Editorial roundup – February 19

The weird principles of giftonomics

Chicago Tribune (TNS)

Economists who study the mismatch of Christmas gift exchanges coined a cold term for this: “deadweight loss.” Here’s what that means: You give your spouse a $100 bracelet. But she doesn’t value it at that amount. She’d have preferred a necklace, or maybe a ring. So the gap between what you paid for the gift, and how much the recipient values it, is called the deadweight loss.

In 2009, University of Minnesota economics professor Joel Waldfogel estimated the economic waste of ill-chosen gifts: “Given the $65 billion in U.S. holiday spending per year, that means we get $13 billion less in satisfaction than we would receive if we spent that money the usual way — carefully, on ourselves,” he wrote in Slate. “Americans celebrate the holidays with an orgy of value destruction.” We pity whoever got Waldfogel as their Secret Santa.

By this reasoning, people should generally give cash or cash equivalents so that receivers know exactly how much the relationship is valued.

Let’s forget about dollars for a minute.

Think back to all the gifts that you remember. If you’re like us, there aren’t all that many. Not that you haven’t had your share of sweaters, ties, toys, electronic gewgaws and — yes — socks. But the gifts that stick in memory aren’t the most expensive, the most elaborate. Who hasn’t framed a child’s gift of artwork, for instance, to cherish? Wasn’t that trip to swim with the beluga whales at the Shedd Aquarium a thrill, even years later? How about that battered pocket watch handed down from your grandfather’s grandfather? Doesn’t work? Doesn’t matter.

One great gift, even once a year, overshadows a dozen uninspired presents. A study in the Journal of Personality and Social Psychology showed how people attach sentimental value to some gifts that outweighs the costs of the gifts and far outweighs the value of presents that they bought themselves during a holiday season. Researchers found that presents people bought for themselves quickly shed their power to bring happiness. That’s called “hedonic adaptation.” But many gifts did not. They held their value, often because of sentimental value.

The trick is to find those gifts that gather sentimental value.

Thought and effort does count. A long investigative effort to track down a favorite childhood recipe for a cheese flaky from a long defunct bakery, for instance, may not have produced the recipe. But it did produce a detective tale of tasty tidbits — emails and phone calls and interviews — entertaining enough to earn the giver at least partial credit for … trying.

Mercy — what gift that is.

Like Mad Men, government-style

The Orange County Register (TNS)

Our federal government is a master of self-promotion, comprising the second-largest public relations firm in the world, according to a new report from Open the Books, a project of the nonprofit group American Transparency, which has developed an app to track federal and state spending.

From fiscal years 2007-14, the federal government spent $4.37 billion on public relations efforts, according to the study. This sum includes more than $2.3 billion for 3,092 in-house public affairs officers – 60 percent of whom make at least $100,000 a year in base salary – across more than 200 federal agencies and $2 billion spent by 139 agencies on outside PR vendors. During this period, the number of government PR positions has increased by 15 percent, and outside PR consulting expenditures have increased 47 percent under the Obama administration, compared to the last two years of George W. Bush’s administration.

The money has gone to fund projects such as the Environmental Protection Agency’s “I Choose Clean Water” social media campaign to tout its massive expansion of authority under its Waters of the United States rulemaking. The Government Accountability Office just determined that this constituted “covert propaganda” and violated federal lobbying laws.

Other expenditures included $36.5 million for polling on foreigners’ opinions of the United States, $630,000 to convince people to “like” the State Department on Facebook, $4.5 million to monitor the media, $62,098 for “cooking videos promoting U.S. agriculture products overseas” and spending on focus groups of older motorcyclists ($93,487) and adult bicyclists ($101,104).

While government agencies are to be commended for making information available, agencies “are not charged with using taxpayer funds to engage in thinly veiled propaganda campaigns that are primarily designed to protect their budgets and hype outcomes,” the report contends. “After $4.5 billion in federal public relations spending over the past eight years, have we reached a point where the people’s consent is being manufactured by our government?”

It is bad enough that our government wastes so many of our tax dollars on things of which we disapprove. It is a double slap in the face that it spends even more on propaganda to pat itself on the back for its extravagance and try to convince us that this is all done for the greater good, when it is really nothing more than a meek attempt to justify unnecessary bureaucrats’ existence.

Local governments need fiscal flexibility

(Fort Wayne) News-Sentinel

Starting in 2009, Indiana established property tax caps of 1 percent of a home’s assessed value. Rental properties were capped at 2 percent and businesses at 3 percent.

The good news from that is for taxpayers, says one new report from the Indiana Fiscal Policy Institute. The caps have saved them $760 million in property taxes so far, said Instituter President John Ketzenberger.

The bad news, says a second report, is for Indiana cities and towns and other taxing units, such as school districts. A look at 18 of the state’s biggest communities showed an overall reduction of 21 percent in property tax levies. And some cities were hit even harder.

Growing suburban communities fared much better. The Indianapolis suburbs of Carmel and Fishers saw declines of less than 5 percent, for example. Older, industrial cities fared worse — a 45 percent decline in Muncie, 35 percent in Anderson, 32 percent in Terre Haute.

Cities can lose a certain amount of revenue without hurting residents. There are the ever-present waste, fraud and abuse, of course, and a lot of cities do things that don’t need to be done or can be better done by the private sector.

But at some point, services are going to have to be looked at, including ones a majority of people would call essential. That will require a conversation between citizens and officials about what services the community actually wants enough to pay for.

But that conversation will be impeded by a silent and stubborn partner in the state. If residents of, say, City X, decide they want service Y but there is no money for it, the state will demand that the city come to the capital and beg for a way to raise it. The state might or might not give permission, and even if it does, the budget vultures will keep a very close eye out.

This is unacceptable. The property tax caps aren’t going away any time soon — our legislative geniuses saw to that by putting them into the state constitution instead of legislation. So taxing units that will get squeezed harder and harder must have the flexibility to enact a local sales tax or income tax or a utilities user fee or whatever other mechanism they feel meets a need.

And then voters can reward officials or punishment them based on how well they think their needs fiscal and otherwise are being met. There is no role for the state here.