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27.12.07

How much clearer, and bolder, can Jindal agenda be?

So, is anybody dense enough still not to understand what Gov.-elect Bobby Jindal said he was going to try to achieve as governor, after a recent interview? To summarize:

  • No tax increases, considering Louisiana’s budget has almost doubled in size in six years even as the state’s population has declined (backing out recovery expenses still indicates a 40 percent increase with an almost 10 percent population decline)
  • Ethics reform which will focus on stricter reporting requirements for both legislators and lobbyists, dramatic curtailment of legislators being able to get contracts from the state or work as “consultants” otherwise, and better funding to accomplish these things on top of existing laws
  • Economic development that begins with cutting business taxes and hopefully ends in reduction of income taxes for both businesses and individuals, and emphasizing work force training.

    A great start, but one never should be afraid to climb those golden stairs which is argued by the editorialists at the Alexandria Town Talk, definitely the outlet with the surest grasp of superior public policy of any media in the entire state. It recommends taking all money that constitutionally must be used to pay items such as underfunded roads and accrued liability for state retirees, construction (presumably for state, not legislator needs i.e. no more reservoirs), and coastal restoration – and debt reduction can be added to the list, too.

    With monies of a recurring nature, it suggests tax cuts, a wise choice that will stimulate the economy that will create higher revenues for the future and will solve the practical political problem of avoiding breaching the state’s spending ceiling (current surplus estimates would require two-thirds legislative majorities to spend past a certain level which could bog down any good spending plan). Better still, it advises then a planned reduction in the size of government of 10 percent, more than justified by the higher number of state employees proportionate to the population than most states.

    Now, all together, this sounds like a real plan for prosperity.
  • 7 comments:

    The Real Sporer said...

    We up here in Iowa think Jindal is a future rock star, like Obama but without the crazy agenda.

    Coming off the incompotence of his predecessor he has a chance to look really good by 2012.

    baton rouge du nord said...

    Here's bolder:

    1. In addition to ethics reform, let's actually make sure that LA is getting value when it lets contracts. Remember, ethics reform does not, in and of itself,solve anything. Just because legislators are doing business with LA, that doesn't mean they're stealing from us. And ethics reform won't do much to keep the chosen ones that are not elected from stealing from the government. It might keep legislators from getting kickbacks except under the table or in the form of campaign contributions.

    Ethics reform is but a baby step toward good government.

    2. Instead of across the board, one-size-fits all tax cuts, the cuts should be targeted toward businesses that produce positives, such as jobs, health care for employees (saving our tax money by lowering utilization of charity hospitals), sound environmental policies, etc. Should we not encourage technology companies in lieu of rendering plants?

    The best that can be said is that Jindal suggests moving in the right direction. Calling any of Jindal's plan "bold" suggests a lack of imagination.

    Jeff Sadow said...

    On the second point, why target? That is assuming government makes better decisions than the market in terms of how to allocate resources. Give everybody the same level playing field, and the market will allocate resources to their best, most efficient and profitable uses meaning maximal economic growth.

    I would say any governor who says he will try to cut income taxe rates to zero is "bold," espeically in this state. Even some rate reduction would be a victory.

    baton rouge du nord said...

    True, but I thought Foster Campbell was bold also.

    Unless things have changed a whole lot since I studied economics in the 80's, and it may well have, the free marketers assumed certain things: 1) free flow of information, 2) no barriers to entry, and 3) unfettered movement of capital.

    I haven't heard anything suggesting that economists have come up with anything earth shattering, so I am assuming that the same flawed assumptions are at work. Which is why I don't place much stock in the virtue of unfettered free market economics.

    Free market economics, taken to their logical extreme, would produce ridiculous results. For example, I could go down the street and open a bank, take deposits, pay a rate a little higher to encourage more deposits, make whatever loans I decided to (and I have no expertise in this field at all), draw a big salary, bankrupt the bank in short order, and leave the depositors holding the bag.

    And in a truly free market, there would be no FDIC insuring the deposits.

    And the depositors would be left holding the bag.

    That's a true "free market" venture, and you'd be way out on the lunatic fringe if you believed that depositors could or should be expected to evaluate the viability of my bank, with caveat emptor as their only protection.

