Friday, July 29, 2005

Taxes To Support Fono Allowances

The House will impose upon the people of American Samoa a ten-cent tax on 500-milliliter water bottles in the near future. The scheme devises 2 cents for salary increases for public school teachers, 2 cents for salary increases for professional medical personnel, 4 cents for the ASG general fund and the last two cents (you've guessed it) for Fono playtime.

We all knew this was coming. The Fono, with Governor Togiola’s help, increased their own allowances by 100% with FY 2004's $4 million surplus and leftover proceeds from the Val insurance settlement. Now there’s no more money, and the Fono is now targeting their own constituents with its tax increase to supplement their lavish lifestyles in Fagatogo.

The crime here is that the House is hiding behind good purposes to push its agenda. Our public schools, LBJ and other services are important to us. What a shame it is that our representatives would use these merits as a backdoor to confiscate more of our money. The Fono continually accuses private enterprises for making a buck after an honest day’s work (McDonalds, foreign businesses, etc.), and yet it has the nerve to demand more greenbacks for their allowances off our backs without even breaking a sweat. Hypocrites.

Before the ASG levies its tax on us, we should consider some important economic factors for a second. What is the elasticity of demand for 500-milliliter water bottles? In other words, how bad do people of Am. Samoa want them? If consumers can readily substitute the product or discontinue its use when its costs rise, a tax increase may only provide a short-lived surge in revenue collection. Budget director Magalei Logovi'i is right to worry that “future years’ collections” may drop. Consumers can easily adjust their current spending behavior quickly, yet the ASG doesn’t know by how much and to what effect. It never knows, does it?

According to Lawrence W. Reed, president of the Mackinac Center for Public Policy, “Congress dramatically boosted taxes on boats, aircraft and jewelry in [1990]. They expected $30 million in new revenue in the first year from the new taxes on those three things. We now know that the higher levies brought in just $16 million. We shelled out $24 million in additional unemployment benefits because of the people thrown out of work in those industries by higher taxes.” $16 million minus by $24 million equals $8 million in the red, which is where the ASG likes to be apparently.

Representatives, senators and the governor never get it. All they see are allowances without even considering the impact on ordinary people. The people of American Samoa should not give the Fono a free pass on this tax increase, under the guise of supporting public services, especially since not one reader of SamoaNews wrote in to support the Fono allowance increase. Don’t legislators brag about how well they listen to the people? I guess they don’t seem to do that when it comes to their own pay.

When Senators accused House representatives for not showing up to session, the people of American Samoa should have breathed a sigh of relief. Because whenever this legislature gets together, everybody should start running for her or his pocketbooks.

Sunday, July 17, 2005

Public Employees Profit And So Does The Governor

Officials in the ASG have been spitting out a lot of rhetoric about the evils of profit and money. It’s very typical of politicians to take the moral high ground when it comes to this subject. However, we should always question their integrity whenever they criminalize moneymaking activities.

Togiola says we need a government airline because “airlines are only looking for profit and gain.” So our governor is implying that neither he nor public employees look out for profit and gain, and so travel services are better off in their hands rather than in those of greedy entrepreneurs.

But what does it mean to profit? Profit is the money one makes after paying for his costs. A businessperson profits after he makes enough money to pay his employees, rent, utilities and other expenses. How about public employees and the governor, do they profit in a similar fashion?

It turns out that they do! Public employees and the governor do not work for free nor do they break even. They need to make more money than it costs them to pay for breakfast, drive to work, catch the bus, eat lunch and all the other expenses they incur to complete their work day. What they make in excess of their daily costs is their profit!

And if public employees were not trying to increase their profits, then why do they keep asking for pay raises?

Profit entices entrepreneurs to do things at the lowest cost available. The lower their costs, the higher their profits. Non-profit and government agencies do not have the incentive of lowering costs because they can always raise taxes and do not face competition. Accountability is not sought unless someone kicks them in the butt (FBI, DOI, GAO, etc.).

