The Minnesota Free Market Institute Weekly Update
Friday, June 12, 2009

Cities Cry Poverty While Handing Over $8.5 M over to Lobbyists
With Governor Pawlenty’s veto of LGA funds, line item vetos
of local pork projects and looming unallotment, local government officials have
gone to the media to cry poverty.   The Brooklyn Center Police Department no longer staffs it’s lobby outside of business hours the Star
tells us.  Some local government  officials have made ominous predictions of higher property taxes to close the gap.

This week we learned that  local units of government (Cities and Counties, school districts and other public entities) spent $8.5 Million on lobbying at the State capitol in 2008. That’s an increase of nearly
10% when compared to the previous year.
Local government associations spent another $4.6 million on
lobbying.  That lobbying is paid for with
dues that cities and towns pay from their revenues.

Businesses, families and individuals throughout Minnesota
are cutting their expenses and trying to save money. We are in a
recession.  Growth is negative and unemployment
is up. But not for the business of government apparently.  No, in these challenging times, it’s more
important than ever for them to argue
for higher taxes to preserve and grow their budgets. And  while
the threat of higher property taxes is not an empty one, it’s important to note
that money that comes from the state taxpayer to the local government is money
with  less accountability.  The local taxpayer can see how the money is
spent and is better able to voice a complaint or even vote local politicians
out of office if they disagree with them.

Government lobbying government can only end up one way, with
bigger and bigger government and higher and higher taxes to pay for it all.

Pat Anderson is President of the Minnesota Free Market Institute

Bachmann was Right, This is “Gangster Government”

Asking for a little
honesty from critics of GOP Rep. Michele Bachmann is a naïve hope, but absent
honesty, we might at least expect some more intelligent criticism than this
found in a recent Minnesota Independent article:

“Rep. Michele Bachmann took
to the floor of the House of Representatives twice Tuesday, likening the United
States to the Titanic and lambasting “gangster government” for meddling in
carmakers’ affairs – though she boasts on her Web site of doing the same auto
dealership-advocacy she decries Democrats for.”

This “analysis” demonstrates
the total lack of understanding of free market economics by progressives who
equate “auto dealership-advocacy” with being pro-business or being pro-free
markets. Bachmann was not criticizing Democrats’ (or her own) dealership
advocacy, but she was indeed blasting government policies that make that
un-American (my word, not Bachmann’s) activity necessary.

In her remarks
on the House floor, Rep. Bachman cited a Democrat Senator who arranged a meeting
between an auto dealer and GM, which resulted in the dealership getting a
disfranchising reprieve. She also noted that Democrat Barney Frank was able to
arrange a meeting for a GM dealer with the same result. She, too, sought help
for a local GM Dealer.

“When I was on the phone today
for over an hour with one of my local dealers,” Bachmann said, “the very first
thing out of her mouth was this: She said, ‘This is the most un-American thing I
have ever seen in my life. I can’t believe that I lived to see the day that my
country would come to this point where, having my dealership for 90 years, I get
a letter FedExed to me that tells me I have until Friday to sign this document
to not only give up my company that was made worthless–worth $15 million, made
worthless overnight–now GM is demanding
that she hand over her customer list, her service customer list to

The point Rep. Bachmann is
making is not that Democrats and Republicans should not be working on behalf of
auto dealers; she was lamenting and lashing out that such action is necessary.
Instead of building business by providing the best products and services (and
investing resources in doing so), the American auto industry now operates in a
gangster-like environment in which it is more profitable to “invest” in elected
officials than in one’s own effort.

“The Federal Government has set
up a new cartel and private businesses now have to go begging with their hand
out to their local–hopefully well politically connected–Congressman or their
Senator so they can buy a peace offering for that local business,” said
Bachmann. “Is that the kind of country we are going to have in the
future?” she asks.

“We need to call this for what
this is,” Bachmann added. “We need to call this for what this is. Call it out.
The American people need to get outraged and figure out that it could be them

Bachmann is right. What is
happening in this country is not capitalism. It is not free market economics. It
is not “necessary” to save either capitalism or free markets. “Gangster
government” is the blatant exploitation of fear, uncertainty and doubt spawned
by an economic crisis created by decades of government meddling in the economy.
It is “the law perverted” as Frederick Bastiat wrote in “The Law.” It is the
destruction of the fundamental principles upon which this country was founded —
the primacy of individual sovereignty, the sanctity of private property and the
rule of law.

This is, paraphrasing a line
from Barry Goldwater, no time for moderation in defense of

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute.

Should Enid pay for Eagan’s Bike Trails?
A million dollars doesn’t even qualify as lost-in-the-sofa
money in the federal budget if you look only at the numbers. But it sends many
other political and economic signals, none of them good.

According to This Week newspapers, the city of Burnsville has
its hands out for a $1 million federal grant so that it can develop a biking
trail along the Minnesota River. One member of the city council expressed her
enthusiasm for the project by that the area gives people the opportunity for
“great bird watching.”

For its part, the city of Eagan is seeking a million of its
own for similar purposes.

Have we, as a nation, gone mad?

Why should the people of Burlington, Vermont pay for a bike
trail in Burnsville? Or the people of Enid, Oklahoma, pay for a trail in Eagan?

In a column I wrote last week for the Saint Paul Legal Ledger, I argued for the phase out of Local Government Aid. There are at least
two good reasons. One is that it expands overall government spending beyond
what people would otherwise rationally pay. The other reason, and it’s related
to the first, is that it reduces the accountability of local officials, who can
say to residents “Look at all the good things we’re doing for you,” while
having their decisions subsidized by someone else.

A similar logic applies when the U.S. government transfers
money from one state to another for simply local projects. Further, it
diminishes the political significance of states as entities with their own,
unique powers (Tenth Amendment, anyone?), and puts us further down the road to
the day when states are merely administrative units of a national government.

Political decentralization has many benefits, including
offering a safety valve. (How high would Minnesota taxes be if legislators didn’t
have to keep in mind the more favorable tax climates of South Dakota, Texas,
Florida and so forth?)

I understand why local officials would seek federal grants.
To paraphrase an advertising slogan used by state lotteries everywhere, “Someone’s
going to win; why not you?” But when we win, we also lose.

John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

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In Case You Missed It from the Minnesota Free Market Institute

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The Minnesota Free Market Institute Weekly Update is edited by Margaret Martin

The Minnesota Free Market Institute conducts research and advocates for
policy that limits government involvement in individual affairs and
promotes competition and consumer choice. By analyzing the actions of
the past and applying the enduring lessons of the free market, the
Minnesota Free Market Institute creates policy options for the future.
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In This Issue
Cities Cry Poverty While Handing $8.5 M Over to Lobbyists
Bachmann was Right, This is “Gangster Government”
Should Enid Pay for Eagan’s Bike Trails?
Must Read
In Case You Missed it from the Minnesota Free Market Institute
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