Taxation STILL changes behavior
Read moreHow not to get Las Vegas building: Hike building fees 70 percent
Although the city of Las Vegas has one of the worst housing/building markets in the country, the Las Vegas City Council has a plan - to make things worse. A city council subcommittee is now considering a proposal to hike building permit fees by up to 70 percent.
The proposed ordinance calls for an increase of 65 percent to 70 percent in the fees for plan checks, building permits and inspections. Those fees pay for the work of the Building and Safety Department.If the city actually wanted to encourage growth instead of just protecting government jobs, it would lower taxes, cut red tape and loosen zoning requirements.
While the city says construction trade groups are reluctantly on board, at least one entity is sharply critical, saying "bloated" salaries should be cut before fees are increased.
Building permit activity is one-third of what it was in 2004 and the Building and Safety Department has adjusted by shedding staff, paring a 124-person staff to 49 employees.
Further staff cuts are "impossible" if the city wants to continue providing adequate services, Chris Knight, the building department's director, said at a recent hearing to discuss the ordinance. Without a fee increase, however, more cuts would be necessary, he added.
And what about the National Association of Industrial Office Properties' Southern Nevada Chapter claim that salaries are "bloated"?
Well, TransparentNevada shows that Chris Knight, director of the Building and Safety Department, made over $250,000 in 2009 in salary and benefits, so I'd say there's at least a case to be made.
Regardless, hiking building fees by 70 percent in the midst of a serious economic downturn (especially for builders) is the height of economic foolishness.
This chart shows how raising taxes (or fees, in this case) affects supply and demand.
Nanny of the Month
Police Chief Robert Copely of Quincy Illinois wins this month's "award" for arresting a man for giving free rides to individuals who had too much to drink. Yup, keeping drunk drivers off the street is illegal if you're not licensed. Go Nanny State!
New low for government
Taking eminent domain to an all new low is Montgomery Alabama. Using the backhand of big government, Montgomery declares your home blighted and orders you to tear it down - at your own expense. If you don't do it, they will, and yes, they'll bill you for it. Then, they will seize your property and sell it to a private corporation for development. Montgomery even did it to a man who was already renovating his home. They even tore down his home after he defeated the city in court.
Feds looking to repeat repeat of failed housing policy
One of my favorite things about idioms is that they often contradict each other. Does absence make the heart grow fonder or does out of sight mean out of mind as well?
With news breaking today that the feds are considering creating a third homebuyer tax credit program, it's the battle of two idioms: "If at first you don't succeed, try, try, try again" vs. "Those who don't learn from their mistakes are bound to repeat them.
Shaun Donovan, Secretary of Housing and Urban Development, said Sunday the housing market's July woes were "worse than expected" and the administration might support a new homebuyer tax credit.In this case, the winner is "Those who don't learn from their mistakes are bound to repeat them." The previous housing tax credit programs cost taxpayers a bundle while simply shifting housing demand forward. Once the tax credits ended,
In an interview on CNN, Donovan said the administration is "concerned" about the path of the industry. He defended the Obama administration's record on supporting the housing market, amid new signs the market is struggling alongside the broader economy.
Donovan did not rule out a further homebuyer tax credit to support the market. Congress passed a homebuyer tax credit to support first-time buyers. The credit has now expired.
demand plummeted, because the government had paid buyers to purchase homes sooner. The tax credits didn't create demand; they simply created a miniature bubble that has since burst. The same thing happened in the Cash for Clunkers tax credit program.
Just another example of why government shouldn't be picking the winners and losers in the economy.
(h/t Hotair)
SEIU and the 'Amercan' Dream
Via Big Government, see if you can find the misspelling:
If only the SEIU were always this laughable. Check out Michelle Malkin for more information on what the SIEU thinks the "Amercan Dream" should be. (Hint: You'd be paying for it.)
How the Governator is trying to save California from pension disaster
First, a short but accurate video on what public employee pensions - without reforms - will do to states' budgets.
Second, here's a brief overview of how messed up California's pension system is, and the problems skyrocketing pension costs are causing for the Golden State.
Third and finally, here's what Gov. Arnold Schwarzenegger wants to do about it and why.
How creative destruction works (and is working in Las Vegas)
Creative destruction is an essential part of the free market. Economist Joseph A. Schumpeter coined the term in "Capitalism, Socialism and Democracy."
Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. ...In my own words, "creative destruction" means this: Because there are limited resources in the world (scarcity), in order for there to be innovations and improvements there must also be a destruction and redistribution (through private decisions) of the scarce resources (raw materials and employees, etc.) that were being consumed by less productive means.
