As the country continues to return to normal from the Covid pandemic, issues of public policy arise and call for the attention of lawmakers to address. School policy has become one of those issues.
John Kristof of EdChoice has released a report that offers insight into the opinions and attitudes of a nationally representative sample of parents regarding schooling and its relation with Covid currently.
For one, the data suggests that parents are becoming more comfortable with sending their kids back to school for in-person learning. According to the report, 63 percent of parents polled showed that they were either “very comfortable” or “somewhat comfortable” with sending their kids back to school in person. Moreover, that number has risen from the previous month by 6 points.
Two possible explanations can come from this. Either parents see that the Covid situation is improving and, therefore, are becoming more comfortable, or they see no change and are gradually becoming more comfortable with sending their kids anyway. While the former is more likely, either option demonstrates that government simply cannot stick with the status quo. Something has to change to promote the education of children. Therefore, this issue ought to be a top issue for state legislatures.
Additionally, the data shows that parents view government institutions as the worst entities to respond to the pandemic. Even state governments rank similarly with national institutions such as the federal government, media, and national corporations. A third of those polled found state government as an obstacle rather than an aid to an individual’s way of life.
As things gradually return back to normal, people as a whole may become impatient with the government education system's inability to get closer to normal as well. Unfortunately, government is often an obstacle to meaningful change, so the default should allow more individuals and their families to make their own choices. This promotes true educational freedom.
It is important to note that the slight increase in support of mandatory masks does not necessarily provide a direct correlation with support for government mask mandates in schools. As time moves on and children continue to remain either out of school or in some Covid-related alternative, parents are gradually going to show support for any requirement for in-school learn as their desire to return to in-school learning increases.
The prospect of masks protecting children at school is inconclusive at best, and some have suggested that they do more harm than good. However, if parents are given a choice between in-school learning with masks or some temporary solution that they think can no longer work, they will likely show support for masks. However, it is possible that such support is given as a concession rather than a preference.
The greatest takeaway from this report is that children have been severely affected by the pandemic. If a child was required to quarantine from school, most had to be quarantined from school multiple times. The average number of quarantines per child was about 2.54. This is a massive disruption to the development and education of the child.
Ultimately, as it approaches K-12 education policy, the state should adopt a philosophy of freedom and choice for families. Seventy-four percent of parents support school choice programs such as Educational Savings Accounts (ESAs). Additionally, parents desire to expand and promote programs such as school vouchers and charter schools to open up options for students as we exit the pandemic. These programs should be expanded to promote more options for families. Government often has a track record of inhibiting freedom. School choice reforms are an opportunity to change this trajectory and provide educational opportunities to families in the state.
Certifications and training are a key part of occupational regulations. Amid the pandemic, many occupational licensing authorities have allowed applicants to take required education courses online instead of exclusively in-person. While online courses are a good step in the right direction, additional technologies could also carry potential.
Many occupational licensing structures require individuals to take certain courses to get certified and then take additional continuing education courses. In the not-so-distant past, applicants would have to take required education and certification courses at the physical places and time determined by government authorities. In addition to the licensing fees and other burdens, such courses often required individuals to set aside time away from their usual course of business for travel. Sometimes they had to drive many hours to attend a class or take a test.
This can change in the context of online courses and certification. While some licensing, certification, and continuing education generally still occur in an in-person context, there has been an expansion in online courses, particularly after the pandemic. Facing the pandemic reality that many individuals would not be able to meet continuing education and/or licensing requirements without online accommodations, several regulatory boards were all but forced to allow for online integration.
These advances suggest that additional technologies could also carry the potential for occupational licensing reform. For instance, virtual reality (VR) headsets are already being used in a variety of extremely technical contexts, with a great degree of success. The military has used VR to prepare soldiers for the battlefield. The medical sector has used VR training for emergency scenario simulation. Industrial and manufacturing sectors have incorporated VR into technical training, and first responders have utilized it for emergency preparedness.
