Rush was wrong,but the market will correct him

Rush Limbaugh went too far when he called activist Sandra Fluke a slut and a prostitute. No woman deserves to be called those disgusting words and Republicans do not support or tolerate that, at all. That kind of cheap tactic does more damage to Republicans and conservatives than to Ms. Fluke.

Rush established his career by “using absurdity to illustrate absurdity”. But this was far beyond absurd. It was cruel and stupid. As a result, well over 100 advertisers are leaving his show. Rush will most likely survive the firestorm and live to insult again. But he will have learned an important lesson – the market punished his bad behavior, and we’re not likely to hear a repeat performance. If he does repeat it and more advertisers walk out, it may be the end of his show. 

That's both the power and beauty of a free market – behavior gets rewarded or punished based on people who are free to pursue their own values. It doesn’t require a government intervention to bring about important change. It only requires people acting on their own free will.

Perhaps this disgusting incident can help teach us a lesson that people who are free to make their own choices, not Government, can better solve our problems.

Electricity, Unemployment, and...

This is my final column for Metro North Newspapers. On Thursday, January 5, I became a candidate for State Representative, and can no longer be a columnist.

How many times do we pay for renewable electricity?

Xcel Energy is asking for another rate hike which will add 6% to your electric bill. The rate hike is to pay for electricity they aren’t generating.

Xcel used to sell 300 megawatts of electricity to Black Hills Energy, a utility that serves southeastern Colorado. In 2004 Xcel forecasted that they would need that electricity and would no longer sell it to Black Hills. Now Xcel says it doesn’t need those megawatts because demand isn’t as high as they forecasted. It costs money to own an idle power plant, hence the requested rate hike.

Coincidentally in 2004, Colorado voted to require 10% of Xcel’s electricity to come from renewable sources. That’s a reasonable and worthy goal. As the economy grew and need for electricity rose, new renewable generation could fulfill the requirement. But then our legislators got carried away with it. They increased the requirement to 30% by 2020. 

Xcel has 328 megawatts of renewable energy, slightly more than the excess capacity. So let’s see how many times we pay for electricity:

1. We pay for power plants.
2. We pay for renewable power plants.
3. We pay for subsidies for renewable energy.
4. We pay for more gas power plants, because coal power plants can’t respond quickly enough if the wind quits blowing.
5. We pay for subsidies for energy saving washers, dryers, furnaces, even window shades, which reduce demand.
6. We pay to upgrade power plants so that they will cause less pollution.
7. Then we pay for idle upgraded power plants.

Who is responsible for this mess? Legislators who believe they know best how to run an economy. Friederich Hayek called this the “Fatal Conceit.”

Misclassified

It’s personal now.

The Colorado Department of Labor and Employment (CDLE) intends to end the practice of “misclassifying” employees as independent contractors. They claim that one in seven Colorado workers is misclassified. The club where I coach swimmers has decided that rather than risk the possibility of a CDLE audit I have to be an employee instead of an independent business owner. Even though I carry my own insurance, market my services, and set my hours, nobody can defeat the power of a CDLE auditor. Employees cost more than contractors, so the club reduced what they are willing to pay for my services.

As a “new hire” my loss of a business counts as a created job in labor statistics. In the very near future, Colorado may see an increase in jobs when many employers reclassify their independent contractors. At the same time, real unemployment will increase. Some independent contractors will lose work because of the extra cost to their employers. Some employers will go out of business because they can’t afford the cost of reclassifying workers. Think about that - one in seven workers (small business owners) is at risk, but the state will claim better hiring.

Farewell?

This will be my last column for Metro North Newspapers. Tomorrow I’ll be filing paperwork and standing for office (That’s how they say it in Australia, and I like the idea of standing for office rather than running.) As a candidate for State Representative, I’ll have to forfeit my job as a columnist.

My column is called “Wake Up Call.” I hope I’ve made my case that government has run amok, and we need to limit what it does. That doesn’t make me an anarchist. Government provides some very important functions. However, the opposite of limited government is unlimited government, and we don’t want to go there. It’s time that we wake up and enforce limits.

