Highway Bill Can Prove Advantageous to Texas
Transportation has been a major topic of conversation in Texas since way before the Republic was established in 1845. Early buffalo and Indian trails served as pathways for the gradual construction of roads and railways which, in turn, became the matrix for the complex multi-modal transportation system that benefits Texans today.
Through the years, dependable, safe, and efficient movement of people and products throughout the state has enabled our economy to grow and develop into the eighth largest in the world. Highways, of course, have played a highly significant role in this development.
The transportation bill recently signed by President Bush will likely add a new dimension to the possibilities soon to be available to Texas. The nearly $290 billion authorized by Congress funds the most expensive public works program in the history of the United States.
With money to construct and repair roads, thousands of new jobs will be created. There is also the potential that better roads will save lives. Highway officials note that substandard road conditions and hazards contribute to nearly 14,000 fatalities across the US annually. Without a doubt, road improvements will increase efficiency, leading to cost savings and encouraging economic growth.
It is estimated that American drivers waste some 2.3 billion gallons of fuel each year due to delays caused by highway congestion, much of which is the result of inefficient infrastructure. Practically any method to save money at the gasoline pumps will certainly be welcome with today’s record fuel prices. Moreover, the easier (and faster) it is to get people and products where they need to be, the more the economy benefits.
The economic benefits of highway improvements can be enormous. Studies have shown that congestion cause drivers in the US around 3.7 billion hours of delays annually. Texas travelers in urban areas spend from 20 to 60 hours or more each year stuck in traffic.
Imagine the potential gains if this time were spent engaging in some more productive activity. Not only would life be much more pleasant for these commuters, they would also be contributing more to the economy.
Taking a lead in transportation innovation is nothing new for the Lone Star State. In 1950, Texas was among the first states to take advantage of the visionary interstate highway system designed to connect major cities. Federal highway matching monies provided the support necessary to accomplish the required construction.
Another new adventure—the Trans-Texas Corridor—is now underway. This project has the potential to accelerate transportation in many parts of the state. The degree of success achieved through this endeavor will depend on many variables, but dire necessity to improve today’s transportation systems to meet the needs of the future are hardly debatable.
Texas has over 79,000 centerline miles of roads maintained by the Department of Transportation, far more than any other state. Texas’ share of the new highway bill’s $24 billion for currently earmarked projects across the US amounts to about $750 million. These funds will certainly prove advantageous in improving road systems across the state. Some 230 highway and transit projects in Texas will be the recipients of these funds. Although Congress’ new highway bill is not considered equitable by some groups representing specific causes, the money provided will certainly be a step forward and a great asset in creating jobs, stimulating our economy, increasing efficiency, and enhancing Texas’ competitive edge.
posted @ 06:48 AM CST [link]
Friday, August 19, 2005
New Trade Agreement Offers Positive Opportunities
Throughout history, trade between countries has been a key factor in the health and vitality of their economies. For just about as long, nations have sought favorable relationships with others in order to enhance trading possibilities for the betterment of their own situations.
European exploration, especially during the 15th through 18th centuries, regularly led to the establishment of new markets and dramatically increased the numbers of available products. The various trade endeavors also led to the general enhancement and improvement of living conditions and lifestyles of the citizenries involved. In addition, the continual expansion of trade played a significant role in creating a commercial revolution.
The recent signing of the Central American Free Trade Agreement (CAFTA) has similar advantages as it removes virtually all tariffs and quota barriers and consolidates Central America’s preferential market access in the US.
The accord is expected to increase trade among all of its members and encourage greater foreign investment in the individual countries. The agreement also promises to help to improve economic growth and reduce poverty in Central America. CAFTA has the potential to benefit both the US and Texas. After the full phase-in of the agreement, US exports to the nations involved are expected to rise by about $2.7 billion.
Texas has trade relationships with more than 225 countries around the world and is among the leading states in the value of exports to the CAFTA nations. Last year, Texas ranked second in the total value of US exports to both Guatemala and Honduras, providing 19% and almost 16%, respectively. The state was also third in the percentage of all US products transported to Nicaragua at about 12% and the Dominican Republic with nearly 8%.
In 2004, the CAFTA nations accepted a total of $1.76 billion of Texas exports, the second highest quantity from all US states. This amount reflects a 98% increase of Texas products sold to the six countries in comparison to the 1999 total.
Over the five-year timeframe from 1999 to 2004, the aggregate value of Texas goods and services exported to the CAFTA signatories was nearly $7.83 billion. Guatemala received almost 27% of this total. The percentage shipped to the other Central American countries from Texas was: Honduras, 23%; Dominican Republic, 20%; Costa Rica, 14%; El Salvador, 12%; and Nicaragua, 4%.
Texas’ leading export products to the CAFTA nations in 2004 included chemical manufactures, petroleum and coal products, computers and electronic products, transportation equipment, processed foods, fabric mill products, and apparel manufacture. Petroleum and coal products accounted for about 41% of the total value of products exported to the group. Chemical manufactures represented approximately one third.
Our nation and state have continuously sought ways to improve trade, expand advantages, and enrich benefits to citizens. In 1993, I was privileged to be involved in the development of the North American Free Trade Agreement (NAFTA), which created the world’s largest free-trade area. It has been beneficial to our state, with more than half of our exports going to Mexico and Canada annually.
