Buffaloed by Obamacare’s Hidden Taxes

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Obamacare’s costs are starting to show by D.W. MACKENZIE:

Someone at Buffalo Wild Wings decided to make the costs of the so-called Affordable Care Act (ACA) explicit in the restaurant’s register receipts. An estimated ACA cost of 2 percent was charged to each paying customer.

BW3’s customers complained. Apparently, they’d rather keep these costs hidden. But hiding costs won’t make Obamacare’s higher prices go away.

Adding the cost of a specific government program to a receipt is unusual. Normally, the only tax itemized on register tapes is sales tax — but these are a fraction of the true costs of governmental activity. There are, in fact, too many different government programs to list on each register receipt. Because the price of regulation is usually built into the prices of goods and services, we tend to pay for regulatory costs unwittingly.

Obama’s “Affordable” Care Act imposes regulations, taxes, and subsidies as a means of income redistribution. As usual, the goal is to tax and regulate higher-income people to subsidize those with lower incomes — but that’s never the way things work out.

Real people do not simply pay taxes and regulatory costs as required by written laws. Everyone tries to avoid taxes by whatever means are available. Tax avoidance usually stems from bargaining over prices in markets. Sellers push for higher prices, and buyers push for lower prices.

Sellers have costs to cover: labor, capital, and taxes. It is a simple fact of economics that when an entrepreneur’s taxes rise, he or she will pass part of that additional cost on to customers.

Regulations are de-facto taxes. There is no economic difference between taxing money from someone to fund some activity and a regulatory requirement to achieve the same goal. The ACA is a complex set of taxes.

How do entrepreneurs respond to ACA taxes? The same way they respond to all taxes, explicit or regulatory: by raising the price of whatever they sell.

There is an inescapable fact of taxation: tax burdens are always shared. Taxes charged to upper-income earners for redistribution are in some measure always redistributed to those with lower incomes through price increases.

While ACA benefits have been touted as “free” to lower-income recipients, this proposition is false — and impossible. Somebody always pays for insurance, or any other good. Goods that seem to be paid for by government only appear to be free because their costs are hidden or obscured. Costs of government programs, like the ACA, are just added into the total costs of taxation, and the costs of taxation are partly factored into the prices of all goods.

Taxpayers cannot buy the same amount of goods when final tax-adjusted prices go up. Economists call the effect of taxes on consumer purchases the tax wedge, because taxes drive a wedge between what consumers pay and what entrepreneurs receive. Taxes make goods more expensive for consumers and less profitable for entrepreneurs.

The explicit 2 percent ACA surcharge at Buffalo Wild Wings may or may not have been intended as permanent. The restaurant chain’s executives have already cancelled the policy after customers reacted negatively. But there is a lesson to be learned from the surcharge. Government programs have the superficial appearance of being free, but they never are.

Government’s lack of financial transparency often leads to an ironic outcome: things that appear to be government gifts end up costing more. Why? Because the public sector’s hidden costs mean less cost control in the public sector.

Private enterprises make costs clear with prices. Prices don’t itemize each cost, but because costs are more easily perceived in the private sector, people make greater efforts to control costs. Some find the explicit nature of costs in the private sector unpleasant. Conversely, the fantasy of a free lunch from the state does have a certain emotional appeal. But the inability of most people to perceive the costs of government makes it almost certain that these costs will be higher, compared to the efficiency the private sector can achieve.

As Buffalo Wild Wings made clear, the ACA is just another example of a government program that makes a false promise of free benefits. Rational economic analysis tells us that there ain’t no such thing as a free lunch, yet politicians continue to use that fantasy for political gain.

Let’s abandon the myth of gifts from government. Every action has an economic cost, public or private.

ABOUT D.W. MACKENZIE

D. W. MacKenzie is an assistant professor of economics at Carroll College in Helena, Montana.

Florida Senate urges Congress to Repeal the Federal Income Tax by Rudy Treml

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secretary-bio

Florida Secretary of State Ken Detzner

“The current income tax system requires individual taxpayers to prepare annual tax returns using many complicated forms, causing innocent errors that are heavily punished.” 

This is an excerpt from Senate Memorial 118, adopted by the Florida Legislature during its 2014 session and sent to Washington, D.C., urging Congress to eliminate the Internal Revenue Service.

It’s true! The position paper – also known as SM-118 – was sent to our president on behalf of the State of Florida Secretary of State Ken Detzner on May 22, 2014.

In his cover letter, Detzner wrote, “This Memorial urges Congress to repeal all taxes on income and enact a national retail sales tax as specified in H.R. 25, the FairTax Act.”

SM-118 has a prose style similar to that of the U.S. Declaration of Independence authored by Thomas Jefferson and approved by the 13 American Colonies in July 1776. That declaration listed grievances against King George III, which justified the demand of the United States for freedom from the British Empire.

SM-118, also, lists grievances placed upon U.S. citizens by the federal income-tax system, to justify the demand for a national sales tax in place of an income tax, as well as the abolishment of the IRS and the repeal of the 16th Amendment to the United States Constitution.

The current tax system, according to SM-118, erodes jobs, retards economic growth, has reduced the standard of living for U.S. citizens, forces family farms to be sold so taxes can be paid, unnecessarily intrudes on citizens’ privacy, isn’t complied with at acceptable levels, has a disproportionate adverse impact on lower-income people, and imposes unacceptable compliance costs.

Our 160 elected representatives in the Florida Legislature have urged the United States Congress to enact H.R. 25, the FairTax Act, which was reintroduced into the 114th Congress on Jan. 6. U.S. Reps. John Mica and Ron DeSantis are co-sponsors of H.R. 25, as are seven other U.S. House members from Florida and another 55 co-sponsors from other states.

H.R. 25 eliminates all federal taxes on productivity (income) in favor of a national consumption tax. It also replaces Social Security and Medicare taxes. It eliminates all corporate taxes thereby making the USA the preferred worldwide manufacturing destination, and bringing jobs back to the USA while growing our economy.

With the passage of H.R. 25, the IRS is defunded and April 15 becomes just another spring day. Citizens control their tax obligation via their spending habits, and there is no sales tax on used items.Everyone is treated equally under a progressive national consumption tax. Those who spend the most pay the most tax. Plus, H.R. 25 authorizes the return of the federal sales tax paid by U.S. citizens for the necessities of life, in the form of a rebate.

The FairTax Act of 2015 is about 130 pages long, compared to the current 75,000-plus pages of income tax codes and regulations.

The FairTax is simple to understand, efficient to collect, hard to avoid, and visible, so taxpayers see the true cost of their government.

With its passage, no longer would politicians be able to use the tax code to reward their friends, punish their enemies, and do social engineering.

ABOUT RUDY TREML

Rudy Treml is a longtime proponent of the FairTax, and an activist with the Florida FairTax Educational Association.

Florida: “Astroturf” groups attack lawmakers who support campus carry (+ video)

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Anti-gun “astroturf” groups don’t like guns on campus and they’re demanding an apology from two lawmakers who do.  Currently under attack from these fake grassroots groups are Florida Representative Dennis Baxley and Nevada State Assemblywoman Michele Fiore.

