Enough Already! – And here who who will run your health care…


The War on Small Business

By: Carl | July 19, 2010, 9:22 am

So we’ve got financial reform now. Boy we really stuck it to those big banks. Never mind that they were lobbying in favor of the bill that passed and gave tens of millions of dollars to the politicians who supported it. I’m sure we’re sticking it to them.

And we got health care reform. Boy we really stuck it to Pharma and big insurance. Never mind that Pharma spent (and is spending) hundreds of millions of dollars lobbying for, advertising in favor of, and supporting candidates who supported the reform bill. And never mind that big insurance (and AARP, one of the biggest health insurance providers in the country) lobbied for and supported it once they got their guaranteed customer pool through mandates. And never mind that big businesses like Walmart supported it from the beginning knowing full well that paying for employee insurance and doing all that paperwork will be way more expensive for those annoying small town competitors than it will be for huge corporations like them. But I’m sure we’re sticking it to them now.

And we’re working on cap-and-trade. Boy we’ll really stick it to those energy companies. Never mind that BP and other oil companies were early and avid supporters of taxing themselves and then getting massive subsidies for more expensive and more profitible renewable energy schemes. And never mind that AIG, the Chicago Board of Trade and others have billions of dollars tied up in energy credit trading. And of course never mind that little mom and pop outfits like GE and many more multi-billion dollar corporations have invested millions in lobbying and billions in technologies that they expect to get paid back through cap-and-trade subsidies. I’m sure we’ll really stick it to them in the end.

Yes we’re really sticking it to big business. They’re going to make billions in subsidies and bailouts, but by golly they’re not going to be able to dupe people into borrowing more than they can afford or into buying insurance that fits their individual needs instead of everyone else’s, on average; that is until big business is the only game in town.

Unfortunately all of these reforms come with huge paperwork and compliance costs. Small banks, even though they had nothing to do with the financial crisis, will still have to create massive amounts of reports and comply with increased capital and insurance mandates. Small businesses will have to spend billions tracking sales and purchases, as well as what they provide for employee health insurance. Big businesses can absorb this kind of overhead, but for small banks and businesses it’ll be crippling, especially when they won’t be able to pass the costs on to consumers since the big boys won’t have the same marginal costs.

What we’re seeing is the systematic elimination of small business in this country. The barriers to entry will be so high, and the cost of complying with regulation so stringent, that small businesses will be unable to make any return on their investments. Many existing businesses will simply close up shop. Community banks will retrench into niche markets and leave home loans and other products to large national chains, or just get bought up by Wall Street banks. New entrepreneurs will look at the barriers to entering the marketplace and do something else – probably get a government job since that’s virtually the only sector guaranteed to grow.

The end of this path lies in a business/government partnership where large corporations operate under the umbrella of government protection and direction. There’s a name for that, but I don’t want to be incendiary. Look to 1920s Italy for an example.

Read More | Comments(0


Enough Already! – Long-term Trend: Wage Redistribution Increases

This chart by the Mercatus Center examines the change in composition of personal income in the U.S. since 1929. It’s no coincidence that proprietors’ income goes down as government transfers go up. That’s who’s paying the bill.

Public Bus Systems More Costly, Environmentally Damaging


Study: Public Bus Systems More Costly, Environmentally Damaging

BOZEMAN – A study released today by the Montana Policy Institute, a nonpartisan think tank based in Bozeman, shows that public transit systems in the state of Montana are both more costly than other means of transportation and more damaging to the environment.

The study, titled Public Transit in Montana specifically looked at the costs and environmental impacts of public transit systems in Billings, Bozeman, Great Falls, and Missoula.

While the average cost of driving in Montana is less than 23 cents per passenger mile, the study shows the average cost of public transit in the state totals more than $1 per passenger mile.

Urban buses are also found to use more energy than private vehicles and release on average more than twice the amount of carbon emissions per passenger mile as a light truck.

