Except, unable to resist a good spin, journalists glommed on to the sympathetic portrayal of the Leaf owner’s seeming inconsequential crime: He only stole a nickel’s worth of electricity. If you didn’t dig very far into the story, you’d see the portrayal of driver Kaveh Kamooneh victimized by a cold, unyielding police officer in the Atlanta suburb of Chamblee. Worse, the officer’s boss, Sergeant Ernesto Ford, said, “I’m not sure how much electricity he stole. He broke the law. He stole something that wasn’t his.”
You’d think from the account that Kamooneh was the electric vehicle-driving version of Jean Valjean, the peasant of the novel Les Miserables who received a five-year sentence for stealing bread for his starving sister’s family. Hey, he just needed a little more power so he could make it home after playing tennis at the school!
Except what appears to be closer to the truth is in the officer’s report of the incident. Rather than the image of an unwitting offender who pleaded for leniency for a minor crime, the cop’s account described a “difficult and argumentative” suspect who had to be pointed out by another tennis player as the owner of the illegally charging Leaf. Rather than apologize or show contrition, he blamed the officer for damaging his car door, which was disproved by video footage that captured Kamooneh driving up to the school. Finally, it was later learned that Kamooneh, due to previous problems, had been warned not to use the school’s tennis courts unless previously approved and was on the property without permission. So, the officer issued a warrant for his arrest – a far cry from the Valjean of EVs!
While that’s an amusing recount of what really happened, there’s a larger point to be made about the government-driven expansion of the electric vehicle market and the public charging systems that re-power them.
Without the extenuating circumstances excerpted above, a situation in which a citizen charges his electric car for 20 minutes (like Kamooneh did) does not warrant an arrest – just a warning. I think we can all agree about that.
But an unintended consequence of the deployment – almost entirely paid for by taxpayers – of electric charging stations has to do with the expectations by EV owners about them: That is, that they are entitled to free electricity. Are we creating a class of vehicle owners that will demand free juice?
The roots of this attitude can be found in the habits Americans have developed when visiting cafes where they buy coffee and camp out for a while with their laptops or tablet computers. Most of these shops – especially Starbucks – have a good number of outlets for customers to plug in to. Their use is not discouraged so long as a purchase is made – part of the cost of doing business. It’s just an hour or two (at most, usually) of electricity – probably less than 30-40 cents-worth of power. And the Internet connection is free too.
Speaking of the Web, there’s another expectation among Americans that’s been instilled: free content. Because media organizations started giving away their information online and have done so for so long, readers expected permanent, free access. It nearly destroyed the newspaper industry, which still struggles. Now most of them are trying to make readers pay for their information and it’s not working very well.
So it’s not much of a logical leap for electric auto owners to think they can just plug into any unused outlet they see and extract a few cents of free juice. After all, with the limited range of their batteries, and the length of time it takes to recharge them, EV owners can be expected to be on the lookout for an outlet every time they stop somewhere – even for very short periods. Every charging second counts to an EV owner who is not safe at home connected to his home charger.
The question is: Are we creating an expectancy class for free electricity, much like newspapers did with Internet delivery of their journalism? Kamooneh certainly thought he was entitled to tap the public school’s outlet while he whacked the tennis ball around, and justified his action by making the case that, hey, it was only a few cents worth!
Sure, there are some paying charging stations around. Most of them are rarely used – just ask bankrupt charging company Ecotality. They received $135 million from the Department of Energy and still couldn’t make their chargers generate revenue. Considering how many free, unattended outlets on both commercial and public properties there are, why would very many people pay for power?
And many of the chargers deployed by Ecotality and others were intentionally set up to not collect money for electricity used anyway. In a fledgling business in which entrepreneurs want to remove every obstacle to adoption, giving away the power was easy to do – especially since the expense for that could be easily foisted on taxpayers too.
The mentality that is sympathetic to Kamooneh is one that is endemic to the Left. It’s reflected in their approach to public policy on budgeting and spending. Whether it’s raising sales taxes a fraction of a cent; or mandating renewable energy that adds a few cents to the monthly electric bill; or increasing property taxes to pay for pet projects – they are all imposed with the idea that “it’s only a few cents” that are worth the expense to gain the intended outcomes they want to impose on you.
That mindset is what got us billions of dollars in subsidies for EVs in the first place. So it’s not beyond the realm of expectation to let people who try to use electricity in public garages and facilities to skate on paying for it. Hey, it’s just a few cents!
[Originally published on the National Legal and Policy Center]
Following incidents in Washington state, Mexico and Tennessee, the National Highway Traffic Safety Administration announced it would probe fires that occurred recently over a six week period in Tesla Motors’ electric Model S.
And this week, as revealed in a Detroit News story, the NHTSA looks like they’re serious – at least more serious than Germany’s transportation safety authority.
Why bring up Germany? Because as the regulatory heat bears down in the U.S. on Tesla and high-profile CEO Elon Musk, they have trotted out the Eastern Europe nation to demonstrate that they’ve been absolved of any culpability in the fires. The media that has mostly fawned over the electric automaker helpfully amplified the development, which certainly Musk welcomed. He even got a slight recovery in the company stock price as a result.
On Monday Tesla posted a press release that claimed the company received an inquiry from the German Federal Motor Transport Authority about the three fires. While the NHTSA seems intent on conducting a thorough investigation (I’ll get to those details momentarily), the Germans have already wrapped up their inquiry! The result: After Tesla provided “data and additional information” and the Germans “reviewed Tesla’s responses to their inquiries,” they determined that “no manufacturer-related defects could be found. Therefore, no further measures under the German Product Safety Act are deemed necessary.”
Tesla posted a copy of the letter from the German Transport Authority – which is addressed to what appears to be the company’s local legal counsel – with the translation into English in the press release. Four things beg for explanation:
- The letter is dated Nov. 27, which is only about three weeks after the most recent fire. Such a rapid conclusion to an inquiry would seem to be a new record for governmental efficiency looking into complicated, sensitive matters such as this.
- The letter references a phone call earlier in the day with the attorney. What was that discussion about, that the Transport Authority immediately issued its exculpatory letter the same day?
- Tesla blacked out the identity and contact information of the Transport Authority representative who wrote the letter. Why?
- It’s apparent the German authority depended only on limited information supplied to it by Tesla (“According to the documents, no manufacturer-related defects could be found”). So it’s hard to give their “investigation” much credibility.
Compare that to what the US NHTSA is asking for. As the Detroit Newsreported Tuesday, the safety agency has requested that Tesla turn over detailed records of all consumer complaints, field reports, warranty claims and property damage claims related to the fires.
“Describe in detail all possible consequences to the vehicle from an impact to the subject component that damages the battery,” wrote NHTSA vehicle integrity chief D. Scott Yon. “Describe in detail how these possible consequences were addressed in the design of the (Model S) and the limits of that design to prevent damage to the propulsion battery, stalling and fires.”
The newspaper reported that Yon also asked for the results of all Tesla’s tests, studies, and investigations to review the battery fires and the alleged defect, and information about whether Tesla made any changes to the Model S to address the possible defect of roadway debris sparking fires in the battery packs. He also wants detailed records of vehicles at the time of the incidents, owner contact information, and all communication to owners or regional officers that the company plans to issue in the next four months.
The letter was dated November 27, and Tesla has until January 14 to respond. That’s about 50 days just to gather the information – more than twice as long as it took the Germans to collect, analyze and conclude their “inquiry” that “cleared” Tesla.
Tesla has carefully controlled information that’s been released about the fires, including statements from the Model S owners. For the most part media reports have derived from these. It makes you wonder if there is some sort of non-disclosure agreement between the company and its vehicle owners.
For example, in early October – shortly after the first fire in Kent, Wash. – Musk posted an essay on Tesla’s blog that explained how the Model S “struck a large metal object” that caused damage.
“A curved section that fell off a semi-trailer was recovered from the roadway near where the accident occurred and, according to the road crew that was on the scene, appears to be the culprit,” Musk explained. “The geometry of the object caused a powerful lever action as it went under the car, punching upward and impaling the Model S with a peak force on the order of 25 tons. Only a force of this magnitude would be strong enough to punch a 3-inch diameter hole through the quarter inch armor plate protecting the base of the vehicle.”
Maybe so, but for all the physical explanations Musk has tried to present, no photos of the large metal object have been produced. Nor are there any pictures – that are reasonably findable on the Web, at least – of the tow hitch that was accused of causing the Model S fire in Tennessee. In such a hotly scrutinized case you’d think Musk would be parading the evidence if it existed, but he hasn’t.
In the same blog post Musk went to great lengths to argue a conventional gasoline powered car, in the same circumstances, could have experienced a far worse fate.
“A typical gasoline car only has a thin metal sheet protecting the underbody, leaving it vulnerable to destruction of the fuel supply lines or fuel tank, which causes a pool of gasoline to form and often burn the entire car to the ground,” he wrote.
But the crash data doesn’t support that. As Justin Hyde of Yahoo!’s automotive Web site Motoramic wrote in early November, “Even though it has fewer electric cars on the road than its competitors (such as the Chevy Volt or Nissan Leaf), none have reported similar fires after crashes. And while liquid-fueled vehicles suffer about 170,000 such fires every year, federal data show they take place in only 0.1 percent of all crashes.”
Tesla’s control freakishness is also reflected in how the Model S owners who were fire victims. Has any independent journalist interviewed them? Below Musk’s blog post was a portion of an email exchange between Tesla’s vice president for sales and service and Rob Carlson, the Washington driver. The VP’s missive came off as a carefully crafted (lawyered?) explanation of how the fire occurred and that the Model S’s safety protections “operated correctly.” In reply, Carlson supported Tesla’s response to the incident and said, “I am still a big fan of your car and look forward to getting back into one.” Then he revealed that he is an investor in Tesla – so certainly a critical response on his part would not have helped the value of the shares he owns!
While not exactly tanking, Musk likely felt some anxiety (and investor pressure) when the company’s stock dropped from almost $200 earlier this year to about $120 the last couple of weeks, after the fires. Publicly Musk has said Tesla’s share price was overpriced anyway (he’s right), but at the same time, what executive wants to see a rapid drop like he’s seen? Not a moment too soon, this week he discovered a way to turn the German “inquiry” of the Model S fires into a Wall Street bump – the stock is up to almost $139 this morning.
As for the American investigation, time – and a serious examination – will tell whether Tesla needs to revisit its Model S design or not. Before the fires NHTSA still gave it a top safety rating, which seemed more like it wasjoining the irrational exuberance party rather than an accurate evaluation. The signs point to the agency taking this a lot more seriously than the Germans did, but then again, this is the Obama administrationwe’re talking about, which has relentlessly protected and subsidized the electric vehicle industry.
[Originally posted on the National Legal and Policy Center]
The folks at my favorite Canadian network, Sun News, asked me to come on Adrienne Batra’s show today to talk about Greenpeace’s absurd “Christmas is Canceled” video. Batra thought my blog post on the Greenpeace video the other day was funny, which was nice to hear.
I must say, however, that the audio quality on my end is pretty poor (we didn’t have time to do a test). So, apologies.
Victor Davis Hanson is a well-known historian, commentator, and senior fellow at Stanford University’s Hoover Institution. He is collaborating with Pajamas Media on a project called Freedom Academy- an online resource that allows the average reader to delve into a brief survey of western civilization and values. Freedom Academy is an online interactive experience designed to differentiate itself from traditional classrooms and other online learning resources.
Why did Hanson choose this particular project? Over the years, he’s witnessed the degradation of the university system, and also the increasing historical illiteracy among us. Freedom Academy is an attempt to interest people in history, particularly western civilization, and defend it using historical facts. He wants to apply an abstract standard to history and culture.
Freedom Academy’s model is different from the traditional university or online lecture; it’s conversational, and they use a sophisticated animation technique to represent images behind the speaker as he is talking. All of Hanson’s efforts are in pursuit of re-developing our society’s ability to self-govern and to learn how to do that through learning history.
