Looting and Freedom

Whether political freedom or economic freedom is more important is a moot question.

The most basic property right is self-ownership. To the degree that right is compromised, so is freedom. A commenter at the linked article above noted this:

“I propose in the following discussion to call one’s own labor, and the equivalent exchange of one’s own labor for the labor of others, the ‘economic means’ for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the ‘political means’.”

   – Franz Oppenheimer, The State. New York: Free Life
      Editions, 1908 (1975), pp. 24-25

Beyond the unabashed wealth redistributionism of a Bernie Sanders, ‘unrequited appropriation of the labor of others’ includes all forms of rent-seeking: Regulation favoring entrenched business (from tariffs to requiring hair braiders to take hundreds of hours of training, to subsidies for solar panels, movies, art, mortgages, etc., etc., etc.); union shops; civil asset forfeiture and eminent domain; and zoning laws.

We may agree politically to give some portion of some of those freedoms to the State, but we will, by definition, be less free; and bureaucracies will always take more than is granted.

Principled resistance to the looting is a requirement of freedom.

#PureHooligan: At the Capitol today

Michigan altercations provoke our indignation, elevate our blood pressure, dismay us and inspire us to avoid large gatherings of union thugs. Michigan’s union halls, large manufactories, public schools, government departments and more are stuffed with people yearning to be free. But felonious assault, is… Pure Hooligan.

A Michigan Union man discusses right-to-work with Steven Crowder

The Teamsters, UAW and SEIU play the Irish Republican Army to MEA’s Sinn Féin.

That guy’s face is on camera, and the union logo on his jacket is easily identifiable. The authorities response will be of interest.

Red flag in Senate district 17

The Conservative Evolution of Randy Richardville
The future majority leader of the Michigan Senate wants his critics to know that he is no liberal

He may want us to know that, and he may not be a liberal. What he is not is a conservative. He’s a “Republican” who favors unionization forced by government

As a recent example, he co-sponsored Senate Bill 731, legislation that would transfer $6.6 million in taxpayer money to the SEIU government employee union. It did it by creating a government “employer” for about 42,000 individuals who are hired by elderly or disabled Medicaid recipients. The Mackinac Center has filed a lawsuit over a similar set- up involving home day care providers.

He wants us to focus on the “big picture” and not on his “voting record from 6 years ago.”

OK, let’s. His SEIU subsidy was introduced in 2009.

In the 2010 election cycle Sen. Richardville was the Republican with the third largest donation total from the MEA.

Sen. Richardville also showed favoritism toward public employee unions by introducing Senate Bill 1072. SB 1072 expanded the number of public safety groups which can go to arbitration in contract disputes involving Public Act 312.

Sen. Richardville cast a vote for corporatism in May of 2010, preventing the owners of a Michigan insurance company from selling their own investment.

I suspect he’ll get along fine with Rick Snyder. I hope I’m wrong about Snyder.

All links from Mackinac Center for Public Policy and its Capitol Confidential newsletter. The Mackinac Center deserves your support.


This undercover report, by a Wired reporter, discusses his experience working for Walmart. The story has been noted elsewhere. However, if you have not read it, you should. REALLY, it’s educational. Especially if you are one of the union robo-activists trying to destroy it. Think of your children, now that the UAW is dying or at least entering a phase of internecine warfare with the SEIU.


Link was broken. Fixed. Sorry.

Investment advice you can figure out for yourself

The Lansing area UAW just finished a month-long local strike here in the economically worst performing state in the Union. American Axle workers in Hamtramck are voting on whether to end an 87 day strike. The UAW is also just coming off a strike in Kansas.

In the mid 60s I worked on the line at the GM Fisher Body plant in Lansing, building Oldsmobile F-85, 88 and 98 chassis on two different assembly lines. When our chassis rolled off the end of the line they were transported to a different plant by truck to be mated with the drive-train and frame. The engines were built in a third facility. Times have changed, more so where the UAW does not hold sway.

This: Ford’s most advanced assembly plant operates in rural Brazil, is a good example of why Michigan needs a right to work law. It’s also a good example of why manufacturing is a dead-end in Michigan otherwise.

And it doesn’t matter if it is manufacturing windmills, Jennifer.

In non-manufacturing news:

ZURICH, Switzerland: Swiss bank UBS AG said Wednesday it has sold subprime and other mortgage-based securities with a nominal value of US$22 billion for US$15 billion (€9.5 billion) to a newly created investment fund run by U.S. asset manager BlackRock Inc.

