Over Regulated

There is plenty of talk going around these days about political polarization, but occasionally the liberals and conservatives do come together and agree.

It was only a small NC legislative subcommittee hearing, but there they were, representatives from the conservative John Locke Foundation and the liberal N.C. Justice Center, agreeing there was too much regulation.

In this case, the regulations they were agreeing on involved 55 state commissions and state agencies that grant licenses to some 700,000 NC workers – such as doctors, attorneys or pastoral counselors.

Now, practically speaking, giving a Commission the power to determine who can be, say, an undertaker, gives that Commission a lot of control over the free market. They can literally determine how many funeral homes there are in a county.

NC, and other states, have long required licenses for professions like doctors and attorneys. And no one is arguing doctors shouldn’t be licensed.

But around 1973, the number of licensed occupations in NC started increasing like mushrooms after a summer rain.

Here’s where the two ends of the political spectrum agreed:

  1. Licensing creates a barrier to entry for workers in general, and particularly the poor, as they try to climb the economic ladder.
  2. Licensing raises the costs of services, which takes money out of everyone’s pockets, but hits the poor hardest.
  3. And, as a group, licensed professions experience slower growth rates than their unlicensed peers.

In other words, unnecessary licensing hurts workers, consumers and our economy.

Granted there are some obvious winners. If you already hold a license to be an undertaker, you find yourself in a protected environment that limits bothersome competition. That’s why people with licensees are quick to argue that uneducated consumers need the protection licensing offers. Without that extra bureaucratic protection, they say, people will be exposed to unnecessary risk from bad actors.

That may have been true 50 years ago. But in the age of smart phones and Yelp, there may be a better way to protect consumers than more bureaucracy.

Special Sessions

They’ve printed the same charge over and over – it seems like just about every newspaper article and every editorial harps on one fact: It costs $42,000 a day for the General Assembly to be is session.

I guess that’s a backdoor way of opposing holding a special session to repeal Charlotte’s city ordinance allowing grown men to enter restrooms occupied by women and young girls.

That ordinance goes into effect April 1st – on April Fool’s Day – but, unfortunately, it’s not a joke.

I admit I am all for cutting government spending. And if the media wants to support some real spending cuts there’re plenty of wasteful programs that make the cost of one day of the General Assembly look like peanuts. After all, state government spends twice that $42,000 amount every minute of the year.

There’s actually a simple reason for holding a special session: According to lawyers advising the legislature, once the Charlotte ordinance goes into effect it can create what’s called a ‘vested right’ in legal parlance. That means waiting may give a grown man, who likes the idea of entering a Charlotte locker room full of young ladies, a legal argument that changing the law denies his vested right.

That sounds plumb crazy to me. But I’m not an attorney. And I’ve seen liberal federal judges do crazier things. And not very long ago.

I’ve also, over the years, have had the misfortune of paying attorney’ s fees, now and then, and understand in a case like this the legal bills would surely end up costing taxpayers a lot more than $42,000.

So if we’re going to stop the Charlotte City Council’s ordinance it’s best to get it over with before April 1. Acting now is like getting a chance to buy an insurance policy after the storm predictors have said there’s a hurricane heading your way. It may cost something. But it saves a lot more.

Monopolies

I received another response to my piece criticizing requiring a farmer to obtain a government permit before renting his land to a solar farm – this time from a respected political group.

The group began by explaining carefully that it opposed ‘all energy tax loopholes and subsidies, regardless of the energy source.’ Which is fine. So do I.

Then it added, disapprovingly, that ‘North Carolina’s energy market currently exists in a monopoly system.’ Which is fine, too. No disagreeing with that.

But, then, the group declared that “the REPs” are a bad law.

Now, the REPs are a little known provision in utilities law that make it possible for independent solar companies to produce electricity in North Carolina.

Without REPs, utility monopolies (in North Carolina that basically means Duke Energy) have complete control of the market. The monopoly can put any independent solar company it wants out of business by simply blocking the right to build its product. REPs are what give independent solar companies a way to sell electricity in the marketplace. No REPs, no competition.

I’ll grant REPs are a peculiar provision. About the only time something like REPs make sense is when the government has granted one company – like Duke Energy – a monopoly over a market.

Since they’re peculiar, in a way doing away with REPs looks sensible. But, in fact, all it actually does is strengthen the monopoly. And reduce competition.

Is that conservative?

Regulation on Top of Regulation

We’ve reached a peculiar place in politics.