Listen to this interesting and fruitful podcast in the player above.
President Obama’s speech yesterday on inequality is being lauded as one of the best of his life, by people who paid attention to it. It’s a sad speech to read, in some sense, since it contains within it the promise of a presidency that we never saw come to fruition – the sort of policy effort that might have been launched to bipartisan success in the first year of his presidency, instead of his effort on Obamacare.
In context today, it comes after the point where most Americans have begun to tune him out, just as they do with nearly all second term presidencies. For the first time, Obama is now below 40 percent approval on every issue polled. As the Washington Post notes, even on issues where Obama looks to be in agreement with the American people, he’s now lagging terribly. Even Millennials are now down on Obama. Whether this is because Americans have lost faith in Obama personally, or just reached a threshold where they are tired of his presence on the screen, his call for an effort to combat inequality is falling on deaf ears.
And that’s just as well, since the president has things all backwards. Consider this passage of his remarks:
“A new study shows that disparities in education, mental health, obesity, absent fathers, isolation from church, isolation from community groups – these gaps are now as much about growing up rich or poor as they are about anything else. The gap in test scores between poor kids and wealthy kids is now nearly twice what it is between white kids and black kids. Kids with working-class parents are 10 times likelier than kids with middle- or upper-class parents to go through a time when their parents have no income. So the fact is this: The opportunity gap in America is now as much about class as it is about race, and that gap is growing.”
Does the president really not realize that he has the causation here completely backwards? He’s spoken eloquently in the past about the dangerous decline of fatherhood among the working class. It’s not that being poor means you’ll have absentee parents, it’s that absentee parents – particularly absentee breadwinners – means you end up poor. Where the middle class and upper class are better insulated from the consequences of the economic pain that comes from family breakups, the poor are not.
What does that mean? Well, it means you can’t afford to live in a place with a good school, and government policy prevents you from learning elsewhere; it means mom has to work two jobs and can’t take time off to take you to the dentist, which can’t be scheduled because you’re on Medicaid; it means you’re likelier to drop out and end up permanently ensconced on assistance programs because you never had the intact family pressure to stay in school and learn a skill.
The greatest elevator of people from lower class to middle class life is an intact household. Robert Rector has done plenty of digging on this, and the ramifications are staggering:
Income inequality is not primarily an economic problem. It is a problem of societal decline and the breakdown of family structures, accelerated by government but not solely by government. Barack Obama the family man could’ve made a difference in this regard, but decided not to. Instead, he embarked on an agenda which has been great for corporate America, Big Banks, and Wall Street, and generally terrible for wage growth and working families. Evan Soltas has a little piece here, frustrated that people are looking to get rich off Obamacare, wringing his hands about how “the expected increase in health-care profits has a whiff of rent about it.” What do you expect to happen when you make it illegal not to buy a corporation’s product which drives these profits? That’s who this presidency has been for all along. As Jeffrey Anderson notes:
The utter failure of Obama’s trickle-down-government approach is perhaps best captured by two contrasting stats. When he took office, we were a full year into a major recession. Economically, there was almost nowhere to go but up. And, indeed, that’s what the Dow Jones Industrial Average, which tracks the stock prices of 30 very large companies, has done: gone up. In January 2009, the Dow was at about 8,000. It’s now at about 16,000. It has essentially doubled on Obama’s watch.
Meanwhile, according to Census Bureau figures compiled by Sentier Research, the median American household income when the Obama household took up residence at 1600 Pennsylvania Avenue in January 2009 was $55,972 (in 2013 dollars). Now, nearly five years later, the median American household income is just $52,529. That’s a decrease of $3,443 – or more than 6 percent. And that’s during a “recovery”! If Americans’ median income were now merely the same (in real dollars) as during the recession, that would mark Obama’s tenure as a miserable economic failure. Instead, Americans’ median income has noticeably dropped. It’s important to note that these median-income figures include government payments, such as unemployment.
Today, Obama is describing inequality as “the defining challenge of our time”. But his agenda for the second term has been about everything but that. His second term has seen payroll taxes go up for all working Americans and a prioritization of immigration reform, gun control, climate change and a host of environmental issues which – while they might appeal to his allies on Wall Street and in Hollywood – have nothing to do with income inequality. In many cases, these policies are actually negatives for the working class, driving up the costs of goods and negatively impacting wages and working hours.
If this was the defining challenge of our time, why did he spend so much time on policies unrelated to it? Why did he go down a policy path which led in the opposite direction? And why, even today, is he bypassing any possibility of brokering a bipartisan effort to combat “the defining challenge” and instead prioritizing a clumsy, tired, politically dead-end solution – minimum wage hikes – which without question has a negative effect on low-skill job creation while aiding his powerful union allies?
It’s unclear why someone as uniquely positioned as Obama to speak to the challenges of being raised by a single mom – of having to rely on the support of relatives and family, and of the importance of such supports in determining success – put this issue on the backburner. Maybe Obama never really focused on the issue of inequality of opportunity before because he really doesn’t have a solution to the harder challenge of what’s really going on in the working class. The vacuity of his answers to the problems of inequality is illustrated in this line: “Kids with working-class parents are 10 times likelier than kids with middle- or upper-class parents to go through a time when their parents have no income.” You mean to tell me families with lower incomes are more likely to have lower incomes than families with higher incomes? How insightful. Tell me more about why we need another industry bailout.
[Originally published on The Federalist]
The government spent about $634 million on creating healthcare.gov; what did they do with all that money? Well, they created a huge mess. They contracted five different people who apparently built their portions while “hiding in silos” and never communicating with each other and they built it on 10+ year-old software.
Facebook is 9 years old! The first Pirates of the Caribbean came out around the same time that the software for healthcare.gov came out… Come on! So, how did they spend so much money and still not deliver? Well, Motley offers up the “wallet rule” as explanation — if you went out on a Friday night with your own wallet, but went out on a Saturday night with someone else’s wallet, which night do you think you’d have more fun on?
The point is, when you spend other people’s money, you are less frugal, and you care less about the results. And that is what happened to healthcare.gov, and what government almost always does!
When asked if the website would ever catch up and work how it’s supposed to work- Motley is not optimistic. He predicts that if the British government can’t pull it off in 9 years and $15 billion, then neither can we.
Listen to the podcast in the player above.
Yes, it’s better than it was two months ago. But by their own measures and by the measures of other retail sites, the administration has failed to fix their bungled website and achieve the easier lift of success on the front end, let alone the as-yet-unconstructed back end of the federal exchange.
Every week brings another announcement of delays in the law – delays that are in some cases more than even Republicans had requested to begin with – from the White House. The small business exchange delay dropped right before Thanksgiving, the decision to kick the can on open enrollment until after the 2014 elections, and the latest decision to scrap the payment system for insurers and rely on manual submissions for at least the first month illustrates how extreme the back end problems are.
Healthcare.gov is even having trouble signing people up for Medicaid, which should be as easy as can be. And we’re just three weeks away from the December 23rd deadline to buy insurance, and the December 31st deadline to pay their premium, before people start getting hit by the mandate penalty.
Taking the president’s public relations campaign rollout claiming “everything’s fixed!” at face value, Democrats are now reportedly demanding that someone be held accountable for the mismanaged launch of Obamacare.
White House officials, asserting that the HealthCare.gov website is largely fixed, are under mounting pressure from Democrats and close allies to hold senior-level people accountable for the botched rollout of President Obama’s signature domestic achievement and to determine who should be fired. For weeks, the president and his aides have said they are not interested in conducting a witch hunt in the middle of the effort to rescue the website. But in the West Wing, the desire for an explanation about how an administration that prides itself on competence bungled so badly remains an urgent mission… Close aides said that Mr. Obama was unlikely to give in to the demands for a public flogging, but White House officials also said that Mr. Obama had demonstrated a calculated willingness to push people out.
So they claim. To this point, there’s every indication that the president is too soft to fire anyone who was actually responsible for this. Kathleen Sebelius should feel safe as ever.
But if you set aside the talking points and look at the real, enduring problems of the federal exchange, the real question Democrats should be asking isn’t who should be pushed out – it’s who should be brought in.[S]uccessful businesses have a good management structure. People in charge are familiar with the problems and able to focus effort, and operational employees are empowered to identify and solve problems. The Obama Administration failed in this last task. The team lacked a “CEO” who could focus the efforts, and line employees were stifled or ignored. As a result, deadlines were missed, minority opinions were ignored, and possible problems were not considered. The universal opposition of Republicans to the ACA made the administration’s task more difficult, but it does not excuse the failure. Fixing the administration’s implementation efforts will require more than just fixing the website. It will mean changing the entire organization of the government’s ACA efforts. Undoubtedly, some people need to leave or move on to other positions. More important is who needs to come on board, and that’s people with management skills and experience in startup businesses. There is no successful organization without good senior leadership.
Going forward, this kind of CEO-style leadership is essential for fixing Obamacare. Back up a moment: one of the lessons about the failure of Obamacare’s launch is that it’s an indication of how the impression of Obama himself was out of sync with his actual approach to leadership. Obama delegates, and he trusts his people. While he ran as a cool under pressure technocrat, the reality is that he’s an ambitious ideologue and a political animal. He left the framing of his namesake legislation to Hill veterans, quickly backing off the promises he’d made while running for the presidency in 2008. The implementation was delegated, too – to a group of self-styled elite bureaucrats at HHS and CMS who, lacking experience in anything approaching a project of this size, turned out to be terrible project managers.So What’s The Answer?
We’re only beginning to deal with the ramifications of this, politically. But when it comes to the implementation side, there’s one simple step Obama could take to rescue his signature project. It’d be bold. It’d be out of the box. It’d be the sort of thing that the Hope and Change era Obama might’ve done, even if today’s Obama would never think of it.
What Obama needs right now more than ever is a turnaround artist. Ideally, he would find someone with executive experience and bipartisan bona fides, someone experienced in the health policy space, who understands how these complicated exchanges are supposed to work. He needs someone with serious management experience and corporate consulting acumen, who’s dealt with a prominent national project while in the public eye, who’s completed a significant Olympic-sized undertaking under the pressure of a hard timeline. He needs someone with no future ambitions or plans to run for office again, a true non-ideological technocrat, someone who won’t manipulate a bureaucratic undertaking toward personal or political ends, but is just interested in solutions, in making things work.
It might even help if this person was a bit cutthroat, a tad robotic, with that special type of smiling harshness – someone who can slash the deadwood from a project, prioritize what needs doing and who can do it, and who won’t hesitate for one second to fire people who deserve it. If you’re talking about the perfect candidate, it’d be someone who actuallyliked firing people, who relishes it, and didn’t really give a damn who didn’t like him for it.
Thankfully, as Ann Althouse has noted, there is exactly one person in America who has all these qualities. And he’s got time on his hands.
All Barack Obama has to do is pick up the phone and say the magic words: “Help me, Mitt Romney. You’re my only hope.”
[Originally published in The Federalist]
A new study shows that academic qualifications for prospective teachers are on the rise. Dan Goldhaber- director of the Center for Education Data & Research and a professor at the University of Washington- joins The Heartland Institute to discuss the aforementioned study.
In the past, teachers tended to be in the bottom half of the SAT distribution, while the top half chose other occupations. Recently, around 2009, there was a slight shift where more people in the upper half of the distribution were choosing to pursue careers in teaching. This is obviously a good thing, and Goldhaber discusses what the implications could mean.
Listen to the podcast in the player above.
The American people don’t trust the government. This could be a great thing for America. It could also be a dangerous opportunity for an enduring and desperate factionalism, of the kind largely unfamiliar to the American experience — and lead to more, and more dangerous, government in the future. But I don’t think it will.
