May 31, 2010


Carroll Andrew Morse


From the North Burial Ground, Branch Avenue, Providence, Rhode Island, May 2010.

Keynes Had Reconsidered the Invisible Hand

Monique Chartier

Monty Perelin at American Thinker observes

Wait, stop the Economics. There has been a terrible mistake.

From the timeline of the "Maynard Keynes" website. [H/T Jill Fallon at Estate Vaults.]

Over lunch at the Bank of England [in April, 1946], Keynes tells Henry Clay of his hopes that Adams Smith's "invisible hand" can help Britain out of the economic hole it is in:

"I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago."


Monique Chartier


May 30, 2010

Conversely, the Moratorium on All New and Exploratory Drilling is Well Within President Obama's Control

Monique Chartier

... unlike the continued gushing of crude into the Gulf of Mexico,

Glenn Beck and Pat Gray do an excellent job breaking down how this moratorium is a wild overreaction on the part of the president and how he may not intend to "let this crisis go wasted" but use it to pass Senator Kerry's renamed yet still abominable cap-and-trade bill.

More to the point, the need for oil is not going away anytime soon, not even if the Magic Substitute Fuel Source were identified tomorrow. The effect of the president's moratorium will only be to make us more dependent on the foreign oil suppliers that everyone condemns while needlessly draining the pockets of all non-rich Americans. (It occurred to me recently that most of the people calling for us to get off fossil fuels now! now! now! would not be financially impacted if we actually did follow that pointless and very rash course of action.)

Accordingly, this should be treated (heh) as a learning moment. For example, it would not be nearly as difficult to cap this well if it were not one mile under water, a condition successfully imposed by well meaning but misguided environmentalists. Accordingly, wouldn't it make more sense for the moratorium to be solely on deep water drilling?

May 29, 2010

A Direct Line from Health, Through Information, to Political Manipulation

Justin Katz

The problem with giving government authority over everything is that, well, it gives government authority over everything. For a shocking example, consider Mark Steyn's description of a minor controversy in Great Britain.

It seems that, in the course of the recent election cycle, the then-ruling Labour party sent out postcards warning that, if victorious, the Conservatives would reduce access to breast cancer treatment. What's shocking is that Labour appears to have culled the list of all citizens to include only those who have" been either diagnosed with, treated for, survived or, in at least one case, died of breast cancer." Writes Steyn:

So a quantum leap in targeted marketing has just been made: The governing party of a free society was able to identify women with breast cancer in swing constituencies and send them a postcard warning that if you vote for the opposition they’ll cut off your chemo and kill you.

I suppose that's not much different than local school committees sending parents warnings that their children will have to return to paper-less one room school houses if they don't receive the budgets that they desire. The difference is that it's unavoidable for school departments to know which households have children in the school system, but at least in the United States, it isn't yet the case that political parties have ownership of everybody's personal health histories.

The easy availability of information has its pluses and minuses. The real danger lies in giving a centralized authority the power to use that information for its own purposes.

Another Wishful Rhode Island Thinking Budget

Justin Katz

Every year, the General Assembly's budget is full of optimistic assumptions meant to make the budget seem balanced on paper, with hundreds of millions of dollars to be found or taken throughout the year. This time around, though, we've reached the level of parody:

As initially proposed by Carcieri, the Assembly's budget plugs deficits with more than $100 million in federal Medicaid funding currently contained in Congress' jobs bill. The Associated Press reported at 7 p.m. that leaders in the U.S. House of Representatives, facing opposition from within the Democratic Party on the cost of the legislation, had stripped Rhode Island's funding along with $24 billion slated to go to states across the country.

Confronted with the news reports during a break in committee action, Costantino phoned the office of U.S. Sen. Jack Reed. After a lengthy conversation, Costantino acknowledged that the increased Medicaid funding had been withdrawn from the jobs bill.

"It's an unresolved issue," Costantino said. "If in the next week we get more information, we will act responsibly. What that is, I don't know."

Those who run this state plan their budgets much like drug-addicted gamblers. They count on money they may not get; they cash in one-time sources of revenue even though it ends up costing them huge sums in the long run; they put off payments, at a cost; they take on debt, at a cost. One suspects that they know what the state needs to do — cut taxes, rein in regulations, erase mandates — but they lack the political will (or financial independence) to budget and legislate responsibly.

Yeah, Costantino promises to adjust as information filters down from the feds, but the one-time windfall shouldn't be part of Rhode Island's structural operations in the first place.

May 28, 2010

Failure to Stop the Gulf Oil Gusher is Not Obama's Katrina

Monique Chartier

... of course, Katrina was not Bush's Katrina. The only "serious" criticism that could be leveled is that he failed for several days to read the minds of a Governor and a Mayor who couldn't stop sitting on their hands long enough to pick up the telephone and ask for help.

But I'm risking an unnecessary discussion of events long behind us. So let's set that aside for the moment and see if we can agree on the definition of a "Katrina". How about this?

It is a situation in which a POTUS 1.) is aware of a disaster 2.) is cognizant that governmental resources exist that could help to abate that disaster and 3.) fails to send those resources knowing full well that they are needed and have been called for.

Clearly, then, the Gulf oil disaster fails item #2 of this test. Contrary to the observations this week of some critics (a list that includes even lefties Carville and Matthews), no branch of the United States government possesses the skills or equipment to deal with an uncapped, gushing oil well one mile under water. This is very much a specialized area of expertise.

Now, could President Obama have attempted to identify another company, possibly another oil company, and elbowed aside BP so as to give this other company a shot at stopping the gusher? Yes, maybe. It would have been a maneuver not without risk, though. If the other company had failed, for instance, could BP have claimed that they would have succeeded? What about the matter of liability? Would the president have reduced BP's liability and placed some liability onto the US government in doing so? Certainly some high powered attorney would have so argued in court.

Another thing. Was it the height of brainless bureaucratic numb-scullery for the US Army Corps of Engineers to call for an environmental impact study before they would consider authorizing the installation of sand berms to protect marshes and other areas along the coast? No question. Several people in that agency need to be fired immediately after they complete the voluntary lobotomies that they had clearly started to undergo just prior to reviewing the application for these sand berms.

(Feel free to take a snack break here as I try to explain.)

These berms were requested, ladies and gentlemen of the Army Corps of Engineers, to try to stop some of the MILLIONS OF GALLONS OF CRUDE OIL WHICH HAS SPILLED INTO THE GULF OF MEXICO, a situation which YOU HAVE OBVIOUSLY NOT HEARD ABOUT even though for the last month, it has been COVERED 24/7 WITH BLARING HEADLINES AND FLASHY GRAPHICS BY EVERY MEDIA OUTLET KNOWN TO MAN.

(Where were we? Oh, yes.) Again, though, the berm denseness of the Army Corps cannot be pinned on the president, at least not until the Louisiana Congressional delegation started jumping up and down in unison, which is something that they did fairly late in the game.

Is the president being too cute by half about the exact circumstances of the termination of employment of Elizabeth Birnbaum, the newly former head of the US Minerals Management Service? Sure he is. And it's not making him look good. But it, too, is a secondary matter - even if he had handled it perfectly, it wouldn't have stopped the oil spill.

There is a very, very, very long list of fiscal, economic, sovereignty, national security and foreign policy proposals and decisions for which the president can be criticized in depth. The steadfast refusal of the mainstream media over the last year and a half to see or discuss 95% of that list makes it very tempting to jump on the president when such a glaringly visible disaster presents itself. We need to resist that, though, both in the interest of our own integrity and so as to retain credibility when we bring up the items on that extremely long list. Failure to cap an underwater oil well is not on that list.

A Unique Notion: Previewing Legislation Before It's Passed

Justin Katz

On Wednesday night's Matt Allen Show, Andrew expressed surprise at the unique notion of attorney general candidate Erik Wallin that he should release his preferred legislation so early that he's not even in office, yet. Stream by clicking here, or download it.

May 27, 2010

The RI Public Sector Always Wins

Justin Katz

I haven't had a chance to review all of the substitutes that the RI House Finance Committee made to the governor's proposed budget, but over on the TCC Web site, I have explained the upshot for school funding in Tiverton. Basically, the General Assembly looks likely to bump up the governor's school aid number for the town, meaning that our 7.88% tax increase could have been 5.7%.

Put differently the local appropriation could have been not even $150,000 more than the Budget Committee recommendation that would have "gutted," "decimated," and "destroyed" the schools and had no deleterious effects.

Well, they're certainly not going to give the extra money back, so anybody want to wager what the $684,319 in "unexpected" money will go toward?

Getting to Details on Regionalization

Justin Katz

As is common among advocates of regionalization in Rhode Island, Joseph Paolino proclaims savings as if they should be obvious:

There is much to be gained from consolidation; unity and taxpayer savings go hand-in-hand. Why should the trucks plowing snow in Pawtucket stop at the boundary with Central Falls? Why should six purchasing agents be buying the same kinds of supplies instead of one? In this age of computer automation, why should there be finance divisions in six city halls, all processing revenues and expenditures? Why should police, fire and rescue personnel be overworked in the busy cities during business hours, while suburban personnel survey nearly empty neighborhoods? Undoubtedly, there would be major gains if public-safety forces in the six communities served under a unified command and were dispatched, wherever needed, throughout the county.

At the very least, one can say that answers to these hypothetical questions are possible. The very fact that snow plows stop at town borders means that there's no overlap in the service, so consolidation would only help in some minimal planning sense. A purchasing agent for an entire county would have more work to do determining who needs what, when, and why, requiring more input (and potential for waste) among underlings, and requiring the agent him or her self to be compensated for the greater authority. The same dynamic plays into finance divisions; as the overall authority moves up the tiers of government, more must be done by subordinates, who have more incentive to waste, not being ultimately responsible, and the person who is ultimately responsible is that much farther away from the individuals whom they are supposed to represent, directly or indirectly.

As for safety personnel, I wonder whether Mr. Paolino believes that the suburbs ought to have no coverage. If not, then regionalization provides no mechanism for reducing excessive staffing beyond that already available to the townsfolk who pay the bills. What regionalization could accomplish is to give city dwellers the chance to load up their staffs at the expense of the suburbs, either increasing the cost all around or decreasing the services available outside of the urban ring.

Regionalization and consolidation sound good, and they'll surely be a common theme as politicians strive to prove their fiscally responsible bona fides, but I'd wager that the effects would, at best, be neutral, but more likely detrimental to the cost and services outcome.

Palumbo's Political Game with Immigration Reform Bill

Marc Comtois

Rep. Peter Palumbo (D-Cranston) gained some kudos from conservatives and immigration reform proponents for submitting an Arizona-like immigration bill. Palumbo further benefited amongst the same group when it was learned that his immigration bill wouldn't get a hearing because House Speaker Gordon Fox killed the bill (something I commented on myself). In short, the perception was that Palumbo had tried to do the right thing on immigration but was foiled by the too-powerful Speaker of the House.

Turns out that wasn't so much the case. Now Palumbo has stated (on WPRO) that he never sought a hearing and that, essentially, he submitted the bill for show because he was upset about the reaction to Arizona bill. So there was no hearing to kill because Palumbo admitted he never requested one. Knowing this, he still allowed people to get their agida up and rail against the system that allows one person (the Speakah!) to kill debate. That criticism is warranted in the abstract, but now, unfortunately, the proximate cause for this discussion and the planned protests turns out to have been nothing but a political ploy.

So let's not martyr Palumbo. It's clear he was playing games, which is something conservatives and other good government reformers should remember, and that he's hardly an outsider. For lest we forget, it was Palumbo who indicated his approval of perpetual union contracts when he sponsored the legislation calling for the automatic extension of expired union contracts (teachers and firefighters) when negotiations had stalled. So, instead of hitching a wagon to a veteran player, maybe conservative and reformist folks should look to Palumbo's 2010 RI Legislature opponent, Don Botts.

Evolution Away from Threats, Versus Toward Desires

Justin Katz

Bradley Watson's essay, "Darwin's Constitution," is worth reading in its entirety (subscription required), but this paragraph points toward the problem with the notion that society is evolving in a progressive direction:

Dewey's elucidation of the new modes of social inquiry drew upon the thought of a number of Social Darwinist and pragmatist thinkers, including William Graham Sumner, Lester Frank Ward, William James, and W. E. B. Du Bois. These thinkers provided the intellectual categories of their age, and today those categories continue to exert a powerful influence over political — and jurisprudential — discourse. Collectively, they point to a view of society as an organism that is constantly in the throes of change and must adapt or die. Like the Social Darwinists, the pragmatists used naturalistic concepts and emphasized change, while rejecting what James called the "rationalist temper" that ossifies rather than adapts. For the Social Darwinists and pragmatists, looking backward — as Lincoln had done — to founding principles, or to any other fixed standard of political practice, inevitably hinders the process of adaptation.

As one observes in other contexts, what progressives are doing, in this regard, is smuggling in their brand of faith as if it were a biological imperative. The adaptation that they laud is not toward survival, not even really toward ease and comfort, but mainly to their concept of what society should be.

In Darwin, a species doesn't grow or lose a limb because it finds itself thus inclined. Rather, it develops inclinations (and limbs) in response to natural stimuli — sometimes, no doubt, in contravention of other inclinations.

In the context of social Darwinism, the urgings of both nature and God become subsidiary to planners' observation that they can leverage people's desires to advance their own political and ideological goals.

Erik Wallin's Anti-Corruption Plan, Part 2

Carroll Andrew Morse

During yesterday's campaign event where Rhode Island Attorney General candidate Erik Wallin unveiled his anti-corruption legislative package, I had the opportunity to ask the candidate about the importance of the law versus the surrounding political culture when it comes to fighting public corruption...

Erik Wallin: "It is important for the people to understand, and part of the process is educating the people, about the costs of public corruption to them..."
Here is part 2 of the list of specific proposals being offered by Mr. Wallin to deal with the problem of corruption in Rhode Island...
  1. EW: "We will also suspend from public office any individual who is in fact under indictment for charges of public corruption..."

    45-4-19. Suspension from office during indictment and loss of office by conviction -- (a) any "Public official" or "public employee" as defined in 36-14-2(4), 36-14-2(9), 36-14-2(10) except for those general officers and general assembly members elected pursuant to Articles VII, VII and IX of the Rhode Island Constitution, may, during any period such official or employee is under indictment for misconduct in such office or employment or for misconduct in any elective or appointive public office, trust or employment at any time held by him, be suspended by the appointing authority, whether or not such appointment was subject to approval in any manner.

    (Extra: I asked Mr. Wallin about the specific application of his proposal to the councilmen in North Providence. His answer was that "under my legislation...they would have been automatically suspended from their elected positions...")

  2. EW: "I will establish on day one of my administration a public corruption task force within the office of Attorney General..."
    42-9-2.1 -- Public Corruption Task Force -- (a) There shall be established within the department of attorney general a division of public corruption known as the Public Corruption Task Force the purpose of which shall be to investigate and prosecute all state and local employees and elected officials as defined in 36-14-2(4), 36-14-2(9), 36-14-2(10), 36-14-2(14), and 36-14-2(1) in conjunction with the Office of Investigations as defined in 42-9-8.1, and/or any federal, state, or municipal law enforcement agency of matters determined by the attorney general to potentially be a violation of 11-7.1 (public corruption) and 11-7 (bribery).

