to accurately disclose their liabilities using fair market valuation. The federal government would respect state and local rights by not forcing any changes to how pensions are funded, but Nunes’s plan would require that state and local governments to tell the public – including people thinking of purchasing municipal bonds – how much they really owe to their pensions.

P.S. By the way, advocates of limited government don’t experience many victories, but there actually was a very good reform of the pension system for federal bureaucrats during the Reagan years. Yes, federal bureaucrats are still over-compensated, but it’s not nearly as bad as it used to be. Yet another example of how Reaganomics was a success.

P.P.S. Shifting to bad news (or laughable news), the hacks in California tried to argue that lavish pensions for bureaucrats boost the economy. Andrew Biggs does a great job of debunking this nonsense.

The California Public Employee Retirement System (CalPERS) issued a report in July claiming that its benefit payments to retired government employees in 2013-2014 “supported 104,974 jobs throughout California and generated more than $15.6 billion in additional economic output.” …To reduce pension benefits for public employees, the study implies, would harm the overall California economy. …This study is nothing short of propaganda that wouldn’t get a passing grade in a freshman economics course. …the CalPERS study lacks one important component, called “counting both sides of the equation.” It needs to count economic costs as well as economic benefits. …CalPERS doesn’t create money out of thin air. Every single dollar of CalPERS benefits comes from a dollar that taxpayers or government employees contributed to the program or from the interest earned on those contributions.

Sounds like the bureaucrats at CalPERS should be working for the Congressional Budget Office.

P.P.P.S. The focus of this column is on the inherent instability of defined-benefit pension plans for bureaucrats, but let’s not lose sight of the fact that the underlying issue is that bureaucrats are ripping off taxpayers. Here are some blurbs from a Reason report by Eric Boehm on how this scam works in California.

If public service truly is a sacrifice, then join me in shedding a tear for the 20,900 public workers in California who pulled down more than $100,000 in retirement benefits during 2015. …Leading the way for 2015 was Michael Johnson. The former Solano County administrator received a $388,407 pension last year. …Rounding out the top three are Stephen Maguin, a former Los Angeles County Sanitation District general manager who pulled down $340,811 in 2015 and Joaquin Fuster, a former UCLA professor who got a pension worth $338,412 last year. …Curtis Bowden, a former member of the California Highway Patrol…retired all the way back in 1947, which means he’s been collecting pension checks for 68 years, after working just 5.3 years for the state. He got $24,800 from CalPERS in 2015.

Wow, I’m not sure what’s more impressive, Getting an annual pension of nearly $400K after being a country bureaucrat or working for just a bit over five years and getting 68 years worth of retirement checks?

Seems like both of them should be part of the Bureaucrat Hall of Fame.

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My biggest complaint about government employees is that they work for bureaucracies that shouldn’t exist. As far as I’m concerned, they may be the most wonderful, conscientious, and hard-working people in the world, but we shouldn’t have a Department of Housing and Urban Development or a Department of Agriculture, so these folks – by definition – are getting dramatically overpaid (i.e., anything about $0).

My second main complaint is that bureaucrats are overpaid relative to their counterparts in the private sector. About twice as much when you include the value of both wages and benefits.

The unions representing bureaucrats sometimes try to argue that this isn’t true, but I always point out the data on voluntary quit rates, which are much higher in the private sector compared to government. Needless to say, this is because folks who get cushy government jobs know they’ve won the employment lottery and have very little desire to switch to the private sector (where, as Dan Aykroyd explained in Ghostbusters, “they expect results”).

A third complaint is that politicians can’t resist catering to the unions that represent government employees, which means not only excessive compensation but also absurdly inefficient rules designed to protect loafers, scroungers, and con artists in the bureaucracy.

Let’s review the example of Queon Jackson. As reported by the Boston Globe, he’s pocketed a lot of money while doing absolutely nothing.

A former acting headmaster in Boston, placed on paid leave more than three years ago amid an investigation into credit card fraud, collected $375,000 in pay during his absence.

In the private sector, employment often is a tenuous situation. You can be fired “at will,” which means for just about any reason.

But unions strike deals with compliant politicians (from the perspective of elected officials, bureaucrats are a special interest group with lots of voters and lots of campaign cash) to provide so-called employment-protection rules for government employees.

And these rules make it very difficult and very expensive to deal with bad bureaucrats.

And it seems that Mr. Jackson meets that definition.

Jackson’s case reflects the thorny issues school systems face when union-protected employees are under federal investigations that drag on for months or years without charges being filed. Jackson, who was classified as an assistant director at the time of his paid leave, is a member of the school system’s union for midlevel school administrators, and the school system would have had to establish just cause to fire him. Thomas Scott, the executive director of the Massachusetts Association of School Superintendents, said…The choice…comes down to this: Either put the person in a low-profile desk job and face a potential public backlash, or fire the employee and run the risk of a lawsuit.

Here’s why Jackson got in trouble.

The school system originally placed Jackson on leave in February 2013, after learning the Secret Service was investigating him for an alleged role in fraudulently obtaining credit and then not paying the bills. But Jackson had contended that he was victimized by someone who stole his identity in an attempt to buy a car.

Though he already had a shady background when he first entered the bureaucracy.

In 2000, a few months before the district hired Jackson as a teacher, he admitted to sufficient facts for a finding of guilty in a drug case and a domestic abuse case that required him to take an anger-management course. That type of plea is commonly used by defendants to avoid a criminal record. …Jackson, who was a state social worker at the time, was charged with possession with intent to distribute counterfeit drugs.

Returning to the current situation, it’s not clear from the story, but I gather investigators from the Secret Service didn’t have enough evidence to nail Jackson, so the school system had no choice but to not only keep him on the payroll, but also to give him a new position.

Now Queon Jackson…is back. …The school system quietly cleared Jackson to return to work on May 9 and gave him a desk job at the agency’s headquarters and the title “special assistant.” The move ended a paid leave of three years and three months, during which he did no work for the school system. …He is receiving an annual salary of about $120,000, equivalent to what he made as a school administrator.

Though he apparently hasn’t been a model employee since his return.

Jackson has been accumulating many absences over the last two months, missing at least 16 days, including seven without pay, according to a Globe review of payroll records. The tally doesn’t include time he took off in mid-July.

Oh, by the way, Jackson is just one of many bureaucrats who get this strange form of paid vacation.

Boston’s school system currently has 34 employees on paid leave.

I shudder to think what the nationwide number looks like, but apparently there are tens of thousand federal bureaucrats getting paid leave. You can see a couple of strange examples by clicking here and here.

The bottom line is that Mr. Jackson isn’t special. Lots of bureaucrats get to scam the system because union contracts protect dodgy employees. So he doesn’t merit membership in the Bureaucrat Hall of Fame, but it’s still outrageous that taxpayers in the productive sector pay extra tax to subsidize this nonsense.

If you like humor about overpaid government employees (and you’re paying for it, so you may as well get some enjoyment), here’s a great top-10 list from Letterman and here’s a cartoon about the relationship of bureaucrats and taxpayers. Looking through my archives, I also found a joke about an Indian training for a government job, a slide show on how bureaucracies operate, a cartoon strip on bureaucratic incentives, a story on what would happen if Noah tried to build an Ark today, and these two posters. There’s also a good one-liner from Craig Ferguson, along with this political cartoons from  Henry Payne.

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In 2014, I was outraged that more than 80 percent of senior bureaucrats at the Veterans Administration were awarded bonuses, even though this is the bloated bureaucracy that caused the death of many veterans by putting them on secret waiting lists. This, I argued, was a perfect example (in a bad way) of federal bureaucracy in action.

In 2015, I put together a version about bureaucracy in action at the local level, noting that the number of firefighters has climbed by 50 percent since 1980, even though the number of fires has declined by more than 50 percent during the same period.

This year, let’s look at the overseas edition of bureaucracy in action. Our story comes from Italy, where there’s been a government shutdown. Though only in the town of Boscotrecase. And not because of an Obamacare-style budget fight, but rather because a bunch of the local bureaucrats got arrested for routinely skipping work.

The mayor of a small town outside Naples had to shut down most municipal offices after police arrested 23 of his staff in the latest revelations of absenteeism in Italy’s public sector. Staff were filmed clocking in and then leaving to go about their personal business or using multiple swipe cards to register absent colleagues, police said, in scenes that have become familiar after numerous similar scandals. A police video showed one man trying to tamper with a security camera and then putting a cardboard box over his head to hide his identity before swiping two cards. Police arrested around half of all employees in the town hall offices of Boscotrecase following a weeks-long investigation that they said revealed 200 cases of absenteeism involving 30 people. …four major town hall departments had been closed on Tuesday due to a lack of staff. Those arrested, accused of fraud against the state, included the head of the local traffic police and the head of the town’s accounting department. The workers, whose arrest comes amid a government crackdown against absenteeism, have been suspended from work for between six and 12 months and risk eventual dismissal.

What I want to know, of course, is whether the bureaucrats were suspended with pay or without pay.

If it’s the former (which would be my guess), how will their lives be any different? They’ll be goofing off at home while getting overpaid!

No wonder Italy is in a death spiral.

P.S. The Bureaucrat Hall of Fame is comprised of specific government employees who have perfected the art of slacking (such as the Italian doctor who legally worked only 15 days in a nine-year period). That being said, I’m tempted to give adjunct membership to the entire local government of Boscotrecase.

P.P.S. Switching topics, the unpalatable choice between Donald Trump and Hillary Clinton does have a silver lining. It’s generated this clever make-believe announcement from the British Monarch.

To the citizens of the United States of America from Her Sovereign Majesty Queen Elizabeth II:

In light of your failure to nominate competent candidates for President of the USA and thus to govern yourselves, we hereby give notice of the revocation of your independence, effective immediately.

Her Sovereign Majesty Queen Elizabeth II will resume monarchical duties over all states, commonwealths, and territories (except North Dakota, which she does not fancy). Your new Prime Minister, Theresa May, will appoint a Governor for America without the need for further elections. Congress and the Senate will be disbanded. A questionnaire may be circulated next year to determine whether any of you noticed.

To aid in the transition to a British Crown dependency, the following rules are introduced with immediate effect:

———————–
1. The letter ‘U’ will be reinstated in words such as ‘colour,’ ‘favour,’ ‘labour’ and ‘neighbour.’ Likewise, you will learn to spell ‘doughnut’ without skipping half the letters, and the suffix ‘-ize’ will be replaced by the suffix ‘-ise.’ Generally, you will be expected to raise your vocabulary to acceptable levels. (look up ‘vocabulary’).
————————
2. Using the same twenty-seven words interspersed with filler noises such as ”like’ and ‘you know’ is an unacceptable and inefficient form of communication. There is no such thing as U.S. English. We will let Microsoft know on your behalf. The Microsoft spell-checker will be adjusted to take into account the reinstated letter ‘u” and the elimination of ‘-ize.’
——————-
3. July 4th will no longer be celebrated as a holiday.
—————–
4. You will learn to resolve personal issues without using lawyers, psychics or therapists. The fact that you need so many lawyers and therapists shows that you’re not quite ready to be independent. If you can’t sort things out without suing someone or speaking to a therapist, then you’re not ready to be a sovereign nation.
———————-
5. Therefore, you will no longer be allowed to own or carry anything more dangerous than a vegetable peeler. Although a permit will be required if you wish to carry a vegetable peeler in public.
———————-
6. All intersections will be replaced with roundabouts, and you will start driving on the left side with immediate effect. At the same time, you will go metric with immediate effect and without the benefit of conversion tables. Both roundabouts and metrication will help you understand the British sense of humour.
——————–
7. The former USA will adopt UK prices on petrol (which you have been calling gasoline) of roughly $10/US gallon. Get used to it.
————–
8. You will learn to make real chips. Those things you call French fries are not real chips, and those things you insist on calling potato chips are properly called crisps. Real chips are thick cut, fried in animal fat, and dressed not with catsup but with vinegar.
——————-
9. The cold, tasteless stuff you insist on calling beer is not actually beer at all. Henceforth, only proper British Bitter will be referred to as beer, and European brews of known and accepted provenance will be referred to as Lager. South African beer is also acceptable, as they are pound for pound the greatest sporting nation on earth and it can only be due to the beer. They are also part of the British Commonwealth – see what it did for them. American brands will be referred to as Near-Frozen Gnat’s Urine, so that all can be sold without risk of further confusion.
———————
10. Hollywood will be required occasionally to cast English actors as good guys. Hollywood will also be required to cast English actors to play English characters. Watching Andie MacDowell attempt English dialect in Four Weddings and a Funeral was an experience akin to having one’s ears removed with a cheese grater.
———————
11. You will cease playing American football. There is only one kind of proper football; you call it soccer.
Those of you brave enough will, in time, be allowed to play rugby (which has some similarities to American football, but does not involve stopping for a rest every twenty seconds or wearing full kevlar body armour like a bunch of nancies).
———————
12. Further, you will stop playing baseball. It is not reasonable to host an event called the World Series for a game which is not played outside of America. Since only 2.1% of you are aware there is a world beyond your borders, your error is understandable. You will learn cricket, and we will let you face the South Africans first to take the sting out of their deliveries.
——————–
13. You must tell us who killed JFK. It’s been driving us mad.
—————–
14. An inland revenue agent (i.e. tax collector) from Her Majesty’s Government will be with you shortly to ensure the acquisition of all monies due (backdated to 1776).
—————
15. Daily Tea Time begins promptly at 4 p.m. with proper cups, with saucers, and never mugs, with high quality biscuits (cookies) and cakes; plus strawberries (with cream) when in season.