Undoubtedly, what I’ve written will be twisted and used against me. But if I wrote nothing, they will just make stuff up anyway. I hope, despite what they say about me, you will remember this: I believe that the aggregated wisdom of millions of free people living under the rule of law beats the heck out of legislators and bureaucrats. As I stand for office, I stand with you for your rights.

How many does it take?

Government never furthered any enterprise but by the alacrity with which it got out of its way. Henry David Thoreau

The number of bills that became law in Colorado in 2011: 330. Average number of pages of new rules issued by Colorado per year: 15,000. The 2010 Federal Register, which contains federal rules and regulations, is 81,405 pages long – you can buy a copy for $929.

 

How many laws does it take to create jobs? We keep hearing politicians talk about creating jobs. Unfortunately, too many politicians don’t really understand how jobs are created, or who creates them. Nor do they understand what prevents job creation. Here’s a hint: see paragraph one, above.

 

There is a pervasive idea that businesses are unwilling to invest because of uncertainty about taxes and regulations. But it’s not uncertainty that prevents business investment and hiring - it’s the certainty. We know with absolute certainty that federal, state, and local governments will continue to write more laws, rules and regulations that limit economic and personal freedom, and require us to beg favor from government officials just to make a living.

 Over 96,000 pages of new state and federal law, rules and regulations, and that doesn’t even include local governments. How many will you violate today? How could anyone possibly know?

 
Although I’m a registered Republican, I’m not particularly optimistic about the ability or willingness of either party to curb the appetite for more control. In 2010 when Democrats controlled both Colorado houses, 454 bills were signed into law. With Republicans controlling one house in 2011, one would hope for a 50% reduction in passed bills, but we got only a 28% reduction. Republican politicians tend to favor legislation that “favors business,” but that generally means favoring big business at the expense of small business. This is called “economic development,” Orwellian doublespeak for corporate welfare.
 
Democrats add more regulations to “help the little guy,” claiming to be the “party of the people,” but regulations almost always benefit larger businesses, and help only workers who are lucky enough to find and keep their jobs. For example, every year we see legislation advanced by Colorado democrats that would require businesses to provide paid time off for workers. Large businesses already do this, so it’s of no consequence to them. But small businesses and start-ups may not be able to afford it. This type of legislation from democrats hurts “the little guy.”
 

The cost of complying with regulations is astounding. A 2010 report from the US Small Business Administration estimated that in 2008, US businesses spent $1.75 trillion in order to comply with federal regulations. The Colorado Senate Republican Caucus extrapolates from that to conclude Colorado businesses’ cost of compliance with federal regulations was over $30 billion in 2008. That’s enough to pay for 500,000 good paying jobs, or 100,000 jobs in the top 1% of wage earners.

 

When I started my first small business in 1990, I was shocked at the cost of compliance. But I was thankful for Adams County government, who demonstrated common sense and flexibility in allowing me to build that business.  In 2008 however, it was entirely different. I was preparing to start a new business and found that government officials now strictly adhered to codes and regulations that added unnecessary costs, and were unwilling or unable to predict what other problems I might encounter.

 

My plans to start a small business that would have kept me working at something I love, would have employed six or eight people to start, would have filled one or more of those many empty retail spaces, and would have provided a valuable service for my customers, have been scrapped. As I contemplate whether to take on another business venture, I look at the regulatory landscape and have to wonder why anyone would bother trying to combat government to create a business. I applaud those who do, but I fear that fewer are willing or able to do so.

Xcel Energy “Breaks Wind” Records for Rate-Payers

The Denver Post reports: 

Early on Oct. 6, Xcel Energy set a world record for electricity from wind power. Between 4 and 5 a.m. that day, 55.6 percent of the electricity consumed by Xcel’s 1 million customers in Colorado came from wind farms dotting the state. 

“We’re proud of that and believe it shows that wind is an important part of the portolio,” said Michelle Aguayo, an Xcel spokeswoman. 

While that seems like a tremendous accomplishment, let’s take a look at what was accomplished, and what it means for Xcel customers.