    (b) Composition -- the Public Corruption Task Force shall be comprised of, but not limited to, the following:
    (1) three (3) prosecutors each with greater than seven (7) years prosecutorial experience;
    (2) one (1) forensic auditor;
    (3) any other department of attorney general employee determined to be necessary for the purpose of the Public Corruption Task Force, including, but not limited to, the Office of Investigations as defined in 42-9-8.1.

  3. EW: Cites the situation in Central Falls and current Attorney General Patrick Lynch as an example of the need for a new special prosecutor law in RI...

    ...and lays out a new process for the appointment of a special prosecutor, when the AGs office is conflicted.

    42-9.2-3. Appointment of a Special Prosecutor. -- If an occasion arises with respect to the conduct or alleged conduct of any person that would call for an investigation and/or prosecution by the Attorney General, and the Attorney General believes that he or she, or anyone in the Attorney General's department, has an actual or perceived conflict of interest because of an actual or perceived relationship, past or present, with such person, or with any person or entity associated with such person, the Attorney General may recuse himself by written notice to the Panel as defined in 42-9.2-4. Contemporaneous with the Attorney General's written notification to the Panel, the Attorney General shall by written notice direct the Panel as defined in 42-9.2-4 to appoint a Special Prosecutor to act in the place and stead of the Attorney General in the investigation and/or prosecution of such person.

Les Phillip, Alabama congressional candidate

Donald B. Hawthorne

The video quality may be poor but the words from Alabama congressional candidate Les Phillip are some of the best I have heard in a long time.

Rainy Day Patriots Speech Highlights.

Here, again, is his ad posted earlier.

His campaign website is here.

From December 5, 2008: Anyone want to bet on what direction Obama wants to take America?

Donald B. Hawthorne

Reposting a December 5, 2008 post entitled Even Lenin would be impressed:

Melanie Phillips:

Trevor Loudon has got hold of a fascinating analysis of Prez-elect Obama's administrative appointments by Mark Rudd and Jeff Jones, two former Weather Underground terrorists (chums of Obama's old ally [chance acquaintance], the unrepentant former WU terrorist William Ayers). The two of them are now on the board of Movement for a Democratic society, in turn the parent body of Progressives for Obama, the leading leftist lobby group behind Obama's presidential campaign. And waddya know - just like me they believe Obama is practising stealth politics with a degree of sophistication and success with which 'even Lenin would be impressed.' As they say, Obama knows that he must be subtle and reassure even the most conservative of his opponents if he is to achieve his radical goals...

Read Phillips for key excerpts from the articles by MDS members. Here is the link to Trevor Loudon's writeup with more complete information.

Phillips continues:

The key is the stupidity of so many of Obama's opponents, amplified by the credulousness and prejudices of the media and the ignorance of the public. The shallow Republicans and their supporters in the media and blogosphere have in large measure fallen for Obama's stealth politics hook, line and sinker. As a result of his 'centris' appointments which have got them absurdly cooing over people like Clinton and Holder, Gates and Jones, their guard is now totally lowered. They still don't know the true nature of what has hit them -- and at this rate will never know until they wake up one morning to a transformed America and a free world that has lost the war being fought against it.

And the more the left shrieks 'betrayal', the more American conservatives will wrap themselves in denial. But characters like Rudd and Jones are the horse's mouth. They know from the inside the manipulative and stealthy game that is being played here. Lenin would be impressed indeed.

As further background, here are a series of Obama posts from the general election:

Clarifying the deeper problems with Barack Obama
Summarizing the philosophical problems with Barack Obama's view of the world
More troubling thoughts about the One
Crisply defining the core problem with Obama's economic and tax policies
On Obama's economic and tax policies
Multiple choice options regarding Obama's "spread the wealth" comment
Any bids for $75,000?
Yep, that'd be my reaction
Obama and ACORN's overt and criminal voter fraud acts
McCarthy: Stifling political debate with threats of prosecution is not the "rule of law" - it's tyranny
Obama on his desire for a civilian national security force
Does Obama believe in liberty?
Obama vs. McGovern on eliminating secret union elections
Obama's fundraising: Insufficient transparency and yet more unanswered questions
A rare Zen moment of simplicity
Senator Obama's naive, ahistorical, and unrealistic foreign policy viewpoints: His Achilles Heel for the November election
On Obama's disarmament priorities
On Obama's healthcare policies
On Obama's extreme abortion beliefs
Obama's views on coal industry
Oh my, it just never stops: In the tank for Obama
Creepy, indeed
Creepy, again
An argument for divided government

Anyone want to bet on what direction Obama wants to take America?

May 26, 2010

Go Bama

Donald B. Hawthorne

Some things speak for themselves:

Rick Barber, Congressional candidate.

Les Phillip, Congressional candidate.

Dale Peterson, Ag Commissioner candidate.

Repeating Public-Sector History

Justin Katz

It seems humanity is fated to always reconvincing itself that it's got the problems all figured out and can henceforth hand broad control to government entities. Ed Achorn makes a contrary suggestion:

Britain confronts what has historically been the great threat to representative republics. A majority of voters, whipped on by self-interested politicians, eventually figure out how to game the system to steal from a minority of productive taxpayers. As an avaricious government expands, the pummeled taxpayers have less incentive to produce and the economy struggles, with massive public debt ensuing. When the money runs out, social upheaval follows, with the imposition of dictatorship.

You can read about it in the ancient historians.

Or you can look at Central Falls, where the citizens have lost their power, through their elected representatives, to make their own decisions. A receiver will decide for them.

It may seem a little off to present a bankruptcy-style receiver as a "dictator," but such consolidations of power, following upon a representative form of government, necessarily look like a benign, good idea at the beginning. True, there are checks and balances in the case of a municipal ruler, but the point of Achorn's column is that Central Falls is a warning of things come at higher levels of government.

A Freeze Would Preserve Everything

Justin Katz

Well, it's certainly not rocket science, but it's nice to know that New Jersey's Governor Chris Christie and I have come to the same conclusion when it comes to schools' supposed funding problems (subscription required):

In the last three years, state and local government-employee compensation grew 9.8 percent, compared with 6.9 percent in the private sector. That’s $1.43 in compensation growth for public employees for every $1.00 in compensation growth for private employees.

Those raises cost money, at a time when state tax revenues have taken a hit because of falling incomes and less consumption. For a time, states were able to close much of the gap with stimulus dollars. In New Jersey, now that the stimulus is running out, teachers' unions are urging the extension of a "temporary" tax increase inflicted last year upon residents making over $150,000 annually, and the elimination of the school-funding cut.

As Christie noted, this tax increase (as well as teacher layoffs and cuts to spending on classroom supplies) can be avoided by means of enacting a pay freeze. An April Rasmussen poll found 65 percent of New Jersey voters support a teacher-pay freeze. But while a handful of local unions agreed to accept one, the vast majority balked at the governor's demand. In return, Christie urged voters to reject proposed school budgets in elections on April 20. (In New Jersey, school budgets must be approved by voters annually.)

It has amazed me that school committees across Rhode Island have been talking school closures and the elimination of extracurricular activities. Requiring public-sector staff to experience even just a small amount of the economic pain makes all the problems go away. Of course, that's assuming that there really are problems. A frequent complaint about school departments is that their budgets are entirely their own concoction, and it's clear whose side school committees and administrations are on, for the most part, when it comes down to it.

Erik Wallin's Anti-Corruption Plan, Part 1

Carroll Andrew Morse

Republican Attorney General candidate Erik Wallin has definitely (and thankfully) not bought into the "you have pass a bill to find out what's in a bill" attitude towards lawmaking currently en vogue in the United States Congress. On Tuesday afternoon, Mr. Wallin unveiled the specific changes to the law he intends to introduce, to fight against public corruption, if he is elected as Rhode Island's Attorney General. The entire legislative package is available from his campaign website.

Immediately below, I have posted several key excerpts, along with audio of Mr. Wallin's explanation of how they will change the status-quo...

  1. Erik Wallin: "Individuals who engage in bribery will face the toughest penalties in this country..."
    11-7.1-2 Public Bribery -- (a) Every person who shall corruptly give or offer to any public servant or candidate, or any public servant or candidate who shall agree to accept, or attempt to obtain from any person, for himself or herself or any other person any gift or valuable consideration, as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any public act shall be guilty of bribery and shall be imprisoned not less than fifteen (15) years nor more than twenty (20) years, with no term of imprisonment provided for under this section to be suspended, and shall be fined not more than Seven Hundred and Fifty Thousand Dollars ($750,000) or three times the amount of the consideration, whichever is greater.
  2. EW: "Anyone who is convicted of a public corruption offense will lose their pension..."
    11-41-31 Pension revocation. -- (a) Notwithstanding any law to the contrary, any person who is convicted or pleads guilty or nolo contendere to any offense, and the offense is related to his or her public office of employment pursuant to § 36-10.12, the judge, as part of any sentence imposed, may shall revoke or reduce any retirement or any benefit or payment to which the public official or public employee is otherwise entitled under titles 36, 16, 45, and 8, under chapter 30 of title 28, under chapter 43 of title 31 or under chapter 28 of title 42.
  3. EW: "We have removed the statute of limitations for those who engage in public corruption..."
    12-12-17 Statute of limitations. -- (a) There shall be no statute of limitations for the following offenses: treason against the state, any homicide, arson, first degree arson, second degree arson, third degree arson, burglary, counterfeiting, forgery, robbery, rape, first degree sexual assault, first degree child molestation sexual assault, second degree child molestation sexual assault, bigamy, any public corruption offense under chapter 7.1 of title 11, manufacturing, selling, distribution or possession with intent to manufacture, sell or distribute a controlled substance under the Uniform Controlled Substance Act, chapter 28 of title 21, or any other offense for which the maximum penalty provided is life imprisonment.
  4. EW: "We will have a public corruption profiteering penalty..."
    11-7.1-6 Civil liability for violations of the public trust and public corruption profiteering penalty -- (a) Whenever a person has engaged in conduct prohibited by this chapter, or otherwise breached a fiduciary duty to an entity that holds, appropriates, or receives public funds, there shall accrue to the entity a civil action to recover three times the amount of the sum involved in the alleged violation. This cause of action shall accrue independent of any criminal prosecution, and recovery shall be had where it appears, based on a preponderance of the evidence, that the public trust has been violated.
Coming in Part 2: A permanent anti-corruption task force and provision for a special prosecutor...

The Subtle Tactics of the NEA

Justin Katz

In an article about securing union approval of Rhode Island's application for federal Race to the Top education funds:

[NEARI President Larry] Purtill also said he is carefully monitoring the acrimonious situation in East Providence, where the School Committee last year unilaterally cut teachers' wages, forced teachers to pay more of their health insurance costs and recently threatened to cut wages again. East Providence is a NEARI local.

The Rhode Island Federation of Teachers and Health Professionals had their Central Falls problem resolved, and the NEA wants its sweetener, too. Race to the Top is looking more and more like a poison pill.

May 25, 2010

Speaker Fox Does a Volte Face on Hearing Palumbo's Arizona-style Illegal Immigration Bill (But the Rally is Still on Thursday)

Monique Chartier

Question for State House observers: is it true that this is the first time that a bill has been pulled after it was scheduled for a hearing?

House Speaker Gordon D. Fox decided Monday that Rep. Peter Palumbo’s controversial Arizona-style bill on immigration will not be heard this session.

"The speaker opposes this and feels it’s better addressed federally. We’re not going to hear it this year," said Larry Berman, spokesman for the House of Representatives. Palumbo could not be reached for comment.

The bill filed by Palumbo, D-Cranston, mirrored legislation signed into law by Arizona Gov. Jan Brewer last month that is considered the toughest such law in the country. It would require the police to determine the immigration status of a person involved in a lawful stop "where reasonable suspicion exists" that they are in the country illegally, and would criminalize failure to carry alien registration documents.

Pro-illegal immigration advocates were to have held a rally late this morning in Central Falls, inexplicably terming this a victory over racial profiling. Inasmuch as the model for Palumbo's bill, the Arizona law, and the original template, the federal immigration law, have nothing whatever to do with racial profiling, they will be celebrating, not a hollow victory, but a completely non-existent one.

By the way, the rally at the State House 4 pm Thursday in support of this bill and of silly notions like sovereignty and honoring those immigrants who respected our process to come here is decidedly still on.

One Degree of Disconnect

Marc Comtois

You grew up with the guy. Went to school together, played sports on the same teams. Went your separate ways after high school, but still saw each other every once in a while. When he ran for the legislature, you didn't think too hard about voting for him. As you got older and had kids and raised your family, you started paying a little more attention to politics.

Now, when you run into him at the ball field or church or at the kids' school, you exchange pleasantries and maybe bring up a thing or three about the economy or this bill or that issue. You're an unaffiliated, independent voter and your buddy is a Democrat, but you get the sense that he is pretty much on the same page as you: traditional kinda guy, law and order, keep taxes down, kind of live-and-let-live.

You agree, for instance, that this country has to do a better job to protect its borders. But it really wasn't a state issue. Then Arizona decided to take matters in its own hands because the Feds wouldn't. You weren't sure about all the details. We need to protect the borders, but you have some questions-you aren't sure about some of the civil liberties issues, for instance--but you could understand how Arizonans are fed up and you're willing to give them the benefit of the doubt.

Then you heard that a similar bill was submitted in the Rhode Island house. The other day you talked to your legislator buddy and learned that he was pretty much in favor of the bill, had some of the same questions as you and was looking forward to a good debate and hearing on the issue. Rhode Island ain't Arizona, so there would be differences, no doubt. But the debate would be worthwhile.

Except now we won't get the chance because the Speaker of the House, Gordon Fox, quashed the hearing. That's his prerogative as Speaker, of course, but it sure doesn't seem right that one person can make that kind of decision, does it?

Yet, that's the way the system works in Rhode Island. The truth is, it really wasn't one person who tabled that bill, or who tables any other bill, for that matter. In Rhode Island's political system, one guy really runs the show, and it ain't the Guvnah. It's the Speakah. He's selected and empowered by the members of his own Party who are elected by their neighbors and the people they grew up with, who consider them good guys.

That includes your buddy, who may not agree with the Speaker on more than 30% of the issues. But your buddy ran as a Democrat because that's how you do things around here. And he voted for the heir apparent to ensure that he was in "good standing" down the line, if you know what I mean. And now--not for the first time and surely not for the last--an important issue won't see the light of day because you and your buddy and the rest of Rhode Island continues to follow the same pattern, year after year.

It's only a single degree of separation between us and the Speaker. But that one degree enables us to say our guy is all right, it's the rest of 'em that are the problem. It allows us to keep fooling ourselves into thinking that our buddy ain't the problem, that we aren't the problem. Of course, the truth is we are the problem. We'll continue to help push Rhode Island down the same rutted path until we realize that the only way to shake up the system is to vote out the entrenched powers. Even our old buddies.

