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Welcome to a special edition of the Boys Wear Pants blogcast. This is an election edition. I have a special guest on the program; his name is Bill Peirce [pronounced “Purse”] and he is currently running for the Libertarian candidate for Ohio Governor. Just to give you a little bit of introduction here; Bill grew up in Lexington, Massachusetts where his ancestor Solomon Peirce was wounded in the famous first battle of the American Revolution. He was an Eagle Scout and earned a BA in Economics from Harvard University. He then went on to study at the American Institute for Economic Research, eventually earning his PhD in Economics from Princeton University. He is currently Professor Emeritus of Economics at Case Western Reserve University where he is also the chair of that department. Bill has written several articles and books, among them one titled “Bureaucratic Failure and Public Expenditure.” He has been married for 40 years, has three grown children and a granddaughter.


Josh: Bill, welcome and thank you so much for agreeing to do this.

Bill: Well, thanks Josh for inviting me.

[There was a story on the Columbus news about candidates using MySpace pages to attract voters and Bill was named as the candidate having the most friends on MySpace. Your humble host is proud to be included as one of those MySpace friends.]

Josh: Well, I guess I owe you some congratulations. You made some pretty big news in Columbus here yesterday. You finally made the news actually. I saw that your MySpace article came up and people can go to your website and watch the actual clip but that is a huge advance for a third-party candidate to actually be mentioned and named on the news and I think its an outstanding accomplishment.

Bill: Yeah, well one of my good volunteers has worked very hard on that and I’m glad we were successful on that front.

Josh: Absolutely. I’ve been following your candidacy since you announced it last year and I can really feel some momentum building up there so I’m happy to have you on the show and to talk about some of the things that you’re standing for and some of the ways that you’re going to change Ohio for the better.

Josh: So, let’s talk about Eminent Domain and Bogus Blight. This is one of those things that just gets me fired up. The first time I ever heard about it was on a John Stossel report a few years back and I know it’s one of your big issues also. I’d like to introduce the topic by introducing a quote from Supreme Court Justice George Sutherland. A long time ago, he said

It is not the right of property which is protected, but the right to property. Property, per se, has no rights; but the individual--the man--has three great rights, equally sacred from arbitrary interference: the right to his life, the right to his liberty, the right to his property…The three rights are so bound together as to be essentially one right. To give a man his life but deny him his liberty, is to take from him all that makes his life worth living. To give him his liberty but take from him the property which is the fruit and badge of his liberty, is to still leave him a slave.

To me, that says it all. Eminent Domain is when the government seizes your land and pays you a value for it that you have no leverage in setting the price for and then leaves you without your property which, as Justice Sutherland said, is an extension of your liberty and life and it cannot be separated except through tyrannical means of taking it away. So, tell me your feelings and plans on how to battle this, what I consider to be an egregious violation of personal liberty.

Bill: Well, first of all, I agree with you that it is egregious. And as I’ve traveled around the state, it’s something that strikes fear in the hearts of lots of ordinary people—that the government is going to come and take their land for some reason or no reason or to give it to somebody else and it really is outrageous.

We had a favorable decision in the Norwood Case and the good people, Carl and Joy Gamble and Joy Horney, who had fought this for years with the help of the Institutes of Justice, were able to reclaim their property in Norwood outside Cincinnati. But that’s not the end of it. There are still problems because the court ruled specifically that the state could still take land because it is “blighted.” They couldn’t take it because it was deteriorating but they could take it if it was blighted.

Josh: What exactly is “blighted?”

Bill: Yeah, well that’s the problem.

[Laughter]

Bill: I think blight is in the eye of the beholder. The Eminent Domain Task Force of the Legislature has worked on this during the year and there are some good people on that but they weren’t able to put in a really tight definition of blight and the Legislature is going to have to work on it.