There are all sorts of polls you can cite about the decline in trust in government, but after the disastrous rollout of Obamacare, this trendline isn’t going up. And Ezra Klein is worried about it. He runs through a litany of recent failures of federal government – considering that Millennials alone have witnessed 9/11, Afghanistan, Iraq, Katrina, the financial crisis, the failed stimulus, and now Obamacare, young voters have every reason to be cynical. But Klein notes that this may not stop voters from trusting government to do more, and implement more big programs, in the future:[B]ecause voters don’t entrust tasks to “the government.” They entrust them to particular administrations, and, righty or wrongly, they tend to extend their faith in the president to the entire federal government. Obamacare’s failures aren’t likely to undermine confidence in Chris Christie or Hillary Clinton’s ability to manage the machinery of the federal government. They might perversely, enhance it, as a country that’s purposefully looking for more effective management is likely to be more desperate to believe they’ve found it. But the fact that the public will trust the government to do big things again doesn’t mean they should.
Government’s inability to get even basic things right may become just another attribute of partisan measures – Democrats trusting Democrats, Republicans trusting Republicans – but a system with a healthy level of distrust for both parties to manage “good government” is a more honest one, one which understands that markets and individuals do best when government doesn’t try to micromanage them. We should welcome an America with more skepticism that our political leaders know best, or know anything at all. They certainly haven’t proven otherwise recently.
If the American people see the lesson of the failures of government in foreign and domestic policy as a sign that the federal government should focus more on the handful of things it can do and set aside the things it keeps screwing up, most conservatives and libertarians would rejoice. There is a danger here, though, of swinging the pendulum back in the other direction. Nick Gillespie outlined this well in a piece earlier this summer, citing this 2010 paper on “Regulation and Distrust,” written by Philippe Aghion, Yann Algan, Pierre Cahuc, and Andrei Shleifer. Gillespie writes:
Drawing on World Values Survey data from the past several decades for over 50 countries, the authors help explain what they call “one of the central puzzles in research on political beliefs: Why do people in countries with bad governments want more government intervention?” The authors make a distinction between “high-trust” and “low-trust” countries. In the former, most people have positive feelings about business and government and the general level of regulation is relatively low. In “low-trust countries,” the opposite is true and citizens “support government regulation, fully recognizing that such regulation leads to corruption.” As an example, they point to differing attitudes toward government-mandated wages in former socialist countries that transitioned to market economies. “Approximately 92 percent of Russians and 82 percent of East Germans favor wage control,” they write, naming two low-trust populations. In Scandinavia, Great Britain, and North American countries, where there are higher levels of trust in the public and private sectors, less than half the population does. As a final kicker, Aghion et al. suggest that increased regulation sows yet more distrust, which in turn engenders more regulation.
This type of experience is echoed by Jorge Castañeda in his book, Mañana Forever. According to Castañeda, to understand Mexicans and their history you have to understand that Mexicans have nothing between the masses and the government, with almost nothing like the “little platoons” of Edmund Burke, nor the network of associations that Tocqueville saw as key to America’s thriving democratic-republic. Castañeda writes:
In the United States, there are approximately 2 million civil society organizations, or one for every 150 inhabitants; in Chile there are 35,000, or one for every 428 Chileans; in Mexico there are only 8,500, or one for every 12,000, according to Mexican public intellectual Federico Reyes Heroles. Eighty-five percent of all Americans belong to five or more organizations; in Mexico 85% belong to no organization and, according to Reyes Heroles, the largest type, by far, is religious. In the United States, one out of every ten jobs is located in the so-called third sector (or civil society); in Mexico the equivalent figure is one out of every 210 jobs. In polls taken in 2001, 2003, and 2005 on political culture in Mexico, a constant 82% of those surveyed stated they had never worked formally or informally with others to address their community’s problems. In another series of polls already quoted concerning Mexican and world values, a robust and inverse correlation was detected between Mexicans’ happiness (which grew remarkably between 1990 and 2003) and their belonging to any type of organizations. In the words of the survey in question, “the more a Mexican joins an organization or belongs to any type of association, the lower the probability of his or her feeling happy.… Studies regarding values have constantly concluded that Mexican society is extremely difficult to organize.”
In place of lateral social bonds, Castañeda maintains Mexicans form bonds upward and downward, creating a patronage society where unhealthy levels of corruption, cartels, and tribal loyalties are a substitute for freedom of association and true community. This creates a cycle of desperation, where people put their faith in charismatic leaders who promise to solve their problems, only to have their hopes dashed. Castañeda writes:[I]t should not be altogether surprising that today, after nearly five hundred years of a strong state, civil society should be weak. From this perspective, Mexicans are disorganized, except during exceptional circumstances (rescuing victims after an earthquake, for instance), because, tautologically, they are not organized, and they are not organized because a perennial, all-powerful, overwhelming state has crowded them out. This Hobbesian behemoth (unmistakable in colonial times, at least after the Bourbon Reforms of the late eighteenth century) has simply never allowed civil society to flourish, and absent an organized civil society, people fend for themselves. When they do that for centuries, they get used to it, and persist in their customs indefinitely, until something occurs that makes them change their mind. It hasn’t in Mexico, and so the ways of the past continue. As we shall see further on, those ways — corruption, cronyism, disregard for the laws — persist and date back to those times. Today, according to polls, nine out of every ten Mexicans believe that “if one does not take care of oneself, people will take advantage of you.” Some sought solutions by joining the state; others by leaving the country; still others, by retrenching into the past and the ways of that past.
So could the United States be on a path to becoming, like Mexico, a state where a hollowed out civil society leaves people with nowhere else to turn than the government they don’t trust? I just don’t think that’s going to happen. It didn’t happen after the Bay of Pigs, the JFK assassination, the quagmire of Vietnam, and Watergate. It won’t happen now. (The Millennials may turn out worse than the Boomers because of it, but that’s a different matter – and no one generation is all bad).
I’m more optimistic in part because America has bucked the trend of other nations and retained its inherent generosity, with more than 70% of charitable giving offered by individuals and families, and a healthier appreciation of civic involvement and volunteerism. The Mexican historical experience is a very different one from ours, and the character of the American people still has some strength in it yet. Even as the nature of our associations have changed, and the level of trust in government, institutions, and others has decreased, there’s still a large segment of the American people who have faith in each other and work to help each other. Rather than throwing up their hands, people should not view the failure or success of government, particularly presidential level policies, as the be all and end all of the nation’s future. Far from it.
There is a path for the country out of the wreck of distrust and disaster we’ve seen at the federal level over the past decade, if the American people choose to take it. The truth is staring them in the face. If the American people reject the false promise of one more politician promising a governmental answer to their problems – “trust me, this time, I’m not like the other guys” – we could see a resurgence of bottom-up trust. This has happened before in American history (the 1830s, for instance): when the failure of large institutions leaves power decentralized, people can give in to hopelessness… or they can realize the sun will still rise the next morning, and that they are better off living as individuals and families, trusting their neighbors rather than trusting in factional political tribes or far off powers which will always fail to live up to their promises.
The failure of government to live up to its promise is an opportunity for honesty and clarity and for the American people to reexamine the role of the citizen and the state – not a moment for despair. There’s more to life, and more to a country, than government.
[Originally published on The Federalist]
Two and a half years ago Eric Holder and the U.S. Justice Department applied dubious legal logic to shut down one of America’s quintessential pastimes – poker games among consenting adults. The Justice Department not only put a freeze on one of America’s fastest-growing forms of entertainment, it made the Land of the Free one of the few democratic nations in the world to ban consenting adults from playing online poker. Is it time for over-intrusive government to allow consenting adults in a free country to play online poker again?A Poker Renaissance
From 2003 through 2010, poker caught America’s fancy in a way not seen since Doc Holiday dominated the poker tables at the Alhambra and Oriental saloons in Tombstone, Arizona, infuriating the outlaw Cowboys gang by relieving them of much of their ill-gotten fortune. In 2003, a full-time accountant who avidly played small-stakes online poker turned, through a remarkable string of events, a $40 entry in an online poker tournament into the world championship at the World Series of Poker (WSOP) in Las Vegas. Chris Moneymaker’s Cinderella championship run coincided with ESPN for the first time devoting major resources to producing several hour-long episodes chronicling that year’s WSOP. This was the poker equivalent of Rocky Balboa beating a stadium full of 838 Apollo Creeds – except this was a true story and the world’s premier sports network captured the story from start to finish.
Buoyed by the “Moneymaker Effect” and a dramatic increase in the popularity of online poker, 2,576 people entered the 2004 WSOP Main Event, fully triple the number of players who entered in 2003. Now, rather than a tournament numerically dominated by professional poker players and extremely wealthy businessmen, the tournament had a large contingent of amateur poker players and small-stakes pros living out a dream and telling themselves that if Chris Moneymaker could take down all those Apollo Creeds, so could they. In a sequel every bit as fascinating as the 2003 WSOP (and every bit as inspirational as the Rocky II sequel), full-time tax lawyer Greg Raymer gave amateur poker players a second consecutive victory over the legendary pros. Raymer’s run to the title gave the cameras everything a viewing audience could ask for, as the large, good-natured man appealed to every-day viewers while simultaneously intimidating even seasoned poker pros with his size, imposing stare, and unnerving lizard-eye sunglasses.
In 2005, the number of entrants jumped again, to 5,619. Again, a relatively unknown poker player won the championship in memorable fashion. With a large, rowdy cheering section reminiscent of a World Cup soccer match, telegenic Australian Joe Hachem seized his dream and won the title. Prior to 2005, poker spectators at the World Series of Poker could easily be mistaken for the nearly silent spectators at a golf tournament. In 2005, Hachem’s large contingent of boisterous friends and family waved Australian flags and chanted, “Aussie, Aussie, Aussie! Oi, oi, oi!”
In 2006, a record 8,773 people entered the WSOP. Hollywood talent agent Jamie Gold captured the title and a staggering $12 million payday. Between 2007 and 2010, at least 6,300 people entered each year. Many of the entrants won their seats by entering small-stakes online tournaments like Moneymaker. Others fronted their own entrance fees, but honed their skills and built up their WSOP bankrolls on the online poker sites.
ESPN devoted more and more air time to the WSOP each year. Lesser tournaments and even simple poker cash games began popping up on the Game Show Network, NBC, and seemingly every channel in between. Top poker players began signing lucrative endorsement deals similar to NFL and NBA stars. Poker was hip, poker was lucrative, and poker was mainstream.
Just as importantly, poker was egalitarian. Everyday people mired in dead-end jobs and with little excitement in their lives could dream of becoming the next Chris Moneymaker or Greg Raymer. Jerry Yang, a religious, soft-spoken social worker who professional poker shark Scotty Nguyen described as the nicest guy you can ever meet, won the Main Event in 2007. In 2008 through 2010, a series of young 20-somethings seemingly fresh out of college took home the title.
In the absence of extraordinary God-given skills refined by a lifetime of practice, nobody can realistically dream of homering off David Price in the seventh game of the World Series, tackling Adrien Peterson in the open field to clinch a Super Bowl victory, schooling LeBron James in the NBA Finals, or taking down Tiger Woods at the Masters. But a skilled amateur poker player – if he or she is playing at the absolute top of his or her game and catching a few breaks along the way – can plausibly dream of entering a small-stakes online poker tournament culminating with sticking it to cocky, irascible poker legend Phil Hellmuth while capturing fame and fortune at the World Series of Poker.Feds Shut It Down
That all changed on April 15, 2011 – Tax Day, by design or not – when Eric Holder and the U.S. Department of Justice shocked the poker world by shutting down poker websites, freezing poker accounts, and filing major criminal charges against operators of online poker sites and the financial companies that processed poker deposits and cash payouts. The Justice Department justified its actions by claiming the companies violated the Wire Act of 1961, a mafia-focused statute that outlaws the use of wire communications to accept sports wagers or process payments relating to sports bets.
By December 2011 the Justice Department, chastened by court rulings indicating it had overzealously applied the Wire Act, indicated it was backing off on its targeting of poker sites. Nevertheless, the damage was already done. The online poker sites had already shut down, and nobody was eager to start back up again without express assurance that the Justice Department wouldn’t change its mind again and resume prosecutions.
