Latest Cato Research on State and Local Fiscal Policy https://www.cato.org/rss/research/state-and-local-fiscal-policy en Mark Sanford cites his grade on Cato Institute's Fiscal Policy Report Card on NPR's On Point https://www.cato.org/multimedia/media-highlights-radio/mark-sanford-cites-grade-cato-institutes-fiscal-policy-report?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Wed, 18 Sep 2019 11:57:01 -0400 Gov. Mark Sanford https://www.cato.org/multimedia/media-highlights-radio/mark-sanford-cites-grade-cato-institutes-fiscal-policy-report Cato's Fiscal Policy Report Card grade is cited on KIRO's The Dori Monson Show https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-kiros-dori-monson?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Wed, 11 Sep 2019 11:25:01 -0400 Cato Institute https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-kiros-dori-monson Mark Sanford cites his grade on Cato Institute’s Fiscal Policy Report Card on Fox News Sunday with Chris Wallace https://www.cato.org/multimedia/media-highlights-tv/mark-sanford-cites-grade-cato-institutes-fiscal-policy-report-card-fox-news-sunday-chris-wallace?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Fri, 06 Sep 2019 16:17:09 -0400 Chris Edwards https://www.cato.org/multimedia/media-highlights-tv/mark-sanford-cites-grade-cato-institutes-fiscal-policy-report-card-fox-news-sunday-chris-wallace David B. Kopel discusses Denver not renewing contracts for GEO Group and Core Civic on CPTV’s Colorado Inside Out https://www.cato.org/multimedia/media-highlights-tv/david-b-kopel-discusses-denver-not-renewing-contracts-geo-group-core?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Fri, 09 Aug 2019 10:35:00 -0400 David B. Kopel https://www.cato.org/multimedia/media-highlights-tv/david-b-kopel-discusses-denver-not-renewing-contracts-geo-group-core Michael D. Tanner’s Newsweek article, “Baltimore Burning: It’s Not a Matter of Money. We Tried That,” is cited on the Rush Limbaugh Show https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanners-newsweek-article-baltimore-burning-its-not?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Mon, 29 Jul 2019 10:36:00 -0400 Michael D. Tanner https://www.cato.org/multimedia/media-highlights-radio/michael-d-tanners-newsweek-article-baltimore-burning-its-not Who Wins in Opportunity Zones? https://www.cato.org/multimedia/cato-daily-podcast/who-wins-opportunity-zones?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Chris Edwards, Caleb O. Brown <p>Opportunity Zones are a part of the 2017 tax bill, but who benefits? And how is it appropriate to single out some places for special investment tax breaks? Chris Edwards comments.</p> Mon, 01 Jul 2019 16:03:00 -0400 Chris Edwards, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/who-wins-opportunity-zones David B. Kopel discusses construction delays at Denver International Airport on CPTV’s Colorado Inside Out https://www.cato.org/multimedia/media-highlights-tv/david-b-kopel-discusses-construction-delays-denver-international?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Fri, 24 May 2019 12:06:00 -0400 David B. Kopel https://www.cato.org/multimedia/media-highlights-tv/david-b-kopel-discusses-construction-delays-denver-international Feds Should End Aid to States https://www.cato.org/multimedia/cato-daily-podcast/feds-should-end-aid-states?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Chris Edwards, Caleb O. Brown <p>The feds don't just offer handouts to individuals and corporations, they also subsidize state and local activities. Chris Edwards explains why this should end in "<a href="https://www.cato.org/publications/policy-analysis/restoring-responsible-government-cutting-federal-aid-states" rel="noopener noreferrer" target="_blank">Restoring Responsible Government by Cutting Federal Aid to the States</a>.”</p> Tue, 21 May 2019 16:10:00 -0400 Chris Edwards, Caleb O. Brown https://www.cato.org/multimedia/cato-daily-podcast/feds-should-end-aid-states Bill Weld cites his grade on Cato Institute’s Fiscal Policy Report Card on NECN’s DC Dialogue https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grade-cato-institutes-fiscal-policy-report-card-necns?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Sun, 19 May 2019 12:58:00 -0400 Cato Institute https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grade-cato-institutes-fiscal-policy-report-card-necns Chris Edwards discusses the $2 trillion infrastructure plan on WRVA's Richmond's Morning News with John Reid https://www.cato.org/multimedia/media-highlights-radio/chris-edwards-discusses-2-trillion-infrastructure-plan-wrvas?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Fri, 03 May 2019 13:37:00 -0400 Chris Edwards https://www.cato.org/multimedia/media-highlights-radio/chris-edwards-discusses-2-trillion-infrastructure-plan-wrvas David B. Kopel looks back at the 2019 Colorado legislative session on CPTV’s Colorado Inside Out https://www.cato.org/multimedia/media-highlights-tv/david-b-kopel-looks-back-2019-colorado-legislative-session-cptvs?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Fri, 03 May 2019 10:29:00 -0400 David B. Kopel https://www.cato.org/multimedia/media-highlights-tv/david-b-kopel-looks-back-2019-colorado-legislative-session-cptvs Randal O’Toole discusses an Illinois gas tax proposal on WBBM Radio https://www.cato.org/multimedia/media-highlights-radio/randal-otoole-discusses-illinois-gas-tax-proposal-wbbm-radio?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Tue, 16 Apr 2019 12:38:00 -0400 Randal O'Toole https://www.cato.org/multimedia/media-highlights-radio/randal-otoole-discusses-illinois-gas-tax-proposal-wbbm-radio Bill Weld cites his grade on Cato Institute's Fiscal Policy Report Card on CNN's The Lead With Jake Tapper https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grade-cato-institutes-fiscal-policy-report-card-cnns?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Mon, 15 Apr 2019 10:55:00 -0400 Cato Institute https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grade-cato-institutes-fiscal-policy-report-card-cnns Bill Weld cites his grade on Cato Institute's Fiscal Policy Report Card on WMUR's Conversations with the Candidate https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grade-cato-institutes-fiscal-policy-report-card-wmurs?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Mon, 01 Apr 2019 12:58:00 -0400 Cato Institute https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grade-cato-institutes-fiscal-policy-report-card-wmurs Larry Hogan Can Revive Baltimore, Just as His Dad Revived Prince George’s County https://www.cato.org/publications/commentary/larry-hogan-can-revive-baltimore-just-dad-revived-prince-georges-county?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Steve H. Hanke, Stephen J.K. Walters <div class="lead text-default"> <p>Prince George's County is one of the richest majority-black counties in the country, with a median household income 37 percent above the nation's and a poverty rate 30 percent below it. Because Prince George's sits next to the District, however, its prosperity is often credited entirely to the economic engine that is the federal government.</p> </div> , <div class="text-default"> <p>But that somewhat patronizing assumption hides an interesting story and a key lesson. In the 1970s, even as federal agencies multiplied and government employment rose, Prince George's was headed downhill. While its neighbors grew rapidly, <a href="https://fred.stlouisfed.org/series/MDPRIN5POP" target="_blank">Prince George's population</a> shrank by 32,000 between 1972 and 1979. From 1969 to 1979, its poverty rate ticked upward by 0.6 percentage points while contiguous Charles and Howard counties' rates fell 3.5 and 1.3 percentage points, respectively.</p> <p>While pundits blamed the usual suspects — notably racism and white flight — some county leaders saw a problem they could fix immediately and completely. As the county's population soared in the 1960s, its property tax rate had climbed to a noncompetitive level; it ranked second-highest in the state, behind only Baltimore City's. So, in 1978, a pair of Democrats, emulating <a href="https://www.washingtonpost.com/news/local/wp/2015/04/08/ten-things-to-know-about-trim/?utm_term=.4053fa002dbc" target="_blank">California's Proposition 13</a>, put a tax cap referendum on the ballot, <a href="http://www.washingtonpost.com/archive/local/1978/06/29/catching-proposition-13-fever/45c34bc4-a32a-4dd6-bdbb-87d777833a6e/" target="_blank">admitting</a> that "the property tax is running people out of their homes."</p> <p>Their "Tax Reform Initiative by Marylanders" — Trim — was embraced by the Republican candidate for county executive, <a href="https://www.washingtonpost.com/national/lawrence-j-hogan-sr-md-republican-who-called-for-nixons-impeachment-dies-at-88/2017/04/20/80fe7f5c-251e-11e7-a1b3-faff0034e2de_story.html?utm_term=.fbbccca83072" target="_blank">Lawrence J. Hogan Sr.</a>, who four years earlier had earned renown as the sole Republican member of the House Judiciary Committee to vote for all three articles of impeachment against Richard M. Nixon. His 22-year-old son, Lawrence Jr., would get his first taste of politics as a volunteer in that 1978 race, in which the senior Hogan was the only one of 60 Republicans on the ballot to win office in a county in which 75 percent of voters were Democrats.</p> <p>Trim also won in a landslide.</p> <p>Coping with the budgetary discipline required by Trim occupied Hogan throughout his term. He made it work: Flight ended immediately. Prince George's population rose for the next two decades. By 1989, the county's poverty rate had fallen by one-quarter and was 2.3 percentage points below Maryland's average.</p> <p>It turns out that tax rates matter.