In this video Astroturf (fake grassroots organizations) is explained at the University of Nevada by Sharyl Attkisson:

At the top of the list of “astroturf organizations” are groups created and funded anti-gun former New York City Mayor Michael Bloomberg to fight the NRA.  They are “Moms Demand Action for Gun Sense in America” and “Everytown for Gun Safety.”

sharyl attkisson

Sharyl Attkisson

In a column titled “Top 10 Astroturfers” Sharyl Attkisson writes: 

The whole point of Astroturf is to try to convince you there’s widespread support for or against an agenda when there’s not.

[ … ]

The groups present themselves as grassroots organizations of “mayors, moms survivors and everyday Americans.” They are spearheaded by former New York Mayor and multi-billionaire Michael Bloomberg, and former PR professional and mother Shannon Watts. Last year, they announced a $50 million political campaign to try to counter the efforts of the formidable gun rights lobby.

[ … ]

The results of an informal, non-scientific poll identify groups related to Gun Safety Action Fund, Inc. as top Astroturf efforts. These groups include Moms Demand Action for Gun Sense in America, Everytown, Everytown for Gun Safety, Gun Sense, It’’s Time for Gun Sense in America, Gun Sense Voter, I”m a Gun Sense Voter, Moms Take the Hill and Stroller Jam.

Attkinsson lists the following as the top 10 astroturfers:

  1. Moms Demand Action for Gun Sense in America and Everytown
  2. Media Matters for America
  3. University of California Hastings Professor Dorit Rubenstein Reiss and Children’s Hospital of Philadelphia’s Dr. Paul Offit
  4. “Science” Blogs such as: Skeptic.com, Skepchick.org, Scienceblogs.com (Respectful Insolence), Popsci.com and SkepticalRaptors.com
  5. Mother Jones
  6. Salon.com and Vox.com
  7. White House press briefings and press secretary Josh Earnest
  8. Daily Kos and The Huffington Post
  9. CNN, NBC, New York Times, Politico and Talking Points Memo (TPM)
  10. MSNBC, Slate.com, Los Angeles Times and Michael Hiltzik of the Los Angeles Times, MSNBC and Jon Stewart.

Presidential Candidate Jeb Bush and the Albatross of Common Core

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In her column, “Your Common Core Marketing Overlords,” Michelle Malkin revealed that Jeb Bush’s non-profit, Foundation for Excellence in Education, was among those saturating the airwaves with pro-Common Core commercials last spring.  The foundation, she charged, was “tied at the hip” to the federally funded testing consortium (one of two) called PARCC (Partnership for Assessment of Readiness for College and Careers).

It’s hard to believe that education may be a determining factor in a presidential election, as it seems to be in 2016, and that it’s due to Common Core.  Back in 2012, polling revealed that nearly 80 percent of Americans knew “nothing” or “not much” about Common Core.  That was three years after the Common Core national standards were quietly agreed to by governors in the Race to the Top competition for a share of $4.35 billion in stimulus funds.

Since that time a grassroots movement of parents, teachers, and citizens has put Common Core on the national political map.  Radio talk show host Hugh Hewitt called Common Core the “defining issue” of the presidential race.  He cited Berkeley professor of public policy David Kirp’s New York Times column, “Rage Against the Common Core.”

Top establishment contender, former Florida Governor Jeb Bush, however, faces his “biggest challenge” from Common Core.  That is Karl Rove’s estimation.

Jeb Bush: Education Governor?

Rove’s assessment is ironic given that at the end of his term in 2007 Bush was heralded as the education governor and praised for raising educational outcomes.

Jamie Gass, Director of the Center for School Reform at the Pioneer Institute, says, “I don’t think they anticipated it going this way.”

How did this happen?

Florida State University Political Science Professor Robert Crew claims that Jeb Bush’s A Plus Plan, of grading public schools on a scale of A through F, is seen as a forerunner to Common Core.  It was not popular in Florida, although it did not receive the “vociferous disagreement” he says that Bush has gotten from the tea party for Common Core.

Bush’s claims for education achievement, however, have been revealed as exaggerated.  A 2011 New York Times article noted that under his tenure scores in math and reading improved in the early grades, but dropped off after fourth grade, falling below the national average by twelfth grade.  Off the record, conservative policy analysts say that Bush’s figures were massaged to make them appear better than they were.

Just the Base?

The Hill, in an article titled, “Will Common Core Sink Bush?” concluded, “As a general election issue, education reform barely registers on the list of voter concerns nationally.” Voters “energized by Common Core” wouldn’t be considering Bush as a candidate to begin with.  In other words, it’s a problem with the base, such as those who attended the recent Iowa Freedom Summit.  All six of the potential candidates attending stated their opposition to Common Core.  Bush did not attend.

But Bloomberg News reported on February 1 that its own poll conducted with the Des Moines Register found that nearly two-thirds of likely participants in Iowa’s caucuses consider Bush’s positions on immigration and Common Core to be deal-killers.

Bush’s Common Core problem may extend beyond the base.  A recent PDK/Gallup poll showed that 76 percent of all Republicans object to Common Core.  A firm majority of Americans – 60 percent – oppose Common Core.  Even the Democratic Party of Washington State passed a resolution opposing the Common Core standards on January 24.  This action follows similar Republican resolutions in 2012 at the state party level and in the Republican National Committee.

Who still likes Common Core?

With parents and teachers of both political parties abandoning Common Core, who is left that likes it? Apparently, the profiteers: companies and their non-profit arms. For example, in technology, it’s Microsoft/Bill and Melinda Gates Foundation; in curriculum development, it’s Pearson Publishing/Pearson Charitable Foundation.  The Chamber of Commerce at the national level, today known more for its support of crony capitalism than small, independent businesses, supports it.  And, of course, there are the politicians who get their campaign contributions.

This is Jeb Bush’s problem. 

In her column, “Your Common Core Marketing Overlords,” Michelle Malkin revealed that Jeb Bush’s non-profit Foundation for Excellence in Education was among those saturating the airwaves with pro-Common Core commercials last spring.  The foundation, she charged, was “tied at the hip” to the federally funded testing consortium (one of two) called PARCC (Partnership for Assessment of Readiness for College and Careers).  One of the top corporate sponsors of FEE, the giant publisher Pearson, profited by $23 million to design PARCC test items and $1 billion for overpriced, insecure iPads for the Los Angeles Unified School District.  In December, Pearson, Inc. agreed to pay $7.7 million to the New York State attorney general for illegally using its non-profit arm to create products to be sold to its for-profit arm.

The Washington Post reported that FEE has been pushing states to embrace digital learning in public schools, with many of those digital products made by donors to Bush’s foundation, “including Microsoft, Intel, News Corp., Pearson PLC, and K12 Inc.”  A New Yorker article too catalogued in detail the billions entangled in “education reform.”

Bush’s position on Common Core has drawn criticism even from those who praise his tenure as governor, as Rep. Debbie Mayfield, Vero Beach, Florida, does.  She claims Common Core is an attempt to impose a national (and unconstitutional) education plan.  “Parents are being pushed out,” as local school boards are stripped of power, she says.

How to Convince Voters

Mike McShane, a research fellow in education policy at the American Enterprise Institute told The Hill that Bush could make it clear that, although he supports the Common Core standards, he would ensure that the federal government would not be pushing it on the states.

But activists have spent years trying to extricate their states from Common Core.  Attempts in Georgia, as I observed, failed because of money interests that have become entrenched in the state with the help of the federal government.

Jane Robbins, Senior Fellow at American Principles in Action, blames “the powerful education establishment (not to be confused with teachers).”  Jeb Bush who has come to be the “very face of Common Core” will not reassure voters with promises not to push the standards through the federal government.