The study provides alternatives for public transportation, including proposals for vouchers, shared taxis, also known as jitneys, and privatization that have the potential to meet urban transportation needs at lower cost and with less environmental impact.

“We’re not just cursing the darkness with this study. We’ve identified a disconnect between what people are being told about the supposed benefits of city busses and what is actually happening; and we’ve proposed serious, workable alternatives that would save taxpayer dollars, reduce environmental costs, and provide much more choice to those who want or need public transportation.” said MPI President Carl Graham. “Cities and counties in Montana need to decide if they’re in the business of moving people or of running busses,” he added.

The study is authored by Cato Institute Senior Fellow Randal O’Toole. Mr. O’Toole’s analysis of urban land-use and transportation issues, outlined in his 2001 book, The Vanishing Automobile and Other Urban Myths, has influenced decisions in cities across the country.


To view the full report or for more information people can go to www.montanapolicy.org



The full study compares cost and subsidies per passenger mile for the Billings, Bozeman, Great Falls, and Missoula bus and paratransit systems to average driving costs per passenger mile in Montana. It then compares energy consumption and C02 emissions per passenger mile of each city’s bus and paratransit systems to those of an average light car, average light truck, and Toyota Prius.


Mr. O’Toole’s bio can be found at: http://www.cato.org/people/randal-otoole


The Montana Economy: How Will Climate Change Legislation Impact Economic and Job Growth Study (2010)


Montana has fared relatively better in the current recession compared to other states. If climate policy bills like Waxman/Markey (H.R. 2454) or Kerry/Boxer (S. 1733) are enacted, economic recovery from the current recession will be impeded as business and households face rising energy prices. In the longer term, Montana’s real GDP, employment, industrial output, state budget revenues and household income will fall relative to the baseline forecast. As state policymakers consider legislation to reduce U. S. GHG emissions, they need to consider that the cost of reducing emissions is likely to exert significant drag on the state’s economy.


Congress is now debating far-reaching energy legislation that would impose an aggressive “cap-and-trade” system on greenhouse gas emissions (GHG) and mandate high levels of energy efficiency and renewable energy.

o Cap-and-trade is a regulatory system for mandating increasingly lower emissions of GHG. Regulated entities must purchase emission allowances from the government for each ton of GHG emitted. Unused emission allowances can be bought or sold (“traded”) by any person.

o The U.S. House of Representatives’ bill, known as Waxman-Markey, and the Senate version, known as Kerry-Boxer, would cap GHGs beginning in 2012 and become increasingly aggressive, requiring as much as a 20 percent reduction of 2005 levels in 2020 and, finally, an 83 percent reduction in 2050.

o Energy efficiency provisions would impose “energy saving mandates” across all sectors of the economy.

o Renewable Portfolio Standards (RPS) proposed in the legislation would dictate that states generate 20 percent of their electricity from renewable sources by 2030.


Despite the current recession, Montana has seen employment gains that have fared the state better than the U.S. as a whole. However, if pending federal energy legislation is enacted, Montana will face a declining economy and increasing unemployment.

o Montana’s employment, gross state product, industrial output, state budget revenues and household income will fall.

o Employment: By 2030, as emission reduction targets tighten and the free allocation of permits and generous carbon offsets phase out, Montana would stand to lose between 4,964 and 6,761 jobs. The primary cause is lower industrial output due to higher energy prices, the high cost of complying with required emissions cuts and greater competition from overseas manufacturers with less stringent emissions requirements.

o Gross State Product: Higher energy prices, fewer jobs and loss of industrial output are estimated to reduce Montana’s GSP by as much as $900 million to $1.2 billion in 2030.

o Industrial Output: Montana is likely to experience a decrease in manufacturing output. Overall manufacturing output declines by 5.1 percent in the low-cost case and by 5.8 percent in the high-cost case. Two important energy-intensive sectors, nonmetallic mineral product manufacturing and primary metal manufacturing, would fall considerably, declining by up to 24 percent in 2030. Coal production would fall by 94 to 96 percent.

o State Budget Revenues: Since Montana typically receives about 10 cents of every dollar of income generated in the state, projected declines in GSP would result in a $49 to $65 million reduction in state tax revenues. Paired with higher energy prices, this will reduce state budget receipts and force Montana policymakers to make hard choices about how to fund basic services, such as law enforcement and schools.

o Household Income: Disposable income would fall by an average of $414 to $764 in 2030. Low-income families and the elderly, who spend a disproportionate amount of their income on energy, will be especially hurt.

