Month: December 2012

Imagine a World…

Imagine a world where we buy our groceries in government stores. We can only shop at the store nearest our house. If we want to shop somewhere else, we’re forced to move our family into another neighborhood―if we can afford it.


In this imaginary world, we elect food boards to oversee our grocery stores. And many of us think the food is free. Well, not quite. We all pay taxes to the government, which then recycles those dollars to grocery store districts and eventually down to our neighborhood stores. We think we eat pretty well, although the government spends five dollars for a gallon of milk and six-fifty for a loaf of bread. The bread is often stale and the milk sour.


Each district has a central office staff of specialists and administrators who work hard designing store shelves, checkout lanes, and (most importantly) the nutritional content of every food item. Since we’re a nation that separates Church and State, the big battles at food board meetings often revolve around whether stores can sell Christmas cookies.


Now, imagine that voters decide to give the government less money for the public food system. Suddenly, food stores find themselves in a crisis. There isn’t enough tax money to keep food district central bureaucracies intact. Stores don’t have enough money to keep all the clerks employed. Food superintendents are faced with the difficult task of eliminating some items from the shelves.


How could we possibly feed ourselves without the government taxing us, building big brick food buildings, and telling us where to shop?


If this imaginary world―and its problems―sounds familiar, you’re way ahead of me. It’s the world of our public school system. It’s the world most of us grew up in. Our parents grew up in the same world, but children now are growing up in a different world.


We can no longer afford to dump more money into a system that isn’t keeping pace with the progress all around us. Technology has opened limitless ways for students to gain knowledge and skills and to interact with their instructors and peers. The landscape of educational options centered on the needs and aspirations of individual students is far more diverse than it was even ten years ago.

Many advocate that we should lead the world in education spending. But you don’t get to be the competitive leader in any industry by being the world’s highest-cost producer. Don’t you want to be the producer with the highest quality, but at an affordable cost? The driving force to achieve high quality, while keeping costs down, is the profit motive. But that’s exactly the motive that doesn’t exist in our public school system.


Why aren’t we worried about a tax revolt decimating our local grocery store shelves? It’s because our grocery stores are private. They’re subject to intense competition, and each of us has virtually unlimited choices about where we shop.


For those who can’t afford food, we don’t build government food stores. We give them food stamps, and they shop in the same stores and for the same products that everyone else does. In essence, our public schools are the equivalent of the former Soviet Union’s collective farms. Communism said government should own and run the food stores―and the farms. The result was a nation that couldn’t feed itself.


We don’t have to ask whether to replace our current public school system with a private one. We can simply let education dollars be spent where the customers (parents) think they should go.


Please don’t let the details of any specific “school choice” proposal stop you from accepting the concept. Instead, let’s figure out why so many of our tax dollars don’t reach the classroom―and why nearly half the people who work for our public school system don’t teach. Let’s look for ways to put the children first and the system second.


The only proven way to accomplish these things is through competition and parental choice. Spending more dollars in the current system will just get us more of the same. Many states are broke, preventing them from spending more money on public schools. And many parents are fed up, wondering why their kids are underperforming or unmotivated in K-12 schools and unprepared for their college courses and future careers.


School choice has entered a new world. Because Americans are increasingly vocal about providing parents at every income level with the ability to choose their children’s schools, states are adopting broad-based school choice initiatives.


Every child who drops out of school, or who graduates functionally illiterate, is being tossed into the sea without a lifeboat. If you think rearranging the deck chairs on this ship will save those children, think again. The way of the future is to put the power of educational choice back into the hands of parents, where it belongs.


Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Holiday Trees and Winter Candelabra

Calling a Christmas tree a “holiday tree” is like calling a Hanukkah menorah a “winter candelabrum.” Generic names for well-known holiday symbols don’t truly honor diversity. Instead, they “airbrush out” the meaning of experiences, traditions, and symbols that are part of people’s lives and cultures.


Wall Street Journal columnist William McGurn recently pointed out, “…In their own day, the 13 American colonies were among the most religiously diverse places on Earth. Yet for all the frictions and flaws, the understanding they bequeathed us in the First Amendment helped shield America from the disastrous religious wars that plagued Europe, not to mention the ones still causing bloodletting in the Middle East.”