These technologies, such as online learning and VR have expanding adoption, and there has been real-world success -including in some high-intensity fields. It would make sense for government regulatory agencies to incorporate such technologies as an option in their approval processes. Of course, not all applicants would prefer to use such technologies for their licensing or continuing education requirements, and legacy options should remain available. Yet, having new technologies also approved as an acceptable option for occupational certification and education could encourage occupational participation from tech-savvy citizens -especially the younger generation. Mississippi and other states would do well to consider incorporating emerging technologies into its regulatory licensing systems. New technologies are continually proving their value for training and certification. Occupational licensing is already a big enough burden. The government should make every effort to incorporate effective technologies so that its citizens have greater flexibility in their occupational certification and education.
“Flatten the curve” is a phrase that Americans who lived through the COVID-19 pandemic will never forget. Its arrival in our collective lexicon marked the moment that our daily lives were dramatically changed for months on end. As COVID patients overwhelmed our hospitals, the goal was to lessen the strain by slowing transmission of the virus to levels that hospitals could handle. Those efforts were not enough, so we were forced to face the virus without enough hospital beds and medical personal to treat the sickest among us.
As we appear to be pulling out of the most recent Delta variant, it’s worth asking: why did it take so little to overwhelm Mississippi’s healthcare system to begin with?
Like most public policy issues, there isn’t just one answer to that question. But there is one answer that stands out as the most obvious and easily fixable one: our state’s “Certificate of Need” (CON) laws.
After all of the efforts to conserve and increase the number of hospital beds – going so far as to set up temporary tent hospitals – would you believe that Mississippi went into the pandemic with a policy of intentionally limiting the number of hospital beds in our state? Shockingly, we did.
Even more shocking are the problems that CON laws were originally designed to solve: a facepalm-worthy fear of too much investment in the healthcare sector. The idea was that competition might lead health care businesses to build too many facilities, and that those facilities would be too large and too fancy, and then patients would receive subpar care and be overcharged for that care to cover the extravagance. Never mind that in every other industry competition increases quality, lowers prices, and spurs innovation.
Just describing the way that CON laws actually work makes it easy to see what is really behind them: protecting established businesses from competition with newcomers. First, a would-be healthcare startup (or even an existing hospital that just wants to add more hospital beds or medical equipment) must complete an application to try to prove to the state government that there is a need for the new facility, beds, equipment, or services. The fees for filing that application can be as high as $25,000, while the cost of paying the lawyers and consultants needed far exceed that amount. The application can take months to complete and years to go through the approval process.
Once the application has been filed, the applicant’s competitors get to take them to court in an effort to prove that the new facility, beds, equipment, or services are not needed, and that the current market participants have patients taken care of just fine, thank you very much.
After all of that time, money, and effort, the application can easily be denied, making all of it a waste. It’s not exactly a business-friendly system, to say the least.
So how did having CON laws work out for Mississippi during the pandemic? According to the Reason Foundation, states with CON laws have exceeded 70 percent of their ICU capacity for an average of 14.99 days per month during the pandemic, while states without CON laws have done so for only 8.65 days per month. Cutting the length of our hospital bed shortages nearly in half during the pandemic likely would have saved lives and spared us from a lot of economic pain.
Mississippi’s CON laws made the pandemic more difficult, but they will continue to lower the quality of our health care, increase the cost of health care, and reduce our access to care well beyond the pandemic. This legislative session, Mississippi should join the twelve other states that have repealed their CON laws and be done with it.
Aaron Rice is the Director of the Mississippi Justice Institute, a nonprofit, constitutional litigation center and the legal arm of the Mississippi Center for Public Policy.
Recent months have seen an economy that is continually struggling with supply chain driven shortages. As the world grapples with these challenges, the evidence suggests that much of these shortages are because of central economic planning based on Covid-driven public policy.
In the complex world of the pandemic, Americans have been inundated with information on the possible causes. Fires in key factories, natural disasters, and the like have been propounded as contributing factors in combination with the “effects” of the Covid pandemic. Yet, the question must be asked how much of these factors are attributable to the effects of people actually falling ill. While the tragedy of these cases is very real, the pandemic's effects have been grossly aggravated by central government planning that determined “essential” and “non-essential” businesses.
Lessons from the Soviet Union Show that Central Planning Leads to Shortages
In order to understand how central government planning causes chronic supply chain shortages, it is helpful to heed the lessons of the Soviet Union. While the concept of shortages is relatively new to Americans, the Soviet Union saw consistent shortages, primarily for consumer goods. Long lines had many Soviet citizens waiting for simple items ranging from clothing to toilet paper. Shortages were so common, that when Soviet Parliament member Boris Yeltsin visited Houston in 1989, he was astonished by how well the grocery stores shelves were stocked, almost convinced that it all must have been staged just for his visit.
