Thursday, December 15, 2011

Trends in Government Services-Less for More

User fees and service fees are becoming a wide spread trend in the delivery model for government services. While there was a time that I advocated for such fees, now I am recanting based upon two points of objection. The first is the notion that government is a not for profit enterprise. The second is that whatever government does should provide a general benefit and be paid by general taxes.

Taking the second point, first, for discussion. Without delving into an arguement to parse each and every function for its proper inclusion as a general benefit suitable to be a be government service, let's stipulate that what we do receive all qualify. I don't agree that they all do. Its just that this discussion goes to methods of paying for them.

Very quickly and simply, if a government service is provided on a fee for use basis this means that the taxpayers pay to staff and equip the agency providing the service but, without the fee the service wouldn't be delivered. This makes little sense except as an admission that the service isn't provided as a general service but targets a specific group. Take toll roads and courts, for instance. While both are open to the public, only users pay fees to use them. The prevailing wisdom is that these services benefit all, even those who do not directly use them. Who wants criminals untried or their goods undelivered. or unable to commute to work?

Going to the first objection, that government should not be involved in for profit endeavors.
Whether or not the purpose of a fee is to make a profit or to subsidize a department, if the service is considered properly delivered by a government agency, the unstated premise is that the service somehow is connected to the general welfare and not a subsidization of a special interest group. If, OTOH, the government imposes fees in order to subsidize the taxpayer at the expense of the user, this gives rise to a challenge that the staffing and equipping of the delivering agency is a taxpayer subsidy to a special interest group. If this is the argument the government wants to make, then the proper mechanism for delivery of the service is through a competitive, private, for profit endeavor.

One way governments have recognized this dichotomy of function (general welfare service) and recipient (subsidized special interest) is to contract out the service to a private company. This is a close proximation to what they ought to be doing. I take exception to long term, monopolistic contracts, though. The benefits of competition are lost when the ink dries. Contracts should be short term and/or divided along some lines like geographical areas.

Parks are a good example. Open to the public. Purchased, equipped, staffed and maintained by general taxes, they are often accessible by fee. Additionally, some users and locations are fee exempt, others pay a hefty amount.

This scheme of delivering government services is Naut Right.

Sunday, December 11, 2011

Explaining more at the well means less at the pump - for gasoline.

First, another link telling more positive news coming from U.S. energy production: US Oil Shale Seen Rising Fast

The Saudis have used production to control prices since 1973, when we had our first oil embargo, courtesy of them and Henry Kissinger. They know this game. It's too obvious that increased supply puts downward pressure on price. What is not so obvious is the vicious circle this can catch the market into riding. If the Saudis feel compelled to maintain revenues large enough to generate near same gross profits that they have for so long, before this new competitor arrived, they have to pump more to make up for lost margins when new supply drops prices. That additional quantity in the market further presses down on prices, leading to another decision to live with less profit or increase supply again until revenues generate profits equal with the past. This could continue until the market becomes saturated and no increases in supply can be bought up. This is a classic equilibrium sequence for any market.

The flip side is that the Saudis could elect to withdraw production in order to keep prices where the margins for profit are maintained. The risk for the Saudis is that the lost gross profits might not sustain their hold on their kingdom, which is now that of a benevolent king. Well, in a few regards. They can be brutal when it suits them. They could choose a chancy road of supression of their subjects, but then spring might come to Saudi Arabia. They don't want that. One other choice they would have would be to cash in their holdings of American assets, until that runs out. Lastly, thet can choose a more frugal lifestyle, which if that were in them, one might think they would have already done so in order to quiet criticisms of their lifestyles juxtaposed against that of their tent bound, camel ridden subjects.

Its going to be interesting.

Friday, December 9, 2011

Fixing the TSA - Congress whittles with the wrong end of the knife

Congresswoman Marsha Blackburn introduced H.R. 3608, the STRIP ACT as reported in The Hill .
All it does is strip the title of officer from TSA employees who have not taken LE training.

My congressman got an earful from me. Summing my complaint, I wrote that the TSA is the congressionally coreographed victory dance for Al Queda and the Taliban. All H.R. 3608 does is rename a character in the playbill. Its an insult, a waste of time and not worthy of my opinion on the merits of its passage.

Abolish the TSA. Put the duty, responsibility and liability for the traveling public onto the transport company.

When you whittle with the wrong end of the knife you won't cut much wood, you will bleed and people will laugh at your stupidity; no matter you thought you were whittling a gift for your hecklers.