The record itself is not that impressive. In a recession at 4:00 in the morning, overall electric usage is pretty low. When the economy is humming along at full steam, manufacturers that require lots of electricity often add night shifts, because electricity often costs less at night, and it’s cheaper than building more production capacity. This creates more jobs. But in this economy, it’s a safe bet there ain’t much happening.  

October 6 was a high wind day. Portions of I-70 were closed that day from winds. In Denver, the wind uprooted power a light pole, which landed on a light-rail power line, delaying the trains. Lots of wind combined with a recession produced the record.

Wind energy costs up to 80% more than conventional power production. When Xcel brags that they broke a record for wind power generation, they are really saying that at 4 a.m. they produced high cost energy at a time that was once considered to be the least expensive time of day to buy electricity.

Let’s go a bit deeper in our analysis. Colorado has a 30% Renewable Portfolio Standard (RPS), meaning 30% of our electricity must come from renewable resources by 2020. The citizens voted in 2004 for a 10% standard, but a “too eager to please” legislature has since raised it twice. Solar and wind devices provide roughly one third of their rated capacities, because the wind doesn’t always blow and the sun doesn’t always shine. A wind farm rated at 100 megawatts will only deliver 33 megawatts. Because they mandated the 30% RPS, we must overbuild renewable generation by nearly three times.

That sounds great, right? Except that there is no way to store the power produced when the wind is blowing for use when it isn’t. Therefore we must have stand-by generation capacity that can meet all our electricity needs.

Coal power can’t easily or efficiently be “cycled”, meaning you can’t turn it off and on to complement wind speeds or sunshine. Some clean coal plants violate clean air standards because solar and wind are too variable. When they are cycled, their clean status is compromised.

Nuclear power, which has no carbon or other bad emissions, can’t be cycled at all. It can only be used for “baseline generation”, the lowest amount of electricity that gets used during a day. As we approach that 30% standard, nuclear can not be part of the mix, because sometimes all our power must come from renewables. The stand-by generation will all have to be quick cycling sources, such as oil or gas.

In recent years, technology has rapidly advanced to make coal a much cleaner fuel for electricity generation. Now that Colorado and President Obama have decided that coal will be eliminated or minimized as a fuel, there will be no incentive for further advancements in clean coal technology. Meanwhile, advancements in wind, solar, and storage technology are creeping along at a snail’s pace. Government interference is misdirecting research and resources.

Colorado’s Renewable Energy Standard is raising electricity costs when families and businesses are struggling, costing hardships and preventing job creation. The environmental savings, if there are any, are negligible. Readily available, clean burning fuels are being ignored, or shipped to China where they burn without the benefit of our clean technology, creating global pollution. It’s time to eliminate the arbitrary Renewable Portfolio Standard and let market forces, guided by sensible restrictions on pollution, determine how we will generate electricity for families and the businesses that create jobs.

Preserving our Blessings

I’m thankful. I’m very thankful. And not just today, Thanksgiving Day, but every day. I grew up in a family with loving parents and siblings. I don’t mean to demean the rest of you, but I’ve got the world’s best wife (some of you are undoubtedly pretty good, but no one can hold a candle to Courtney, the love of my life). We have a home that someday we’ll own, in the great State of Colorado, a state whose abundance of outdoor beauty and recreation gave birth to my entrepreneurial spirit. We live in a land of liberty and opportunity, and for all these things, I’m grateful.

Dad worked hard to provide for us, but also instilled a strong work ethic so that we could provide for ourselves. I remember working with Dad after school one day as an 11 year old. We were picking up scraps and trash at a home he was building. A subcontractor stopped to talk to Dad, and I stood idly by and listened for most of an hour. Then it was time to go home. As we got into the van I was foolish enough to remark how easy it was to earn my 50 cents for that last hour. Man, did he lay into me! He said he wasn’t going to pay me for that hour. I complained that I was there to help him, and since he was listening to the subcontractor, I was helping him listen. Dad carefully explained that he pays me to work, and that we each have different jobs. If I expect to get paid, I had better stay busy doing my work.