Reasonably clever. Reminds me of the somewhat un-PC humor a British friend sent me on how different countries respond to terrorism.

By the way, I’m not sure the part about needing a permit to carry a vegetable peeler is a joke. After all, we’re talking about the country where you need an ID to buy a teaspoon.

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It’s difficult to be a libertarian.

Politicians and bureaucrats do so many foolish things that you can spending your entire day being outraged.

But that’s probably not healthy, so it’s good to keep things in perspective with some political humor.

Even if libertarians are the ones being mocked, and that’s the case for my most-viewed post on libertarian humor.

Fortunately, some libertarians are capable of generating anti-government humor.

Such as Libertarian Jesus, which has been my most-popular example of pro-libertarian humor.

And here’s a new addition to my collection. We can all relax because Los Angeles is dealing the crisis of…GASP…driving past the same spot twice in a 6-hour period! And somebody at Reddit decided this merited some sarcastic applause.

Huh?!? I’m trying to imagine what could motivate such a law.

  • Does Los Angeles actually have a problem with people driving past the same point every six hours?
  • What victims are being saved thanks to this law?
  • Do cops in the city really have nothing better to do with their time?
  • If this street is between you and your local supermarket, do you have to…ahem…cruise the produce section for six hours before heading home?

Being a diligent researcher, I tried to find the answer to these question. Lo and behold, here’s the relevant passage from the underlying law establishing L.A.M.C. 80.36.10.

This Ordinance is urgently necessary for the preservation of the public health and safety. Cruising has resulted in the congregating of persons in certain areas engaging in destructive activities. It has also resulted in traffic congestion.

The law doesn’t tell us what “destructive activities” are being facilitated by driving past the same spot more than once in a six-hour period.

Though I’m guessing it must have something to do with the drug trade or prostitution.

Like most liberty-minded people, I don’t think the government should make it illegal for people to do stupid things to themselves. I believe in being tough on crime, but a real crime has to have a real victim.

But let’s set aside my libertarian grousing and focus on a practical issue.

If I’m a random idiot looking to buy some drugs or sex, what’s to prevent me from driving to the relevant part of town and conducting that transaction without circling past the same spot more than one time?

Since I don’t consume drugs and don’t consort with prostitutes (other than the non-sexual ones that are so common in Washington), maybe there’s something about those markets that I don’t understand. So perhaps a no-cruising rule will have a genuinely disruptive effect.

I’m guessing though, that this is akin to money-laundering laws, which were passed – at least in theory – to discourage crime by making it harder for crooks to get their loot into the financial system.

But these laws have imposed very high costs on law-abiding people and institutions while having no measurable impact on actual criminal activity.

So it’s very likely that anti-cruising laws in Los Angeles won’t have any impact of drugs or prostitution.

P.S. It’s not libertarian-specific humor, but let’s end with a joke about how President Obama dealt money-laundering laws.

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As I’ve repeatedly explained, governments generally get in fiscal trouble because politicians can’t resist spending lots of money when the economy is buoyant and therefore generating lots of tax revenue.

And this is why I’m a huge fan of spending caps. If outlays can’t grow faster than, say, 3 percent annually, that make it difficult for politicians to enact unsustainable spending commitments (as we’ve seen in Greece, Alberta, Puerto Rico, California, and Alaska) in years when there is extra revenue.

Now I have a new example, and it’s extra painful because the politicians literally want me to pay for their profligacy.

Here’s part of what was recently written in the Washington Post about the supposed budget hardships in my home county of Fairfax in Virginia.

Virginia’s largest municipality is fraying around the edges. A population that is growing older, poorer and more diverse is sharpening the need for basic services…even as a sluggish local economy maintains a chokehold on the revenue stream. Since the 2008 recession, local officials have whittled away at programs to the tune of $300 million. …Since 2008, the county has eliminated 700 jobs. Libraries operate on shorter schedules and with fewer books, class sizes have swelled past 32 students in some schools… County agencies are stretching out vehicle maintenance — including for school buses and fire engines — and officials say aging athletic courts and deteriorating playgrounds await nearly $20 million in repairs. …The county slashed $3.8 million in summer school funding in 2015 and is trying to use $374,000 less in paper this year.

But all this budget “slashing” apparently isn’t enough to balance the budget.

…there is no fat left to trim. Instead, they are searching for ways to raise taxes… The county is searching for new revenue to cover some of what officials estimate are hundreds of millions of dollars worth of unmet needs. …“We’ve been punting for seven years now,” said John C. Cook (R-Braddock), a county supervisor. “There’s really nothing easy left to cut.” …the County Board of Supervisors will decide whether to raise residential property taxes by as much as four cents — to $1.13 per $100 of assessed value.

Gee, sounds like the government has “cut spending to the bone” and imposed “savage austerity,” which means higher taxes are the only option, right?

Not exactly, Professor Don Boudreaux of George Mason University digs through the data and exposes the truth.

What budget cuts?  In fiscal year 2016 Fairfax County’s government will spend $7.13 billion dollars – the highest inflation-adjusted annual expenditure in County history.  And this real expenditure is the highest in County history even on a per-capita basis.  …Fairfax County’s government today spends, per county resident, 168 percent more real dollars than it spent in 1975, 144 percent more than in 1986, 30 percent more than in 2001, and 1.6 percent more than in 2008 – the year that your reporter suggests marks the beginning of Fairfax County’s budget austerity. …it is emphatically not true that the Fairfax leviathan has cut its spending or suffered budget cuts.  Quite the opposite.

Don included a table of data, which I’ve put into a chart.

Let me know if you can find where spending was “slashed.”

Remember, this is inflation-adjusted spending, and also per-capita-adjusted spending, which means we can do apples-to-apples comparisons.

And the comparison that really matters is that the local government is now spending more than twice as much as it did 30 years ago.

  • Are the schools more than twice as good? No.
  • Are the roads more than twice as good? No.
  • Are the parks more than twice as good? No.

So where did all the money go? Beats me, though I’m going to take a wild guess that the country bureaucracy is now far bigger and getting paid much more.

In other words, the same theorem of government that explains the behavior of Washington also applies at the local level.

P.S. Let’s close with a very appropriate joke about the type of people who create fiscal crises.

A father told his 3 sons when he sent them to the university: “I feel it’s my duty to provide you with the best possible education, and you do not owe me anything for that. However, I want you to appreciate it. As a token, please each put $1,000 into my coffin when I die.”

And so it happened. His sons became a doctor, a lawyer, and a financial planner, each very successful financially. When their father’s time had come and they saw their father in the coffin, they remembered his wish.

First, it was the doctor who put 10 $100 bills onto the chest of the deceased.

Then, came the financial planner, who also put $1,000 there.

Finally, it was the heartbroken lawyer’s turn.He dipped into his pocket, took out his checkbook, wrote a check for $3,000, put it into his father’s coffin, and took the $2,000 cash.

He later went on to become a member of Congress…

If you want more jokes about politicians, click here.

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Even though it’s theoretically possible to design a desirable budget deal that includes a tax increase, I’m a big advocate of the no-tax-hike pledge for the simple reason that – in the real world – support for genuine spending restraint and real entitlement reform evaporates once politicians think higher revenues are an option.

Heck, bumping into the Loch Ness Monster while riding my unicorn is more likely than an acceptable budget deal including tax hikes.

Though I confess that my anti-tax resolve sometimes gets a bit wobbly when I think about unsavory tax breaks such as the ethanol credit, the state and local tax deduction, and the healthcare exclusion. I have to remind myself that while these provisions are very odious, they should be repealed as part of tax reform rather than as part of some deal that gives politicians more money to waste.

Now there’s another example of a tax that is very tempting, and it comes from my home state of Connecticut.

When I was growing up, the Nutmeg State didn’t have an income tax and it was a refuge for overtaxed New Yorkers. But then an income tax was imposed in 1991. And ever since politicians got their hands on this new source of revenue, the burden of spending has skyrocketed and Connecticut has become a fiscal dystopia.

So you would think I’d be reflexively hostile to additional tax hikes by the politicians in Hartford. And I should be, but I’m perversely intrigued by a new levy they’re considering. The Wall Street Journal opines on the proposal.

…most Yale University professors are proud to be progressives. Well, they are now getting the chance to live their convictions as Connecticut Democrats attempt to soak Yale’s rich endowment. Democrats in Hartford have proposed taxing the unspent earnings of university endowments with more than $10 billion in assets. Only Yale’s $25.6 billion endowment—the country’s second largest after Harvard—fits the tax bill. Yale’s tax-exempt investments earned $2.6 billion last year, eight times more than the University of Connecticut’s $384 million endowment. Oh, the inequality! …Hartford is already taxing anything that moves. Last year Democrats raised the top individual tax rate to 6.99% and extended a 20% corporate surtax. The tax hikes precipitated General Electric’s decision in January to move its headquarters to Boston. Between 2010 and 2015, Connecticut lost 105,000 residents to other states. For the last five years, it has recorded zero real GDP growth.

Nobody should be double taxed on income that is saved and invested, so my mind tells me that the right approach is to give all taxpayers the treatment now reserved for places like Yale.

But my heart tells me the opposite because it’s galling that Yale is dominated by statists who presumably want higher taxes on the rest of us, so maybe it’s time they swallow some of their own bitter medicine.

But the way, it’s not just state politicians that are salivating to pillage Yale. It’s now being reported that city politicians want a slice of the action.

The mayor of New Haven is backing a push to revisit an 1834 Connecticut statute affecting taxes for Yale University, saying new guidelines are needed to assess liability for the institution… “Since taxing real estate and other property is the only form of municipal taxation allowed by state law, more modern guidelines as to what’s taxable and what’s tax exempt are essential,” New Haven Mayor Toni Harp said this week in testimony supporting the legislation. …The Ivy League university has strongly objected to proposal.

Gee, I wonder if Yale also “strongly objected” to the various big tax hikes that have savaged the state’s investors, entrepreneurs, and small businesses? Or is their battlefield conversion against tax hikes solely a selfish gesture.

Needless to say, I’m sure it’s the latter, which is why part of me is thinking it would be rough justice if the jackals in state and local government descended on Yale.

That being said, I certainly don’t like the idea of these profligate politicians getting their greedy hands on even more money. So if they do impose taxes on Yale, I hope the university will consider a very thoughtful invitation from the Governor of Florida.