The federal government recently told the individual states it would not interfere with state-specific laws authorizing and regulating online poker. However, only a few states have begun to seriously consider this option. Those that do will have differing regulations and standards, meaning gaming companies will have to navigate a patchwork of often contradictory legal requirements. Moreover, each state that authorizes online poker must ensure that nobody can access that state’s poker sites from outside the state. For all intents and purposes, online poker remains dead thanks to the U.S. Justice Department, even though few seriously argue that it is illegal.The best and perhaps only way for government to reliably assure the online poker community that it can operate without fear of a new round of overzealous criminal prosecutions is for Congress to formally affirm that online poker remains legal.
The best and perhaps only way for government to reliably assure the online poker community that it can operate without fear of a new round of overzealous criminal prosecutions is for Congress to formally affirm that online poker remains legal. But not many Congressmen appear eager to stir a potential hornet’s nest of anti-gaming sentiment when the political rewards appear minimal. Nevertheless, is it time to restore legality to this quintessential American game?Ingrained in the American Spirit
History records the first poker games springing up in New Orleans during the 1820s. Large-wheeled riverboats delivered the game and its first professional players up and down the Mississippi River in America’s antebellum period. Poker became synonymous with Mississippi River folklore, and as the frontier stretched west, so did poker.
Poker provided river travelers with entertainment to relieve the boredom of long days confined on a boat deck. Poker offered a sanity-preserving diversion for Union and Confederate soldiers experiencing the long, drawn-out misery of fighting the Civil War. Poker gave gold prospectors and fur trappers an entertainment commodity thousands of miles from the bustling cities of the East. Poker became the preferred form of competition among outlaws and gunslingers in the Wild West, allowing them to blow off steam in a manner that did not involve bullets. Poker sustained thousands of Navy servicemen devoting years of service patrolling the Atlantic and Pacific Oceans during World War II. Poker, as much as baseball, steam boats, covered wagons, and manifest destiny, is part of the very fabric of America.The Strange Politics of Poker
Strange bedfellows have joined forces to vigorously oppose legal online poker. Two political factions that are usually in sharp disagreement on almost every political issue form the strongest opposition to online poker.
One faction consists of so-called nanny state liberals who believe government must step in to protect ourselves from our own personal choices and our own unregulated activities. These are the folks who often support laws against Big Gulps, laws requiring kids to obtain a permit to set up a lemonade stand or sell Girl Scout cookies, and laws requiring McDonald’s to serve apple wedges rather than French fries as the default side item in a Happy Meal. These folks believe some people will recklessly lose their rent money playing online poker, so therefore nobody should have the opportunity to play.
The other faction consists of social conservatives who believe playing poker is inherently immoral or sinful and therefore government must step in to preserve public morality. These are the folks who usually raise the most strenuous objections to the liberal nanny state, but find common ground with such liberals on this particular issue.
The result of this strange political coalition is legalized poker is neither a Democratic nor Republican issue. Support for legal poker spans the bipartisan middle ground between the usually bifurcated poker opponents.Misguided Opposition
The irony is the two factions opposing poker reveal a certain degree of self-contradiction.
For liberals concerned about people being victimized by their own choices, poker offers opportunities that for many people do not exist anywhere else. People without advanced education or highly developed job skills can master a game that allows them to pluck money from wealthy executives who play poker merely for ego and fun. The house commission for online poker tournaments is typically merely 10 percent, with 90 percent of the money returning to the players. This is a far more generous return than legally sanctioned lotteries, which are disproportionately played by low-income Americans, and a more generous return than brick-and-mortar casinos that typically return only about 75 percent of players’ entry fees.There is no Bible verse that condemns gambling, though gambling has occurred throughout human history.
Social conservatives concerned about the morality issue should take several points into consideration.
There is no Bible verse that condemns gambling, though gambling has occurred throughout human history. Gambling is more akin to drinking wine or engaging in other activities that are not immoral in themselves but can be problematic if a person does not behave ethically or exercise self-control. Indeed, some religious customs such as spinning the Hanukkah dreidel involve gambling.
For certain people, gambling can be an activity associated with self-destructive or immoral activity, but for many other people it is not. For 2012 Main Even champion Greg Merson, his love of poker and his need to stay sober in order to play well gave him the strength and inspiration to kick a serious drug habit. If you attend any WSOP tournaments you will observe that 99 percent of the players are sober, well-rested, and drinking nothing stronger than bottled water throughout the competition. Neither smoking, nor profanity, nor hostile behavior is allowed. The WSOP taking place in the inescapably wild atmosphere of the Las Vegas Strip has the feel of a convention of designated drivers taking place in Rio de Janeiro during Mardi Gras.
Also, poker has more in common with contests of skill than with gambling. In true gambling, there is little skill involved in choosing a particular wager and participants have little or no control over the outcome of the contest. Playing the lottery or slot machines is gambling. If you buy a lottery ticket, you theoretically have no better or worse chance of winning than anybody else who buys a ticket. The only person or entity with an advantage in the lottery is government, which unavoidably turns a profit on every lottery it promotes, administers, and thereafter taxes. In poker, by contrast, skill is a far greater factor than luck. Sure, the luck of the draw will impact the results in any given tournament, but in the longer term the best players are regular winners and the unskilled players are regular losers.
A good analogy is looking at the day-by-day results of a full baseball season. Even the best teams will lose plenty of games and have significant losing streaks. Even the worst teams will occasionally beat the best teams and string together several wins in a row. By the end of the season, however, the luck largely evens out and skill is rewarded in the standings. The best teams make the playoffs and the worst teams try to improve for next year.
There is little logic to opposing poker on morality grounds while allowing individuals the freedom to drink heavily, smoke, eat unhealthy foods, climb Mt. McKinley, or play golf with lightning nearby. Each of these activities is more dangerous or self-destructive than consenting adults deciding to spend a little of their hard-earned money playing in an online poker game. Yet each of these other activities is rightfully legal and few poker opponents argue these other activities should be against the law.
This brings us back to empowering the Big Government nanny state that most social conservatives oppose. Doesn’t government have more important things to do than tell people what card games they can play?Overlooked Virtue
For those who still believe poker is inherently immoral, the personal stories of virtue among poker players are too many for this column. However, here are a quick few:
2007 WSOP champion Jerry Yang, a childhood refugee from war-torn Laos, donated more than $2 million of his winnings to the Make-A-Wish Foundation and other charities. Yang’s unabashed Christian faith shone throughout the WSOP, as he frequently talked about his Lord and gave thanks for his tournament run.
Legendary poker pro Barry Greenstein is known as the Robin Hood of poker, donating all his tournament winnings to charity. Those donations have totaled millions of dollars.
Hedge fund manager David Einhorn gave all of his $4.3 million in winnings at the 2012 WSOP to the One Drop charity, which provides clean drinking water to people in Third World nations.
Without poker, none of this charity takes place.Time to Affirm the Freedom to Play Online Poker
In a free society, government should be very careful about taking away people’s freedoms. While some justifications and necessities will exist, it is hard to make a compelling, internally consistent case for the Land of the Free taking away the right of consenting adults to play online poker. With its de facto ban on online poker, America is an outlier among the world’s democratic nations that largely respect and protect such a right. Congress can and should affirm that online poker remains legal, and in the process demonstrate that America remains the Land of the Free.
[Originally published on The Federalist]
Radical left-wing organizations have long-enjoyed stenographic coverage in the mainstream media. So it certainly came as a shock to Greenpeace to see CNN rip into the organization for employing a decrepit Santa to advance lies that scare kids and adults alike about the climate.
CNN’s Jeanne Moos has for many years specialized in quirky human interest stories at the venerable cable channel. This week she ripped Greenpeace for its latest video featuring a disheveled and depressing Santa that makes Billy Bob Thornton’s iconic “Bad Santa” look as warm as the one from “Miracle on 34th Street.”
You see, says Greenpeace’s Apocalyptic Santa, if the ice doesn’t stop melting at the North Pole, “there may be no alternative but to cancel Christmas.” Worry not, kids. Arctic ice has actually increased this year by 533,000 square miles (and total polar ice is at highest point in about a decade), which Moos notes in her report.
That’s a good thing. Yet here’s proof the MSM still can’t just report the facts about the climate: Moos couldn’t bring herself to simply declare the truth of increasing polar ice, which is proven by scientific observation. She had to couch it with the qualifier of “critics say” polar ice has increased.
But why quibble? Moos was nice enough to cite our friends at the International Climate Science Coalition who told CNN: “Santa should be celebrating the return of the ice!”
Moos also cast the alarmists at Greenpeace and elsewhere as folks who “believe in global warming.” Exactly right. Their adherence to human-caused climate calamity is akin to religious belief, unaffected by the reality of scientific proof. It was a nice touch by Moos that I’m amazed got past CNN’s editors.
Moos also cited a commenter at the YouTube post of the Greenpeace video who wrote:
Hope that you are proud of yourselves green piece (sic) for scaring innocent children with your bully boy tactics as usual.
That’s right. CNN cited a critic of Greenpeace in its story. That represents amazing progress for truth (if not grammar) in MSM coverage of the climate.
Here’s another taste of Moos’ CNN-approved mockery of Greenpeace and what she said was a “sorry excuse for a Santa”:
It looks like a hostage video, but instead of Al Qaida, it’s Santa.
Let it be said forever more: CNN compared Santa to terrorists! (Sorry. I channeled the mindset of the left for a second. Now I’m back to normal.)
Moos closes by asking: “Who would you trust to save the icecaps?” She makes it clear that it is not Greenpeace. Perhaps the public and the MSM would do better to trust an organization (ahem!) that recently published a 1,000-page report containing the latest climate research, and has hosted eight international conferences on climate change with some of the most-esteemed climate scientists in the world.
This much is true: CNN is not trusting Greenpeace and its Doomsday-Cult Santa.
Watch Moos’ CNN spot below, and the whole Greenpeace video below that. If watching these videos do not make you merry, Heat Miser might be your Christmas hero.
UPDATE, Dec. 6: The folks at Sun News in Canada liked my post, asked me on the air to talk about it today. Watch it here.
CNS News reported in October of this year that according to the U.S. Treasury the government’s federal debt had jumped by $409 billion. This equals approximately $3,546 for each of the Census Bureau’s estimated 114,663,000 U.S. households, and makes October’s spending the largest one-month jump in debt in this nation’s history.
What is troubling is that Congress is not currently restrained by a debt limit. Since October 17 when Congress enacted the Continuing Resolution (CR) with a deal that ended the government shutdown and pushed the debt ceiling level to February 7, 2014, no set dollar amount exists to restrict spending.
With nothing to stop legislators from piling even more spending and debt on taxpayers before February 7, 2014, it is folly to believe that legislators will restrain their spending, nor have they done so. Noted was how an additional $409 billion of debt was accrued through the end of October. While on October 17 the debt subjected to limit stood at $16,699,396,000,000, just $25 million shy of the legal limit of $16,699,421,095,673.60, by October 31 the debt now subject to limit had grown to $17,108,378,000,000.
Troubling is that even with this nation’s credit card maxed out (along with taxpayers’ wallets), Washington aims to continue its spending spree. Instead of addressing future debt by controlling the growth in entitlement spending and enforcing lower levels of spending, the budget conference committee is considering an option that could increase spending by up to an additional $100 billion; that is, if a compromise deal can be fashioned to bust the sequestration spending caps by up to $100 billion.
An increase in user fees (really a disguised tax increase) would be employed to offset mandatory spending with necessary revenue. Although gimmicks are nothing new in Washington, D.C., raising user fees to pay for more spending is what has helped fuel our now $17.2 trillion national debt.