Voters will remember his dismissive attitude towards those who disagree with him, says Robbins: “He’ll have a tough time winning over parents whom he has accused of wanting ‘mediocrity’ for their children.”

Bush is passionately defending his education record, though. The Hill reported that Bush went off script during a speech before the Detroit Economic Club on February 4, and “thundered about how his education initiatives turned the Florida education system around.”  A Bush spokesperson told the paper that the speech was not a defense of Common Core “in particular, but that he still supports the higher standards associated with the practice.”

On February 10, protestors were ready for Bush’s address at an education summit hosted by the Foundation for Florida’s Future, an education nonprofit he founded.  That day, he went even further, omitting the words, “Common Core,” according to Politico and other sources. Although the Politico article mentions only the Democratic Progressive Caucus, it was confirmed to me that there were also conservatives protesting.

It seems that Bush has a bipartisan problem on his hands with Common Core.

EDITORS NOTE: The column originally appeared on the Selous Foundation For Public Policy Research website. The featured image is of former Florida Governor Jeb Bush accompanying President Obama and Education Secretary Arne Duncan at Miami Central Senior High School in March 2011. Photo: AP-Pablo Martinez Monsivais.

Florida ranked as the ‘Freest State in the Union’ — But…

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What state is the freest? According to the John Locke Foundation, the answer is Florida. However, in some categories Florida is far from being ranked first. The John Locke Foundation ranked the states using four metrics: fiscal policy, education freedom, regulatory freedom and healthcare freedom. All of these metrics focus on government intervention into personal freedom.

The social issues, such as religious freedom, freedom of speech, freedom of the press, and freedom to petition elected officials, were not measured. While this ranking is useful it is not complete. When the John Locke Foundation includes social freedoms then the index may have greater validity.

The George Mason University’s Mercatus Center “Freedom in the 50 States” gives a more complete analysis of freedom in each state. The Mercatus Center ranks Florida at 23rd on its freedom index. While Florida ranks first in the John Locke Foundation index it falls short in several areas. Florida ranks 45th in regulatory freedom and 30th in healthcare freedom according to the John Locke Foundation index. Mercatus Center ranks Florida as 36th in personal freedom and 32nd in regulatory freedom.

Michael Hausman from IJReview in a column titled “What States are the Freest? This Map Shows Americans Where to Go If They Crave Liberty” writes:

The John Locke Foundation just published its First In Freedom Index, a report that compares and ranks the relative freedom of all fifty states.

The North Carolina-based think tank says it has an institutional commitment to “individual liberty and limited, constitutional government,” weighed four different variables to compile the rankings.

The most significant consideration was fiscal policy, which measures taxes and budgetary measures. This aspect generated 50 percent of each state’s score, with 20 percent given each to education and regulatory policies, and the final 10 percent to health care policy.

[ … ]

The overall results from the report show:

  1. The ‘freest’ state is Florida, followed by Arizona, Indiana, South Dakota, and Georgia.
  2. The ‘least free’ state is New York, followed by New Jersey, California, West Virginia, and Kentucky.

Read more.

The map below shows the overall index ranking of each state:

freest states in the union

For a larger view click on the image.

Hausam includes in his column the George Mason University’s Mercatus Center “Freedom in the 50 States” map, which includes more than 200 economic and personal variables in their calculations.

RELATED ARTICLES:

You Might Be Surprised By Which State Grabbed the Top Spot for “Well-Being”

Freedom of Press Across the World, “Dramatically Worse,” U.S. Slips Further Behind

The 10 Best (and Worst) States to Find a Job

The EPA’s Ozone Nightmare

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Putting aside its insane attack on carbon dioxide, declaring the most essential gas on Earth, other than oxygen, a “pollutant”, the Environmental Protection Agency (EPA) is currently engaged in trying to further regulate ozone for no apparent reason other than its incessant attack on the economy.

In late January on behalf of the Committee for a Constructive Tomorrow (CFACT), Dr. Bonner R. Cohen, Ph.D, filed his testimony on the proposed national ambient air quality standard for ozone. The EPA wants to lower the current ozone standard of 75 parts per billion (ppb) to a range of 70 to 65 ppb, and even as low as 60 ppb.

“After promulgation of the current ozone standards in 2008,” Dr. Cohen noted, “EPA two years later called a temporary halt to the nationwide implementation of the standard in response to the severe recession prevailing at the time.”

In other words, it was deemed bad for the economy. “Now, EPA is proposing a new, more stringent standard even before the current standard has been fully implemented and even though, according to the EPA’s own data, ozone concentrations have declined by 33 percent since 1980.”

AA - Ozone molecule

Ozone molecule.

According to Wikipedia: “Ozone is a powerful oxidant (far more so than dioxygen) and has many industrial and consumer applications related to oxidation. This same high oxidizing potential, however, causes ozone to damage mucous and respiratory tissues in animals, and also tissues in plants, above concentrations of about 100 ppb. This makes ozone a potent respiratory hazard and pollutant near ground level. However, the so-called ozone layer (a portion of the stratosphere with a higher concentration of ozone, from two to eight ppm) is beneficial, preventing damaging ultraviolet light from reaching the Earth’s surface, to the benefit of both plants and animals.”

So, yes, reducing ozone in the ground level atmosphere does have health benefits, but the EPA doesn’t just enforce the Clean Air Act, it also seeks to reinterpret and use it in every way possible to harm the economy.

As Dr. Cohen pointed out, “the Clean Air Act requires EPA’s Clean Air Scientific Advisory Committee to produce an evaluation of the adverse effects, including economic impact, of obtaining and maintaining a tighter standard. Despite repeated requests from Congress, (the Committee) has not produced the legally required evaluation. By ignoring this statutory mandate, and moving ahead with its ozone rulemaking, EPA is showing contempt for the rule of law and for the taxpayers who provide the agency’s funding.”

Since President Obama took office in 2009 he has used the EPA as one of his primary tools to harm the U.S. economy. In a Feb 2 Daily Caller article, Michael Bastasch reported that “Tens of thousands of coal mine and power plant workers have lost their jobs under President Obama, and more layoffs could be on the way as the administration continues to pile on tens of billions of dollars in regulatory costs.”

The American Coal Council’s CEO Betsy Monseu also testified regarding the proposed ozone standards, noting that the increased reductions would affect power plants, industrial plants, auto, agriculture, commercial and residential buildings, and more.

Citing a study undertaken for the National Association of Manufacturers, “a 60 ppb ozone standard would result in a GDP reduction of $270 billion per year, a loss of up to 2.9 million jobs equivalents annually, and a reduction of $1,570 in average annual household consumption. Electricity costs could increase up to 23% and natural gas cost by up to 52% over the period to 2040.”

In a rational society, imposing such job losses and increased costs when the problem is already being solved would make no sense, but we all live in Obama’s society these days and that means increasing ozone standards only make sense if you want to harm the economy in every way possible.

© Alan Caruba, 2015

Senator Rubio Introduces Bill to Destroy Operation Choke Point

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About a year ago, the Second Amendment community was rocked by news that the Federal Deposit Insurance Corporation (FDIC) had teamed up with Attorney General Eric Holder to utterly destroy firearms manufacturers and dealers by cutting off all credit and banking relationships with them.

For its part, the FDIC categorized gun and ammunition sales as a “high-risk business,” lumping it in with drug dealers, pornographers, and Ponzi scheme operators — all of which it was working to completely destroy.

