Freedom Updates: September 24, 2003

Bruce Launches New Tax-Cut Initiative
Douglas Bruce, author of the Taxpayer's Bill of Rights, is looking for people to gather signatures on two new initiatives. One initiative would cut various Colorado taxes; the second would protect the right to petition. Signature gathering will begin on October 15, 2003, and last until April 15, 2004. Bruce is looking for volunteer and paid signature gatherers -- he may be reached at taxcutter@msn.com or 719.550.0010. The issues will be decided in the 2004 elections.

"Paid circulators who follow our training can expect to earn about $100 a day with no withholding. This would be a great fundraiser for a church, Libertarian group, or social club. We need 100,000 signatures on each petition, and payment is on a per-signature basis," Bruce said.

The initial $25 tax cut will increase $25 annually, Bruce added. It will apply to utility, vehicle, income, and property taxes. It will also include occupation (head) taxes and fees such as occupational licenses. Individual taxpayers can opt to forego the tax cuts. The provision will amend existing TABOR language in Colorado's constitution.

The petition-rights initiative, also a constitutional change, states, "Petition rights shall exist in all districts." This will expand the right to petition to counties, school districts, special districts, enterprises, and authorities.

"The initiative would establish a uniform set of rules for all state and local petitions. Persons who use taxpayer money to campaign for or against petitions would be fined and required to repay legal costs of both sides," Bruce said. The provision will also ensure quicker resolution of single-subject disputes and require clear guidance for changing an initiative if it's found not to fit a single subject.

The initiative will limit the number of bills the legislature can pass as "emergency" measures. The legislature typically invokes the "emergency" clause to exempt bills from voter review.

Appropriate Sentence for Abuse
Cheryl Preheigm of 9News writes September 19, "A father from Littleton was sentenced to 12 years in prison Thursday for repeatedly abusing his infant son... He broke his son's leg and fractured the boy's rib cage in 17 places... Until [the boy's] broken leg began to swell, there were no outward signs of his injuries, such as bruising. Police said David Gallegos abused Ethan while the boy's mother was at work." Surely that was a bad, bad thing for the genetic father to do. I have to wonder, though, what exactly locking the father up for 12 years -- at taxpayer's expense -- is supposed to accomplish. (I also find it strange that the mother didn't notice many of the injuries.) Wouldn't it be better to require the genetic father to work during those 12 years, and thereby support both himself and his son? It seems to me there needs to be some sort of system that's between a prison (full confinement) and a half-way house (relative freedom). If the genetic father were kept locked up at night, and allowed to work during the day in the community as he wore an ankle tracking device, that strikes me as a low-cost solution (paid for by the offender) that's better for all involved.

Open Range 2003
Shortly after I wrote a review of Open Range, I read of a modern-day range dispute. An AP story by Angie Wagner relates, "SNOWFLAKE, Ariz. -- Kent Knudson had been fed up with cows wandering onto his property for years. So when he came home one afternoon and found a herd in his back yard, he promptly got his .22-caliber rifle and fired. A red-and-white pregnant cow fell to the ground kicking, and died by Knudson's shed. Problem was, Knudson violated open-range law, a remnant of the Old West. And he learned the hard way that cows still rule the range: He was handcuffed and jailed, charged with a felony."

According to the article, open-range laws require property owners to erect fences if they want to keep out cows. Offhand, there's nothing about this system that seems intrinsically unfair. As Coase argued, so long as property rights are stable and secure, the initial assignment doesn't impact efficient use unless transaction costs are lower for certain arrangements. If the cattle owners originally had open use of a large tract of land, it's arguably okay to require new owners to assume responsibility for keeping cows out. The problem is that the what constitutes lowest transaction costs seems to have changed over time. Initially, it seems to have made the most sense to let cows roam freely, unless specific property owners fenced them out. Today, it seems less expensive to put the responsibility on cattle owners. This strikes me as a difficult problem (even for libertarians). The main point that is reinforced from my review, though, is that poorly defined property rights lead to conflict.