Not only is the federal government at a tipping point financially, but Illinois has already reached its tipping point. Consider this Statement of Position from Illinois Treasurer Dan Rutherford:
- Illinois taxpayers’ debt from borrowing = $44.3 billion
- Illinois taxpayers’ unpaid bills = $8 billion
- Illinois’ unfunded pension and retiree health care liabilities = $140
Each Illinois family shoulders this debt = over $40,000 per household Moody’s rates Illinois as the worst credit risk of all the states in the nation, which raises the cost of borrowing money, which, in turn, adds billions of dollar in the repayment of bond issuances.
The following dreary picture of Illinois was painted by Reboot Illinois on November 18:
All of Illinois’ neighboring states were in the top half of Chief Executive Magazine’s 2012 list of best states for business. Illinois was rated third worst. The state’s unemployment rate, consistently the highest in the region, is evidence of that ranking’s accuracy [Since 2008, Illinois has lost the third most jobs by state in the country]. Businesses in Illinois suffer under some of the highest workers compensation insurance rates in the country, and in 2011 they saw their income tax rate jump from 4.8 percent to 7 percent — a 46 percent increase [IIllinois' Corporate tax rank is now 45th in the nation].
On Tuesday, Illinois legislators addressed in a one-day special session a pension reform deal crafted by the Illinois House and the Senate. Numerous reports about the bill before the vote left much to be desired, making Tuesday’s exercise seemingly geared to convince the pubic that legislators are finally taking the state’s $100 billion pension shortfall seriously.
According to a report by Ted Dabrowski, Vice President of Policy at the Illinois Policy Institute, House speaker Mike Madigan’s solution is just the next in a long line of disastrous pension maneuvers and does nothing more than delay real reform and keep Illinois in a chronic state of crisis.
In typical Illinois fashion, little advance information was shared with the media, the public, and legislators about a bill so critical to the financial well-being of this state. Just what might be the language of a bill that is being kept under wraps until only hours before legislators cast their votes?
In addition to federal and state tax obligations, there are also local taxing bodies that make financial demands. Significant is that Illinois has more “local” governments than any other state in the country, 6,963, which is one-thousand more than any other state when factoring in state population. As it is, Illinois residents pay the second-highest-owner-occupied property tax rates in the country, and their state is the third most corrupt.
Having so many units of government at the local level put taxpayers on the hook for unnecessary layers of government that duplicate services and cause taxes to soar. It is not uncommon for Illinois residents (61% of them do) to live under the burden of three levels of local government (municipal, township or county government), resulting in a huge outlay of funds allocated for salaries.
Lake County in northern Illinois, Thorner’s home county, ranks No. 1 for the Midwest region on Forbes’ list of U.S. counties with the highest property taxes, the average being $6,052.
Thorner also lives under a township government, that of Shields, in addition to her Village of Lake Bluff. In Shields Township a whole department exists to handle the scattered township roads and bridges whose trucks criss-cross the same area when snow plowing far fewer mile, than do municipal trucks.
Also adding to the tax burden at the local level are the high number of school districts in Illinois, 911 in all. Two hundred of them are single school districts. These single districts (Lake Bluff Elementary School District 65 is a single district) cost more per student to educate than do multi-school districts.
Federal, state, and local tax liability has become a burden to many. Often asked is how much is too much to pay in taxes? Although little can be done to fight taxation at the state and federal levels, citizens have more of a say at the local level. Unfortunately many officials are opposed to doing away with the positions they hold, either elected or appointed, even if they hold positions that duplicate work done by others.
And so our tax burden continues to grow to keep the hungry beast that is government fed, with many legislators indifferent about the way taxpayers’ money is wasted and spent as long as it suits their own political interests to be re-elected, thereby ensuring that they will continue to enjoy all the attractive perks they have grown so accustomed to receiving over the years.
A common fallacy is that the Great Depression was ended by the explosive spending of World War II. But World War II actually institutionalized the sharp decline in the standard of living caused by the Depression. The Depression was actually ended, and prosperity restored, by the sharp reductions in spending, taxes and regulation at the end of World War II, exactly contrary to the analysis of Keynesian so-called economists.
True, unemployment did decline at the start of World War II. But that was a statistical residue of sending millions of young American men to fight and die in the war. There are better ways to reduce unemployment, as was shown after the war.
Statistics showed a rise in GDP during the war. But that just reflects misdefined statistical analysis. The military guns, tanks, ships, and planes produced and counted as showing rising GDP did not reflect improved standards of living for working people, or anyone else. Yes, they did win the war, and that victory was a social good, just as removing Saddam Hussein from power was a social good. But these were not economic goods and services, and should not be counted as such.
The sale prices of goods and services sold in voluntary market transactions reflects the true value of the goods and services produced, because they reflect what consumers are willing to pay for them, and so reflect the benefit that consumers see in them. But the same voluntary market transactions where consumers are spending their own hard earned money were not involved in the government’s acquisition of the military guns, tanks, ships and planes produced during World War II. The cost of all that military materiel was simply added to GDP, as if it reflected increased production. But would not a better measure of the economic value of that military materiel, and of any coerced government transaction, be to subtract the cost of that production from GDP, rather than adding it?
Perhaps this economic reality can be seen better in other military conflicts. Did the American Civil War reflect a time of soaring economic prosperity for America, when both the South and the North were producing weapons of as much mass destruction for Americans as was feasible at the time? What about the cost of the Mexican-American War in the 1840s? Did the cost of the Vietnam War represent a net addition to, or a net subtraction from, American GDP? Or the cost of the most recent wars in Iraq and Afghanistan?
I am not a pacifist who thinks defense spending has no value. But that value cannot be measured the same as consumer or productive goods and services that do increase the standard of living for working people and their families, and are purchased through voluntary market transactions.
World War II institutionalized the falling standards of living of the Depression through wage and price controls, and extensive rationing of consumer goods and services. The economic deprivation, and reduced standards of living, continued, although people perceived it was now for a good cause.
But increased government spending does nothing to create economic recovery, growth and prosperity. That is because the money to finance that increased government spending is drained from the private sector, either through increased taxes, or increased borrowing. That entire transaction involves a net drag on the economy. Increased taxes to finance the increased spending involve counterproductive incentives that reduce production and growth. Increased government borrowing drains investment capital from productive activities in the private sector and reallocates it to non-productive government consumption.
There can never be inadequate demand for any good or service in a free market economy, which is the problem Keynesian witch doctors think they are solving. If demand for any good or service is insufficient to buy up all the available supply, the price for the good or service will decline, increasing demand and reducing supply, until they are equal.
This was all further demonstrated by the end of World War II. As George Gilder explains in his brilliant, recent, ground breaking book, Knowledge and Power: The Information Theory of Capitalism and How It Is Revolutionizing Our World,
“After World War II, when ten million demobilized servicemen returned to an economy that had to be converted from a garrison state to civilian needs, economists steeled themselves for a renewed depression. A sweeping Republican victory in the Congressional election of 1946, however, brought an end to the wartime government-planning regime [overregulation]. Dropping from 42 percent of GDP to 14 percent, government spending plummeted by a total of 61 percent between 1945 and 1947. One hundred fifty thousand government regulators were laid off, along with perhaps a million other civilian employees of government. The War Production Board, the War Labor Board, and the Office of Price Administration were dismantled [deregulation].”
Gilder explains the great debate at the time,
“Every Keynesian economist confidently predicted doom. Sounding exactly like his future student Paul Krugman, who would beg Obama for trillions in additional ‘stimulus’ spending, Paul Samuelson in 1945 prophesied ‘the greatest period of unemployment and dislocation any economy has ever faced.’ Arnold Kling of the Cato Institute has observed that ‘as a percentage of GDP the decrease in government purchases was larger than would result from the total elimination of government today.’ As Paul Krugman points out, nominal GDP, as measured by economists, did drop a record 20.6 percent in 1946 when government spending plummeted.”
But that drop was just an artifact of the government’s definition of GDP to include its own spending. Gilder, however, explained what actually happened,
“But a drop in government spending after a war does not depress creativity; it unleashes it. Judging the public sector contribution by its cost is the great error of Keynesian economics….the Great Depression, which had continued through the war disguised by price controls and necessary defense spending, at last came to an end. Economic growth surged by 10 percent over two years and the civilian labor force expanded by seven million workers….[T]he private sector…launch[ed] a ten-year boom despite self-defeating tax rates on investors as high as 91 percent. The Republican Congress compensated for the high rates by introducing joint returns, effectively cutting taxes in half for intact families. Corporate taxes dropped drastically, and the tax burden, measured by government spending, fell more dramatically than at any other time in American history. Low inflation and privatization led to a resurgence of large manufacturing corporations….[Emphasis added for low logic voters].
By 1948, the unemployment rate was 4.0% or less every month for the entire year. For most of 1952 and 1953, unemployment was 3.0% or less. Today, rabid leftists bloodthirsty to suck on other people’s money worship the economic glory days of the 1950s, with its 91% top income tax rate, the boom actually ushered in by the greatest reduction in government spending in world history. But still Krugman sings daily from his same frayed Keynesian hymnal, with the broken spine and yellowed pages falling out, grinning with what he thinks is his transparent genius in repeating over and over the long proven wrong, cutting edge ideas of almost a century ago.
It was the last great Democrat President, John F. Kennedy, who put an end to the socialist tax policy, campaigning on cutting income tax rates across the board by nearly 25%, which reduced the top income tax rate from 91% to 70%. His tax cut was enacted in 1964, after his tragic assassination. The next year, economic growth soared by 50%, and income tax revenues increased by 41%! Starting in December, 1965, the unemployment rate stayed at or below 4.0% for the next 4 years! U.S. News and World Report exclaimed, “The unusual budget spectacle of sharply rising revenues following the biggest tax cut in history is beginning to astonish even those who pushed hardest for tax cuts in the first place.”
The bipartisan troika of Nixon, Ford and Carter trashed the American economy in the 1970s, with stagflation automatically increasing effective tax rates every year. Reagan tracked in Kennedy’s footsteps with the most sweeping tax rate cuts in world history, following another 25% rate cut for everyone with the 1986 bipartisan tax reform, together reducing the top income tax rate from 70% all way down to 28%. That combined with his (domestic discretionary) spending cuts, deregulation, and strong dollar monetary policy produced the greatest economic boom in world history.
The boom lasted for 25 years, from 1982 to 2007, what Art Laffer and Steve Moore rightly called in their 2008 book, The End of Prosperity, “the greatest period of wealth creation in the history of the planet.” In the first 7 years alone, the real economy grew by one third, which was the equivalent of adding the entire economy of West Germany, the third largest in the world at the time, to the U.S. economy. Newt Gingrich and his Republican Congress added further to the tax cuts, restrained spending, and deregulation in the 1990s to keep the boom going. That was followed by the further Bush tax cuts in 2001 and 2003, which brought the unemployment rate back down to 4.4% in December, 2006, March, 2007, and May, 2007. Those unemployment rates will never be seen again, until some time after Air Force One departs to return Obama to his previous career as a street agitator. Steve Forbes reports that even in the last 5 years of the Reagan boom, from year-end 2002 to year-end 2007, American economic growth was equivalent to adding the entire economy of China to the American economy.
Unfortunately, Bush’s Republicans lost sight of Reagan’s domestic spending restraint and strong dollar monetary policies, and even maintained the overregulation of housing finance, so that by 2008, the Reagan Long Boom was over. Today, Obama’s Democrat Progressives argue that every pro-growth economic policy – tax rate cuts, spending cuts, deregulation, and strong dollar monetary policy – is contractionary. Your average illegal alien understands America better than that. I say keep the illegal aliens, and deport the Progressives.
Peter Ferrara is the Director of Entitlement and Budget Policy at the Heartland Institute. Ferrara is also a Senior Advisor for Entitlement Reform and Budget Policy at the National Tax Limitation Foundation, General Counsel for the American Civil Rights Union, and Senior Fellow at the National Center for Policy Analysis. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush. He contributes to a weekly Forbes column, as well as frequently writing for the American Spectator.[Article originally posted on Forbes.com]
“Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.” – C. S. Lewis, author of The Chronicles of Narnia and many other works of literature.