Historically, conservatives have opposed excessive regulation and rightfully so. Regulations are like wind resistance when you drive your car. The bigger the car, the harder it has to work to move along at 70 miles per hour and the more it costs to drive.

Cutting foolish regulations is like rounding the corners and cutting the size. For a strong economy and maximum jobs, we want regulations that look more like a sedan than a box truck.

So it was odd when Republicans started hollering that state government should increase regulations on solar farms – some politicians even went so far as to suggest requiring a farmer to obtain a state permit before leasing his land for a solar farm.

It gets worse: In fact, a solar company already needs to get a permit from the Utility Commission to build a solar farm. It’s not a simple process and to further complicate it, when they process that application , the Utility Commission sends out notice to  seven state departments, seven divisions and four sections*.

Counting the Commission itself, that’s 19 bureaucracies that get a chance to stop, or at least delay construction of a solar farm.

Now, some say that 19 bureaucracies still isn’t enough.

How is that conservative?

* 1)      Dept. of Environmental Quality

               –          Division of Air Quality

               –          Division of Water Resources

               –          Division of Water Quality

               –          Division of Coastal Management

               –          Division of Environmental Health

               –          Division of Energy, Mineral, and Land Resources

               –          Division of Waste Management

•  Solid Waste Section

•  Hazardous Waste Section

•  Superfund Section

  2)      NC Wildlife Resources Commission

  3)      Dept. of Transportation

  4)      Dept. of Cultural Resources

  5)      Dept. of Agriculture

  6)      Dept. of Commerce

  7)      Dept. of Public Safety 

              –  Emergency Management Section

Gerrymandering and the Supreme Court

It’s easy to make fun of redistricting maps drawn by the NC legislature. It’s not a pretty picture.

While the just adopted new Congressional District maps have fewer splits of counties (13) and precincts (12) than any maps in recent NC history they still leave you wondering why, for example, the 5th Congressional District, which already was 10 counties big, needed to reach into Catawba County to include two precincts and a portion of a third.

What difference did it make that it’s worth the confusion of splitting a precinct? And putting a handful of people in Catawba County in the 5th District?

Was this just more political gerrymandering to move Republicans and Democrat votes around?

The fact is the legislature had little or no choice – they were simply following orders laid down by the U.S. Supreme Court.

In 1964, in Wesberry v. Sanders  , the Supreme Court told us the Constitution requires States to select congressmen by elections in districts composed “as nearly as is practicable” of equal population.

Which the legislature’s redistricting attorneys translated into “one person, one vote” and means exactly that. There is only a one vote difference in the total population of each of the new 13th NC Congressional Districts.

Balancing districts perfectly with 733,000 people sounds hard but it’s even harder than you think. If you need 150 votes to balance, you can’t just grab the closest 150 residents across a county line, you have to balance using entire voting blocks, (which are smaller geographic pieces that, together, make a precinct). So you may end up including a voting block of 250 people in one county and then subtracting a voting block of 100 people in another county to get the net increase of 150 people and make the districts balance. When you do that, you split two counties.

If this sounds a bit crazy, it is.  It’s unlikely that the census, taken every ten years by temporary workers is anywhere close to that level of accuracy. Even if it was, one week later a family moves and the district is no longer equal.

In our state legislative districts, we allow a 5% margin in balancing districts. A margin a fraction of that size in the Congressional Districts could eliminate splitting precincts and a lot of split counties.

But I’m not sure you have to understand mathematics to be a Federal judge.

Is That Conservative?

I stirred up a bit of controversy with my article about the proposal to require a farmer to have the government’s permission to lease his land to a solar farm.

One fellow wrote me that he agreed the idea didn’t sound like something government needed to do. But then he added what government really should do is pass regulations telling the farmers what the leases ought to say – for example, how to dispose of solar cells.

So now, instead of a permit, we have government dictating leases to farmers?

Is that conservative?

Why shouldn’t the farmer have the freedom to handle his own business dealings?

It’s a fact I have yet to meet a government employee I would recommend a property owner use for real estate advice.

Freedom Fighters

It’s an old story that repeats itself throughout history – a flamboyant leader exhorts a suffering people to join his crusade to overthrow a ruthless dictator and win their freedom. But then, as soon as the revolution is over, it turns out the new leader is not what he seemed. He wanted power for himself, not freedom for the people.

