In the end, “When we consider all traffic crashes in Oklahoma, drivers who were distracted by electronic devices or other factors make up only a small percentage. Of 72,667 total crashes, 2.3 percent involved a driver distracted by an electronic device; 7.1 percent involved a driver distracted by something else.”
These next statistics come from out of state and they squash Chuck Mai’s advice on why Oklahoma should have a new law. That is unless he only wants to use his statistics he gathered from other states.
- North Carolina and South Carolina -cell phone outlaws teens using phones when leaving school
statistics remain unchanged before law and 5 months after law.
- New Y ork 15 months after cell phone ban- slightly lower statistics.
- Connecticut, 15 months after cell phone ban- slightly higher statistics.
There is no doubt that lawmakers are and will be continually pressured to pass more laws because of strong lobbyist and media attention. There is always the incentive to make them out to be the great protectors. There is no doubt that many are concerned about texting and driving. Shouldn’t Oklahoman’s be more concerned about any distraction rather than the target placed on phones? The law we have addresses the consequences of what can happen if a police officer sees you going down the road driving in a way that indicates you are doing something you shouldn’t be doing.
Really folks…do we need government adding to the list of micro managing more of our daily lives? If the police aren’t ticketing distracted drivers under our existing law why would anyone think they will all of a sudden start issuing tickets? No information was found on how many tickets were issued in Oklahoma for distracted drivers, not to say it isn’t there, I couldn’t dig it up. Is the core problem a lack of enforcement rather than the need for a new law?
One other example of having a law that doesn’t stop the law breakers is mandatory vehicle insurance
. How many are driving around Oklahoma without coverage? How many responsible drivers carry uninsured motorist insurance because they know that Oklahoma doesn’t know how to enforce a law?
How about one in four drivers are uninsured so how is this law working for ya? And this is another story. And these folks that don’t have insurance, how many have cell phones?
For the New Legislators, a Lesson in Rent Seeking
and Why You Need to Be Aware of the Process
Oh my God! Run before you get bored to death! Economics is boring! And it is but we will try to make it interesting because this is lesson one on how to be a good legislator in the coming legislative session and more importantly for you, how to keep the Sooner Tea Party off your back.
Rent seeking is simply spending money on political lobbying to increase one’s share of existing wealth without creating any new wealth. A society should be against rent seeking because it lowers economic efficiency by allowing the allocation of resources in a poor manner, it reduces new wealth creation, causes a loss of government revenue, increases the distance between the poor and the wealthy, and leads to eventual decline of the government and society.
The temporary winners of rent seeking are those who bribe public officials and the public officials who receive the bribes or campaign contributions. Often it isn’t outright bribery but hiring of the official’s relatives or a future job for the official once they are term limted.
Rent seeking in politics is focusing on the manipulation of the law to gain a monopoly advantage or a share of an monopoly advantage and the term comes from the ancient practice of earning a portion of another’s production through land ownership or the control of that land. Basically a sharecropper handing over a portion of the crop to the landowner, something that isn’t immoral or counterproductive to society as the amount of food is increased and both the landlord and sharecropper are better off in the end or they wouldn’t continue the business relationship.
The word rent seeking is fairly new, coined by a woman named Anne Krueger in the mid seventies after she expounded on the theory developed by Gordon Tullock in the mid sixties. The “rent” portion of the theory came from Adam Smith’s division of income into three categories: profit, wage, and rent. The word rent of course means gaining control over land or other resources by paying an annual or monthly payment for the use of the property.
The value of true rent, the payment for the use of actual land or physical property like a house, a parking lot, a machine, or vehicle can be intertwined with government action. The value of land, a home, or a business location depends on the government infrastructure and services surrounding the property such as roads, schools, law and order and of course by the sheer amount of population nearby that was attracted by peace and stability of the region. Thus a 1,000 square foot commercial property will have different rental value in Northeast 23rd Street than the same sized property on Northwest 23rd street. An acre of land in downtown OKC is going to rent for more than an acre of land in the wilderness of the panhandle or a town that has lost most of its residents.
