Jim Holt: The Traditional Fiscally Conservative Choice for Arkansas Lieutenant Governor

In local news, there were debates yesterday between Democrat and Republican candidates in the race for Governor of the State of Arkansas as well as for the position of Lieutenant Governor. I was more intrigued in the dialogue of the Lieutenant Governor candidates since they tended to focus more on fiscal policy. The candidates, Democrat Bill Halter and Republican Jim Holt, expressed differing opinions of the path the state should take to increase the economic production, and thus constituent and state wealth.

Mr. Holt claims he is in favor of tax reductions as a way to attract business investment to the state, while Mr. Halter is in favor of tax incentives. First of all, tax reductions will give businesses permanent incentives to operate in the state, while tax incentives usually are given for a period of time. Secondly, through tax reductions, the entire tax burden on businesses throughout the state, not just certain businesses, is reduced. This brings the Laffer Curve (lower taxes creates more economic activity, thus expanding the tax base) into effect. This will increase small business investment by making entreprenuership more attractive. This incentive for risk taking is the key to wealth development. Tax incentives are not necesarily a bad idea because they can bring good jobs to the state and boost economic activity, but permanent tax reductions have proven to be the better and more sustainable method (look at economic growth in Texas and Florida with their 0% income tax rate).

The two candidates also took on the issue of the minimum wage. Mr. Halter defended the recent state increase in the minimum wage from $5.15 to $6.25 by saying it hadn't been increased since 1997 and inflation had eroded buying power. The question for Mr. Halter is: Why not set the minimum wage at $20 an hour? If the unskilled are really getting it put to them, then why not make everyone middle class? The reason is because free markets do not work like that. Raising the minimum wage simply pushes those lesser skilled workers who were making the old minimum wage out of the workforce. Business owners will force higher skilled more productive employees to take on more of a workload to preserve their profits. In basic economics class we learn price floors create a surplus because prices cannot be lowered enough to take care of excess supply, and that is exactly what happens with the minimum wage, it creates a surplus of workers. Mr. Holt is correct that minimum wage is just politics and a "joke, it's a red herring" and not economic reality. Mr. Halter criticizes Mr. Holt for being the only State Senator to vote against the minimum wage and says Mr. Holt has "a record of putting personal ideology ahead of the best interest of the state." I must say I commend Mr. Holt for standing up for what he believes in. If his constituents do not like it at least they know where he stands and can vote for someone else next time an election comes around. Mr. Holt, agree or disagree with his ideology, captures how the Founders of this country wanted future leaders to govern. He brings ideas and solutions to the table that may or may not be signed into law, and he brings them forward because he believes in something, not just for political gain. If more politicians, liberal and conservative, had the conviction of Jim Holt this country would operate the way it was originally intended.