There was a reason that a shortage of consumer goods was a way of life in the Soviet Union. Using the Socialist economic model, the Soviet government engaged in centralized economic planning that prioritized certain sectors over others. The Soviets did this via 5-year plans that gave specific priority on outputs for certain sectors. While the plans were made to look good for paper and propaganda, such plans failed to account for unexpected circumstances and were determined by the minds of bureaucrats instead of being informed by the market.
Supply Chains Have Had Disruptions Before, Without Such Widespread Impact
In 2021, a casual read of the headlines could lead one to believe that many of the economic disruptions brought about by Covid just so happened to occur along with other unprecedented supply chain disruptions occurred that were unrelated to Covid. Yet, it is important to note that factory fires, hurricanes, labor shortages, blockages of shipping canals, geopolitical instability, and other factors are not new. These challenges have consistently occurred over the course of modern history.
While the effects of such challenges do have a real impact, the ability of the supply chain to respond to these challenges is the real test of strength. In former days, supply chain shortages in the free world were usually short-term and relatively isolated to specific sectors.
The laws of supply and demand were generally able to alleviate the pressures. As the demand for certain products went up, the cost went up as well. In turn, these additional revenues helped alleviate supply chain challenges. Lower then return as the supply chain system adjusted to the new demand. But as the lessons from the Soviet Union demonstrate, this can only happen when a free market is permitted to operate and respond quickly to unexpected challenges.
“Disaster Socialism” is a Prelude to Supply Chain Disaster
With Covid, many at the highest levels of government decided that the circumstances justified central economic planning based upon a model that many admittingly called “disaster socialism.” “Disaster socialism” is the idea that the free market cannot operate properly in a time of disaster and that government must implement economic controls. Under this application of “disaster socialism” certain businesses found themselves being labeled as either “essential” or “non-essential.” Meanwhile, the federal government did a massive welfare expansion program and moved America forward towards a more thorough economic reset.
Initially, the long-term effects of such policies were not as easily detected. The government simply pumped out money and mailed out stimulus checks to keep the economy afloat. But it wasn’t long before the realities of this arbitrary central planning began to take effect, particularly on the supply chain.
The Model of Covid Central Planning
The federal, state, and local governments adopted a two-pronged model of central economic planning during Covid. While not all jurisdictions applied this model in the same way, the basic tenets were the same. This economic planning model employed:
- Simultaneous ban on the operations of certain businesses that were arbitrarily deemed “non-essential.”
- Pouring federal funds into the economy through unprecedented government spending.
In the area of sector-specific planning, governments determined what elements of the economy would operate based on their priorities. For instance, if a state government could determine that liquor stores should be open (note, a large source of tax revenue) while restaurants should be closed.
While state governments were primarily responsible for lockdowns and the closure of “non-essential businesses,” the federal government stepped in. It provided the additional element of central planning that called for an influx of funds in the economy. This was accomplished through massive spending plans.
The primary effects of such spending plans brought about inflation combined with a decrease in active workforce participation. Regardless of whether or not they had been directly labeled as a “essential” or “non-essential,” all businesses now had to grapple with the consequences of inflated prices and a labor shortage.
The Effects of Central Planning on the Supply Chain
All of these factors come full circle back to the principle of supply and demand and its impact on the supply chain. The logistics sector has now been hit by the same collateral effects of central planning that other sectors have been impacted by. Furthermore, the logistics sector had to deal with additional challenges due to government restrictions on movement and a lack of raw materials.
As the demand for products increases to at or above pre-pandemic levels, the logistics sector has to deal with that demand while still attempting to address the backlog brought about by the effects of lockdowns and a decreased workforce. Like the failed socialism and central planning of the Soviet Union, the American economy is seeing what happens when those in power attempt to orchestrate the economy.
Yet there is a contrast to such failure, in 1776, the economist Adam Smith referred to the forces of the free market as an “invisible hand” that brings about the best outcomes for the economy and consumers. Such a belief in the free market has driven America forward. The whims of central government planning have failed the test of history. To see an effective supply chain in the future, America would do well to return to the free market principles of its past.