Gov. Rick Scott…issued a statement calling on the Ivy League institution to pick up stakes and move on down to sunny Florida. “We would welcome a world-renowned university like Yale to our state and I can commit that we will not raise taxes on their endowment,” Governor Scott said

Hmmm…. Better weather and no state income tax. Sounds like a good deal to me.

And since Florida doesn’t double tax anybody, Yale’s leftist professors could sleep easier at night since they no longer would be hypocrites who work at a school that enjoys tax-free status on its investments while neighbors are being taxed.

P.S. I should add Yale’s anti-tax leftists to my collection of statist hypocrites.

P.P.S. I might be willing to accept a tax hike if it somehow could be designed so that it only applied to advocates of higher taxes.

P.P.P.S. While some tax distortions are destructive, some are simply bizarre.

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While I’m a big fan of federalism, this isn’t because I have a starry-eyed view of non-Washington politicians. Of course there is plenty of grotesque misbehavior by state and local governments.

And it’s most troubling when it involves law enforcement and the legal system.

David French of National Review has a very powerful and compelling article about thuggery at the local level.

…my experience with small-town government…pushed me in a libertarian direction before I even knew what a libertarian was. The public schools were dreadful. Focused on patronage more than education, the school system was a public jobs program… Our local government’s core mission was dispensing favors. If you were part of the local elite, the normal rules of life simply didn’t apply. Speeding tickets? No problem. You need a conditional use permit? You got it! …if you were poor or lacked connections, “the rules” applied to you with a vengeance. After all, someone had to pay the city’s bills. There was no escaping speeding tickets, zoning officials were ruthless, and each interaction with the unyielding authorities carried with it the threat of immediate escalation, sometimes without justification.

Some of the folks who protest police mistreatment see the issue through the prism of race, but maybe the real problem is that cops are expected to generate revenue for local politicians.

…It is entirely possible to believe (as I do) that the evidence indicates that “hands up, don’t shoot” is a fiction, even a malicious fiction, while also believing that the evidence indicates that Ferguson’s government was corrupt in exactly the way that government is typically corrupt.  We often take for granted the rule of law. If you are blessed to live in a town where the officials are relatively clean, or if you’re among the class of people that officials fear to cross, then public institutions seem benign — helpful, even. But there are millions of our fellow citizens who live a different reality, under the authority of different kinds of public officials — officials who view them as virtual ATMs, regardless of their ability to pay. And when the government imposes that mindset on police officers, forcing men and women who are trained to respond to (and anticipate) the most violent incidents to essentially become the armed tax collectors of a corrupt system, then that government is unjust.

Amen. Eric garner is dead today because New York City has cops act as deputy tax collectors.

Speaking of mistreatment and abuse, Debra Saunders has a must-read account of California’s immoral system for pillaging drivers.

California is filled with people who are one traffic ticket away from losing their means of independent transportation. They get a ticket for a busted tail light or a small-change moving violation. On paper, the fine is $100, but with surcharges, it’s more like $490. People who cannot pay often do not show up in court — which drives up the cost. According to the Judicial Council of California, about 612,000 Californians have suspended driver’s licenses because they didn’t pay fines. In 2013, more people — 510,811 — had their licenses suspended for not paying fines than the 150,366 who lost their licenses for drunken driving. “For a lot of people, the car is the only asset they own in this whole damn world,” noted Mike Herald of the Western Center on Law and Poverty. …“We’ve turned too many of the police into tax collectors and wonder why they don’t have strong relations with the community,” Norquist said.

This is disgusting, particularly because of how the system is a nightmare for poor people.

I’m about as far from an advocate of class warfare as is possible, but I can’t help but be sympathetic to the notion that traffic fines should be tied to income. Maybe if the middle class and the rich had to pay fines that confiscated huge chunks of their disposable income, there would be pressure to fix this horrid system.

And what’s really outrageous is how the government adds all sorts of fees to the cost of a ticket.

It’s deceptive advertising: a $100 fine fronts for an extra $390 in add-ons. The price tag can grow exponentially if unpaid and lead to losing one’s license. The penalty is harsh and crushing on the poor, but these fees also are undeserved for the middle class. If Sacramento wants to levy a $490 fine for moving violations, let lawmakers put honest numbers on their legislation — instead of pretending that the fine is $100. Alas, the Legislature has found that hidden fees are a handy way to finance the court system without voting to raise tax revenue. …If a private corporation advertised a $100 payment for something that really cost $500, California Attorney General Kamala Harris probably would go after the corporation for false advertising. If a credit card company boosted its fees the way the courts do, activists would call those practices usury. If the police yanked people’s driver’s licenses because they didn’t pay a $100 fine, the public would regard such a harsh penalty as excessive force. Yet Sacramento has codified a system that commits all three sins and it’s perfectly legal. Really, is there anything more brutal than government.

The good news is that the state is offering an amnesty, allowing some drivers the ability to clean up their record at a reduced cost.

But there’s a catch. You have to pay a hidden fee!

…there is a $50 amnesty program fee. That’s right — if you want to pay off unpaid traffic fines that have ballooned because of hidden fees, first you have to pay another…hidden fee.

I guess coughing up $50 is a good deal if that can reduce other fines by a greater amount, but isn’t this typical of government. Making you give them some money in order to give them more money.

Low-income communities also bear the brunt of dubious police tactics.

The Washington Post has an in-depth report on how cops are conducting raids against residences even in the absence of any evidence of criminal wrongdoing.

Sallie Taylor was sitting in her apartment in Northeast Washington one evening in January 2015 watching “Bible Talk” when…D.C. police officers smashed through her door, a shotgun was pointed at her face and she was ordered to the floor. …Taylor, a soft-spoken 63-year-old grandmother who was dressed in a white nightgown and said she has never had even a speeding ticket. The heavily armed squad thought they were searching the residence of a woman arrested two miles away the previous night for carrying a half-ounce vial of PCP. …The search warrant executed at Taylor’s apartment cited no evidence of criminal activity there. Instead, in an affidavit to a judge, police argued that they should be able to search for drugs there based on their “training and experience” investigating the drug trade. They relied on an address they found in a court-records system for the woman arrested with PCP.

In other words, the government can bust into someone’s home, notwithstanding the lack of any evidence, simply because some cop has a hunch based on “training and experience’?

I suspect America’s Founding Fathers would not be pleased with this reinterpretation of the Constitution.

The Fourth Amendment to the U.S. Constitution protects citizens from “unreasonable searches,” generally requiring government agents to obtain a warrant from a judge by showing they have probable cause to think that they will find a specific item at a specific location. In recent decades, police have been given wide latitude by the courts… Attorney Alec Karakatsanis, of the nonprofit group D.C.-based Equal Justice Under Law, said warrants that rely on training and experience as justification for a search subject the black community to abusive police intrusion based on flimsy investigative work.

To make matters worse, the government oftentimes doesn’t bother to confirm addresses before launching these raids.

Failure to properly verify an address led police to the home of Patricia Dandridge on Jan. 27, 2015. She returned from work to find her apartment in Southeast ransacked. The door was beaten in and her bed frame was broken, she said. Clothes and personal papers were strewn across the floor. “I thought I’d been robbed, but my neighbor told me it was the police,” said Dandridge, 45. …Three officers had forced their way in to look for firearms. They left empty-handed. The warrant was based on a drug complaint at a housing complex in Southeast more than five miles from Dandridge’s apartment, according to the affidavit police used to justify the search. …Palmer lived down the hall with his parents in Apartment 103. Dandridge lives in 102. “103 does not look like 102,” Dandridge said. The apartments are on opposite ends of the building.

Last but not least, Kevin Williamson weighs in at National Review with a withering look at police misconduct and corruption.

Is it really so difficult to believe that there is widespread wrongdoing, and widespread lying about it, among U.S. law-enforcement agencies, particularly those in big, Democrat-run cities infamous for the corruption of their other municipal institutions? Why do conservatives find it so plausible — obvious, even — that the IRS and the EPA and the Atlanta public schools are corrupt and self-serving, but somehow believe that the Baltimore police department isn’t?

He has lots of examples.

There are a great many investigations of police misconduct in Baltimore, where the local police behave more like the militia of a third-world warlord than a police agency. …Today, it is the Los Angeles sheriff. Before that, it was the Los Angeles Police Department, whose anti-gang task force became a rolling crime wave of its own, with 70 officers eventually implicated in unlawful shootings, bank robbery, drug dealing, theft, planting false evidence, framing suspects, destroying evidence of their wrongdoing and the usual perjury, perjury, and perjury. Then came Louis Eppolito and Stephen Caracappa, NYPD detectives convicted in 2006 on a raft of charges — racketeering, extortion, drug-dealing, murder and conspiracy to commit murder, running an illegal gambling ring, obstruction of justice — as part of a 20-year crime spree that ranged from New York to Las Vegas. …In Fairview, Tenn., a new police detective was just fired after responding to a prostitution ad. An NYPD officer was awarded $15 million in damages for being kidnapped and beaten inside his own home by other NYPD officers with a score to settle. Honolulu announced that in 2015 it fired a record number of officers for misconduct.

Corruption, malfeasance, and misbehavior seem to be a natural part of the system.

…facts suggest that our police departments have the same problems as our other government agencies, exacerbated by the fact that police are, inevitably, in the business of violence. It isn’t a few scattered misdeeds when it’s the NYPD, the LAPD, the Baltimore PD, the Los Angeles sheriff’s department, and more. That’s not a few bad apples — that’s the orchard. And it needs pruning.

Kevin’s argument is very compelling, particularly his appeal to conservatives about being skeptical of all parts of government at all times.

This is similar to the argument I made that it’s especially important to monitor and resist government wrongdoing when “the good guys” are in power.

In other words, calling for the elimination of the Department of Education or the Department of Housing and Urban Development while Obama is in office is (or should be) the easy part.

By contrast, fighting against such wasteful programs when Bush was in the White House was much harder. Many supposed fiscal conservatives suddenly went silent, and that sin of omission helps to explain why the burden of federal spending increased so rapidly.

Yes, police protection is a legitimate function of government, so the issue isn’t whether police forces should be abolished (though Camden, New Jersey, got good results by doing exactly that). But skepticism of police budgets and police behavior is still very appropriate. Indeed, one obvious takeaway from Kevin’s article is that it’s especially important for “law and order” conservatives to be vigilant to make sure police forces operate honestly and efficiently (thus making life easier for the majority of cops who simply want to do a good job and protect their communities).

And that also means getting rid of laws that don’t make sense.

Just as defense hawks should be the ones most critical of wasteful spending by the Pentagon or misguided military commitments by politicians.

P.S. You can enjoy some police-related humor here, here, and here.

P.P.S. And don’t forget cops generally are on the right side on guns.

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Northern Virginia just got buried by more than two feet of snow.

This has two implications. First, I’m going to have a fun time shoveling my driveway.

Second, I’m going to add to my collection of humor that pokes fun at libertarians.

And now, courtesy of a left-leaning, quasi-populist softball buddy, we have our new addition: The tyranny of government snowplows!

Now that we’ve all enjoyed a good laugh (because some of us libertarians can be very doctrinaire and dour, and thus deserve to be teased), it’s worth noting that plenty of places, such as private communities, shopping centers, etc, do rely on the private sector.

And it’s no mystery that the snow in those places is generally cleared faster and at lower cost.

That being said, most libertarian types are far more tolerant of local governments spending money on things that arguably might be public goods.

Indeed, one of our principles is that things tend to go awry (like the water scandal in Flint) when responsibility and accountability are blurred because of involvement by state government or the federal government.

So most of us will tolerate snow removal by local governments, even if we would prefer the private sector.

P.S. I also have a collection of pro-libertarian humor.

P.P.S. Just in case you want to vicariously share my snow-shoveling misery, this picture will give you an idea of the size of the problem.

Though it is nice that one of the cats is helping to point the way.