Legislation vs. Contracts for Property Rules
The Denver Post published a curious editorial August 19 concerning homeowners associations (HOAs). Citing an August 17 story from the business section, the editorial claims "many organizations often enforce restrictive covenants with an iron hand and little regard for fairness." HOAs govern about 80% of new housing developments, the Post reports. The editorial adds, "[T]he elected boards of the HOAs can be dictatorial in applying restrictive covenants. One retired woman paid $15,000 for a new roof only to be informed that the board had made a mistake in approving her request to use a certain style of roofing. The HOA ordered the woman to have the roof removed. Her response was to mount a successful campaign to replace the HOA board."

The Post calls for a legislative solution: "There should be a balance between keeping a community looking nice and allowing residents the freedom to enjoy their homes within reason. And if HOAs can't respect such fundamental concepts, the legislature should curb the obnoxious trend toward micromanaging other people's lives."

But whenever somebody suggests replacing voluntarily arranged contracts with forced legislation, the appropriate response -- the libertarian response -- is skepticism. The main problem with the Post's analysis is that the paper's writers look to the flaws of HOAs, but they apparently completely ignore the flaws of legislative intervention.

Yes, HOA rules can be enforced unfairly. Generally, they are not. As the Post reviews, it is possible to reverse unfair decisions. The woman mentioned was able to replace her HOA board -- something possible in a small-scale, opt-in democratic system. How much change would her efforts have earned on the state level or even the city level? Probably none.

In my HOA -- the organization absolutely essential to maintaining property values and a livable complex -- the rules are enforced fairly to stop things like littering and making too much noise. (We all share walls, so loud noise can be a real problem.) If somebody is fined, he or she can contest the fine, and the board decides the case. Finally, though, the courts may be used to decide disputes if internal mechanisms fail.

I'm certain HOA rules are sometimes stupid and they are sometimes stupidly enforced. But the alternative is legislative action -- which is usually stupid. As a last resort, if I find my HOA rules (which I agreed to live by in buying the residence) oppressive, I can move a few miles (or even a few hundred yards) outside of the tiny HOA area. If the state legislature makes the rules, though, I cannot escape them except by moving out of the state.

As the Post relates, 80% of Colorado home buyers voluntarily choose to enter into HOAs. There must be a reason most people find HOAs to be appealing. At the same time, 20% choose not to live in HOAs. The greater threat, though, are zoning ordinances and nuisance codes that are imposed by law and enforced by bureaucrats, and that are enormously more difficult to fight or escape.

On the free market, people are free to enter into contracts that govern behavior. People don't always sign contracts intelligently, and contracts do not always guarantee a lack of conflict. But the alternative to free markets is political force, where the appropriate presumption is that intervention will make good things bad and bad things even worse. I stand by my analysis from earlier in the year.

Alternative Currencies
The July/August edition of Nexus, "Colorado's Holistic Journal" distributed for free at health-food stores, contains an extraordinary article. Ravid Dykema interviews Bernard Lietaer in a piece titled, "Complementary currencies for social change." It is this sort of analysis that makes me quite hopeful indeed that libertarians can cooperate with the left, even on some economic matters.

Like the free-market Austrian economists, Lietaer sees harm in state control of the money supply. He says the International Monetary Fund imposes a "system that is currently unstable, unfair, and not working." While he is supportive of big-government programs libertarians dislike, Lietaer also appreciates the importance non-state-based money. "I define money, or currency, as an agreement within a community to use something as a medium of exchange," he says. He believes "privately issued currencies" will become increasingly important. As a current example, he notes, "There are 31 states in America that are paying employees to start such time dollar systems..."

However, Lietaer sees "complimentary currency" arising to work with existing "competitive currency." Libertarians, on the other hand, see cooperation and peaceful competition as two sides of the same coin. Thus, most libertarians would prefer to see the state stop interfering with currency entirely.

Dykema offers the most amazing line: "I think complementary currencies, barter included, should be tax-free, because they offer solutions to social problems." There you have it, folks: a leftist for tax cuts. If lefties are willing to drop taxes only when the currency is not controlled by the state, that's a deal libertarians will happily pursue. Next month, Nexus will interview Douglas Bruce. Okay, perhaps that level of collaboration is still a bit premature...