On Monday, eight Midwestern governors met in Chicago to sign a memorandum of understanding by which they committed to a widespread effort to vie for stimulus funds that will be used expand high-speed rail systems throughout participating states. The governors of Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio, and Wisconsin were all signatories.

This policy’s price tag will be in the billions. Leaving aside ideologies about public spending, I want to first evaluate this policy in terms of whether it is viable — whether it can even achieve its stated goals. If a policy cannot even accomplish its stated goals, then peripheral discussions about whether the government should spend money, or whether the price tag is too large, become unnecessary. The primary stated values of high-speed rail policy, as I see them, are: job creation; increasing commuter ease; and, reducing environmental impact.

I would contend that the policy fails its cause in all three, and over the next few days, I will try to evaluate high-speed rail’s viability in protecting the environment, creating jobs, providing economic stimulus, and reducing travel times. Stay tuned.

Last night at the Cardinals game, a friend of mine and I discussed the bottle deposit law. It came up because we discussed how they have gotten rid of beer cans entirely at Busch this year. You can only buy your $27 dollar beers on tap or in plastic bottles. This is regrettable, because aluminum is so easy to recycle, although plastic can obviously be recycled, too. Also, I had just returned from a trip to Michigan, with its famous 10-cent deposit.

So, should Missouri institute a deposit law of either a nickel or dime? I think it should. It would be one way to encourage positive social behavior (recycling bottles) through incentives rather than directives. You don’t have to recycle if you don’t want to, it will just cost you $1.20 extra per case of beer. This is not a tax you have to pay, it is one you choose to pay, and the behavior encouraged is so simple to do it can hardly be considered onerous or burdensome. So, I say bring on a 5- or 10-cent deposit law in Missouri. Let me know what you think in the comments.

It is always dangerous to talk before you have all the facts, as a certain person sharing a beer today with two Bostonians has realized, but, dammit, if it’s good enough for him it’s good enough for me. I want to direct you to an example of government consolidation in Kansas City. According to the Star, the city’s independent ambulance service is being folded into city government. I am not here to talk about the silly use of consultants, although I certainly agree with this councilman — whose point applies to corporate America as well as to government:

“I still think we’ve got the expertise in-house,” Sharp said. “We use too many consultants.”

From what I can tell and what I have learned, this seems to be a good move in KC. MAST, a regional, independent government entity, is the nonprofit company that has formerly provided this service. There are many types of these regional entities in Missouri, and some of them certainly deserve to remain independent, like MSD in St. Louis. But MAST appears primarily to serve Kansas City and surrounding unincorporated areas, like Blue Summit. Hopefully in the areas outside of KC, fully private ambulance services will begin providing services.

But back to the consolidation issue. If the city can save money on overhead, et al, by bringing one government entity under the control of another, then this will be a good thing for taxpayers. There is no compelling reason to avoid this — the need for checks and balances from separate agencies doesn’t really apply here. Plus, most people, right or wrong, probably think ambulance service is a legitimate responsibility of government, so this is not another example of the government expanding its reach. It’s just one government consolidating with another; which is fine with me as long as it saves tax dollars.

I am totally open to being corrected on any of this by our KC readers, so fire away in the comment section, if you like.

Yesterday morning, I (along with a number of other Show-Me Institute staffers) attended a talk by Newt Gingrich, hosted by Delta Dental. He outlined four major tax changes that he thought were worth supporting to grow the economy (and, thus, make it feasible to support programs like Medicare).

Newt Gingrich’s four major tax changes:

1. A two-year, 50-percent tax reduction for Social Security and Medicare (including employer match).

Gingrich suggested this would provide a sort of “raise” for people, by increasing their take-home pay. By eliminating the employer match, the tax burden per employee small businesses would decrease, which would encourage businesses to hire more employees. This type of temporary tax cut might not be terribly effective on its own, however, as forward-looking people recognize their tax burdens will be unchanged over most of their planning horizon.

