Misuse of the N.C. Map Act

Property owners in communities across North Carolina are taking the N.C. Department of Transportation to court to challenge its use of the state Map Act to limit development and other uses of their property.

Winston-Salem-based attorney Matthew Bryant is handling multiple suits against the state DOT. He outlined his legal arguments in a presentation today to the John Locke Foundation’s Shaftesbury Society. In the video clip below, Bryant explains why DOT wants to block development of properties identified on maps for future road projects.

2:40 p.m. update: Click play below to watch the full 49:52 event.

You’ll find other John Locke Foundation video presentations here.

America’s entrepreneurial heart beating more slowly

That’s James Pethokoukis’ observation in this AEI piece. We are getting fewer business startups than in the past. He says that doesn’t agree with the contention that entrepreneurship cannot be taught (which I find quite debatable), but the real problem is that it can be deterred. The ever-increasing cost of complying for federal and state regulations, worst of all, Obamacare, undoubtedly deters some people from doing the tough and risky work of starting a new business. That’s one of the many hidden costs of our growing governmental leviathan.

“Lyfting” the regulations from ride for service companies

One likely issue to come up in the 2015 legislative session is if, how and what to regulate ride for services companies like Uber and Lyft.  What we know is regulation stifles innovation and creativity. Government can easily regulate a successful business model right out of business.  

According to a HuffPost report, the fee for ride model is alive and well in NC.  For now.

Uber currently offers rides in 10 cities in North Carolina, ranging from Wilmington and Asheville to the larger Raleigh and Charlotte. The company says that’s more than any other state but California. Six of those cities have populations greater than 200,000, and all are home to universities.

The companies’ expansion has legislators in North Carolina and elsewhere scrambling to study their business models ahead of sessions in 2015 when they could address insurance, car inspections or criminal background checks. Throw in concerns from traditional taxi companies and insurance lobbyists, and Uber and Lyft’s public policy staffs should stay busy.

The taxi industry opposes these other fee for ride companies, of course and not just in the US.  This is another good example of regulations used to keep out competition.  The Uber/Lyft question raises the whole issue of occupational licensing and one lawmakers should carefully consider in 2015.

Dispatches from the campaign trail, November 27, 2014


• The new Republican House leadership for the 2015 session of the General Assembly is in place, led by Speaker-designate Tim Moore of Cleveland County (at right). Moore, who chaired that chamber’s Rules Committee in the previous session, will face election before the entire House after the session convenes.

• Before Saturday’s vote for the new speaker, The Insider obtained letters several of the candidates sent to Republican caucus members suggesting how they would handle issue differently than outgoing Speaker Thom Tillis, who’s on his way to the U.S. Senate.

• WRAL News gives Gov. Pat McCrory’s statement that the state has recovered all the jobs lost during the Great Recession a green light.

• Congressional Black Caucus chairman Rep. G.K. Butterfield, D-1st District, says he hopes the grand jury investigating the shooting death of Michael Brown in Ferguson, Mo., “will find sufficient evidence to conclude that a crime was committed. … “

The Founders and immigration

Seth Lipsky doesn’t necessarily disagree with President Obama’s idea of liberalizing American immigration policy. But Lipsky explains in a TIME magazine column why Obama is going about pursuing his goal in the wrong way.

This is one of the reasons we seceded from Great Britain. King George III had been interfering with immigration to the colonies. It was one of the complaints enumerated in the Declaration of Independence. The British tyrant, the Americans declared, had endeavored “to prevent the Population of these States.” For that purpose, they said, George III had been not only “obstructing the Laws for Naturalization of Foreigners” but also “refusing” laws “to encourage their Migrations hither.”

The articles of confederation that first bound the newly independent states failed to solve this problem. Each state set its own policy on naturalization, with the potential for chaos. Hence the founders, who gathered in 1787 in Philadelphia to write the Constitution, granted to Congress the power to “establish an uniform Rule of Naturalization.” They could have granted this to the President or left it to the states, but they assigned it instead to Congress.

So Obama, in threatening to act on his own, is playing with constitutional fire. It’s not that I object to his liberality on immigration. On the contrary, for years I was part of the Wall Street Journal’s editorial page. It reckons that it would be illogical to stand for the free movement of trade and capital absent the free movement of labor. It once called for a constitutional amendment saying “there shall be open borders.” …

… All that, though, is trumped by the constitution. It not only seats naturalization power in Congress but also gives it almost total sway. The founders discussed adding language relating to how long someone must reside in America before becoming a citizen. In the end they required of Congress only that its rule be “uniform.” They didn’t want the states feuding over this and setting competing policies. They wanted a united front to the world.

Nor, the record suggests, did they want the President setting policies on immigration and naturalization. There may be talk about Obama having presidential “discretion” in enforcing immigration laws, but the record of the Constitutional Convention makes clear where the founders wanted discretion to lie. “The right of determining the rule of naturalization will then leave a discretion to the legislature,” James Madison quotes Alexander Hamilton as saying.

We’re No. 13! We’re No. 13!

barronslistThe latest Barron’s cover story focuses on a new ranking of states’ creditworthiness. Among Southeastern states, only Virginia (No. 7) ranks higher than North Carolina at No. 13. That’s the good news. The bad news? The ratings from Eaton Vance had North Carolina slated at No. 4 last year.

This year’s top three states are all located in the West.

THE TOP THREE STATES aren’t necessarily tops in the two categories shown in the table. In fact, North Dakota is 14th nationally in the debt, pension, and health-care measure.

