Tuesday, January 26, 2010

Something Is Not An Answer, It’s An Excuse

Talifaitasi W. Satele

I find it quite ironic that the answer to COS’s departure due to government intrusion (the minimum wage law) is more government.

How nice it is for government to offer itself as the solution to the very problem it created. Hence the excuse that it must do something rather than nothing.

Yet the last thing we want is for our government to make matters worse. That is not an unreasonable demand for the People to expect of their elected representatives. Something is better than nothing— when that something is actually better than nothing.

If that is not the case, then lawmakers earn every single dollar we pay them by deciding to sit on Governor Togiola’s proposal.

Our objection to the governor’s proposal is the government’s poor track record in running businesses. ASG’s involvement into ASTCA’s business has meant that the semi-autonomous company’s revenues go to pay for the ASG’s loans rather than improving services and its infrastructure. ASG’s involvement into ASPA’s business has meant that the ASG can stall and refuse to pay its bill effectively forcing the semi-autonomous company to pass such costs along to the rest of its customers.

The reason government is not any good at running business is because it doesn’t have to play by the same rules as business. No business could do what the ASG has done with its two step-children noted above.

So here are some suggestions to improve the Governor’s proposal. 1) Hold the Governor, all sponsoring legislators and all private parties involved liable for the $5 million of taxpayer money. 2) The ASG cannot bail out the operation should it become a failure; if it fails, it fails, and the ASG cannot leave taxpayers holding the bag again and again.

Those two items alone will make his plan more market-driven and responsible as liability and failure for the parties involved are on the table.

Nevertheless, the Governor is right that lawmakers should offer an alternative. That alternative should be an agenda that incrementally reforms government in ways that lead the ASG to protect and respect private property rights, enforce contracts, level the playing field in terms of paying for needed government services, lower the costs of those services and reduce its bureaucratic burden and red tape.

That is an agenda that supports freedom, and history has demonstrated that freedom and prosperity go hand in hand. Now that is something that’s definitely not an excuse.

Saturday, January 09, 2010

The Market Will Determine Aspire's Fate

Talifaitasi W. Satele

Despite the strongly held beliefs of either supporters or opponents of the ASPIRE legislation, it will be the marketplace that ultimately determines whether it is a success or a failure.

The market is made up of people (both consumers and producers) who don’t respond to elaborate speeches or emotional arguments. They react to their own self-interests whether that be low costs, high profits or some other value they treasure more than the before-mentioned two.

In absence of ASPIRE, the market has determined the price of tuna. On the consumer side, that price is determined by a number of things: household budgets, the price of substitutes and complements, and market trends. From the maximum price that producers can trade their product comes the various forms of its economical costs: profit (which is called opportunity cost), labor cost and capital cost.

To use the force of government, as ASPIRE clearly does in its elaborate scheme of incentives and penalties, to fashion several portions of the tuna market will have effects on the others. Whether those effects end up being beneficial to the people or not is for the market itself to decide.

If this legislation increases cost, that cost has to be paid by someone: either the consumer or the producer. If the consumer faces a higher cost, he may choose to consume a different product (e.g. corned beef instead of tuna). Fewer consumers mean fewer cans of tuna to produce which means fewer jobs. If the producer faces a higher cost, he may choose to do something else or he may not be able to attract or even retain shareholders/investors as his profits dwindle. Fewer producers or investors means less capital which means fewer jobs.

Besides cost, let’s consider whether even reducing our catch of tuna is a worthy goal. Achieving that goal will not happen in a vacuum. Fewer fish being caught will lead to less supply, which leads to higher costs which leads to fewer jobs.

ASPIRE is supposed to be about “jobs, jobs, jobs”. The market, if it could speak, may testify that this legislation does the exact opposite.