My dad taught me that hard work in this land of opportunity is rewarded. Indeed, the United States of America is the most prosperous nation in history. Even the poorest among us live far better than most of the rest of the world. We owe that to our history of respect for liberty. It is our deeply held belief in liberty that gave us a legal system that protects property rights. Without property rights there is no incentive to create or produce anything more than what it takes to survive. After all, if you can’t enforce your right to own what you produce, why bother?

As thankful as I am for all these things, I’m also deeply concerned. Former State Senator John Andrews today told me of the writings of Alexander Tytler:

The average age of the world’s greatest civilizations from the beginning of history has been about 200 years. During those 200 years, those nations always have progressed from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to complacency, from complacency to apathy, from apathy to dependence, and from dependence back into bondage.

In Senator Andrews’ book “Responsibility Reborn” he says, “You’d have to be dreaming, not to recognize that we have been living in a nation that has for quite a while been somewhere on the declining side of the cycle”. He also points out that the cycle can be reversed. If I didn’t believe that, I would not write these columns. I would not have run for State Representative in 2010. Simply put, I wouldn’t bother. If we don’t renew our respect for liberty, if we don’t restore limits on government that respect property rights, we will continue down that cycle.

We have gone from a nation that was built on a rugged entrepreneurial spirit, on self reliance and personal responsibility, and on mutual respect for rights and liberty, to a nation with a culture of dependence that relies on what the government can take from one to give to another.

 

During this season of thanks, let us be grateful for the work of those who established, secured, and protect our freedoms. Let us be mindful of the abundance we enjoy, and how the blessings of liberty created that abundance. And let us commit to not decline into complacency, apathy, and dependence, but embrace the independence and personal responsibility that will ensure the survival of the Republic.

The Misdirected Anger of the Occupiers

“I’ll have a hamburger, for which I’ll gladly pay you, Tuesday”. Wimpy.

Comics often allow a humorous glimpse into real life. I remember growing up and reading Family Circus every Sunday, tracing Billy as he ambled from amusement to amazement throughout the entire cartoon panel. At the time, it didn’t occur to me that we behave that way as children. I just thought Billy was cool. Then there was the comic strip “There Oughta Be a Law”. Can anyone doubt its success? Although its not singlehandedly responsible for overregulation, we certainly have an abundance of laws!

 

What can we learn from Wimpy, the affable carnivore from the Popeye comics? For many youngsters, this was our first look at capitalism. Wimpy made an offer. The hamburger vendor (Bluto) was under no obligation to accept the offer. Why might he accept the offer? If he values the future payment more than his immediate possession of the burger. Were another customer to show up and offer to pay immediately for the burger, Wimpy might not get to eat. Neither has the right to demand anything of the other, because they each have the right to control the fruits of their own productivity. If Wimpy does not respect Bluto’s rights, he may be inclined to steal the hamburger. At that point, government should step in to protect Bluto’s rights, ensuring that each participant in this scenario has full enjoyment of their own property, but not the unearned right to the property of the other.

 

Capitalism is based on value, offer, acceptance, competition, and property rights. The participants, each looking out for their own interests, decide with whom and for what they will trade. Some call this selfishness, but it’s really rational self interest. Competition ensures that resources are used where they achieve the best value for their owner, and that creates wealth. Wealth creates jobs. Jobs create more wealth and society benefits as a whole.

Government’s role is to ensure respect for property rights, the ultimate basis for liberty. When each individual is assured of the right to his property, self interest unleashes the kind of creativity that transformed America into the wealthiest, most respected, and most generous nation in history. Without the rule of law to protect property rights, there is no reason to create wealth because someone else can simply take what you created. Self interest is lost to the extent that property rights are lost.

The Occupy Wall Street movement is based on self interest. The protesters hope for some ill-defined change within Corporate America that will somehow turn into comforts for themselves. Unfortunately, their desires are examples of the very greed they rail against, and their anger is misdirected.