By preventing the federal government from imposing or prohibiting religious beliefs and practices, the framers of the Constitution not only defended the rightful freedom of hearts, minds, and souls, but also Americans’ ability to keep traditions and celebrations associated with faith.


American tolerance shouldn’t be understood to mean we can’t celebrate openly or say the word “Christmas” in public. It’s a quirky postmodern phenomenon to be timid about naming the season of good cheer. Authentic respect for our various beliefs involves honoring the truth about the origins and meaning of our traditions and learning about each other. Let us take a moment to remember our freedoms as we gaze at our Christmas trees this holiday season. A Merry Christmas to all!

Kathryn Hickok is Publications Director and Director of the Children’s Scholarship Fund-Portland program at Cascade Policy Institute.

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Money for Nothing

On December 18 Metro referred a five-year local option levy of 9.6 cents per $1,000 of taxable assessed value to the voters for consideration in the May election. If passed, the measure would raise about $10 million annually for maintenance of 12,400 acres of land Metro bought over the past decade with public tax dollars.

Unfortunately, very few voters will ever get to visit those areas. Most of the large natural areas are far from population centers, such as the 1,200-acre Chehalem Ridge tract near Gaston or the 1,100 acres purchased in the Sandy River Gorge.

More importantly, Metro doesn’t want you there. The agency has announced that if the levy passes, only five to fifteen percent of the funds each year would be used to provide access for the public, such as signage, parking facilities, public rest rooms, or trails. Many of the access points, now gated, would remain closed. This is because Metro’s top priority is restoring natural areas for wildlife, fish, and water quality.

Metro likes to promote the concept of “nature in the neighborhood,” but when it comes to spending our tax dollars to buy up land, neighborhoods will be locked out. The levy should be rejected until these priorities change.

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.

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Freedom in Middle-Earth: A Hobbit’s Eye View

By Lauren Hickok

The first installment of director Peter Jackson’s long-awaited film adaptation of J.R.R. Tolkien’s Lord of the Rings prequel, The Hobbit, is now in theaters. Jackson’s gorgeously rendered movie trilogy The Lord of the Rings has given Tolkien fans the joy of seeing the epic story’s “applicability” (a term Tolkien loved) discussed anew in the public square. The Lord of the Rings shares with us some insights into a value dear to the American heart: freedom.

Montesquieu famously wrote, “Countries are well-cultivated, not as they are fertile, but as they are free.” The Shire, home of the Hobbits, is both: self-governed, minimally, in a culture of hearth, home, and pride in cultivating one’s own garden. Hobbits distrust intruders. Though generous with each other, no doubt they would agree that a Hobbit’s hole is his castle.

However, insulation cannot defend home and autonomy against outside threats. In the Rings trilogy (as in The Hobbit), Hobbits sally forth and fight, proactively, for the right to live peacefully at home. Frodo and Sam travel all the way to Mordor, the land of the enemy, to save the Shire. In The Two Towers, when Merry and Pippin debate whether to give up and go comfortably home, Merry realizes that if Mordor is not challenged, “there won’t be any Shire.”

Mordor is an icon both of slavery and of infertility, a black wasteland where every will is subjugated to an eye that can penetrate minds. In Mordor as in George Orwell’s 1984, the enemy Sauron, the Big Eye, is always watching you. Sauron’s influence would lay waste the Shire, too. Totalitarianism consumes both the free peoples and, symbolically, the lands in its path.

The striking ugliness of Mordor, while symbolizing evil, is also a direct consequence of the suppression of freedom. Beauty is the domain of creative individuals. Because no one tends his or her own garden, the earth goes disregarded. Because no one takes pride in his own work, the mass-produced armor of Mordor’s Orc army is ugly and rough. Hobbit farmers and Elf craftsmen achieve excellence by doing their work with care, love, and pride. In Mordor only the design of Sauron has value, and he desires domination of mind and will.

Loss of individual livelihood breeds loss of respect for individual personhood. Thus the Lieutenant of Barad-dûr, “the Mouth of Sauron,” has forgotten his own name. Under the power of the Ring, Sméagol (Gollum) also loses his individuality, referring not to himself but to “us, Precious.” In a striking juxtaposition, the nine Nazgûl, servants of Sauron, are all faceless, clothed in black like the monotonous landscape of Mordor, while the nine members of the Fellowship of the Ring colorfully represent all the free peoples of Middle-earth, bound together by friendship, not by coercion.