And another one of the kitties seems rather fascinated by the walls of snow.

For what it’s worth, this snow definitely beats the December 2009 storm and also is heavier than the February 2010 storm.

P.P.P.S. Since I’m not as smart as my neighbor, who parked at the end of his driveway, I have hours of work ahead of me. Too bad there aren’t any criminal, unlicensed teenagers looking for work.

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Remember the cluster-you-know-what in New Orleans following Hurricane Katrina? Corrupt and incompetent politicians in both the city and at the state level acted passively, assuming that Uncle Sam somehow should be responsible for dealing with the storm.

And we’ve seen similar behavior from other state and local politicians before, during, and after other natural disasters.

The obvious lesson to be learned is that the federal government shouldn’t have any responsibility for dealing with natural disasters. All that does it create a wasteful layer of bureaucracy, while also inculcating a sense of learned helplessness on the part of state and local officials who should be responsible for dealing with storms and other local crises.

In other words, the answer is federalism. State and local governments should be solely responsible for state and local issues.

But not just because of some abstract principle. There’s a very strong practical argument that you get more sensible decisions when the public sector is limited (as Mark Steyn humorously explained) and there is clear responsibility and accountability at various levels of government.

And this is why the biggest lesson from the scandal of tainted water in Flint, Michigan, is that local politicians and bureaucrats should not be able to shift the blame either to the state or federal government. Which was my main point in this interview.

To be sure, it is outrageous that state and federal bureaucrats knew about the problem and didn’t make it public, so I surely don’t object to officials in Lansing and Washington getting fired.

But I do object to the political finger pointing, with Democrats trying to blame the Republican Governor and Republicans trying to blame the Democratic President.

Nope, the problem is an incompetent local government that failed to fulfill a core responsibility.

The Wall Street Journal has the same perspective, opining that the mess in Flint is a failure of government.

…the real Flint story is a cascade of government failure, including the Environmental Protection Agency.

More specifically (and as I noted in the interview), we have a local government that became a fiefdom for a self-serving bureaucracy that was more concerned with its privileged status than in providing core government services.

…after decades of misrule: More than 40% of residents live in poverty; the population has fallen by half since the 1960s to about 100,000. Bloated pensions and retiree health care gobble up about 33 cents of every dollar in the general fund.

And the WSJ editorial also castigated the state and federal bureaucrats that wrote memos rather than warning citizens.

MDEQ and the EPA were chatting about Flint’s system as early as February. MDEQ said it wanted to test the water more before deciding on corrosion controls, though it isn’t clear that federal law allows this. …the region’s top EPA official, political appointee Susan Hedman, responded… “When the report has been revised and fully vetted by EPA management, the findings and recommendations will be shared with the City and MDEQ and MDEQ will be responsible for following up with the City.” She also noted over email that it’s “a preliminary draft” and it’d be “premature to draw any conclusions.” The EPA did not notify the public.

The lesson is that adding state and federal bureaucracy impedes effective and competent local government.

The broader lesson is that ladling on layers of bureaucracy doesn’t result in better oversight and safety. It sometimes lets agencies shirk responsibility for the basic public services like clean water that government is responsible for providing.

Here’s the bottom line.

Federalism is about getting better government by creating clear lines of responsibility and accountability in an environment that allows state and local governments to learn from each other on best practices.

The current system blurs responsibility and accountability, by contrast, while also imposing needless expense and bureaucracy. And we get Katrina and Flint with this dysfunctional approach.

So whether it’s Medicaid, education, transportation, welfare, or disasters, involvement from Washington makes things worse rather than better.

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Here’s a simple rule. When a politicians says a new program will cost X, hide your wallet because it actually will cost three or four times as much. Or even more.

Obamacare is a particularly painful example from recent history.

Simply stated, politicians and bureaucrats routinely under-estimate costs because they figure once a project or program is underway, voters can be tricked into throwing good money after bad.

It happens all the time in Washington. And it happens in other nations as well.

And even though I’m a fan of decentralization, that doesn’t mean I’m oblivious to the fact that state and local governments are very capable of similar behavior.

Consider, for example, the streetcar project in our Washington, DC. The main problem is that taxpayers are getting reamed. The current price tag, according to a report in the Washington Times, is about $3 billion.

And what are taxpayers getting for that “investment”?

So far, based on a story in one of the city’s other newspapers, the Washington Post, they’re getting long delays.

In the early 2000s, an ambitious band of city officials set out to cut through the bureaucratic mire and launch a vast streetcar network that would be a model for the nation, eventually running 20 to 40 miles or more. The first leg was supposed to open in 2006. But as 2015 comes to a close, officials are scrambling toward their latest goal of opening a diminished, 2.2-mile streetcar line.

But major delays are just the tip of the iceberg.

The Post‘s report highlights how one small part of the project – a maintenance facility for the streetcars – has become symbolic of grotesque cost overruns and waste.

The District is spending three or four times what other cities have to build a maintenance facility for its fledging streetcar system… The “Car Barn” project was originally designed as a simple garage and rail yard for light repairs and storage, with some offices for staff. But it has ballooned in ambition and nearly tripled in cost — to $48.8 million. It will now include a number of pricey and unusual features, including grass tracks for parking the fleet of six streetcars and a cistern for washing them with rainwater. …The District says it…is projected to open in 2017 after long delays. Tucson spent $13 million. Cincinnati’s was $11.5 million. Seattle’s came in at $11.1 million.

I’m sure local taxpayers (plus taxpayers around the nation that also subsidized this farce) will be happy to know they paid for a solar roof and other useless quirks.

Here are some of the details on why costs exploded.

…the building has…become a teaching tool for how public projects can be saddled with immense new costs. The historic designation “prompted an immediate six-month stop-work order,” DDOT said, and required, along with the green building rules, numerous upgrades. Those included using stone and brick materials; adding a saw-toothed roof with skylights; and hiding a streetcar power supply under photovoltaic cells and behind “green screen walls.” …Among the other major additions was an intricate system of turf tracks and paving stones that allow rainwater to drip into an underground vault for storage and filtering before flowing toward the city’s storm-water pipes.

Though taxpayers may think the “drip” is the sound of their money being flushed down a toilet.

In 2011, under Mayor Vincent C. Gray (D), the District estimated it would spend $6.2 million on a maintenance yard and a temporary shelter — basically, a big tent. Then, with the temporary tuneup location in place, the permanent building, additional track and other work in the yard would be finished for an additional $10.7 million. …The yard-and-tent total grew to $10.4 million, DDOT said, including environmental work and hundreds of thousands of dollars to keep some Dean-Facchina workers on the job 12 hours a day, six days a week to speed things up. By last year, estimates for the second phase, including the permanent Car Barn, had risen to $24 million. In July, the city agreed to spend $38.4 million on this phase, bringing the total to $48.8 million. Among the unforeseen costs listed by DDOT are $1 million in storm drainage and $824,000 in “indirects.”

So what’s the bottom line?

Well, the late former Mayor of DC, Marion Barry, is not normally a credible source. And I’m not sure I trust any numbers that came out of his mouth.

But I suspect he ventured very close to the truth when he was quoted in a Washington Times story from 2014.

…the late former Mayor Marion Barry said D.C. taxpayers would be spending $2,000 to subsidize each ride, calling it “a streetcar to nowhere.”

In other words, it would have been cheaper to hire chauffeured limousines for the handful of people who will use the streetcar. Assuming, of course, it ever gets opened.

By the way, there must be something in the local water, because there’s a similar example of grotesque waste on the other side of the Potomac River.

But let’s not just pick on profligate local governments.

Never forget that the federal government is the real expert at waste.

National Review has a very depressing list of ways that Uncle Sam has been squandering our tax dollars.

Federal spending gets more ridiculous every year, and a new congressional report details 100 of the most egregious examples. Following in the footsteps of chronic-waste chronicler Tom Coburn, Oklahoma senator James Lankford published “Federal Fumbles” late on Monday afternoon. …Here are NR’s top-ten favorite — which is to say, most scoff-worthy and absurd — examples of how the government wastes your time, energy, and hard-earned cash.

Here are some of the highlights, though lowlights might be a better term.

…the Department of Defense…approved a $283,500 grant to monitor the day-to-day life of baby gnatchatchers. …the U.S. National Institutes of Health…announced it would grant some hapless grad student $48,500 to pen the definitive history of smoking in Russia over the past 130 years. …the National Science Foundation…gave Massachusetts Institute of Technology more than $400k to ponder the burning question: “Does media choice cause polarization, or does polarization cause media choice?” …five federal agencies alone spent $3.1 billion on workers placed on administrative leave in a two-year timespan. A lot of that cash — $775 million, to be exact — went to public employees banned from their desks for more than a month. …The National Park Service forked over $5,000 to Mars Hill University so it could make a documentary film about a local musician. …$65,473 to figure out what bugs do near a lightbulb…$35,000 for solar-powered beer.

To be sure, these items are just a drop in the bucket compared to entitlement spending.

And these examples of pork-barrel waste also are minor compared to all the supposedly non-controversial outlays that are part of the discretionary budget that funds various agencies and departments.

That being said, keep the above list in mind the next time some politicians says that we need more taxes to finance ever-bigger government.

And never forget that the real waste is when governments spend money on things that should in the private sector or civil society.

In other words, the real waste is about 80 percent-90 percent of what happens in Washington.

P.S. If you have a strong stomach, you can watch some short videos on government waste here, here, here, and here.

P.P.S. And some egregious additional example of waste can be perused here, here, and here.

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Let’s revisit the issue of urban unrest, with special attention to the challenges for both entrepreneurs and ordinary citizens.

While potential police misconduct may serve as a trigger for riots, the powder keg is already in place because of decades of bad government policy.

Jay Steinmetz, who runs a supply-chain management company in Baltimore, provides a real-world perspective on what it’s like to be an entrepreneur in a city run by kleptocrats. Here are some excerpts from his Wall Street Journal column.

When the building alarm goes off, the police charge us a fee. If the graffiti isn’t removed in a certain amount of time, we are fined. This penalize-first approach is of a piece with Baltimore’s legendary tax and regulatory burden.  …Maryland still lags most states in its appeal to companies, according to well-documented business-climate comparisons put out by think tanks, financial-services firms, site-selection consultants and financial media. Baltimore fares even worse than other Maryland jurisdictions, having the highest individual income and property taxes at 3.2% and $2.25 for every $100 of assessed property value, respectively.

Here’s what it means, in terms of lost revenue, to Mr. Steinmetz’s company.

The bottom line is that our modest 14,000-square-foot building is hit with $50,000 in annual property taxes. And when we refinanced our building loan in 2006, Maryland and Baltimore real-estate taxes drove up the cost of this routine financial transaction by $36,000. State and city regulations overlap in a number of areas, most notably employment and hiring practices, where litigious employees can game the system and easily find an attorney to represent them in court. Building-permit requirements, sales-tax collection procedures for our multistate clients, workers’ compensation and unemployment trust-fund hearings add to the expensive distractions that impede hiring.

So it’s no surprise to learn that the geese with the golden eggs (as well as the silver and bronze eggs) are flying away.

Our employees reduce their tax burden and receive better public services in the suburbs.  …The financial problem Baltimore does face is a declining tax base, the most pronounced in the state. According to the Internal Revenue Service, $125 million in taxable annual income in Baltimore vanished between 2009 and 2010.

I’m not sure why Mr. Steinmetz hasn’t left as well. I guess it’s both admirable and foolish for him to persevere is such a hostile environment.

Thomas Sowell, in an article published by National Review, demolishes the argument that criminal behavior can be blamed on racism or poverty.

He starts by drawing attention to the 1960s as a key turning point.

The “legacy of slavery” argument is not just an excuse for inexcusable behavior in the ghettos. …Anyone who is serious about evidence need only compare black communities as they evolved in the first 100 years after slavery with black communities as they evolved in the first 50 years after the explosive growth of the welfare state, beginning in the 1960s.