Growing Gov't, Shrinking Priv't Sector

Marc Comtois

USA Today reports that recent number from the Bureau of Economic Analysis confirm what many people have sensed: private wages are shrinking while government grows. The facts:

* Private wages. A record-low 41.9% of the nation's personal income came from private wages and salaries in the first quarter, down from 44.6% when the recession began in December 2007 {and down from 47.6% in 2000--ed.}.

* Government benefits. Individuals got 17.9% of their income from government programs in the first quarter, up from 14.2% when the recession started {and up from 12.1% in 2000--ed.}. Programs for the elderly, the poor and the unemployed all grew in cost and importance. An additional 9.8% of personal income was paid as wages to government employees.

The spin, for and against:
The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

The recession has erased 8 million private jobs. Even before the downturn, private wages were eroding because of the substitution of health and pension benefits for taxable salaries....The shift in income shows that the federal government's stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

"It's the system working as it should," Van de Water says. Government is stimulating growth and helping people in need, he says. As the economy recovers, private wages will rebound, he says.

Economist Veronique de Rugy of the free-market Mercatus Center at George Mason University says the riots in Greece over cutting benefits to close a huge budget deficit are a warning about unsustainable income programs.

Economist David Henderson of the conservative Hoover Institution says a shift from private wages to government benefits saps the economy of dynamism. "People are paid for being rather than for producing," he says.

It doesn't look like the current administration is going to do much to change the trends, but, as de Rugy suggests, maybe Americans will learn lessons from the Greek crisis and take action on their own.

More of What Americans Don't Want

Justin Katz

The financial regulation legislation — which has passed both houses and is awaiting reconciliation — hasn't raised the ire that healthcare did before it. Several factors come play into that dynamic no doubt: financial regulation is less tangible, Wall Street makes a better villain than insurance companies, folks are tired from the healthcare skirmish, and so on. But it still represents fine evidence that we need wholesale change of the people representing us in Washington.

Kevin Williamson describes one reason why (subscription required):

Much too much has been made of the $50 billion resolution fund and the levy that financial firms would pay to fund it. Senator McConnell abominated it as a "bailout fund," but he was paying attention to the wrong pot of money: That $50 billion is a little ladle-load of cashola compared with the buckets of schmundo that the Dodd bill will make available for indirect bailouts and endless support of troubled businesses — financial and non-financial firms alike. Case-by-case interventions may be out, but the bill would allow — in fact, appears designed to ensure — bailouts for the creditors of troubled firms. Under the Dodd bill, Wall Street firms (or unions, or sovereign-wealth funds, or anybody else with the right political connections) who are exposed to losses on failing financial companies will be able to collect significantly more money than they would be able to under normal bankruptcy procedures. That is the bailout.

We've seen this before, of course. The AIG bailout, for instance, amounted to bailout of Goldman Sachs and other banks that had a lot of AIG exposure and would have had a harder time being made whole in bankruptcy court than they did under Washington's management. The Dodd bill instructs that the government shall "ensure that unsecured creditors bear losses in accordance with the priority of claim provisions" in the existing law — but how well has that worked out in the past? What legal authority did the Obama administration have to upend the normal priority of claims in the bailout of General Motors, a corrupt deal that saw secured creditors forced to take substantial losses while unsecured creditors received a better deal than they were legally entitled to — all because those unsecured creditors were the union bosses who put Barack Obama into the White House? That wasn't just a bailout of GM; it was also a bailout of the UAW. That's the kind of bailout regime that the Dodd bill will make permanent: the indirect bailout.

Portsmouth Institute Conference on Newman and the Intellectual Tradition

Community Crier

Registration for the upcoming conference on Newman and the Intellectual Tradition is still open with the Portsmouth Institute, at the Portsmouth Abbey School:

This year’s Portsmouth Institute conference will be held June 10-13, on Newman and the Intellectual Tradition. The conference will be held just months prior to Cardinal Newman’s beatification, which is now expected to be presided over by Pope Benedict XVI personally, during his official visit to England next September. ...

So far our roster includes a number of distinguished speakers. Fr. Ian Ker of Oxford University, author of the definitive intellectual biography of Newman, will speak on “Newman’s (and Pope Benedict XVI’s) Hermeneutic of Continuity;” Professor Peter Kreeft of Boston College will speak on Newman’s great poem, The Dream of Gerontius; Dr. Paul Griffiths of Duke University will speak on Newman’s The Grammar of Assent; Father George Rutler, Pastor of the Church of Our Saviour in Manhattan, will speak on “The Anglican Newman and Recent Developments;” and Edward Short, whose book on Newman and his contemporaries will be published next year, will speak on “Newman and the Americans.” Deacon John Sullivan of the Boston Archdiocese will preach about his miraculous healing after praying to John Henry Newman. Patrick Reilly, the president of the Cardinal Newman Society, will speak on "Newman and the Renewal of Catholic Identity in American Catholic Higher Education", and Father Paul Chavasse of the Birmingham Oratory will speak at dinner Friday evening on the Newman cause for canonization, of which he is the former postulator.

Musical Director Troy Quinn is planning a Saturday evening concert featuring major sections of Elgar’s monumental The Dream of Gerontius as well as a shorter concert on Friday evening. Although the main body of the conference will be Friday and Saturday, there will be recreational opportunities at Carnegie Abbey and elsewhere on Thursday afternoon, a welcoming cookout at Green Animals Thursday evening, and a closing Mass and brunch on Sunday morning for all who wish to attend these additional events.

Several Anchor Rising contributors attended events at last year's conference on William F. Buckley and found it to be a wonderful way to spend a few days.

Registration and additional information can be found on the Portsmouth Institute's Web site.

ObamaCare Less and Less Popular

Justin Katz

Imagine how unpopular it will be when its costs really start to kick in:

Support for repeal of the new national health care plan has jumped to its highest level ever. A new Rasmussen Reports national telephone survey finds that 63% of U.S. voters now favor repeal of the plan passed by congressional Democrats and signed into law by President Obama in March.

Prior to today, weekly polling had shown support for repeal ranging from 54% to 58%.

And by "costs," I don't mean just the direct cost to the federal government, which (for those who've forgotten) is not the sum total of the United States. For one example, Americans are pretty good at intuiting this sort of outcome:

A study by the National Center for Policy Analysis shows that tax credits in the new healthcare law could negatively impact small-business hiring decisions.

The new law provides a 50 percent tax credit to companies offering health coverage that have fewer than 10 workers who, on average, earn $25,000 a year. The tax credit is reduced as more employees are added to the payroll.

The NCPA study finds the reduction in tax relief to be a cost concern for companies looking to hire additional workers, but operate on slim profit margin yet still provide employee health coverage.

Incumbents — making government less efficient and American life more difficult, year after year.

May 24, 2010

Why More than Economics is Needed to Understand the Tea Party

Carroll Andrew Morse

Last Thursday, the Projo published an excellent op-ed by Rhode Island Tea Party President Colleen Conley, written in response a derisive editorial on the Tea Party from a week ago Sunday.

Since Ms. Conley was more than clear about where the editorial board's perspective was lacking, the part of the op-ed I would like to call attention to is the penultimate paragraph, 1) because I like taking advantage of any opportunities to use the word "penultimate" and 2) because it challenges the conventional wisdom commonly found in both Democratic and Republican political circles...

We do not just protest; we are active, organizing and engaging in civic discourse. We are mobilizing in every city and town in Rhode Island. It is not only about economics; it is about individual liberty and the vision of the great patriots who created our country.
Often forgotten by so-called moderates and political professionals who seek to build tactical political coalitions -- yet who seem unable to understand why the Tea Partiers are not happy with the standard political choices being offered -- is that either good or bad ends can be pursued through efficient means, and that it will always take a discussion extending beyond fiscal and economic efficiency, in order to define what the goals of government should be in a society that is worth having.

Peter Bonk: The Opposite of Warming and a Brit Quotes Lincoln - the Last, Dramatic Day of the 4th ICCC

Engaged Citizen

I attend talks focusing on the influence of solar activity on climate, and the news is not good. Both speakers suggest that we will soon be entering another Little Ice Age! For those of you keeping score, the Little Ice Age is a well documented period from 1300 to 1850 AD when generally cooler temperatures were the norm. It followed the Medieval Warming Period of 950-1250 AD.

I find the evidence fascinating. The earth’s orbit is not a perfect circle and has wobbles and wiggles and oscillations, all on time scales of thousands of years that bring it closer and farther away from the sun in a manner that is complex but well researched and predictable. This is one piece of the puzzle, the other being cyclic changes in the activity of the sun itself. The most well known change is the ~22 (or 11) year sunspot cycle. Solar activity also influences how many cosmic rays hit the earth’s atmosphere and make certain isotopes, including the well known Carbon 14. The measurement of these special isotopes in terrestrial samples often serves as proxies for solar activity over the ages.

To my mind, when one realizes all the factors at play that define and shape climate, the idea of hanging all the changes (and saying that they are all bad) on CO2, an important but minor atmospheric component, seem beyond all reason. But that’s me. The sun is huge, and since we know some cycles occur every 22 years, it suggests that other longer term cycles of solar size, luminosity or energy output would easily influence climate here on earth.

As was the case at the Second and Third Conferences, Lord Christopher Monckton is the final speaker during the last plenary session after lunch, giving the Benediction and dismissal. Monckton is a very gifted speaker, and to a large degree personifies much of what we in the USA like about the Brits.

Monckton is from the United Kingdom, of course, but it is clear that he truly loves the United States as well.

Monckton can be deadpan and hilariously sarcastic in the same breath. Some felt he went over the edge at his sendoff at the Second ICCC in NYC in March 2009, which can be best described as scathing, and he referenced that criticism in DC three months later. Lord Monckton has testified before the US Congress on the issue of global warming "alarmism" several times, and the technical part of his talk goes over his recent testimony in Washington earlier in May. His bottom line is that cap and trade will at best do nothing to alleviate CO2 levels, and that society will easily adapt to modest changes in climate that may occur.

He concludes his remarks by emphasizing that "Cap and Trade" (as well as Obamacare) are core threats to freedom and the ideals that have formed the USA. He ends in a bare whisper, very close to breaking down, quoting a portion of Lincoln’s Gettysburg Address.

Video should be up soon of this and all the plenary sessions from this conference at the Heartland website.

Peter Bonk resides in Westerly. A chemist by training and profession, he, along with millions of us, scientists and laymen, has been attempting to discern whether the core science supports the policy positions, enacted and proposed, that have evolved out of the debate on anthropogenic global warming.

When the Focus Is on Results, One Way or Another

Justin Katz

The title of Julia Steiny's Sunday column, "Test results don't accurately write a school's story," doesn't really reflect the theme of the essay. Sure, she does say that the efforts that Beacon Charter School put forward to improve its reading and writing scores on the New England Common Assessment Program (NECAP) would have been well worthwhile and successful even if the students had not performed as well as they actually did. But what Steiny's really talking about is summed up here:

So the story of Beacon's reading triumph is twofold. On the one hand, it's about how the staff treats the kids generally, as illustrated by the TLC they doled out on the test days. Lots of schools resent the statewide testing program and communicate that resentment to the kids. Beacon nurtures its kids.

Secondly, the triumph reflects what a whole-school collaboration can accomplish in a year when every adult is on task.

The kids were given incentives and perks of the sort that a coach might give a successful athletic team — tools for relaxation, the necessary equipment, candy. And the teachers worked together, often outside of their areas of focus, to come up with a school-wide strategy to attack the target (namely, reading and writing scores). In other words, it was what one might expect in an environment in which the success of the students actually and truly comes first and negotiations and work rules for adults is subsidiary.

That's really the question that our society has to answers: At bottom, are schools meant to educate students or to employ teachers?

Johnny Wraps is Rhode Island

Marc Comtois

THIS really is Rhode Island, isn't it? Dirty lawyer brother of medium city mayor makes contacts in prison thanks to his past links with organized crime.

A friend from the camp gave him the names of two inmates who would take care of him: Rex Cunningham and Blind Eddie.

Cunningham, a tough-guy from Springfield, Mass., is a longtime associate of the New York-based Genovese crime family who has specialized in loansharking, racketeering and collecting debts from deadbeat gamblers. Blind Eddie is a Boston mobster.

The first day, Cicilline wandered over to the prison track to look for his new contacts. One of the guys walking the track was Bobby Joost, a mob associate and career criminal from Providence, serving a 26-year sentence for plotting an armored car robbery.

"Hey, John," yelled Joost. He hustled over and gave him a big hug.

"He took care of everything," Cicilline said. "Bobby looked out for me."

The prison was loaded with wise guys from Boston, New York and New Jersey. Most of them knew Cicilline's father, John F. "Jack" Cicilline, the longtime lawyer for the Patriarca crime family, otherwise known as the New England Mob.

Cicilline's new friends were Theodore "Teddy" Persico, brother of Carmine "The Snake" Persico, the one-time boss of the Colombo crime family in New York. He said that Persico, 72, was like a "grandfather" to him during his 18-month prison stay. He also grew close to Giovanni "John" Riggi, the 85-year-old boss of the DeCavalcante crime family in New Jersey.

And they set him up and helped him out. Come to find out, that Johhny C. made a pretty freakin' good wrap, ya know? So he got some of his buddies to traffic in contraband so he could " hone his culinary skills" as the ProJo put it. And when he gets out? He sets up a new sandwich shop, complete with a free feature ad courtesy of the ProJo. And I think this is a case of the "paper of record" giving their readers a story they'd like. Hey, not for nuthin'...but I think they know their market.

Maybe Foreclosure Isn't the Worst Thing

Justin Katz

We all get that mortgage foreclosure is a bad thing, in an absolute sense, but I can't help but wonder whether this is actually a positive development for borrowers, lenders, or the entire system:

Retsinas said that the increase in people three months behind on their mortgage coupled with the drop of mortgages entering the foreclosure process likely indicates some sort of intervention is preventing those borrowers who are seriously behind from entering foreclosure.

Possible interventions, he said, include cities passing ordinances that have made it harder for banks to foreclose, especially on multi-unit houses. Also, federal regulations have encouraged banks to allow borrowers to "modify" their mortgages and lower their payments by changing the interest rate, repayment term or, more rarely, the amount of principal due.

It seems to me that it mightn't be in the interest of anybody to prolong a difficult situation, whether that means postponing payments to the end of the agreement or some other mechanism for passing along the underlying financial problem.

The Constitution and Contracts

Carroll Andrew Morse

One of the places that my quest for the sources of receivership law in Rhode Island has led me to is the Federal Constitution, Article I, section 10...

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
But wait; just because the Constitution says that "states shall pass no law impairing the obligation of contracts", doesn't mean that the United States Supreme Court thinks that states shall pass no law impairing the obligation of contracts. The Court, in its 1934 majority decision in Home Building and Loan Association v. Blaisdell authored by Chief Justice Charles Evans Hughes, substantially depreciated the plain meaning of the contract clause...
These put it beyond question that the [contract clause] prohibition is not an absolute one, and is not to be read with literal exactness, like a mathematical formula...

