Tying some loose ends from past columns

August 08, 2004|by Tom Firey

Over the last year or so, I've written several op-eds on local issues. I now find myself with a problem - I have a few "follow-ups" and comments that I want to make public, but nothing lengthy enough for a column. I'll try to tie up these "loose ends" below.

First, I need to acknowledge some flawed thinking on my part. An op-ed I wrote last winter argued against the thenen vogue notion that Washington County and the City of Hagerstown should merge into one governmental entity.

My argument was simple: Merging local governments typically leads to higher taxes and lower-quality public services because the merged entity faces less competition in attracting and retaining residents. I cited several academic studies supporting that idea, which is known in the literature as the "Leviathan Theory."

My op-ed drew a response from one reader (whose name, sadly, I can no longer find) who argued that my position amounted to demanding multiple, costly layers of local government. The reader misunderstood my point; I want people to have the choice of whether the city or county would provide them a single layer of local government.


Despite that misunderstanding, the reader raised a good point: Hagerstown residents statutorily fall under the jurisdiction of both the city and county, and thus pay taxes to and receive services from both. City residents are thus burdened with two layers of local government and cannot enjoy the benefits of competition - they're captured customers of both governments.

Puzzlingly, the reader claimed that fact supports city-county merger. In fact, it's an excellent argument for the opposite - the city and county should be further separated to better enable competition between the two. Creating that separation would require a provision in state law, but Annapolis likely would grant it.

In having to compete with each other for residents, the city and county would be less inclined to dip into the treasury for boondoggle airport and parking deck projects that in no way fit the definition of public goods.

Early in 2003, I criticized Washington County lawmakers in Annapolis for gaining passage of a ridiculous business welfare law that prohibits chain liquor stores from opening shops in the county. I blasted the law because it protects politically well-connected incumbents and their suppliers from competition over price, selection and quality. My letter drew unhappy responses from some local alcohol retailers.

Now, I find myself on the same side as some of those retailers - on a different issue: the prohibition of local restaurants and bars from holding charity poker tournaments.

Last spring, county liquor board chairman Robert Everhart announced that he would be cracking down on such shenanigans.

Surely this can't be the same Robert Everhart who's active in the supposedly limited-government, individual liberty, anti-nanny state Republican Party - can it?

I was quite surprised that some of the supporters of Habitat for Humanity's effort to get past the Town of Boonsboro's land-use regulations are also vigorous supporters of Washington County's proposed tightening of land-use regulations.

Given that the Habitat controversy was provoked, to some extent, by skyrocketing lot prices resulting from the county building moratorium, how many, similar controversies will follow the county's adoption of the proposed downzoning?

Hagerstown City Councilman Kristin Aleshire, in a column early this summer, criticized me for not providing citations in an earlier column where I claimed that several academic studies show that hospital Certificate of Need programs raise health care costs and lower medical outcomes. Here are a few of those citations:

- "Does Removing Certificate-of-Need Regulations Lead to a Surge in Health Care Spending?" by Christopher J. Conover and Frank A. Sloan. In Journal of Health Politics, Policy and Law, June 1998.

- "Certificate of Need Regulation and Health Outcomes," by Scott Hankins. University of Florida Working Paper, January 30, 2004.

- "The Effect of State Certificate-of-Need Laws on Hospital Costs: An Economic Policy Analysis," by Daniel Sherman. Federal Trade Commission Staff Report, Jan. 1988.

- "Containing Health Expenditures: Lessons Learned from Certificate-of-Need Programs," by Frank A.Sloan. In Cost, Quality and Access in Health Care: New Rules for Health Planning in a Competitive Environment (Jossey-Bass Publishers, 1988).

Aleshire may also want to read the brand new report "Improving Health Care" from the Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission. The report finds that "there is considerable evidence that CON programs can actually increase prices by fostering anti-competitive barriers to entry."

By the way, given the quality of Aleshire's research into the nature of my employer, the Cato Institute, I'm even more convinced that Washington County's medical professionals and hospital administrators, and not Aleshire and his council colleagues, are better suited to determine the right location for the county's new hospital.

Thomas A. Firey, a Washington County native, is managing editor of the Cato Institute's Regulation magazine and a senior fellow of the Maryland Public Policy Institute. He may be contacted by e-mail at

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