</p> <p>Fast-forward to the present day, and the younger Hogan has begun his second term as Maryland's governor — just the second Republican governor in the past half-century in this deep-blue state. With an approval rating consistently <a href="https://www.washingtonpost.com/local/md-politics/poll-hogans-approval-ratings-sky-high-democrats-stronger-among-women-millenials/2018/04/23/ae79f614-4705-11e8-8b5a-3b1697adcc2a_story.html?utm_term=.30416a627471" target="_blank">near 70 percent</a>, he has a reputation as a pragmatic centrist. Like his father, he has taken a <a href="https://www.washingtonpost.com/politics/i-havent-abandoned-my-principles-hogan-pondering-challenge-to-trump-casts-himself-as-a-traditional-republican/2019/03/17/3862b274-48d3-11e9-9663-00ac73f49662_story.html" target="_blank">principled stand against a Republican president</a> of whom he disapproves. And he is getting buzz as a presidential candidate, either in 2020 or beyond.</p> <p>To enhance that status and build his legacy as a transformative leader, he might also consider doing for Maryland's most troubled jurisdiction what his dad did for Prince George's County. Baltimore City surpassed Prince George's excesses by imposing 19 <a href="https://www.baltimoresun.com/news/maryland/baltimore-city/bs-md-ci-homeowners-taxes-20190311-story.html" target="_blank">property tax increases</a> in 25 years (1950 to 1975). But its leaders never opted for a restorative, Trim-like tax cap despite Baltimore City's massive flight of population and jobs, spiraling crime and stubborn poverty.</p> <p>Instead of pursuing a competitive property tax rate that would benefit residents and businesses, Baltimore has instead doled out special tax breaks to select developers. But, as its decades-long decline shows, inducing new investment on a few hundred acres here and there is not enough to revitalize a decaying city of 81 square miles. Furthermore, it is not fair. A few developers enjoy large tax breaks while the vast majority of residents suffer under punishingly high property tax rates.</p> <p>There is a better way, as we detailed in a special issue of the <a href="http://jacf-pub.com/" target="_blank"><em>Journal of Applied Corporate Finance</em></a>. To allow the city to maintain levels of public services while delivering a competitive property tax rate, it should adopt a binding tax cap that will take effect at least one full reassessment cycle in the future. As new investment arrives, property values would improve, and the city would begin to repopulate. New residents would deliver more local income tax revenue, and the city's tax base would expand. The added receipts could then be set aside in a "lockbox" to close any budget gap when the cap takes effect.</p> <p>As Prince George's demonstrated, a competitive property tax rate is a necessary condition for growth and broad-based prosperity. Baltimore's leaders have ignored this fact far too long. Hogan could be the force who transforms the city. If he were to announce a willingness to backstop the tax cap plan with some state financing, should the lockbox be a little light, the city could begin a long-overdue turnaround — just like the one his dad oversaw in Prince George's County 40 years ago.</p> </div> Fri, 22 Mar 2019 11:06:00 -0400 Steve H. Hanke, Stephen J.K. Walters https://www.cato.org/publications/commentary/larry-hogan-can-revive-baltimore-just-dad-revived-prince-georges-county Cato’s Fiscal Policy Report Card grade is cited on KTTH’s The Michael Medved Show https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-ktths-michael-medved?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Fri, 01 Mar 2019 11:51:00 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-ktths-michael-medved Cato’s Fiscal Policy Report Card grade is cited on The Ben Shapiro Show https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-ben-shapiro-show?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Fri, 01 Mar 2019 11:10:00 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-ben-shapiro-show The Influence of Air Conditioning on the Growth of State Government Expenditures https://www.cato.org/cato-journal/winter-2019/influence-air-conditioning-growth-state-government-expenditures?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Thomas A. Garrett, Natalia A. Kolesnikova <div class="lead text-default"> <p id="ch09_Garrett-REF001">A key feature of the U.S. economy is the dramatic increase in expenditures by all levels of government beginning in the 20th century. At the national level, the U.S. government annually spent roughly $142 (in 2017 dollars) per capita from the 1790s to the 1910s compared to $11,500 per capita in 2017.<sup><a href="#ch09_Garrett-ref001">1</a></sup> Expenditure growth outpaced the growth in income as well as population, with U.S. government expenditures accounting for 3.3 percent of gross domestic product (GDP) in 1930 compared to 20.5 percent of GDP in 2017. The behavior of state government expenditures parallels that of the U.S. government: total state government spending increased from $1,470 (in 2017 dollars) per capita in 1960 to nearly $6,980 per capita in 2017. Total state government expenditures increased from 5.8 percent of GDP in 1960 to roughly 12 percent of GDP in 2017.</p> </div> , <div class="text-default"> <p id="ch09_Garrett-REF002">The growth in government has attracted considerable academic research that has generated numerous theories to explain (or partially explain) government growth in the United States. All theories assume that a market for public sector output and expenditures exists (<a href="#ref024">Mueller 2003</a>).<sup><a href="#ch09_Garrett-ref002">2</a></sup> The demand for government output and expenditures is determined by individual citizens or a collection of citizens organized into special interest groups. Essentially, demand-side theories argue that government has grown because citizens have demanded more government. These theories make use of the median-voter model (<a href="#ref012">Downs 1957</a>, <a href="#ref013">1961</a>) to explain why citizens have had an increased demand for public goods (e.g., increased income) and a reduction in externalities (<a href="#ref003">Baumol 1967</a>; Ferris and West 1996; <a href="#ref024">Mueller 2003</a>), as well as a greater demand for more redistribution of income (<a href="#ref021">Meltzer and Richard 1978</a>, <a href="#ref022">1981</a>, <a href="#ref023">1983</a>).<sup><a href="#ch09_Garrett-ref003">3</a></sup> In addition, citizen-based interest groups can increase government size by organizing members and applying political pressure more effectively than individuals (<a href="#ref026">Olson 1965</a>; <a href="#ref023">Becker 1983</a>; Ekelund and Tollison 2001).</p> <p id="ch09_Garrett-REF004">Supply-side theories of government growth argue that government expenditures are determined by legislators and bureaucrats who face certain incentives, the inherent inefficiencies in the provision of government goods, and the structure of government (e.g., representative democracy versus democracy). Niskanen’s (<a href="#ref025">1971</a>) theory of bureaucracy postulates that government bureaucrats maximize the size of their agencies’ budgets in accordance with their own preferences, and are able to do so because of the unique monopoly position of the bureaucrat.<sup><a href="#ch09_Garrett-ref004">4</a></sup> Fiscal illusion theory (<a href="#ref009">Buchanan 1967</a>) assumes that government, specifically legislators and the executive branch, can deceive voters as to the true size of government by using taxes and tax collection measures that are less obvious to citizens.<sup><a href="#ch09_Garrett-ref005">5</a></sup> Finally, the idea that representative governments behave as monopolists was first suggested by Breton (<a href="#ref008">1974</a>) and extended further by Brennan and Buchanan’s (<a href="#ref006">1977</a>, <a href="#ref007">1980</a>) model of leviathan government where a monopoly government’s sole objective is to maximize revenue.<sup><a href="#ch09_Garrett-ref006">6</a></sup></p> <p>It is not unreasonable to argue that government growth is likely the result of both demand-side and supply-side factors. Thus, research along these lines to deepen our understanding of the market for government output and expenditures seems warranted. In this article, we argue that the introduction of air conditioning in states’ capitol buildings was a permanent technology shock that may have contributed to the growth in state government output, and thus expenditures, by increasing the productivity (output per unit of labor input) of legislators, lobbyists, bureaucrats, and others involved in producing government output and expenditures. We also argue that the effects of air conditioning would have been most pronounced in warmer states.</p> <p>The following quotations suggest that the hypotheses of this article merit more rigorous attention:</p> <p>The installation of air conditioning in the 1930s did more, I believe, than cool the Capitol, . . . . members were no longer in a hurry to flee Washington. The southerners especially had no place else to go that was half as comfortable [<a href="#ref019">Martin 1960</a>: 49].</p> <p>Six months of every year, the nation enjoyed a respite from the promulgation of more laws, the depredation of lobbyists, the hatching of new schemes for Federal expansion and, of course, the cost of maintaining a government running at full blast. Once air conditioning arrived, Congress had twice has much time to exercise its skill at regulating and plucking the population [<a href="#ref002">Baker 1978</a>: 6].</p> <p id="ch09_Garrett-REF007">Prior to air conditioning, attempts to cool buildings or rooms, including those in states’ capitols, were typically done with electric fans or swamp coolers (which worked on the principle of evaporation), neither of which reliably cooled rooms to comfortable levels (<a href="#ref001">Arsenault 1984</a>).<sup><a href="#ch09_Garrett-ref007">7</a></sup> Air conditioning, however, effectively lowered both room temperatures and humidity levels, thus greatly improving working and living conditions. There is little doubt that the introduction of air conditioning transformed society during the 20th century by increasing the productive efficiency of businesses and households (<a href="#ref001">Arsenault 1984</a>; <a href="#ref011">Cooper 1998</a>; <a href="#ref028">Solomon 2003</a>). There is thus reason to presume that the public sector was also influenced by the transformative and productivity-enhancing effects of air conditioning.