But I think as long as that standard is in there at all, we’re in trouble because blight ends up being defined the way it was in the Lakewood case where the house is blighted if it doesn’t have a bathroom on the first floor or if the driveway is two ribbons of pavement with grass in between (which is what every environmentalist tells us we should have). And so on down the line, there are all these really arbitrary and artificial standards: the houses are too close together (which the New Urban people tell us is what we should want).

So it really becomes a matter of what is current urban planning fashion rather than something concrete. And it’s easy to go to the extremes and say, “If somebody is not paying his taxes, the house is collapsing and nobody is claiming it, then it’s blighted.” But you don’t need a blight standard for that because we have ordinary procedures for dealing with abandonment of property and foreclosure if people don’t pay their taxes. And maybe those should be tightened up or speed up so that the places don’t’ sit there for years—but that’s a separate issue.

When we’re talking about blight and Eminent Domain, we’re talking about somebody who is living in a house and the city comes along and says, “No, we don’t want you living there because…the paint’s peeling.”

Josh: Do you think there are malicious forces behind that, you know, wanting to tear down and put up a shopping mall 9 times out of 10?

Bill: Yeah, there certainly are these forces and if, once you say to a developer, “Gee, if you want that property, just pay for a study and show that it’s blighted and we’ll take it for you;” then you set things up so that it can be very, very unsavory.

What’s to prevent an unscrupulous developer from bribing the city officials? Now, I’m not saying that happens every time but if you set up the situation that is really conducive to bribery then certainly it’s going to happen sometime.

Josh: Agreed. Agreed. So, do you think it’s a matter of public education on one hand, letting people learn about what Eminent Domain is and then, on the other hand, also attacking it through the Legislature and setting up barrier and stop gaps so that doesn’t happen?

Bill: I think we’re going to need a Constitutional Amendment. I’m worried about the Legislative approach. We have several people in the Legislature who are pretty good on this issue now and they might get a good bill through but two or three years from now, when nobody’s looking, that could be amended very, very quietly so that you’d never know what hit you.

The other problem is that the court decision said that you can’t take property solely for economic development purposes but it wasn’t clear what else you had to add to it. I think that, very quickly, there will be a whole industry of consultants who can say, “All right, we want this for economic development but we can add these items to it and it will get through the courts.”

Josh: So the loophole finders?

Bill: Yeah, the loophole finders. And very soon, you get a whole industry of who have all the right words in their word processors and they can just crank out these studies and we’re no more protected than we were before the Norwood case.

Josh: Right. Well, I think it’s an enormously important issue and hopefully people will wake up and realize that every state is dealing with this problem right now, not just Ohio.

Bill: Yeah, that’s right and whenever I’ve gone around the state talking to people, I think that at least 95% of the population of the state wants to have more protection and the only people who don’t want that protection are the politicians who are scared of the developers who have a lot of money to contribute and also of the urban planners, the big city economic development people and that whole group who think they need Eminent Domain in order to make the cities grow. And that’s just demonstrably wrong—these big economic development projects bulldoze a renewal; it just hasn’t worked.

Josh: This just kills me because, as a Libertarian, this is one of those times when you say, “Yes, the government should be stepping in right here but they’re void, they’re absent, they’re gone.

Bill: Yeah, well government is supposed to protect our rights and life, liberty, property and all those rights like free speech and free press and freedom of assembly and so on. That’s the role of government. But not to take away property.

Josh: Whenever anyone asks me what a Libertarian is, I just give them a one sentence response and say, “You know what? I believe that citizens should be protected for their life and their property and they should be [prevented] from infringing upon the life and property of other people—that’s what government does. If it goes beyond that, it’s in the realm of some kind of tyrannical gray zone.

Bill: Well, you can say, “Get together and do something like build a road or have a city hall or something. So there is room for a little bit more but the basic, legitimate function of government is to protect individual rights.

Josh: So the law, in other words, is like each individual giving up a little bit of their right to defend their life and property for the greater collective good and that law should also serve that same function.

Bill: Right, right.

Josh: But does it anymore?

