Secret Subsidies to Huge Corporations

Photo by Ron Dauphin

The ever interesting Greater Greater Washington recently asked “How much will Walmart cost DC taxpayers?

The argument: some of Walmart’s employees are earning a small enough amount, and draw so few benefits, that they actually still qualify for public compensation. GGW’s authors call this a “backdoor subsidy” to Walmart’s workforce–and interesting angle, no doubt.

Now, I think it’s a little deceptive to say that Walmart is costing DC taxpayers money in this scenario, since that assumes that the people getting those benefits would have had jobs to begin with if Walmart wasn’t around. But I won’t belabor the point.

The authors point to a study (PDF) which claims that it would only cost Walmart two cents on the dollar to give their employees the same benefits packages as their competitors give. They then carry this line of thought to its logical conclusion and suggest that the DC Council might force “large retailers” to pay a higher minimum level of compensation.

Now, I am extremely skeptical of studies like this, even when they are peer-reviewed, which this one was not, or printed in an academic journal, rather than merely presented to an advocacy group.

But you don’t need to share my skepticism of such things, and we don’t have to have a debate about the complicated question of determining just how much it would actually cost. There is a much simpler solution to the problem of “secret subsidies” than to increase the intrusiveness of regulations in the District. That solution is to get rid of those subsidies.

I’m not talking about eliminating public health benefits to low income individuals. I’m talking about changing the criteria for getting those benefits so that people who make as much as Walmart offers are no longer eligible for it.

Then we can leave things to people’s own choices–either they can keep their public benefits, or they can work and earn as much as Walmart can get them. If this”backdoor subsidy” is as significant as the post implies, then it might be that Walmart would have to start offering more benefits in order to attract as many workers as they need. Or it could be that enough people would be willing to give up the public benefits for what Walmart offers–be it what they would actually make to begin with or the possibility to make more later on–that Walmart wouldn’t have to.

Either way, the primary problem that the authors appear to be concerned with–taxpayer funds going to Walmart employees–would be entirely solved.

The Argument From Corruption

Photo by Andrew Bossi

Those who follow the theater of setbacks to true home rule in DC know that the recent federal budget compromise includes stipulations on how the District’s local government can spend the tax money it raised from residents. Then our mayor, along with a few other representatives and several dozen civilians went and got themselves arrested in protest.

Those of us who live in DC face a unique situation in this country–while we do have representatives that we elect, who can tax us, ultimately how they decide to use that money can be overruled by a body that is not elected by us. I would never argue that voting guarantees liberty or perfect outcomes, but I have to think that the selection pressures that a Congressman or Senator faces does not align them with the interests of District residents.

But I don’t want to get into an in-depth argument over DC home rule or federal representation. I want to address a specific argument I have heard in defense of Congress’ authority over our local budget: the argument from corruption.

The argument is simple–DC’s short history of home rule is infamous for its corruption. Marion Barry in particular is an embarrassment, past and present, to those who would make a case for home rule.

Yet this argument seems frankly irrelevant to me. For better or worse, corruption or lack thereof is not the criteria on which we grant representation in this country.

If it were, Louisiana and Illinois would probably have had their federal representation and local sovereignty revoked long ago. Here are some stats provided by Slate:

According to data collected by Dick Simpson, a political scientist at the University of Illinois at Chicago, more than 1,000 public officials and business people from Illinois have been convicted in federal corruption cases since 1971. Of those, an astonishing 30 were Chicago aldermen; that’s around 20 percent of those elected to the City Council during that period.

And on Louisiana:

According to statistics compiled by the Corporate Crime Reporter, it was No. 1 for the period between 1997 and 2006, with 326 federal corruption convictions. That’s a rate of 7.67 per 100,000 residents.

The point is not that the people of Illinois and Louisiana should lose their right to vote. The point is that the argument from corruption is irrelevant to the discussion of home rule. Corruption is a real problem in the District, and one that we need to sort out. But our current paternalistic arrangement with Congress is not the answer.

Adding Council Members to Decrease Their Power

Photo by Wally Gobertz

Mike DeBonis recently kicked off a discussion over the size of DC’s Council with his article “Is D.C. overgoverned? Or undergoverned?” The article came in response to a recent Pew study on the compensation of council members in major American cities, which found that at an average of around $130,000 DC’s council came in second. The authors of the study acknowledge that in DC’s case this isn’t comparing apples to apples–unlike other city governments, the DC council performs functions more traditionally associated with state governments.

Looking at it from this perspective, DeBonis asks whether DC residents are “undergoverned”, compared to the typical state resident. By this he means simply that we have a lot fewer representatives per resident than state residents have. He suggests that it might be reasonable to consider expanding the number of members to the Council.

Now, I thought I would be unsympathetic to this line of argument. After all, as the Pew study highlights, Council members are expensive. Even if you compare them to state county officials, rather than other city council members, they come out way overpriced. Moreover, each Council member is allocated $400,000 for their staff, and twice that much if they chair a committee. The payoff would have to be pretty great to justify the huge additional expenses of adding just one more Council member, much less a handful or a dozen.

Yet I have to admit I was swayed by DeBonis’ argument, on purely libertarian grounds. For while DeBonis argues that we are “undergoverned” in the sense of being underrepresented, in practice we are really overgoverned because fewer representatives means fewer barriers to legislation.

With a 13-member council doing the lawmaking done by much larger bicameral assemblies in 49 states, the barriers to legislating are lower in the District than anywhere in the nation. In less populous Wyoming, for instance, passing a law means convincing majorities in a 60-seat House and 30-seat Senate.

