What Works on the Small, Works on the Large

Recently my father-in-law visited from Minnesota and I really enjoy his company. We both love golf, classic rock, and my family, but when it comes to politics, we tend to have to keep our conversations short.

While we were both golfing we began discussing his future retirement, at that time he noted that he planned on moving to South Dakota. I knew he was from there originally, but I also knew he loved his adopted home. So I asked him why he was leaving and he said, "that's easy, South Dakota has a much better tax situation for retirees than virtually any state in the country." I cannot begin to state the many times he had told me how unpatriotic businesses were to leave the country because of tax and other laws.

With that I asked him, "so here you are, the average American, who is smart enough to change where you live to protect your wife and you from higher taxes, but you don't expect businesses to do the same thing with often large numbers of employees and even greater tax implications?" It is very rare to get him to get quiet once we gets started (and he would say the same about me), but he had that knowing look on his face that this conversation was over.

The United States has the second highest corporate tax rates of any industrialized country in the world and we are working hard to try to become number in this dubious area. Businesses are about efficiency, profit, and looking out for the interest of its stockholders. Taxes, like regulations and licensure laws, are just the fixed costs of doing business. If the costs get too high, businesses have no choice but to move to better places for commerce. It isn't personal, it is just business.

Most of the things that work or don't work on a micro level, translate the same on the macro. Because in both cases they include human nature and humans tend to respond to incentives (and disincentives) the same way. If the government could eliminate their fantasy and replace it with reality, all of our lives would be so much better.

Kevin Price is Host of the Price of Business, the longest running show on CNN 650 (M-F at 11 am), AOL Radio, and CBS Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com.

Privatize Those Bridges!

Any regular reader of this blog knows I am frequent viewer of Fox News in general and Cashin' In in particular. One of the debates through out the business programming day has been infrastructure versus social programs. During the debate, one of the participants -- when reviewing private options -- laughed and said "we are not talking about privatizing bridges." She should, because such an approach is working around the world.

In France, the government worked with a private company to create the Millau Viaduct (photo). This bridge has the highest pylons, highest bridge deck, and highest mast. It is an engineering masterpiece. Both beautiful and functional, it is being funded by the individuals who are using it and not be the general French population who may never have anything to do with it. This approach is refreshing to a country noted for being over taxed and it needs to be done more often.

The Wall Street Journal pointed out that:

In Britain, Margaret Thatcher's privatization movement in the 1980s spurred both the sale of existing government assets and public-private construction projects. Later, the fall of the Soviet Union produced a vast round of privatization of public assets in formerly Eastern bloc countries. The U.S. Department of Transportation estimates that world-wide there have been more than 1,100 public-private deals in the transportation field alone in the last 20 years, with a value of some $360 billion.

The Journal article also points out that similar projects have come close to my home:

Texas has made private capital a key ingredient in a vast road-building project known as the Trans-Texas Corridor. The state has already entered into a build-and-operate deal with an international consortium (Zachry American Infrastructure and Cintra) to construct a 320-mile toll road for an upfront payment of $1.3 billion to the state and the right of the private owners to operate the toll road for 50 years. In California, a private company is building a nearly 10-mile, $800-million extension of Route 125 south of San Diego in exchange for a 35-year lease to operate the road and collect tolls.

I use that toll road gladly and usually daily. Why should people in Abilene, Texas pay for my toll road? The fact that I have to pay, there are usually less drivers on it and it becomes a more convenient way to travel. One of the things that frustrates me is the ferry off of Galveston that is state funded and doesn't cost a penny to ride. On the boat you hear a message about the "free ferry" funded by "the state of Texas." What is the state of Texas? People who live 15 hours and more away and have never even seen Galveston. These people are forced to pay for it?
If private ownership is involved with bridges, projects will get done on time and within budget.

As far as maintenance, Aristotle argued "that which is common to the greatest number has the least care bestowed upon it." Again, if private interests are involved, the long term care of the roads is far more assured.

There is no doubt that our infrastructure has been neglected and needs attention. But there is also no doubt, in my mind, that the answers are found in private solutions. (See video above).

Bridge Tragedy Provides Communications Warning

Hopefully my father in law is in Alaska. That's the rumor at least. Minutes after the recent tragedy of a destroyed Minneapolis, Minnesota bridge, my wife and I were on the phone trying to reach her dad, Bill. Besides being the father of my wife, he's my golfing buddy who got me turned on again to the sport. We wanted to phone him.

As of the time of this writing, we haven't found him. In fact, all we have found is recordings each time we call telling us of "technical problems," that we are sure are related to the disaster that has had several casualties and fatalities.

Again, rumor has it, he's in Alaska. Everyone who knows for sure is in the Minneapolis-St. Paul area. I don't see making a successful phone call any time soon. We will soon try emails, but preoccupation with the tragedy probably will delay a response.

This is a terrible tragedy and I'm not trying to under estimate the magnitude of this tragedy. However, it could be worse. Much worse. September 11, 2001 proved that. This disaster reminds us that, in spite of the wonders of modern communications, we still have a long way to go.