Holder, in turn, would provide the “muscle” — using a program called Operation Choke Point to make sure banks “got the message.”

Senator David Vitter (R-LA) and Congressman Blaine Luetkemeyer (R-MO) soon got appropriations language to defund Operation Choke Point.  But when Holder promised to be a “good boy” and the FDIC removed guns from its “high-risk list,” the appropriators relented and allowed the program to continue.

Not surprisingly, every evidence is that Holder was lying — and has every intention to continue using Operation Choke Point to go after gun dealers on a case-by-case basis. 

In Hawkins, Wisconsin, for instance, a bank was just recently pressured to deny credit to the local gun dealer for the purpose of shutting its doors.  (And, incidentally, AG candidate Loretta Lynch lied to Vitter and Mike Lee about knowing nothing substantial about Choke Point, even when warned she would be asked about it.)

So now, Senator Marco Rubio (R-FL) has introduced legislation to shut the doors of Operation Choke Point — and bar all of the possible escape routes.

Rubio’s bill, S. 477, would defund Operation Choke Point — permanently.  It would insure that the FDIC didn’t use “fees” to fund a program which could no longer go on with appropriated funds. And it would prohibit Holder and the FDIC from reestablishing “Choke Point” under another name.

Furthermore, Rubio is committed to not just allow his legislation to lie dormant.  He understands that he may have to add the proposal as an amendment to a must-pass bill.  This is exactly what we will need to overcome a potential presidential veto.

Rubio’s strategy can become a template for other pro-gun legislation, in addition to putting the Second Amendment community on the offense, rather than simply playing a defensive strategy.

EDITORS NOTE:  Readers may click here to Contact their Senators on S. 477, the Firearms Manufacturers and Dealers Protection Act of 2015.

RELATED ARTICLES:

BATFE To Ban Common AR-15 Ammo

NRA Backs Constitutional Concealed Carry Bill

Federal Court Holds Ban on Interstate Transfer of Handguns Unconstitutional

Remaining Anti-Gunners in U.S. Senate Renew Push for Gun Control

Montana’s Fight in the War on Coal by Taylor Rose

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Looking into the coal industry in Montana gives us a strong insight into the present state of affairs of American coal.  Montana generally ranks around fifth in terms of coal output in the United States, while having the largest amount of reserves, roughly 25 percent of U.S. reserves, or 120 billion tons. Montana’s coal output is currently larger than Canada’s and roughly the same size as India.

In 2008, then senator and presidential candidate, Barack Obama declared war on the coal energy sector of the American economy.  Today, his ongoing war on coal is being waged aggressively through Environmental Protection Agency (EPA) mandates.  President Barack Obama’s vision is a world where coal production and use is virtually non-existent.

Though Kentucky, Ohio, West Virginia and Pennsylvania are typically regarded as the icons of American coal production, looking into the coal industry in Montana gives us a strong insight into the present state of affairs of American coal.

Montana generally ranks around fifth for coal output in the United States, while having the largest amount of reserves, roughly 25 percent of all U.S. reserves, or 120 billion tons. Montana’s coal output is currently larger than Canada’s and roughly the same size as India.

Speaking with Bud Clinch, the Executive Director of the Montana Coal Council noted how the “need for coal is decreasing in the United States because of emission restrictions, but worldwide the demand is strong, especially in China, South Korea, the United Kingdom, the Netherlands and Serbia.”

Though for the moment, the anti-coal president has yet to cause a significant dent in the U.S. coal industry, thanks to the massive increase in global demand. Yet, Montana and the United States will struggle to meet the growing demand for two reasons: lack of port expansion and government regulation. The common denominator between these two obstacles is the radical environmentalist lobby.

In other words, the American inability to meet global coal demand is self-imposed.

With regard to government regulations, according to Clinch, “EPA regulations are forcing plants to close because they cannot meet EPA regulations.” Therefore it is not so much that coal production is the major problem, but rather “the EPA and air quality on emissions from a power plant are where the problem is at.”

This is keeping consistent with President Obama’s plans to restrict carbon emissions.

At present, Clinch says that Montana’s “annual production is fairly stable over the last decade of around 42 million tons of coal per year,” however, “this is subject to change as power plants pull back thanks to regulations on CO2 regulations.”

Mike Carey, president of the Ohio Coal Association appearing before Congress testified,  “In 2008, President Obama said, ‘If someone wants to build a new coal-fired power plant they can, but it will bankrupt them because they will be charged a huge sum for all the greenhouse gas that’s being emitted.’”

To further exacerbate the problem, “environmentalists are blocking coal port construction,” Clinch said, explaining that “at the moment there are no ports in the Western USA that export coal…. the only port is in Vancouver and the Canadians are very willing to find ways to expand coal production.”

Though these coal specific ports in Canada function for the time being, the problem is that “ports in British Columbia are operating at capacity and it is difficult for other products to come into port…”

Clinch warns that “if these regulations persist, coal exports to other nations will have to increase…South Korea and China have massive demands….they will find ways to get coal one way or another from Australia or the USA.”

In looking at the future of coal development, Clinch observes that main-stream “Democrats have been temporarily stopped by the GOP and pro-coal Democrats…but nothing advantageous has been passed” and is unlikely to be passed, as long as Obama is in office.

Montana Democrats have even taken a leadership role on this issue, where  last year, Senator Jon Tester and former Senator John Walsh “pushed Senate Finance Committee to include the Indian Coal Production Tax Credit in the next round of tax legislation.”

Even former Democrat Governor Brian Schweitzer has advocated for increasing coal production, as a means to help eliminate poverty and improve America’s national security.

Their reasoning being that “reauthorizing the Indian Coal Production Tax Credit is critical to the financial stability, self-sufficiency and self-determination of several Tribes,” Tester and Walsh said. “Not only does responsible resource development have the potential of reducing unemployment on reservations, it also promotes Tribal sovereignty.”

This echoes Senator Steve Daines’ commonly known statement that Obama’s “war on coal is a war on the Crow people of Montana.”

Senator Daines has taken a leadership role in fighting back against the Obama Administration’s harmful anti-coal policies. In March 2014, when Senator Daines was a Congressman, he introduced the “Preventing Government Waste and Protecting Coal Mining Jobs in America Act,” which “would save American jobs and taxpayer dollars by preventing the Obama Administration from continuing a wasteful process to develop new job-destroying coal regulations.” The bill passed overwhelmingly with bi-partisan support, although then Senate Majority Leader Harry Reid tabled the bill and refused to bring it up for a vote.

Clinch says that at present “90 percent” of coal produced in the United States is used within the United States. However, with the rising power of environmentalists, a gradual shift towards natural gas will become more inevitable.

If no federal legislation is passed to either improve the ability of the American coal industry to meet global demand or at least reign in the EPA’s bureaucratic power, the Montana coal industry will decline and come to resemble the impoverished and high unemployment lands of Appalachia.

Regardless of whatever actions the EPA and Obama Administration take to restrict coal production and use, the global demand will still be there and continue to grow. Either the United States and working class families can benefit from Republican led efforts to restrict the EPA’s authority and expand coal production, or many of these blue-collar areas will languish in indefinite poverty.

(To read more about Obama’s EPA policies toward coal, a detailed account is provided on pp. 24-36 in a paper entitled American Energy Independence: A Policy Review published by the Selous Foundation for Public Policy Research.)