But rent seeking is obtaining income by social or political lobbying, obtaining a portion of a monopoly at the expense of the existing pool of money in the economy, transferring wealth from the public at large into your pocket without creating any new products or services. An over the top example would be someone erecting a toll barrier on I-40 and demanding a dollar to allow you to pass the toll booth. That is different from a legitimate toll road that was built to lower the cost of traversing the countryside or traversing a natural barrier such as a river or sea. A turnpike might allow a more direct route, saving money on gasoline or wear and tear on the vehicle or it might save time traveling through a congested area, saving time out of your day or less cost for labor.
Nothing is gained by society at large if someone erects a toll barrier on a highway other than the enrichment of the owner of the toll booth from charging money for something that used to be free. Of course in a society that such a thing would be possible even that toll road would face competition in short order as another gang or political group decided to open a bypass or alternate route for traffic and ask less money for passage. A free market and a free people will always find a way around a poor economic choice.
Profit seeking is not rent seeking as profits are received from free trade where both parties stand to gain something they value more. The seller manufactures or obtains a product or service that the purchaser values more than the amount of money he has to pay for the item or service. Both are happy with the trade or both agree that the deal is the best trade they can obtain under the circumstances.
Rent seeking examples are spending money on political lobbying to impose regulations that will affect your competitors more than your own company or to gain subsidies available to you and not to others. Or it could be restricting access to profitable occupations like driving a truck, practicing medicine or law, a license to operate a taxi service or paying union dues to work at a union shop. The idea is to constrain supply of services or workers, inhibiting competition instead of increasing competition. We see the Uber company facing this very thing when they expand into a city that licenses taxi cabs and their service undercuts the rates by bringing a customer and a car owner together where they negotiate their own rate for the transportation.
Rent seeking is also bribery like a tax official taking money for lowering the tax burden on a particular taxpayer. Or a legislator willing to support new legislation, remove old legislation, or modify either type of legislation in return for campaign contributions or a lucrative job offer for a spouse or for a nice retirement job.
This collusion between officials and firms they should be regulating interferes with the free market through licensing, tariffs, regulation requiring more costly equipment or insurance. Eventually the free market works its magic even in corruption as the cost of the bribes rise to nearly the additional profit gained by the firm paying the bribe. Society suffers through increased prices or a scarcity of products. Rent seekers will justify their conduct saying they are raising the bar on an industry to improve service or quality or keeping fly by night operators from preying on consumers.
The worst part of rent seeking is that companies and entire industries put money into purchasing political favor rather than more efficient manufacturing to eliminate problems or to stave off more efficient competitors. Why increase research and development, training or inventory when you can simply hire a lobbyist to gain favor or to defeat those attacking your advantages? And it is a vicious circle as the lobbyists show a return on the money draining the economy as paying off politicians replaces economic growth from natural means.
It can be a company or trade association that starts the process or a politician looking for bribes or campaign contributions. Or the impetus might come from a member of the bureaucracy looking for bribery or a pay off retirement job. Regardless of who initiates the process the government becomes beholden to the graft furnished by organized special interest groups and the economy begins to falter.
On the flip side once a regime or economy collapses the reverse becomes true as business is finally able to innovate rapidly and expand due to the lack of rigid control. Both Japan and Germany are excellent examples of economies where the special interests have been swept aside and the economy flourishes.
What is the impact? Some studies have shown that rent seeking reduces income by as much as 45% and the first to suffer are the poor and middle class as the rich get richer.
Rent seeking was recently in the news as a Kentucky moving company battled the state over losing an appeal for a “certificate of necessity” that moving companies had pushed into law. The company failed to get a certificate as existing moving companies opposed the new competition and the owner sued in federal court. Amazingly the owner won in federal court and the federal judge overturned the first CON law since Oklahoma’s law was struck down in 1932.
Businesses reacted back then as they do now and the judges were quickly shown the error of their ways and no other court has struck down these sort of anti competition laws or up until the Kentucky case. The CON laws were used to protect public trolley services as the new fangled taxies emerged after WWII and in turn we see the Uber web based company facing the same sort of tactics that were used to stifle the early taxi cab industry.