Perhaps the most profound insight of Rings is that self-government requires governance of self. Freedom is not license. To be free you must exercise control over your own will, which often means doing what you would rather not and expressing your individuality in solidarity.

Throughout The Lord of the Rings, the salvation of Middle-earth’s freedom requires sacrifice. Frodo leaves home to face unimaginable horrors. Sam follows him with unflagging loyalty. Gandalf surrenders his life for his friends in Moria, dramatically increasing his power. Galadriel rejects the temptation to claim the Ring for herself; Faramir rejects keeping it for his father’s kingdom. Elves sacrifice their immortal lives to help Men achieve victory at Helm’s Deep. Arwen gives her “life’s grace” first to save Frodo (in the film) and finally to protect Aragorn. Théoden must conquer his resentment to come to Gondor’s assistance. If one person takes the Ring for himself, the entire free world will fall—the Ring even enslaves the wearer.

Finally, I assume I spill no secrets by mentioning that the king returns. Limited interference and mutual respect characterize his rule. Gandalf tells Butterbur that the new king will rebuild the old road. “It will be good for business, no doubt,” the innkeeper replies, “so long as he lets Bree alone.” Gandalf replies that the king loves the town and will do so.

This only scratches the surface. Read Tolkien’s books, see Jackson’s film adaptations, and discover for yourself how the theme of freedom permeates the fascinating story voted the greatest book of the 20th century.

Lauren Hickok is a guest writer for Cascade Policy Institute, Oregon’s free market think tank. She has a BA in mathematics and music from the University of Portland and works as an actuary.

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Testimony on the Nike Tax Bill (Economic Impact Investment Act of 2012)

Good morning, Co-Chair Burdick, other co-chairs and members of the committee. I’m Steve Buckstein, Senior Policy Analyst and founder of Cascade Policy Institute, a public policy research center based in Portland. Our mission is to promote individual liberty, personal responsibility, and economic opportunity in Oregon.

Regarding the concept of this legislation, I have some praise for the Governor, coupled with concerns and suggestions for making the bill better, and fairer.

First, the fact that the Governor is ready to grant tax certainty to Nike and other big companies in return for capital investment and job creation should be applauded. It’s recognition that taxes matter, and good tax policy can attract business and jobs. But, Oregonians of all political stripes also appreciate fairness, and I’m concerned that this legislation will be fundamentally unfair, especially to small businesses and many Oregon job seekers.


The Governor only wants to make tax certainty deals with what he calls “the right kind of businesses” that will drive our per capita income up. This leaves out people who, for whatever reason, have little education and/or few job skills. These are often the young and minorities, for whom a lower wage job is the first rung up the economic ladder.


Also, granting the Governor power to approve or disapprove such deals at all risks charges of favoritism and corruption. Just think about Nike getting its deal while one of its competitors is later turned down. A level playing field would eliminate these concerns. One way to do this is with a formula that prorates the number of jobs and capital investment required to the business size. For example, 500 jobs added to Nike’s current 8,000 Oregon employees would equate to 125 new jobs for a company that currently employs 2,000 Oregonians, without any gubernatorial discretion at all.


And, what’s magical about the 500-job threshold in the first place? While that’s a big number anywhere in Oregon, 50 jobs may be a big number in smaller communities. And, five jobs may be significant elsewhere. This is a small business state; so why not expand tax certainty to the businesses that create most of the jobs already?


In conclusion, I agree that granting Nike tax certainty is a good idea. But it would be an even better idea if all companies got the same certainty—big and small alike. That way, every Oregonian would stand to benefit, and the program would be fair to all.


Thank you.

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“Streetcar Drives Development”―Portland’s Urban Legend

For much of human history, mass transit has had the utilitarian goal of quickly moving people from place to place. Even Portland’s early streetcars were designed with speed in mind.

Advertisements touted how quickly people could get around by streetcar. One ad from 1920 boasted that University Park in North Portland was only 20 minutes from downtown by streetcar. That works out to a speed of more than 15 miles an hour.

Times have changed. Modern streetcars have become the pleasure boats of public transit: flashy, expensive, and slow.

Today, Portland’s streetcars quietly glide through the streetscape at a leisurely pace. Portland’s new Central Loop covers 3.3 miles in about an hour and a half. At 2.5 miles an hour, that’s slower than most people walk.