Mississippi currently levies specific taxes on timber, gas, and oil extraction within the state. These taxes are known as severance taxes. While these taxes are a small part of the overall state tax structure, the small and unpredictable revenues suggest that these taxes should potentially be reformed or repealed.
The amount of revenue from severance taxes has been on the decline. According to the Mississippi Revenue Annual Report (FY 2020), severance tax revenue was well over $80 million in 2012. However, that number took a steep decline between 2014 and 2015. Now, severance revenue is at its lowest point: a little over $20 million.
In 2020, the severance tax comprised a mere 0.5 percent of the total state tax revenue. When this much fluctuation occurs, and the tax makes up such a small portion of the state revenue, the question should be asked whether or not this tax merits being in place at all.
Mississippi’s severance tax rate rests at 6 percent and is evaluated based on the gas and oil’s value at the time. On the other hand, Georgia’s rate is based on volume and collects 3 cents per barrel of oil or 1 cent per 1,000 cubic feet of gas. Meanwhile, Pennsylvania, the largest producer of natural gas in the United States, does not have a severance tax and instead charges a well fee that is allocated to various local and state entities. In 2014, Elizabeth Stelle from the Commonwealth Foundation in Pennsylvania warned readers that a severance tax would harm local landowners, schools, and business owners for the sake of meeting the state’s “chronic budget shortfalls.”
How does this compare to other states? Thirty-four states have a severance tax and sixteen states have elected not to impose them. Comparing the rates and effects can be difficult in this respect as nearly all of these severance tax systems are constructed in many different ways and are designed by varying tax methodologies.
It also important to note that severance taxes are among the most unpredictable form of tax revenue. With this in mind, the question must be asked whether or not the state can really justify having the tax when the revenues are small and unpredictable. The tax carries very little value from a budgetary angle since the expected revenues cannot be predicted easily.
For instance, as the value for natural gas has decreased, the tax revenues have decreased. According to the Mississippi Department of Revenue, between 2008 to 2017, the value of natural gas has decreased in value by 24 percent. This substantial decrease led to a decline in the total amount of revenue collected from the tax. If the state had budgetary funds dependent on the taxable value of natural gas, the funds would see negative effects from the decrease in natural gas value. A better model is to base state budget projections on revenues with greater predictability.
Furthermore, while the severance tax impact on the total general fund is small, that does not isolate the taxpayers from its effects. The current tax rate of six percent on the total proceeds of fossil fuels and varying percentage rates for timber could actually have a real impact on the state's timber and fossil fuel industry. Both fossil fuels and timber are in competitive markets. A lower tax on these commodities could help Mississippians in the industry have a better market advantage.
Of course, that raises further questions as to why the value has decreased so steeply in such a relatively short amount of time. A popular answer is that renewable energy is taking the place of energies that traditionally contributed to severance tax revenue. As the oil and natural gas industry seeks to find new business models to keep up with new technologies and cultural preferences, the government should not overburden the industry with taxes that have relatively low value to the state.
As a general rule, taxes do not solve problems. In fact, problems are often solved when taxes are eliminated. If states like Mississippi are worried about the decline of the oil and gas industry and the reduction of government revenue from it, perhaps a viable option is to simply decrease or eliminate the tax and let Reaganite economics take its course. If severance tax revenue continues in the direction the trend is pointing, there may not be much to lose anyways.
A recent proposal from the Biden administration has called for the Internal Revenue Service to have more direct access to the bank accounts of Americans. Many of the leaders on both sides of the aisle in Washington have advocated for data privacy. Yet, this proposal has a hidden technological danger as it threatens the data privacy and protection of Americans’ bank accounts.
In the backlash against the proposal that certain American bank account information be reported directly to the IRS, much of the opposition to the proposal has centered around the danger of federal agents utilizing bank data to put Americans under financial surveillance. All of these concerns are well-grounded and legitimate. However, it is important to also consider that having sensitive bank account data centralized under one government agency carries an enormous cybersecurity risk.
Despite the claims that the proposed concept would help curb tax fraud, there has been no widely circulated data on how much it would cost the IRS to protect the data adequately. Worse yet, no analysis has been conducted on the enormous financial damage that taxpayers could face in the event of a catastrophic data breach.