Bill: Well, we certainly don’t want anarchy; that isn’t very comfortable for anyone—even very strong people with big guns have to look behind them all the time in anarchy. So there is a role for government but it should be just a small part of our lives, just looking out for our rights and then getting out of the way so that we can live as we want to live.

Josh: I know we romanticize the pre-Civil War era here in America but you almost have to wonder what it was like to be an American citizen back then in their relation to the government. I mean, it was nothing pretty much; it wasn’t an entity that dealt very much in the normal lives of people at all. But since then, it’s pervasive.

Bill: Yeah, and of course the role of the Federal government has changed most markedly. I have a friend, also a Libertarian, who grew up on a farm in Tennessee in the 1930s and 40s and he said that you hardly even knew that there was a Federal government around.

Josh: Wow!

Bill: And then in the 30s, you started to get all the agricultural interferences and various other things but it has really changed since then. Now, of course the state government hasn’t changed as much except that its’ now spending a lot more and therefore is able to interfere with our lives a lot more.

Josh: I know coming up and getting into politics; I never really thought of the state government as being that important. I mean, you vote, as Archie Bunker said, “I only vote in the big elections!” You know, “I only vote for the President and everything else can go by the wayside.” But as I’ve grown older, I’ve realized that your local and your state government is really where everything happens. That’s what affects your life more than even the Federal stuff.

Bill: Yeah, it does in a lot of ways. And I think a lot of people pay attention to local government because it is so close and you’re likely to know a councilman or somebody like that, school board member and, of course, the national government gets all the attention in the TV news but the state really goes along under the radar which I think is a special danger; especially now that the state has so much money to spend.

Because you don’t really know what’s going on in the legislature. If you have a bill that sounds very good like a Consumer Protection Bill or something to prevent predatory lending, you know it has a nice ring to it. But you don’t really know unless you study very, very carefully what goes on in each paragraph of that bill, whether the net effect is to make it easier for predatory lenders to take your property or whether it is to protect you from them.

Josh: And as we came to find out after 9/11; few of the Senators and Congressmen even read the bills that they sign anyway.

Bill: Right and I think that might be the solution, to require that they read the bills before they vote on them.

Josh: Maybe we can get it on audio book for them and sit them down in their cars and make them listen to it on their way to Congress.

Bill: Yeah, yeah.

Josh: Alright, well let’s move on to tax reform because I’ve got to tell you that I was very excited when I read your platform on tax reform because I’m a huge proponent of the Fair Tax Bill on the federal level (which is H.R. 25); it was a subject of a book by Neil Boortz, the famous Libertarian talk show host, and John Linder, Congressman from Georgia. Again, I was excited when I read your tax reform because it’s a comprehensive plan. It’s got tax cuts and reduction in spending and waste that, to me, makes the Republican strategy look like one of Stalin’s five-year plans. It makes them look that backward. So, tell us about your vision of what the tax structure of Ohio is going to look like under a Peirce governorship.

Bill: Well, we do have to cut taxes. It’s shameful that we’re on the wrong end of all these lists. If you look at the rankings of states according to tax burdens as a percentage of personal income or economic freedom or the environment for starting a business and growing it or business tax environment and if you look at the rate of economic growth and the rate of personal income growth, we’re at the wrong end of all these rankings. I think we’re at the wrong end of the economic growth rankings because we’re at the wrong end of the tax rankings and the economic freedom rankings.

So, yes we have to cut taxes and I would start, definitely, with getting rid of the Commercial Activities Tax that was just put in during the last budget because we’re not yet dependent on it. We can still get rid of it without too much pain.

Josh: Explain that because I was pretty shocked when I read about it. I had never heard about that until I read about it on your site.