If streetcars don’t improve transit times, then what do streetcars do?

Many ascribe the development of Portland’s heralded Pearl District to the streetcar. In truth the streetcar was more of an afterthought. The Pearl’s success began with a few pioneering developments that took advantage of historic building tax abatements to convert warehouses into condos. The success of these pioneering developments attracted other investments and more developments.

After these successes, an urban renewal area was created, and the streetcar came along a few years after the birth of the urban renewal area. Development made the streetcar possible, not the other way around.

It’s impossible to find a clear-cut example of where streetcars are the single factor driving development. It’s impossible because streetcars are always just one part of a complex development package. The packages can include roadway improvements, tax abatements, rezoning and environmental cleanup. There is no way to determine whether a streetcar system is just one of many factors that boost development potential or is a vital linchpin without which development would be impossible.

Supporters argue that streetcars and other rail projects provide a magic key that unlocks zoning and uses of an area. They point to the “condotopia” that grew out of the banks of the Willamette River in Portland’s South Waterfront urban renewal area, now served by a streetcar and an aerial tram.

As early as the mid-1990s, however, private developers had their eyes on Portland’s South Waterfront. Yet, every single effort was shot down or stifled by the city’s planning process. One development didn’t follow a city commissioner’s vision for an ideal street pattern. Another development would have exceeded the city’s maximum allowable building height at the time (35 feet, or about three stories).

Even so, Portland’s planning class continues to argue that the aerial tram and streetcar have magically unlocked the ability to build waterfront skyscrapers.

In reality, there is nothing magical about streetcars and trams. City commissioners held—and still hold—the keys to unlock an area’s development potential. If rail and tram expenditures had been invested in roadway improvements, the South Waterfront would be celebrating its 15th anniversary of redevelopment instead of suffering round after round of fire sale condo auctions.

It remains to be seen whether the streetcar’s Central Loop can breathe life into Portland’s Central Eastside, Convention Center, and Lloyd District. Large-scale rezoning to unlock development potential doesn’t need a streetcar. Investments in roadway improvements best serve the way the people actually travel, rather than the way we wish they would travel.

A streetcar by itself does nothing without these other key improvements.

Eric Fruits, Ph.D. is a Portland economist and an adjunct professor at Portland State University. He is a guest contributor at Cascade Policy Institute. This article originally appeared in The Portland Tribune.

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Tax Certainty for Nike? “Just Do It” for All

Governor Kitzhaber has called a special session of the Oregon legislature to enact what he calls the Economic Impact Investment Act of 2012. It would give him the authority to directly negotiate with, and offer “tax certainty” to, any company promising to create at least 500 jobs and invest at least $150 million over five years in our state. Any future changes in Oregon’s business tax structure would not apply to such firms over the lifetime of their agreements.


The urgency of this proposal comes from the fact that Nike is looking to expand soon and is apparently being courted by other states. According to the Governor, if his proposal is rushed into law, Nike has agreed to expand here with a proposed $400 million investment and more than 2,000 jobs.


Unfortunately, the Governor made it clear that he would only approve such deals for companies that create a lot of relatively high wage jobs. He explicitly rejected the idea that a company offering 500 minimum wage jobs, for example, would be approved.


While it’s good to seek high wage jobs here, rejecting low wage jobs hurts those with little education and/or few skills. These are often the young and minorities. They have little reason to rejoice over the Governor’s new plan.


Granting Nike tax certainty is a good idea, but it would be an even better idea if all companies got the same certainty—big and small alike. That way, all Oregonians would stand to benefit.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Sailing Competitive Seas

By William B. Conerly, Ph.D.

I picked up my beer at the yacht club’s bar and went out on the deck to watch the last few boats come in. It had been a good day’s sailing. We finished the race in the middle of the fleet, but we had a couple of new stories to tell. When John grabbed the chair next to me, I was all set to talk about the wind shift that had helped us at the end. John, though, had other interests.


“Tell me, Doctor, what are we going to do about these Japanese imports?” John asked.


I sail on the weekends; Monday through Friday I’m an economist. Even though I love economics, I didn’t want to spend the whole cocktail hour talking about it.


“Did you do the race to Drake’s Bay three years ago?” I asked. Without waiting for his answer I began my story. “After we rounded the point and turned north, a light fog set in. It wasn’t thick enough to be dangerous, but we couldn’t see the other boats.”


