Good news: At least one Nevada assemblyman understands economics

Victor Joecks

Bad news: The rest either don’t, or don’t have the courage to oppose an idea that economists from Keynesians to Austrians understand will kill jobs in the long term.

What revealed this need for a lesson in basic economics?

Assembly Bill 144, also known as Nevada Jobs First, which passed the Assembly, 39-1 today. AB 144 would give Nevada-based contractors a 5 percent preference in bidding and put a whole host of new regulations on contractors working on government projects.

[T]he contractor, applicant or design-build team must ensure that: (1) at least 50 percent of the workers on the public work have a Nevada driver’s license or identification card; (2) all of the non-apportioned vehicles primarily used on the public work are registered in Nevada; (3) at least 50 percent of the design professionals who work on the public work have a Nevada driver’s license or identification card; (4) at least 25 percent of the materials used in the public work are purchased in Nevada; and (5) certain payroll records related to the public work are maintained and available within this State.

There are so many problems with this provision, it’s hard to know where to start. But that doesn’t mean I’m not going to try.

The key to wealth creation, in Nevada and other states, is specialization. Economic policies like mercantilism or tariffs destroy wealth. Note the negative effects of Smoot-Hawley during the Great Depression.

If economic theory doesn’t do it for you, consider these practical impacts:

First, the cost of every public-works project in Nevada will increase, which means we’ll have fewer of those roads and schools that liberals claim we so desperately need.

Second, other states are likely to enact measures similar to this, which means Nevadans who work out of state will be hurt.

Third, this is going to dramatically increase the compliance costs for construction companies, which means they’ll be spending more money checking paperwork rather than building things.

Fourth, policies like this delay long-term economic growth, because they send a message to construction workers that they don’t need to retrain and get new skills. Individuals in the free market do an amazing job of creating wealth precisely because the market incentivizes workers to retrain for areas of higher need. This bill delays that necessary retraining.

Fifth, this is a perfect example of government picking the winners (Nevada construction workers working only on government projects) and the losers (taxpayers who are getting less for their money).

The U.S. Supreme Court also ruled that a similar measure in Alaska represented a violation of interstate commerce.