Bill: Yeah, well it just kind of sneaked in but it is a tax on the gross income of all firms whether it’s a little ma and pa shop, a proprietorship, or a huge corporation. So, right now it’s a small percentage of gross income. No deduction. And a lot of the small business people didn’t object because right now there’s a $150,000 exemption and so the very small people miss it and then there’s a flat amount until you get up to a million. But those things can all be changed very quickly when the state runs into budgetary problems. So I think it’s short sighted not to object right away. And because it’s a tax on gross income or gross sales; it doesn’t take very long if you’re a small contractor with a couple of employees and buying for materials, you’re up over $150,000 very, very quickly and no deductions for anything.

So, it’s a very dangerous tax because people say, “Well, you know, it’s a quarter of 1%”-- but another few years from now, there’s a budget problem, “Well, we’ll just nudge this up another ¼ of a percent.” But if you look at some of the retail stores, for example, supermarkets—¼ of 1% or 1%--that’s a huge part of their total margins! Trucks are pulling up to the loading platforms and pushing the stuff in and people are hauling it out in shopping carts. It’s just moving so quickly and they work on very small margins.

Josh: Well, [the Commercial Activities Tax] was even applied on services as well, right?

Bill: …applied on services, that’s right.

Josh: If you’re an accountant that just does taxes for a small group of people or a few companies, that could really affect you.

Bill: Well, suppose that you’re one of the new style businesses where you try to outsource everything. You’re running a one-person operation out of your house.

Josh: The Delegation Firm.

Bill: Yeah, and you just outsource everything but you do have these billings that are large, even though it’s all being paid out to your subcontractors or suppliers or whatever. So you can be clobbered with that very quickly.

Josh: And you’re also going to eliminate the rest of the Estate Tax too?

Bill: Yes. That serves no function at all at the state level. It generates very little income for the state. People can argue about Estate Taxes at the Federal level but at the state level all it does is to drive the wealthier people to establish a legal residence in Florida

Josh: Sure. Sure. [laughs] It’s more like a slap in the face that serves no function whatsoever except maybe a talking point for class warfare people. Okay, that makes sense. So what else above and beyond the Republican tax cuts that are planned, what else above and beyond are you going to do?

Bill: Well, I want to talk some about the reform of the property tax. Because, right now if you look across the board at all the taxes that we levy, we do levy, or we can levy; nearly all of them do a lot of damage to the economy. Income taxes are probably the worst because they inhibit people from earning income and isn’t that what we want people to do?

And sales taxes are not nearly as bad but you still are not really interested in cutting sales. But if you turn to the property tax as it’s administered now, it’s really two things. It’s a tax on buildings and a tax on land. And the tax on buildings is damaging because if you tax people for improving the building or building a new building, they’re less likely to do it. And if you tax them high enough on buildings, they let them run down and eventually the building moves away because it depreciates and nobody rebuilds it.

But if you tax land, it can’t go anywhere. It’s stuck So you can tax land and exempt the building and that creates an incentive for people to develop the property. If they’re holding vacant land or land in the middle of the city with crummy buildings on them, then it becomes a very strong incentive to develop that and start rebuilding the city.

Josh: That makes perfect sense and I just want to interject here that I think this is the biggest difference between a politician and an economist because a politician tends to think about today and an economist tends to think about five to ten to twenty years down the road. They understand that incentives are what drive future prospect and growth. Whereas politicians are more about the barriers that are going to give them some kind of elation in the moment which gets them elected. So, I think that what you’re bringing in here is something totally new to the population [and the political discourse]. They’ve never been talked to like this—about incentives and stuff like that, not in a real way. So what you’re saying here is just an outstanding platform for improvement and for protecting people who want to buy [and improve] property.

Bill: Well, that’s what we want to do: protect those property rights so people have an incentive and so they won’t feel afraid to improve their property and then change the taxes so they have an incentive to do it. And we could get these decaying cities moving again. But if you always stick with the, you know, you give a subsidy to this developer for putting up a hundred houses here and another subsidy down the street to somebody for doing something else; particularly to give subsidies to people putting in a retail development just outside downtown and that sucks all the life out of downtown and so you have musical developments moving around, each one of them subsidized. And you end up with just a different pattern of decay. You haven’t changed the decay.

