Weak GDP Keeps Oil Prices Down

The decline in oil prices has been anywhere from tough to catastrophic for states relying on severance taxes for their budgets. Alaska has taken a brutal beating and is on the brink of bankruptcy. North Dakota has experienced one of the largest contractions in GDP any state has seen in recent memory, shrinking the tax base as well.

Wyoming is having a slightly different experience, with a lighter dependency on oil than Alaska but a coal production that at its peak made Wyoming the world's second largest coal producer. The combination of gradually tighter regulations on coal, a global drop in energy demand thanks to recessions in Europe, China and Japan, and on top of that depressed oil prices has been a death-by-a-thousand blows experience for the Cowboy State.

In all the states where severance-tax revenue has declined substantially there are political wishing wells where legislators go to find a glimmer of hope that the good old severance-tax days are going to come back. Some of them think that the recent rebound in oil prices is only the beginning. 

Some media stories seem to reinforce that hope. For example, according to CNN Money:

New Entitlement Bigger than Social Security

With the federal debt exceeding GDP, a predictable return to trillion-dollar deficits and two credit downgrades, the last thing Congress should do is expand the welfare state in the United States. Yet that is exactly what Hillary Clinton hopes they will do if she is elected president in November. It is her ambition to add three new, major entitlement programs to the American welfare state. 

One of her new programs is a federal paid-family-leave program, also known as general income security. Nobody should be surprised at this: as I explained in my 2010 book Remaking America, Democrats in Congress have been pushing for general income security programs for many years. 

To find out what a federal paid-leave program might look like and what it would cost, it is a good idea to study the state-level programs that are popping up around the country. The best study object is the federal pilot program in the District of Columbia, which, if implemented at the federal level, would cost American taxpayers more than Social Security.

Completing the American Welfare State, Part 2

Yesterday I discussed one of Hillary Clinton's three welfare-state reforms, namely a federal paid-family-leave entitlement program. I used the recently-created program in New York as an example. I explained how enormously under-funded that program is. 

New York is not the only state enacting or considering a paid-leave program. With the threat of a federal program it is important to explore the state-level models already enacted or being considered. Emphasis should first and foremost be on the fiscal side of these programs, a side that seems to go completely unnoticed in the national debate.

Perhaps the most important example of a paid-leave entitlement is the pilot program in the District of Columbia. Sponsored by the U.S. Department of Labor, the program has "enthusiastic support from the Obama administration". Back in October 2015 the National Law Review presented the program:

Completing the American Welfare State, Part 1

While the public conversation is centered around Secretary Clinton's e-mails, no attention is being paid to what kind of welfare-state reforms she would like to impose on the United States. It may be worth keeping in mind that she was the ideological driving force behind President Clinton's attempt at single-payer reform in 1993 - the reform earned the "Hillarycare" nickname for a reason - and as recently as in May this year she declared that she once again wants the American people to accept single-payer idea. 

She is also a champion of general income security programs - known to Americans as "paid family leave" programs - and government-provided universal pre-school programs for all children in the country.

Privatizing the Regulation State

The American welfare state differs from its European counterpart in two ways: it still lacks a couple of major entitlement systems that have tipped European economies over the edge into perennial economic stagnation; and government's regulatory incursions into the economy are in some instances even worse here than in Europe. 

There are exceptional instances when market regulation can actually preserve the free market itself, such as to shield entrepreneurs and consumers from the destructive consequences of predatory capitalism. History is full of examples of how private businesses have used their might to drive competitors out of the market, for example by means of below-cost pricing, vertical integration to control key production inputs, etc. However, those examples do not dominate the history of capitalism and the free market - far from it - but they do remind us that the protection of economic freedom is an ongoing process, even when government is no longer its adversary.