Montana’s economy has benefited from growth in mining and related industries, enabling the state to fare better in the current economic climate. Mining, however, is particularly vulnerable to adverse impacts from federal climate change bills.

o The Montana economy actually grew in 2008—at a rate of 1.8 percent — compared to the U.S. economy, which only grew at a rate of 0.7 percent in 2008. Employment also grew in Montana at a rate of 1.7 percent in 2008.

o Montana’s real per capita GSP grew 25 percent in the last decade, five percent more than the national growth in that period.

o In the past 10 years, employment in Montana’s mining industry grew by 68.4 percent – that is nearly double the growth of the mining industry in the United States over the same time period.

o According to a study by commissioned by the National Mining Association, the mining industry contributed 16,220 jobs and $3 billion to the state’s economy in 2007.

o Montana is a substantial oil producing state and is responsible for nearly two percent of U.S. production. According to a 2009 study by PricewaterhouseCoopers, the oil and natural gas industry supported 34,210 jobs and contributed $3.3 billion to the Montana economy in 2007.


Multiple economic analyses show that these federal energy bills would increase the price of electricity, gasoline and natural gas. Consequently, economic productivity, employment and household income would decline.

o To meet the stringent emissions targets of Waxman-Markey, electric companies would have to substitute high-cost technologies for conventional generation, increasing prices for Montana families and businesses.

o Energy prices in Montana, a state which now depends on coal (the energy source most at risk under mandatory greenhouse gas emission caps) for 63 percent of electricity generation, would rise higher than many other states.

o By 2030 the price of gasoline would increase by as much as 27 percent, electricity up to 61 percent and natural gas up to 78 percent.

o Faced with skyrocketing energy costs, decreasing production and greater competition from overseas manufacturers without these pressures, Montana businesses will have no choice but to cut thousands of jobs.

o Montana’s 967 schools and universities and 65 hospitals will likely experience a 18.1 percent to 27.9 percent increase in energy expenditures by 2030. For government entities, costs for services, including public transportation and vehicle fleets, such as school buses, would also rise.

o Montana’s current relatively favorable electricity prices are an important factor in the state’s ability to keep business costs low and thus, attract new sources of employment.


At a time when margins are running thin on family budgets, the average Montana family will experience higher energy costs, leaving less income to be spent on other necessities.

o The average Montana family would see their home energy costs go up 61 percent by 2030.

o The ripple effect of higher energy prices would impose a financial hardship on Montana households with disposable income being reduced by $414 to $764 in 2030.

o Because they spend a greater share of their income on energy costs, low-income families, including elderly residents on fixed incomes, will suffer disproportionately from the effects of this legislation.

We all want a clean environment. Most of us live in Montana because we love our Big Sky and the beautiful land beneath it. But those shrill voices demanding that we trade our economic well being for a clean environment are trying to drive us into a false choice. Exporting our jobs to cheap overseas labor and our energy production to dirty overseas power plants will not help the environment or reduce greenhouse gases. There are alternatives to cap-and-trade, and a politician’s willingness to look at them can be a litmus test indicating whose interests he or she is really serving.



The Montana Policy Institute is a 501(c) (3) policy research organization that equips Montana citizens and decision makers to better evaluate state public policy options from the perspective that policies based upon limited government, individual rights, and individual responsibility will result in the greatest common good. To find out more or for copies of the complete Cap-and-Trade study, visit us at www.montanapolicy.org. NOTHING WRITTEN here is to be construed as an attempt to influence any election or legislative action. PERMISSION TO REPRINT this paper in whole or in part is hereby granted provided full credit is given to the authors, the American Council for Capital Formation, and the Montana Policy Institute.