Not only is the constitutional provision qualified by the measure of control which the State retains over remedial processes, but the State also continues to possess authority to safeguard the vital interests of its people. It does not matter that legislation appropriate to that end "has the result of modifying or abrogating contracts already in effect." Not only are existing laws read into contracts in order to fix obligations as between the parties, but the reservation of essential attributes of sovereign power is also read into contracts as a postulate of the legal order. The policy of protecting contracts against impairment presupposes the maintenance of a government by virtue of which contractual relations are worthwhile -- a government which retains adequate authority to secure the peace and good order of society.

In other words, a state cannot impair a contract, unless a state decides that it really needs to -- for the good of the state of course.

I would like to suggest this as an opportunity for reflection on the part of individuals who think they have no stake in the conservative and Tea Party emphasis on respecting Constitutional limitations on government. As the evolution of contract law illustrates, once the only recognized governing principle becomes that government has the power to do whatever government decides is good and necessary, then everything becomes subject to the whim of the ruling class of the moment -- even in areas of the law where the rules seem to have been spelled out in unequivocal terms. And once you accede that government has the right to do anything it decides is important, it is not reasonable to expect that it will always and forever use its unlimited grant of power to only to do the stuff that you like.

Finally, as a historical footnote, readers may be interested in knowing that majority opinion undermining contracts was joined by the justices regarded as enlightened progressives of their era, while the four justices remembered today largely for their repeated opposition to various aspects of the New Deal all dissented.

Blumenthal to the New London Day: Get my (Lack of) Middle Initial Right

Monique Chartier

When it was pointed out to Connecticut AG Richard (this space deliberately left blank) Blumenthal that newspaper articles had picked up and repeated his lies, thereby unwittingly contributing to his stolen valor, Mr. Blumenthal indignantly replied that he could not keep track of all news reports about himself.

Not so fast. An editorial in Wednesday's New London Day dryly reports

And why did Mr. Blumenthal not act quickly to correct inaccurate reports in state newspapers that described him as a Vietnam veteran? The candidate explains he can't track all news reports about him. Yet this newspaper knows from experience that Mr. Blumenthal is quick to correct unflattering statements published about him or to refute opinions with which he disagrees. One reporter got a call from the attorney general for inserting a middle initial in his name. He has none.

When Bureaucrats Fill in the Gaps

Justin Katz

Experience in Rhode Island has left me much more sensitive to this dynamic:

In section after section of the massive 1,560-page Senate bill, lawmakers leave much of the details for the regulators to figure out. These are the bank and market overseers — the Federal Reserve, the Office of the Comptroller of the Currency, the Securities and Exchange Commission — who took a beating for not overseeing Wall Street more strictly and for failing to see the danger before it struck in 2008.

Wall Street powerhouses will probably force a more even application of the regulations that bureaucrats build on the law than, say, a local taxpayer group, but this approach to governance is one more way in which we're handing off our freedoms and right to self governance. State law requires the Division of Municipal Finance to approve tax levies in excess of the tax cap. The law does not, however, have detailed information about time lines and processes, leaving that up to the regulator. For that purpose, the division published regulations that stipulate the following:

3.02 A. No later than fifteen (15) calendar days prior to the adoption of the annual operating budget, a city/town may petition the Department of Administration (Department of Revenue) to override the levy cap in accordance with amended RIGL Section 44-5-2(d)(1) or (3).

As we discovered, in Tiverton, two days before our financial town meeting, the head of Municipal Finance, Susanne Greschner, can undo her organization's regulations with a last-minute email to the town administrator, having been privately petitioned by influential people in government. While the parallel is not perfect, one suspects that regulators of the financial industry will find cause for similar adjustments on the fly, making capricious the rules that govern our nation. My recollection of government theory is that the entire purpose of regulation is to create a fair and consistent playing field for economic and political action.

May 23, 2010

"Arizona Sing-A-Long": The Importance of Reading

Monique Chartier

(... the AZ law before commenting on it). H/T NewsBuster's Noel Sheppard.

On a slightly more serious note, Rep Peter Palumbo's bill to bring the "Arizona" - aka, the US federal - immigration law to Rhode Island will be heard in the House Judiciary Committee late Thursday afternoon.

A Familiar Drum

Justin Katz

I'm keeping up the posting over on the Tiverton Citizens for Change Web site, including the observation that the drum that the Tiverton School Committee beat prior to our financial town meeting are now being played in West Warwick:

Sports programs and part-time employees join the list of recommended cuts school officials hope will compensate for a $1.2-million hole in the School Department’s proposed $47.8-million budget. …

Topping the list of cuts is the closing of the Maisie E. Quinn Elementary School, a move that will save the district $750,000. …

The School Committee is still discussing this budget, Chairwoman Lindagay Palazzo said Thursday. The committee will review the proposal at the June 8 public meeting, and likely will vote to have a budget ready for the Financial Town Meeting, now scheduled for June 22.

How long, do you suppose, until parents and taxpayers learn that there's a template in play, here.

Rhode Island's Love of the Bottom

Justin Katz

I'm not sure whether or not it's a healthy development that Providence Journal economy columnist John Kostrzewa has come to the despair-bearing conclusion that many of us in the back alleys of conservative RI commentary have harbored for many months, now:

Hope has all but evaporated for a V-shaped recovery in Rhode Island — one in which the state quickly gains back the jobs and economic strength it lost during the recession. ...

Rhode Island has a noncompetitive tax structure, a lousy business climate and reputation, and an inability to solve state and local budget crises, leaving uncertainty for any taxpayer or business trying to plan a future here. Who would want to live or move into that environment?

During the long recession, a lot more could have been achieved if the state's leaders had kept their promise to rebuild the state's economy.

Because they didn't, Rhode Island is still stuck in the back of the pack.

Too many Rhode Islanders are invested in the status quo or duped by the arguments that what they love about the state is irrevocably tied to what's killing it or lulled by the preemptive assertions that we'll always be first in, last out of every economic decline for reasons outside of our control. The truth is that, in a state with a healthy political culture, every member of the General Assembly would be facing a tough fight to retain office, this November. The likelihood is that only a handful will change, and without significant effect.

The most sound advice, at this point, has to be to get out or hunker down. And if you choose the latter, for whatever reason, the best strategy for substantive change is to start local. It's not a thrilling call apt to rile up a revolution, but it's the only way forward.

Peter Bonk at the 4th ICCC - Monday, Part II: Pointlessly Expensive Energy Policies; the Importance of Being Unearnest; In Defense of Proxy Measurements

Engaged Citizen

The second half of the morning gets seriously wonkish.

I enjoyed the presentation from Mike Jungbauer, a State Senator from Minnesota ("Come for the weather, stay for the taxes") whom I had met at the 2nd ICCC in NYC last year. He describes the costs of many of the regulations in his home state: one example is the $1.55/month charge on utility bills and the over $1 billion spent to retrofit the three coal fired power plants in the state to reduce mercury emissions which, due to uncontrolled activity in other parts of the world, "does not fix anything".

Another example: The fees utilities pay for dry cask storage of nuclear waste at the two nuclear power plants in the state raise millions of dollars each year, and the money goes to fund renewable energy projects. And the situation will continue even though the current administration has shuttered the Yucca Mountain Nuclear Depository site in Nevada.

Like Rhode Island and its Regional Greenhouse Gas Initiative (RGGI), Minnesota has its regional compact, the Midwest Greenhouse Gas Accord, which requires an 80% reduction in CO2 by 2050.

Senator Jungbauer’s conclusions should sound familiar to Rhode Island residents:

We live in a Global Economy

Money always seeks its highest return

High taxes do not change habits

You can get people to relocate (high net worth people leave the state)

Government seldom gets it right

Indeed there is a depressing similarity to the problems that Minnesota and Rhode Island share.

Chris Horner of the Competitive Enterprise Institute and Marc Moreno of Climate Depot finish off the morning in the public policy track.

It is this assault on freedom that has Horner all wound up; this same issue animates much of the Tea Party movement and its opposition to Cap and Trade. Many Tea Party supporters have made their way to Chicago this week. Lord Christopher Monckton closes the conference on this same theme in a remarkably emotional speech (more on this later).

Horner pulls no punches and describes how "global warming" is not about global warming; the Issue is not the Issue. It is about control of energy and power over the lives of people, an attempt to regulate and control all aspects of behavior and life. For Horner, it is the all too familiar story of totalitarianism over the ages, playing out yet again, at a country near you. It’s all there in the works of those promoting it; no conspiracy theory is needed.

Morano is the over the top, self appointed court jester of global warming realists, and the loud, lurid headlines at his website, reminiscent of the early Drudge Report, are off putting to some. He holds nothing back during his high energy evangelization, complete with a few "Hallelujahs" thrown in for good measure.

No politician that ever made a silly statement about global warming is spared, and the crowd is enjoying Morano’s righteous indignation as the litany continues, relishing the amazing turn of events of the last year or so.

Professor Richard Lindzen of MIT was one of the lunch speakers and gave a dispassionate, professorial description of the limits on how much influence CO2 can have on climate. Later in the afternoon, some people I talk to whine that his presentation was too dull and technical. Linzen is a well respected by folks on both sides of the global warming issue, a contributor to the IPCC reports, and his science cannot be easily dismissed.

Later in the day, I attend a presentation on 18O/16O isotope ratios from moss stems taken from core samples of the slight hillocks found in bogs near Ottawa by Professor Tim Patterson of Carleton University. This detailed work requires amazing precision and care to coax out the desired information. This isotope ratio is a proxy for temperature, and the study tries to determine what the temperatures were over the last 5000 years or so. Professor Patterson’s talk followed a related study by Dr. Helen Roe of Queens University, Belfast UK that looked at organisms as proxies for temperature in Irish Peatlands.

“Proxies”, measuring one thing and inferring another from a known correlation, usually based on more basic scientific principles, are common in this science. It is at this level of detailed, carefully planned and executed work that scientists have a kinship, no matter what their thoughts may be on the Big Issue. Work at this level is questioned and defended every day as part of the process, and is the forge where scientific truth is hammered into being.

All scientists know how hard the work can be, with stated and implied assumptions. It’s the reason most scientists speak conditionally, with caveats and qualifications. They know what they don’t know. Much of that innate caution goes by the wayside when science is morphed into public policy.

Peter Bonk resides in Westerly. A chemist by training and profession, he, along with millions of us, scientists and laymen, has been attempting to discern whether the core science supports the policy positions, enacted and proposed, that have evolved out of the debate on anthropogenic global warming.

The Fatal Bubble

Justin Katz

What defines an economic bubble? There are probably technical answers to that question, perhaps even involving percentages and such, but the basic inference is an apparent growth that's really just full of air, deceiving people into behaving as if the cause of the increase is actually something of substance when, in reality, it could dissipate immediately upon exposure to the atmosphere.

In a recent letter to the Providence Journal, Philip Overton, of Westerly, expresses something that has likely been nagging at a great many of us, in recent months and years:

There is no fiscal integrity in our government right now and this is the next possible great bubble building.

The substance in which we've been deceived to believing is that the government can absorb the vicissitudes of the economy. We're relying more and more on government not only to fill the craters that other bubbles have left when they've popped, not only to fill other bubbles (sometimes in the form of doomed companies), but also to conduct matters of economy and even personal well-being. It can't last.

The only question is what happens when the government bubble bursts. A free-for-all of wealth grabbing and recriminations seems likely, and let's not forget that there are those on the global playground relentless in the eye that they keep on our every step, in the hopes that the lone superpower will falter.

May 22, 2010

A Quick Review of Avatar

Justin Katz

The past week left me feeling like a man trapped in anachronism. My work environment, which is rarely more hospitable than "endurable," seemed transported to a time when "servitude" was a more accurate description than "employment." Physically, it took a week for doctors to find the correct eye drops to battle a progressive eye infection that, by Thursday night, had swollen one eye to a slit and found its way to the other. Until yesterday, the medical miracles we take for granted were less than miraculous, and a traveling doctor might have done just as well by advising a damp cloth for the face and an elixir with high alcohol content.

So, by the time Friday evening arrived like the break of the Twentieth Century, I could motivate myself to be no more productive than was required to prepare a snack before staring at a television screen for several hours. My wife and I watched Avatar.

I'd been forewarned, of course, to let the overt politicization of the film go in the name of simple enjoyment, and while the showing was in process, I was able to do so. But movies ought to be like wines that make a supplementary savor of aftertaste, and once the gush of aesthetic pleasure and emotional balm had passed, what remained of Avatar was bitter indeed.

It's really a shame. I don't give to much away, I don't think, in explaining that the fantasy world of Pandora has coursing through it a sort of electrical current connecting all life on the planet and even retaining memories of the dead as if downloaded into the hardware of an organic computer. In other words, Director James Cameron had plenty of room to explore the parallels between computer science and physics, with the intriguing questions about God that thereby arise. He even could have pushed a heavy-handed environmentalism, on those grounds, without interfering with the appeal of the story.

That wasn't, apparently, enough.

A scene from the 1996 Independence Day came to mind repeatedly. In that movie, a psychic link between a captured alien and President Bill Pullman (I believe) reveals that the alien species travels from planet to planet, using up the resources that it finds there and moving on. It doesn't take but a modicum of cultural awareness to realize the insinuation that humankind bears some resemblance, in that respect. However, it's just a path, perhaps a tendency, of our species, and as the entire world comes together, with cooperation between corporate types, military forces, and average folk joining forces against the common foe, Independence Day leaves the viewer with the feeling that, when it comes down to it, people will turn toward goodness.

That wasn't good enough for Cameron. Almost in a direct reference to the earlier movie, the protagonist of Avatar, a human being whose consciousness has temporarily been transferred to a man-made alien body (the "avatar"), warns the native creatures that humanity used up every last bit of green on its native Earth and will do the same on Pandora. In other words, not only are the human beings who've traveled across the universe for a precious mineral evil, but their entire species is evil by its nature.

The message that humankind should resist those qualities that could fester into parasitical behavior has given way to the assertion that humankind is, in fact, a parasite, with only the rare dork, woman, minority, and cripple able to find redemption.

It seems to me that, in making such decisions, Cameron has turned his craft from the very possibility of creating art that seeks universal truth, because the film explicitly disclaims our specie's interest therein.

Advancing in the Melting Pot

Justin Katz

Ron Haskins seeks to answer the question of whether the United States of America is really the land of bootstrap advancement and personal opportunity (subscription required). In a nutshell, he does find economic advancement from generation to generation, but by the numbers, it appears that the economic quintile of one's parents is more determinative in America than in other Western countries.

But he points out a factor that is too often lost, and that (I'd argue) applies to a wide variety of comparisons. Healthcare comes to mind.

One of the annoying features of many media stories and political speeches about the evidence reviewed here is that the popular accounts make it seem that impersonal social forces, especially the American economy and government policy, entirely determine the opportunities new generations will find as they grow up. Leaving aside the fact that, as we have seen, the American economy has been exceptionally productive, and the fact that the federal government alone spends $750 billion (5.7 percent of GDP) on mobility-enhancing programs, the critics hardly mention the vital role of parental and personal responsibility.