Oklahoma was in the news again on this issue in 2004 when the 10th Circuit Court of Appeals upheld a law requiring sellers of caskets to employ a licensed funeral director and blandly agreed that the state was handing out economic benefits to connected businesses. The legal argument was called “rational basis” for handing out benefits to special interests and it was the law of the land for many years.
The most recent examples of rent seeking were the bailouts for GM, brokerage houses, and even banks during the 2008/2009 bailouts. Both the far right and the far left and many of those in the middle soundly opposed the bailouts but they were rammed through using scare tactics. In the end the Dodd/Frank law that was passed institutionalized the idea that some businesses simply couldn’t be allowed to fail. And of course Obama Care is simply a rent seeking law pushed by the insurance companies to force people to purchase their products while also driving out most of the smaller insurance companies that had lower overhead and lower prices due to their smaller size and smaller overhead.
Real companies go after profits and their money is at risk so the rewards might be great or they might go broke trying. Without an army of lawyers to lobby for them these companies live and die by their decisions in the marketplace. True wealth is created in the process as there is a higher standard of living for all when services and products become more available. Wages are similarly mirrored by comparison as wages rise in relation to the productivity of the worker. Low wage jobs continue to be low productivity jobs as the employers can’t pay high wages and still compete in the very competitive market. These same low wage workers might fear productivity improvements because they eliminate jobs but that is also the only way their wages will be able to be increased. Those laid off workers have a chance to seek other work, more productive work, and wage levels rise as a result.
Look at the farming industry. In most of the history of the world we needed way over 90% of all workers to produce the food we ate but in the mid 1800’s we saw the improvement in agrarian practices begin to force sustenance farmers and share croppers off the lands and into the cities. After the Civil War the U.S had less than half of its workers on the farm and now less than 2% of our workforce produces our food. That didn’t happen because industries tried to get government to protect their profits; it happened because businesses faced competition and learned to increase their productivity and make more with less labor and less cost. All because some businessman wanted to earn more money so he risked his capital.
But both working for wages and risking capitol are less attractive than bribing for political favors. Renting property or machinery also risks capital so it is no wonder that special interests prefer to try to get the government to allow them to earn profits of things that do not belong to the businesses. Sometimes the companies are victimized such as in rent controls in big cities but usually it is the public as the victim as we all pay higher prices to protect the wealthy.
And what actually causes rent seeking? Excess taxation….
Most people can only pay a small amount of taxation but there are a few that earn enough to pay heavy taxation. The poor and middle class have little incentive to fight back as they pay the least but the wealthy have enormous incentive to push back. The average Joe or Jill simply isn’t motivated to go to the Capitol to complain and conversely the wealthy not only have the time and incentive to complain, they have enough wealth to pay the needed bribes. Unions are another example that is formed around the idea of each member paying dues for collective bargaining and for special interest legislation to advance their interests. As special interest groups form there are more and more benefits carved out for them and the cost to the general public increases.
Eventually the taxation and the higher prices for goods is noticed but the culprits for each line item are so dispersed that few know who to go after and what is left for the general public is a mood of hopelessness, anger, and discontent. Which creates an opening for the same politicians to create a boogie man to go after to deceive the public as to who is the real reason for the problems of the economy. Straw men are set up to blunt the public anger
While the left condemn the greed of businesses producing a profit they are silent as unions and unproductive/at risk business busy themselves trying to protect their profits. A productive business increases wealth while the special interest merely re distributes the wealth from the population to the special interest. Thus the bailouts wrecked interest rates for the retirement accounts and the savings accounts of the many while the few well connected retained their wealth. The dichotomy that is given to the public is interesting and is called the “Prisoner’s Dilemma” for the students of Game Theory.
The basic premise is that you are part of a prison gang planning escape. You can either be trustworthy to your fellow inmates or you can earn special favor by betraying them to the warden and you also have to contend with the idea that the same idea has occurred to the others so you will suffer if someone betrays you before you betray them. Everyone soon figures out that “winning” depends on betraying the others while convincing others to be faithful to the group.