Copyright © 2010

The Montana Policy Institute

67 West Kagy Blvd., STE. B

Bozeman, MT 59715




Click here for full study.

The Power of an Idea

By: Carl | July 2, 2010, 11:29 am

I was recently asked by a national organization to address our founding as part of a project they’re doing on perspectives from around the country. It seems like a good idea so thought I’d share my response. I’ll try to remember to post the link to the entire project when it’s complete.


What do you think was the most important idea of the Founders?


The Founders’ most important idea was to believe in the power of ideas. They knew that a nation had to be bigger than any single person or a place; that there had to be something to embody and to propel a people forward or they would lapse into tyranny or anarchy. That “something” was the idea that we all have a basic inalienable right to seek happiness and fulfillment in any way that doesn’t deny the opportunity for others to do the same. This not only produced a very simple rule book in the form of a constitution that protects rather than grants rights, but it created a system where individuals are rewarded for productive, innovative, and moral behavior rather than for birthrights or bloodlust.


A system based on ideas is also welcoming to anyone who shares those values regardless of skin color, religion, or means. It opens its arms to the most innovative and productive people to not just share but to participate in the prosperity and the governance of a nation that’s ruled by law, governed by principle, and led by ideas. Our shining city on the hill has lost much of its luster as we’ve become lazy and confuse equality of outcome with equality of opportunity. But we are still united by a set of ideas and ideals that the Founders passed down. Our success or failure will be determined by how well we honor their vision.

Read More | Comments(0)

Even GE CEO Gets the Costs of Overregulation

By: Carl | July 1, 2010, 2:59 pm

According to an article I can’t link to in the Financial Times because I’m not a subscriber, GE CEO Jeffrey Immelt said, among other things, the following:

“We are a pathetic exporter…We have to become an industrial powerhouse again but you don’t do this when government and entrepreneurs are not in synch.”

GE itself, as one of the country’s foremost rent seekers at the Global Warming subsidy trough, immediately disclaimed any and all association to Immelt’s remarks. But it gives you an idea of what these companies that want to profit at our expense through government intervention and regulation really know versus what they’re willing to say for a seat at the table.

According to an article in the Wall Street Journal that I can link to but you probably can’t unless you’re a subscriber (and you should be):

Turning to the administration of President Barack Obama, Mr. Immelt expressed concern that new regulation would hinder a “tepid” U.S. economic recovery and complained about a “terrible” national mood, according to the FT.

So, according to the CEO of one of the largest manufacturing and service (think NBC) corporations in America, heavy regulation and government interference is hurting our ability to grow and expand overseas. And yet, you’ll find no bigger cheerleader (except BP until recently) for cap and trade. And you’ll find few larger contributors to the campaigns of cap and trade sponsors in D.C.

I’d like to go on and say something snide about GE but to be honest I can’t blame them. They’re reacting to incentives, and the incentives when government picks winners and losers is to pay enough to those who do the picking to make sure you’re a winner.

It’s not rocket science. Campaign finance reform and lobbying reform and any other attempts to take money out of the system is useless if it doesn’t address the root cause: If the government has the power to rob Peter to pay Paul, then both Peter and Paul have an incentive to bring money to the table…and they’ll always find a way. Remove government’s ability to pick winners and losers and neither of them will need to hire lobbyists or finance campaigns.

They’ll also be able to put those billions of dollars to productive use that will make them more competitive and provide better products and lower costs. Gee, what a concept.

Read More | Comments(0)


Enough Already! – Top 5 Federal Stimulus-Funded Job Creators

This chart by the Mercatus Center compares the top five federal stimulus-funded job creators. Data are from the most recent quarter of recipient reported data from Recovery.gov, the reporting period ended June 30, 2010.