Delahunty says that North Dakota is a prime example of why it’s important to look beyond the debt, pension, and health-care total. The state has the lowest unemployment rate in the country, 2.7%, thanks to an energy boom, and it has had the highest economic-growth rate of any state over the past three years. North Dakota also has a large cash pile—enough to fully fund its pension plan and still have ample liquidity left over.

Wyoming has a healthy economy, minimal debt, the lowest tax burden of any state, and a large cash hoard, sufficient to support its budget for four years. And, Delahunty says, the state could fully fund its pension plan with a modest contribution from its rainy-day fund.

Wyoming Gov. Matt Mead emphasizes the importance of pension funding. “If I were a company moving to a state, I would want to know how those pension plans are doing because I wouldn’t want to make a 20-year commitment to a state that’s going to raise taxes because they’re underwater on their pension plans,” he tells Barron’s.

With no state income tax, Wyoming is an anti-California—and it plans to stay that way. “I think it’s very tempting sometimes to raise taxes if you want to raise revenue. But when I’ve seen the economic development we’ve had in the past 3½ years, I’m telling you, it’s a huge deal to have the lowest taxes in the country,” Mead adds.

Utah has little debt and makes ample annual contributions to its pension plan. The state also has one of the lowest jobless rates in the country and the second-highest median household income, adjusted for the cost of living, behind Virginia.

Despite Utah’s sterling credit quality, Gov. Gary Herbert argues that there’s room for improvement, such as cutting the state’s modest debt of $2.6 billion. “It’s just a little bit high. Either way, we’re one of only nine states with a triple-A bond rating [from all three main rating agencies]. So we’re in pretty good shape. I just want to make sure we don’t jeopardize that.”


Profits and inequality

Tufts professor Amar Bhide devotes a Barron’s column to debunking Thomas Piketty‘s arguments about the impact of profits on inequality.

In Capital in the Twenty-First Century, Thomas Piketty announced an audacious thesis that sets his opus apart from most other works of economic history. Capitalism inevitably increases inequality, Piketty claims, because the return on capital grows faster than the economy. …

… Replication won’t resolve whether Piketty has discovered an economic law about the root cause of inequality that had eluded generations of researchers. Economists cannot run independent scientific experiments—they have to rely on the same historical data to advance or refute their theories. Inevitably, economists with different preconceptions offer different opinions about what the same data tell us. Milton Friedman, who extolled historical analysis, conceded that researchers tend to resolve the unavoidably ambiguous results of historical analysis in favor of their pet theories. Economists, whether Keynesians or monetarists or supply-siders, find proofs of their theories wherever they look, even when they look in the same places.

Worse, historical information about inequality and return on capital that Piketty relies on is both voluminous and spotty. Any analysis of such information is time consuming, the possibility of errors is high, and the need for subjective judgments is great. We cannot expect many serious efforts to reproduce Piketty’s results. The few that are undertaken will also be prone to error and partisan interpretation.

Whatever happened in the past, two broadly accepted features of a modern capitalist economy make it highly unlikely that Piketty has discovered a durable principle about investment returns. …

… The complexity and dynamism of modern capitalism make Piketty’s reductive, once-and-for-all thesis even less plausible. People are not mindless atoms controlled by immutable natural laws. Capitalism delivers the goods through myriad contests of wills and imaginations. Fortunes and incomes don’t rise and fall for everyone in tandem. Some investors and entrepreneurs make a killing. Others lose their shirts.
No Final Answers

Because capitalist enterprise relentlessly challenges the existing order, the past is a poor guide to our individual or collective futures. The predictions of mechanistic models of overall economic growth and investment returns—Piketty’s or anyone else’s—are not much better than coin tosses. Look at the forecasts of the Federal Reserve, the U.S. Treasury, the Congressional Budget Office, the International Monetary Fund, and the smart money on Wall Street.

Yet, we cannot dismiss Piketty’s book the way physicists did cold fusion. His fanciful theory has tapped into real angst even among stalwart supporters of capitalism who applaud great rewards for great economic contributions. Huge increases in the fortunes of a few while the economy as a whole has stagnated do raise legitimate concerns about rent-seeking and cronyism.

Denying concerns about unfairness as petty jealousy invites a dangerous popular backlash. Even though Piketty’s vision of inevitable unfairness is misguided, we must identify and change the specific inequities that undermine the legitimacy and dynamism of capitalist enterprise in our age.

Barron’s ‘Economic Beat’ writer examines sustained low inflation

ON-BH177_BeatEy_G_20141121203058Gene Epstein of Barron’s turns his attention to long-running low inflation.

The era of low-flation continues. While the Federal Reserve used to be concerned that inflation may be running too high, it has more recently been worried that it may not be running high enough.

The October consumer-price index showed no change from September and was up just 1.7% from the same month a year earlier, the Bureau of Labor Statistics reported Thursday. The energy component of the CPI fell for the fourth consecutive month and was down 1.6% from the same month a year earlier, driven mainly by the plunging price of oil. As the chart on this page shows, over the past two years, the 12-month change in the all-items CPI has generally been running less than 2%, a marked slowdown from 2011.

As the chart also shows, the October CPI excluding food and energy—known as the “core” consumer price index—has also been running less than 2% from the same month a year earlier, and has shown no great change since 2011. That is the index Federal Reserve Chair Janet Yellen watches more closely.

Skeptics demand to know just how a price index labeled “core” can exclude food and energy, surely among the “corest” of commodities, along with clothing and shelter. Answer: because economists are afflicted with a tin ear. This index would more aptly be called the “trend” CPI, since, as the chart shows, its fluctuations are far more stable once the volatile components of food and energy are excluded.