    That is the long way of saying that unfettered free markets don't really work and can't be expected to do so. Imperfections in information flow are the main reason, in my opinion, but entry barriers are huge also. We are seeing a financial oligarchy that can be oppressive.

    Assuming that free markets can and should work is like assuming that the moon is made of green cheese. If you start out with bad assumptions, you reach flawed conclusions.

    Jeff Sadow said...

    Except, of course, Campbell wanted to foist a tax increase in other ways on the populace.

    To think free markets would not work means one of two things by your statement, either the moon is made of green cheese, or you do not have a very good understanding of human behavior. And I can assure you the moon is not made of green cheese. I'll not spend time trying to correct/inform you but I can recommend any number of sources to help you: you could start with the works of Ludwig von Mises or generally any economist of what is called the Austrian School, or, if you want just two tomes to get you up to speed, try Friedrich Hayek's Law, Legislation, and Liberty, Vol. 2, and Robert Nozick's Anarchy, State, and Utopia.

    You do pose an interesting example of a presumed market failure, however, with the depository insurance example. What would happen if we didn't have it? Very little that is different from today. Market forces combined with the rare failure and prison terms for those who deliberately mislead would provide incentives for providers to act prudently and for consumers to educate themselves make wise decisions. The current system provides disincentives for consumers to be choosy about who they would pick; they would pick up the slack without it except for a very few foolish people who because of the nature of their inattention would manage to lose it some other way as they do under the present system.

    baton rouge du nord said...

    This topic fascinates me, and I appreciate the reference materials. I will try to read them. I am skeptical of the premises of unfettered free markets, but I also recognize the dangers of having "a little knowledge."

    My initial thoughts are that government may not make better decisions than the market, but the market's power is limited. Let me explain.

    Unless we want to be the rendering plant/toxic waste dump/landfill, etc. capital of the nation, the government musn't make it substantially cheaper to operate rendering plants here than in Texas or Mississippi, etc. Otherwise, we'll have a disproportionate number of those types of plants.

    But we might want to make it advantageous to bring a high tech company here, so we might want to underprice ourselves with regard to Texas.

    We cannot let the marketplace decide the utility of various enterprises unless we coordinate with other states, which is impossible. Businesses of all types will race to the cost "bottom" when deciding where to locate a business.

    Good public policy dictates that we not encourage businesses whose cost exceeds its benefits. Unless and until there is a level taxation playing field among the various states, the marketplace is limited in its ability to encourage/discourage enterprises.

    As long as we have a federalist system, other states will "NIMBY" and make us the anus of the country if the government creates a "bottom" for the wrong enterprises.

    My bank hypothetical illustrates how your philosophy greatly differs from mainstream thought. Most of us believe it more efficient for specialists (government regulators) to inform themselves of banking practices while the rest of us engage in other productive endeavors for which we are better suited. Same principle with insurance commissioners, the SEC, and the like. We wring our hands about whether we have the right people are doing the job and how well, not whether Joe Pipefitter ought to understand liquidity/delinqency ratios and the like.

    Takes a long time for even the pros to catch a crook, so the criminal disincentives aren't enough.

    Joe Pipefitter would keep his money under his mattress if he didn't have any help deciding which banks were ok.

    The free market would likely work in a more ideal world, but the assumptions the free marketers use idealize a flawed economy.

    Jeff Sadow said...

    I think people are much less helpless than what you assume here. A more tangible argument might be Social Security. Too many people completely turn off their thinking about retirement planning because they assume they government's there to do it for them. If we didn't have this "taking care" of retirement planning in the minds of many, they would have to think for themselves about it -- and most would.

    This is the insidious nature of big government everywhere, especially when dealing with economic issues. Government involvement in the economy encourages a learned helplessness that need not be there. Like in the case of banking, it's hard to believe that somebody can't make a decent decision on this. Look at a few rates, see how long they've been in busisness or, if you really can't or won't think for yourself, ask a relative or friend for a recommendation. You don't need to to look at liquidity ratios or reserves to make a satisfactory decision. In fact, having depositor insurance probably causes laziness in this regard and encourages less prudent bankers to take more risks and less prudent depositors to chase unrealistic rates, in the back of their minds thinking, "I can't lose any money on this" (unless they have a lot to deposit).