</p> <p>Our theory of government growth is not an independent explanation for growth but rather a contributing explanation. That is, we take the supply-side and demand-side factors as given and reasonable and argue that the introduction and existence of air-conditioning has <em>enhanced</em> the supply-side and demand-side factors that have been hypothesized to influence state government growth — for example, lobbying in states’ capitols by citizens and legislators became more pleasant and occurred all year without summer break. While we are agnostic about the precise effect of air conditioning on specific supply-side and demand-side factors that influence state government growth, it seems reasonable to suggest that air conditioning could have a direct effect on the productivity of all parties involved in producing government output just as it did for households and businesses.</p> <p>The analysis proceeds in several steps. As a motivation for our empirical methodology, we first present a simple model of technological growth to demonstrate how the introduction and subsequent existence of air conditioning in a state capitol may have led to increased growth in state government output. A brief discussion is then provided to motivate the link between state government output and state government expenditures. We then discuss the panel data, identification strategy, and the empirical methodology that is used in order to test our hypothesis that the growth in state government expenditures was greater after the introduction of air conditioning in states’ capitols. Finally, we present our empirical results, which support our hypothesis that the growth in state government expenditures was higher after the introduction of air conditioning in state capitols, and that this effect was more pronounced in the warmer southern states.</p> <h2>Conceptual Framework and Motivation</h2> <p>As the starting point for our conceptual framework, it is important to first examine how the introduction of air conditioning could have influenced the growth in the output of state governments. As discussed shortly, there is a direct link between the growth in government output and the growth in government expenditures.</p> <p id="ch09_Garrett-REF008">We assume that the introduction of air conditioning, both generally and in state capitols, acted as a one-time and permanent labor-augmenting technology shock.<sup><a href="#ch09_Garrett-ref008">8</a></sup> Let the labor-augmenting technology be represented by the parameter <em>A</em>, where <em>A</em> = 1 before the labor-augmenting technology shock and <em>A</em> &gt;1 after the technology shock. We can write a representative production function for a state government’s output (<em>q</em>) as</p> <p><em>q</em> = <em>q(K, A</em> • <em>L),</em></p> <p id="ch09_Garrett-REF009">where <em>K</em> and <em>L</em> are capital and labor inputs, respectively.<sup><a href="#ch09_Garrett-ref009">9</a></sup> Rewriting the above production function as a function of time to capture output growth as a result of air conditioning gives</p> <table border="0" cellpadding="0" cellspacing="0"><tr><td align="left"> <p>(1)</p> </td> <td align="right"> <p><em>q</em>(<em>t</em>) = <em>q</em>(<em>K</em>(<em>t</em>), <em>A</em> • <em>L</em>(<em>t</em>)).</p> </td> </tr></table><p>Totally differentiating with respect to <em>t</em> yields</p> <p align="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="0d3cdfdc-5291-4fb7-a931-64d4e86b5592" data-langcode="en" class="embedded-entity"> <img width="230" height="50" alt="Media Name: cj-v39n1-chapter-09-equation-01.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-01.jpg?itok=rrWaQEeZ 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-01.jpg?itok=H0k4XALV 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-01.jpg?itok=rrWaQEeZ" typeof="Image" /></div> <p>Dividing both sides by <em>q</em> gives</p> <p align="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="7b7b7f8c-a2fd-4c0d-80d7-ae0a4c17451b" data-langcode="en" class="embedded-entity"> <img width="293" height="55" alt="Media Name: cj-v39n1-chapter-09-equation-02.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-02.jpg?itok=WUq8yGhk 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-02.jpg?itok=WAZMGJBH 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-02.jpg?itok=WUq8yGhk" typeof="Image" /></div> <p>or, equivalently,</p> <table border="0" cellpadding="0" cellspacing="0"><tr><td align="left"> <p>(2)</p> </td> <td align="right"> <p> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="8c508d61-b039-4be0-882d-3d428fc947b2" data-langcode="en" class="embedded-entity"> <img width="352" height="55" alt="Media Name: cj-v39n1-chapter-09-equation-03.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-03.jpg?itok=7gWpSsTn 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-03.jpg?itok=d4Jfye78 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-03.jpg?itok=7gWpSsTn" typeof="Image" /></div> </td> </tr></table><p>Rewriting in familiar terms gives the following expression for output growth due to labor-augmenting technological progress:</p> <table border="0" cellpadding="0" cellspacing="0"><tr><td align="left"> <p>(3)</p> </td> <td align="right"> <p> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="36e8f02f-8750-489a-b8ec-d73013f0dfab" data-langcode="en" class="embedded-entity"> <img width="253" height="33" alt="Media Name: cj-v39n1-chapter-09-equation-04.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-04.jpg?itok=6HR1Naqx 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-04.jpg?itok=X6IYnG0a 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-equation-04.jpg?itok=6HR1Naqx" typeof="Image" /></div> </td> </tr></table><p id="ch09_Garrett-REF010">where ε<em><sub>q,K</sub></em> is the elasticity of output with respect to capital and ε<em><sub>q,L</sub></em> is the elasticity of output with respect to labor.<sup><a href="#ch09_Garrett-ref010">10</a></sup> It should be clear from (3) that output growth, <sub><img alt="" data-src="https://object.cato.org/sites/cato.org/files/images/cato-journal/winter-2019/qoverdot.jpg" class=" lozad" /></sub>, is higher after the introduction of air conditioning (<em>A</em> &gt; 1) than before the introduction of air conditioning (<em>A</em> = 1), regardless of whether the usage of inputs remains constant or increases over time.<sup><a href="#ch09_Garrett-ref011">11</a></sup> Note that the technology shock essentially increases output by increasing the marginal product of labor, (∂<em>q/</em>∂<em>L</em>) • <em>A</em>, in equation (2) even if the quantity of labor remains constant.</p> <p id="ch09_Garrett-REF012">There is a clear link between government output and government expenditures; namely, that government expenditures reflect the total cost of producing total government output.<sup><a href="#ch09_Garrett-ref012">12</a></sup> This cost not only includes the cost of inputs but also the cost of maintaining government programs (social programs, military, etc.). Thus, our line of reasoning is that air conditioning in a state’s capitol was a positive technology shock that increased legislative output in a state capitol by “shifting up” the government production function, which resulted in an increase in the total output of the respective state government. This increase in total output then resulted in an increase in state government expenditures after the introduction of air conditioning.</p> <p>We also argue that air conditioning enhanced the supply-side and demand-side factors that have been argued to also contribute to government growth. On the demand side, the presence of air conditioning in state capitols may have facilitated lobbying by consumer and business interests by making lobbying more comfortable, thus leading to additional legislative output and, following the explanation made earlier, ultimately an increase in government expenditures. On the supply side, theory and evidence suggest that governments are not cost minimizers. The additional total physical output due to air conditioning would therefore not be produced at the lowest cost. In other words, air conditioning would have further increased the cost inefficiencies of government, thus increasing state government expenditures even more.</p> <p>It is worthwhile to summarize our conceptual framework and resulting hypothesis, as both serve as the basis for our empirical setup. Government output and expenditures were increasing before the introduction of air conditioning due to changes in input usage as well as supply-side and demand-side factors. The introduction of air conditioning was a one-time, permanent technology shock that increased output and expenditures by not only increasing the marginal product of labor, but also by enhancing the supply-side and demand-side factors that have been found to contribute to government growth. This implies that the average annual growth rate of state government expenditures was greater after the introduction of air conditioning. In the following section we discuss the empirical methodology used to test our hypothesis.</p> <h2>Data and Empirical Methodology</h2> <p id="ch09_Garrett-REF013">We use a panel dataset of U.S. states in order to test our hypothesis that the growth of state government expenditures was greater after the introduction of air conditioning in each state’s capitol. In order to account for population growth that has occurred over time (which would affect the government expenditures via the supply and demand for government), our dependent variable is real per capita state government expenditure.<sup><a href="#ch09_Garrett-ref013">13</a></sup> Our empirical approach is to examine whether the trend-rate of growth in state government expenditures, where the trend captures the behavior of expenditures due to all aforementioned supply and demand factors, was greater after the introduction of air conditioning, especially in warmer states.