Prof. Sowell then makes the obvious point that blacks faced much harsher conditions before the 1960s, yet crime was much lower.

And the black family was much more stable before the so-called war on poverty in the 1960s.

We are told that such riots are a result of black poverty and white racism. But in fact — for those who still have some respect for facts — black poverty was far worse, and white racism was far worse, prior to 1960. But violent crime within black ghettos was far less. Murder rates among black males were going down — repeat, down — during the much-lamented 1950s, while it went up after the much celebrated 1960s, reaching levels more than double what they had been before. Most black children were raised in two-parent families prior to the 1960s. But today the great majority of black children are raised in one-parent families.

Sowell’s point is that the welfare state created incentives for dysfunctional behavior.

And he stresses that this isn’t a racial issue.

Such trends are not unique to blacks, nor even to the United States. The welfare state has led to remarkably similar trends among the white underclass in England over the same period. …You cannot take any people, of any color, and exempt them from the requirements of civilization — including work, behavioral standards, personal responsibility, and all the other basic things that the clever intelligentsia disdain — without ruinous consequences to them and to society at large. Non-judgmental subsidies of counterproductive lifestyles are treating people as if they were livestock.

I particularly appreciate his point about the importance of social capital, what he calls the requirements of civilization.

But this doesn’t mean black citizens don’t have some legitimate grievances. Radley Balko of the Washington Post explains that African-Americans are getting abused by greedy governments, just like Mr. Steinmetz.

He starts his article by sharing some good news on falling crime rates and big reductions in police deaths. But for our purposes today, the most powerful and relevant part of his story deals with one citizen’s interaction with government.

Antonio Morgan [is] a 29-year-old resident of Hazelwood, Missouri. He owns his own small business, a car repair and body shop he’d been saving up to buy since he was a teenager. He has also been arrested more than 20 times. All but two of those arrests were for misdemeanors. Morgan saved up for his business by fixing cars in his mother’s driveway. That required him to occasionally park cars on the street. That earned him parking tickets. He paid them when he could, but he occasionally missed deadlines. And that would lead to an arrest warrant. All of this also put Morgan on the radar of local police.

As you continue reading, keep in mind he was “on the radar” even though he did nothing to infringe on the life, liberty, and property of other citizens.

His unpaid parking tickets led not just to arrest warrants, but to the occasional suspension of his license. That led to more citations, although like many in the area, Morgan was sometimes pulled over and issued only a ticket for driving on a suspended license, or driving a car that wasn’t registered to him. (Morgan sometimes drove his clients’ cars to test them.) But there was no underlying traffic violation — which raises the question of why the officer pulled Morgan over in the first place, if it wasn’t to profile him. Those citations then led to more arrests.

It certainly seems as if St. Louis County in Missouri has been treating Mr. Morgan as a revenue-generating milk cow, much as Baltimore has been squeezing Mr. Steinmetz.

Different approach, but same result.

Cops would show up at his garage and cite his employees for operating without a business license. Morgan has a license; his employees didn’t need one. But to get the citations dismissed, Morgan and his employees would have to go to court, which was held once a month, at night. If they missed their court date, they too would be hit with an arrest warrant. Wealthy people can hire an attorney to go in their stead, and to negotiate their way out of a citation. But neither Morgan nor his employees were wealthy.

Some of you may be wondering about the two ostensibly more serious arrests on his record.

Radley’s column discusses both, and it certainly looks like Mr. Morgan has been mistreated by the justice system.

Here’s the first arrest. And remember it only occurred because he had to be in court to deal with ridiculous fines and petty harassment.

As Morgan walked toward the courthouse a police officer asked him the kids in the truck were his. He replied that they were. The officer asked him why he had left them alone. Morgan replied that he hadn’t, and that the woman parked next to him had agreed to watch them. ..Morgan pleaded with the police officer to flag down his friends, who he said would vouch for him. He says the officer then threatened to Taser him. Morgan put up his hands. The officer then arrested him for child endangerment. …The incident still upsets Morgan — not even the arrest so much as that his children had to see it. “I’m a good father,” he says. “I own my own business. I provide for my kids. Do you know what it’s like for your own children to see you get arrested? For a cop to say, right in front of them, that he’s arresting you because you’re a bad parent?”

I’m not someone who sees racism under every bed and behind every tree, but you can’t help but wonder whether this incident would have even happened if he was a white guy in a business suit.

The second arrest is equally dubious.

…the officer confronted Morgan because he was “trespassing” on a neighbor’s lawn. Morgan responded that he wasn’t trespassing, because the neighbors didn’t mind. Morgan says the cop moved to arrest him, and he lost his cool. He claims he never struck the police officer, but he does admit that he screamed at him. Once he did, he was hit with a Taser and arrested for assaulting a police officer. That charge was later dropped. (The neighbors back Morgan’s account of the entire incident, including his assertion that he never touched the cop.)

It’s always a smart idea to act servile and obsequious when dealing with cops, so Mr. Morgan obviously didn’t play his cards right.

But imagine if you had been endlessly harassed. Wouldn’t you be angry? Radley sure would have been.

I was stunned. But not because Morgan lost his cool with the cop. I was stunned that it had taken him so long to do so. And that even then, he’d manage to restrain himself from physical violence. I’m not sure I’d have been able to say the same.

Here’s the bottom line. Or, to be more accurate, two bottom lines.

First, we should sympathize with Mr. Morgan just as we should sympathize with Mr. Steinmetz. Actually, we should sympathize more with Morgan.

Morgan is no one’s definition of a “thug.” He’s a guy who breaks his back to keep up the business that supports his family, despite obstacles that, frankly, most white business owners don’t have to endure. For all he’s been through, he is remarkably composed. He deals with the daily harassment in a remarkably manner-of-fact way. …Morgan isn’t a drug pusher. He isn’t an absentee father. He isn’t in a gang. He’s a guy trying to do right by his family.

Second, we should recognize that one “root cause” of the problem is greedy government.

The primary source of revenue for the local towns is sales tax. But the poorer (which means blacker) towns don’t generate enough income from sales taxes. So they turn to municipal fines to keep themselves from going under. The poorer the town and its residents, the more likely the town relies on fines for a greater percentage of its annual revenue. Which means that the blacker the town, the more likely its residents are getting treated like ATMs for the local government.

None of this justifies rioting. And I have to imagine that Mr. Morgan would be one of the good guys during any unrest (much like Stretch and his friends in Ferguson).

But stories like this should make all of us appreciate how some communities may have a very sour impression of the police.

Let’s close with some economic analysis of riots (hey, I’m a policy wonk, so bear with me).

Here’s some of what Professor Edward Glaeser of Harvard wrote a few years ago for Bloomberg.

…public disturbances are a classic example of tipping-point phenomena, which occur when there is some positive feedback mechanism that makes an activity more attractive, or less costly, as more people do it. …There is a tipping point in rioting because the cost of participating — the risk of going to jail — gets lower as the number of people involved increases. …riots occur when the shear mass of rioters overwhelms law enforcement.

He then looks at the more challenging issue.

But how do these mass events get started? In some cases, …such as the 1965 Watts Riot, a peaceful crowd provides cover for initial lawlessness. Sporting events, such as Game 7 of the Stanley Cup Finals in Vancouver this year, can easily produce the crowds that allow a riot to start. Most strangely, riots can follow an event that creates a combination of anger and the shared perception that others will be rioting. The acquittal of police officers in the Rodney King case seems to have created these conditions in Los Angeles in 1992.

The left-wing excuse for rioting doesn’t seem to have much merit.

…across U.S. cities, there has never been much of a link between unrest and either inequality or poverty. In fact, the riots of the 1960s were actually slightly more common in cities that had more government spending.

But economic analysis gives us good clues, both about how to deter riots and who is most victimized when they occur.

Light penalties widely applied and serious penalties applied to a few can both deter unlawful behavior. This is a central conclusion of Gary Becker’s path-breaking economic analysis of crime and punishment. …Even when they are connected to understandable grievances, they do great harm, particularly to the poorest residents.

The moral of the story is that we should be tough on crime, but that doesn’t mean mistreating people like Antonio Morgan.

Instead, the legal system should focus on trying to deter bad behavior, which is when genuinely bad people infringe on the life, liberty, and property of others.

But how do we get politicians and bureaucrats to properly focus?

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I wrote back in 2010 that riots in Europe were a harbinger of future unrest in the United States.

Given the chaos in Baltimore, I’m tempted to claim profound wisdom and great foresight.

But I’ll reluctantly confess that my main point five years ago was to warn about the long-run consequences of poorly designed entitlement programs and unfavorable demographics (leading to the outcome illustrated by this set of cartoons).

Simply stated, Margaret Thatcher was right when she warned that the problem with big government is that “eventually you run out of other people’s money.”

The riots in Baltimore, by contrast, are a short-run phenomenon exacerbated by factors such as a loss of social capital and potential police misconduct.

But we can still learn something by looking at the dysfunctional consequences of big government in Baltimore and other big cities in America.

Here’s some of what’s been written by my colleague, Michael Tanner.

…there are lessons to be learned about the failures of government and how those failures can create a climate of anger and frustration that just awaits a spark to ignite the flames of violence and destruction. …the powder keg was put in place by decades of big-government liberalism, both in the city of Baltimore and in the state of Maryland. …Maryland has one of the most generous welfare systems in the nation. A mother with two children participating in seven common welfare programs — Temporary Assistance for Needy Families (TANF), food stamps (SNAP), Medicaid, housing assistance, Supplemental Nutrition for Women, Infants, and Children (WIC), energy assistance (LIHEAP), and free commodities — could receive benefits worth more than $35,000. Yet, nearly a quarter of the people in Baltimore still live in poverty. In 1960, Baltimore’s poverty rate was just 10 percent. …while Baltimore’s high welfare benefits haven’t reduced poverty, they may well have exacerbated other social problems. For example, some studies have long shown that high welfare benefits correlate with high out-of-wedlock birth rates. It should not come as a surprise, then, that two-thirds of births in the city are to unmarried mothers, and almost 60 percent of Baltimore households are headed by single parents.

While the politicians subsidize bad things in Maryland, they penalize good things.

…while Baltimore’s high welfare benefits haven’t reduced poverty, they may well have exacerbated other social problems. For example, some studies have long shown that high welfare benefits correlate with high out-of-wedlock birth rates. It should not come as a surprise, then, that two-thirds of births in the city are to unmarried mothers, and almost 60 percent of Baltimore households are headed by single parents. …if that were not bad enough, the city of Baltimore adds one of the highest property taxes among comparable cities…a tax rate more than twice the rate of most of the rest of the state.

Mike has lots of additional information, including revelations about bad education policies, dangerous anti-gun laws, and counterproductive drug prohibition.

But let’s now shift to a Wall Street Journal editorial on the same subject.

…what went up in flames in Baltimore Monday night was not merely a senior center, small businesses and police cars. Burning down was also the blue-city model of urban governance. …let’s not forget who has run Baltimore and Maryland for nearly all of the last 40 years. The men and women in charge have been Democrats, and their governing ideas are “progressive.” This model, with its reliance on government and public unions, has dominated urban America as once-vibrant cities such as Baltimore became shells of their former selves. …the main failures are three: high crime, low economic growth and failing public schools that serve primarily as jobs programs for teachers and administrators rather than places of learning. …of late the progressives have been making a comeback, led by Bill de Blasio in New York and the challenge to sometime reform Mayor Rahm Emanuel in Chicago. This week’s nightmare in Baltimore shows where this leads. It’s time for a new urban renewal, this time built on the ideas of private economic development, personal responsibility, “broken windows” policing, and education choice.

One would think that Detroit – and now Baltimore – show the dangers for cities of big government and dependency.

Unfortunately, the election of Mayor de Blasio in New York City suggest many voters are incapable of learning any lessons from the real world.

Last but not least, here’s some of Kevin Williamson’s column for National Review.