It is not common for the spirit of charity to be lost on profit seeking individuals. Many successful people and organizations find value in giving away their money to causes they care about. In his book, The Enterprise of Education, James Tooley notes, “The ‘cost per achievement point’ in the private unaided schools (in India) is less than half that in the government schools (in India).” He also goes on to say, “Impressively, the great majority of the (private unaided) schools offer significant number of free places – up to 20 percent – for the poorest students, allocated on the basis claims of need checked informally in the community.”


For-profit schools doing better than public schools and even providing free seats for the poorest of poor. Wow. I bet you won't hear that from a politician.

Togiola should put the blame for the lack of airline competition where it belongs: the Jones Act (Merchant Marine Act of 1920). This federal law prohibits foreign carriers from operating between two U.S. ports, and that is why Hawaiian Airlines is our sole provider. But considering our racism and anti-immigration stance, perhaps foreign airlines shouldn’t even bother with blessing us with their for-profit business.

Saturday, July 09, 2005

Minimum Wage Scam

After employee representatives Bridget Martin and Jeff Turkus advocated a living wage during the minimum wage hearings, one must ask whose interest they are really looking after. It is very tempting to believe that such a law is in our best interest, and that we should honor these two men for being our heroes in shining armor.

Between 1996 and 2002, 82 cities and counties in the United States enacted living-wage laws. Such wages ranged from $7.00 to more than $13.00 an hour. Economist Jeffrey M. Perloff stated, " Consequently, these laws may lower the quantity of labor demanded for the employees of covered firms because uncovered firms (including businesses from nearby cities) can hire labor at lower wages."


Competition between different communities is exactly why the U.S. Congress imposed the federal minimum wage. Representatives from several states would loathe the fact that other states would have lower wages for the same type of work. Thus, a high-wage state would lose jobs to low-wage states. The late Murray Rothbard, an economist with Ludwig von Mises Institute, noted, “During the 1966 Congressional battle over a higher federal minimum wage, the late Senator Jacob Javits freely admitted that one of his main reasons for supporting the bill was to cripple the southern competitors of New York textile firms.”

Another economist, a Nobel laureate, the late Gunnar Myrdal, stated in his book, An American Dilemma, that the 1930’s minimum wage law had hurt African Americans the most. Since blacks were willing to work in conditions and for pay not favorable to most whites, employers ignored their racism and prejudice to employ black workers. As soon as the government forced wages up, employers had no incentive to ignore their bias. We should thank the government for encouraging discrimination with its intervention into the marketplace.

It seems clear to me that Mr. Martin and Mr. Turkus are looking after their own interests and not ours. We would be accused of the same if we tried to impose our minimum wage laws on countries with whom we compete. Do we care about their poor? Hell no. What we care about is that their low wages may take our jobs away from us one day. Using the same logic, is Mr. Martin and Mr. Turkus trying to get us to raise our wages so that less jobs would migrate from the mainland and Hawaii to American Samoa?

Who’s being immoral here?

Jobs don’t create themselves. Workers don’t create their own jobs either. Entrepreneurs, who organize everything, put up the capital and take the risk, create jobs. StarKist creates jobs. McDonalds creates jobs. Local and foreign businesses create jobs. Employee representatives and politicians do not.

The most moral way to set wages is through negotiation between employees (unions) and employers without state interference.


Friday, July 08, 2005

We Need More Money

It is only in government where the answer to every problem is, “We need more money.” When the hospital has shortages of medical supplies, the government says, “We need more money.” When our schools abuse and fail to teach our children, the government says, “We need more money.” When the police brutalize suspects, the government says, “We need more money.”

If McDonalds, or any private firm for that matter, was not financially accountable, the last thing any of us would say is, “We need to raise taxes and give McDonalds more of our money.” Either the company shapes up or ships out, otherwise, Krystal Burger will make a come back.

Public employees simply cannot match costs to revenues. No one can when the source of funding is indirect. I wish we were all mind readers and can tell whether someone really needs a service or not. The only method of measuring how much someone needs something is price, and that happens to be the most moral way. Any other method amounts to government intrusion into your private life to investigate whether or not you’re abusing the system.

Paying for what you receive has much more value to it than just responsibility. Having public services depend on user fees protects the less affluent and less influential person. If the police do not protect a poor minority neighborhood, for example, then the quickest way for that community to seek relief ought to be to stop paying the police. Poor people may not pay high income taxes, but in most states, they pay a sales tax on everything they buy, which goes into the general fund. If only the poor can direct their sales taxes to another security firm to provide just the basic services, then that will really make the police want to serve and protect them then.