</p> <p>Testing for differences in the trend-rate of growth in state expenditures before and after air conditioning requires identifying the point in time in which the “break” in the trend occurred. Our identification of this break in trend is the year in which air conditioning was installed in each state capitol. One issue we faced was how to define the existence of “air conditioning.” Prior to the installation of central air-conditioning systems, some offices in state capitols had window air-conditioning units that cooled individual offices while leaving many other offices, conference rooms, and the legislative chambers uncooled. We consider the year when central air conditioning (e.g., HVAC) was introduced throughout the entire state capitol as the date in which air conditioning was introduced.</p> <p>Much effort went into contacting state historians, legislative archivists, and even “old-timers” who had worked in the state capitol for decades, in order to determine when air conditioning was installed in each state capitol. We were able to obtain air-conditioning installation dates (years) for 21 states. The first year after each state installed air conditioning in its capitol building serves as the break in the trend for each state’s expenditure growth that we test for in our empirical models.</p> <p>As suggested earlier, it seems likely that the effect of air conditioning on state government expenditures would differ depending upon the relative difference in indoor air temperature due to air conditioning compared to indoor air temperature without air conditioning. That is, the relative increase in indoor comfort levels due to air conditioning would be greater in the states with warmer and more humid climates compared to the states with cooler and less humid climates. Thus, the hypothesized effects of air conditioning should be greater in warmer and more humid states. To explore this possibility, our empirical analysis considers the impact of air conditioning on state government expenditures in “warm” states compared to “cool” states.</p> <p id="ch09_Garrett-REF014">We followed several steps in order to classify each of the 21 states in our sample as either a “warm” state or a “cool” state. The National Oceanic and Atmospheric Administration (NOAA) defines an uncomfortable and potentially dangerous heat-index level as that above 80 degrees Fahrenheit.<sup><a href="#ch09_Garrett-ref014">14</a></sup> Thus, we classify a state as “warm” (“cool”) if its average summertime heat index is above (below) 80. To calculate the summertime heat index for each state, we used the primary formula used by NOAA.<sup><a href="#ch09_Garrett-ref015">15</a></sup> This formula requires data on air temperature and humidity levels. For each state, we therefore obtained the average air temperature and humidity levels over the months of June, July, and August in 2010 for each state’s capital city.<sup><a href="#ch09_Garrett-ref016">16</a></sup> We then calculated the heat index for each state’s capital city and used the heat index benchmark of 80 to either classify the state as a warm state or a cool state.</p> <p id="ch09_Garrett-REF017">Not surprisingly, it turned out that warm states had air conditioning installed sooner than many cool states. In order to be able to make a comparison between the effect of the introduction of air conditioning in warm and cool states, we omitted from our final sample those cool states that had air conditioning installed much later than any warm state. Our final sample includes all seven warm states for which we were able to obtain the dates of air conditioning installation and five cool states that had air conditioning installed during the same time period as warm states. <a href="#ch09-table-01">Table 1</a> presents the 12 states in our panel of data, the year that air conditioning was installed in each state’s capitol, and the classification of each state as “warm” or “cool.” In these 12 states, air conditioning in the capitol buildings was installed between 1959 and 1969.<sup><a href="#ch09_Garrett-ref017">17</a></sup> In order to ensure a sufficient number of year-observations before and after the introduction of air conditioning, our panel includes the years 1950–75.<sup><a href="#ch09_Garrett-ref018">18</a></sup></p> <p align="center" id="ch09-table-01"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="139f5879-72e6-4aa4-9ebe-0ed8669cabae" data-langcode="en" class="embedded-entity"> <img width="444" height="700" alt="Media Name: cj-v39n1-chapter-09-table-01.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-01.jpg?itok=9BpYHvag 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-01.jpg?itok=CpUXOYnk 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-01.jpg?itok=9BpYHvag" typeof="Image" /></div> <p>Our empirical objective is to test whether the trend growth in state expenditures is larger after the introduction of air conditioning, and whether the difference in expenditure growth as a result of air conditioning varies between warm states and cool states. To meet this objective, we first created binary variables that denote whether a state is warm or cool, as well as a variable that denotes the presence of air conditioning in each state’s capitol. We construct the variable <em>Cool</em> that has a value of ‘1’ if state <em>i</em> has been classified as cool, and has a value of ‘0’ if state <em>i</em> has been classified as warm. Similarly, we construct another binary variable <em>Warm</em> that has a value of ‘1’ if state <em>i</em> has been classified as warm, and has a value of ‘0’ if state <em>i</em> has been classified as cool. The variable <em>PostAC</em> has a value of ‘1’ for all years in which air conditioning was present in each state’s capitol, and has a value ‘0’ otherwise. We also create a linear time trend variable (<em>Trend</em>) to capture the growth in state government expenditures, where <em>Trend</em><em><sub>t</sub></em> = <em>t</em> for years (observations) <em>t</em> = 1, 2, . . . 26.</p> <p>The variables we use in our empirical models are as follows. The variable <em>WarmTrend</em><em><sub>it</sub></em> is constructed as <em>Warm</em><em><sub>it</sub></em> • <em>Trend</em><em><sub>t</sub></em>, and this variable captures the time trend for all states classified as warm. Similarly, the variable <em>CoolTrend</em><em><sub>it</sub></em> is constructed as <em>Cool</em><em><sub>it </sub></em> • <em>Trend</em><em><sub>t</sub></em>, and this variable captures the time trend for all states classified as cool. These two variables are then interacted with the variable <em>PostAC</em> to arrive at the variables <em>WarmTrendPostA</em>C<em><sub>it</sub></em> and <em>CoolTrendPostA</em>C<em><sub>it</sub></em>. With these variables in hand, we can specify our regression equation as</p> <table border="0" cellpadding="0" cellspacing="0"><tr><td align="left"> <p>(4)</p> </td> <td align="right"> <p><em>G</em><em><sub>it</sub></em> = <em>a</em><sub>0</sub> + <em>a</em><sub>1</sub> • <em>WarmTrend</em><em><sub>it</sub></em> + <em>a</em><sub>2</sub><em>WarmTrendPostAC</em><em><sub>it</sub></em> +<br /><em>a</em><em><sub>3</sub></em> • <em>CoolTrend</em><em><sub>it</sub></em> + <em>a</em><sub>4</sub> • <em>CoolTrendPostAC</em><em><sub>it</sub></em> + <em>a</em><sub>5</sub> •<br /><em>Inc</em><em><sub>it</sub></em> + δ<em><sub>i</sub></em> + <em>θ<sub>D60</sub></em> + <em>θ<sub>D70</sub></em> + δ<em><sub>i</sub></em> • <em>θ<sub>D60</sub></em> + δ<em><sub>i</sub></em> • <em>θ<sub>D70</sub></em> + ε<em><sub>it</sub></em>,</p> </td> </tr></table><p>where <em>i</em> denotes each state (<em>i</em> = 1, 2 . . . 12) and <em>t</em> denotes each year (<em>t</em> = 1, 2, . . . 26) in our sample of panel data. The dependent variable, <em>G</em>, is total state government expenditures. We first specify this variable as the natural log of real per capita expenditures so that the trend coefficients reflect the average annual growth rate of expenditures. As an alternative measure, we also estimate this regression with the dependent variable measured as the level of real per capita state expenditures. Fixed state-effects (<em>δ<sub>i</sub></em>) are included to account for cross-state heterogeneity, as well as allowing the initial level of government growth to differ by state. Fixed decade-effects (<em>θ<sub>D</sub></em><sub>60</sub> and <em>θ<sub>D</sub></em><sub>70</sub>) are included to account for decade-specific shifts in government expenditures. We also interact these decade-effects with each state’s fixed-effect to account for state-specific decade-effects, such as crisis episodes (<a href="#ref017">Higgs 1987</a>; <a href="#ref005">Bologna and Young 2016</a>), changes in the federal/state relationship (<a href="#ref027">Sobel and Crowley 2014</a>) that have been shown to be state specific and have differing effects on state government expenditures, and other technological changes (e.g., the introduction of computers) that may have occurred. Finally, we include per capita state personal income (<em>Inc</em><em><sub>it</sub></em>) to control for the demand-side effect of income growth on government expenditures. Our key trend variables thus capture the behavior of government expenditures due to all possible aforementioned reasons except income growth.</p> <p>The interpretation of the coefficients of interest in equation (4) is as follows. When the dependent is specified as the natural log of real per capita expenditures, the coefficient <em>α</em><sub>2</sub> reflects the growth in government expenditures for warm states after the introduction of air conditioning <em>relative</em> to the growth in government expenditures for warm states prior to the introduction of air conditioning (<em>α</em><sub>1</sub>). Similarly, the coefficient α<sub>4</sub> reflects the growth in government expenditures for cool states after the introduction of air conditioning <em>relative</em> to the growth in government expenditures for cool states prior to the introduction of air conditioning (<em>α</em><sub>3</sub>). When the dependent variable is specified as the level of real per capita expenditures, <em>α</em><sub>2</sub> and <em>α</em><sub>4</sub> reflect the marginal difference in per capita spending after air conditioning relative to spending before air conditioning in warm and cool states, respectively. As stated earlier, the goal of our empirical framework is not to determine the significant factors that explain the growth in the state government expenditures, but rather to see if there is a break in the trend (where the trend reflects the behavior of government expenditures due to all possible aforementioned reasons, except income) after the introduction of air conditioning.