Taylor Rose is a graduate of Liberty University with a B.A. in International Relations from the Helms School of Government. Fluent in English and German he has worked and studied throughout Europe specializing in American and European politics. He is a prolific writer and author of the book Return of the Right an analysis on the revival of Conservatism in the United States and Europe. He is also a contributor to SFPPR News & Analysis.

Shut Out: How Land-Use Regulations Hurt the Poor — Economics paints a damning picture of zoning and smart growth by Sandy Ikeda

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People sometimes support regulations, often with the best of intentions, but these wind up creating outcomes they don’t like. Land-use regulations are a prime example.

My colleague Emily Washington and I are reviewing the literature on how land-use regulations disproportionately raise the cost of real estate for the poor. I’d like to share a few of our findings with you.

Zoning

One kind of regulation that was actually intended to harm the poor, and especially poor minorities, was zoning. The ostensible reason for zoning was to address unhealthy conditions in cities by functionally separating land uses, which is called “exclusionary zoning.” But prior to passage of the Civil Rights Act of 1968, some municipalities had race-based exclusionary land-use regulations. Early in the 20th century, several California cities masked their racist intent by specifically excluding laundry businesses, predominantly Chinese owned, from certain areas of the cities.

Today, of course, explicitly race-based, exclusionary zoning policies are illegal. But some zoning regulations nevertheless price certain demographics out of particular neighborhoods by forbidding multifamily dwellings, which are more affordable to low- or middle-income individuals. When the government artificially separates land uses and forbids building certain kinds of residences in entire districts, it restricts the supply of housing and increases the cost of the land, and the price of housing reflects those restrictions.

Moreover, when cities implement zoning rules that make it difficult to secure permits to build new housing, land that is already developed becomes more valuable because you no longer need a permit. The demand for such developed land is therefore artificially higher, and that again raises its price.

Minimum lot sizes

Other things equal, the larger the lot, the more you’ll pay for it. Regulations that specify minimum lot sizes — that say you can’t build on land smaller than that minimum — increase prices. Regulations that forbid building more units on a given-size lot have the same effect: they restrict supply and make housing more expensive.

People who already live there may only want to preserve their lifestyle. But whether they intend to or not (and many certainly do so intend) the effect of these regulations is to exclude lower-income families. Where do they go? Where they aren’t excluded — usually poorer neighborhoods. But that increases the demand for housing in poorer neighborhoods, where prices will tend to be higher than they would have been.

And it’s not just middle-class families that do this. Very wealthy residents of exclusive neighborhoods and districts also have an incentive to support limits on construction in order to maintain their preferred lifestyle and to keep out the upper-middle-class hoi polloi. Again, the latter then go elsewhere, very often to lower-income neighborhoods — Williamsburg in Brooklyn is a recent example — where they buy more-affordable housing and drive up prices. Those who complain about well-off people moving into poor neighborhoods — a phenomenon known as “gentrification” — may very well have minimum-lot-size and maximum-density regulations to thank.

When government has the authority to restrict building and development, established residents of all income levels will use that power to protect their wealth.

Parking requirements

Another land-use regulation that makes space more expensive is municipal requirements that establish a minimum number of parking spaces per housing unit.

According Donald Shoup’s analysis, parking requirements add significantly to the cost of housing, particularly in areas with high land values. For example, in Los Angeles, parking requirements can add $104,000 to the cost of each apartment. Parking requirements limit consumers’ choices and increase the cost of housing even for those who prefer not to pay for parking.

Developers typically build only the minimum amount of parking required by law, which indicates that those requirements are binding. That is, in a less-regulated environment, developers would devote less land to parking and more land to living space. A greater supply of living space will, other things equal, lower the cost of housing.

Smart-growth regulations

In the 1970s, municipalities enacted new rules that were designed to protect farmland and to preserve green space surrounding rapidly growing cities by forbidding private development in those areas. By the late 1990s, this practice evolved into a land-use strategy called “smart growth.” (Here’s a video I did about smart growth.)  While some of these initiatives may have preserved green space that can be seen, what is harder to see is the resulting supply restriction and higher cost of housing.

The Unintended Consequences of “Smart Growth” from Mackinac Center on Vimeo.

Again, the lower the supply of housing, other things equal, the higher real-estate prices will be. Those who now can’t afford to buy will often rent smaller apartments in less-desirable areas, which typically have less influence on the political process. Locally elected officials tend to be more responsive to the interests of current residents who own property, vote, and pay taxes, and less responsive to renters, who are more likely to be transients and nonvoters. That, in turn, makes it easier to implement policies that use regulation to discriminate against people living on low incomes.

Conclusion

Zoning, minimum lot sizes, minimum parking requirements, and smart-growth regulations demonstrably and significantly increase the cost of housing for everyone by raising construction costs and restricting the supply of housing.

The average household in the United States today, rich or poor, spends about a third of its income on housing. But higher home prices hit lower-income households disproportionately hard because a dollar increase in housing expenditure represents a larger percentage of a poorer household’s budget. Indeed, the bottom 20 percent of households spends around 40 percent of income on housing.

In other words, these land-use regulations are unfairly regressive. Relaxing or even removing them would be a step toward achieving greater equity.

ABOUT SANDY IKEDA

Sandy Ikeda is a professor of economics at Purchase College, SUNY, and the author of The Dynamics of the Mixed Economy: Toward a Theory of Interventionism.

Florida: Bill introduced to reduce Common Core mandated testing — But does it?

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Florida State Senator John Legg has presented a new bill February 2, 2015 with much fanfare, Education Accountability – SB 616.

Like most other efforts by those who created the problem, this one creates more questions than answers.  His bill attempts to solve the problem of too much testing by simply demanding that schools should limit testing to 5% of the school year while it doesn’t reduce testing requirements by the State.

If schools can only use standardized tests 5% of class time, (9 of 180 days) does that mean just the time they are sitting and filling in the blanks?  Who measures this and tracks it? What about the time they are sitting in their classroom with no teacher while she proctors the makeup tests or retests?  This is what creates most of the 40% estimated lost class time.  We don’t have a computer for every student and the “musical chairs” problem is a huge and expensive complexity!

Who will notify parents when the 5% threshold is reached?  Is that 5% collectively by school, by class, or individually?  If only “permission” is required over 5%, why would parents deny this and under what penalty?  I just saw a “permission” slip in Lee County which penalized parents $15 for a standardized test or $55 for refusing an alternate exam and asked for the student’s phone number as well as parent info and IDs.

This “edict” is no better than just raising the bar and demanding better performance, a strategy they are using for testing overall.  And by the way, most have agreed the tests used to measure success are unreliable at best.

Schools must test because they are mandated to do so in statutes Senator John Legg helped create.  The existing mandated tests fit nicely into the 9 day window if you don’t account for the lack of testing computers, space and proctors, retests and makeup tests, and this would not provide any relief for students, teachers and schools.

Here’s a link to the bill and article about it on Sunshine State News.

This bill prescribes how teachers and schools must be evaluated in detail, removing all local control from local districts and providing unworkable and formulaic measures with no evidence of successful use.  What makes 40% test score weight in teacher evaluation the right number?  Why not 70% or 10% or 50% as it was?  No one has explained or scientifically justified these arbitrary numbers which have high stakes consequences for students and teachers.  The same goes for the 5% number on the amount of time for testing.   Why not 1%, or 10%?