The sale is part of an attempt by Switzerland’s largest bank to offload risky positions that contributed to its massive writedowns of US$37.4 billion over the past nine months.

The securities had a nominal value of about US$22 billion (€14 billion), but have been listed with a book value of US$15 billion since March, UBS said. Investors have shunned mortgage-backed securities over fears too many of the mortgages were made to people with shaky credit who may eventually default.

The fund received a US$11.25 billion (€7.14 billion) loan from UBS to buy the assets.

We have a short, clear analysis of this transaction from an anonymous tipster:

The mortgage industry’s lunacy at its finest.

UBS loans billions to a hedge fund so the hedge fund can in turn, buy crap loans owned by who else, but UBS!! Oh, and the purchaser is 49% owned BY Merrill Lynch, a fierce, cut-throat competitor of UBS.

Tip of the Hat for both stories.

Wealth of Station

“Anonymous” left a comment regarding yesterday’s post, Unions busting you, that is worth examining. He/she writes:

The Mackinac Center for Public Policy has it all wrong.

They support a low wage economic development policy which attracts footloose jobs.

Those low paying footloose jobs will come, and leave when another state or country offers them even lower wages.

Lower wages reduce the amount of disposable income, thereby slowing the economy and reducing tax revenues to unacceptable levels.

It is telling that Anonymous thinks it will be another state (in the broad sense of a sovereign political entity) offering “even lower wages,” as if what people are paid is up to the government. This is true in countries like China and Cuba, but while Western democracies did get the memo, for the most part they’ve only partially implemented it. Check out the reasons for Ireland’s remarkable turnaround. Read about Hong Kong.

The other preliminary comment I have is that a more accurate description of the Mackinac Center’s position is that they advocate market-based wages, but let us not quibble. With that correction, lets assume what Anonymous said is true and follow its implications.

The argument, I think, is stated fairly as follows:

  1. If Michigan had market wages it would indeed attract employers and create jobs.
  2. Unfortunately, these jobs will vanish as soon as some other jurisdiction offers a lower cost environment.
  3. We must therefore have laws to keep wages higher than market level.
  4. This will result in greater tax revenue, or at least a slower decline.

I unconditionally grant that if points 1 and 2 are true, then they would be prevented by point 3. If employers will move “footloose” jobs to a lower wage environment at will, they will almost certainly not move them to a higher wage environment. Legislating wages unsustainable by the market, then, ensures there won’t be a net inflow of even temporary jobs. An obvious corollary, in possible contradiction to point 4, is that jobs will continue to leave.

Another consequence of legislating above-market wages will be to allow other jurisdictions to offer much smaller incentives to win the temporary jobs we disdain. However, no evidence has been offered that suggests such jobs are any more temporary than any other jobs in a global economy. Ask the 73,000 people employed in new jobs in Alabama between 2001 and 2006; a period during which Michigan lost 220,000 jobs, and the taxes associated with those jobs. On a per capita basis that’s a 1.6% increase vs a 2.2% decrease.

Personally, I think no state should offer any form of corporate welfare whatsoever. Just leave the market alone, including the right of unions to bargain. That means not mandating union wages. Then we can just focus on what should be the tax rate. This can be accomplished unilaterally.

On the question of whether the The Mackinac Center is “all wrong,” let’s consider these facts and advice:

In 2001, per capita disposable income was $4,000 higher in Michigan than in Alabama, but by 2006 that advantage had shrunk to less than $2,000.

We should be prepared to learn from and even emulate Alabama. That means freeing up our workforce with reforms like a right-to-work law. Repeal or reform of Michigan’s strict prevailing wage law, which requires the payment of union wages on state-financed construction, would also be helpful. The prevailing wage adds 10 percent to the cost of construction, adding roughly $250 million to the cost of government. Prevailing wage also costs jobs; Alabama, which does not have a restrictive prevailing wage law, added 5,000 construction jobs between 2001 and 2006 while Michigan lost 26,000.

You may well reject the advice, your laid-off neighbor may wish we’d taken it, but the facts indicate higher employment and greater revenue is associated with market wages, as well as increases in disposable income.

The case above shows a net difference of 31,000 construction jobs. Per capita, it’s a .11% increase vs a .26% decrease.

