Public Choice – Page 35 – artdiamondblog.com

Georgia Taxpayers Pay for “Go Fish” Museum in Former Governor’s Home Town

“A largemouth bass dominates the hatchery display at Go Fish Georgia Educational Center, a museum financed partly by the state and approved when the economy was more robust.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A14) PERRY, Ga. — Every weekend, Michael Morris and his 2-year-old son, Jacob, visit this small town’s enormous new $14 million fishing museum. They watch bream and bass swim in aquarium-size tanks. They play with an interactive model of a fishing boat and try to catch fish on a computer simulation using a rod and reel connected to a video screen.

And because the museum, the Go Fish Georgia Educational Center, is primarily financed by the state, their father-and-son outings cost only $5.
. . .
But not all Georgia taxpayers are so thrilled. Even before the museum opened in October, “Go Fish” had become shorthand in state political circles for wasteful spending. Republicans and Democrats alike groaned over $1.6 million a year in bond payments and operating costs. And even supporters concede that the museum would never have gotten financed in 2007 if the legislature knew where the economy was headed.
. . .
And then there is the controversy over the museum’s location — in the home county of its main supporter, former Gov. Sonny Perdue, a Republican who left office this month after two terms.

For the full story, see:
ROBBIE BROWN. “New Fishing Museum Becomes Symbol of Waste in Georgia.” The New York Times (Tues., January 18, 2011): A14.
(Note: ellipses added.)
(Note: the online version of the article is dated January 17, 2011 and has the title “Fishing Museum Is Symbol of Waste in Georgia.”)

To Do Business in India, Bureaucrats Still Must Be Bribed

“In the twilight of his career heading Tata Group, Ratan Tata says he was thwarted in his homeland by arbitrary regulatory decisions and corruption.”

(p. B1) NEW DELHI–Ratan Tata has transformed Tata Group into the world’s best-known Indian company, the owner of Jaguar cars, the Pierre Hotel in New York and Tetley tea.

But in the twilight of his career as chairman of the $67.4 billion conglomerate, Mr. Tata, 73 years old, is frustrated that he hasn’t been able to expand more in his native India. He says bureaucratic delays, arbitrary regulatory decisions and widespread corruption have thwarted his domestic ambitions in such sectors as steel, power, aviation and telecommunications.
. . .
. . . 20 years after . . . reforms began, New Delhi still exerts tight control over large swaths of the economy. All too often, Mr. Tata and other critics say, regulators are picking winners and losers through their decisions, either by delaying certain projects and green-lighting others or by freeing up natural resources for some companies at the expense of others.
“Economically it is a much more open environment. It’s one that fosters a fair amount of free enterprise until you need approvals or some kind of sanction to get something done,” Mr. Tata said during an interview at the Tata-owned Taj Mahal hotel in New Delhi. “Then you still have problems, and maybe more acute then you did before.”
. . .
As chairman, one of Mr. Tata’s first goals was to get Tata back into the airline business. The company’s former airline had been nationalized to form Air India. He planned a venture with Singapore Airlines. But, he says, aviation ministry bureaucrats held up his application for years despite his constant prodding. An aviation ministry spokeswoman didn’t respond to a request for comment.
In 1998, after seven years of government inaction, Mr. Tata withdrew the application. “We went through three governments, three prime ministers, and each time there was a particular individual that thwarted our efforts,” he said in a TV interview last fall. He recalled a conversation with a fellow industrialist several years ago. “He said, ‘I don’t understand. You people are very stupid…. Why don’t you just pay?'”
Paying bribes isn’t his style, Mr. Tata says. “Maybe I’m stupid or old fashioned, but I really want to go to bed at night saying I haven’t succumbed to this.”

For the full story, see:
AMOL SHARMA. “India’s Tata Finds Home Hostile; Chair of Nation’s Best-Known Company Says Bureaucracy Slows Domestic Growth.” The Wall Street Journal (Weds., April 13, 2011): B1-B2.
(Note: ellipses added, except for the one after the word “stupid” which appears in the original.)
(Note: in the online version of the article, the final paragraph quoted above reads: “Mr. Tata says paying bribes isn’t his style. “Maybe I’m stupid or old fashioned, but I really want to go to bed at night saying I haven’t succumbed to this,” he says.”