This bill does not mention the main issue for many, and that is the content that is being “taught” to our children does not measure up, and is NOT rigorous, but crippling our children’s future.  Common sense and empirical data shows the children of Florida are being short changed.  We have recently dropped to number 28th in the Nation as shown by the ACT scores.  Our scores were better in 1995 than they are today, yet we are constantly being fed misleading statistics on “student growth” showing otherwise.  The tortured use of made up measures is just unseemly to disguise the fact that Florida’s vaunted education system is a massive failure.

The underlying question is why the Legislature micromanages the education process at all when nearly all of them have no teaching expertise?  We can use “off the shelf” Nationally Normed tests to measure how our students compare and save billions in the process.   Using pencil and paper tests equalizes the districts and eliminates the musical chair complexity, costs and fears of computer failures.   No explanation has ever been provided as to why pencil and paper tests should be replaced by computer only testing.  Why not let certified teachers teach and accredited schools monitor the teachers?

The answer is simple, POWER AND MONEY.

Billions must be spent to purchase, maintain and upgrade computers, software and networks to prepare for computer testing.  No estimate has been provided to the taxpayers and voters of Florida, but judging by the pilot project in Orange County reported Feb 18, 2104 at the State Board of Education meeting, this cost was estimated at over $2 Billion by Chair, Gary Chartran.

We do know, however, that the companies promoting this, Pearson, Microsoft, Hewlett Packard, GE and others are the selfsame companies which receive this money.  They are also making large donations to the politicians who push for computerized testing and Common Core.  The Superintendents Association and State School Boards Association both list the same group of supporting corporate cronies who are benefactors in this incestuous scheme.  Here are links:  Gary Chartran and the KIPP Schools, Florida School Boards Association,  and the Florida Superintendents Association.

American Sniper Chris Kyle on President Obama and the Second Amendment

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On January 20, 2013 Guns.com interviewed the most lethal sniper in the U.S. military history Chris Kyle at SHOT Show 2013. Chris Kyle died on February 2nd, 2013. As we all know Chris Kyle was a former Navy SEAL, best selling author and TV show host, and was the president of a combat and tactical training company Craft International.

With the popularity of the Clint Eastwood movie “American Sniper” about the short but heroic life of Chris Kyle this video is as of as much importance today as it was then. Chris Kyle talked in the video about gun violence, gun control and the Second Amendment:

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Will New AG Support Civil Forfeiture Reform?

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The Wednesday hearings on the confirmation of a new Attorney General, Loretta Lynch, lasted hours because members of the Senate Judiciary Committee were often called away to vote. In the wake of the scandals surrounding the manner in which Eric Holder’s Department of Justice has functioned, the hearing, led now by Republicans, could have been harsh, but it was not. The Wall Street Journal characterized the mood in the hearing room as “cordial.” Watching it on CSPAN, I can confirm that.

In early November the Wall Street Journal, in an opinion titled “The Next Attorney General: One area to question Loretta Lynch is civil asset forfeiture”, it noted that “As a prosecutor Ms. Lynch had also been aggressive in pursuing civil asset forfeiture, which has become a form of politicking for profit.”

“She recently announced that her office had collected more than $904 million in criminal and civil actions in fiscal 2013, according to the Brooklyn Daily Eagle. Liberals and conservatives have begun to question forfeiture as an abuse of due process that can punish the innocent.”

That caught my eye because the last thing America needs is an Attorney General who wants to use this abuse of the right to be judged innocent until proven guilty. Civil forfeiture puts no limits on the seizure of anyone’s private property and financial holdings. It is a law that permits this to occur even if based on little more than conjecture. It struck me then and now as a bizarre and distinctly un-American law.

Writing in the Huffington Post in late 2014, Bob Barr, a former Congressman and the principal in Liberty Strategies, told of the passage of the Civil Asset Forfeiture Reform Act (CAFRA) in 2000 “as a milestone in the difficult—almost impossible—task of protecting individual rights against constant incursions by law-and-order officials.” The problem is that civil forfeiture was and is being used to seize millions.

“The staggering dollar amounts reflected in these statistics, however,” wrote Barr, “does not pinpoint the real problem of how law enforcement agencies at all levels of government employ the power of asset forfeiture as a means of harming, and in many instances, destroying the livelihood of individuals and small businesses.”

“In pursuing civil assets, the government need never charge the individuals with violations of criminal laws; therefore never having to prove beyond a reasonable doubt that they are guilty of having committed any crimes.”

As noted above, as the U.S. Attorney for the Eastern District of New York, Ms. Lynch’s office had raked in millions from civil forfeiture. Forbes magazine reports that she has used it in more than 120 cases and, prior to the hearing to confirm her as the next Attorney General US News & World Report noted on January 26 that Ms. Lynch’s office had quietly dropped a $450,000 civil forfeiture case a week before the hearings. She clearly did not want to answer questions on this or any other comparable case.

Just one example tells you why there is legitimate concern regarding this issue and it appeared in a January 3rd edition of Townhall.com. I recommend you read the account written by Amy Herrig, the vice president of Gas Pipe, Inc, a Texas company that an editor’s note reported as “faced with extinction of a civil asset forfeiture to the federal government of more than $16 million. Neither Herrig nor her father, Jerry Shults, have been charged with any criminal offense.”

Jerry Shults is a classic example of an American entrepreneur. After having served in the Air Force and serving in Vietnam where he earned a Bronze Star, Shults moved to Dallas where he began selling novelty items at pop festivals throughout Texas. Since the first store that he opened had gas pipes exposed in the ceiling, he dubbed it Gas Pipe, Inc. Suffice to say his hard work paid off for him. By the late 1990s, he had seven stores, a distribution company, a five-star lodge in Alaska, and was an American success story. By 2014 the company had grown to fourteen stores and other notable properties.

By then he had been in business for nearly 45 years and employed nearly two hundred people. And then someone in the northern district of Texas, Dallas division, initiated a civil forfeiture seizure against him. I was so appalled by his daughter’s description of events I secured a copy of the September 15 complaint that was filed. I am no attorney, but it looked to me as spurious as one could have imagined, except for the details of Gas Pipe’s assets. On 88 single-spaced pages, those were spelled out meticulously and all were subject to seizure despite the fact that not a single instance of criminality had been proven in a court of law. Imagine having 45 years of success erased by one’s own government in this fashion. It is appalling.

Assuming Ms. Lynch will be approved for confirmation as our next Attorney General, civil forfeiture is the largely hidden or unknown issue that could spell disaster for countless American businesses, large and small, in the remaining two years of the Obama administration. She has a record of pursuing it. The upside of this is that the current AG, Eric Holder, in early January announced that the DOJ would no longer acquire assets seized as part of a state law violation.

On the same day of Ms. Lynch’s hearing, January 28, writing in The Hill’s Congress Blog, former Representative Rick Boucher (D-VA) was joined by Bruce Mehlman, a former Assistant Secretary of Commerce in the George W. Bush administration, to raise a note of warning. “The topic of civil asset forfeiture should be an important part of the discussion with Lynch. As U.S. Attorney for the Eastern District of New York, Lynch was the top official in a hotbed of civil asset forfeiture—helping to bring in hundreds of millions of dollars under the program in recent years.”

Ms. Lynch was not asked about civil forfeiture by either the Republican or Democrat members of the Senate Judiciary Committee. It was a lost opportunity and, if the new Attorney General applies her enthusiasm for it to the entire nation, it will be yet another Obama administration nightmare.