It is one of the great mysteries that, for progressives, also called liberals, the past provides no lessons, no warnings that would prevent them from repeating their errors. Progressives are always focused on a magical future in which there will be no wars, no hunger, no poverty. Their belief in the redistribution of wealth—communism—is, in Winston Churchill’s words, “the equal sharing of misery.”
Obamacare is a perfect example of the progressive inability to accept that socialism and/or communism simply does not work. It depends on coercion and in the case of communism it left hundreds of millions dead in its wake over the course of the last century. Obamacare depends on (1) the belief that human nature will change—which it will not—and (2) the lies to implement it.
The news is filled with the failure of the government, despite the expenditure of hundreds of millions of dollars, to provide a working website. Even assuming that the technical problems are solved, the failure of Obamacare is built-in because Americans have always enjoyed a culture of independence, despite the creep of government programs that occurred over the last half century.
The trust in the federal government, of Congress, is at an all-time low.
Social Security is insolvent or soon will be. Medicare was rendered even more insolvent when billions were transferred to Obamacare. Medicaid will bankrupt states as thousands more sign up for this program of minimal medical service.
As I listened to and read about the Obamacare roll-out, I was reminded of an earlier program that was adopted, Prohibition. It involved a nationwide ban on the sale, production, importation, and transportation of alcoholic beverages. It was the law of the land from 1920 until 1933. When it went into effect it was hailed as a victory for public morals and health. By the time it was repealed with the 18th Amendment to the Constitution, Americans had seen the growth of organized crime, the corruption that permitted ordinary citizens to ignore it, and the loss of the taxes to fund other aspects of governance.
Wikipedia notes that “By 1925, in New York City alone, there were anywhere from 30,000 to 100,000 speakeasy clubs” where liquor was sold. Prohibition proved nearly impossible to implement and enforce.”
Barack Obama represents the high-water mark of progressives to impose communism on America. A totalitarian form of government, we have witnessed how his administration has turned the Internal Revenue Service into a political instrument to suppress its opponents and has expanded the National Security Agency into a means to spy on all Americans, accessing every piece of communication between them. Obamacare enables the government to know every bit of information about individual’s health records.
It is, as C.S. Lewis said, “tyranny exercised for the good of its victims.” Even so, the progressives ignore the failure of communism in the former Soviet Union and the decision of China to move to a capitalist economy while endeavoring to retain a single party government that is encountering increasing protests and resistance from its population.
Obamacare is being imposed at the same time that socialist healthcare programs are in retreat in Europe. In Britain, the government led by Prime Minister David Cameron has introduced a bill seeking to partially privatize the National Health Service (NHS) in an effort to avoid the Greek-style financial meltdown that threatens the European Union member states. Cameron’s argument for the bill is that there is too much bureaucracy in the NHS system and that it interferes will patient care. NHS is based on the rationing of medical care as opposed to the free market system where costs are determined by supply.
As reported in a recent article by Arnold Ahlert on Front Page Magazine.com, “Last November, such rationing reached a scandalous level. A study by the Co-operation and Competition Panel revealed that Primary Care Trust heads were imposing arbitrary spending caps, denying patients procedures such as hip replacements and cataract removals—and that waiting times for services were seen” to be deliberately extended ‘so patients would go private or die before they were seen,’ to slash costs.”
Obamacare, as has been widely reported, has increased the costs of healthcare insurance, particularly for the young on whom the system relies to pay for the costs of caring for the elderly. It has led to the cancellation of millions of healthcare insurance plans and millions more will lose their plans.
In a November 30 Washington Times article by Jennifer Oliver O’Connell, it is reported that the inherent unconstitutionality of Obamacare will bring about its end. Cases making their way through the judicial system such as Sebelius v. Hobby Lobby and Conestoga Wood Specialties Corp v. Sebelius, Indiana v. IRS, Pruitt v. Sebelius, “may be the final nails in the coffin of Obamacare.” The first two cases cited will likely be heard in March with a final ruling in the summer of 2014. There are others such as Halbig v. Sebelius, King v. Sebelius, the Independent Payment Advisory Board, as well as the HHS employer mandate and origination clause challenges are among the many cases challenging the basis of Obamacare.
Finally, in the November 2014 midterm elections, political pundits are virtually unanimous in the prediction that Democrats will be driven from their control of the Senate and Republicans will increase their control of the House.
Obamacare is the ultimate expression of the progressive and/or liberal approach to government and it is, just as was the case of Prohibition, the increasing resistance of the American public and will be, at some point, repealed.
Last week’s punishment/settlement between the Department of Justice and Duke Energy over bird deaths caused by its wind turbines gives evidence that the Obama administration needed a scapegoat, to defuse accusations that it applies a double-standard in enforcement of wildlife laws.
The Friday before Thanksgiving both parties announced that Duke would pay $1 million for the deaths of more than 160 birds that are protected by the Migratory Bird Treaty Act. The incidents occurred over the last four years at two Wyoming sites operated by the utility’s Duke Energy Renewables subsidiary.
“This case represents the first criminal conviction under the Migratory Bird Treaty Act for unlawful avian takings at wind projects,” said Robert Dreher, acting assistant attorney general for the Justice Department’s Environment and Natural Resources Division, in a statement.
That’s nice. The problem is the timing of the action coincided with aresponse by the Justice Department to Republican Sens. David Vitter (La.) and Lamar Alexander (Tenn.). The delayed reaction came ten months after they challenged Attorney General Eric Holder over an obvious double standard, in which fossil-fueled energy producers have been penalized for killing birds, while wind energy was allowed to apply for permits to kill bald eagles and other protected birds.
“It appears the Justice Department is hand-picking which migratory bird mortality cases to pursue with an obvious preference of going after oil and gas producers,” said Vitter in a January 30 statement. “For example, while three oil and gas companies are facing fines for killing birds, a wind energy company is applying for permits to kill up to fifteen bald eagles. We obviously don’t want to see any indiscriminate killing of birds from any sort of energy production, yet the Justice Department’s ridiculous inconsistencies begs questioning and clarity.”
The senators waited, and waited, and waited for an answer. By mid-May they had still not received one, but again publicly questioned the administration’s policy as the U.S. Fish and Wildlife Service informed wind operator Terra-Gen Power that they would not be subject to prosecution for killing California condors, another protected species.
“Basically, the federal government has issued a condor hunting permit to big wind companies,” said Sen. Alexander in May. “Federal law designed to protect a species from extinction doesn’t distinguish between oil and gas companies and wind farms. Equal protection of the law means laws should be enforced evenly, and it’s wrong for the Department of Justice to enforce the law against oil and gas companies but not against wind companies.”
Two days after the Senator’s joint criticism, House Committee on Natural Resources Chairman Doc Hastings (R-Wash.) requested extensive documentation from the Fish and Wildlife Service about its decision-making regarding the enforcement of the Migratory Bird law and the Bald and Golden Eagle Protection Act, and asked for a response by May 30. After five months the agency had not responded with the information and Hastings accordingly slammed Director Daniel Ashe in a follow-up letteron November 4.
Finally, two days before the settlement with Duke Energy was announced, the Justice Department answered Sens. Vitter and Alexander about their January inquiry. Deputy Assistant Attorney General Elliot Williams told the senators there has been no double standard in enforcement of the wildlife laws.
“Violations of the (Migratory Bird Treaty Act) are referred to the Department only when companies fail to make good-faith efforts to avoid, minimize, and mitigate avian take,” Williams wrote.
Nevertheless the delay – and then the sudden confluence of Justice’s answer to the senators and the announcement of the Duke settlement – gives the strong impression that Fish & Wildlife and the government lawyers wanted a “scalp” to show the senators that they are evenhanded in their pursuit of the law. But Vitter, for one, wasn’t buying it.
“It looks like DOJ is making an example out of this particular case to shift the focus away from the Administration’s bias of using the Migratory Bird Treaty Act to go after oil, gas and other businesses,” he said in a statement on Monday. “The instances of wind energy’s favoritism have been so egregious under this Administration, and DOJ’s settlement and response still don’t explain the Administration’s obvious bias.”
How biased? An independent study published by the Wildlife Society Bulletin, cited by the Daily Caller, found that 573,000 birds and 888,000 bats are killed by wind projects in the U.S. every year. And according to the Fish and Wildlife Service’s own analysis, the number of birds killed is 440,000 per year, National Review reported. With those kinds of numbers it’s hard for Justice Department to make a serious case for no prosecutions under the migratory bird law.
So Duke Energy, the nation’s largest publicly owned utility and a close friend of the administration, was an obvious “offender” that could afford to step forward and take a hit for the overall cause of wind energy – after all, $1 million is pocket change for the company that lives and breathes regulatory favoritism.
As NLPC has reported, Duke has been on a wind (and solar) project-buying spree for years. The utility, which sells its “retail” power to customers in the Carolinas, Ohio, Indiana, Kentucky and Florida, has been building up its renewable resources for its wholesale energy delivery as well. The company, in part, benefits from the existence of renewable energy mandates in about 30 states, and lobbyists helped form North Carolina’s standard which requires Duke to generate 12.5 percent of its power from renewables by the year 2021.
The stimulus also provided handsome subsidies for Duke Energy renewable projects, with the Department of Energy providing a $22 million grant for Duke’s Notrees Windpower Project in Texas, more than half the estimated $43.6 million cost for the 20-megawatt energy storage experiment. And DOE also came through with $204 million under the Recovery Act for Duke’s smart grid projects in the Midwest and in the Carolinas.
Duke followed with solar and wind energy projects that it has either purchased or launched, after announcements in 2007 in Ohio (“Duke Energy Ohio to ‘Go Green’”), Indiana and the Carolinas that the company was seeking bids from providers of renewable power. “Duke Energy is interested in talking with potential suppliers about purchased power agreements, purchasing a generating facility, or purchased power agreements with the option to buy the facility,” a company press release said.
The buying bender of wind and solar projects immediately followed: 100 wind turbines from GE and 1,000 megawatts of wind assets in Texas (Dec. ’07); a 20-year commitment to buy solar power from SunEdison (May ’08); the purchase of wind company Catamount Energy (June ’08); and so on. Hardly a month has gone by since where Duke doesn’t announce some new purchase of solar or wind resources, including this past week.
Mandates and subsidies aren’t the only things that make the economics of wind energy extremely profitable for Duke. As Glenn Schleede, a former Atomic Energy Commission official, has detailed in the past, utilities invested in wind and solar reap an array of financial breaks including “Five-Year Double Declining Balance Accelerated Depreciation,” which frees up massive amounts of tax-free cash from capital investments, and also reduces corporate income taxes. Duke also has benefited from the Federal Production Tax Credit, Investment Tax Credits or Production Tax Credits, additional state subsidies for utilities, and other Department of Energy subsidies such as research and development grants and contracts. As Schleede said, this transfers “hundreds of millions of dollars annually from the pockets of ordinary taxpayers and electric customers to a few large corporations that own wind farms….”
If there is any doubt left about Duke’s cash flow thanks to renewables, recently departed CEO James Rogers told energy expert Robert Bryce in mid 2011 that wind subsidies enabled the utility to earn returns on equity of 17 to 22 percent.
So clearly, with wind energy bringing in so much money, a $1 million token fine over less than 200 bird deaths is not going to affect Duke Energy. The Charlotte-based utility frittered away at least ten times that much as a host of the Democratic National Convention last year.
Last week, writing for the Wall Street Journal, Bryce suggested the action by the Justice Department might mean the “green bubble” is about to burst with possibly more actions coming. But it’s hard to imagine the Obama administration doing much more of significance on that front after it has poured billions of dollars into the expansion of renewables via grants, loans and subsidies.