For years conservatives, standing for two fundamental principles, have battled tax incentives that favor one business over others. We have argued those incentives are examples of government interfering with the free market and ‘picking winners and losers.’

Along the way, additional political leaders (and their allied political groups) joined in, using almost precisely the same arguments while specifically criticizing the state incentives for solar energy.

For a while, it sounded like we were all allies in the conservative cause.

But then, everything changed. After the solar incentives were eliminated, the second group dropped the cloak of standing up for free markets and, contrary to conservative principles, set out to use government to tilt the market to suit its purposes.

How? By proposing to pass a law that said no farmer could rent his land to a solar farm without the government’s permission. In other words, they want to use government to accomplish their goal of stopping solar energy.

That is not my idea of freedom. Or of protecting the free market. The government has no business getting into the business of telling a farmer how he can or cannot use his land.

Asking Permission

He works from sunrise to sunset, spent the last 40 years raising his family, sent his children to college (where they graduated without debt), contributes to his church, pays his taxes to help build the public schools and he’s done it all by growing corn and wheat and raising chickens and hogs.

He’s a farmer.

When it rains too much he can’t plant and when it rains too little his crops wither. It’s hard to know which is worse, late spring frosts or the early fall frosts. A microscopic virus can wipe out all his chickens and, as he watches, months of backbreaking work (and money) disappear.

He wonders sometimes what he’s done to deserve the treatment he receives from Mother Nature – he both loves and curses nature. In the end, like his father and grandfather before him, he simply rolls up his sleeves and goes back to work to dig out of whatever hole he’s in.

One day not long ago a man came to see him who wanted to lease the back 40 acres, where nothing hardly ever seemed to grow, for a solar farm. His wife liked the idea.  She said it would be the first time they ever received money that did not require their own sweat to earn. It would also mean no longer having to mow 40 acres of brambles every winter, after the yellow jackets were gone.

But now it looks like he may have waited too long to sign the agreement.

A bureaucrat sitting in Raleigh has decided he – the farmer – doesn’t have enough sense to decide whether to rent his land. That the government needs to tell him what to do. So now, it looks like, he’s going to need to ask a bureaucrat for permission to rent his own land.

All he can do is shake his head. And offer a silent apology to Mother Nature.

How Much Is Enough

It felt like a stick in the eye when the NC Commerce Department announced they were paying Corning Optical Communications $2.35 million in taxpayer funded incentives to move their headquarters from Catawba County to Mecklenburg County. It appears I’m not the only one feeling poked.

Even beyond using taxpayer money to help Corning move 500 jobs between NC counties, most people feel uncomfortable with idea of paying cash to a company to move to NC. It’s true that it sometimes works. It’s equally true that a corporation’s commitment to NC may not last any longer than the cash payments and the company moves on.

So why is paying corporate ‘incentives’ such a seemingly unstoppable juggernaut? The answer is politics. Woven into the state’s government and political fabric is a cluster of people who promote incentives for a straightforward reason – their livelihood depends on it. Those lawyers, lobbyists, and assorted political appointees make a better than average living advocating for government to hand out taxpayer dollars to out-of-state corporations – so they fight ending the incentives program.

But in the new NC business climate a couple of crucial factors have changed.

For years, NC had the highest Corporate Income Tax (CIT) rates among the southeastern states. So, the incentives cluster did, then, have a valid argument that cash was necessary to lure new corporate employers to NC – because our tax rates were higher than our neighbors. The result was a convoluted system of government handouts that, oddly enough, punished long term NC job creators while providing a steady stream of cash to support the incentives cluster and to keep politicians busy cutting ribbons on new plants.

Then, in 2013, the General Assembly started doing two things: 1) Closing tax loopholes and 2) Using those savings to cut tax rates. In all, the legislature has cut the Corporate Income Tax rate 57% — from 6.9% to 3%. You would think as the corporate tax rate dropped the need for cash incentives would fall too. But to the incentives cluster, none of that matters – instead the lobby continues to holler the same old line: ‘We have to give incentives because everyone else does’.

How about trying something new?

Let’s answer a simple question: How much lower does NC’s CIT rate need to be before incentives aren’t necessary and we treat all job creators the same?

Have we reached that point now? Which matters most: Lower tax rates? Or cash handouts to a few corporations?

After all, the incentives lobby perpetually crying, “We know you cut corporate tax rates 57%… but we still need to hand out ‘more’ cash to corporations” – cannot be the correct answer.