2. Eliminating the capital gains tax — like in China.

3. A 12.5-percent corporate tax rate — like in Ireland.

Nos. 2 and 3 would promote business growth (and provide an incentive for industries to stay in the United States). Our current corporate tax rate is 35 percent, which creates an economic incentive to move operations overseas — to Ireland, for instance, which has the lowest rate. By lowering the U.S. rate, government might capture less revenue, but this policy change could easily lead to capturing more — 12.5-percent collections on a business that stayed in the United States is much higher than 0 percent for a business that departed. And this doesn’t take into account the fact that lower business tax burdens lead to spurred economic activity.

4. Abolish the death tax.

Why should taxed income be taxed a second time? At any rate, an estate tax — in which the government gets paid when somebody dies — seems like a perverse policy incentive, especially considering the larger role that government wants to play in health care.

Personally, I think all these tax cuts are great ideas. As Show-Me studies have demonstrated time and time again, lower taxes promote economic growth. Solidifying a new growth trend is crucial before we even consider increasing government’s role in health care — something that should, of course, be minimized when at all possible.

This morning, six employees of the Show-Me Institute and one of our regular book club attendees found ourselves among 200 other guests at the futureFOCUS 2009 seminar, which featured a presentation from former speaker of the House Newt Gingrich. He made some excellent points that I can only agree with on the topic of health care, including: The public option is likely ill-considered; taxes should be lowered across the board so that individuals will have more money to buy their own health care; and, the present level of bureaucracy is to blame for much of the present cost of health care. He also pointed out that the Canadian system currently does not cover a number of conditions, for which many Canadians cross the border to get treatment; if we adopt a system similar to Canada’s, where will those people go?

Gingrich made one point I did not agree with. After pointing out that the progression of technology will afford new avenues for medical care and scientific progress, he used that as an opportunity to advocate a federally funded project that would study the brain using the latest technology, similar to the Human Genome Project or the Manhattan Project.

Overall, Gingrich was an incredible speaker, and the hour just flew by. During the Q&A, one audience member indicated his disappointment at the lack of outrage at some of President Barack Obama’s proposals. He asked, “Do you have any outrage?” Gingrich waited several beats before responding, and ultimately indicated that, yes, it’s easy to get outraged, but then you’re exhausted and you may not accomplish what you want. It’s better to remain level-headed, slow down the debate, and point out anything false stated by your opponents with calm reason.

This reminded me of a blog post I read awhile back about how anger and emotionality in politics is adaptive. It made sense for our ancestors to get excited about policy decisions, because it could literally mean life and death for the tribe. As modern individuals with the benefit of self-analysis and better reason, however, it is incumbent upon us to follow Gingrich’s great advice and make every effort to withhold anger, instead letting cooler heads prevail. It makes sense that a veteran politician would have learned this lesson already, but it was still impressive to see him articulate it so clearly.

The Congressional Budget Office (CBO) recently published a letter to the House majority leader regarding a proposal to establish a commission to cut Medicare spending. The council would consist of five medical doctors or health care experts who will suggest cuts that the president must approve.

This is the model of the public option, a top-down plan that takes the individual’s (and doctor’s) agency out of health care. As the Baby Boomer generation becomes eligible for Medicare, the program will inevitably expand — expanding a plan while simultaneously requiring cost cuts is counterintuitive. Cuts are best made through increased efficiency and better preventive care, not because a panel of five people decides to stop covering certain procedures.

The CBO estimates that $2 billion can be saved in the latter half of the next decade. However, this amount is minuscule in comparison to the $1 trillion proposed cost of the public option in that same time period.

Two of the more disturbing recommendations from the CBO letter appear on page 5:

• Setting explicit and feasible quantitative goals for reducing outlays in the Medicare program.
• Incorporating an explicit fall-back mechanism (such as an across-the-board reduction in payments) if goals for cost reduction are not met.

Health care costs have increased significantly since the creation of Medicare. This can be attributed in part to cost floors and the regulations imposed on doctors by Medicaid and Medicare. As it is, some doctors cannot afford to accept Medicare patients, and some are reimbursed for less than the required procedures cost. These added costs are foisted onto private insurance companies.

The Kaiser Family Foundation estimates that Missouri spent $7,029 per enrollee in 2004, slightly below the national average. Could these costs be lowered? Probably, but outright cuts to what treatments will (and won’t) be paid for will only have a dire outcome for the health care system.