The IRS has been a target of hackers for decades. However, a new influx of data in this level provides many more entry points and for hackers and a greater incentive for hacking operations to occur. There are multiple angles to consider this from.
Centralized bank account data would be a high-value target for hackers
In the first place, the IRS possessing a centralized repository of American bank account data would invite hackers' operations. Even though the proposal has not yet fully specified the exact type of bank account data that would be included, there would still be a danger. The advocates for this policy have insisted that the bank account data being gathered would be fairly limited. Yet, even the smallest amount of bank account information can be leveraged by hackers.
For instance, a hacker might get something as basic as a list of bank account numbers, the total amount of annual funds for each account, and the email addresses associated with the accounts. Then, the hacker could use this information to go after specific targets such as high-value bank account owners, retirees and elderly, and other particular victims with spear-phishing campaigns, spoofing, and additional attack methods.
These hackers could come from two primary sectors, foreign government-sponsored attacks, and criminal cybergangs. Although these entities utilize stolen data for different purposes, the danger is the same.
Government-sponsored attacks to get bank account information would carry several incentives for foreign governments. Foreign intelligence agencies can use hacking as a data harvesting method and then use that broad information to hone in on specific individuals. In the context of bank account data, simply having a confirmation of which business, political, and military leaders own specific bank accounts could serve as a precursor to initiate hacking operations against the bank itself in order to get more detailed information on specific individuals. In addition to intelligence, government-sponsored hackers could also potentially use this information in attempts to steal from the bank accounts themselves.
Non-government cybergangs would also have many uses for a centralized repository of IRS bank account data. While foreign government hackers often have a focus on gathering data for intelligence purposes, organized cybercrime primarily focuses on financial incentives. If they got access to this IRS bank account data, hackers could use this to single out potential victims with high-value accounts. Furthermore, by knowing where potential victims have bank accounts, hackers can use additional methods, such as installing fake banking apps made to look like the victim’s home bank.
Government agencies have a history of data breaches
Even if an organization has a perfect track record of cybersecurity with no major incidents, there is still always the possibility that a breach will occur. Yet, the federal government does not even remotely have such a track record. It is also notable that while different agencies have fared differently, the IRS has become especially notorious for a track of record filled with data breaches and compromises.
According to a Government Accountability Office (GAO) report, in 2016 the IRS encountered $12.2 billion in attempted identity theft tax fraud and paid out at least 1.6 billion in fraudulent refunds. This is a 13 percent fail rate. The report also found that the IRS had not followed best practices for cybersecurity. If the IRS cannot even always determine that they are issuing a refund to the right person, there is little reason to think that bank account data would be protected from fraudsters.
Yet, it is also important to recognize that the IRS is not in a siloed cyber-ecosystem with data sharing that is exempt from the generalized attacks that have targeted multiple agencies across the federal government. Current federal law explicitly permits the IRS to share data with federal, state, and local agencies for a variety of purposes, and it has been doing so for years. In effect, this means that no matter how strict the IRS cybersecurity standards were, there would always be a possibility that another government agency could have a data breach, and jeopardize the shared IRS bank account data.
For instance, in the recent and massive SolarWinds hack, the federal government saw data compromises across numerous agencies and departments. These entities included the Bureau of Labor Statistics, the Department of the Treasury, the National Finance Center, and several others. Thus, even though the IRS claims that it was not affected by the SolarWinds hack, this does not mean that taxpayer data in possession of these other agencies remained secure.
The potential for third-party backdoors
The GAO report also determined that one of the primary security flaws in the system was the policies of the IRS that permitted third-party software to submit and extract data with a lack of adequate cyber oversight. Specifically, the report found that much of the third-party tax preparation software had critical flaws that could lead to data compromises.
If the IRS required banks to report their account data, additional third-party software would likely be introduced into the IRS technology ecosystem in order to deal with the sheer volume of bank data. If the IRS had multiple third-party data reporters approved for integration with its system, each reporting software would stand as potential security fail point.
The broader effects of this would be twofold. On the one hand, if the IRS was too lax in its security compliance requirements, there would be a higher likelihood of taxpayer bank account data breaches. On the other hand, if the IRS implements extremely stringent cybersecurity compliance mandates, there could be an increased cost to the banks themselves and the third-party data reporting software developers.