And so is the dilemma for the public good. The most profit comes from rent seeking and those that don’t see their wealth transferred to those have gained the advantage. Not only that, as we all should understand that only a few can take advantage of this strategy without crippling the economy quickly it also depends on the rent seekers convince everyone to not rent seek while they quietly collect their money. Like the prisoner’s dilemma the special interest isn’t sure who else is going to betray the common good so they act first if possible and hide the true intent behind rationalizations or cloak the reasoning behind compassion, poverty, racism, the environment, greedy insurance companies or greedy businessmen.
As a legislator the best solution is simple, the classic libertarian principles:
- Rule of law
- Sanctity of private property
- Freedom of contract
Limiting the power of government through rule of law prevents rent seeking as a legislator can simply refuse to give away what is not his to give. As private property is… well… private, it is not the legislator’s right to sign away the wealth of others. The freedom of contract means that any mutually satisfactory agreement between two people that is not a crime is to be upheld. Perhaps both parties aren’t 100% gaga over the deal but you can be certain the deal is the best either of them can drive or they wouldn’t agree to the deal. That is said of course with the idea that the balance of power is equal, unlike a defendant agreeing to a plea deal because they have no other options.
That begs the question of course that there will always be people who would rather pursue advantage and wealth through rent seeking instead of supporting a level playing field and good government. Which brings us to the idea that there are actually two Prisoner’s Dilemmas involved which are short term and long term.
In the Prisoner’s Dilemma the prisoner had to decide whether to betray his fellow inmates or to stay true in the hope that no one else betrayed the group so that all could escape. His choice was to A) betray or B) stay true. In a short term situation with only two outcomes like a prison break that will work but in a long term situation a different strategy will emerge. Initially the winning strategy is to stay true until betrayed then respond in kind.
Now the prisoners understand that to betray means that no one will ever trust you again and those that keep only to the high ground of never betraying will be consistently betrayed by the more self serving. If a prisoner betrays and then in turn is betrayed in payback he isn’t likely to betray the one that paid him back and he will betray those who always stick to the high ground.
The end result in this Games Theory reveals the ultimate survival strategy; A) honesty pays, B) an eye for an eye also pays, and C) forgive your enemies after they have been suitably punished. The end result is that the most moral will prosper and the dishonest will eventually turn honest in self defense or lose. Also a government based upon the three Libertarian principles would also thrive while the rent seekers would eventually fail. Further proof is watching the natural world in the process of natural selection where altruism and cooperation wins over selfishness in any long term contest.
Now the left will counter that those that successful owe the less fortunate most of their “ill gotten gains” through taxation but those of us that understand that hard work and coming from an advantaged family are probably what made that success possible think otherwise. Liberal guilt comes from being “accidently” benefited from unearned wealth which is why you really don’t see as many poor liberals other than the rent seekers themselves from that population. And insteps the wealthy rent seekers willing to fulfill the fantasy and to magically erase liberal guild by redistributing the wealth. Suddenly the greedy insurance companies are to blame and Obama Care is the result despite the fact that the insurance companies that pushed the law gained the most; an increased customer base under threat of government force, eliminated competition, and a guarantee that they will always make money.
Another process at play is the tragedy of the commons, so named for the practice of holding large areas in “common’ in earlier eras. The poor could go cut wood, farm, graze animals, without owning land but it became a race as to who could strip the most from the public lands and the lands were destroyed. Eventually this lead to the 18th century Enclosure of public lands in Britain which ruined many a poor farmer. That of course forced them into the cities and into the employ of the Industrial Revolution and productivity soared.
True insurance by contrast works because everyone joins the risk pool voluntarily and are all at risk in some way or they wouldn’t buy insurance. Not everyone will get sick or have their house burn down so the risk is spread throughout a larger population that is paying the actual costs of making people whole after a calamity in addition to a nice profit for the insurance company. Not only that but the risks are fairly predictable from studying past occurrences so adequate fees can be charged to maintain a healthy insurance company.
Insurance has been replaced by the desire of the citizens to have government stand in place of an insurance company. Suddenly we had government run unemployment insurance in place of private savings for periods of unemployment, social security in place of retirement policies, disability policies, or strong families that could take care of their own. And this occurred despite the well known public failure of the poor houses, public orphanages, public asylums, and indigent hospitals.