Josh: I think Columbus is a good example of that. I mean, you look at Easton and Tuttle Mall and Polaris Parkway; they’ve sucked all of that vibrancy away from downtown. And not that downtown is suffering by any means, but it has definitely changed the way that people function within the city.

Bill: Right and, of course, we see it in Cleveland where the population is actually declining and none of these plans to reverse the decline have done anything.

Now, of course the other problem with trying to get people to live in the city is the school problem and we do know how to address that but it’s not very popular with the teachers’ unions.

Josh: [Laughing] Yeah, I know that but is there anything else you wanted to talk about in terms of taxes before we move on into education?

Bill: Well, we do have to cut those income taxes. The Ohio maximum rate was 7½%. It’s come down a bit now; it’s down to about 7% but our neighbors are at 3½ % so we certainly can’t survive that kind of competition.

Josh: Right. Right.

INTERJECTION:

Josh: I want to apologize to all the listeners here and Bill as well because at this point in the conversation, my Audioblog software actually failed me and I lost about five minutes of the conversation in which we talked about Bill’s amazing educational plan which is geared towards putting out a certain amount of money for each child and allowing parents to make the choice of where the children want to go to school. I’ll put information in the actual transcript [CLICK HERE to read the specifics of the Peirce Educational plan and click on the "Parents and Children link in the yellow box] with a link to Bill’s site where he explains this in detail. But it basically allows the parents to become the leverage in the market and drive true changes in the educational system which we all know that we need badly.

It’s obvious that the Republican and Democratic strategy of just throwing money at the educational pot just results in lawyers and special interest groups fighting over the money while, ironically, the children are the only ones getting left behind. So it’s time for a true change and Bill’s plan is something very special so make sure you check that out.

And according to this 8/17/2006 Columbus Dispatch article, Ted Strickland has no Education Plan. Guess who gets my vote on the issue?

But I did manage to save a little of the end of our conversation, so we’ll go to that now.

END INTERJECTION


Bill: I’ve just written an educational policy statement called A Child-Centered Educational Finance. So we’re focusing on the child and in this Child-Centered Educational Finance, the base amount is about $6,000 and then you subtract what the community can generate from its own taxes. So, a rich school district like Beechwood here in the Cleveland area has just a huge amount of property per student and so it’s own contribution [per student] far exceeds the $6,000.

But if you take some poor community, particularly in the Appalachian regions, the poor rural districts—they can’t generate much property taxes because they just can’t generate much property per student and so they’d get the bulk of the $6,000. Under my revised scheme, now, the amount that the state would have given the local school district is available then to the parents to shift it to another school if that would do better for their child.

Josh: It makes perfect sense to me. I’ve always been of the opinion that the public library is the true institute of public learning anyway because you can literally walk in there and look for any subject you want and find it. It sounds to me like your plan is just right in line with that philosophy. Choice drives change.

Bill: Well, it is and I think the public library is a good example because we know that if we can teach those kids to read and write and do arithmetic, they can learn anything else they need to know in the library or with access to the Internet. I mean the materials are out there and it isn’t very expensive to teach reading writing and arithmetic. Why is it that we spent so much more in the last twenty years on education and test scores have fallen.

Josh: Sure. And in addition to this, with parents choosing the avenue of their children’s education; one would think that would kind of build them up to begin participating more in the education of their child so that reading, writing and arithmetic would be second nature by the time their child even got to school.

Bill: Yeah, that certainly is another benefit of this—once the parents are involved in selecting a school, particularly if they have to put some of their own money in to bolster the amount coming from the state then they will certainly put some pressure on the kid. And everybody acknowledges that involved parents are very, very important for education.

Josh: Absolutely. I’d be much more willing to dig into my pocket if I could see the direct influence that it was having on my child rather than to vote for a levy or something for my community.

Bill: Right.

Josh: So, I think it’s brilliant and I think it’s going to go over very well when people hear what you’re really saying on that issue.