The fact that personal responsibility plays a major role in mobility and economic well-being can be easily demonstrated. The three basic rules of success in America are that young people should finish their educations (at least high school), get jobs, and get married before having children. Computations based on Census data that my Brookings Institution colleague Isabel Sawhill performed for our recent book, Creating an Opportunity Society, show that kids who follow these rules have a 74 percent chance of winding up in the middle class (defined as income of $50,000 or more) and a mere 2 percent chance of winding up in poverty ($17,200 for a family of three in 2008). By contrast, young people who violate all three of these rules have only a 7 percent chance of winding up in the middle class and a 76 percent chance of winding up in poverty.

One could say that the U.S. has built a structure for opportunity and given everybody the rulebook, but it does not force citizens to follow it. Indeed, progressive policies over the past century have created unhealthy incentive to stay put, economically, and the identity politics and political correctness of the past few decades have sealed the fates of too many.

So we're back to the left/right divide. One side looks at a lack of universal economic opportunity, regardless of personal outlook, and insists that the American system be replaced with something centrally planned and designed to guarantee individual results. (Put aside the clear fantasy of that objective.) The other side replies that costless cultural changes and the acceptance of some degree of risk will yield better results for the individual and for our shared culture and economy.

May 21, 2010

King at the Crowne Tuesday: But What Office is He Running For?

Monique Chartier

Kerry King, who ran for Lieutenant Gov in 2006 (handy dandy info courtesy Andrew), sent out the following announcement a couple of hours ago.

Kerry King cordially invites you to his announcement for candidacy for a State General office on Tuesday, May 25, 2010 at 5:30 pm, at the Crowne Plaza Inn, Warwick, RI. King promises to outline his program to rebuild Rhode Island as a state with less government, lower taxes and more jobs. King is a lawyer, financial planner and an executive with the experience of directing 11,000 employes and responsible for a $900 million budget. "I will lead the charge for state constitutional amendments that will insure less government and impose fiscal restraint...and prevent legislators from continuing to ignore the will of the people," King said.

Governor Carcieri, honored guests, friends and supporters will join Kerry for a brief program followed by refreshments.

Race to the Cash Crop

Justin Katz

I'm not sure one has to be a conspiracy theorist to think that government policies have become little more than a series of scams perpetrated on the American people. Take Secretary of Education Arne Duncan's Race to the Top concoction. Sure, there's some favorable nods in the direction of reform and school choice, but those nods may be easily dispersed when eyes turn away. And even up front, as Frederick Hess points out, they aren't really the meat in the stew:

A few of the 19 priorities rewarded states for moving on measures such as charter schooling and merit pay, with states earning 40 points (out of a maximum total of 500) for supporting high-performing charters and 58 points for using student-achievement results to improve teacher and principal effectiveness. But the vast majority of the points are awarded for compliance with often woolly federal criteria: 65 points for articulating an agenda and securing local buy-in, 10 points for prioritizing education funding, 20 points for providing effective support to educators, and so on. If you're not entirely sure what these categories entail, welcome to the club; they reward states for procuring signatures of union support, for spending more on schools, and for adopting impressive-sounding professional schemes.

Andy Smarick, a Bush Education Department veteran who has painstakingly reported on RTTT, recently observed, "All this talk about revolutionary state change has really been overstated." While RTTT enthusiasts talk of states' lifting caps on charter schooling or removing "firewalls" that prevent student-achievement data from being linked to teachers, he noted that "the full story of states' legislative changes is more complex and less exhilarating." No state that previously prohibited charter schooling has enacted a new charter law to attract RTTT funds, and while Wisconsin technically relaxed its data firewall, it still prohibits student achievement from being used in teacher evaluations. Smarick explained this resistance to major changes as a consequence of union influence: "The problem is how much states had to give up to get that union support and buy-in."

Take away the catchy buzz words meant to disarm natural opponents of schemes implemented by and for big, centralized government and what you've got is a huge bundle of money being used to persuade state and local officials and bureaucrats to seek special-interest buy-in.

Backing off of the Receiver (Not a Post About Ellis Hobbs)

Carroll Andrew Morse

In the last couple of Projo stories on the Central Falls receivership situation, no references have been made, in the voice of the omniscient news narrator, to the power of the receiver to either raise taxes or fire city employees. For example, today's news staff story about the city's bond rating being cut to a junk rating says that...

The court-appointed temporary receiver has the power to go over the municipality's finances, approve or reject purchases and payments and, if the court approves, change contracts with unions and vendors.
I'm going to speculate that this is more than just an edit for space, and that some of the early descriptions of the receiver's formal powers were overstated.

However, in Steve Peoples and John Hill's story on the statewide reaction, North Providence Mayor Charles Lombardi is quoted as equating receivership with a town government giving up control of its tax rate...

North Providence Mayor Charles A. Lombardi, already working with the state to shape his city's $10.5-million deficit-reduction bond plan, said the contract-busting aspect of a receivership may be tempting, but would cede control of the town's finances, particularly its tax rate. there's still some room for clarification on this.

Expensive Sheets on That Ghost

Justin Katz

Look, I know the effort that goes into writing, and I've got no gripe against ghost writers. Truth be told, I generally assume that public figures act more as editors of their prepared speeches than as authors, and if they opt to outsource the writer function, well, nobody expects historic literature from state appointees. But I read Education Commissioner Deborah Gist's General Assembly speech prior to interviewing her, last month, and its hokeyness persuaded me that she must have written it herself — not because she's especially hokey, but because it's a quality that's much more tolerable when writing about one's self than when reading what others have written.

I mean, this in a $10,000 speech?

I can’t tell you how nice it was to be talking about a winning streak — or any streak, for that matter — other than the one in my hair. ...

Well, I quickly came back to earth. As you may know, we got some very, very bad news that Monday. I learned that my Guinness World Record for most kisses in a minute had been broken by some ill-natured person in Scotland. ...

Our action agenda, like all learning, starts with teachers. That’s no surprise coming from me! I am a teacher. I truly never imagined doing anything else. In fact, I was an active member of the NEA. Someone please revive Bob Walsh!

Next time Board of Regents member Angus Davis wants to shell out ten grand for a ten-page speech, I hope he'll think to give me a call. For that much money, I could write the speech and then take the rest of the quarter off. And I'll have the advantage of actually knowing who Bob Walsh is and might even be aware of tiny details like the fact that he was not long ago sidelined from the political battlefield by an in-surgery stroke.

Ushering in Further Decline with Cutsie Tax Changes

Justin Katz


Legislative leaders are poised to unveil a sweeping plan as soon as next week that would bring fundamental changes to the state's personal income tax system.

This may be one of the few times that I agree with a statement related to taxation coming out of the Poverty Institute, whose fiscal policy analyst, Russell Dannecker, advised legislators to "try to look for the unintended consequences."

With respect to the tax code, the problem begins right at the General Assembly's first statement of objectives. Requiring revenue to remain largely neutral means that necessary tax cuts in some areas have to be made up with tax increases elsewhere. Looking at the 9.9% top tax rate as the main culprit for detrimental perception of our tax climate focuses on a bullet point rather than the comprehensive list of ill-conceived policies.

As came up in recent conversation comparing Massachusetts and Rhode Island, the very progressivity of Rhode Island's tax system is central to its revenue and demographic problems, attracting those with low incomes and repelling those with middle-to-high. I'm not suggesting that Rhode Island should shift its tax burden suddenly onto its poorest residents. What the state government should do is cut taxes at the top and middle brackets and then cut spending as necessary.

I can't be alone in doubting the ability of the people who got us into our current budgetary mess to discern a careful path out of it.


As pointed out by a commenter, I had misread part of the article. (It's been a very, very rough week.) I deleted the section related thereto.

May 20, 2010

Not the Cause of the Surplus Swing

Justin Katz

One gets the sense that when certain commentators on the left claim that "tax cuts for the rich" were the most substantial cause of our government's deficit, they simply mean that the cuts were the part that they liked the least. According to Brian Riedl, the tax cuts — especially just those for "the rich" — have been a relatively minor factor:

... among tax-increase advocates, it has become an article of faith that President Bush's 2001 and 2003 tax cuts caused the budget deficit. Newsweeks Fareed Zakaria echoed this conventional wisdom recently: "The Bush tax cuts are the single largest part of the black hole that is the federal budget deficit." Similarly, in 2004, when Sen. John Kerry , Massachusetts Democrat, accused Mr. Bush of having "taken a $5.6 trillion surplus and turned it into deficits as far as the eye can see," he focused on "Bush's unaffordable tax cuts for the wealthiest people." ...

Instead, the largest cause of the swing (33 percent) was economic and technical revisions, arising from CBOs understandable failure to anticipate two recessions and two major stock market corrections over the next decade. Other causes of the lost surplus were the 2009 stimulus (6 percent), other new spending (32 percent), new net interest costs (12 percent), and other small tax cuts and tax rebates (3 percent). ...

Furthermore, Mr. Kerrys quote further singled out "tax cuts for the wealthiest people." On that theme, Mr. Obama has proposed ending the tax cuts only for those earning more than $250,000 annually. Yet CBO data shows that just 25 percent of the tax cuts went to those making more than $250,000. Therefore, the "tax cuts for the wealthiest" come to approximately 4 percent of the total swing from projected surpluses to actual deficits.

I guess that massive amount of new spending (initiated under Bush and taken to the heights of parody under the current administration) doesn't count, though, since it was good and noble and just what government ought to be doing.

Teachers Skeptical Over Race to the Top

Marc Comtois

As we've learned, the state American Federation of Teachers (AFT) union has decided to support Race to the Top (RTTT). It isn't too much of a leap to see the link between the recent Central Falls agreement and the AFT sign on, but there also can be little doubt that rank-and-file teachers remain skeptical about RTTT, particularly the teacher evaluation component. Education Commissioner Deborah Gist was in Warwick last week to speak about RTTT and it was clear that the prospects of a new evaluation system seems to be causing the most heartburn in the teacher ranks.

What teachers wanted to know Thursday evening was how they would be evaluated and whether such measures would be fair.

Toll Gate English teacher Darlene Netcoh asked if she would be held accountable for the performance of teachers who shaped students since they entered the system in kindergarten?

"What are these hardworking teachers not doing," queried Toll Gate history teacher Kate Rauch.

Netcoh's concerns are valid, which is why any student performance component of a teacher evaluation system has to account for the "raw material" the teacher is starting with. In other words, each student will have a baseline performance score (or something like that), which will be used for comparison at the end of the year to determine progress.

Teachers and union leaders have also complained that there haven't been enough details given out regarding a new teacher evaluation system. As Gist explained, it hasn't been developed because RIDE wants to include teachers in the development process. As she said, if she had developed an evaluation system without teacher input, she would be accused of forcing a system on them. More fundamental is that the reason she hasn't started that process is because she hopes to use RTTT funds to develop that system. However, as she has said, whether or not RI gets RTTT funds, a new statewide teacher evaluation standard will be developed by 2011.

What is Municipal Receivership III

Carroll Andrew Morse

I am becoming increasingly uneasy with the scope of the powers being attributed to a "municipal receiver" in Rhode Island. John Hill's story in today's Projo on the situation in Central Falls describes a broad range of executive and taxation authority being suddenly transferred to one man, perhaps working in tandem with the court system (I guess that would be two men)...

The court-appointed receiver has the power to approve or reject purchases and payments and, if the court approves, change contracts with unions and vendors and hire and fire municipal employees.

[Jonathan N. Savage], who said he'd be paid between $100 and $375 an hour for his work as receiver, said it was too soon to predict what he might ask the court to do, from imposing new contract terms or increasing taxes, until he'd had a chance to examine the city's books and consult with all the parties who might be affected.

Granted, the foundational legal issues regarding non-delegation of government authority are not as clear cut in the case of municipal governments as they are in the case of state governments. Since states are the fundamental units in the American system of government, and states create city and town governments and establish the scope of their powers, states can presumably reserve the power to make changes to municipal government at a future time.

But just because they can reserve their powers doesn't mean that they do. Article XIII of the Rhode Island Constitution spells out some very clear limitations on the state's power to change the governance of established cities and towns, Section 4 being the most relevant to the situation in Central Falls...

The general assembly shall have the power to act in relation to the property, affairs and government of any city or town by general laws which shall apply alike to all cities and towns, but which shall not affect the form of government of any city or town. The general assembly shall also have the power to act in relation to the property, affairs and government of a particular city or town provided that such legislative action shall become effective only upon approval by a majority of the qualified electors of the said city or town voting at a general or special election, except that in the case of acts involving the imposition of a tax or the expenditure of money by a town the same shall provide for the submission thereof to those electors in said town qualified to vote upon a proposition to impose a tax or for the expenditure of money.
This makes pretty clear, for example, that the state couldn't decide to remove the mayor of a city in mid-term and replace him or her with a state-appointed "governor-general" -- at least not without the approval of the voters via a referendum. Nor is there any provision allowing a governor-general to be appointed, again in the absence of a referendum, just because a City Council asks for one. Nor would appointing a governor-general become legitimate by re-titling the position to be the "receiver-general" or something similar.

It's important to understand what the maximum allowed scope for receivership at the outset -- and whether it needs to be challenged -- because the citizens of Rhode Island cannot assume the Central Falls will be the only place where residents may be told that someone who has not been elected is being put in charge of the local government, to make the decisions that elected officials have been trying to avoid. If we don't question what is happening in Central Falls right now, Central Falls may become an overly expansive precedent for the future.

Campaign Fire Money

Justin Katz

Monique's topic on the Matt Allen Show, last night, was David Kane's intended use of the settlement money that he receives as the father of a Station Nightclub fire victim to prevent Attorney General Patrick Lynch's advancement into the governor's seat. Stream by clicking here, or download it.

May 19, 2010

What is Municipal Receivership II

Carroll Andrew Morse

Here is one aspect of the aforementioned exploration.

Receivership usually means that an organization, as it has been, is going away. A city itself, of course, can't actually go away solely due to fiscal problems. And only in the most extreme of circumstances could a city government go away, or even change very quickly, because of money troubles, in the same way that a private organization might.

So if municipal government is still going to be around after a receivership, albeit with a different cost structure, but with fundamentally the same organizational structure, then what municipal receivership mostly means is that city officials are going to get somebody else to make the tough choices, and then have the full authority of their official positions returned with very little in the way of direct consequences. This is a problem in terms of accountability.

So if units of municipal government are allowed to treat their fiscal problems with a concept like receivership which isn't entirely compatible with the nature of governmental organizations, shouldn't a city council and mayor submit their resignations along with a receivership petition, to show they really have exhausted any options they have to offer, and that no parts of their organization are off-limits to radical change?

What is Municipal Receivership?

Carroll Andrew Morse

Pardon me for asking what might be a silly question here, but what does a municipal receivership of the kind being undergone by Central Falls actually mean?

I've looked through the Rhode Island General Laws, and there is no mention of municipal receivership there that I am able to find.

There's something in Federal law called "Chapter 9 bankruptcy" that relates to local governments. According to a Richard Dujardin Projo article from April 23 of this year, the Central Falls City Council had "voted to ask the General Assembly to enact legislation allowing Central Falls and other municipalities to file for bankruptcy protection", but I can't find any evidence that the legislature acted in response.

The resolution passed last evening by the Central Falls City Council asking for a receiver to be appointed (available via the Projo's website) cites no legal authority; its content is mostly a bunch of different variations on the theme of "we're broke and we want to give up".