Replacing private charity solved a problem for some of the poor and that was if you were lazy and able the private charities wouldn’t help you for long if at all. The new government charity didn’t care, you were simply a client to them and that increased their budget and their individual empires and the elimination of the government wards and asylums generated more employees to supervise the poor. Not only that but now the government got to set standards for individual behavior if a person wanted help.
Social Security was the ultimate rent seeking scam. Originally sold as a pension plan where the workers paid premiums based on salary, matched by the employers, to be saved for old age, something that once had to be based upon sound actuarial basis if it was to survive and pay off the obligations. Suddenly “retirement” became a vehicle for taking from the many to distribute to the needy and people started retiring after only a few years paying into a system. As long as the working population was increasing this was not a problem but soon the political rent seekers managed to convince Congress to add disable workers to the beneficiaries of Social Security and the working population began to shink after the Baby Boom of the post war era.
No problem said the politicos and they jacked up Social Security rates in the 80’s so the program ran a surplus and that simply increased the amount of cash the politicians could give away each year in return for votes and bribes. All the excess money went into U.S. government IOUs with nothing invested to compound and once that annual surplus ran dry then the U.S. government needed to increase taxation on others in order to pay the IOUs pledged earlier. So the money was raised, squandered, and now must be raised again.
This is called a Ponzi scheme where incoming revenue is used to pay current expenses and ignores future needs and obligations. As of this year the current federal income from all sources is enough to pay for Social Security, Medicare, Medicaid, and national debt interest, everything else we spend is borrowed money or simply money printed or more zeros in a computer data base. Which is why the Federal Reserve has been buying two thirds of the U.S. Treasury Bonds since 2008 because few others are stupid enough to buy them. Inflation is the result and it is skyrocketing and we all know it.
In the Obama Care rent seeking case we have also seen the maturity of the process of including everything related to health care into insurance. Used to be that we all understood that there were things done every year like vaccinations, doctor visits for minor problems, dental work, and other predictable expenses.
As we can predict these expenses we should individually budget for them on a monthly basis instead of folding them into a risk pool, however the insurance companies convinced us that this was a good idea. It was for them, premiums increased and so did their profits. Which is why Obama Care allows your 26 year old to stay on your policy instead of them being forced to buy their own policy, which they wouldn’t, but it allows the monthly premium to be increased for a segment of the population that isn’t likely to need serious medical expenses anyway.
Suddenly insurance has changed from spreading the risk among a large group that had many members that would never need benefits to simply collecting medical costs up front and doling them out to those in need. No more savings from those that didn’t get sick= skyrocketing premiums and skyrocketing profits for insurance companies.
Competition increases productivity, lowers costs, and generates innovation in the free market while government run processes do the opposite. Even the doctors, or the savvy ones, understood that more and more people would use their services with the tradeoff being the rationing of health care for the sickest and for the elderly. In turn the obligations shift from an insurance company that is obligated by contract to provide benefits to the government that can deny benefits at will with zero accountability. Remember ten years ago you would get an annual letter from the Social Security Administration that said exactly what you would receive? Now you get the same message with this addition: “if congress doesn’t change your benefits.” This was after the Supreme Court ruled that citizens had zero rights to collect money they have paid into Social Security and ruled that these benefits are given at the discretion of Congress.
As a new legislator you will be asked to vote for legislation that is simply nothing more than legalized theft or rent seeking. The Sooner Tea Party expects you to have one master; your constituents that put you in office. Follow the three rules of good government: Rule of law, sanctity of private property, and the right to freely contract. Reading and understanding the U.S. and Oklahoma constitution is a good start to the first, understanding that many things are simply not yours to give and not the government’s to give is a good start on the second, and allow people to bargain for the best they can under the circumstances and resist any effort to put some bargains off limits in the effort to “help” people.
One Shining Example of Charlie’s Picks
By the Watchman
We will begin our reports with one of the worse picks made by Charlie Meadows. That would be Duane Crumbacher, Candidate for Senate District 48. This would almost be laughable if it wasn’t such a sorry selection for a candidate. Here we had an open Senate seat that had been vacated by a sitting Senator so she could run for a higher office, and this is what the party gives us in an uncontested primary. This is the leadership we get from the state GOP Chair, let us change that, this is due to the lack of leadership from the state GOP Chair.