But in the District, “you can do anything if you have seven votes,” said Jack Evans (D-Ward 2), a defender of council prerogatives but also a frequent critic of the body’s overreach.

Now I think Wyoming is ridiculously overrepresented–but the fact that you only have to get seven votes to pass anything is definitely a frighteningly low barrier to legislation. DeBonis documents the consequences:

According to a State Net analysis, the District processed about 1,400 bills last year. Wisconsin, with nearly 10 times the population, dealt with half as many.

Whether you are a libertarian or just someone who believes in good governance, this should give you pause. DeBonis calls this throwing “legislative darts against a wall”, but I call it an unhealthy concentration of power.

As such, I would support Richard Layman’s proposal to double the number of Council members elected by each ward, as well as four more at-large seats. Including an at-large chairman, this would bring the Council membership up to 25.

There has been a lot of discussion about how to bridge the budget gap here in the District, and I have been skeptical that the Council would ever consider serious measures. I believe that politicians are unlikely to behave responsibly as a result of reasoned discussion. The only circumstances under which they either support good policies or fewer bad ones is when they are facing the right constraints on their behavior.

It is my view that increasing the number of Council members is a far more effective measure for addressing our budget woes than if we were to change the entire composition of our current Council. A larger Council is a more constrained Council; less likely to spend as recklessly as the current sized Council does.

Take Council compensation, for example. Most of the discussion I’ve seen on Council size includes the stipulation that we ought to reduce their compensation. While I agree with this, I’m not certain that a larger Council would be more likely to vote to reduce its pay. I do think that there’s a strong argument for the idea that a larger Council would be less likely to increase their own pay.

The size of the governing body is undoubtedly subject to rapid diminishing returns, and it seems likely that Wyoming crossed into the red on the front long ago. But my instinct is that we are well within the range where the marginal value of additional representation results in a net gain.

Hat tip: Greater Greater Washington

Also, I want to thank Eli Dourado for discussing some of the implications of larger or smaller governing bodies. And for pointing out New Hampshire’s extreme position on this issue.

Which appears to be true. I’d take 400 Council members being paid $100 a year in a heartbeat!

The Right Number of Police Officers

Photo by Cliff1066

The District currently has more cops than Baltimore or Denver, both of which have larger populations than us. WUSA9 brought this up in light of the fact that Mayor Gray’s proposed budget would reduce the number of officers from 3,800 to “below 3,700” in 2012.

WUSA9’s video goes through the population and number of officers for Baltimore, Denver, and Atlanta, which I have collected along with DC’s numbers.

It would have been helpful of WUSA9 to provide the actual crime rates of these cities, but I guess that’s what Google is for. Turns out, Baltimore and Atlanta both have higher violent and property crime rates than the District. Denver‘s a more mixed picture–property crimes are so much higher that they bring up the overall number of crimes per thousand above DC’s, but the violent crimes are lower.

Of course the relationship of the size of the police force to the crime rates is far from straightforward–near as I can tell (from Wikipedia) New York City has fewer police officers per thousand than DC but much lower crime rates.

So to return to the cause of this discussion: should District residents be concerned about the proposed reduction?

I don’t think so for one main reason: the reduction doesn’t appear to be that large. Granted “below 3,700” is a vague term that could mean anything from 3,699 to 0. Fortunately, the Washington Post was more helpful than WUSA9 in this regard–the number of officers cut from the force will be “approximately 100“. This is in the noise–as the Post article notes, more than twice that amount are expected to retire by the end of next year.

Crime enforcement has come a long way in the past twenty or so years in this city, and as much as I enjoy a good budget-slashing, cutting down on the police force wouldn’t really be the area I’d focus on. Still, despite the police Chief’s protests, I have trouble thinking that a difference of 100 officers will really have that huge an impact.

As to the question of what the right number of officers is, I don’t really have an answer. But I’m certain that drawing comparisons to a handful of cities that have worse crime rates than we do isn’t really going to help anyone arrive at a meaningful answer.

Hat tip: Greater Greater Washington

Introducing The District Libertarian

DC Flag with Ama-gi

Welcome to The District Libertarian, where local DC issues are covered from a classical liberal perspective.

Why Start a Blog About DC?

In the two years since I moved into the city, DC’s blogosphere has continued to amaze me. On the one hand, a lot of information is being made available to district residents–from city-wide coverage that blogs like DCist and We Love DC are so good at, to the neighborhood level topics that blogs like U Street Girl, 14th & You, and Frozen Tropics keep residents informed on. On the other hand, DC’s online ecosystem is about much more than just the blogs and getting information–it’s a legitimate and lively community.

I have connected with a lot of the people in that community through their blogs, through Twitter, and in person. This blog is the next logical step for my participation in that community.

Why Make it Explicitly Libertarian?

Beyond the fact that I think disclosure is an honest way to proceed in a discussion, I have two basic goals in mind:

  1. To encourage libertarians living in DC to be more open in their views and engage in discussions with one another as well as the community at large in a constructive and respectful manner.
  2. To enrich the larger discussions taking place in DC’s online community by increasing the diversity of perspectives participating in them.
Both of these goals stem from a perception I have that the libertarian point of view is not currently represented in most of the discussions that happen in DC’s online community. I hope to change that.
That’s it for now. District Libertarian can be liked on Facebook or followed on Twitter.