Following Anonymous’ advice would apparently further depress employment and cause the economy to stagnate. We know this is likely because in Michigan it has already happened. High wage mandates haven’t worked. Why? Anonymous’ answer appears to be, “Because we don’t have enough of them.”

If the formula of government mandated above market wages was a way to improve revenue, then couldn’t we just have a law that says everyone must be paid half-a-million a year? The answer is obviously not – for 100% of the population. At the moment the wage laws only benefit a privileged class of about 20% of the population who occupy the station of union member.

Anonymous argues that wages legislated to be substantially higher than market value produce more revenue than market-based wages. This requires assumptions about the difference in wages and the number of jobs lost which are not demonstrated. Jobs times wages times tax rate. The Mackinac Center presents empirical evidence arguing that Anonymous’ assumptions are mistaken on these numbers.

The idea that we can dig an economic moat around Michigan, constituting protectionism for union jobs or wages, is well past its prime. The United States economy is not powerful enough to accomplish that, and the longer Michiganians cling to this failed strategy, in this floundering state, the longer will be our one state recession.

I recommend to Anonymous that he or she read the following books for an elementary introduction to economics:

Eat the Rich, J. P. O’Rourke
Basic Economics, Thomas Sowell
Free to Choose, Milton Friedman
The Road to Serfdom, F. A. Hayek

Wealth of Nations, Adam Smith – would be good too, but it’s a bit less accessible than those above.

We need right to work laws

Some Lansing unionists are clamoring for a local “prevailing wage” rule. They don’t like non-union people making $25 an hour when they are making $35.

The Lansing State Journal reports on this issue:

Proposal for prevailing wage in city faces hurdles

A proposed prevailing wage ordinance that would require contractors to pay union wages generated a storm of controversy when it was suggested to the Lansing City Council earlier this month.

But it will have to clear two hurdles before it can become law.

First, it remains doubtful if the ordinance, which essentially would require contractors to pay union wages for projects receiving city aid, has the legal muster to stand as proposed.

A similar ordinance was recently struck down by a court in Wayne County.

Second, supporters will have to demonstrate the ordinance will help, not hinder, the local economy. [This is impossible, of course.]

…The notion of a prevailing wage is nothing new. The city already has a prevailing wage ordinance, passed in 1992, but that rule only applies to construction work done for the city. [Your taxes already pay above market wage for all City of Lansing construction projects. The proposal is to force private developers to pay a 30% premium.]

Michigan has a similar law, passed in 1965.

The proposed ordinance, should it pass, would expand the scope. Any project costing more than $50,000 that receives assistance from the city – whether in the form of tax breaks, grants or other aid – would fall under the prevailing wage rules.

That would include projects such as the proposed $182 million Ottawa Power Station renovation for Accident Fund Insurance Co. of America’s new headquarters and the redevelopment of the City Market.

…Prevailing wages – the rate of pay stipulated in union contracts for organized workers – can be considerably higher than pay for nonunion counterparts. On average, union wages, including benefits, on construction sites are 30 percent to 40 percent higher than nonunion pay and benefits.

…Requiring a prevailing wage for all workers likely would kill projects such as the nearly $60 million Ball Park North and Market Place developments announced last week, developer Pat Gillespie said. Gillepsie wants to build housing, retail and office space north of Oldsmobile Park and on the site of the Lansing City Market.

“It will probably hurt it to the point where it does not make economic sense to do,” he said. “There aren’t enough tax incentives to make up for it.”

Developer Shawn Elliott estimates the prevailing wage requirement would add $600,000 to the cost of a proposed $22.4 million downtown condominium high-rise he’s working on.

“But that makes the project fail,” he said, because profit margins become too small to meet bank financing requirements. He said he already expects the project would be 80 percent union labor without the ordinance.

For the record, I would prefer a regulation prohibiting any and all government “tax breaks, grants or other aid” to any developer, business, charity or cause whatsoever. That corporate welfare is deemed necessary merely shows that taxes are at least high enough to allow government to grant favors. That is – too high. Worse, whether in the form of tax breaks or enforcement of inflated wages, the smaller entrepreneurs will never have access to any substantial loot taken from taxpayers. The way to level the playing field is to stop all of it. An ancillary benefit would be the cessation of lobbying, which would be given up as futile under an appropriately limited government.

Today, a desire for limited government is considered utopian, or delusional. In defense of that desire, I will say the Founders did not consider it so, and up until just after the time of Calvin Coolidge limited government worked quite well. So, I plead innocent at least to the charge of utopianism.