American cities are by and large Democratic-party monopolies, monopolies generally dominated by the so-called progressive wing of the party. The results have been catastrophic, and not only in poor black cities such as Baltimore and Detroit. …Would any sentient adult American be shocked to learn that Baltimore has a corrupt and feckless police department enabled by a corrupt and feckless city government? …While the progressives have been running the show in Baltimore, police commissioner Ed Norris was sent to prison on corruption charges (2004), two detectives were sentenced to 454 years in prison for dealing drugs (2005), an officer was dismissed after being videotaped verbally abusing a 14-year-old and then failing to file a report on his use of force against the same teenager (2011), an officer was been fired for sexually abusing a minor (2014), and the city paid a quarter-million-dollar settlement to a man police illegally arrested for the non-crime of recording them at work with his mobile phone. There’s a good deal more.

And who should be blamed for this horrible track record?

No Republican, and certainly no conservative, has left so much as a thumbprint on the public institutions of Baltimore in a generation. Baltimore’s police department is, like Detroit’s economy and Atlanta’s schools, the product of the progressive wing of the Democratic party enabled in no small part by black identity politics. This is entirely a left-wing project, and a Democratic-party project. …Community-organizer — a wretched term — Adam Jackson declared that in Baltimore “the Democrats and the Republicans have both failed.” Really? Which Republicans? Ulysses S. Grant? Unless I’m reading the charts wrong, the Baltimore city council is 100 percent Democratic. …The evidence suggests very strongly that the left-wing, Democratic claques that run a great many American cities…are incompetent, they are corrupt, and they are breathtakingly arrogant. Cleveland, Philadelphia, Detroit, Baltimore — this is what Democrats do.

My one contribution to the wise words in the three articles excerpted above is to point out that the troubles in Baltimore are somewhat similar to riots we’ve seen in Greece and the United Kingdom. There’s no racial or ethnic component to the chaos we’ve seen in most of the European riots, so the analogy is far from exact, but the events are alike in that a big part of the problem is a failure of government and a concomitant erosion of social or cultural capital.

Simply stated, too many people on both sides of the Atlantic now think they are entitled to a life based on freebies from government. This almost surely erodes any sense of self worth and breeds anger and resentment.

Putting the toothpaste of self-reliance back into the societal tube doubtlessly will not be easy. Here’s some of what Jay Nordlinger wrote today.

The young rioters have…been brought up to regard themselves as entitled and victimized, at the same time. In truth, they are among the luckiest people in the whole world: to have been born American. Millions, probably billions, would be happy to trade places with them. The rioters are free to make of life what they will. Their shackles are mental and spiritual. …These young people have been grossly mistaught — misled — by the “grievance industry” (to use shorthand). Just about the worst thing you can do to a child is tell him he’s a victim — when it’s not true. Even when it is true, it may be unwise. It is surely damnable when it’s not true.

While I’m sometimes pessimistic about certain societal trends, one part of the answer is easy.

Stop creating new entitlements (such as Obamacare) that alter the already perverse tradeoff between work and leisure. Then people might feel a greater incentive to get jobs.

And stop imposing punitive taxes, particularly on the investors and entrepreneurs that are willing to put capital at risk to create jobs and wealth for the rest of us.

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I periodically share this poster, in part because it’s funny, but mostly because it’s true.

After all, can you think of many “success stories” involving government?

When I pose this question to my statist friends, I usually get a blank stare in response. Though some of them will offer answers such as the GI Bill, interstate highways, and landing on the moon.

But even if you accept that those policies were successful, it’s rather revealing that folks on the left have a very hard time identifying any success stories from recent decades.

On the other hand, we have a never-ending and ever-growing list of government failures, boondoggles, and screw-ups.

And that’s our focus today. We’re going to look at all levels of government for new examples that confirm Bastiat was right.

Let’s start with Montgomery County in Maryland, where bureaucrats are waging a legal battle against parents who – gasp! – allow unsupervised play for their children.

Here are some troubling passages from a Washington Post report.

The Maryland parents investigated for letting their young children walk home by themselves from a park were found responsible for “unsubstantiated” child neglect…the finding of unsubstantiated child neglect means CPS will keep a file on the family for at least five years and leaves open the question of what would happen if the Meitiv children get reported again for walking without adult supervision. The parents say they will continue to allow their son, Rafi, 10, and daughter Dvora, 6, to play or walk together, and won’t be swayed by the CPS finding. …The case dates to Dec. 20, when police picked up the two Meitiv children walking in Silver Spring on a Saturday afternoon after someone reported them. …The Meitivs said they would not have allowed the one-mile outing from Woodside Park to their home if they did not feel their children were up to it. …The Meitivs, both scientists by training, embrace a “free-range” philosophy of parenting, believing that children learn self-reliance by being allowed to make choices, build independence and progressively experience the world on their own. …Danielle Meitiv said when she first read the decision, she felt numb. As she reread it, she recalled turning to her husband and saying: “Oh my God, they really believe we did something wrong.” …Danielle Meitiv said that in spite of the decision, her children played at a nearby park by themselves Monday, when schools were closed for the snow day.

I confess that I was more paranoid than the Meitivs when my kids were young, so I can’t claim to have followed the same “free-range” approach.

But I also tried to avoid being a “helicopter” parent.

Not that my decisions on child rearing matter. What’s important from the perspective of public policy is that the Montgomery County bureaucracy is trying to dictate how to raise kids. And there’s a very clear implicit threat that it will arrest the parents and/or confiscate the children if the Meitivs don’t acquiesce.

And if you think I’m exaggerating and governments don’t behave this way, check out the story of the mom who was jailed overnight because her kids played outside – while she was watching them!

All of us should be outraged, regardless of our parenting approach.

Now let’s look at an example of a state government in action.

As reported by the Washington Post, the Georgia State Patrol enjoyed a Keystone Cops moment when it raided an old man because…drum roll, please…he was growing okra.

Georgia police raided a retired Atlanta man’s garden last Wednesday after a helicopter crew with the Governor’s Task Force for Drug Suppression spotted suspicious-looking plants on the man’s property. A heavily-armed K9 unit arrived and discovered that the plants were, in fact, okra bushes. …Okra busts like these are good reason for taxpayers to be skeptical about the wisdom of sending guys up in helicopters to fly around aimlessly, looking for drugs in suburban gardens. And that’s not to mention the issue of whether we want a society where heavily-armed cops can burst into your property, with no grounds for suspicion beyond what somebody thought he saw from several hundred yards up in a helicopter.

In some sense, this is an amusing story of government incompetence.

But military-type raids, when the supposed offense involves a possible “crime” with no victims, are a recipe for disaster. Let’s be glad that the cops didn’t accidentally kill anybody in this raid.

By the way, this isn’t the first time cops have seized okra bushes. Or looked foolish because of an inability to identify marijuana leaves.

At the point, I don’t want to miss an opportunity to say that it’s time to end the foolish Drug War. People who abuse drugs may be stupid, but they’re not infringing on the rights of others. The War on Drugs, by contrast, has led to all sorts of policies that do infringe on our rights, from disgusting asset forfeiture policies to pointless snooping on our bank accounts. Or, as we just read, raids on okra growers.

Time now for a look at an example of federal government fecklessness.

But this story from the Washington Times won’t surprise anybody. Because anybody with a pulse already knows that there is a lot of waste in Washington.

Federal agencies across the board are continuing to waste tens of billions of taxpayer dollars on duplicative spending efforts, even after Congress‘ official watchdog has made hundreds of recommendations for cutting back. The spending issues, ranging from Medicare and Medicaid mismanagement to transportation programs to weapon systems acquisitions, cost taxpayers $125 billion in improper payments in 2014 alone, as highlighted in a new report from the Government Accountability Office. …GAO investigators noted in the report that the government can’t continue to sustain its wasteful spending habits… “The federal government faces an unsustainable long-term fiscal path. Changing this path will require difficult fiscal policy decisions to alter both long-term federal spending and revenue,” the GAO analysts concluded. …The GAO report targeted both the Internal Revenue Service and the Department of Health and Human Services for mismanaging programs that saw rampant wasteful spending. …“These programs combined account for over 76 percent of the government-wide estimate. We have made numerous recommendations that if effectively implemented, could help improve program management, reduce improper payments in these programs, and achieve cost savings.”

Notice that HHS and the IRS win the prize for wasteful incompetence.

But don’t laugh. After all, those are the two bureaucracies that got lots of new power and authority as a result of the costly Obamacare boondoggle. So the joke’s on us.

By the way, the GAO’s definition of waste is very narrow. It merely applies to funds that are improperly disbursed.

If you also include monies that are squandered, then the amount of waste includes every penny at the Department of Agriculture, Department of Education, Department of Housing and Urban Development, Department of Transportation, etc.

Last but not least, let’s look at a great moment in foreign government.

I’ve written about the crazy Greek government on many occasions. And given that this collection of misfits does utterly bizarre things (such as giving handouts to pedophiles and requiring stool samples when setting up online companies), I’m never surprised to learn when they adopt foolish policies.

But even I was taken aback to learn about the latest gimmick they concocted to “solve” the nation’s fiscal crisis. Here are some excerpts from a report in the U.K.-based Guardian.

The Greek government has told its eurozone creditors it has a novel way of tackling the country’s chronic tax evasion culture – wiring students, tourists, and housewives for sound and video to spy on tax dodgers while posing as shoppers and customers. …Varoufakis’s plans for a new government-sponsored amateur snoopers’ charter…attracted most attention. …He said the prospects of successfully countering tax dodging were dismal because of the demoralised and understaffed state of the tax inspection service. Instead, he proposed recruiting large numbers of “non-professional inspectors” on short-term casual contracts of no longer than two months who would be paid by the hour. They would be “wired for sound and video”, trained to pose as “customers” and “will be hard to detect by offending tax dodgers.” …Varoufakis said the launch of the amateur snoopers would act as a deterrent, “engendering a new tax compliance culture” in Greece. He added that Athens would need to ask eurozone partners for help with the equipment and the training. Germany has previously offered to send 500 tax inspectors to Athens. …In Athens, news of the undercover tax agents was quick to spark ridicule and widespread disbelief.

Hmmm….so the Germans offered to send 500 tax inspectors? Sounds like a perfect job for ex-Stasi officials.

And there are some bureaucrats in Chicago who almost surely would want to help implement this snitch-on-your-neighbor scheme. And the governor of New York has related experience, though his police-state policy focused on guns rather than tax revenue. Let’s also not overlook the U.K. politicians who have a tax-enforcement-über-alles mentality.

Never mind that all the research shows that low rates are honest government are the best ways of getting high compliance.

So I’m not holding my breath expecting success from this latest Greek scheme.

But I can say it’s a perfect example of how governments operate. Screw up, grab for more money, screw up some more. Lather, rinse, repeat.

It’s almost a shame that there’s no life on Mars. We could make today’s list even longer if there was another layer of government.

Now you know why it’s almost always the right time to mock politicians.

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One of the most important bulwarks of a just society is equal justice under law.

That principle is even etched in stone above the entrance to the Supreme Court.

My belief in equal treatment is one of the reasons I support the flat tax. As an economist, I like the pro-growth impact of tax reform. But as someone who believes in justice, I also support the flat tax because I don’t like class-warfare policies that punish some taxpayers and corrupt loopholes that give preferential status to other taxpayers.

Indeed, my support for equality of law is so strong that I even object to policies that benefit me, such as special TSA lines in airports for frequent flyers.

But sometimes it’s not clear how a principle should be applied. So let’s revive the “you be the judge” series, which asks thorny questions about the workings of a free society, and explore the case of income-based traffic fines.

Check out these excerpts from a BBC story.

Finland’s speeding fines are linked to income, with penalties calculated on daily earnings, meaning high earners get hit with bigger penalties for breaking the law. So, when businessman Reima Kuisla was caught doing 103km/h (64mph) in an area where the speed limit is 80km/h (50mph), authorities turned to his 2013 tax return, the Iltalehti newspaper reports. He earned 6.5m euros (£4.72m) that year, so was told to hand over 54,000 euros. …Mr Kuisla might be grateful he doesn’t earn more. In 2002, an executive at Nokia was slapped with a 116,000-euro fine for speeding on his Harley Davidson motorbike. His penalty was based on a salary of 14m euros.