And the order issued by Superior Court Judge Michael Silverstein placing Central Falls into receivership (also available via the Projo's website) makes mention of only one legal authority, State Supreme Court Executive Order 95-01, but no specific, full-fledged law.

Given that other Rhode Island municipalities in addition to Central Falls could conceivably pursue this course of action, I think we need to explore the meaning and consequences of municipal receivership a little more...

The Failure of Enron (the Play)

Marc Comtois

Reading the Sunday ProJo, I noticed the weird picture of a normal looking business-type guy smiling alongside a couple others dressed in suits, but with dinosaur heads. The picture accompanied a piece explaining how the London theatre crowd was aghast that American audiences just didn't get the London hit play Enron. Basically, according to the article, cultured Brits thought us ugly Americans were to stupid and unsophisticated to get the humor.

In London, the show has been a runaway hit since opening last January in the West End after a sold-out run at the Royal Court.

Here in New York, "Enron" didn't receive a single major Tony nomination other than best score--and it's not even a musical!

"Since 9/11 the insular Americans have become terribly sensitive to criticism," Jerry de Groot wrote in the Telegraph. "They don't mind when Jon Stewart dumps bucketloads of heavy-handed political satire on the 'Daily Show,' but they get tetchy when the criticism is delivered with an English accent."

Michael Billington, the critic of the U.K.'s Guardian, suggested Americans were just too stupid to appreciate a satire requiring a sense of history and a modest understanding of accounting legerdemain.

"If 'Enron's' melancholy saga proves anything," Billington wrote, "it is Broadway's irrelevance to serious theatre."

For his part, the author of the piece, Jeremy Gerard, thinks the play's promoters marketed it wrong--it was less a story about Enron and more about the workings of capitalism and markets in general. But the failure of Enron in New York is less surprising when it is learned that there is an intense, 6 minute segment devoted to 9/11 in the middle of it all--a section that had been unremarked upon in the reviews. As Nicole Gelinas explains:
The play's instant 9/11 simulation is like a sucker punch for which New York theatergoers had no fair warning. Oddly, none of the critics I've read mentioned the scene, though Brantley devoted a strange passage to "the design team keep[ing] the stage pulsing with flashing colors [and] rainstorms of sparks (and later, ashes)."

Even today, video replays of 9/11 can induce a physical reaction in New Yorkers. On the night that I attended the play, in previews, two people seated in the rows ahead of me left during the scene. Many viewers likely paid little attention to the final scenes of the play.

If Goold did not notice his audience's visceral response to the previews, he's an incompetent director. During the play's first half, the audience and the actors interacted easily. Theatergoers were generous with their laughter, applause, and attention, and they were patient with the story. At intermission, the audience chatted comfortably. But shortly into the second act, along comes 9/11, and shocked audience members launched a quiet but seething strike. Funny scenes were met with frosty silence. At the end, the audience offered only tepid applause, though Butz's performance, certainly, merited a standing ovation. The white-faced crowd headed silently for the exits.

It's likely that Enron would still be running on Broadway if Goold had heard what his audience was trying to tell him. No New Yorker would subject his friends, relatives, or neighbors to this. Goold either didn't get the message, or he chose not to compromise his creativity, such as it is. As a result, New Yorkers rejected Enron. And that, you might say, is how markets work.

Yawn If You're Interested

Justin Katz

Just because it's interesting:

... According to psychologists and researchers who study such things, yawning has nothing to do with boredom, rudeness, or even fatigue. Quite the contrary. Yawning helps cool down our brains so they function better, explains Andrew Gallup, a researcher who specializes in yawning at New York's University of Binghamton.

"Our brains are like computers," says Gallup, who conducted yawning studies in 2007 with his father, Gordon, of the State University of New York at Albany. "They operate most efficiently when cool. Our research indicates that we yawn in response to increased brain or body temperature."

Apparently, we associate yawning with tiredness because our body temperature is highest just before and just after sleep, but in general, it just means that our brains are overheating and need a boost of cool air.

The Attorney General Should not be Rewarded with Your Vote: What Dave Kane Will Do with Some of the Station Nightclub Fire Settlement Money

Monique Chartier

Dave Kane issued the following press release today.

Since yesterday's announcement about the release of the Station Nightclub Fire settlement money, I have been asked several times what our family plans to do with the money. First, at the risk of sounding like a commercial, "We're going to Disney world", Nicky's favorite place to go with his family.

However, the release of these funds does not mean that our fight for justice is over. My wife, Joanne and I are dedicating some of Nicky's settlement money to begin a Media campaign to defeat Patrick Lynch's attempt to be elected Governor of the State of Rhode Island.

As Attorney General, Patrick Lynch proved to be an incredible combination of incompetence and corruption. After taking steps and making rulings that resulted in the denial of justice for all the victims and their families, Attorney Lynch wants to be rewarded with your vote for Governor.

The election of Patrick Lynch as Governor would add severe insult to devastating injury to everyone touched by the Station Nightclub Fire. This man needs to be held up as an example of what happens when elected officials fail to execute the duties of their office honorably. As I have said many times, "Patrick Lynch may have been re-elected Attorney General over my son's dead body. But, he will be elected Governor over mine."

An ad and a spoof of another ad

Donald B. Hawthorne

Dale Peterson for Alabama Ag Commissioner. (More on the ad here.)

Another interpretation of GM CEO's recent ad. (Full story here.)

The Obligation of Participation

Justin Katz

Jay Nordlinger's profile of Florida congressional candidate Allen West is interesting reading, overall, but this passage should haunt the days of all productive Rhode Islanders (emphasis added):

After the Army, West taught high school for a while — history. He is especially pleased that some of his students went on to service academies. Then he went to Afghanistan as a civilian adviser, training Afghan officers. He says he felt "a yearning in my heart" to do this. And then, politics called. West quotes Plato: "One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors."

The story of our state — and its characteristic apathy — in a sentence.

Complexity is Knowing that Government Control Must be Better, No Matter What that Pesky Constitution May Say

Carroll Andrew Morse

One of the more maundering sections in the Projo's recent Tea Party editorial began by looking at the view expressed at many Tea Party events that modern government needs to continue to be consistent with the principles of the founding of America...

They also make frequent reference to getting back to what the nation's Founders wanted, though it is not at all clear how the Founders would have governed a country that has grown from about 3 million people living in a mostly agrarian nation in 1790 to about 310 million in the highly urban/suburban, technological and multicultural one now. We do know that the Founders supported the right to amend the Constitution as things changed.

But complexity is anxiety-provoking, while simple slogans are comforting.

The connection that the editorial seeks to establish, between simplicity and Constitutionality, is not at all clear. Given that defining and enforcing limits on the power of government has never been a simple problem for any society, it would have been helpful if the editorial board had discussed the specific Constitutional sections they believe to be too simplistic for a "highly urban/suburban, technological and multicultural" nation.

Indeed, much modern history has been shaped by human struggles with and against the consequences of contrasting formulations of government. The renowned philosopher and sociologist Raymond Aron described the key contrast in the past two-and-half-centuries as being defined by the difference in the ideas of...

...representative governments restrained by the balance of power, and so called democratic governments invoking the will of the people but rejecting all limits to their authority.
Then again, given the Projo editorial board's steady stream of editorials over the past year declaring the need for more government power over healthcare regardless of the details -- and perhaps the Constitutionality -- of the the plans that were being proposed, they may feel that the issue has been settled, with the latter view of government described by Aron having won out.

However, those who would feel comfortable with a system where the most important factor limiting a government's power is that government's ability to decide for itself when its actions serve true public interests really shouldn't be congratulating themselves on their ability to deal with complexity.

When Taxation's Involved, Everything's a Sin

Justin Katz

One of my classes in high school did a unit of debating, and among the topics was the legitimacy of sin taxes. Something peculiar is in play when a government entity takes more of your money for your own good, and not surprisingly, the scope of taxable sins is apt to expand:

One week after a White House task force suggested that raising taxes on sugary drinks might help combat childhood obesity, Rhode Island's House Finance Committee will hold a hearing on a bill that would levy a new tax on soda.

The measure would make Rhode Island consumers pay a 5-cent tax on every soft drink they buy and 10 cents on each such beverage larger than 20 ounces.

Far be it from me to suspect the motives of our good legislators, but given the flow of this tax money, I can't help but recall that the state has been trying to cut its aid to cities and towns:

It is not clear how much money the proposed tax would raise, but the bill would funnel all such revenue to the city or town where the drink was sold. The resulting funds could be used to establish or maintain local recreational facilities, jogging paths and the like, [State Rep. Edith] Ajello [D, Providence] said.

May 18, 2010

Peter Bonk: Monday Morning at the 4th ICCC: Tough Talk about Fraud (and Rhode Island Once Again Pops Up on the Wrong End of a National Ranking)

Engaged Citizen

The breakfast speakers are Patrick Michaels from George Mason University and George Allen, former Senator and Governor of Virginia. Professor Michaels is deadpan and funny with a serious message. He takes the reprobates associated with the “Climategate” scandal to task for corrupting the peer review process, labeling the behavior “hanging offenses”, and he is right. It is ok, (not fun, but ok) to be wrong in science, but most scientists don’t even get a second chance if fraud is involved. It is usually an instant career killer. Michaels chastises the University of East Anglia and Penn State for their whitewashing of the bad behavior of Phil Jones and Michael Mann.

As a scientist and someone with a modicum of common sense and decency I can not even imagine sending an e-mail like this:

The next time I see Pat Michaels at a scientific meeting I’ll be tempted to beat the crap out of him. Very tempted. [Climate researcher Benjamin Santer of Lawrence Livermore National Laboratory to Professor Phil Jones of the University of East Anglia, Oct. 9, 2009]

This behavior is shockingly unprofessional. We all think some people are fools and idiots, but most of us wisely keep those thoughts to ourselves.

Governor Allen talks about energy policy, and opines that even “Doing nothing is doing something” in that allows people to keep and spend their money as they see fit. His chart of energy costs and the sources of energy for the states has Rhode Island 46th out of 51 in average price per kilowatt hour. Allen reminds us that it is access to affordable, reliable energy that has given the developed world its high standard of living.

The meeting has break out sessions during the day, with four tracks in parallel: two on science, one on economics and one on public policy. I find myself spending most of the morning in the Economics and Public Policy talks.

Peter Bonk resides in Westerly. A chemist by training and profession, he, along with millions of us, scientists and laymen, has been attempting to discern whether the core science supports the policy positions, enacted and proposed, that have evolved out of the debate on anthropogenic global warming.

A Foreboding Web Site Name

Justin Katz

I have to say that the name of Angus Davis's new social networking site seems predestined for irony:

Backed by $8.5 million in early-stage funding, is a social networking site that allows consumers to share and rate their everyday purchases. Got a great deal on a pair of jeans? You can post news of the purchase to the site the moment it happens by linking it to your credit card. You can also write a review of what you bought and answer questions from people in your network.

Linking a Facebook-style page to your credit card so that people can see what you're buying in real time? We're already well past the point at which too much information becomes too much information. Removing the need to pause and log in to Twitter to announce every purchase seems rife with risks.

Gist on Central Falls and the Importance of Evaluations

Marc Comtois

Rick Hess at EdWeek interviewed RI Ed. Commissioner Deborah Gist in light of the recent agreement between Central Falls teachers and Superintendent Frances Gallo. Hess' focus was on the importance of a good evaluation system for making reform work.

Rick Hess: The deal turns critically on the teacher evaluation component that'll be introduced next year (with unsatisfactory teachers targeted for termination). How will we know whether the evaluation is sufficiently tough, or whether it becomes a fig leaf for backing away from more painful measures?

Deborah Gist: There are a couple of ways that we'll know. One is that the administration has the complete authority to put the evaluation into place. The agreement says the evaluation will be put into place solely by the management. And the Board of Regents passed regulations that define what the evaluations have to look like in this state. The guidelines are good and strong, and everything that we're doing is based on those.

RH: Okay, but suppose that, at this time next year, we see that just five or six of the school's 93 teachers are removed. Would observers be right to be skeptical that the process was toothless?

DG: It's not about removing any particular percentage of teachers. It's hard to know what the proper percentage would look like. But I strongly encourage people to be skeptical. We should be skeptical. I want people to take a hard look at us, and I'm going to do the same with the district and with my staff. But it's not about the percentage of teachers we remove. It's about the quality of the evaluation and about performance. I expect there will be turnover, but how much there is remains to be seen....

RH: What do you say to critics who might ask how you can leave the faculty intact for another year at a school that you've identified as profoundly low-performing?

DG: We don't take this decision lightly. We take it very seriously. But there are some great teachers at the high school and, because teacher evaluation is so poor around the country and in the state, we don't have good evidence as to who should stay and who should not. This deal gives us the opportunity to make those decisions in a more informed way and gives folks the opportunity to be a part of the reform movement. There are examples of groups of teachers coming together to turn their schools around in various communities, and there's no reason to assume it can't happen here. We're going to give teachers that chance. Our expectations are high. We'll be watching carefully. If they're not ready to deliver results, we'll act upon that rapidly.

As research conducted by The New Teacher Project (TNTP) has shown (outlined in their report, "The Widget Effect" -- PDF and website), the teacher evaluation process is woefully inept nationwide. The TNTP's "Widget Effect" is largely a by-product of the industrial era/collective-bargaining system whereby school districts and unions have come to view and treat teachers as identical widgets in the educational machinery. The operating assumption is that the vast majority of teachers are all equally effective. In the districts that TNTP studied:
All teachers are rated good or great - In districts that use binary evaluation ratings (generally "satisfactory" or "unsatisfactory"), more than 99 percent of teachers receive the satisfactory rating. Districts that use a broader range of rating options do little better; in these districts, 94 percent of teachers receive one of the top two ratings and less than 1 percent are rated unsatisfactory.
That's simply impossible and unrealistic. While such a flawed system clearly overstates the effectiveness of the average teacher (and being a teacher of "average" effectiveness isn't a net negative, by the way), worse is that they diminish the real effectiveness of those who truly are superior educators. Further, these evaluation systems are not fair to new teachers and teachers who are average or good but still have areas that need improvement.
73 percent of teachers surveyed said their most recent evaluation did not identify any development areas, and only 45 percent of teachers who did have development areas identified said they received useful support to improve....Though it is widely recognized that teachers are least effective in their beginning years, 66 percent of novice teachers received a rating greater than "satisfactory" on their most recent performance evaluation....Despite uniformly positive evaluation ratings, teachers and administrators both recognize ineffective teaching in their schools. In fact, 81 percent of administrators and 58 percent of teachers say there is a tenured teacher in their school who is performing poorly, and 43 percent of teachers say there is a tenured teacher who should be dismissed for poor performance.
But instituting an evaluation system won't be easy thanks to the culture that has developed in which, teachers--even novice teachers--expect to be given the highest rating. And why not? They've never been evaluated any differently (everybody wins)!
Our research reflects that there is a strong and logical expectation among teachers that they will receive outstanding performance ratings. While the vast majority of teachers receive the highest rating, those teachers who do not receive it tend to believe that the higher rating was warranted....Even teachers who are just beginning their careers believe they deserve the highest performance ratings and are dissatisfied if they are rated good, not great. This inflated sense of performance is evident in the self-assessment ratings of novice teachers. In a subset of districts where teachers were asked to assess their own instructional performance on a scale of 1 to 10, 69 percent of novice teachers rated their instructional performance an 8 or higher.