© Alan Caruba, 2015

The FairTax Deserves An Up or Down Vote by U.S. Senator Jerry Moran (KS)

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Congress and the American people are ready to have a conversation about comprehensive tax reform, and now more than ever there is the opportunity to replace our deeply flawed tax system with a commonsense system that is simpler and more growth-oriented.

Senator Moran Discusses FairTax Legislation on U.S. Senate Floor:

Many of my colleagues suggest that tax reform should be achieved by creating a fairer, more balanced system with lower rates and a broader base – I couldn’t agree more. But, I am also convinced we must think bigger if we are to capitalize on this opportunity for economic growth and new prosperity.

I am proud to join my colleague, Senator David Perdue of Georgia, in introducing the Fair Tax Act of 2015. As a longtime proponent of the FairTax®, it is a privilege to lead this effort in Congress following the retirement of Senator Saxby Chambliss of Georgia from the U.S. Senate. Thanks also to the thousands of FairTax advocates, grassroots volunteers and Americans For Fair Taxation leadership for your steadfast support of this legislation.

The FairTax is a significant step in the direction of individual freedom, a fundamental concept of our nation’s founding. By eliminating the withholding of federal income taxes and social security taxes from paychecks, it would allow Americans to keep the entirety of their income and put individuals in charge of their own finances rather than the government or, more specifically, the Internal Revenue Service.

All Americans have the right to assume that the IRS, which exercises great authority over the taxpayers of this country, is operating in a neutral, fair and appropriate manner. Unfortunately, we now know that the IRS under the Obama Administration has failed in those basic tenets. To quote one of my colleagues from across the aisle, the IRS has done “permanent damage” to its reputation and legacy through the political targeting of conservative nonprofit groups. Rendered obsolete by the FairTax, the IRS would become a thing of the past.

The benefits of the FairTax are immediate and obvious. This year, Americans will likely work 100 days or longer to earn enough to pay their share of federal, state and local taxes. Americans will then spend billions of hours preparing their tax returns this spring.

A 2013 study by the Mercatus Center at George Mason University estimates that Americans spend between $300 billion and $1 trillion each year attempting to comply with the 70,000+ page tax code. There is no reason why paying taxes should be so confusing and complicated. The burden this process places on individuals and small businesses must be relieved.

But the problems with our current tax code go deeper than the complexities of paperwork, and the FairTax gets to the very root of those problems. Loaded with thousands of loopholes, exceptions, exemptions, credits, deductions, you name it – our tax code grossly manipulates the decision-making of businesses in our country.

By some estimates, U.S. companies are currently holding more than $2 trillion overseas. We can only speculate how much foreign investment continues to sit on the sidelines when it could be brought to America to create jobs and stimulate economic growth. For international businesses looking to relocate to the United States, the FairTax would be welcome news.

With the FairTax, Americans would no longer be punished for working hard to make money to support their families. All Americans, regardless of economic status, would be on equal footing and achieve greater freedom.

Overhauling the American tax system is not an easy undertaking, but the economic need for a leaner and fairer tax code has never been greater. It should be common sense: a simplified tax code will help boost the economy. With no tax on savings or investment, there will be more jobs and greater productivity.

The FairTax deserves to be heard in a committee setting, debated, and given an up or down vote. Americans know that when our economy is strong they can provide for their families, and see their children and grandchildren pursue the American Dream. The FairTax is a commonsense step toward restoring that dream.

VIDEO: Florida Education Stakeholders Empowerment Act Explained

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Chris Quackenbush from the Florida Citizens’ Alliance explains the Florida Education Stakeholders Empowerment Act:

Readers may download the Florida Education Stakeholders Empowerment Act by clicking here.

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Why Is Day Care Scarce and Unaffordable?

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It’s time to call off the child care regulators by JEFFREY A. TUCKER:

Social democrats want to nationalize childhood by having government fund and manage universal day care. Social conservatives want the family to be the day care, which is a lovely idea when it’s affordable. Libertarians don’t seem much interested in the subject at all. That leaves virtually no one to tell the truth about the only solution to the shortage and high price of day care: complete deregulation.

Let’s start the discussion right now.

The Obama administration has the idea to model a new program for national day care on a policy from World War II that lasted from 1944 to 1946 in which a mere 130,000 children had their day care covered by the federal government. Here’s what’s strange: right now, the feds (really, taxpayers) pay for 1.3 million kids to be in day care, which means that there are 10 times as many children in such programs now as then. The equivalent of the wartime program is already in place now, and then some. The shortages for those who need the service continue to worsen.

How did this wartime program come about? The federal government had drafted men to march off to foreign lands to kill and be killed. On the home front, wives and moms were drafted into service in factories to cover the country’s productive needs while the men were gone. That left the problem of children. Back in the day, most people lived in close proximity to extended family, and that helped. But for a few working parents, that wasn’t enough.

Tax-funded day care

Tax-funded day care became part of the Community Facilities Act of 1941 (popularly known as the Lanham Act). The Federal Works Agency built centers that became daytime housing for the kids while their moms served the war effort. Regulation was also part of the mix. The federal Office of Education’s Children’s Bureau had a plan: children under the age of 3 were to remain at home; children from 2 to 5 years of age would be in centers with a ratio of 1 adult to 10 children. The standards were never enforced — there was a war on, after all — and the Lanham Act was a dead letter after 1946.

The program was a reproduction of another program that had begun in the New Deal as a job creation measure (part of the Works Project Administration and the Federal Economic Recovery Act, both passed in 1933). It was later suspended when the New Deal fell apart. Neither effort was about children. The rhetoric surrounding these programs was about adults and their jobs: the need to make jobs for nurses, cooks, clerical workers, and teachers.

Obama’s day care solution

Obama wants not only to resurrect this old policy but to make it universal, because day care is way too expensive for families with two working parents. This proposal is piling intervention on intervention; it is not a solution. Do parents really want kids cared for in institutions run the same way as the US Postal Service, the TSA, and the DMV? Parents know how little control they have over local public schools. Do we really want that model expanded to preschoolers?

Still, for all the problems with the Obama proposal, its crafters acknowledge a very real problem: two parents are working in most households today. This reality emerged some 30 years ago after the late 1970s inflation wrecked household income and high taxes robbed wage earners. Two incomes became necessary to maintain living standards, which created a problem with respect to children. Demand for daytime child care skyrocketed.

The shortage of providers is most often described as “acute.” Child care is indeed expensive, if you can find it at all. It averages $1,000 per month in the United States, and in many cities, it’s far pricier. That’s an annual salary on the minimum wage, which is why many people in larger cities find that nearly the whole of the second paycheck is consumed in day care costs — and that’s for just one child. Your net gains are marginal at best. If you have two children, you can forget about it.

Perhaps this is why Pew Research also reports a recent rise in the number of stay-at-home moms. It’s not a cultural change. It’s a matter of economics. And the trends are happening because the options are thinning. Parents are being forced to pick their poison: lower standard of living with only one working spouse, or a lower standard of living with two working spouses. This is a terrible bind for any family with kids.

The reason behind the day care shortage

The real question is one few seem to ask. Why is there a shortage? Why is day care so expensive? We get tennis shoes, carrots, gasoline, dry cleaning, haircuts, manicures, and most other things with no problem. There are infinite options at a range of prices, and they are all affordable. There is no national crisis, for example, about a shortage of gyms. If we are going to find a solution, surely there is a point to understanding the source of the problem.