Health care costs need to come down, but mandating cuts is not the best way to achieve that. Instead, increasing efficiency by lowering regulatory barriers or lowering fixed costs through tort reform, in order to lower malpractice insurance rates, would help ensure that patient needs continue to be met. Mandated cuts are just another way of imposing health care rationing.

I have a lot of problems with the wording of this headline. Don’t get me wrong — I love KMOX and am listening online to The Charlie Brennan Show as I type this. But this is exactly the type of headline, and media story, that gets people to buy into the blatantly false idea that it is the government’s job to get people out of poverty and manage the economy.

Even if you are of the regrettable belief that it is the proper role of government to manage the economy, headlines like this make it sound like the government somehow is good at doing that. Which it ain’t. Seriously, does anyone believe that even one family is going to be lifted out of the cycle of poverty because the Board of Aldermen and the mayor passed an ordinance? I am not criticizing the elected officials, here; I am just pointing out that headlines like this reinforce economic ignorance.

Almost precisely one year ago, I wrote about how some Missouri cities were dedicating your taxpayer dollars to preserve the government’s ability to take property from one private owner and give it to another private owner. As you may remember, the Missouri Municipal League engaged in litigation intended to prevent Missouri’s citizens from voting on the question — using a combination of funds from city governments and contributions from the same commercial developers who are eager to see eminent domain used to their advantage.

Folks, they’re at it again.

Almost as soon as Missouri Citizens for Property Rights got a ballot title from the Secretary of State, the Missouri Municipal League sued in an attempt to make the ballot title recite a parade of imaginary horrors that they claim would follow the end of eminent domain abuse. A couple of weeks ago, Judge Richard Callahan ruled that the Secretary of State’s ballot title could go forward with only one insubstantial adjustment.

The Missouri Municipal League has appealed that ruling, continuing to insist that the restoration of property rights should be described as nothing less than the death knell for America. And, again, they’re calling on your elected officials to pony up your money in order to prevent you from having a say in the matter.

As a “Red Alert” sent out by the Municipal League states:

[A]lthough cities cannot directly contribute to support or oppose any ballot measure, cities may fund public informational campaigns. The City of Springfield has already committed $5,000 to this effort. Other cities are following suit. City contributions should generally reflect the size and financial capacity of the participating city. The League will also continue to coordinate these efforts with private sector “partner organizations” such as the Missouri Chamber of Commerce.

Of course, other cities have a more direct means of trying to prevent your participation in the political process. The city government of Slater, Mo., passed a resolution last week that “urges the citizens of [that] community to refrain from signing a CPR constitutional initiative petition because doing so would be contrary to the best interest of most property owners within the State of Missouri.”

When I used the Sunshine Law to compel the city to produce all documents its officials considered before adopting this resolution, all they could provide was a PowerPoint presentation created by the Missouri Municipal League — meaning, apparently, that city officials did not even consider the actual text of the proposed amendment, much less seek out any alternative interpretations. Instead, they resorted to the Orwellian suggestion that a constitutional amendment designed to protect the property rights of all Missourians would somehow be bad for property owners.

This should not be tolerated. Fortunately, it seems that some people have recognized this and are taking action. The Post-Dispatch reported just the other day that some citizens in Pacific, Mo., have demanded that their city withdraw from the Missouri Municipal League.

If enough people put pressure on their city governments to do the same, the Municipal League may have no other choice but to start respecting property rights instead of continuing their defense of eminent domain abuse.

This weekend, the Columbia Business Journal ran a tremendous article (part one of what looks to be a series) discussing how that city used eminent domain to demolish a thriving part of its black community. I’ve discussed previously how, particularly in the mid–20th century, cities would frequently use eminent domain to accomplish “Negro removal.” I had not previously been aware of Columbia’s own experiment with this racist enterprise, and I’m thankful to the Business Journal for bringing it to light.

When I first glanced at the title of Bill Schrier’s latest blog post, “Gray, Not Green, Technology,” I thought he must be referring to green jobs. Those are the jobs in alternative energy that aren’t productive enough to sustain themselves in the marketplace, but that are supposed to be the professions of the future (if the government subsidizes them, that is). Wasting resources on jobs that wouldn’t exist in a competitive environment is antithetical to the goal of saving and conserving resources, so I would readily classify such programs as “gray” rather than “green.”