Father of Cornhusker Kickback Is Named “2010 Porker of the Year”

(p. 6A) Sen. Ben Nelson can’t shake the “Cornhusker Kickback.”
This week, a government watchdog group named the Nebraska Democrat its “2010 Porker of the Year,” based on an online poll.
Citizens Against Government Waste included Nelson in the poll, citing his role negotiating a provision of the federal health care bill that would have exempted Nebraska from paying the added costs of the law’s expanded Medicaid coverage. That provision was later dropped in favor of relief for all states, which Nelson has said was his goal all along.
Nelson cast the decisive 60th vote for the bill in late 2009.
. . .
Mark Fahleson, chairman of the Nebraska Republican Party, said Nelson was trying to rewrite history. “The fact is he’s the father of the Cornhusker Kickback,” he said.

For the full story, see:
MICHAEL O’CONNOR. “Nelson rejects group’s ‘Porker of Year’ label.” Omaha World-Herald (Fri., March 4, 2011): 6A.
(Note: ellipsis added.)

How Bacardi Fought Predatory Taxation in Pre-Castro Cuba

Source of book image: http://www.nytimes.com/2008/09/21/business/21shelf.html?_r=1

(p. W6) When it comes to chronicling the Bacardi rum dynasty, the best model may be “Buddenbrooks” or some other novelistic attempt to capture the experience of a family business trying to survive across generations. Tom Gjelten’s “Bacardi and the Long Fight for Cuba” — though fact-driven history and far more upbeat that Thomas Mann’s tale of dynastic decline — feels very much in this literary tradition.
. . .
Perhaps the most fascinating figure in the Bacardi tale is José Bosch, called Pepín, a young businessman who also married into the Bacardi family and was an early opponent of Gerardo Machado’s corrupt rule in the 1920s. Machado made Bacardi, one of Cuba’s most successful companies, a target of predatory taxation, but a proposed rum tax was more than the distiller could stand. Bacardi opened new facilities in Mexico and threatened to move its operations there if the tax was enacted. The Cuban legislature dropped the idea — and Bacardi soon found itself with a Mexican distillery it didn’t need, trying to sell a liquor to tequila- quaffing public that didn’t want it.
Bosch was dispatched in 1933 to shut down the Mexican facility, but instead he saved it. “Noticing that Mexicans drank a lot of Coca-Cola,” Mr. Gjelten writes, Bosch urged the company to promote Bacardi-and-Coke cocktails. Observing the rich tradition of Mexican handicrafts, he also suggested that the locals would be more inclined to drink rum if it was sold in the sort of wicker-covered jugs often used for it in Cuba. Sales in 1934 doubled.

For the full review, see:
ALVARO VARGAS LLOSA. “The Family Spirit.” The Wall Street Journal (Fri., September 12, 2008): W6.
(Note: ellipsis added.)

The book being reviewed, is:
Gjelten, Tom. Bacardi and the Long Fight for Cuba: The Biography of a Cause. New York: Viking Penguin, 2008.

UFT “Trying to Deny Poor Parents Choice for Their Children”

Madeleine Sackler. Source of image: online version of the WSJ article quoted and cited below.

(p. A13) ‘What’s funny,” says Madeleine Sackler, “is that I’m not really a political person.” Yet the petite 27-year-old is the force behind “The Lottery”–an explosive new documentary about the battle over the future of public education opening nationwide this Tuesday.

In the spring of 2008, Ms. Sackler, then a freelance film editor, caught a segment on the local news about New York’s biggest lottery. It wasn’t the Powerball. It was a chance for 475 lucky kids to get into one of the city’s best charter schools (publicly funded schools that aren’t subject to union rules).

“I was blown away by the number of parents that were there,” Ms. Sackler tells me over coffee on Manhattan’s Upper West Side, recalling the thousands of people packed into the Harlem Armory that day for the drawing. “I wanted to know why so many parents were entering their kids into the lottery and what it would mean for them.” And so Ms. Sackler did what any aspiring filmmaker would do: She grabbed her camera.
. . .
But on the way to making the film she imagined, she “stumbled on this political mayhem–really like a turf war about the future of public education.” Or more accurately, she happened upon a raucous protest outside of a failing public school in which Harlem Success, already filled to capacity, had requested space.
“We drove by that protest,” Ms. Sackler recalls. “We were on our way to another interview and we jumped out of the van and started filming.” There she discovered that the majority of those protesting the proliferation of charter schools were not even from the neighborhood. They’d come from the Bronx and Queens.
“They all said ‘We’re not allowed to talk to you. We’re just here to support the parents.'” But there were only two parents there, says Ms. Sackler, and both were members of Acorn. And so, “after not a lot of digging,” she discovered that the United Federation of Teachers (UFT) had paid Acorn, the controversial community organizing group, “half a million dollars for the year.” (It cost less to make the film.)
Finding out that the teachers union had hired a rent-a-mob to protest on its behalf was “the turn for us in the process.” That story–of self-interested adults trying to deny poor parents choice for their children–provided an answer to Ms. Sackler’s fundamental question: “If there are these high-performing schools that are closing the achievement gap, why aren’t there more of them?”