</p> <p>It is worthwhile to briefly discuss our expected empirical results based upon the previous conceptual framework. Regarding warm state capitols, it seems reasonable that air conditioning would have likely resulted in a significant marginal improvement in comfort levels, and thus productivity and expenditures. If air conditioning increased the growth in government spending in warm state capitols, we expect to find that <em>α</em><sub>2</sub> is positive and statistically significant. However, with respect to cool states, the marginal improvement in comfort levels as a result of air conditioning may not have had a significant impact on subsequent expenditure growth. More importantly, however, if air conditioning had a greater impact on expenditures growth in warm states than it did in cool states, we should find that <em>α</em><sub>2</sub> is significantly larger than <em>α</em><sub>4</sub>.</p> <h2>Empirical Results</h2> <p>This section presents the empirical results from equation (4) as well as the results from the above-mentioned hypothesis tests. In addition, we present empirical results from growth regressions that consider various components of state government spending.</p> <p>The Growth Rate of State Government Expenditures before and after Air Conditioning</p> <p>The empirical estimates for equation (4) with the dependent variable specified as the natural log of real per capita expenditures (so the trend coefficients reflect the average annual growth rate of expenditures) are shown in the first column of <a href="#ch09-table-02">Table 2</a>. We find that, not surprisingly, expenditure growth in both warm and cool states was increasing before the introduction of air conditioning, where warm states had an average growth rate of 4.6 percent and cool states had an average growth rate of 4.1 percent. Per our hypothesis, we wish to examine whether the growth in expenditures was higher after the introduction of air conditioning in the capitols. For warm states, we find that the relative annual expenditure growth in warm states after the introduction of air conditioning was 0.29 percentage points larger than annual expenditure growth before the introduction of air conditioning. For cool states, we find no statistically significant change after the introduction of air conditioning. Per the bottom of column (1), this difference in expenditure growth for warm states after air conditioning is found to be statistically larger (0.20 percentage points) than expenditure growth in cool states after air conditioning. In sum, the results in column (1) support our conceptual hypothesis as well as the notion that the introduction of air conditioning in cool states may not have resulted in significant marginal improvement in comfort levels to influence productivity and expenditures.</p> <p align="center" id="ch09-table-02"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="fc687a2d-ea43-42a4-8bf3-b750be18fa8c" data-langcode="en" class="embedded-entity"> <img width="401" height="700" alt="Media Name: cj-v39n1-chapter-09-table-02.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-02.jpg?itok=X5cHH9UL 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-02.jpg?itok=UlPWoufY 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-02.jpg?itok=X5cHH9UL" typeof="Image" /></div> <p align="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="cd22c101-68f1-43a3-a97f-b7a96704cc8c" data-langcode="en" class="embedded-entity"> <img width="423" height="700" alt="Media Name: cj-v39n1-chapter-09-table-02b.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-02b.jpg?itok=zkONA-YR 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-02b.jpg?itok=peYri66K 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-02b.jpg?itok=zkONA-YR" typeof="Image" /></div> <p>Having shown that the growth in state government expenditures in warm states was higher after the introduction of air conditioning, we now examine whether the growth rate of various components of state government spending were similarly affected by the introduction of air conditioning. Doing so not only provides additional support for our hypothesis but provides insight into the underlying drivers of the previous results for total state government expenditures. We consider four components of state government spending in the subsequent analysis: education spending, health spending, welfare spending, and transfer payments to local governments. Equation (4) is estimated for each component of state government spending, where the dependent variables are now the natural logarithm of each of the four components of state government expenditures. The results from these regressions are shown in column (2) through column (5) of <a href="#ch09-table-02">Table 2</a>.</p> <p>The results are similar to our findings for total state government expenditures. There was positive growth in per capita expenditures in each component of state government expenditures in both cool states and warm states before introduction of air conditioning. After the introduction of air conditioning in warm states, the spending growth rate for each component except welfare was higher. In addition, the increase in the growth rates of education spending and transfer payment spending in warm states after air conditioning are greater than the increase in spending on these categories in cool states after the introduction of air conditioning, as evident from the <em>t</em>-tests shown at the bottom of <a href="#ch09-table-02">Table 2</a>. There was no statistically significant difference between increases in spending on health and welfare between warm and cold states.</p> <p>State Government Expenditures before and after Air Conditioning</p> <p>Here we repeat the previous analyses but use the <em>level</em> of real per capita expenditures instead of the natural logarithm. These results are presented in <a href="#ch09-table-03">Table 3</a>. First considering total state government expenditures, the results in column (1) show that per capita expenditures have increased after the introduction of air conditioning in both warm and cool states. Specifically, per capita expenditures increased by $5.13 per capita in warm states after the introduction of air conditioning and by $1.42 dollars in cool states after the introduction of air conditioning. As shown in the bottom of column (1), the difference in the relative effects ($3.71) for warm state and cool states is statistically significant. Considering the four components to total spending in column (2) through column (5), we find that per capita spending on all the components has increased after introduction of air conditioning in both warm and cool states. The effect of air conditioning was greater in warm states than in cool states for per capita expenditures on education, health care, and transfer payments, with significant differences of $1.83, $0.23, and $1.74, respectively.</p> <p align="center" id="ch09-table-03"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="9d33e933-4226-46c5-838a-5eb22285f110" data-langcode="en" class="embedded-entity"> <img width="403" height="700" alt="Media Name: cj-v39n1-chapter-09-table-03.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-03.jpg?itok=3UrUCyBQ 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-03.jpg?itok=U6AvMXqH 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-03.jpg?itok=3UrUCyBQ" typeof="Image" /></div> <p align="center"> </p><div data-embed-button="image" data-entity-embed-display="view_mode:media.full" data-entity-type="media" data-entity-uuid="18b1de8f-d685-4c39-b4a9-7229a54e4815" data-langcode="en" class="embedded-entity"> <img width="428" height="700" alt="Media Name: cj-v39n1-chapter-09-table-03b.jpg" class="lozad component-image lozad" data-srcset="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-03b.jpg?itok=ipC8JNBR 1x, /sites/cato.org/files/styles/pubs_2x/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-03b.jpg?itok=3bPHcolU 1.5x" data-src="/sites/cato.org/files/styles/pubs/public/images/cato-journal/winter-2019/cj-v39n1-chapter-09-table-03b.jpg?itok=ipC8JNBR" typeof="Image" /></div> <h2>Conclusion</h2> <p>Previous research has found that the introduction of air conditioning led to a substantial increase in the productivity of households and businesses, especially those located in warmer climates. In this paper we argued that a contributing reason for the growth in state government expenditures that occurred during the latter half of the 20th century was due in part to the introduction of air conditioning in state capitols. Our conceptual framework of state government production demonstrated that the introduction of air conditioning in state capitols was a positive technology shock that would have increased the productivity of all demand-side and supply-side groups involved in producing public sector output. By collecting and assembling a unique data set containing the various dates when air conditioning was installed in state capitols, we tested our hypothesis using a quasi-experimental empirical framework.</p> <p>Our empirical work supports our hypothesis. We find that the annual rate of growth in expenditures for warmer states was significantly higher after the introduction of air conditioning in these state capitols than was the annual growth of expenditures in cooler states. In addition, we also find that the growth rates for each of several components of government spending — education, health care, transfer to local governments — were significantly higher in warmer states after the introduction of air conditioning compared with cooler states. Similar results were obtained with per capita expenditures. Both our conceptual framework and empirical results not only contribute to the literature on government growth, but they also provide a contribution to the literature on the productivity effects of air conditioning.