Bill: It goes over well with everybody except the …

Josh: …the Teachers’ Unions…

Bill: …yeah, the Teachers’ Unions, yeah…

Josh: I imagine there’ll be a lot of them out there just clenching up and walking a little bit uptight when they hear that but, you know what, I’m sorry but the public’s will is going to speak in the end.

Bill: Yeah, some of them get practically violent. Now, that doesn’t apply to teachers themselves because a lot of teachers recognize the problems of the educational system. And the good teachers, of course, have nothing to fear because there will always be jobs for good teachers.

Josh: Sure. Absolutely. Absolutely. Okay, well let’s go ahead and wrap this up. I know you’re a busy man and you’ve got a campaign to drive on. But I did want to ask you one last question: What is the one book you’ve read in your life that had a profound influence on your thinking, your relationships with other people, and why should everyone listening to this read that book?

Bill: Well, this may seem a little trite but I think it’s Wealth of Nations by Adam Smith. It’s a wonderful book. Most people don’t get very far into it but Smith had this wonderful feeling for how people really act, how they really behaved, and he developed this wonderful system and description, not just of the economy but of society also. And every time I go back and read parts of it; I think, “Why did we bother to write anything after that?” It was all here.

Josh: So you think it’s still applicable to this day?

Bill: Oh, it certainly is.

Josh: Excellent. You know, I can honestly say I have not read that but Easton Press offers a nice $200 version of it that’s hand-made leather and everything so you know what? It’s on my list.

And I want to thank you for your time and your honesty here. And as a private citizen who is registered as an independent voter, I am pleased to extend my vote to you this coming November and I hope that all my fellow Ohio citizens are intelligent enough to actually listen to your positions, consider your talents, skills and your background and extend their vote to you as well.

Bill: Well thank you very much, Josh for your vote and for the opportunity.

Josh: Well thank you and we’ll see you out on the campaign trail. I’ll be rooting for you.

Bill: Great!

Josh: Thank you Bill and we’ll talk to you soon.

LINKS:

• Bill Peirce’s Libertarian Campaign Website
  
• Bill Peirce’s MySpace Page(ADD HIM and give him your support)
  
  READING ASSIGNMENTS
  
  
  • The Law by Frederic Bastiat: This book was originally published in the mid 1800s and remains the primary treatise on what a just society should look like and what the proper function of law should be. Buy the book for $4 here or the audio CD for $10 here. If you consider yourself a patriot, you must have this book on your shelf.
    
  • The Wealth of Nations by Adam Smith: Read the book that Bill Peirce calls the most important book he’s ever read in his life. Learn about the invisible hand and how it affects every aspect of our lives.
    
  • Atlas Shrugged by Ayn Rand. This is the Libertarian manifestor. If you've never said the phrase, "Who is John Gault" and knew that this mantra should strike fear in the hearts of the parasites and thieves of the world then you don't know what you're missing. If you read nothing else of this book, make sure to read the Francisco D'Anconia monologue on money.
    
  • Cliches of Politics edited by Mark Spangler: This is one of the most important books I ever read in terms of clear and concise political education on the fundamentals of justice in society. It is hard to get a hold of, however, as it is out of print. Lucky for you that Amazon has several used copies for under $4 each. Trust me, rush to buy these up—you won’t be sorry.
    
  • Basic Economics: A Citizen's Guide to the Economy by Thomas Sowell: This is the most important book I ever read on Economics as a subject. It is taught in the patented down to earth Sowell style that will leave you on top of your game when debating economics versus politics. Thomas Sowell is a true American treasure and master and no intelligent person should be without this book.
  
  
  TAGS: William Peirce, Bill Peirce, Libertarian, Governor, Ohio, Eminent Domain, Blight, Taxes, Reform, Education, Freedom to Prosper, Consumer Protection Act, Child Centered Educational Finance, Wealth of Nations, Adam Smith, Thomas Sowell, Frederic Bastiat
  
  

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