The Occupiers are asking for unearned wealth. That’s human nature. It’s the trait that Corporate America and unions display when they funnel millions of dollars into campaign coffers of elected officials. There will be no human evolution that eliminates self interest, and no amount of punishment for Wall Street will convince corporations to forego their own survival for the sake of mankind. The anger should be directed at government.

 

Lawmakers acting in their own self-interest have lost respect for liberty, property rights, and the right of people to pursue their own selfish interest. With subsidies, loopholes, and regulations, lawmakers have bestowed undue power on those that can return the favor by funding their campaigns. Big business competes for favorable treatment, and it nearly always comes at the expense of the “little guy.” Lawmakers and bureaucrats have essentially institutionalized legal theft. The result is a loss of freedom, opportunity and jobs for society as a whole, and the 99% in particular.

A return to constitutional limits on government will return opportunity to the powerless, increase self interest, and create greater prosperity for all Americans. As F. D. Roosevelt said, “[it is] not that the system of free enterprise for profit has failed in this generation, but that it has not yet been tried”.

The Cost of Monopolies

Jon Caldara of the Independence Institute, when asked if teachers are paid too much, said, "How would we know? The reason that I say that is, there is a government monopoly for education…"  

Proposition 103 is on your ballot. It’s a huge increase, advertised as being for education (although the legislature is not required to spend the money on education.) IF it really does go to education, a major chunk of will probably go to increasing teacher compensation. It’s reasonable to ask if teachers should be paid more. 

I met many teachers while I was on the campaign trail in 2010. Every one impressed me as a caring, devoted, hard worker. They expressed a sincere desire to make a difference for the youth they teach. Teachers, like all of us, want to do good and also better their own lives. That’s a common instinct for all of us, and it’s what led to America’s prosperity.

Wages and benefits, like other valuable resources, are controlled by supply and demand. That’s the essence of a free market. In times of full employment employers often find it difficult to find workers. To entice people to join their companies they offer higher wages than other companies who are competing for those workers. If the strategy is successful the companies that are losing workers have to raise wages. At some point the businesses will either have to become more efficient or pass the increased costs on to customers. Those who can’t will lose customers. If they go out of business, their laid-off workers add to the supply. The fresh supply of new job-seekers reduces wages. In a free market for workers, wages never quite reach stability, but are always moving toward balance. 

In contrast, public education is a monopoly with wages set by union demands and school board acquiescence. Public teacher unions will always push for higher wages and benefits, regardless of sustainability, because public education simply won’t go out of business. Taxpayers are forced to meet the demands of these unions because the consumers (parents) never have to pay directly for the product. In contrast, private sector unions often give up some of their benefits to help in the survival of their industries. 

Back to Caldara’s question about how much public school teachers are paid: we can look at schools that compete for the same teachers but aren’t compelled by a union contract. This won’t give us a complete answer, because the supply of teachers is mostly consumed by public schools, but it could give us an indication.  

 

 

In 2007-08, private school teachers were paid $13,000 less than their public school counterparts, and that doesn’t even include the far superior benefits most public schools offer. So do private schools have trouble finding qualified teachers at a considerably lower price?  

Compared to private schools, public schools are free. Private schools must offer enough value to persuade parents to pay for them. If private schools could not get enough teachers, or if they were only able to hire teachers rejected by public schools, they would not be able to compete for customers. Who would pay thousands of dollars every year to put their children in poorly staffed schools? The existence of successful low-paying private schools indicates that they can find good teachers. 

Meanwhile, unions are sending good teachers to the unemployment lines. There are about 50,000 public school teachers in Colorado. If unions agreed to accept lower wages and benefits for teachers, every 25 cents per hour in reduced compensation would allow our public schools to retain 3-400 teachers. Would public schools be able to find enough teachers at lower wages? 

Principal Pat Gardner of Broomfield Academy (a private school) tells me that she quickly gets 40 qualified applicants for every open full time teacher position. After that she quits taking applications. Broomfield Academy pays less than public schools. Granted, working for a private school has other benefits. Because of the greater freedom to hold students and parents accountable, a teacher can be more effective. Does that added benefit make up for less pay? As Caldara said, how can we know?