California vs. Texas

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In recent years, much has been made about the economic success of Texas and the decline of California. Many have pointed to California’s tax and regulatory burdens and the more business friendly policies of Texas as a primary reason. These certainly are a fundamental reason, and one statistic captures the essence of the difference between the nation’s two most populous states.

In California, there are 252 non-education government employees per 10,000 citizens. In Texas, that number is 22 percent lower: 196 per 10,000 citizens. The obvious impact of this is that Texans must pay far less of their income to support government workers. In California, it is $11,302 per person; in Texas, it is $7,756 per person (the national average is about $9,450). Less obvious is what these government workers are doing.

Certainly, many government workers are working in legitimate government functions: police, courts, and prisons. But what are the others doing? They are creating regulations, checking paperwork, inspecting businesses, and generally putting obstacles in the path of citizens living their lives and operating their businesses. California has substantially more people erecting these arbitrary barriers than Texas.

In short, California has more people snooping and prying into the lives of its citizens than Texas does. Not only are Texans freed from the financial burden of paying for these glorified babysitters, Texans are freer to go about their business. And since Texans have been leading the nation in job creation for more than a decade, it would appear that their business is business—producing the values that we want and need.

Can the Government Really Pick Winners?

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It is often claimed that new technologies would not be developed without massive government expenditures. Advocates of this view point to NASA, the Internet, and the interstate highway system as examples. Thus, they claim, government should invest in “green energy.”

While it is true that NASA, the Internet, and the interstate highway system have contributed to improving our lives, this is not evidence that such improvements would not have occurred in the absence of government involvement. Further, we have abundant evidence that private businesses can and do develop a wide variety of life-enhancing values without government involvement.

For example: the steam engine, the telegraph, the telephone, the automobile, the airplane, the phonograph, photography, moving pictures, refrigerated railroad cars, and much, much more. At the time of their invention, these were life-changing innovations that dramatically improved the lives of individuals. Even today, innovations like smart phones and flat screen televisions are the result of private individuals, not government “investment.”

But innovations do not always occur at the speed or in the direction that government officials would like. They believe that they can accelerate the process by stealing money from millions of taxpayers, pooling it, and then doling out that money to those who will engage in the activities that Congress finds desirable. And this is nothing new.

In 1862, Congress passed the Pacific Railway Act to facilitate the construction of a transcontinental railroad line. The act awarded railroads land for a right-of-way to construct the rail lines, as well as land adjacent to completed lines. The adjacent land was to be sold to settlers as a source of revenue. The act also authorized the federal government to purchase 30-year bonds from the railroads with an interest rate of 6 percent. Every company that was supported by these government subsidies eventually went bankrupt.

The reason is simple: the government attempted to provide a service that was not needed. In the 1860s, there was no market for a transcontinental railroad. That is why the private companies did not build one. The government intervened, and the results were destructive.

Today, private companies do not invest in “green energy” for the same reason—there is no market. Yet, the government insists otherwise, and it is pouring billions of dollars down the same sewer that was once the transcontinental railroad.

Those who do not learn from history are doomed to repeat it. And so are those who reject principles.

A New Way to Compete

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There was a time when business owners competed on the basis of their products or services. They would try to be more innovative than competitors. They would develop new products, offer better service, or charge lower prices in order to win market share. Today, it appears that business owners compete to find the most creative legal arguments.

For example, in Garrett County, Maryland, three business owners have filed suit to stop Lakeside Creamery from renting boats on Deep Creek Lake. The plaintiffs claim that the boat rental business would be detrimental to “public welfare.” If this is true, “the public” will discover that fact rather quickly and the business will go broke. But rather than allow consumers to make that choice, these businesses want to impose their judgment on the entire community.

Said one opponent to Lakeside Creamery’s plan, “You are allowing an ice cream place to become a boat rental place. I think that was totally unfair to the existing boat people. You are cutting their throats by just allowing someone to come in and rent boats.”

According to this individual, competing in a free market is akin to a street brawl. Apparently, offering a better service, or lower prices, or nicer boats is akin to cutting throats. He believes that the existing “boat people” should be protected from further competition. They were there first, and that fact “justifies” using government force to prohibit competition.

The plaintiffs in this case are no better than a common street gang. They are fighting to protect their turf. That the battle is being fought in a well-lit court room, rather than a dark alley, doesn’t change the principle.