</p> <h2>References</h2> <p id="ref001">Arsenault, R. (1984) “The End of the Long Hot Summer: The Air Conditioners and Southern Culture.” <em>Journal of Southern History</em> 50 (4): 597–628.</p> <p id="ref002">Baker, R. (1978) “No Sweat.” <em>New York Times Magazine</em> (July 9).</p> <p id="ref003">Baumol, W. (1967) “The Macroeconomics of Unbalanced Growth.” <em>American Economic Review</em> 57 (3): 415–26.</p> <p id="ref004">Becker, G. S. (1983) “A Theory of Competition among Pressure Groups for Political Influence.” <em>Quarterly Journal of Economics</em> 98 (3): 371–400.</p> <p id="ref005">Bologna, J., and Young, A. (2016) “Crises and Government: Some Empirical Evidence.” <em>Contemporary Economic Policy</em> 34 (2): 234–49.</p> <p id="ref006">Brennan, G., and Buchanan, J. M. (1977) “Towards a Tax Constitution for Leviathan.” <em>Journal of Public Economics</em> 8 (3): 255–74.</p> <p id="ref007">__________ (1980) <em>The Power to Tax: Analytical Foundations of a Fiscal Constitution.</em> New York: Cambridge University Press.</p> <p id="ref008">Breton, A. (1974) <em>The Economic Theory of Representative Government.</em> Chicago: Aldine.</p> <p id="ref009">Buchanan, J. M. (1967) <em>Public Finance and Democratic Processes</em>. Chapel Hill: University of North Carolina Press.</p> <p id="ref010">Clinton, J., and Lapinski, J. S. (2006) “Measuring Legislative Accomplishment, 1877–1994.” <em>American Journal of Political Science</em> 50 (1): 232–49.</p> <p id="ref011">Cooper, G. (1998) <em>Air-conditioning America: Engineers and the Controlled Environment 1900–1960.</em> Baltimore: Johns Hopkins University Press.</p> <p id="ref012">Downs, A. (1957) <em>An Economic Theory of Democracy.</em> New York: Harper and Row.</p> <p id="ref013">__________ (1961) “In Defense of Majority Voting.” <em>Journal of Political Economy</em> 69 (April): 192–99.</p> <p id="ref014">Ekelund, R., and Tollison, R. (2001) “The Interest Group Theory of Government.” In W. Shughart and L. Razzolini (eds.) <em>The Elgar Companion to Public Choice</em>. Northhampton: Edward Elgar.</p> <p id="ref015">Ferris, J. S., and West, E. G. (1999) “Cost Disease versus Leviathan Explanations of Rising Government Costs: An Empirical Investigation.” <em>Public Choice</em> 98 (March): 307–16.</p> <p id="ref016">Garrett, T. A., and Rhine, R. M. (2006) “On the Size and Growth of Government.” Federal Reserve Bank of St. Louis <em>Review</em> 88 (1): 13–30.</p> <p id="ref017">Higgs, R. (1987) <em>Crisis and Leviathan: Critical Episodes in the Growth of American Government</em>. New York: Oxford University Press.</p> <p id="ref018">Howell, W.; Adler, S.; Cameron, C.; and Riemann, C. (2002) “Divided Government and the Legislative Productivity of Congress, 1945–94.” <em>Legislative Studies Quarterly</em> 25 (2): 285–312.</p> <p id="ref019">Martin, J. (1960) <em>My First Fifty Years in Politics.</em> New York: McGraw Hill.</p> <p id="ref020">Mayhew, D. R. (1991) <em>Divided We Govern: Party Control, Lawmaking, and Investigations 1946–1990</em>. New Haven: Yale University Press.</p> <p id="ref021">Meltzer, A. H., and Richard, S. F. (1978) “Why Government Grows (and Grows) in a Democracy.” <em>Public Interest</em> 52 (Summer): 111–18.</p> <p id="ref022">__________ (1981) “A Rational Theory of the Size of Government.” <em>Journal of Political Economy</em> 89 (2): 914–27.</p> <p id="ref023">__________ (1983) “Tests of a Rational Theory of the Size of Government.” <em>Public Choice</em> 41 (3): 403–18.</p> <p id="ref024">Mueller, D. C. (2003) <em>Public Choice III</em>. New York: Cambridge University Press.</p> <p id="ref025">Niskanen, W. N. (1971) <em>Bureaucracy and Representative Government.</em> Chicago: Aldine-Atherton.</p> <p id="ref026">Olson, M. (1965) <em>The Logic of Collective Action: Public Goods and the Theory of Groups.</em> Cambridge, Mass.: Harvard University Press.</p> <p id="ref027">Sobel, R., and Crowley, G. R. (2014) “Do Intergovernmental Grants Create Ratchets in State and Local Taxes?” <em>Public Choice</em> 158 (1–2): 167–87.</p> <p id="ref028">Solomon, D. (2003) <em>Global City Blues.</em> Washington: Island Press.</p> <p id="ref029">Tullock, G. (1959) “Some Problems of Majority Voting.” <em>Journal of Political Economy</em> 67 (6): 571–79.</p> <p></p> <p><a id="ch09_Garrett-ref001" href="#ch09_Garrett-REF001"><sup>1</sup></a>U.S. government data (nominal values) are from the Office of Management and Budget. State government data (nominal values) are from the U.S. Census’s <em>State Government Finances</em>, various years.</p> <p><a id="ch09_Garrett-ref002" href="#ch09_Garrett-REF002"><sup>2</sup></a>Also see Garrett and Rhine (<a href="#ref016">2006</a>) for a more thorough discussion of demand-side and supply-side theories of government growth.</p> <p><a id="ch09_Garrett-ref003" href="#ch09_Garrett-REF003"><sup>3</sup></a>The median voter’s demand for government is typically modeled as a function of income, the relative price of public goods to private goods, and tastes.</p> <p><a id="ch09_Garrett-ref004" href="#ch09_Garrett-REF004"><sup>4</sup></a>Mueller (<a href="#ref024">2003</a>: chap. 16) provides a summary of 70 studies that examined the cost of public- versus private-sector provision of identical services. The majority of studies find that public provision is more costly.</p> <p><a id="ch09_Garrett-ref005" href="#ch09_Garrett-REF005"><sup>5</sup></a>Examples include the federal withholding of income taxes and property tax collection through monthly mortgage payments</p> <p><a id="ch09_Garrett-ref006" href="#ch09_Garrett-REF006"><sup>6</sup></a>Breton (<a href="#ref008">1974</a>) argues that the party in control of the legislature has an objective function that includes the probability of reelection, personal pecuniary gain, and the pursuit of personal ideals. While providing basic public goods, a monopoly government can obtain its objectives by bundling narrowly defined issues that benefit individual members of the government (see <a href="#ref029">Tullock 1959</a>).</p> <p><a id="ch09_Garrett-ref007" href="#ch09_Garrett-REF007"><sup>7</sup></a>We discuss different types of air conditioning (e.g., window units versus central systems) later in the article.</p> <p><a id="ch09_Garrett-ref008" href="#ch09_Garrett-REF008"><sup>8</sup></a>We argue that air conditioning was a labor-augmenting shock since government output is predominantly determined by the actions of citizens and legislators. However, the impact of technological growth on output is similar regardless of how the technology is specified (e.g., capital augmenting or augmenting both inputs).</p> <p><a id="ch09_Garrett-ref009" href="#ch09_Garrett-REF009"><sup>9</sup></a>We assume that there was no technological progress in air conditioning. Dropping this assumption would give us a parameter <em>A</em> that is a function of time, resulting in output growth being a function of technological growth in air conditioning over time. While technology may have improved the efficiency and cost of air-conditioning systems over time, it is unlikely there would have been significant improvements in the cooling ability of subsequent air-conditioning systems since initial air-conditioning systems already provided cool and low-humidity environments (<a href="#ref001">Arsenault 1984</a>).</p> <p><a id="ch09_Garrett-ref010" href="#ch09_Garrett-REF010"><sup>10</sup></a>Recall that the growth rate of any variable <em>x</em> per unit of time is <em>ẋ</em> = (<em>dx/ x</em>)/ <em>dt</em>.</p> <p><a id="ch09_Garrett-ref011" href="#ch09_Garrett-REF011"><sup>11</sup></a>It is certainly possible that the introduction of air conditioning would have also increased labor supply and hours worked. Air conditioning in state capitols made the workplace more pleasant; thus, on the margin, employees would work more hours and consume fewer leisure hours. More hours worked would then have led to an increase in output. Unfortunately, we cannot isolate this effect with the available data.</p> <p><a id="ch09_Garrett-ref012" href="#ch09_Garrett-REF012"><sup>12</sup></a>Measures of government output have included the number of bills, acts, or statutes (termed legislative output) enacted during a specified period of time, as well as legislative session length (<a href="#ref020">Mayhew 1991</a>; <a href="#ref018">Howell et al. 2002</a>; <a href="#ref010">Clinton and Lapinski 2006</a>). More legislative output will increase the total output of the respective public sector by increasing, for example, the scope and number of agencies, the number of new social programs, and, ultimately, expenditures on these programs, and so on. In our empirical models, we use government spending rather than the aforementioned government output measures due to the annual availability and consistency of expenditure data across states compared with state-specific data on bills, acts, or statutes (e.g., more bills or statutes passed in one state does not necessary imply that that state will have higher expenditures, because expenditures depend upon the purpose of the bills and statutes). We argue that government spending is a more comprehensive measure of (the dollar value of) government activity than bills, acts, statutes, or session length because spending not only captures the effects of the number of bills, acts, statutes, and session length, but also the demand-side and supply-side factors that occur outside of the legislative session.</p> <p><a id="ch09_Garrett-ref013" href="#ch09_Garrett-REF013"><sup>13</sup></a>All state government expenditure data were obtained from the U.S. Census Bureau’s <em>State Government Finances</em> (various years). State population data are from the Bureau of Economic Analysis. All data are in CPI base-year dollars (1983).</p> <p><a id="ch09_Garrett-ref014" href="#ch09_Garrett-REF014"><sup>14</sup></a>See <a href="http://www.nws.noaa.gov/os/heat/heat_wave.shtml">www.nws.noaa.gov/os/heat/heat_wave.shtml</a>.</p> <p><a id="ch09_Garrett-ref015" href="#ch09_Garrett-REF015"><sup>15</sup></a>See <a href="http://www.wpc.ncep.noaa.gov/html/heatindex_equation.shtml">www.wpc.ncep.noaa.gov/html/heatindex_equation.shtml</a>.