So is this a case of greedy government targeting people for the sin of success?

Well, I’m sure the government is greedy, but what about the morality of income-based fines?

The driver isn’t happy, but others argue that deterrence doesn’t work unless the actual impact of the fine is the same for rich and poor alike.

The scale of the fine hasn’t gone down well with Mr Kuisla. “Ten years ago I wouldn’t have believed that I would seriously consider moving abroad,” he says on his Facebook page. “Finland is impossible to live in for certain kinds of people who have high incomes and wealth.” There’s little sympathy from his fellow Finns on social media. …person says: “Small fines won’t deter the rich – fines have to ‘bite’ everyone the same way.”

At the risk of sounding like a soft-headed leftist, I’m not overly sympathetic to Mr. Kuisla’s position.

Simply stated, if the goal of traffic fines is deterrence, then the penalties should vary with income.

I remember when I was young, living on a paycheck-to-paycheck basis, a traffic fine sometimes would chew up a non-trivial part of my disposable income. That affected my behavior.

Now that I’m older and making more money (and especially since my kids are mostly done with their schooling!), a traffic fine is just a nuisance (though I still sometimes get very upset).

Though this discussion wouldn’t be complete without also considering the fact that traffic laws and enforcement oftentimes are motivated by revenue rather than safety.

The most compelling evidence comes from Ferguson, Missouri. It seems that what’s driving the mistreatment of black people is government greed.

Here’s some of what Ian Tuttle wrote on the topic for National Review.

The Department of Justice’s “Investigation of the Ferguson Police Department,” released this week…what the material in the report reveals is less a culture of racial animus than one of predatory government: “Ferguson’s law enforcement practices,” states the report, “are shaped by the City’s focus on revenue rather than by public safety needs.” …myriad municipal regulations that, rigorously enforced, nickel-and-dime the citizenry to the local government’s benefit. This is the injustice on which the Justice Department has stumbled, which helps to explain the city’s racial tensions — and which merits urgent correction.

I fully understand why many blacks in Ferguson are angry.

Imagine if you had a modest income and you were constantly being hit with $50 and $100 fines (oftentimes then made much larger thanks to the scam of “court fees”).

This can wreck a family’s budget when it doesn’t have much money. So wouldn’t you be upset?

Particularly since “predatory government” is a very good description of the Ferguson bureaucracy.

In 2010, the city’s finance director encouraged Ferguson police chief Thomas Jackson to “ramp up” ticket-writing to help mitigate an anticipated sales-tax shortfall. …One stop can yield six or eight citations, and officers have been known to compete to set single-stop records. Indeed, within Ferguson Police Department, because opportunities for promotion have been tied to “productivity” — that is, enthusiasm for ticket-writing — officers have perverse incentives to issue citations, and in concert with police and prosecutors, municipal courts regularly enforce the payment of fines in a way that compounds what a single defendant owes.

Now let’s connect Ferguson with Finland.

Our Finnish driver is upset by his giant fine, but at least he probably can relate to the poor people of Ferguson.

But the more successful people of Ferguson, to the extent that they are even targeted by the local cops, have almost nothing to worry about.

…this practice — of police and prosecutors and courts together — disproportionately affects black communities not because they are black, but because they are poor. They do not have the means to escape the justice apparatus, unlike the comparatively wealthy, who can pay a fine and be done with the matter — or hire an attorney, and inconvenience courts that prefer the ease of collecting fees to the challenge of arbitrating cases.

Here’s the bottom line.

If we want a just society, there should be few laws and they should be enforced on the basis of protecting public safety rather than enriching the bureaucracy.

In such a system, income-based fines and penalties are a reasonable way of making sure deterrence applies equally to rich and poor.

Unfortunately, we have far too many laws and they are used as back-door taxes on the citizenry.

So if we adopt income-based fines, the politicians will simply have more money to spend and even less incentive to scale back excessive and thuggish government.

Heck, just look at how asset-forfeiture laws and money-laundering laws have turned into revenue scams for Leviathan.

P.S. Since today’s post ended with a depressing conclusion, let’s share some a bit of offsetting good news.

As reported by The Hill, the spirit of civil disobedience lives even in Washington!

From sledding to snowball fights, dozens of children and their parents took to Capitol Hill Thursday afternoon to protest a controversial sledding ban. Capitol Police have refused to lift the sledding ban, but some parents organized a “sled in” on the west lawn of the Capitol to put a spotlight on the unpopular rule. …Capitol Police pointed out that more than 20,000 sledding injuries occur in the U.S. each year…, but officers on the ground also refused to enforce it. …It’s turning into a public relations nightmare for those who oppose sledding and support the ban.

You’ll doubtlessly be horrified to learn that illegal sledding is – gasp! – a gateway crime to other forms of misbehavior.

…the children were not only sledding but also climbing trees, building snowmen and throwing snowballs at one another.

Oh My God, unlicensed snowmen, unregistered tree climbing, and illegal snowballs! Freedom is obviously too dangerous.

Next thing you know, these kids will grow up to engage in other forms of civil disobedience, just like Arizona drivers and Connecticut gun owners.

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I’ve periodically cited the great 19th-century French economist, Frederic Bastiat, for his very wise words about the importance of looking at both the seen and the unseen when analyzing public policy.

Those that fail to consider secondary or indirect effects of government, such as Paul Krugman, are guilty of the “broken window” fallacy.

There are several examples we can cite.

A sloppy person, for instance, will think a higher minimum wage is good because workers will have more income. But a thoughtful analyst will think of the unintended consequence of lost jobs for low-skilled workers.

An unthinking person will conclude that government spending is good for growth because the recipients of redistribution have money to spend. But a wiser analyst will understand that such outlays divert money from the economy’s productive sector.

A careless person will applaud when government “creates” jobs. Sober-minded analysts, though, will wonder about the private jobs destroyed by such policies.

It’s time, though, to give some attention to another important contribution from Bastiat.

He also deserves credit for the pithy and accurate observation about government basically being a racket or a scam.

And what’s really amazing is that he reached that conclusion in the mid-1800s when the burden of government spending – even in France – was only about 10 percent of economic output. So Bastiat was largely limited to examples of corrupt regulatory arrangements and protectionist trade policy.

One can only imagine what he would think if he could see today’s bloated welfare states and the various ingenious ways politicians and interest groups have concocted to line their pockets with other people’s money!

Which brings us to today’s topic. We’re going to look at venal, corrupt, wasteful, incompetent, and bullying government at the federal, state, and local level in America.

We’ll start with the clowns in Washington, DC.

Remember when the unveiling of the Obamacare turned into a cluster-you-know-what of historic proportions?

Well, the Daily Caller reports that the IRS has just signed an Obamacare-related contract with an insider company that recently became famous for completely botching its previous Obamacare-related contract.

Seven months after federal officials fired CGI Federal for its botched work on Obamacare website Healthcare.gov, the IRS awarded the same company a $4.5 million IT contract for its new Obamacare tax program. …IRS officials signed a new contract with CGI to provide “critical functions” and “management support” for its Obamacare tax program, according to the Federal Procurement Data System, a federal government procurement database. The IRS contract is worth $4.46 million, according to the FPDS data.

Just one more piece of evidence that Washington is a town where failure gets rewarded.

And CGI is an expert on failure.

A joint Senate Finance and Judiciary Committee staff report in June 2014 found that Turning Point Global Solutions, hired by HHS to review CGI’s performance on Healthcare.gov, reported they found 21,000 lines of defective software code inserted by CGI. Scott Amey, the general counsel for the non-profit Project on Government Oversight, which reviews government contracting, examined the IRS contract with CGI. “CGI was the poster child for government failure,” he told The Daily Caller. “I am shocked that the IRS has turned around and is using them for Obamacare IT work.” Washington was not the only city that has been fed up with CGI on healthcare. Last year, CGI was fired by the liberal states of Vermont and Massachusetts for failing to deliver on their Obamacare websites. The Obamacare health website in Massachusetts never worked, despite the state paying $170 million to CGI.

For a company like this to stay in business, you have to wonder how many bribes, pay-offs, and campaign contributions are involved.

Now let’s look at an example of state government in action.

Kim Strassel of the Wall Street Journal has a column about a blatantly corrupt deal between slip-and-fall lawyers and the second most powerful Democrat in the Empire State.

New York Assembly Speaker Sheldon Silver was last week arrested and accused by the feds of an elaborate kickback scheme. …Mr. Silver is alleged to have pocketed more than $5 million in a set-up in which he directed state funds to the clinic of an asbestos doctor, who in turn provided him with patients who could be turned into jackpot plaintiffs. Weitz & Luxenberg, a class-action titan, paid Mr. Silver huge referral fees for these names, off which the firm stands to make many millions. …when the Silver headlines broke, Weitz & Luxenberg founder Perry Weitz said he was “shocked”… The firm quickly put the Albany politician on “leave.”

A logical person might ask “on leave” from what? After all, he didn’t do anything.

But he did do something, even if it was corrupt and sleazy.

…here’s the revealing bit. Queried by prosecutors as to what exactly the firm did hire Mr. Silver to do—since he performed no legal work—Weitz & Luxenberg admitted that he was brought on “because of his official position and stature.” In other words, this was transactional. Weitz & Luxenberg gave Mr. Silver a plum job, and Mr. Silver looked out for the firm—namely by blocking any Albany bills that might interfere with its business model.

So workers, consumers, and businesses get screwed by a malfunctioning tort system, while insider lawyers and politicians get rich. Isn’t government wonderful!

Just one example among many of how state governments are a scam. Perhaps now folks will understand why I’m not very sympathetic to the notion of letting them take more of our money.

Last but not least, let’s look at a great moment in local government.

As we see from a report in USA Today, a village in New Jersey is dealing with the scourge of…gasp…unlicensed snow removal!

Matt Molinari and Eric Schnepf, both 18, also learned a valuable lesson about one of the costs of doing business: government regulations. The two friends were canvasing a neighborhood near this borough’s border with Bridgewater early Monday evening, handing out fliers promoting their service, when they were pulled over by police and told to stop. …Bound Brook, like many municipalities in the state and country, has a law against unlicensed solicitors and peddlers. … anyone selling goods and services door to door must apply for a license that can cost as much as $450 for permission that is valid for only 180 days. …Similar bans around the country have put the kibosh on other capitalist rites of passage, such as lemonade stands and selling Girl Scouts cookies.

Though, to be fair, it doesn’t seem like the cops were being complete jerks.

Despite the rule, however, Police Chief Michael Jannone said the two young businessmen were not arrested or issued a ticket, and that the police’s concern was about them being outside during dangerous conditions, not that they were unlicensed. “We don’t make the laws but we have to uphold them,” he said Tuesday after reading some of the online comments about the incident. “This was a state of emergency. Nobody was supposed to be out on the road.”

But the bottom line is that it says something bad about our society that we have rules that hinder teenagers from hustling for some money after a snowstorm.

Just like these other examples of local government in action also don’t reflect well on our nation.

Let’s close with my attempt to re-state Bastiat’s wise words. Here’s my “First Theorem of Government.”

And if you think what I wrote, or what Bastiat wrote, is too cynical, then I invite you to check out how politicians are bureaucrats are squandering money on Medicare, the Veterans Administration, the Agriculture Department, Medicaid, the Patent and Trademark Office, the so-called Consumer Financial Protection Bureau, the National Institutes of Health, Food Stamps, , the Government Services Administration, unemployment insurance, the Pentagon

Well, you get the idea.

Which is why this poster is a painfully accurate summary of government.

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As a taxpayer, I don’t like the fact that government employees get paid more than folks in the private sector.