“I remember that one,” John said. “I never did figure out where the wind was that day, but everyone else seemed to find it. I think I was third from last.”


I continued: “After about two hours we happened to sail close enough to another boat to see her. It was Fred’s boat, which is pretty competitive with ours. We sailed side by side, about a hundred yards apart, and she was pulling away from us.”


“You should have been able to keep up with her,” John said. “You’ve beaten her plenty of times.”


“That’s what we thought. So we started looking around and decided to ease the Cunningham a bit.”


Racing a sailboat isn’t as simple as letting the wind catch the sails and push it along. The sails are airfoils, like airplane wings, but with an added complication: Being made of fabric, the curvature of the sails isn’t fixed in place. We have thirteen separate controls that will change the sail’s shape in one way or another.


The Cunningham is one of those thirteen.


“It was hard to tell at first, but it looked like we were no longer losing to her. We put two good fellows on the sheets—and we started to gain ground. We even got a little ahead of her.”


John asked if we had kept our lead. We hadn’t. After we got moving a bit faster, the other boat picked up speed. It took them 20 minutes to find the trick, and I don’t know what they did, but just as we were feeling confident, they got their boat moving definitely faster than ours.


“Rob looked up at the mainsail. You know how he’s so quiet. He softly said, ‘Maybe there’s too much mast bend. Can we let off on the backstay a bit?’ The mast looked fine to me, but on the rare occasions when Rob talks, we all listen.


“We eased the backstay a little, and then watched the speedometer. We picked up a tenth of a knot in no time, and started to gain on them.”


“Sounds like a game of leapfrog,” John remarked.


“It was. Pretty soon we couldn’t find any more gains out of sail trim. But watching Fred’s boat helped us spot a tired helmsman right away. I had been steering for 45 minutes when they pulled out on us. I felt fine, or thought I did, but when Murphy took the wheel he brought our speed right back up.”


“How did you finish the race?”


“First and second. Turns out we were the only two boats to have been in sight of anyone else for most of the race. We took second, which is too bad, but that was one of our best finishes the whole summer.”


“It sounds to me like you have that other boat to thank for your good finish, even if they did beat you.”


“Exactly. A speedometer tells you how fast you are going, but it doesn’t tell you how fast you could be going. You need a competitor to tell you if you have greater potential. It’s easy to think that you’re doing your best, but usually you aren’t. Besides,” I continued, “we were able to learn a trick from him. When the wind turned light and we were wallowing in the swells, we saw that he had vanged his boom down hard. We weren’t used to doing that, but we gave it a try and it helped.


“All the other crews thought they were doing their best, but they couldn’t see the other boats because of the fog. I know most of the other crews and they’re not lazy. It’s just hard to be fast when you’re out there by yourself.”


John finished his beer and stood up. “Well, Doctor, I’ve got to run. Thanks for the story. But I really would like to sit down some time and talk with you about the danger of foreign competition.”


“I thought that’s what we’ve been talking about,” I replied.

William B. Conerly, Ph.D. is the principal of Conerly Consulting, an economic and financial consulting firm, and chairman of the board of Cascade Policy Institute, Oregon’s free market research center. An avid sailor, he races his sailboat Strange Bird as often as he can.

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Raising Taxes Won’t Reduce the Deficit

With just weeks to go before America slides off the so-called Fiscal Cliff, many politicians and pundits argue that we must forge a “grand bargain” which includes tax increases and spending cuts. But now, two noted economists have crunched the numbers and conclude that Nobel-Prize-winning economist Milton Friedman was right when he said, “Politicians will always spend every penny of tax raised and whatever else they can get away with.”


Stephen Moore of the Wall Street Journal and Richard Vedder of Ohio University recently updated a study done for the congressional Joint Economic Committee in the late 1980s that found every dollar of new taxes led to more than a dollar of new spending by Congress.


Moore and Vedder “found that over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending. Politicians spend the money as fast as it comes in—and a little bit more.”


They looked at different time periods, used different data, altered other variables, and never once found that higher tax collections resulted in less government spending. These results completely counter the argument that we can solve our nation’s fiscal problems by combining spending cuts with tax increases.


The “grand bargain” isn’t such a bargain after all. The only way to cut spending…is to cut spending.

Steve Buckstein is founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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