</p> <p><a id="ch09_Garrett-ref016" href="#ch09_Garrett-REF016"><sup>16</sup></a>Air temperature and humidity data are readily available from The Weather Underground at <a href="http://www.wunderground.com/history">www.wunderground.com/history</a>.</p> <p><a id="ch09_Garrett-ref017" href="#ch09_Garrett-REF017"><sup>17</sup></a>The omitted cool states (Massachusetts, Michigan, Minnesota, Nevada, New Jersey, North Dakota, Vermont, Wisconsin, and Wyoming) had air conditioning installed in their capitol buildings as late as 1992.</p> <p><a id="ch09_Garrett-ref018" href="#ch09_Garrett-REF018"><sup>18</sup></a>In addition to ensuring a sufficient number of years pre– and post–air conditioning, we chose to end our sample in 1975 to (1) avoid potential confounding effects from the national and state fiscal crises of the late 1970s, and (2) to best capture the effects of air conditioning that are likely to be seen soon after the introduction of air conditioning rather than later years due to dilution of the potential effect over time. Similar results are obtained using alternative end-dates around 1975. These results are available from the authors.</p> </div> Tue, 26 Feb 2019 03:00:00 -0500 Thomas A. Garrett, Natalia A. Kolesnikova https://www.cato.org/cato-journal/winter-2019/influence-air-conditioning-growth-state-government-expenditures Diverging Trends in National and Local Concentration https://www.cato.org/publications/research-briefs-economic-policy/diverging-trends-national-local-concentration?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Esteban Rossi-Hansberg, Pierre-Daniel Sarte, Nicholas Trachter <div class="lead text-default"> <p>Most product markets are local. This is because the transportation of goods and people is costly, so firms set up production plants, distribution centers, and stores close to customers. A coffee shop or restaurant in Manhattan does not compete with similar establishments in Seattle, and probably not even in Brooklyn. The wedge in prices or costs created by the inconvenience of buying a product far away from the desired consumption point shields companies in different locations from direct competition. Of course, the size of these costs, and therefore the geographic extent of the market, varies by product. Markets are also product-specific. Producers of a particular product are shielded from competition by producers of distinct but related goods and services to the degree that their consumption requires households to move away from their ideal variety. Much has been written recently.</p> </div> , <div class="text-default"> <p>Much has been written recently about the increase in national market concentration observed over the last two decades and the role that large national firms have played in driving this trend. The evidence for the rise in concentration is uncontroversial; the share of the largest firms and the Herfindahl-Hirschman Index, among other measures of concentration, have increased consistently in most sectors since 1990. A narrative has emerged whereby this increase in national concentration is perceived as the cause of lower product-market competition. This fall in competition is then viewed as the culprit of other apparent trends, such as rising markups and market power, the increasing profits of large firms, declining labor market dynamism and firm entry, and a declining labor share. All these trends—and particularly those related to concentration, markups, and profits—point to the notion that market power has been increasing. While the empirical robustness and validity of some of these trends have been contested in recent work, the rise in national market concentration remains their main empirical foundation.</p> <p>We document four main facts regarding national and local product-market concentration in the U.S. economy between 1990 and 2014. We make use of the National Establishment Time Series (NETS) dataset, which covers the universe of U.S. firms and their plants. The dataset includes sales and employment numbers for plants at different levels of geographical and industrial disaggregation.</p> <p>Our first fact is that the observed positive trend in market concentration at the national level has been accompanied by a corresponding negative trend in average local market concentration. We observe an increase in concentration at the national level across the vast majority of sectors and industries but a fall in concentration when it is measured at the core-based statistical area, county, or ZIP code levels. The narrower the geographic definition, the faster the decline in local concentration. This is meaningful because the relevant definition of concentration from which to infer changes in competition is, in most sectors, local and not national.</p> <p>The second fact shows that local concentration is falling across a range of industries that together account for 77 percent of employment and 70 percent of sales. Furthermore, in industries where national concentration is rising, industries where local concentration has declined account for the majority of employment overall (70 percent of employment and 65 percent of sales) across all major sectors. The presence of these diverging trends is always large, but it is more pronounced in services; retail trade; and finance, insurance, and real estate relative to wholesale trade and manufacturing. This ordering is natural given that transport costs are less relevant in the latter two sectors. Together, these first two facts underscore an unmistakable decline in local concentration that is pervasive across all sectors.</p> <p>How does one reconcile a positive trend in national concentration with a negative trend in local concentration? Our third fact shows that, among the industries that exhibit this pattern, top firms have accelerated these trends. That is, excluding the top firm in each industry (in terms of national sales in their industry in 2014), the national increase in concentration naturally becomes less pronounced. Perhaps more surprisingly, the decline in local concentration also becomes less pronounced. Put another way, while large firms have materially contributed to the observed increase in national concentration, they have also contributed to the observed decline in local concentration. Among industries with diverging trends, large firms have become bigger, but the associated geographic expansion of these firms, through the opening of more plants in new local markets, has lowered local concentration, which suggests increased local competition. In the considerably smaller set of industries where we observe increases in both national and local concentration, top firms have also been responsible for increases in both forms of concentration.</p> <p>Our fourth fact establishes that, among industries with falling local concentration, the opening of a plant by a top firm is associated with a decline in local concentration at the time of the opening and that this lower level of concentration persists for at least the next seven years. This observation provides further evidence that, in those industries, large enterprises do not enter and dominate the local market but instead lower its concentration, either by competing with the previous local monopolist or simply by adding one more establishment that grabs a proportional market share from other local establishments. In any case, the notion that entry by large firms eliminates local producers to the point of increasing concentration is certainly not supported in the vast majority of industries where most U.S. employment resides.</p> <p>Consider the much-publicized case of Walmart. Most of Walmart's establishments are in the discount department store industry, an industry with increasing national concentration and declining local concentration. Consistent with fact four, when Walmart opens a store, concentration falls in the associated ZIP code. In contrast, when computing the concentration without considering the opening Walmart establishment, concentration remains constant. One can also consider the effect of Walmart on the number of firms in a local market. When Walmart enters, the total number of establishments in the ZIP code increases, though by less than one-to-one (about 3/4). In other words, Walmart generates some exit, but the net result of opening a Walmart store is a greater number of competitors in the market for at least seven years after entry. This case is paradigmatic, but there are many others across all major sectors. For example, the expansion of Cemex, the top firm by sales in 2014 in the ready-mixed concrete industry, led to a similar decline in local concentration and an expansion in the local number of establishments in the industry.