For the full interview, see:
BARI WEISS. “THE WEEKEND INTERVIEW; Storming the School Barricades; A new documentary by a 27-year-old filmmaker could change the national debate about public education.” The Wall Street Journal (Sat., JUNE 5, 2010): A13.
(Note: ellipsis added.)
(Note: the first paragraph quoted above has slightly different wording in the online version than the print version; the second paragraph quoted is the same in both.)

Public Employees’ Union Was Biggest Spender in 2010 Election

(p. A1) The American Federation of State, County and Municipal Employees is now the biggest outside spender of the 2010 elections, thanks to an 11th-hour effort to boost Democrats that has vaulted the public-sector union ahead of the U.S. Chamber of Commerce, the AFL-CIO and a flock of new Republican groups in campaign spending.

The 1.6 million-member AFSCME is spending a total of $87.5 million on the elections after tapping into a $16 million emergency account to help fortify the Democrats’ hold on Congress. Last week, AFSCME dug deeper, taking out a $2 million loan to fund its push. The group is spending money on television advertisements, phone calls, campaign mailings and other political efforts, helped by a Supreme Court decision that loosened restrictions on campaign spending.
“We’re the big dog,” said Larry Scanlon, the head of AFSCME’s political operations. “But we don’t like to brag.”

For the full story, see:
BRODY MULLINS And JOHN D. MCKINNON. “Campaign’s Big Spender; Public-Employees Union Now Leads All Groups in Independent Election Outlays.” The Wall Street Journal (Fri., OCTOBER 22, 2010): A1 & A4.

Feds Chastise Us for Being Fat AND Urge Us to Eat More Cheese Pizzas

“A government-created industry group worked with Domino’s Pizza to bolster sales by increasing the cheese on pies.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) Domino’s Pizza was hurting early last year. Domestic sales had fallen, and a survey of big pizza chain customers left the company tied for the worst tasting pies.

Then help arrived from an organization called Dairy Management. It teamed up with Domino’s to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign.
Consumers devoured the cheesier pizza, and sales soared by double digits. “This partnership is clearly working,” Brandon Solano, the Domino’s vice president for brand innovation, said in a statement to The New York Times.
But as healthy as this pizza has been for Domino’s, one slice contains as much as two-thirds of a day’s maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories.
And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture — the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting.
. . .
When Michelle Obama implored restaurateurs in September to help fight obesity, she cited the proliferation of cheeseburgers and macaroni and cheese. “I (p. 23) want to challenge every restaurant to offer healthy menu options,” she told the National Restaurant Association’s annual meeting.
But in a series of confidential agreements approved by agriculture secretaries in both the Bush and Obama administrations, Dairy Management has worked with restaurants to expand their menus with cheese-laden products.

For the full story, see:
MICHAEL MOSS. “While Warning About Fat, U.S. Pushes Cheese Sales.” The New York Times, First Section (Sun., November 7, 2010): 1 & 23.
(Note: the online version of the story is dated November 6, 2010.)
(Note: ellipsis added.)

Source of graphic: online version of the NYT article quoted and cited above.

“Pork Actually Pushes Private Investment Out of a State”

Some West Virginia miners may have faced unemployment due to technological progress. But what they needed to improve their situation was economic growth from private enterprise, rather than Senator Robert Byrd’s federal pork.

(p. A11) . . . mining companies developed more efficient techniques for extracting coal and natural gas, which eliminated the need for many blue collar jobs. Laid-off workers lacked the skills to attract other types of businesses and college students couldn’t find jobs after graduation, so they left. Such dramatic changes would be serious obstacles for any politician.

. . .
By contrast, Byrd’s solution was to steer federal largess to his state.
. . .
Take Route 50. Thirty years ago, the federal government extended the route from two lanes to four with the hopes of spurring development. But hit the open road today and you’ll notice it’s just that–open. “You won’t see another car for two hours,” says Russell Sobel, a professor of economics at West Virginia University. “You can’t just build roads and expect that things will happen. People who want to transport goods and services need to be there.”
. . .
“We’ve created this culture of dependency,” warns Mr. Sobel, “Our human capital is not good at competing in the marketplace; it’s good at securing federal grants.”
Federal funding is a shaky foundation for an economy because no one can replace Big Daddy. In their recently released paper “Do Powerful Politicians Cause Corporate Downsizing?” Harvard professors Lauren Cohen, Joshua Coval and Christopher Malloy found that states that lose chairmanships on important congressional committees lose 20% to 30% in earmarks.
Even worse, they found that pork actually pushes private investment out of a state. When the federal government intrudes, it raises demand for the state’s workers and real estate, jacking up prices. Often, companies can’t compete, so they flee.

