Better than Charlie Rose w/Adam Smith: Berkowitz w/Heritage Foundation’s Steve Moore on the Wealth of States, Web and Cable

Tonight’s City of Chicago edition of Public Affairs features Steve Moore, preaching the gospel of  “hope, growth and opportunity.”  The show airs throughout the City of Chicago at 8:30 pm on Cable Ch.21 [CANTV] and repeats again at Midnight.  

Don’t have cable? Don’t live in the City? Not to worry, you can watch the Public Affairs show with Steve Moore 24/7 by clicking here.

What causes the wealth of states to vary, variation in tax rates?  

According to Moore, who studied the economies of our 50 states with his co-authors, Laffer, Sinquefield and Brown, in their book, “An Inquiry into the Nature and Causes of the Wealth of States, the solutions to the economic problems of Illinois and other states who are losing jobs and population are simple: Cut tax rates, become a “Right to work state,” relax restrictions on energy growth and increase the freedom of management to deal directly with their employees.

Abolish the state income tax in Illinois?

In Moore’s world, companies thirst for low tax states.  Abolish the state income tax, and businesses will beat a path to your state, providing jobs galore.  More jobs, of course, mean more tax revenue to provide an efficient flow of state, county, city and village government services. Moore refers to nine states that have no income tax, including Texas, Florida and New Hampshire and Moore says jobs are growing much faster in those states than in the high income tax states, such as California, New York, Illinois and Rhode Island.

Moore contends not only does Illinois have high tax rates that drive businesses away, but also bloated, inefficient government that means Illinois has the worst of all worlds: high tax rates, high government spending and poor quality, inefficient government services. We pay a lot for our government, says Moore, and get very little.

Broaden the sales tax to apply to services as well as goods?

Moore would have a sales tax which taxes services such as legal, accounting, advertising and other services-- which may represent 40% of Illinois’ economy.

Rauner v. Quinn

Moore notes that Republican candidate for Governor Bruce Rauner, unlike Gov. Quinn, very much tracks Moore’s preferences on lowering the state income tax rate and imposing a tax on services, and Moore opines the November, 2014, Illinois race for Governor is one of the most important in the country.

Right to work

A right to work state is a state where unions can’t compel all employees to join the union or pay union fees. Moore contends many if not most employees feel they can get better wages and working conditions by negotiating without unions—and they also want to avoid the higher union fees. In Moore’s world, employees hunger for the opportunity to be rewarded for individual, not collective, performance—as is the union model.

Merit compensation in teaching and automobile production  

Thus, in education, Moore thinks teachers want to see those teachers who perform well paid better than those who perform poorly. Now, with education largely ruled by teachers’ unions, wages are set largely by the number of years a teacher has been teaching, not by the quality of the individual teacher’s performance.

Moore also refers to workers at a Volkswagen plant in Tennessee where the employees voted down union representation because, according to Moore, they preferred a wage scale that factored in an individual worker’s performance.

The Free Rider problem, Right to Work and unions

Show host Jeff Berkowitz challenged some of Moore view’s by bringing up the “Free Rider,” argument. That is, if a union negotiates a higher than free market wage for all those who are working, doesn’t everybody benefit, including those who stay outside the union and don’t pay union fees in a right to work state.  Moore contended that the employee’s desire to be free to be represented or not, as he or she chooses, should dominate. Further, he thought in many, if not most cases, unions don’t win improved working conditions or wages—they simply are a drain on the real wages of employees by deducting a union fee. Thus, says Moore, there is nothing for the employee outside the union on which to take a “Free ride.”

Education and attracting business to a state

Moore also stresses the importance of the role of education in attracting business to a state. However, in Moore’s world, it is not increases in the amount of money per capita spent on education that improves the quality of education. No, says Moore, it is school choice in the form of school vouchers and charter schools that gives parents, the ultimate consumers of K-12 education, the benefits of competition in the form of better quality and lower cost education for their children.

You won’t want to miss this show. Whether you agree or disagree with Steve Moore, you will be challenged to think by a person who believes in logic, coherent economic theory and empirical evidence. Stephen Moore has been a writer on the Wall St. Journal Editorial Board and he is now the chief economist at the Heritage Foundation, a conservative think tank based in Washington, DC.  Steve Moore is an alum of New Trier High School in Winnetka, IL with an undergraduate degree from the University of Illinois at Champaign and a Master’s Degree in economics from George Mason University.

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