[Originally published on the National and Legal Policy Center]
Stenhouse and his team used a state tax modeling tool to determine what kind of tax reforms would best suit their state. They concluded that ending the sales tax would make their state more friendly to businesses and residents, creat 20,000-25,000 more jobs and eliminate 30% of their unemployed. Nationally, it makes more sense to lower the income tax, but due to Rhode Island’s geographical location, the sales tax is a better option for them.
Their proposal has bipartisan support and is gaining more traction in the legislature than they ever thought possible. The bottom line is that no one in the state has proposed a tax reform measure that is outside the box and would institute real change. People know that this it.
Stenhouse doesn’t believe that they will get the sales tax to zero, but he thinks they can make a significant reduction and is excited to see what happens in the future.
Listen to the podcast in the player above.
The media is giving mixed reports of Cardinal Dolan’s interview on Meet the Press with David Gregory. According to Fox News, the Catholics oppose Obamacare and, according to NBC News, the Catholics embrace it.
FOX NEWS link:
NBC NEWS link:
The reports merely focus on two different parts of the Cardinal’s discussion. The Catholics (A) support universal health insurance and (B) oppose the parts of Obamacare that mandate Catholic institutions provide coverage for contraception, abortion and other procedures prohibited by the Catholic Church.
Giving the recent dramatic shift in the teachings of the Catholic Church regarding free market-oriented economics, I’m going to say a few words on behalf of the Cardinal Dolan:
The Catholics generally support a government that is medium-size. They cannot support big government. The opposition to big government is very clear. They generally do not support a government that is small. From time to time, they have attacked small government, but not in ways that are as clear as their attacks on big government. It may be possible for the Catholics to encompass both the small and the medium-sized government-types; but, the Catholic Church has generally not been a comfortable place for small government-types.
Pope John Paul II was kind of an exception to the rule among the leaders of the Catholic Church with regard to small government, at least with regard to the focus and tenor of his teachings. I may be exaggerating a bit, but when John Paul II was Pope, atheistic communism was the Great Satan in the world. Today, according to Pope Francis, it is free market economics. In his words, the “trickle down theory” of economics is the “new tyranny” in the world.
Thus, Cardinal Dolan, in defending universal health insurance, is in keeping with the mainstream of Catholic political economy. My defense of Cardinal Dolan will be based, however, on a different principle. instead of supporting medium-sized government, I will say that it is unjust to condition charity on not working. This principle is called “less eligibility.” A person should not be made less eligible for benefits because he works. This principle was developed by the private charity movement of the 19th Century, which was mostly a Protestant initiative, but was embraced at the time by some Catholics. I am not aware, however, that the Catholics have ever spoken on this principle.
According to the principle of less eligibility, denying charity to poor people because they work is evil. It not only undermines the incentive to work, it robs the poor of the dignity that comes with work, and it replaces “agape” or friendly love with sympathy. Instead of seeing the poor as like ourselves, in that they, too, work, it sees the poor as objects of pity, and replaces brotherhood as the basis of charity with victimhood.
According to the principle of less eligibility, once the government starts to get into the charity business, and starts to dispense goodies like cash benefits, food stamps, health insurance, housing vouchers, Pell Grants, and so forth, the discrimination among the poor based on working becomes an issue. If those on welfare who do not work have health insurance, why is health insurance denied to those who are poor who work.
My mother, who was one of the working poor of this country, in her old age put it this way: Why do prisoners have health care, and she did not? It was no use for me to remind her that she had health insurance through Medicare, as she had problems with her memory. I told her, Mom, if you need an operation, you can rob a bank. If you’re successful, you’ll have the money for your operation. And, if you’re not successful, you’ll wind up in prison where you’ll get the operation for free.
In theory, we could have a tax and welfare system consisting of (A) a package of benefits, mostly non-cash, and including health insurance, for those at the very bottom, and (B) a tax rate – let’s say 20 percent – where you start losing the benefits as you start to have income, eventually come to a break-even point, and then start paying taxes. With this kind of system, we would have a floor but no ceiling to income, and at every point along the income distribution people would have a good incentive to work. I think the system I have just described would be o.k. with most people who support small to medium-sized government, although maybe it would not be o.k. to all at either end of this range.
But, here’s the problem for the Catholic Church: church leaders cannot pretend to know what is the right amount of the basic grant or what is the right mix of cash and non-cash benefits in that basic grant, and what is the right tax rate to make this tax and welfare system work. That would be for government leaders to decide, relying on economic advisors and their own good judgment.
My judgment, as an economist, is that the dollar value of Obamacare is way too high for it to be affordable by the taxpayer for those who are subsidized, or to be affordable by those at the lower end of the income distribution who are not subsidized. Also, that the dollar value of the total package of welfare benefits – cash and non-cash benefits – is too high (mostly because of the health insurance part of the package). And, that the effective tax rate on those at the low end of the income distribution is way too high, approximately 100 percent, so that there is little incentive to work.
So, speaking as an economist, the particulars of Obamacare and of the tax system have to be addressed. But, the principle that nobody should be treated more shabbily because they work implies that if welfare recipients get health insurance so too should poor working people.
I would to conclude by returning to the insight into brotherhood developed by the 19th century private charity movement. As described by Joseph Tuckerman, the first leader of this movement in this country, we are all called to be our brother’s keeper, both the rich and the poor, each of us expected to work and be self-responsible to the extent that we are able. To this teaching, I would like to append the remarkable insight into brotherhood developed by Pope John Paul II. He said that by developing a sense of self in the context of a private property-based, market-oriented economy, a person might fall in love with himself; and, by entering into relations with others on the basis of free association, he might come to love others as he loves himself.
The Wisconsin Department of Public Instruction (DPI) has the power of interpreting laws regarding the voucher system and has increased and changed its reporting procedures that end up placing burdens on participating voucher schools and limit eligibility for students. Apparently, DPI makes complicated rules, like requiring parents to actually staple their income tax return to their voucher application. Although the state legislature has rectified some of these issues, DPI seems to come up with more and more.
Voucher school officials are bogged down by the never ending rules placed on them; they just want to run their schools efficiently and help the kids the best they can, but they just keep running into road block after road block. They keep participating in the voucher system because their communities have a demand for better education options.
It doesn’t help that the elected State Superintendent, Tony Evers, does not think voucher systems should exist. It’s a giant conflict of interest for the state of Wisconsin.
Listen to the podcast in the player above.
/* Style Definitions */
mso-padding-alt:0in 5.4pt 0in 5.4pt;
DefSemiHidden="true" DefQFormat="false" DefPriority="99"
UnhideWhenUsed="false" QFormat="true" Name="Normal"/>
UnhideWhenUsed="false" QFormat="true" Name="heading 1"/>
UnhideWhenUsed="false" QFormat="true" Name="Title"/>
UnhideWhenUsed="false" QFormat="true" Name="Subtitle"/>
UnhideWhenUsed="false" QFormat="true" Name="Strong"/>
UnhideWhenUsed="false" QFormat="true" Name="Emphasis"/>
UnhideWhenUsed="false" Name="Table Grid"/>
UnhideWhenUsed="false" QFormat="true" Name="No Spacing"/>
UnhideWhenUsed="false" Name="Light Shading"/>
UnhideWhenUsed="false" Name="Light List"/>
UnhideWhenUsed="false" Name="Light Grid"/>
UnhideWhenUsed="false" Name="Medium Shading 1"/>
UnhideWhenUsed="false" Name="Medium Shading 2"/>
UnhideWhenUsed="false" Name="Medium List 1"/>
UnhideWhenUsed="false" Name="Medium List 2"/>
UnhideWhenUsed="false" Name="Medium Grid 1"/>
UnhideWhenUsed="false" Name="Medium Grid 2"/>
UnhideWhenUsed="false" Name="Medium Grid 3"/>
UnhideWhenUsed="false" Name="Dark List"/>
UnhideWhenUsed="false" Name="Colorful Shading"/>
UnhideWhenUsed="false" Name="Colorful List"/>
UnhideWhenUsed="false" Name="Colorful Grid"/>
UnhideWhenUsed="false" Name="Light Shading Accent 1"/>
UnhideWhenUsed="false" Name="Light List Accent 1"/>
UnhideWhenUsed="false" Name="Light Grid Accent 1"/>
UnhideWhenUsed="false" Name="Medium Shading 1 Accent 1"/>
UnhideWhenUsed="false" Name="Medium Shading 2 Accent 1"/>
UnhideWhenUsed="false" Name="Medium List 1 Accent 1"/>
UnhideWhenUsed="false" QFormat="true" Name="List Paragraph"/>
UnhideWhenUsed="false" QFormat="true" Name="Quote"/>
UnhideWhenUsed="false" QFormat="true" Name="Intense Quote"/>
UnhideWhenUsed="false" Name="Medium List 2 Accent 1"/>
UnhideWhenUsed="false" Name="Medium Grid 1 Accent 1"/>
UnhideWhenUsed="false" Name="Medium Grid 2 Accent 1"/>
UnhideWhenUsed="false" Name="Medium Grid 3 Accent 1"/>
UnhideWhenUsed="false" Name="Dark List Accent 1"/>
UnhideWhenUsed="false" Name="Colorful Shading Accent 1"/>
UnhideWhenUsed="false" Name="Colorful List Accent 1"/>
UnhideWhenUsed="false" Name="Colorful Grid Accent 1"/>
UnhideWhenUsed="false" Name="Light Shading Accent 2"/>
UnhideWhenUsed="false" Name="Light List Accent 2"/>
UnhideWhenUsed="false" Name="Light Grid Accent 2"/>
UnhideWhenUsed="false" Name="Medium Shading 1 Accent 2"/>
UnhideWhenUsed="false" Name="Medium Shading 2 Accent 2"/>
UnhideWhenUsed="false" Name="Medium List 1 Accent 2"/>
UnhideWhenUsed="false" Name="Medium List 2 Accent 2"/>
UnhideWhenUsed="false" Name="Medium Grid 1 Accent 2"/>
UnhideWhenUsed="false" Name="Medium Grid 2 Accent 2"/>
UnhideWhenUsed="false" Name="Medium Grid 3 Accent 2"/>
UnhideWhenUsed="false" Name="Dark List Accent 2"/>
UnhideWhenUsed="false" Name="Colorful Shading Accent 2"/>
UnhideWhenUsed="false" Name="Colorful List Accent 2"/>
UnhideWhenUsed="false" Name="Colorful Grid Accent 2"/>
UnhideWhenUsed="false" Name="Light Shading Accent 3"/>
UnhideWhenUsed="false" Name="Light List Accent 3"/>
UnhideWhenUsed="false" Name="Light Grid Accent 3"/>
UnhideWhenUsed="false" Name="Medium Shading 1 Accent 3"/>
UnhideWhenUsed="false" Name="Medium Shading 2 Accent 3"/>
UnhideWhenUsed="false" Name="Medium List 1 Accent 3"/>
UnhideWhenUsed="false" Name="Medium List 2 Accent 3"/>
UnhideWhenUsed="false" Name="Medium Grid 1 Accent 3"/>
UnhideWhenUsed="false" Name="Medium Grid 2 Accent 3"/>
UnhideWhenUsed="false" Name="Medium Grid 3 Accent 3"/>
UnhideWhenUsed="false" Name="Dark List Accent 3"/>
UnhideWhenUsed="false" Name="Colorful Shading Accent 3"/>
UnhideWhenUsed="false" Name="Colorful List Accent 3"/>
UnhideWhenUsed="false" Name="Colorful Grid Accent 3"/>
UnhideWhenUsed="false" Name="Light Shading Accent 4"/>
UnhideWhenUsed="false" Name="Light List Accent 4"/>
UnhideWhenUsed="false" Name="Light Grid Accent 4"/>
UnhideWhenUsed="false" Name="Medium Shading 1 Accent 4"/>
UnhideWhenUsed="false" Name="Medium Shading 2 Accent 4"/>
UnhideWhenUsed="false" Name="Medium List 1 Accent 4"/>
UnhideWhenUsed="false" Name="Medium List 2 Accent 4"/>
UnhideWhenUsed="false" Name="Medium Grid 1 Accent 4"/>
UnhideWhenUsed="false" Name="Medium Grid 2 Accent 4"/>
UnhideWhenUsed="false" Name="Medium Grid 3 Accent 4"/>
UnhideWhenUsed="false" Name="Dark List Accent 4"/>
UnhideWhenUsed="false" Name="Colorful Shading Accent 4"/>
UnhideWhenUsed="false" Name="Colorful List Accent 4"/>
UnhideWhenUsed="false" Name="Colorful Grid Accent 4"/>
UnhideWhenUsed="false" Name="Light Shading Accent 5"/>
UnhideWhenUsed="false" Name="Light List Accent 5"/>
UnhideWhenUsed="false" Name="Light Grid Accent 5"/>
UnhideWhenUsed="false" Name="Medium Shading 1 Accent 5"/>
UnhideWhenUsed="false" Name="Medium Shading 2 Accent 5"/>
UnhideWhenUsed="false" Name="Medium List 1 Accent 5"/>
UnhideWhenUsed="false" Name="Medium List 2 Accent 5"/>
UnhideWhenUsed="false" Name="Medium Grid 1 Accent 5"/>
UnhideWhenUsed="false" Name="Medium Grid 2 Accent 5"/>
UnhideWhenUsed="false" Name="Medium Grid 3 Accent 5"/>
UnhideWhenUsed="false" Name="Dark List Accent 5"/>
UnhideWhenUsed="false" Name="Colorful Shading Accent 5"/>
UnhideWhenUsed="false" Name="Colorful List Accent 5"/>
UnhideWhenUsed="false" Name="Colorful Grid Accent 5"/>
UnhideWhenUsed="false" Name="Light Shading Accent 6"/>
UnhideWhenUsed="false" Name="Light List Accent 6"/>
UnhideWhenUsed="false" Name="Light Grid Accent 6"/>
UnhideWhenUsed="false" Name="Medium Shading 1 Accent 6"/>
UnhideWhenUsed="false" Name="Medium Shading 2 Accent 6"/>
UnhideWhenUsed="false" Name="Medium List 1 Accent 6"/>
UnhideWhenUsed="false" Name="Medium List 2 Accent 6"/>
UnhideWhenUsed="false" Name="Medium Grid 1 Accent 6"/>
UnhideWhenUsed="false" Name="Medium Grid 2 Accent 6"/>
UnhideWhenUsed="false" Name="Medium Grid 3 Accent 6"/>
UnhideWhenUsed="false" Name="Dark List Accent 6"/>
UnhideWhenUsed="false" Name="Colorful Shading Accent 6"/>
UnhideWhenUsed="false" Name="Colorful List Accent 6"/>
UnhideWhenUsed="false" Name="Colorful Grid Accent 6"/>
UnhideWhenUsed="false" QFormat="true" Name="Subtle Emphasis"/>
UnhideWhenUsed="false" QFormat="true" Name="Intense Emphasis"/>
UnhideWhenUsed="false" QFormat="true" Name="Subtle Reference"/>
UnhideWhenUsed="false" QFormat="true" Name="Intense Reference"/>
UnhideWhenUsed="false" QFormat="true" Name="Book Title"/>
Today the Illinois Legislature is expected to take up a faux pension reform bill that is being heralded by many business groups, lawmakers, and the media as real “fundamental reform.” The financial problems facing Illinois’ pension system are massive and obvious, and yet the minor changes being proposed are being heralded by various advocates and some opponents as being significant or even “extreme.”
