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Policy discussion over breakfast good start to day

Fred Smith, the founder and president of Competitive Enterprise Institute (CEI), was in Jackson last week talking to the Mississippi Leadership Forum. I met with Mr. Smith for breakfast at the Marriott downtown to chat about issues affecting Mississippi businesses and really got an earful.

By way of background, CEI is a public policy think tank dedicated to free enterprise and limited government. Mr. Smith has appeared everywhere from CNN’s “Crossfire” to “The G. Gordon Liddy Show.” He has written extensively for leading magazines and newspapers, such as The Wall Street Journal, National Review and Forbes magazine plus appearances on Jim Lehrer’s and Bill Moyers’ news programs.

Our chat rambled over a plethora of current issues facing both Mississippi and the rest of the nation. Being a fiscal conservative myself, I found his views were generally in sync with my own. However, his ability to reduce complex issues to their lowest common denominator and put it all in context was most impressive. Space limitations being what they are, I will just touch on a couple of things we discussed and, hopefully, bait the hook for some analytical thinking about some of the emotion-charged issues facing our society.

The entire healthcare debacle stems from lack of competition in the industry. Insurance companies have little incentive to curtail the cost of healthcare because they merely pass the increasing cost through to the policy payers, which in most cases are employers who are hesitant to squeeze the system for fear of causing morale problems. Health savings accounts, which are opposed by the healthcare industry because they introduce a consumer element into the equation, could help solve the problem.

The unemployment resulting from outsourcing manufacturing jobs will be absorbed in the service sector over time. To prove the point, early on, American workers were almost all engaged in farming and now only a small percentage are working the land. All those other people found useful work doing something else. A free market economy will adapt and absorb the available workforce. Technology makes it easier for low-skilled workers to prosper in new occupations.

Pouring more money into education without reforming the system is stupid and perpetuates poverty. Introducing the element of competition into the education system would cure the problem. The entire education system is excessively bureaucratic, non-competitive and concentrates on excluding prospective teachers through the credentialing process. Education is the only profession with no hope of financial reward for doing an outstanding job.

Some options to improve the education system include:

• Offer students and parents choices through a voucher program.

• Curtail credentialing to allow more aspiring teachers to teach. The bulge of soon-to-be retiring, experienced Baby Boomers could help alleviate the current teacher shortage.

• Build financial rewards for superior performance into the system.

Civil justice reform, also known as tort reform, is signaling the end of the progressive era of American governance. Government should promote the rule of law and give up trying to equalize everyone by taking from the rich to give to the poor. Government should curtail its role in everyday affairs rather than seeking expanded opportunities for its own growth.

The national flood insurance program is an example of improper intrusion of government into private affairs. With the advent of the program all incentive to manage risks in flood-prone areas was eradicated. Now, the taxpayers are assessed taxes to insure against losses for mansions built in high flood risk areas. If commercial insurance companies won’t write the coverage, then the taxpayers shouldn’t have to pay the tab either.

Another example of government overreaching its bounds is the famed tobacco settlement, the Multi Settlement Agreement (MSA).

The settlement constitutes an unlegislated tax on business by attorneys general from a number of states. In fact, the MSA may violate the U.S. Constitution, which, through the Compact Clause, forbids states to enter into unilateral agreements without federal approval.

The CEI has filed a lawsuit in federal court alleging the illegality of the tobacco settlement on those constitutional grounds and a ruling is expected shortly.

I have assumed that, odds are, the U.S.-based automobile manufacturers are doomed. Smith disagrees. He believes, though the U.S.-based automakers are facing the toughest situation ever faced by any industry, they may prevail and reinvent themselves as viable players.

The welfare state created by Ford and General Motors has failed because they don’t have control over their workers. Failure is inevitable for all welfare states so the fall of U.S. based automakers was no surprise. However, they’re a capable, industrious bunch and they may be able to regain control of their business and survive.

When I quizzed Mr. Smith about the Bush administration’s fiscal record, I found that we were in agreement on that subject also.

President Bush is many things, but a fiscal conservative is not one of them. By amassing a huge federal deficit he is paying government bills with a credit card rather than with cash. The error in pushing for tax cuts was that he should have focused on controlling expenditures before tinkering with the tax system. However, that would require fiscal conservatism, which is not on President Bush’s radar screen.

An enjoyable interview with an eloquent, informed man. Though many will disagree with his conservative stance on issues, few can argue that he hasn’t thought through the issues facing our nation and formed opinions on what needs to be done. We all should care enough to make ourselves informed and take a stand on the direction our country should be taking.

Thought for the Moment

You are never too old to set another goal or to dream a new dream. — writer C.S. Lewis (1898-1963)

Joe D. Jones, CPA (retired), is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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