Here is a principle to use in all aspects of economic policy:

When you find a good or service that is in huge demand, but the supply is so limited to the point that the price goes up and up, look for the regulation that is causing the high price.

This principle applies regardless of the sector, whether transportation, gas, education, food, beer, or day care.

Child care is one of the most regulated industries in the country. The regulatory structures began in 1962 with legislation that required child care facilities to be state-licensed in order to get federal funding grants. As one might expect, 40 percent of the money allocated toward this purpose was spent on establishing licensing procedures rather than funding the actual care, with the result that child care services actually declined after the legislation.

This was an early but obvious case study in how regulation actually reduces access. But the lesson wasn’t learned and regulation intensified as the welfare state grew. Today it is difficult to get over the regulatory barriers to become a provider in the first place. You can’t do it from your home unless you are willing to enter into the gray/black market and accept only cash for your business. Zoning laws prevent residential areas from serving as business locations. Babysitting one or two kids, sure, you can do that and not get caught. But expanding into a public business puts your own life and liberty in danger.

Too many regulations

Beyond that, the piles of regulations extend from the central government to state governments to local governments, coast to coast. It’s a wonder any day cares stay in business at all. As a matter of fact, these regulations have cartelized the industry in ways that would be otherwise unattainable through purely market means. In effect, the child care industry is not competitive; it increasingly tends toward monopoly due to the low numbers of entrants who can scale the regulatory barriers.

There is a book-length set of regulations at the federal level. All workers are required to receive health and safety training in specific areas. The feds mandate adherence to all building, fire, and health codes. All workers have to get comprehensive background checks, including fingerprinting. There are strict and complex rules about the ratio of workers per child, in effect preventing economies of scale from driving down the price. Child labor laws limit the labor pool. And everyone has to agree to constant and random monitoring by bureaucrats from many agencies. Finally, there are all the rules concerning immigration, tax withholding, minimum wages, maximum working hours, health benefits, and vacation times.

All of these regulations have become far worse under the Obama administration — all in the name of helping children. The newest proposal would require college degrees from every day care provider.

And that’s at the federal level. States impose a slew of other regulations that govern the size of playgrounds, the kind of equipment they can have, the depth of the mulch underneath the play equipment, the kinds of medical services for emergencies that have to be on hand, insurance mandates that go way beyond what insurers themselves require, and so much more. The regulations grow more intense as the number of children in the program expands, so that all providers are essentially punished for being successful.

Just as a sample, check out Pennsylvania’s day care regulations. Ask yourself if you would ever become a provider under these conditions.

A couple of years ago, I saw some workers digging around a playground at a local day care and I made an inquiry. It turned out that the day care, just to stay in business, was forced by state regulations to completely reformat its drains, dig new ones, reshape the yard, change the kind of mulch it used, spread out the climbing toys, and add some more foam here and there. I can’t even imagine how much the contractors were paid to do all this, and how much the changes cost overall.

And this was for a well-established, large day care in a commercial district that was already in compliance. Imagine how daunting it would be for anyone who had a perfectly reasonable idea of providing a quality day care service from home or renting out some space to make a happy place to care for kids during the day. It’s nearly unattainable. You set out to serve kids and families but you quickly find that you are serving bureaucrats and law-enforcement agencies.

The economic solution to the day care shortage

Providing day care on a profitable basis is a profession that countless people could do, if only the regulations weren’t so absurdly strict. This whole industry, if deregulated, would be a wonderful enterprise. There really is no excuse for why child care opportunities wouldn’t exist within a few minutes’ drive of every house in the United States. It’s hard to imagine a better at-home business model.

What this industry needs is not subsidies but massive, dramatic, and immediate deregulation at all levels. Prices would fall dramatically. New options would be available for everyone. What is now a problem would vanish in a matter of weeks. It’s a guaranteed solution to a very real problem.

The current system is a problem for everyone, but it disproportionately affects women. It is truly an issue for genuine feminists who care about real freedom. The regulatory state as it stands is attacking the right to produce and consume a service that is important to women and absolutely affects their lives in every way. In the 19th century, these kinds of rules were considered to be a form of subjugation of women. Now we call it the welfare state.

From my reading of the literature on this subject, I’m startled at how small is the recognition of the causal relationship between the regulatory structure and the shortage of providers. It’s almost as if it had never occurred to the many specialists in this area that there might be some cost to forever increasing the mandates, intensifying the inspections, tightening the strictures, and so on.

A rare exception is a 2004 child care study  by the Rand Corp. Researchers Randal Heeb and M. Rebecca Kilburn found what should be obvious to anyone who understands economics. “Relatively modest changes in regulations would have large and economically important consequences,” they argue, and “the overall effect of increased regulation might be counter to their advocates’ intentions. Our evidence indicates that state regulations influence parents’ child care decisions primarily through a price effect, which lowers use of regulated child care and discourages labor force participation. We find no evidence for a quality assurance effect.”

This is a mild statement that reinforces what all economic logic suggests. Every regulatory action diminishes market participation. It puts barriers to entry in front of producers and imposes unseen costs on consumers. Providers turn their attention away from pleasing customers and toward compliance. Regulations reduce competition and raise prices. They do not serve the stated objectives of policy makers, though they might serve the deeper interests of the industry’s larger players.

Creating a free market for child care

And so the politicians and activists look at the situation and say: we must do something. It’s true, we must. But we must do the right thing, which is not to create Orwellian, state-funded child care factories that parents cannot control. We must not turn child care into a labyrinthian confusion of thousands of pages of regulations.

We need to make a market for child care as with any other service. Open up, permit free entry and exit, and we’ll see the supposed problem vanish as millions of new providers and parents discover a glorious new opportunity for enterprise and mutual benefit.

But isn’t this laissez-faire solution dangerous for the children?

Reputation and market-based quality control govern so much of our lives today. A restaurant that serves one bad meal can face the crucible at the hands of Yelp reviewers, and one late shipment from an Amazon merchant can ruin a business model. Markets enable other active markets for accountability and intense focus on consumer satisfaction.

It’s even more true of child care. Even now, markets are absolutely scrupulous about accessing quality, as these Yelp reviews of day care in Atlanta, Georgia, show. As for safety, insurers are similarly scrupulous, just as they are with homes and office buildings. As with any market good, a range of quality is the norm, and people pick based on whatever standards they choose. Some parents might think that providers with undergraduate degrees essential, while others might find that qualification irrelevant.

In any case, markets and parents are the best sources for monitoring and judging quality; certainly they have a greater interest in quality assurance than politicians and bureaucrats. If any industry is an obvious case in which self-regulation is wholly viable, child care is it. Indeed, the first modern day care centers of the late 19th century were created by private philanthropists and market entrepreneurs as a better alternative to institutionalizing the children of the destitute and poor new immigrants.

The shortages in this industry are tragic and affect tens of millions of people. They have a cause (regulation) and a solution (deregulation). Before we plunge wholesale into nationalized babysitting, we ought to at least consider a better way.

ABOUT JEFFREY A. TUCKER

Jeffrey Tucker is a distinguished fellow at FEE, CLO of the startup Liberty.me, and editor at Laissez Faire Books. Author of five books, he speaks at FEE summer seminars and other events.  His latest book is Bit by Bit: How P2P Is Freeing the World.