That couldn’t be further from the truth. The reforms being proposed won’t lead to a fully funded system for another 30 years, assuming the overly optimistic estimates and rate of return assumptions are correct. Benjamin VanMetre of the Illinois Policy Institute points out the “plan is really no different than the ramp Illinois has today, which is expected to have the systems 90 percent funded by 2045. The truth is there is no difference between the old plan and the new one.”
While compromise is a basic element of politics and policy-making, compromise also can give the public the illusion that the problem has been solved, when in fact such compromises purposely avoid the root of the problem.
The fundamental source of the pension problem in Illinois is the “defined-benefit” pension plan system, which goes practically untouched by the proposal except for a few minor tweaks to retirement age and COLAs. Public employees will continue to receive a pre-set benefit amount upon retirement for an indeterminate amount of time. This type of system is financially unsustainable and will crowd out spending for other programs such as education.
Here are the three biggest problems with the pension proposal:
1. The optional defined-contribution plan included is capped at 5 percent enrollment. One could assume this is out of fear that too many public employees will want to take control of their own retirement and be given the flexibility to change jobs, thereby undercutting the current Ponzi scheme. Cunningly, the proposal includes language that would allow government to cancel these defined-contribution plans and seize the money in them. The combination of the enrollment cap and the provision allowing the state to seize these plans makes this aspect of the proposal nothing more than window-dressing for what is truly needed as part of any fundamental pension reform. At minimum, the state should have stopped the bleeding by enrolling all new employees in a true, employee-owned 401k-style pension plan.
2. Changes to cost-drivers are minor or are actually harmful. The changes to the COLA formula and a pension cap of nearly $110,000 do little to curb costs and change the financial trajectory of the system. Phasing in a five-year increase in the retirement age is a step in the right direction but one that will still allow pensioners to retire much earlier than private-sector employees and collect millions of dollars’ worth of pension benefits for an indeterminately lengthy amount of time.
3. Prioritizing and guaranteeing pensions payments above other government expenditures, such as education and public safety, is a guarantee for higher taxes and higher spending. The guarantee written into the proposal is somewhat vague, but that doesn’t mean it won’t be applied at the expense of other core functions of government or taxpayers.
Illinois politicians are refusing to acknowledge they are guilty of promising overly generous benefits while pushing the costs onto future generations of taxpayers by failing to fully fund the pensions. Those who say this plan is the best one that is politically viable in Illinois are being disingenuous or haven’t been paying attention. Rhode Island – a very blue state with a similar per-capita proportion of state and local public employees – passed fundamental pension reforms that go much further than Illinois’ proposal does.
Illinois may have only one opportunity to get pension reform right, and this proposal is not it. More than likely, this proposal will set back the true fundamental pension reform that is required to protect taxpayers from further tax hikes, give public employees more job flexibility, and put Illinois on a sustainable fiscal path.
“Rich countries are still not pledging enough money to begin financing a shift to a cleaner global economy,” reports the Financial Times (FT) in its coverage of the United Nations climate talks in Warsaw that ended with little more than a “vague road map on how to prepare for a global climate pact they’re supposed to adopt in two years.”
Leading into what has now been called an “unsatisfactory summit,” predictions suggested the “talks could collapse because of a lack of financial support from rich nations.” Delegates from developing countries, such as Ecuador’s lead negotiator Daniel Ortega, believe “an effective 2015 emissions reduction agreement has to be based on a clear financial package.”
Ortega stated: “I’m not personally expecting any commitment by Warsaw. What we need to have is a clear roadmap of how the discussions of financing will allow us to have a clear idea of commitments by 2015.”
Even low expectations like Ortega’s were dashed when, on the opening day of the climate talks, November 11, Australia’s Prime Minister Tony Abbott’s government produced a document, outlining its position at the Warsaw conference, which boldly stated: “Federal cabinet has ruled that Australia will not sign up to any new contributions, taxes or charges at this week’s global summit on climate change.” The Australian points out: “This rules out Australia playing any role in a wealth transfer from rich countries to developing nations to pay them to decrease their carbon emissions.” But, perhaps, the most dramatic line in the government document is: Australia “will not support any measures which are socialism masquerading as environmentalism.”
A few days later, November 15, Japan announced that “its emissions would increase slightly rather than fall 25 per cent as promised in 2009.” Japan was struggling to meet its previous emissions promises—which were the most aggressive of any big developed country—even before the Fukushima accident prompted the shutdown of its 50 still-operable nuclear reactors and its corresponding rise in the supplemental use of fossil fuels.
Then on November 20, news came out of England stating that Prime Minister Cameron is telling everyone: “We’ve got to get rid of all this green crap.”
All of this is on the foundation of Todd Stern, the Obama Administration’s chief climate diplomat, dialing back expectations when, during an October 22 speech in London, he addressed U.S. involvement: “an international agreement is by no means the whole answer.” He pointed out “the need to be creative and flexible” and acknowledged the “hard reality” that “no step change in overall levels of public funding from developed countries is likely to come anytime soon.” Stern added: “The fiscal reality of the United States and other developed countries is not going to allow it.”
Toward the end of the conference, “six environment and development groups walked out, saying the annual round of talks had delivered little more than hot air.” A statement from Greenpeace, World Wildlife Fund (WWF), Oxfam, ActionAid, the International Trade Union Confederation and Friends of the Earth said: “The Warsaw climate conference, which should have been an important step in the just transition to a sustainable future, is on track to deliver virtually nothing.” Samantha Smith, leader of the WWF’s climate and energy initiative called the meeting a “farce.” She told the FT: “Finance is one of the big reasons we walked out. Expectations were that developed countries were going to put money on the table, but what happened when we got here was exactly the opposite.”
In a statement, Smith blamed: “Japan’s announcement that it would not reduce emissions as promised, Australia’s decision to end its carbon tax and Canada’s congratulating the latter on its new climate policy.”
Just as it looked like predictions of collapse would come true, a last-minute compromise came through in overtime: the Warsaw international mechanism for loss and damage (IMLD). Stern led the 36 straight hours of “bad-tempered negotiations”—including a standoff between the US and developing nations—in which “countries of the South … finally won.”
Addressing the IMLD, the Associated Press (AP) reports: “agreements were watered down to a point where no country was promising anything concrete.” While the IMLD was agreed upon, according to The Hindu, “deciding how this mechanism would get the funds in future” remained unresolved. And, BusinessGreen.com bemoans: “the vague wording fell short of the kind of detailed commitments on additional funding and avoided a commitment to compensation that many developing nations had been seeking.”
So, while a deal was reached that allows “just enough to keep things moving,” little is really expected. The AP states: “In two-decades, the U.N. talks have failed to provide a cure to the world’s fever.” Even Connie Hedegaard, European climate commissioner, acknowledges: “the process needs to provide a ‘substantive answer’ to global warming in two years to remain relevant.”
Fortunately, Mother Nature can’t be bought. Despite the billions the world’s wealthy nations have provided to poorer countries, global CO2 emissions have continued to rise. As the Washington Post reports, from 2010-2012 only about $5 billion of the $35 billion actually went toward helping poor countries prepare for actual climate change impacts. $100 billion per year is expected by 2020 but “most developed countries are failing to demonstrate promised increases.”
Britain was one of the “wealthier nations” to promise billions in aid, but it is balking, too. Ed Davey, energy and climate secretary, believes that paying additional compensation to poorer nations is “not fair or sensible.” The Telegraph states: “Growing numbers of Tory backbenchers are now calling for the government to withdraw from expensive climate change and carbon commitments.”
Douglas Carswell, Tory MP, sums up the so-called climate compensations: “We’re spending money that we don’t have to solve a problem that doesn’t exist at the behest of people we didn’t elect.”
Canada, Australia, Britain, and even Japan—home of the landmark Kyoto climate talks two decades ago—are coming to their senses. The US held out until the very last minute—and then capitulated by agreeing to the IMLD.
It really is all about the money. The Abbott Administration has stated: Australia’s efforts on greenhouse gases will be conditioned by “fiscal circumstances.” Japan, acknowledges its need for energy: “Although Japan’s economy is one of the world’s most energy efficient, the country is still the fifth-biggest CO2 emitter, owing to its large-scale concentration of manufacturing industries.” Britain’s Carswell says: “The rethinks that have happened in Japan and Australia and elsewhere desperately need to happen here as well.” Ditto for America. After all, they’ve had their way for twenty years—CO2 emissions have gone up, the economy has gone down, and global warming has stalled.
[Originally published on Townhall.com]