Downsizing Blog

Greece to Privatize, We Should Too

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The Wall Street Journal reports that the beleaguered Greek government is going to privatize state assets as part of an effort to reign in its crushing debt burden. America’s mounting debt will reach Greek proportions on our present path, so U.S. policymakers should start looking at privatization as well.

Among the Greek government’s “eclectic” holdings that could be sold off are ownership stakes in banks, casinos, a water utility, oil refinery, and a telecommunications company. Standing in the way will be unions, which are already riled up over the privatization of a container terminal in an Athens port.  
 
Like Greece, public sector unions represent an obstacle here as privatization would threaten the excessive compensation and job security they’ve secured. However, federal policymakers need to muster the courage to move forward. Privatizing federal assets and programs could put a dent in the debt. And unleashing the private sector to make more productive use of these assets and activities would foster economic efficiency and growth.
 
The following are some targets that policymakers should consider:
 
  • U.S. Postal Service. Technology, labor costs, and congressional mandates make it unlikely that the USPS can survive in the long-run. Nor should it. Countries across the globe are subjecting their government postal monopolies to competition from private mail carriers, with positive results. 
  •  Amtrak. Created in 1970, Amtrak was supposed to become self-financed. Forty years and $37 billion in federal subsidies later, it provides second-rate service while its infrastructure continues to deteriorate. It’s plagued by the same problems that afflict the USPS: burdensome labor costs, congressional meddling, and potential customers’ preference for other forms of transportation. 
  •  Air Traffic Control. The Federal Aviation Administration has run a mismanaged air traffic control system for decades. Its technology is outdated, and its upgrade efforts have often fallen behind schedule and gone over budget. The U.S. should look abroad for solutions. Canada, for instance, successfully privatized its air traffic control system by setting up a private, non-profit corporation that is financed by user fees on aviation users. 
  • Federal Assets. The federal government has almost 900,000 buildings and structures with a total area of 3.29 billion square feet and more than 41 million acres of land (not including federal parks and forests). In fact, the federal government owns about one-fourth of the land in the United States. 

See this essay for more on privatizing federal assets and operations.  

Posted by Tad DeHaven on March 19th, 2010

To Kill ACORN, Kill the Programs

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Last year, when the issue of defunding ACORN was a hot-button issue, I told countless radio talk show audiences that the focus should be on eliminating the underlying fuel that created the organization—the flow of federal subsidies.

Chris Edwards pointed this out in September. If Congress simply stops subsidizing ACORN, its activists will reincorporate under new names and again become eligible for funds. Alas, that’s precisely what ACORN is currently doing.
 
From FoxNews.com: 
One of the latest groups to adopt a new name is ACORN Housing, long one of the best-funded affiliates. Now, the group is calling itself the Affordable Housing Centers of America.
 
Others changing their names include what were among the largest affiliates: California ACORN is now Alliance of Californians for Community Empowerment, and New York ACORN has become New York Communities for Change. More are expected to follow suit. 

A comment from Frederick Hill, a spokesman for Republicans on the U.S. House oversight and government reform committee, doesn’t indicate that the GOP has quite received the message: 
To credibly claim a clean break, argued Hill, the new groups should at least have hired directors from outside ACORN. 
It appears that for many Republicans, attacking ACORN represented political opportunism, not a statement about the proper role of the federal government. 
 
Further rendering the GOP’s ACORN agenda moot was last week’s ruling by a U.S. District judge that singling out ACORN for defunding is unconstitutional. It truly boggles the mind what passes for constitutional and unconstitutional in this country.
 
Tuesday was the birthday of James Madison, the “Father of the Constitution.” Reflecting upon Madison’s wise words, it’s hard to understand how the federal “community development” programs that have funded ACORN could pass constitutional muster: 
“The government of the United States is a definite government, confined to specified objects. It is not like state governments, whose powers are more general. Charity is no part of the legislative duty of the government.”
 
“[T]he powers of the federal government are enumerated; it can only operate in certain cases; it has legislative powers on defined and limited objects, beyond which it cannot extend its jurisdiction.”
 
“With respect to the two words "general welfare," I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.”
 
“If Congress can do whatever in their discretion can be done by money, and will promote the general welfare, the government is no longer a limited one possessing enumerated powers, but an indefinite one subject to particular exceptions.” 
See this essay for reasons why these HUD community development programs should be abolished.
Posted by Tad DeHaven on March 18th, 2010

Sugar Subsidies Not So Sweet

Americans pay a lot more tor sugar than do people in other countries. The culprit is the government, which imposes trade barriers and other damaging regulations on the industry.

The spread between what Americans and the rest of the world pay for sugar has recently hit highs last seen in 1999. As of Friday, the price per pound of raw sugar in the U.S. was 78 percent higher than the global price. 

The government-generated high price damages average families and U.S. companies that use sugar in production, such as food and candy companies. These companies are pleading with the Soviet-style planners at the Department of Agriculture to increase the sugar import quota in order to ease prices. Note to those who dislike corporate lobbying: this effort by U.S. businesses is pro-market and pro-consumer. 

The anti-market side of the business world in this case is represented by the American Sugar Alliance, which represents sugar growers. They are claiming that the food companies just want to “boost profits.” Well duh! All businesses try to boost their profits, which anyone who has taken Econ 101 understands is a good thing. The problem is when businesses use the coercive power of government to bludgeon other companies and consumers, which is what the sugar growers do.       

See this essay for more on agricultural regulations and trade barriers, including sugar protectionism.

 

Posted by Tad DeHaven on March 17th, 2010