However, reading further I see that Schrier isn’t referring to any specific policy; he’s wary of technological progress in general. Here’s why he thinks green technology is a myth:

Technology contains scarce minerals mined from the earth. It uses a lot of plastic (plastic comes from oil, right?). It takes a lot of water and toxic chemicals to make electronic components. An integrated circuit or chip factory uses as much water and power as a small, not-very-green, city.

Using technology is injurious, both to the environment and to people.

I’m starting to wonder why he took the job of Chief Technology Officer for the city of Seattle!

Schrier doesn’t consider all the materials and brainpower that would be wasted if we tried to do the same tasks without the benefit of technology. For example, imagine if there were no Internet and blog posts had to be printed in newspapers. You would have to deliver the newspapers several times a day in order to deliver information as quickly as a blog. Maybe you’re thinking, “They should just print them once a day and people could do without reading blog posts as soon as they’re written.” But then you have to take into account all the resources that would go to waste because of a lack of information — all the poor decisions that could have been prevented had people known more, sooner.

Even if you accept Schrier’s premise that technology is harmful, you must admit that technology is here to stay. And, because it is, the smartest thing to do is to create more new technologies, because they are cleaner, greener, and more efficient. It’s a good thing we didn’t stop developing computers when they were the size of rooms. Let’s welcome technological innovation and the environmental benefits it’s sure to bring.

James McWilliams, author of Just Food, discusses in a recent issue of Forbes magazine how the practice of buying local does not necessarily support the aim of reducing environmental impact.

McWiliams begins by citing a 2006 academic study in New Zealand that determined Londoners could reduce their environmental impact by purchasing lamb imported from New Zealand rather than lamb produced in England, because factors other than transportation often play a far larger role in environmental impact.

Mcwilliams continues by discussing how economies of scale in production can positively distribute environmental costs:

To choose a locally grown apple over an apple trucked in from across the country might seem easy. But this decision ignores economies of scale. To take an extreme example, a shipper sending a truck with 2,000 apples over 2,000 miles would consume the same amount of fuel per apple as a local farmer who takes a pickup 50 miles to sell 50 apples at his stall at the green market. The critical measure here is not food miles but apples per gallon.

We’ve argued on this website before that locavore policies constitute a new form of protectionism. This is true, but likely not a very compelling line of reasoning for locavores.

In this case, the economically efficient and environmentally efficient solutions do not have to be polarly aligned. Locavores should understand how their actions may fail to uphold the values they are rooted in, because of logistics and unintended consequences that haven’t been thoroughly considered. It’s even more important to view with a skeptical eye any legislation, government purchases, or changes in trade policy based on the reasoning that local consumption equates to environmentally friendly consumption.

Over at Mises Daily, Art Carden revisits the harmful effects of minimum wage laws and cites a Show-Me Institute study to do so:

Suppose that a job can be done by either three unskilled workers or two skilled workers. If the unskilled wage is $5 per hour and the skilled wage is $8 per hour, the firm will use unskilled labor and produce the output at a cost of $15. However, if we impose a minimum wage to $6 per hour, the firm will instead use two skilled workers and produce for $16 as opposed to the $18 cost of using unskilled workers. In the “official data” this shows up as a small job loss — in this case, only one job — but we see an increase in average wages to eight dollars per hour in spite of the fact that the least skilled workers are now unemployed.

I am in favor of helping the poor, but minimum wage laws — striking examples of the law of unintended consequences at work — are not the best tools to address the plight of the working class. As Carden notes, wage floors create unemployment for low-skilled workers. But earning a low wage would be better than no wage at all. Further, wage floors create deadweight losses through inefficiency, strain employer-employee relations, and foster the emergence of black markets in labor.

Wage floors are supported by people with the noblest intentions and the poorest reasoning. Proponents would do well instead to support education, skills training, and expansion of market opportunities through deregulation as better mechanisms to alleviate lower class struggles without the sting of such harmful unintended consequences.