For the full commentary, see:
BRIAN BOLDUC. “CROSS COUNTRY; Robert Byrd’s Highways to Nowhere; Government pork hasn’t made West Virginia prosperous.” The Wall Street Journal (Sat., JULY 10, 2010): A11.
(Note: ellipses added.)

The research referenced is:
Cohen, Lauren, Joshua D. Coval, and Christopher J. Malloy. “Do Powerful Politicians Cause Corporate Downsizing?” NBER Working Paper No.15839, March 2010.

Mob Museum Financed from Local, State and Federal Tax Dollars

“The $42 million museum has been financed through a series of state, federal and local grants. It is set to open next March.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 4) The idea for the Las Vegas Museum of Organized Crime and Law Enforcement was seeded when the city bought the 1933 federal courthouse and post office from the federal government for $1 in 2002, with the strict understanding that the building — one of the oldest in Southern Nevada — be used for cultural purposes.

For much of the middle of the last century, organized crime ruled the Strip, developing and managing an array of casinos, skimming their way to success. Federal prosecutors put an end to their reign in the 1980s. The city determined its historical relationship to organized crime — and the role the courthouse played in it — made the site a perfect fit.
. . .
The $42 million project has been financed through a series of state, federal and local grants, and the work has progressed a bit glacially as money has trickled in.
The project, once listed as one that could stimulate this city’s embattled economy, was attacked by Senator Mitch McConnell, the Republican leader, when city officials suggested that it might qualify for federal stimulus money.

For the full story, see:
JENNIFER STEINHAUER. “‘2 Mob Museums in Las Vegas, Ready to Go to the Mattresses.” The New York Times, First Section (Sun., April 25, 2010): 1 & 4.
(Note: ellipsis added.)
(Note: the online version of the article is dated April 24, 2010 and has the title “Vegas Mob Museums, Set to Go to the Mattresses.”)

MidAmerican Energy Gives Ben Nelson a $1.1 Million Ride from Georgia to Omaha

(p. 3B) LINCOLN — MidAmerican Energy is suing the state after state officials grounded a $1.1 million sales tax refund the company expected on the purchase of a corporate jet.

Under Nebraska’s 1987 economic development act, LB 775, companies can get sales tax refunds for such aircraft.
But the Nebraska Department of Revenue rejected the refund because MidAmerican’s multimillion-dollar Falcon 50EX jet, purchased in 2004, was used to transport U.S. Sen. Ben Nelson, D-Neb., on a trip between Albany, Ga., and Omaha on Nov. 28, 2006.
Using such planes for fundraising or transporting an elected official disqualifies a company from getting the sales tax benefit, State Tax Commissioner Doug Ewald ruled, citing prohibitions in LB 775.
MidAmerican, an Iowa-based energy firm headed by Omaha businessman David Sokol, is appealing.
The company is asking the Lancaster County District Court to overturn the department’s March ruling.
MidAmerican argued that a single trip taken by Nelson should not be enough to deny the refund. It also maintained that the state, under LB 775, should have based its ruling on the intended purpose of the airplane and can test that use only when the plane is purchased.

For the full story, see:
Paul Hammel. “MidAmerican Sues State Over Tax Credit on Jet.” Omaha World-Herald (Friday, May 7, 2010): 3B.
(Note: the online version of the article was dated Thursday, May 6, 2010 and had the title “MidAmerica (sic) sues Neb. for refund.”)

FDR’s Logrolling to Pack Supreme Court

The unsavory political practice known as “logrolling” is discussed in one of the public choice chapters of the Gwartney et al text that I use in my micro principles courses. Here is an apt example:

(p. 193) . . . , McCarran was more than ever determined to (p. 194) fight the Court-packing plan, even if he lost all of his federal patronage.

Roosevelt had some success charming more malleable politicians such as young Florida senator Claude Pepper. Roosevelt invited the wavering Pepper into the Oval Office and turned on the charm. It helped even more when he turned on the spigot. “The president,” Pepper recalled, “was not above a little logrolling, promising to help me win re-election in 1938 and, in my presence, notifying the army that he wanted to see some favorable action on a Florida canal project that I had been pushing.” Pepper ended up backing Roosevelt.

Source:
Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR’s Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.
(Note: ellipsis added.)