</p> <p>Our findings challenge the view that product-market concentration is increasing in the United States. They do so not by challenging the evidence that national concentration has increased—we actually provide additional evidence for that effect across many industries—but by observing that this national trend does not imply a positive local trend in concentration. In fact, we show that it implies the opposite in most industries: a declining trend in concentration. Ultimately, concentration matters because it can lead to less competition. Hence measures of concentration must be aligned with product markets, as well as their geographic and industrial scope. In particular, for the majority of industries, concentration is likely more relevant to firm pricing and other strategic behavior at the local level. Our findings are also consistent with the mixed evidence found in recent literature regarding secular changes in markups across individual industries. If local competition matters, we should not see increases in markups or profits in the markets where local competition is increasing. The measurement of markups in local markets associated with particular industries depends on important assumptions and requires very detailed data. The NETS data does not allow us to calculate these local statistics, but there exists evidence of flat markups over time in specific industries with declining concentration and in the aggregate. </p><p>The facts we document are directly relevant to the design of antitrust policy and other policies that can prevent successful firms from growing at the national level. We document heterogenous trends across industries, and in some industries, concentration is clearly rising both at the national and local level. However, our results should provide pause for policymakers who worry about increases in market power. In most industries, large firms are lowering local concentration, and therefore most likely increasing product market competition. Carl Shapiro, a former deputy assistant attorney general at the Antitrust Division of the Department of Justice and member of the Council of Economic Advisers under Barack Obama, makes a similar argument. Discussing evidence of the positive trend in national market concentration, he observes: "So, while these data do reflect the fact that large, national firms have captured an increasing share of overall revenue during the past 20 years in many of these 893 'industries,' they do not, in and of themselves, indicate that the relevant local markets have become more concentrated." We provide empirical evidence supporting the notion that, in the face of rising national concentration, local markets have indeed become, on average, significantly less concentrated.</p> <p><strong>NOTE:</strong><br />This research brief is based on Esteban Rossi-Hansberg, Pierre- Daniel Sarte, and Nicholas Trachter, "Diverging Trends in National and Local Concentration," NBER Working Paper no. 25066, September 2018, <a href="http://www.nber.org/papers/w25066" target="_blank">http://www.nber.org/papers/w25066</a>.</p> </div> Wed, 20 Feb 2019 00:00:00 -0500 Esteban Rossi-Hansberg, Pierre-Daniel Sarte, Nicholas Trachter https://www.cato.org/publications/research-briefs-economic-policy/diverging-trends-national-local-concentration Cato’s Fiscal Policy Report Card grade is cited on KEEL’s American Ground Radio https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-keels-american-0?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Tue, 19 Feb 2019 12:25:00 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-keels-american-0 Bill Weld cites his grading of A on Cato Institute’s Fiscal Policy Report Card on Bloomberg https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grading-cato-institutes-fiscal-policy-report-card?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Tue, 19 Feb 2019 12:23:00 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-tv/bill-weld-cites-grading-cato-institutes-fiscal-policy-report-card Poor Results in Overdose Crisis Management Call for a Shift to Harm Reduction https://www.cato.org/publications/commentary/poor-results-overdose-crisis-management-call-shift-harm-reduction?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Jeffrey A. Singer <div class="lead text-default"> <p>A recent report reveals California’s “Death Certificate Project,” is terrorizing doctors into under-prescribing or even abruptly terminating medication for acute and chronic pain patients. The project investigates doctors who have treated patients identified as overdoses on death certificates and considers rescinding their licenses or charging them with homicide.</p> </div> , <div class="text-default"> <p>It is scandalous that we doctors and our patients are the latest victims of America’s war on drugs, while deaths from nonmedical use of licit and illicit drugs continue their exponential and perpetual climb—with no end in sight. It is time to change the prevailing approach to the crisis. The goal should shift from reducing production and prescription of painkillers to reducing death and harm.</p> <p>Harm reduction strategies begin with the realistic, nonjudgmental premise that there has never been and will never be a drug-free society. Akin to my profession’s credo—“First, do no harm”—harm reduction seeks to mitigate the harms caused by black market drugs, fueled by drug prohibition. Instead it aims at reducing the spread of disease and death from drug use.</p> <p></p> </div> , <aside class="aside--right aside pb-lg-0 pt-lg-2"> <div class="pullquote pullquote--default"> <div class="pullquote__content h2"> <p>It is scandalous that we doctors and our patients are the latest victims of America's war on drugs, while deaths from nonmedical use of licit and illicit drugs continue their exponential and perpetual climb—with no end in sight.</p> </div> </div> </aside> , <div class="text-default"> <p>The U.S Centers for Disease Control and Prevention recently released the latest results of the current strategy: opioid-related overdose deaths in 2017 continued their steady climb, increasing 13 percent over 2016 totals. This happened despite the fact that per capita high-dose opioid prescriptions fell 58 percent from 2008 to 2017, while the number of all opioids dispensed fell 29 percent from 2010 to 2017.</p> <p>The focus on prescription opioids has only served to change the make-up of the overdose numbers. In 2017, fentanyl or heroin accounted for 75 percent of opioid-related overdose deaths and, according to CDC data, 68 percent of deaths from prescription opioids involved heroin, fentanyl, cocaine, barbiturates, benzodiazepines, or ethanol. More people take increasingly greater risks with nonmedical drug use. Some might even be self-medicating to deal with stress or despair.</p> <p>But while the prohibition strategy has been unsuccessful, harm reduction strategies have been used in much of the developed world, and to a very small degree in the U.S, for over forty years. A deep dive into the data from decades of experience with harm reduction shows a range of methods that are successful in reducing overdose deaths, the spread of infectious diseases, and, in many cases, the nonmedical use of dangerous drugs.</p> <p>Medication-assisted treatment is one harm reduction technique in use since the 1960s. This employs a medical replacement for the opioid on which a patient has become dependent, allowing that person to avoid the nightmare of withdrawal—often the chief reason they continue using the drug—without experiencing the fogginess or “high” they get from injecting. The first drug used for this was the synthetic opioid methadone. In recent years, buprenorphine combined with the overdose antidote naloxone (brand name Suboxone) has also proven effective. Research shows more than 50 percent of people with substance abuse disorder have psychiatric co-morbidities. MAT lets people escape harmful street use, think more clearly, stabilize their lives, and work with therapists while gradually weaning off the substitute. A comprehensive 2017 study found methadone treatment associated with a 69 percent reduction in all-cause mortality, while buprenorphine treatment led to a 55 percent drop. For those who fail, heroin-assisted treatment has found a fair amount of success in Switzerland (since 1994), Germany, the UK, Netherlands, and Canada, as noted in a 2018 RAND study.</p> <p>“Safe Syringe Programs,” endorsed by the CDC, reduce the spread of HIV, hepatitis, and other infectious diseases. One form, needle-exchange, has existed in the U.S since 1988, and has reduced the spread of HIV by up to 58 percent. Unfortunately, in about half the states anti-paraphernalia laws stand in the way. Supervised Injection Facilities, also called “safe consumption sites,” ensure needles don’t subsequently get shared or sold because they are used under supervision and returned after use. Staff are close by with the overdose antidote naloxone at the ready if needed, and nudge users into rehab programs. The Lancet reported a 35 percent drop in overdoses resulting from the safe injection site in Vancouver, British Columbia. Over a hundred safe consumption sites exist throughout Europe, Canada, and Australia. Unfortunately, federal drug laws block them in the U.S.</p> <p>Naloxone is still not accessible enough to opioid users. The overdose antidote is bought off the shelf in Australia and Italy. Unfortunately, it is still a prescription-only drug in the U.S, despite suggestions from the Food and Drug Administration that it should be reclassified.</p> <p>Most developed countries recognize the value of harm reduction and make it central to drug policy. Portugal had one of the highest overdose rates in Europe in 2001 when it decriminalized nonmedical drug use and focused nearly exclusively on harm reduction. Now it has the lowest overdose rate in Europe and saw a 75 reduction in heroin use and a 95 percent drop in HIV infections since the policy change.</p> <p>Critics like Grayson County, KY Sheriff Norman Chaffin dismiss harm reduction as “offering a drunk the keys to his car.” As the decades pass and the deaths mount, it is time to view harm reduction as a way to help the driver get home safely.</p> </div> Tue, 12 Feb 2019 09:47:00 -0500 Jeffrey A. Singer https://www.cato.org/publications/commentary/poor-results-overdose-crisis-management-call-shift-harm-reduction Cato’s Fiscal Policy Report Card grade is cited in an interview with Sen. John Neely Kennedy (R-LA) on WJBO’s Moon Griffon on Weekends https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-interview-sen-john?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Sat, 09 Feb 2019 10:48:00 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-interview-sen-john Cato’s Fiscal Policy Report Card grade is cited on KEEL’s The Moon Griffon Show https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-keels-moon-griffon-1?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Tue, 05 Feb 2019 12:39:00 -0500 Chris Edwards https://www.cato.org/multimedia/media-highlights-radio/catos-fiscal-policy-report-card-grade-cited-keels-moon-griffon-1 Cato Institute's Freedom in the 50 States is cited on KPRC Radio https://www.cato.org/multimedia/media-highlights-radio/cato-institutes-freedom-50-states-cited-kprc-radio?utm_source=rss_topic&utm_medium=rss&utm_campaign=rss Thu, 31 Jan 2019 10:19:00 -0500 Cato Institute https://www.cato.org/multimedia/media-highlights-radio/cato-institutes-freedom-50-states-cited-kprc-radio