Wednesday, August 30, 2017

If the Feds REALLY want to help....

"If you see the oppression of the poor, and the violent perversion of justice and righteousness in a province, do not marvel at the matter; for high official watches over high official, and higher officials are over them."
Ecclesiastes 5:8

Obviously, the President was in town yesterday.  His remarks and observations were basically fine.  He met expectations.

That being said, it appears the wheels are in motion for the Feds to cut Texas a big check for "disaster recovery."  We hope you'll forgive our lack of enthusiasm for this approach.  The history of federal "disaster recovery" efforts doesn't inspire confidence.

Instead, off the top of our head, are three actions Congress could take that would help fulfill the President's pledge that the Harvey recovery effort would be "better than ever before":

  • Repeal the Jones Act of 1920 -- This protectionist law mandates all goods shipped between U.S. ports be carried on U.S. built ships.  This raises shipping costs for everyone to insulate a politically favored industry from competition.  In the context of the Harvey recovery, considering that Houston is the second busiest port in the United States, it doesn't take a genius to see how lowering shipping costs will lower the overall cost of the recovery.

    While some "America first" types might prattle on about foreign ships or some such nonsense, the truth is that by raising the shipping costs for US firms outside a reasonable trucking distance, the Jones act incentivizes seeking foreign suppliers (eg. If politically driven shipping mandates make it cheaper to import from Honduras than ship from North Carolina, you shouldn't be surprised when there are more imports from Honduras).

    Note: While not related to disaster recovery, the Jones Act also increases cost of living in Hawaii and Alaska, so the coalition that could get this through congress is pretty obvious.
  • Repeal the Davis-Bacon Act of 1931 -- This sop to organized labor artificially raises the costs of Federally funded construction projects by imposing a politically driven wage schedule; in the seemingly inevitable event that the Feds cut Texas a big check, repealing Davis-Bacon will at least allow taxpayers to receive a decent return on our "investment."

    While we're on the subject, the original intent of Davis-Bacon was to make it illegal for African-Americans to compete with whites, which makes getting rid of it that much better of an idea.
  • Repeal the National Flood Insurance Act of 1968 -- Federal flood insurance subsidizes construction in flood plains.  If private insurance won't cover something, there's a reason for that.  Once claims for the current crisis are paid, the program should be eliminated.
Bottom Line: If we continue with stale, government-centric, thinking, we shouldn't be surprised when the recovery produces underwhelming results.  Eliminating crony federal protectionism, by contrast, will lower recovery costs while laying the foundation for new prosperity.  All it requires is Congressional political will....

1 comment:

  1. I have pushed for the elimination of the Davis Bacon Act both in my years in the Government and often done so since. Appreciate your highlighting info about it.

    Davis Bacon forces the government to pay contractors "so called" "prevailing wage rates." However, in fact it results in forcing Government to pay more than the local area prevailing wage rates -- and paying wage rates established by unions even when unions are not present or represented in the areas that the Government is contracting the work to be done in. It results in billions of dollars being paid which would not have been paid due to the influence of unions even when not present in the bid process as contractors.


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