While CAFTA will never equal NAFTA in the value of goods imported from Texas, the agreement should benefit numerous industrial sectors across the state, thus proving to be a positive—even though small—contributor to our overall economy.
posted @ 07:44 AM CST [link]
Friday, August 12, 2005
The “eBay Effect”
Years before Adam Smith penned The Wealth of Nations in 1776, the venerable father of natural law, John Locke, set forth a simple notion which is now known as the “Quantity Theory of Money.” The year was 1692. The concept was refined by the great Irish economist with the Spanish name who wrote in French, Richard Cantillon, in 1732 and even further by Smith’s friend and mentor, David Hume, in the 1750s.
In its simplest form, the Quantity Theory simply states that the quantity of money (M) multiplied by the number of times it turns over in a year (the “velocity” of money (V)) is equal to the price level (P) multiplied by the number of transactions (T) in the economy (MV=PT). For some, like Milton Friedman, it is the key to understanding all there is to know about the economy—proof positive that increasing the money supply causes inflation. For others, it is a simple mathematical identity without much embedded knowledge—not unlike 1 + 4 = 2 + 3. In any case, it is now well into its fourth century of recognition (and several millennia of reality), and it’s still going strong.
One of the modern phenomena that we have observed within this framework is a notable increase in the velocity of money (V). Credit cards, debit cards, paying bills by phone and online, electronic transfers, and a host of other innovations have caused the financial system to become much more efficient. The result is that we can accomplish many more transactions (T) without increasing the money supply or prices. Much of our remarkable era of growth without significant inflation can be traced to this simple fact.
There is another part of this story, however, that to date has not been chronicled. I call it the “eBay Effect,” although it is really much more than that. The idea is that, for most of our history, a substantial part of wealth has been tied up in assets that were not liquid (easily convertible to cash). While many of these assets, such as machinery, are essential to productivity and progress, this freezing of available funds was an impediment to transactions. If you had furniture, machinery, or almost any other “used” asset that you no longer needed, you had a difficult time converting it to cash. You might run an ad in the local paper or a trade publication; you might even hire a broker; but it was almost always a slow and expensive process. Because of this lack of liquidity, such assets were also difficult to use as collateral for loans. The money was pretty well locked up.
Those days are gone! With the advent of the Internet, online auctions and specialty sites bring millions of buyers and sellers from around the world together on a non-stop basis. The search cost for finding the right purchasers has dramatically diminished, and virtually everything has become a liquid asset. Thus, more things are acceptable as collateral, more things can be quickly and efficiently converted to cash, and the entire financial system gains efficiency. As a result, more transactions can be accommodated, which in turn provides growth without inflation.
The Internet has affected our daily lives in many ways, and will continue to do so. Many of those are easy to see; others are more subtle. One which should not be overlooked is the eBay Effect. It goes beyond the ability to buy and sell online. It literally impacts the very essence of our economy. It allows more resources to enter our increasingly efficient financial system, thus providing more transactions and enhanced potential for prosperity. The equation may be over 300 years old, but its relevance to the modern world continues to be manifested.
posted @ 07:26 AM CST [link]
Friday, August 5, 2005
A Different Kind of Holiday
Often when one hears the word “holiday,” the mind conjures up thoughts associated with relaxation, celebration, and a break from regular routines. Barbecuing or homemade ice cream might be at the top of the list of planned activities for those days, especially during the summer months.
Through the years, many days have been designated as holidays as a result of official action by the US Congress and the Texas Legislature. In addition, local governments, businesses, religious bodies, civic groups, higher education institutions, and other entities have fashioned an assortment of holidays for their own members.
The popularity of particular holidays in Texas has varied over the years. Not all of them are regularly observed by the average Texan. Some receive very little publicity and even less attention. Probably only avid history buffs know the period set aside to observe Confederate Heroes’ Day or Lyndon Baines Johnson’s Birthday. Finding someone who can name all 19 of those authorized by either the constitution or legislative action might prove difficult.
But there is also another kind of holiday in the Lone Star State for which the focus is completely different. It’s the sales tax holiday beginning at 12:01 a.m. August 4th and running to midnight August 7th. Of course, this holiday doesn’t rank up there with those created to recognize nation-changing events or special religious observances. Still, it’s pretty well liked and is gaining popularity every year, particularly among Texans who enjoy saving money while doing their back-to-school shopping.
Texas, of course, is not the only state with special tax-free periods. The first endeavor of this type was instituted in New York in 1997. Florida followed the next year, and Texas authorized the program in 1999. Since then, a total of about 15 states and the District of Columbia have either implemented or are considering legislation to authorize similar tax-exempt shopping days. Florida not only has the back-to-school savings weekend, but the state also provides tax-free shopping the first 12 days in June so residents can prepare for the annual hurricane season.
The number of days allotted for the shopping spree differs among the states as do the items permitted to be purchased under the plan. During the 2005 three-day, tax-free holiday in Texas, no state or local sales taxes are required on purchases costing less than $100 that meet specific requirements. Items exempt from these taxes are mostly clothing and footwear, exclusive of those used primarily for athletic activities or protective wear. Jewelry and school supplies are also not included in the sales tax exemption.
Since the first tax-free weekend in 1999, Texans who shop during this period have saved some $188.8 million in state sales taxes and another $50.8 million in local taxes. Following a combined savings of approximately $32.6 million during the initial holiday, savings have increased annually to reach $46.1 million last year. Expectations are that the amount of spending and savings will rise again this weekend.
According to a survey by the National Retail Federation, the average outlay per back-to-school shopper this year will be $205.31 on clothes and $88.54 on footwear. Although school supplies and backpacks are not among the tax-free items that are available, the average expenditure on them will probably be about $81.83 as students get ready for the fall school term.
Texans are noted for many things, and bargains are certainly among them. For those looking to save money, this weekend might offer a great opportunity.
posted @ 09:50 AM CST [link]