Government financial monitoring of citizens has principle issues and technical dangers
It goes against the most basic American principles of limited government and due process for the IRS to presumptively monitor the bank accounts of citizens. Given that the entire policy proposal is based upon a faulty foundation, it comes as little surprise that the proposal carries extreme technological and security risks as well. Americans should be able to have confidence that their private bank account information will not be centralized in the hands of a government agency with a history of leaking data.
When it is shown that a policy is good and effective, it is often necessary to branch out that policy to other areas that need it. For more than five years in Mississippi, the state has benefited from Educational Savings Accounts program. However, despite existing for so long and having shown to be beneficial, only a very small portion of students are eligible. Mississippi should revisit and expand this program.
An Education Savings Account assesses the funds that the state has already allocated to each student. Then, the fund allows that student’s parents to use those funds for sanctioned educational costs such as private school tuition, online learning programs, and private tutoring. Conventional education funding models apportion taxpayer dollars to the exclusive control of government education boards and bureaucrats. On the other hand, ESAs allow parents to choose the best way to use their child’s public education funds, if they decide to use it outside of public school administration.
However, across the United States, Educational Savings Accounts have been implemented differently, bringing various results. As it stands currently, there are eight states that have implemented Educational Savings Accounts into their educational systems: Arizona, Florida, Indiana, New Hampshire, North Carolina, Tennessee, West Virginia, and Mississippi. States such as Indiana have broadened the eligibility of their Educational Savings Accounts program to a need-based system for students. Other states like Mississippi have limited eligibility only to those students with special needs.
Mississippi has certainly taken the right steps in providing this opportunity for students with special needs. However, broadening the eligibility for Educational Savings Accounts would give more students these alternative education options. Despite Mississippi’s Educational Savings Accounts program existing for more than five years, it still only makes up for about 0.06 percent of the state’s K-12 revenue. Additionally, only 19 percent of Mississippi students are eligible for the program, and only 0.1 percent of students across the state actually use this educational choice program.
In Mississippi, the problem goes beyond merely increasing awareness. Instead, the Educational Savings Account program in Mississippi is limited to only a small group of students. Mississippi would do well to expand the program, as other states have done.
For instance, in addition to providing accounts to special needs students, Arizona has expanded its program eligibility. This expansion now applies to those who attended a “D” or “F” ranked school, have been adopted in the state’s foster care system, and those whose parents were killed in the line of duty. This has aided a little less than a quarter of Arizona students, and the program continues to grow.
In West Virginia, the state has expanded its ESA eligibility to 93 percent of its student population. This policy has given West Virginian students and parents the ability to determine where their allocated education funding will go instead of leaving those decisions exclusively in the power of education school boards and bureaucrats. Students can attend public schools if they opt to do so, but the funds follow the student if they decide to pursue other educational options.
Mississippi has taken good steps in providing school choice to its students, but the policy is too limited in scope to be more than five years old. Expanding Education Savings Account eligibility would give Mississippi parents the choice to decide where their student’s education funding should best be spent.
Due to a decreased demand in light of the Covid pandemic and stay-at-home orders, the price at the pump in 2020 was artificially low since fuel was in relatively low demand. Yet, as the economy moves forward, gas prices have skyrocketed to extremely high levels. Despite these factors, some federal and state leaders have advocated for an increase in the gas tax.
As the economy continues to move forward, the demand for fuel has gone up. According to the Energy Information Administration, the average gasoline cost per gallon in the Gulf Coast states has gone from $1.85 in October 2020, to $2.95 in October 2021. This reflects an increase of 59 percent in just 12 months. Fundamentally, the cost of gasoline directly influences economic activity, particularly on the level of consumer spending.
Despite the market forces that are already driving up the costs of gasoline, some have advocated for an increase in the state and federal gas tax on top of these high gasoline costs. The key argument made for such proposals is the claim that tax increases are needed to increase funding for roads and bridges. However, the quantifiable benefits of increasing funding by raising taxes are questionable when one considers the fact that large amounts of funding have been allocated and then mismanaged.
While an increase on the gas tax might be easier to propose in the midst of low-cost fuel, the recent increases in fuel cost have demonstrated just how much of an impact permanent gas tax increases could have. An understanding of the effect of the gas tax on consumer spending provides some insight into this issue. Tax areas such as the corporate and personal income tax rates have a more general impact on economic growth and spending. On the other hand, the price of gasoline and its accompanying taxes directly correlate to consumer spending and economic activity.