In a system where negative or even less than perfect performance ratings are given only rarely, teachers naturally develop an expectation that they will be among the large majority considered top performers. In this context, teachers perceive low or negative ratings not in terms of what they communicate about performance but as a personally-directed insult or attack. The response is understandable in the context of the current system, where so few teachers get critical feedback of any kind. When their evaluation does include criticism, they feel as though they have been singled out while other examples of poor performance go unaddressed.

This creates a culture in which teachers are strongly resistant to receiving an evaluation rating that suggests their practice needs improvement. Schools then find themselves in a vicious cycle; administrators generally do not accurately evaluate poor performance, leading to an expectation of high performance ratings, which, in turn, cause administrators to face stiff cultural resistance when they do issue even marginally negative evaluations. The result is a dysfunctional school community in which performance problems cannot be openly identified or addressed.

That's why teacher "buy-in" is so important to effect change. Of course, that doesn't mean that change requires that the current teachers buy in, just that you find teachers who will.

There's much more good stuff in "The Widget Effect" report, but the bottom line is that implementing a robust and fair evaluation system is extremely important for moving forward with school reform.

ADDENDUM: Writing elsewhere, Hess is supportive of the Central Falls deal, noting:

The Rhode Island story is a truly encouraging development....this story shows how leaders with backbone can eventually force union leadership to accept a new reality. Yes, Gallo walked back the bold action that won her many education reformers' approval, but good management is about discipline, not bloodlust. The point of school turnarounds is not to count scalps, but to win necessary changes, force out lousy teachers, and reset the board.

Planning Military Strategy Around Politics

Justin Katz

This account of military actions and strategy in Afghanistan makes for interesting reading. Here, writer Bing West notes an adjustment of strategy intended to prevent deleterious interference by America's political class:

Marja's objective area comprised about twelve by twelve miles of canals, irrigation ditches, and flat fields, with several thousand farm compounds. The assault began on February 13 with a night landing by helicopters of three Marine companies, with Afghan soldiers attached to every squad. They attacked from the center out, aiming to link up with two battalions moving in from the northwest and the east. Thus, once the attack had begun, no politician could stop it. This was a lesson from Fallujah, where in 2004 politicians called off the attack in mid-battle.

Pulling back in Fallujah was the single biggest mistake of the Iraq War, and it's encouraging to learn that military leaders are taking domestic weak knees into account while planning. Of course, it's easy to imagine that making troops' job more dangerous.

I'd stress, though, that I'm not arguing for military independence from political control. Politics, though, should be big picture, with strategy and the picking of battles left to the military.

John Biszko: Rhode Island's It for Me II

Engaged Citizen

Sailboats on whitecaps turn and toss
Each mayor — his own tomato sauce
Taxes so high yet our bridges fall
Here! Getchya Pawsox tikitz!
Come one. Come all.

E'er true flies the elegant seagull
O'er the playground of the illegal
The foghorn wanes its comforting blast
Come join our burgeoning entitlement class.

In 1772 the Gaspee we did seize
Could I get a glazed crullah with that please?
Majestic pastures, vineyards, 'ahh Pro Patria'
A futile search for a socialist utopia.

The proud golden anchor and 13 stahz
On sleeves of riot police outside Providence bahz
Regal waves and cliffs fit for a post cahd
Save us wind turbines! But not in my back yahd!

RI, RI, RI's it for me.
Estate tax is fertile soil for my family tree
For her 2 months of summer, my golly, I'll be boating
It's easy to catch fish when they're already floating.

Come over. It's great. But no need to hurry.
We vote Dem every time. No change. No worry.
Someone owns a gun?! Good Lord, what to do?!
I'm sorry I said Lord. Did it offend you?

On these shores we hold forth a lively experiment
Alternative lifestyles. Blind progressive sentiment.
That a flourishing civil state may stand.
Have you tried Dunkin's new clam coffee?

It's not at all bland!

Greener Taxation Grass Across the Border

Justin Katz

An interesting conversation took place in the comments section of my "Nothing to See Here" post, and this offering from Patrick is worth highlighting:

Let's look at facts now:

Using the numbers here, on the state's department of revenue web site:

And here at for RI's:

East Providence: 15.43
Seekonk: 9.64
Rehoboth: 8.90

Woonsocket: 22.36
Wrentham: 12.22
Blackstone: 12.52

Pawtucket: 17.78
Attleboro: 10.09
N. Attleboro: 9.82

Tiverton: 14.35
Fall River: 8.06
Westport: 5.54

Those are all bordering towns. Why the difference? Rather than spewing your normal nonsense, I've provided you with facts and sources. Now explain it?

One commenter objected that Massachusetts has higher income tax, and that the state money is spread to municipalities, lower the need for property taxes. The analysis is complicated by the fact that Massachusetts' income tax rate is 5.3% of adjusted income, while Rhode Island breaks its rates up into progressive tiers: 3.75% to $32,550, 7% to 78,850, 7.75% to $164,550, 9% to $357,700, and 9.9% over that. And of course, there's RI's flat tax option, at 6.5%. In other words, Rhode Island's tax rate is only lower for folks at the bottom of the spectrum.

Another way to look at the comparison is through the prism of tax collections, and this chart (granted, from 2002) does show that Massachusetts collected $31.75 per $1,000 to Rhode Island's $25.83. This moves us away from the topic of comparative property tax rates, but it appears to be the case that Massachusetts collects more in income tax because it takes more from people at lower ends of the income spectrum.

Put differently, if you'd like to own a home and work hard to increase your income, you're better off in Massachusetts. If you're content to rent or to live in subsidized housing and earn a small salary, you're better off in Rhode Island. That may, we can suppose, have something to do with Rhode Island's dire economic condition.

May 17, 2010

Why the Tea Party Has Emerged from America's Side Streets

Carroll Andrew Morse

Bill James, the pioneer baseball number-cruncher who is also a gifted sportswriter, once observed that historians reduce real events to patterns of light and shadow, which popular memory further reduces to black and white. The description of the Tea Party movement offered yesterday by the Projo in an unsigned editorial was derived from a black-and-white picture of political activity that allows for only limited avenues of basic citizen participation: decisions by individual voters, activities of special interests and not much else.

In the political science literature, Republican Party support is often characterized, in terms of this limited set of possible actors, as an alliance of Main Street and Wall Street interests (which then added the "religious right" leading to the Republican Revolution of the 1990s). But the Wall Street/Main Street model has to my mind always been insufficient, as it is difficult to envision enough votes existing in the dual-street coalition to provide the totals needed to actually win anything. In cases where Republicans have been successful, there have to have been a goodly number of people from the side streets who also choose to vote Republican.

Side-street voters can be brought into the picture in a couple of different ways. In addition to citizens who focus solely on their narrow interests, our political and social system can also produce citizens concerned more generally about the long-term health of their municipality, state or country (I know it's hard to believe, given the cynicism of the times). Over the course of American political history, the Republican Party may have had the stronger attraction to these voters, who served to counterbalance the coalition of special interests that is the Democratic Party. (Digression: Don't blame me for characterizing the Democrats like this. This is how the poli-sci literature frequently describes them). Or there could be a significant segment of American voters who lie outside of a deep attachment to either party, who serve as neutral referees, choosing amongst the options they believe best serve the common good. Like many items in political analysis, the reality will be a continuum between the two ends.

But however this dynamic has worked in the past, at the present moment, the side-streets are where the Tea Partiers are coming from. The Tea Partiers are citizens who have put their hands up, to tell the established political players 1) you've really screwed up in planning for the future of our country 2) so you need to put together a better plan to pull things together 3) or else we will replace you, via the ballot box, with someone different who will. Yet while efforts to replace politically-chosen decision makers when the public believes that they have governed poorly are recognized as fundamental to the practice of democracy, reactions to the emergence of a segment of citizens who are visibly signaling that they want better choices than what is currently being offered have ranged from the dismissive to the apoplectic.

The negative reactions towards citizen participation are, in part, the result of special-interest-centric attitudes towards politics that have disimagined any significant role for regular citizens concerned about the long-term future their society. In many theories which gained traction in the latter-half of the 20th century on the subject of how democracy "really" works, the role of the common-folk was limited to picking amongst options offered by coalitions of elites and organized interests. Elites had the ability to transcend base motivations of self-interest, as well as to manage a power-structure that balanced competing special interests and to create the right messaging to get some of the common folk to come along, but the common folk, being common, couldn't be expected to organize in pursuit of a larger purpose, on their own, with the same vigor that they would organize themselves to pursue more immediately gratifying ends. Elite leadership was required to move them towards broader, high-minded goals.

Now, this is not the only pattern of light and shadow about the workings of American democracy offered by modern political science and, in this century, it may not even be the dominant one. But it is still one accepted view. Certainly, for example, a black-and-white picture of narrowly-focused special interests being the only significant mode of citizen participation that is possible informs the Providence Journal editorial board's cynical attempt to pound Tea Partiers into the mold of a traditional interest group.

Fortunately, immediate evidence of the deficiency of the narrow view of citizen participation is present on the same Projo page as the Tea Party editorial, where in what is either an unintentionally schizophrenic juxtaposition, or a brilliantly subversive move by someone on the editorial staff, a second editorial discusses the need for spending restraint to secure the future of all of Rhode Island.

When one newspaper editorial calls for spending restraint which will depend on political change, while another expresses unconcealed disdain for citizens who advocate for political change involving spending restraint, it is safe to say that a contradiction has been identified. The question needing to be asked to the author of the Tea-Party editorial, in light of the spending editorial, is whether it is acceptable for regular folks to organize on their own to address the long term, system-wide consequences of special-interest dominance of government -- or whether they should only be addressing hazards to the general good that staid and proper elites (like maybe the Projo editorial board) have declared to be legitimate concerns.

Legal, but Gone

Justin Katz

So, the Mojave Desert cross honoring American servicemen and -women has been stolen:

A cross erected on a remote Mojave Desert outcropping to honor American war dead has been stolen less than two weeks after the U.S. Supreme Court allowed it to remain standing while a legal battle continued over its presence on federal land.

Versions of the memorial have been vandalized repeatedly in the last 75 years and the motive this time was not immediately known, but the theft was condemned Tuesday by veterans groups that support the cross and by civil libertarians that saw it as a violation of the constitutional separation of church and state.

Among the generic suspects mentioned by National Park Service spokeswoman Linda Slater are "metal scavengers." It seems like a long way to go for metal, unless there was gold beneath the white paint.

Peter Bonk: Standing Room Only at the First Evening of the 4th ICCC

Engaged Citizen

The room is packed. Heartland Institute officials tell me the room can only hold 800 people, and all the seats are filled. Attendance had to be closed down prior to the start of the conference.

A small group of protesters, students from a suburban high school, were holding a long banner in front of the Marriott where the conference is being held. The students are polite and readily agree when I ask to take their picture. The sidewalk is full of youthful idealism. I don’t recall seeing any protesters back in March 2009 in NYC.

Keynote speakers at the Sunday night dinner were former Senator and Astronaut Harrison Schmitt (Ph.D, Geology) and Stephen McIntyre, former mining executive from Canada with training in statistics. It was McIntyre who, with fellow Canadian Ross McKitrick, challenged the validity of the famous (or infamous) “Hockey Stick” graph of Professor Michael Mann. The “Climategate” e-mails revealed in November 2009 speak of “tricks” and “hiding the decline” in reference to the now controversial graph of temperatures and CO2 over time. The folks from have placed 2 foot hockey sticks in the conference goodie bags with the following inscription: “Mann Made Global Warming: Why we should be more worried about the intellectual climate”.

Schmitt talks about the Constitutional powers and climate legislation, a rather strange topic, but it does indicate where he sees legitimate government involvement vs. where overstepping of originally granted powers in Articles I and II may be occurring. McIntyre’s talk is “Climategate: A Battlefield Perspective”.

The real interest and heat is in the Q & A that follows, which takes a turn unimaginable 14 months ago in NYC. Climategate and the Tea Party (many later express sympathy and involvement with Tea Party groups from SC to TX to NM) have emboldened folks, and questions of fraud and criminal charges are raised again and again. McIntyre is reserved but unmoved, citing the need for the scientific community to police its own. Schmitt takes a more aggressive tack, and while not calling Mann’s work fraudulent says some have “An agenda different from science”.

There is a clear sense of accelerated momentum on the questioning of anthropogenic global warming since the 2nd ICCC in March 2009.

Peter Bonk resides in Westerly. A chemist by training and profession, he, along with millions of us, scientists and laymen, has been attempting to discern whether the core science supports the policy positions, enacted and proposed, that have evolved out of the debate on anthropogenic global warming.

Two Perspectives on Root Causes

Justin Katz

The two perspectives on what constitutes the root causes of poverty and, therefore, how to resolve them, emerged when the six gubernatorial candidates met with the Rhode Island Interfaith Coalition. On one side:

Republican John Robitaille, Governor Carcieri's former communications director, said the large number of single-parent families in poor communities is a key factor contributing to childhood poverty. He said the state needs to streamline access to its social service programs and adopt "targeted and measurable" ways to deal with the root causes of poverty, he said.

And on the other:

Rabbi Alan Flam, a senior fellow at Brown University's Swearer Center for Public Service, urged attendees to do more than write checks and organize food drives.

While such charitable acts are helpful, they don't address the roots of poverty — or the ways to end it. Solutions require action in town halls and at the State House, he said. "We must act with a resolve and a belief that we can be a catalyst for change."

One can fairly infer that Robitaille would decrease government incentives for the behavior that constitutes the root causes, while Flam, in attempting to leverage the government as his "catalyst for change," would increase them. It's an old debate, but I'd suggest that if we perpetuate the sense that the indigent have a civil right to government solutions, we'll perpetuate the adolescent dependency that is primary among the roots.

We do have a moral obligation to assist those who need help, but that assistance must be seen as voluntary charity on our part, not as something that is owed to the recipients.

Greece Is the Way

Justin Katz

I'd been intending to highlight Ed Achorn's column from last week, anyway, but it's got special significance for me, after Saturday's vote in Tiverton:

See if any of this sounds familiar.

In Greece, politicians have duped voters into believing that it is compassionate to run up massive debts, fund unsustainable social programs, punish the work ethic and job creation, and give away the store to public-employee unions (with higher wages, better benefits and earlier, more generous retirements than those available to most in the private sector). ...

Still, thanks to a sufficient number of voters who pay little in taxes, get handouts, and/or have friends or relatives in government to protect, its politicians have gotten away with this behavior for quite some time.

Ed's focus is on Rhode Island, as a state, but the same characteristic philosophy resides in the cities and towns, to varying degrees. Some of the people who voted for a 7.88% minimum tax increase, in Tiverton, were parents riled by the threats of the School Committee, but most were teachers themselves or the family and friends of union members. Fill in the remainder with residents who enjoy what they perceive as free services and others who just resent having people who've lived here for only a decade or two deign to offer suggestions.