When there is a disconnect between payment and service, such injustice as discrimination and favoritism will exist.

And you would think that as more security firms take up more responsibility from the real police, taxes would come down as the real police have less to do. However, that is simply not the case, and there are tons of private security firms in America. If more private schools started to educate more of our children, the last thing the ASG would do is call for a decline in taxes and funding for public schools. The sad fact is that politicians’ careers depend on hand outs to friends and family, raising the cost of living for the rest of us honest folk.

We can’t get around the fact that there is no such thing as a free lunch so why avoid it. While we pay our way out of the hole, we will not only find honor, respect, dignity and responsibility, but we would also enjoy better services now and cheaper rates further down the road. That is what privatization and open competition provide for.

There is fear that a few of us may not make the cut, but our history of charity precedes us. Let’s put faith in that again. I appreciate "begging alongside the road" because at least those people have the decency to ask. Members of the Fono, on the other hand, would sign legislation from the comfort of their offices to take more your money without your permission.


Where's the decency in that?

Monday, July 04, 2005

Celebrating One's Independence Day

Today, on July 4, 2005, many will be celebrating the birth of a country. Today, I ask that you celebrate the birth of the recognition and protection of the individual. Countries come and go, empires rise and fall, but on July 4, 1776, our forefathers enshrined individual rights in the Declaration of Independence. On July 4, 1776, government was instituted among Men, not above Men.

Tonight, pop off a firework in honor of yourself. If anyone asks why you are so self-serving, just say, “I ask not what my country can do for me, but I ask what I can do to take care of myself and my love ones so that the rest of country doesn’t have to.” Now that’s real independence.

Go out and enjoy it, celebrate it, be unashamed of it and fight to protect it.

Happy Birthday good old U.S. of A.

Saturday, July 02, 2005

Healthcare Is Not a Right

The financial crisis at the LBJ draws many criticisms about the role of government in providing universal healthcare. Many people, like Senator Moliga and Taimane Johnson, believe that the ASG and the Fed have that responsibility because healthcare is supposedly a right. Along with healthcare, many others advocate rights to a living wage, to a good education, to a home, to a ticket to Hawaii, to run a business without threat of competition and to a full course meal. All of these rights at the expense of taxpayers.

Soon, there are going to be enough votes to create a right to free manicures and haircuts. Obviously, a majority vote to steal from Peter to pay for Paul’s haircut does not make thievery alright with the Lord above. So if we don’t have a right to a free lunch, what rights do we have?

When people talk about rights, many think about the first ten amendments of the Constitution, known as the Bill of Rights. These laws explicitly state what government cannot do to its citizens. They do not state what the government can do for its citizens. The first amendment is “Congress shall make no law…abridging the freedom of speech.” It does not say that Congress shall raise taxes to pay for people’s opinions. Free speech is not a right to speak at taxpayers’ expense; it is just the right to speak. Rights are not subsidies; they are freedoms to act and to own without the state or anyone else interfering.

You have the right to live and to own property and the liberty to do with your life and your property as you choose. Obviously, if you live at someone else’s expense, as in children living with their parents or tenants renting someone’s home or employees working for businesses or writers expressing views on SamoaNews, you have to play by that person’s rules because its their property not yours. As long as those rules don’t infringe your own rights to live and own property, they are justified, and you can either accept them or not patronize the owners by taking your business to someone with rules you agree with.


The idea of a right to universal healthcare is gaining popularity in the mainland. We should ask Senator Moliga what would happen when the people who pay for our medical care today expect someone else to pay for theirs as well tomorrow. There are close to 300 million people in U.S. Who’s going to pay for all of them and then us? Shortages today, shortages tomorrow, and shortages well into the future.

Once, we were warriors. We took pride in taking care of ourselves a long time ago. We may not have had a lot back in those days, but what we did have was ours because we worked for it. Now, our officials in government seem all too eager to catch the crumbs that fall off the Uncle Sam’s table and shrug off reform by increasing taxes.

All in the name of the bogus right to healthcare.