Crumbacher of course refused to distance himself from Charlie Meadow’s racist ranting which is why he is worthy of our attention. Kind of strange seeing that he was running in a predominantly minority district.
There we found that he claimed credit for an Associates of Arts degree from Oklahoma City Community College. He claims to be a Christian and raises his family under the golden rule, but we wonder how he can keep a straight face when saying this knowing that he had knowledge of the stolen email list from the Dr. Paul 2012 Oklahoma rally and wouldn’t turn in his buddies that actually stole the list. That’s not setting a very good example Mr. Crumbacher. We also found that he didn’t even take the time to modify his web page after the state overturned the Common Core Standards. It’s obviously that there was no attention to detail being done within his campaign.
We next went to www.votesmart.org
to see what information was available on him there. We promise you there was precious little. He failed to answer any questions in the political courage test they sent him on several occasions. We know he has a family and we found he took a course in Economics at the University of Central Oklahoma. That’s all they have on him. We then went to www.followthemoney.org
to see if they had any information on his campaign finances. They had nothing. They will have shortly.
We next turned to google for some research. The first item of interest we found was this
. This was a simple six question sheet that should have taken less than 3 minutes to fill out. Instead it was reported as “No Response” on all six questions. By this time we are beginning to wonder if he was serious about seeking the seat to begin with.
The next item of interest we found was this gem
. Now why would an Oklahoma politician reach out to the Little Rock Regional Chamber of Commerce? This is disgraceful. What’s even worse is a review of his financial records, or at least the ones he submitted to the ethics committee, no one in the Little Rock Chamber of Commerce saw fit to donate to his campaign. That is truly sad.
Now this one has us really scratching our heads, Duane Crumbacher Candidate for State Senate OK 48th District. (Republican)
. We can find no reference to his ever has attending the University of Kansas, so we have to wonder how he became a member of the KU Alumni Association. This is also the first time we see any mention of any military service. For that we should thank him, but there is no reason to believe it’s true. So far there have been so many new discoveries from so many new sources that we don’t know what to believe anymore.
We don’t normally reference this commentator since they are partially controlled by the Oklahoma State Chamber of Commerce, but it’s necessary to show you how liberal of thought that Mr. Crumbacher is. In the article Senator Coburn is blasting the Senate for wasteful spending. Everyone knows that follows politics that without control of the Senate nothing to defund Obamacare was going to pass. Yet if you read this article
and then read the comments you’ll find that Mr. Crumbacher is politically naive.
Now this next article is almost rising to the level of a criminal offense. Who are the idiots that nominated a man who was complicit in the cover up of the theft of a presidential candidates email list? And he is given this
as an award. This is shear madness and corruption. Why was this man ever allowed to take this seat much less run for office?
The next article we found should have told everyone something about Mr. Crumbacher and his Democratic opponent. This is a report from the Research Institute for Economic Development dated October, 2014 New Tab
. The score for his opponent was a 52. That’s not bad for a Democrat, but Mr. Crumbacher was at a disadvantage as he had no political experience at all. Did anybody bother to vet this guy?
We next went to the ethics commission public disclosure site
to see what they had on file for his campaign finances. It didn’t take us long to figure out that Mr. Crumbacher never made a serious attempt to win this seat. We didn’t break out a calculator, but it was clear that you’re not going to win an election in a metropolitan area on less than $5,000.00. This was clearly just a name thrown in there to fill a slot, so the question is who the guilty party is?
To prove that what we have been saying is fact, all you have to do is look at the election results for Nov. 4th
, 2014 here, State Election Results, General Election, November 4, 2014
. This alleged shining star of a candidate forced upon the citizens of district 48 managed to get an entire 17% of the vote. That’s pitiful. Kind of makes you wonder what kind of deal was made with the Democratic Party.
In closing we should all be grateful this man is not in our state Senate. This is why people need to investigate the candidates more and look at them for who they are not just what brand they represent. You can’t just throw them up against the wall and hope they’ll stick.