As we have seen in the preceding chapter, the contents of the laborer's budget, say from 1760 to 1940, did not simply grow on unchanging lines but they underwent a process of qualitative change. Similarly, the history of the productive apparatus of a typical farm, from the beginnings of the rationalization of crop rotation, plowing and fattening to the mechanized thing of today-linking up with elevators and railroads-is a history of revolutions. So is the history of the productive apparatus of the iron and steel industry from the charcoal furnace to our own type of furnace, or the history of the apparatus of power production from the overshot water wheel to the modern power plant, or the history of transportation from the mailcoach to the airplane. The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation-if I may use that biological term-that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. [Emphasis added]
This is why it's so important that bad businesses are allowed to fail and lose money (as happens naturally in the marketplace outside of government interference). If bad businesses aren't allowed to fail, the limited resources that they are using will be stuck in inefficient and unwanted businesses instead of becoming available for better uses (as determined by the individuals in the marketplace). And if the government doesn't allow bad businesses to fail, successful businesses and taxpayers will be forced to subsidize them - literally rewarding failure.
Anyway, that's a long way of saying that there's a great story today in the Las Vegas Sun about how the recession is creating new opportunities for businesses - creative destruction in action.
Even as many retailers and food establishments are struggling to outlast the recession, franchises and chains are entering the market or expanding their footholds.Recessions are a normal part of the business cycle (especially, as F.A. Hayek and my colleague Geoffrey Lawrence have argued, since the Fed inflates the money supply) and must be allowed to run their course.
Some are taking advantage of the sharp decline in rent, the availability of storefronts at high-traffic shopping centers and declining competition. ...
"We are doing this for the long term," said Loren Kreiss, spokesman for San Diego-based Kreiss furnishings, which in July at Town Square opened its 14th U.S. store. "We see the benefits when others are shying away. It is an opportunity for us to get in the market. Our strategy is to double down where we see the growth." ...
The recession does have its benefits: [Business owner Todd] Miller says his rent is about a third of what was charged several years ago.
If recessions are a normal part of the business cycle, why has this one lasted so long? Because it hasn't been allowed to run its course. From bailouts, to the stimulus, to Government Motors, to propping up Fannie and Freddie, to imposing huge new health care mandates, to the looming expiration of the Bush tax cuts, the federal government has been trying to save failing businesses for the last two years - hindering the creative destruction of the market.
And it's failed miserably.
The government's been trying to prop up failing businesses, and this has led to a failing economy. Government needs to get out of the way. Bad businesses need to fail so that new businesses can attempt to use the scarce resources, which were previously tied up in the bad businesses, in more productive ways.
As Las Vegas shows, creative destruction works - if it's given a full chance.
Rory Reid's budget plan: Strong in theory, short on details
As promised earlier today, here's NPRI's just issued press release on Rory Reid's budget plan.
Rory Reid's budget plan: Strong in theory, short on detailsIf you're interested in getting NPRI's press releases and other research materials as they come out, head over the NPRI homepage and sign up for email updates using the top box on the right column.
LAS VEGAS - A fiscal policy analyst with the Nevada Policy Research Institute today reacted to the release of Democratic gubernatorial candidate Rory Reid's budget plan, saying that while Reid is right that Nevada's budget needs fundamental reform and can be balanced without raising taxes, his plan is short on details and relies on untenable assumptions.
"Rory Reid should be applauded for presenting a no-new-taxes budget and being willing to go on record with his proposals," said Geoffrey Lawrence, the NPRI analyst. "As the Nevada Policy Research Institute has been saying for months, past spending increases have created Nevada's current budget problems, and reducing spending will be necessary in the next session.
"However, while Reid's budget includes many meritorious reforms, especially those borrowed from the Spending and Government Efficiency Commission and from other states, several parts should concern taxpayers. Foremost is Reid's assumption of significantly higher revenue collections. Additionally, his plan includes multiple ideas that, while worth considering, are not backed up with specific details."
Reid's budget plan assumes that Nevada will collect $615 million more in taxes in Fiscal Year 2013 than the Legislative Counsel Bureau currently projects.
"The problem with assuming more tax revenue in the second year of a two-year budget is that the governor is legally obligated to present a balanced budget to the legislature in January," said Lawrence. "Even if Reid's assumption proves correct in Fiscal Year 2013, his office would be forced next year to present a balanced budget based on the revenue projections from the December 2010 meeting of the Economic Forum.
"Additionally, while his plan to save $200 million in human services and transportation is solid in concept, it contains few details. Nor does his plan consider the implementation cost of many of his proposed programs.
"Overall, taxpayers should be grateful for Rory Reid's commitment not to raise taxes. But they should adopt a 'trust-but-verify' approach toward his plan. It has a lot of potential - and a lot of unanswered questions."
Why Nevada and most other states have budget problems
I've been sharing a lot of charts recently, but sometimes a picture really does say it all. This one shows why states such as Nevada, California and New York are facing budget deficits.
It's the spending, stupid.