A study conducted by JP Morgan and Chase compared consumer spending trends from periods with high fuel costs to periods with low fuel costs. This analysis determined that for every $1 saved at the gas pump, consumers saved 20 cents and spent the remaining 80 cents directly in the economy. In addition, the study found that approximately 18 percent of the increased consumer spending went to restaurants, 10 percent went to groceries, and the remaining spending was distributed across several other sectors.
All of these economic growth factors carry a strong argument against any increase in the gas tax. On the federal level, there have been proposals to raise the gas tax from 18 cents to 33 cents. On the state level, there have been proposals to raise the gas tax from 18 cents to 28 cents. This would equate to a 25-cent increase per gallon on just fuel taxes.
According to the Mississippi Department of Revenue, the state economy used approximately 4.3 billion gallons of gasoline in the 2020 fiscal year. 2.6 billion gallons were exempt from taxation, mostly due to a policy that government gasoline use is exempt from taxation. This left 1.6 billion gallons of gasoline to be taxed in the state. The gas tax proposals mentioned above would have both caused an approximate $400 million increase in the tax burden on Mississippians. Using the JP Morgan consumer spending metrics mentioned above, this tax-driven increase in gas prices could equate to $72 million in unrealized consumer spending at restaurants, $40 million for grocery stores, and $208 million in the remaining sectors.
Increasing taxes must always be compared against the economic impact of the tax increase. Rather than using gas tax increases to bring more funding to Mississippi’s roads, state leaders should encourage free-market economic growth by leaving more money in Mississippi pockets. As economic activity increases, the state’s citizens and government can go into a better economic position without increasing the tax burden.
The Chinese government recently clamped down on cryptocurrencies. Owning or brokering Bitcoin is now frowned upon, and mining digital money has been outlawed all together.
This isn’t the first time that China has acted to keep out digital innovation. For years, China has blocked her citizens from using many of the social media platforms and search engines – Facebook, Google, Twitter – that are ubiquitous elsewhere.
The actions of the Chinese government might impact these digital innovations in the short terms. But in the longer term, the behavior of the Chinese government does more to hinder China.
Following the move against cryptocurrency, the price of Bitcoin plunged. But, as of writing this, Bitcoin has bounced back. China might have developed her own indigenous alternative to Google and Facebook. Like all state approved monopolies, China’s clunky social media giants might not find it as necessary to innovate.
China has a long history of keeping innovation out. Whatever effect this might have had on the outside world, it ensured China fell behind. I suspect we are seeing the start of something similar today.
From the late 1970s until about 2015, China seemed to have escaped her authoritarian trap. Under Deng Xiaoping, Chinese rulers placed limits on their own authority. The politburo stopped trying to run everything, turning a blind eye when farmers gradually abandoned collectivized farming. China began to grow.
For three fleeting decades, maritime provinces were given more autonomy and special economic zones allowed to decide their own rules. After 1997, with Hong Kong once again Chinese, there were even two distinctive legal systems. Chinese output soared.
But under President Xi many of these reforms have been reversed. Hong Kong’s autonomy has been treated as an affront and eradicated. Deng’s term limits have been cast aside. Officials in Beijing have become increasingly interventionist and authoritarian.
This same mindset has now been applied to cryptocurrencies. Rather than let crypto develop, the Chinese state seems determined to nationalize the innovation, introducing a state digital ledger, and banning the non-state alternatives.
In the manner of a Medieval monarch, China’s government is becoming increasingly hostile towards its own entrepreneurs, as Jack Ma and co have discovered. As often happens when you attack the wealth creators, you begin to get less wealth creation.
For as long as anyone can remember, we have been told that China is the coming power. China would, it was often said, eclipse America and the West. I doubt it.
China seems to me to be in a trap of her own making. Far from being the Chinese century, I suspect future historians writing about the early twenty first century will note how China under Xi cut herself off from outside innovation and fell behind.
China might not be the rising power we once imagined. I am not sure that that makes her any less dangerous. Wannabe great powers that aren’t quite as powerful as they would like to be are often far more threatening to the international order than those that actually are.