But the big difference between bureaucrats and regular workers isn’t so much the pay, it’s the fringe benefits.

And perhaps the  biggest difference of all is that government bureaucrats get far more  lavish retiree benefits.

Sounds like a sweet deal, at least if you get a coveted job (or even six jobs!) with a state or local government.

It’s not a good deal for taxpayers, though, and the entire system is rather unstable because politicians and union bosses have conspired to create huge unfunded liabilities that threaten to create a death spiral for state and local governments.

Simply stated, why should productive taxpayers continue to live, work, and pay taxes in places where a huge chunk of money is diverted to pay off past promises rather than to deliver goods and services (education, parks, trash pickup, police, etc) that have some value?

Indeed, this is a big reason why places such as Detroit already have collapsed. And I fear it is just a matter of time before other local government (as well as some states such as California and Illinois) reach the tipping point.

But perhaps you think I’m being too dour? Yes, I’m prone to pessimism because of my low level of faith in the political elite. In this case, however, any sensible person should be very worried.

Let’s look at what some experts have to say about these issues.

Here are some passages from Steve Malanga’s Wall Street Journal column from earlier this month.

He starts by explaining that Jerry Brown’s big tax hike for education actually has very little to do with helping kids to learn (not that more money is the recipe for better education, as shown by this jaw-dropping chart, but that’s a separate issue).

Instead, the money is being diverted to finance the lavish pension system.

California Gov. Jerry Brown sold a $6 billion tax increase to voters in 2012 by promising that nearly half of the money would go to bolster public schools. …Last June Mr. Brown signed legislation that will require school districts to increase funding for teachers’ pensions from less than $1 billion this year in school year 2014-15, which started in September, to $3.7 billion by 2021, gobbling up much of the new tax money. With the state’s general government pension fund, Calpers, also demanding more money, California taxpayer advocate Joel Fox recently observed that no matter what local politicians tell voters, when you see tax increases, “think pensions.” …When California passed its 2012 tax increases, Gov. Brown and legislators promised voters the new rates would expire in 2018. But school pension costs will keep increasing… Public union leaders and sympathetic legislators are already trying to figure out how to convince voters to extend the 2012 tax increases and approve “who knows what else” in new levies

Sounds grim, but Mr. Malanga warns that “Californians are not alone.”

Decades of rising retirement benefits for workers—some of which politicians awarded to employees without setting aside adequate funding—and the 2008 financial meltdown have left American cities and states with somewhere between $1.5 trillion and $4 trillion in retirement debt. …the tab keeps growing, and now it is forcing taxes higher in many places.

Such as Pennsylvania.

A report last June by the Pennsylvania Association of School Administrators found that nearly every school district in that state anticipated higher pension costs for the new fiscal year, with three-quarters calculating their pension bills would rise by 25% or more. Subsequently, 164 school districts received state permission to raise property taxes above the 2.1% state tax cap. Every one of the districts cited rising pension costs.

And West Virginia.

In West Virginia, where local governments also face big pension debts, the legislature recently expanded the state’s home rule law—which governs how municipalities can raise revenues—to allow cities to impose their own sales taxes. The state’s biggest city, Charleston, with $287 million in unfunded pension liabilities, has already instituted a $6 million-a-year local sales tax devoted solely to pensions, on top of the $10 million the city already contributes annually to its retirement system. At least five more cities applying to raise local sales taxes, including Wheeling, also cited pension costs.

The column also has lots of material on the mess in Illinois.

Here’s just a sampling.

The city of Peoria’s budget illustrates the squeeze. In the early 1990s it spent 18% of the property-tax money it collected on pensions. This year it will devote 57% of its property tax to pension costs. Reluctant to raise the property levy any more, last year the city increased fees and charges to residents by 8%, or $1.2 million, for such items as garbage collection and sewer services. Taxpayers in Chicago saw the first of what promises to be a blizzard of new taxes. The city’s public-safety retirement plans are only about 35% funded, though pension costs already consume nearly half of Chicago’s property-tax collections.

All this sounds depressing, but it’s actually worse than you think.

We also have to look at the promises that have been made to provide health benefits for retired government employees.

Robert Pozen of Brookings has some very sobering data.

Public-pension funds have garnered attention in recent years for being underfunded, but a more precarious situation has received much less notice: health-care obligations for public retirees. …only 11 states have funded more than 10% of retiree health-care liabilities, according to a November 2013 report from the credit-rating agency Standard & Poor’s. For example, New Jersey has almost no assets backing one of the largest retiree health-care liabilities of any state—$63.8 billion. Only eight out of the 30 largest U.S. cities have funded more than 5% of their retiree health-care obligations, according to a study released last March by the Pew Charitable Trust. New York City tops the list with $22,857 of unfunded liabilities per household. …Total U.S. unfunded health-care liabilities exceeded $530 billion in 2009, the Government Accountability Office estimated, but the current number may be closer to $1 trillion, according to a 2014 comprehensive study released by the National Bureau of Economic Research.

By the way, these retired government workers are covered by Medicare, but Pozen explains that the unfunded liabilities exist because so many of them retire before age 65.

And their health plans sometimes cover Medicare premiums once they turn 65.

State and local governments typically pay most of the insurance premiums for employees who retire before they are eligible for Medicare at age 65. That can be a long commitment, as many workers retire as early as 50. Many governments also pay a percentage of Medicare premiums once retired workers turn 65.

But there is some good news.

States are trying to deal with this healthcare-driven fiscal Sword of Damocles.

Since 2010 more than 15 states have passed laws to reduce health-care cost-of-living adjustments—automatic benefit increases linked to the consumer-price index. Courts in eight states upheld these reductions on grounds that cost-of-living adjustments should not be considered a contractual right. Only Washington’s law was struck down in 2011, and the case is now on appeal. Some state and local governments—Nevada and West Virginia, for example—have increased deductibles and scaled back premium subsidies. Others like Ohio and Maine have reduced the health-care benefits provided to retirees. Several years ago Pennsylvania changed early retirement eligibility to 20 years of service from 15.

In many cases, though, I fear these reforms are a case of too little, too late.

So long as the fiscal burden of providing pensions and healthcare expands at a faster rate than the private economy, states and localities will push for more and more taxes to prop up the system.

But people won’t want to live in places where a big chunk of their tax payments are diverted to fringe benefits. So they’ll move out of cities like Detroit and Chicago, and they’ll move out of states like New Jersey and Illinois.

So the bottom line is that politicians and government employee unions engineered a great scam, but one that ultimately in many cases will self destruct.

And the lesson for the rest of us is that government bureaucrats should not get special goodies, particularly when they are financed by nothing other than promises to screw future taxpayers.

Pensions for government workers should be based on the defined-contribution model, and healthcare promises should be more limited and in the form of health savings accounts.

But how do you get these much-needed reforms when the government unions finance the politicians who are on the opposite side of the negotiating table?!?

P.S. Here’s a good joke about government bureaucracy. Here’s a similar joke in picture form. And we find the same humor in this joke, but with a bit more build up. And now that I’ve given it some thought, there’s more bureaucrat humor here, here (image near bottom), and here.

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Like the good people of Arizona, I despise speed cameras.

But not because I want reckless driving. Instead, my disdain is based on the fact that governments set up cameras where speed limits are preposterously low in order to generate revenue. And I speak from personal experience.

Like the good people of Houston, I also despise red-light cameras.

But once again, this isn’t because I want jerks racing through red lights and endangering innocent people. Instead, my opposition is based on the fact that greedy governments – operating recklessly – use such cameras as tools to fleece drivers.

Holman Jenkins has a column in today’s Wall Street Journal, explaining how the industry was supposed to operate.

A promising industry betrayed by the behavior of its customers—that’s the story of the red-light camera business. …Redflex Traffic Systems, leading practitioner of the once-sparkling business of setting up automatic traffic-enforcement systems for municipalities. The company and its industry were set to grow. The product improved traffic safety, freed up officers for more important work, and paid for itself. Towns and cities didn’t even have to budget a dime upfront because Redflex assumed the costs and risks of setting up cameras at designated intersections.

But in the real world, that’s not what happened. Politicians all over the nation used cameras as revenue-generating devices.

…serial revelations by the Chicago Tribune about the city’s buccaneering ways—running its camera system for profits rather than safety. …New York state conspicuously authorized cameras at various upstate locations in 2010 to close a budget gap. When New Jersey last week let a five-year experiment lapse amid a voter backlash, Moody’s called the decision a “credit negative” for local treasuries. In California, public acceptance steadily eroded as politicians kept piling on “surcharges” that turn a hundred-dollar traffic offense into a $500 fine in the mail. …the Trib cited the city’s “long-standing reliance on using the lowest possible yellow light time” to maximize revenues even at the cost of encouraging more accidents. …a universal peeve of motorists, being fined for a harmless rolling right on red.

At this point, some people may be thinking that this is no big deal. After all, they might argue, at least the cameras make the roads safer.

But according to research commissioned by the Chicago Tribune, the cameras simply replace one type of accident with another, at least in part because the city government rigged the system to maximize revenue rather than safety.

Here are some excerpts from a report published by Reason.

Chicago’s red light camera program hasn’t made driving in the city any safer and has replaced one type of car crash for another. The cameras are there obviously to make money for the city, not for the benefit and safety of the residents. The Chicago Tribune commissioned a study to break down the city’s claims that cameras have reduced right-angle crashes at intersections by 47 percent and calls the number nonsense. They calculate that it actually dropped the rate of crashes that caused injuries by only 15 percent. That wouldn’t be such a terrible number if engineers hadn’t also calculated that their cameras didn’t also cause a 22 percent increase in rear-end collisions that caused injuries. …the Tribune story makes sure to point out how much revenue the city has gotten from the program—$500 million over 12 years. The Tribune also reminds readers of the many, many, many scandals and issues the program has faced, like tickets handed out for lights that had yellow signal times below the national standard, unexplained ticket surges, and outright bribes from a company operating the cameras to city officials.

By the way, this data from Chicago isn’t an anomaly. Radley Balko has reported on similar accident-causing scams all over the nation.

So now, perhaps, you’ll understand why I wrote more than three years ago that Jay Beeber is a hero.

And why I expressed admiration for England’s NoToMob.

But I confess I’m nonetheless conflicted about cameras. Simply stated, I don’t want morons driving 60 miles per hour on residential streets. And I don’t want narcissistic jerks zipping through intersections a couple of seconds after a light has turned red.

Cameras, if properly operated, could discourage genuinely dangerous behavior.

So here’s the libertarian quandary (actually it’s a quandary for everyone who wants a sensible society). How can you give government the power to enforce legitimate laws without simultaneously giving government the power to abuse people?

This is the puzzle that America’s Founding Fathers tried to solve with a set of rules that limited the power of government. As Thomas Jefferson wrote, “ let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution.”

Unfortunately, courts haven’t done a good job in recent decades of constraining the federal government. And the only halfway decent constraint on state and local governments is jurisdictional competition, and that’s a necessary but far from sufficient condition for good policy.

Returning to the narrow issue of cameras, part of the solution is to reduce government’s role in transportation. We already have lots of privately built and privately operated highways in America (and even in the United Kingdom). And private developers also build and operate some local roads. So why not let them set – and enforce – the traffic rules?

Such a system wouldn’t be perfect, of course, but I’m guessing we would have better rules than the ones imposed by politicians.

Or we can let politicians use new technologies to further monitor and control our lives (and empty our pockets).

P.S. If some brave citizen got arrested for busting a bunch of revenue cameras and I somehow wound up on the jury that decided the case, you can probably guess what I would do.

P.P.S. I shared a chart back in 2010 to show that economists are terrible forecasters.

Now we have more evidence. But instead of looking at growth predictions versus reality, here’s what economists predicted about interest rates compared to what actually happened.

This chart helps to show that economists shouldn’t try to make short-run predictions, which good economists already understand.

Whereas the bad ones are easily confused with con artists.

No wonder it’s so easy to make fun of us.

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