But, back to the main question. If nothing else, a prevailing wage represents a special, hidden tax targeting Lansing developers. “Prevailing wage” is just a tax that goes directly into the pockets of Lansing based union members without passing through a government bureaucracy. Worse, it is a regressive redistribution of Lansing taxpayer’s money in an economy that can no longer support such privilege. It’s union monetary welfare, and corporate regulation welfare.

It’s not as if the developers are actually going to pay this Lansing area closed shop dues stealth-tax anyway. Business doesn’t pay taxes. We do. Either we’ll pay more for the fruits of the project, or we’ll forgo the benefits it would have brought when it’s canceled. On the approximately $180 million development proposed by the Accident Fund (assuming 60% is labor) the increased cost would be around $30 million. This is money that cannot go, for example, to current Accident Fund employees, or to new hires. It cannot be used to reduce insurance premiums. Facing that large increase, it may even be that a 180 million dollar project would be canceled.

Daring this possibility, the Lansing unions are saying, “At least none of those non-union people would get any money.” It reminds me of this joke about the difference between the attitude of Russians and Americans:

An American farmer lives next door to another farmer with a prize cow.
A Russian farmer’s nearest neighbor also has a prize cow.
The American farmer dreams that he has a better cow than his neighbor.
The Russian farmer dreams that his neighbor’s cow dies.

The idea that businesses do not pay taxes is a difficult concept for many to grasp. It is worth a small digression so that we may learn something about taxes, regulations and prices from our neighbors north of the 49th parallel.

The Canadian dollar is lately worth more than the US dollar. This is quite a turnaround. In the last 10 years the Loonie has been as low as 68 cents US$. The last time it reached its current heights was in the early 1970s.

Canadians have long been aware that it’s quite a bit cheaper to shop in the US for many items, even with an unfavorable exchange rate. With a strong Canadian dollar, US goods are even cheaper to shopers crossing the border. You might even expect prices to go down in Canada in response. You’d be disappointed. The Loonie’s surge has not resulted in a reduction in Canadian prices. Canadians want to know why.

They are getting reasonable explanations, even if they don’t like them. Summed up, it’s this simple: Businesses don’t pay the cost of regulation and they don’t pay taxes – their customers do.

Price parity with U.S. an ‘economic impossibility
The Canadian Press

Shoppers might be hoping the strong dollar will push down prices of goods in Canada to par with what’s in U.S. stores, but industry watchers say consumers can keep dreaming because there’s more than just the loonie to consider in the price of everything from cameras and TVs to fruits and vegetables and clothing.

“Historically, there has been a perception that there are only price differentials between Canada and the United States because of a different currency exchange, but there are a lot of other underlying costs that tie into that,” says Elizabeth Evans, director of the Ted Rogers School of Management at Ryerson University in Toronto.

…Yesterday, John Williamson, the federal director of the Canadian Taxpayers Federation, fired off a letter to [Federal Finance Minister Jim] Flaherty saying that price parity between Canada and the United States isn’t realistic.

“Our economy has more costly regulations and higher taxes and until this is changed, Canadians cannot expect price parity with the U.S., which has a more dynamic, lower taxed, less regulated and therefore less costly market,” he wrote.

“As such, Canada cannot have radically higher minimum wages, higher business taxes and more costly regulations and suppose prices will be the same on both sides of the border – it is an economic impossibility.”

Many Canadians want to achieve price parity without having cost parity. Our local unions want to enforce cost parity and insist it has no effect on prices. That is simply impossible.

To see how much attention you’ve been paying, TOC presents a multiple choice question on prevailing wage statutes.

A prevailing wage rule is:

1) A hidden tax increase on employers.
2) Stealth redistributionism.
3) Inflationary.
4) A way for a privileged class to restrict access to jobs.
5) A way to increase construction costs by 15% to 30%.

This is truly a multiple choice question. Pick any five.

The only advantage a prevailing wage statute has over a straight 15 to 30 percent tax on developers of major Lansing projects is that it does not waste as much in bureaucratic overhead as would administration of a more honest tax.

“The natural function of a trade union and the one for which it was historically conceived is to represent those employees who want collective representation in bargaining with their employers over terms of employment. But note that this function is perverted the moment a union claims the right to represent employees who do not want representation, or conducts activities that have nothing to do with terms of employment (e.g. political activities), or tries to deal with an industry as a whole instead of with individual employers.” -Barry Goldwater