It's difficult to see what could turn the ship around.

May 16, 2010

Central Falls: Tomorrow's News Today

Justin Katz

The press releases are coming out concerning an administration-union deal in Central Falls. First in the emailbox was the union's take:

The Central Falls Teachers Union and the Central Falls School District reached a tentative agreement Saturday to implement a transformation plan for Central Falls High School for the 2010-11 school year in a way that involves all stakeholders—administrators, teachers, students and parents—to create a pathway toward excellence for everyone at the school.

Both the school district and the union agree that while this has been a difficult process for everyone involved, the negotiations resulted in a newfound appreciation for shared responsibility, and a solid commitment to bring lasting solutions that will improve teaching and learning at Central Falls High School.

As part of that agreement, which is pending ratification, the current staff will return to the school without having to reapply for their jobs. Teachers will need to recommit to their jobs and interview with the new principal. The agreed upon plan would also incorporate important changes designed to increase student achievement. These include a longer school day, more after-school tutoring, a new evaluation system designed to inform teaching and learning, and targeted and embedded professional development, among other changes. Details of the agreement will be released following a ratification vote by Central Falls teachers at a meeting Monday. A press conference is scheduled at the high school at 3:30 p.m.

Followed, just now, by two cents from Education Commissioner Deborah Gist:

I am really pleased that the Central Falls School Department, under Dr. Frances Gallo’s leadership, and the Central Falls Teachers Union have come to a tentative agreement about a plan to transform Central Falls High School, and that they will do that work together. The ideal situation is when we can do this important work collaboratively, and that's why this agreement is so promising. ...

From the outset, I have said that my one commitment is to ensure that we provide the best possible education for the students of Central Falls High School. The tentative agreement reached today is evidence that all parties can put aside their differences and work in the best interest of our students. Now it's time to move forward and work together to make Central Falls High School one of the best schools in Rhode Island.

We'll see who got what, but I have to think that the teachers have become increasingly nervous as the applicant pool to replace them has approached the 1,000 mark.

Live Streaming Coverage of Portions of the 4th ICCC

Monique Chartier

... is available at PJTV, for AGW geeks (which includes yours truly) who could not make it to Chicago. [High speed - i.e., not dial-up - internet connection and not very onerous registration with PJTV required to access.]

First up tonight, at 8:10 Eastern time, will be Lord Monckton.

Peter Bonk: Reporting on the 4th ICCC from the Edge of a Long-Melted Glacier

Engaged Citizen

I arrived in Chicago Sunday morning after a weekend in the Detroit area to see the Redsox play the Tigers and visit family, in the area where I grew up. Flying from DTW to Midway on this clear morning, one can't help but notice the many lakes in Michigan that we fly over; and there are literally thousands more scattered in bands across the state.

Lakes are temporal bodies, always getting filled up and filled in around the edges from the encircling plant growth. These many lakes, made by huge blocks of ice that remained as the bulk of the last ice sheet from the Wisconsinan epoch retreated, are evidence for just how recently the last glaciers shaped this landscape, and it is this knowledge of geologic history that has always made me skeptical of the alarmism of the global warming crowd.

I am in Chicago to attend the 4th International Conference on Climate Change: "Reconsidering the Science and Economics of Climate Change". The 4th ICCC is organized by The Heartland Institute, a 25 year old conservative/libertarian think tank based in the Windy City, and co-sponsored by about twenty other organizations.

I received my Bachelor of Science degree in chemistry from the University of Michigan, but when I started school I was planning to study geology. My doctorate, in organic chemistry was from the University of Wisconsin-Madison. A thousand mile Ice Age National Scenic Trail runs across Wisconsin, highlighting the Ice Age landscape aftermath.

Every state I have lived in for any period of more than six months has been shaped by glacial ice, of very recent origin, as geology goes. The four major cycles of the last 2 million years are clear evidence of the breadth of what has to be considered natural in the range of climate.

It's a lovely spring day in the city and I hope to play tourist a bit before the 4th ICCC starts at 5 pm this evening. I was fortunate to have been able to attend the 2nd ICCC held in NYC in March 2009, and was very impressed with the diversity of the theories (and the evidence to support them) to try and explain climate. As a scientist, this range of theory has an innate appeal to me, in that a wickedly complex phenomena such as long term climate variation is bound to have many, many factors shaping long term behavior.

Other aspects of the global warming/climate change debate were also eloquently covered in NYC last year, including policy, economics and even morality. I expect no less from this conference. Stay tuned.

Peter Bonk resides in Westerly. A chemist by training and profession, he, along with millions of us, scientists and laymen, has been attempting to discern whether the core science supports the policy positions, enacted and proposed, that have evolved out of the debate on anthropogenic global warming.

The Haka

Monique Chartier

No, that's not a NY/MA/RI mispronounciation of someone who breaks into your computer. It's the dance (ritual?), lasting about a minute, performed before each game by New Zealand's Rugby team, the All Blacks. It has its roots in a Maori dance tradition, battlefield and other.

There's actually a movement to ban the Haka, for reasons that seem pretty lame. A reference this morning by a travelling BBC World Service reporter led me to discover one enjoyable aspect of a sport that otherwise strikes me (forgive me, rugby aficionados) as eighty minutes of unmitigated, pointless violence.

May 15, 2010

Sunday at 6 pm: Your Opportunity to Personally Lobby the Junior Senator from Rhode Island

Monique Chartier

As the Ocean State Republican points out, there's even free food!

…With that in mind, I’d like to invite you to bring your family and friends and join me for a free macaroni and meatball community dinner to share your personal story regarding flooding in your neighborhood, and to speak with representatives of FEMA, SBA, and RIEMA directly.
Sunday, May 16, 2010, 6:00 p.m.

Cranston Senior Center
1070 Cranston Street
Cranston, RI

This free event is open to all Rhode Islanders. You can RSVP by calling 401-453-5294 or e-mailing to rsvp_whitehouse [at] whitehouse [dot] senate [dot] gov. RSVPs are encouraged, but not required and the event is first come, first served.

I was going to attend but Sundays are when I clean my hood and sheets ...

So Future, Potential Tax Revenue (i.e., Private Income) Is and Has Been the Property of Public Labor?

Monique Chartier

Eight public labor unions filed suit Wednesday to stop the implementation of minor changes made last year to public pension eligibility guidelines. The basis cited for the claim is revealing.

Calling the changes a “taking of property without justification,” the unions are asking that the changes be declared unconstitutional, that lost benefits be restored and that the state pay for the unions’ legal costs.

The pension system consists of past and future contributions by employers and past and future contributions by employees, together to be amplified (hopefully) by investment instruments. However, as has been noted here and elsewhere, employer contributions have not been made as required; accordingly, the pension system is not sitting fully funded in a lock box. And even if it were, defining it as the property of current and future retirees still seems far from the mark.

The only way that the current Rhode Island pension system can play out as envisioned by the politicians who promised these pensions and then failed to properly fund them is via the appropriation, over many years, of a seriously non-feasible amount of taxpayer money. The only way that these eight labor unions can make the far-fetched case that public pensions are their "property", then, is if they are laying claim to the private sector funds that may or may not materialize over the next couple of decades in the pockets of taxpayers who may or may not even be here to surrender those funds.

Nothing to See Here, Locally and Globally

Justin Katz

Well, we got beat at the Tiverton financial town meeting. Liveblog here, and post-game here. Tiverton's tax levy will now go up a minimum of 7.88% in the middle of the worst economy in a century, with house values plummeting, businesses closing, and for sale signs loitering for months on end on front lawns around town. Too many people stand to gain by taxing others for the upward climb of taxes to take a break for such things as unemployment and the expansion of the working poor.

But I'm going to get out of my now-more-expensive basement office and go spend some family time in the fresh air. In the meantime, I leave you with a laugh-out-loud good line from Mark Steyn:

At Ford Hood, Major Hasan jumped on a table and gunned down his comrades while screaming "Allahu Akbar!" — which is Arabic for "Nothing to see here" and an early indicator of pre-post-traumatic stress disorder.

If you're merely in the mood for levity, don't click the link and read beyond that sentence. Suffice to say that I associate the growing government in Tiverton, Rhode Island, and the United States with the weakness of the West that Steyn sees on a global scale.

Challenging the increasing momentum toward a nanny state

Donald B. Hawthorne

It seems increasingly relevant so here is a re-run of a February 7, 2009 post, with some updates:

As Obama, Pelosi and Reid accelerate the implementation of statist practices in America - building on what Bush started - it is helpful and necessary to reacquaint ourselves with fundamental economic principles and some specific significant issues animating today's public debate.


The 17-blog post series below was originally put together in 2006 and contains excerpts from the writings of Thomas Sowell, Reason magazine, Bruce Caldwell, Friederich Hayek, Milton Friedman, Arthur Seldon, Gordon Tullock, Jane Shaw, Lawrence Reed, The Freeman magazine, Leonard Read, Donald Boudreaux, John Gray, Bertrand de Jouvenel, and Michael Novak, with links to others like Walter Williams, David Boaz, and David Schmidtz:

No matter how emphatically these politicians rant and rave in their effort to re-write history, they cannot re-write the basic laws of economics. As a Reverend once said, those chickens will come home to roost at some point. The only question is when and how big a price we will pay when it happens.


As some of the above posts note and as further ammunition for the public debate, these books are excellent primers on important economic topics:

An excellent site for articles, blogging, and podcasts on a broad range of economic issues is Library of Economics and Liberty.

Furthermore, the budding public debate in America touches on these significant issues, highlighted below and drawing on the 17 blog posts:


As part of their argument for a more intrusive government, one of the core arguments of the Left is that interventions by government in the marketplace are somehow more high-minded and of purer intent than private sector actions in the same marketplace.

Part VIII in the above blog series describes public choice theory, which explains the fallacy of that world view. While false, it is nonetheless a pervasive view that holds sway in many minds - even if not articulated explicitly - and has to be tackled directly.

Here are some excerpts from Part VIII about government failure:

...Many economics writers and teachers still present economic systems of exchange between private individuals or firms as "imperfect" and requiring "correction" by government. Most teachers of politics, politicians, and political journalists still present government as well-meaning and able to remove such "imperfections."...

In the past many economists have argued that the way to rein in "market failures" to introduce government action. But public choice economists point out that there also is such a thing as "government failure."...

...that government is imperfect carries with it two consequences. The first is that imperfections in the market process do not necessarily call for government intervention; the second is a desire to see if we cannot do something about government processes that might conceivably improve their efficiency...

Although public choice economists have focused mostly on analyzing government failure, they also have suggested ways to correct problems. For example, they argue that if government action is required, it should take place at the local level whenever possible. Because there are many local governments, and because people "vote with their feet," there is competition among local governments, as well as some experimentation...

What causes governmental failure?

...One of the chief underpinnings of public choice theory is the lack of incentives for voters to monitor government effectively...the voter is largely ignorant of political issues and that this ignorance is rational. Even though the result of an election may be very important, an individual's vote rarely decides an election.

Public choice economists point out that this incentive to be ignorant is rare in the private sector...he or she pays only for the [purchased item] chosen. If the choice is wise, the buyer will benefit; if it is unwise, the buyer will suffer directly. Voting lacks that kind of direct result...

Public choice economists also examine the actions of legislators. Although legislators are expected to pursue the "public interest," they make decisions on how to use other people's resources, not their own. Furthermore, these resources must be provided by taxpayers and by those hurt by regulations whether they want to provide them or not...Efficient decisions, however, will neither save their own money nor give them any proportion of the wealth they save for citizens. There is no direct reward for fighting powerful interest groups in order to confer benefits on a public that is not even aware of the benefits or of who conferred them. Thus, the incentives for good management in the public interest are weak. In contrast, interest groups are organized by people with very strong gains to be made from governmental action. They provide politicians with campaign funds and campaign workers. In return they receive at least the "ear" of the politician and often gain support for their goals.

In other words, because legislators have the power to tax and to extract resources in other coercive ways, and because voters monitor their behavior poorly, legislators behave in ways that are costly to citizens.

...bureaucrats in government...incentives explain why many regulatory agencies appear to be "captured" by special interests...Capture occurs because bureaucrats do not have a profit goal to guide their behavior. Instead, they usually are in government because they have a goal or mission. They rely on Congress for their budgets, and often the people who will benefit from their mission can influence Congress to provide more funds. Thus interest groups...become important to them. Such interrelationships can lead to bureaucrats being captured by interest groups...

Or, as is stated in Part III about any government action:

...One of the recurring themes in our consideration of various policies and institutions...has been the distinction between the goals of these policies and institutions versus the incentives they create...

What must be asked about any goal is: What specific things are going to be done in the name of that goal? What does the particular legislation or policy reward and what does it punish? What constraints does it impose? Looking to the future, what are the likely consequences of such incentives and constraints? Looking back at the past, what have been the consequences of similar incentives and constraints in other times and places?...

Now, does any sane person believe that the railroading of a nearly $1 trillion spending spree in about two weeks by Obama, Pelosi and Reid passes the smell test here?

Similarly, the financial crisis of the last year has provided numerous examples of governmental actions and inactions which created incentives for tawdry behaviors in the marketplace. Meanwhile, governmental agencies or individual players have not only suffered no adverse consequences but they are now using these recent events as justification for further governmental involvement in economic activities.


As Bastiat noted in the 1800's, Paris got fed every day without anyone intentionally planning that outcome. Similarly, Part XII above describes how a pencil is made without one person knowing or doing all the work. Why do those outcomes occur?

Appreciating how these outcomes occur via prices which comunicate the knowledge that enables individuals to coordinate their actions and create economic value is a critical issue usually ignored by public sector players. For example, when they aggressively insert disruptive government actions into the marketplace via a TARP bailout and pork-intensive spending legislation. Contrast that blunt hammer approach with potential legislation which seeks to alter incentives in a way which encourages certain constructive economic behaviors to happen naturally.

Parts III and IV above elaborate further on the role of dispersed knowledge:

...In addition to the role of incentives and constraints, one...other central theme has been the role of knowledge...

...the role of prices...[is to coordinate] action where knowledge is dispersed...

Hayek...zeroed in on the critical assumption of full or perfect information. He said that in the real world, we have millions of individuals who have little bits of knowledge. No one has full knowledge, and yet we see a great deal of social coordination...How does that happen? Hayek's answer is that a market system ends up coordinating individual activity. Millions of people are out there pursuing their own interests, but the net result is a coordination of economic activities. And prices are the things that contain people's knowledge.

Mainstream economists have picked up on this and talk about prices as containing information. Modern information theory certainly nods to Hayek as a precursor. He argued that pricing contains knowledge of specific time and place and the man on the spot. Prices contain knowledge that is tacit, that can't really be expressed by individuals. Individuals make actions in markets, and that's what causes prices to be what they are. People are acting in markets. They are not always explicitly saying why they are acting, but they are acting on their knowledge of local situation, the past, and more...

...Given the decisive advantages of knowledge and insight in a market economy...we can see why market economies have outperformed other economies that depend on ideas originating within a narrow elite of birth or ideology. While market economies are often thought of as money economies, they are still more so knowledge economies, for money can always be found to back new insights, technologies and organizational methods that work...Capital is always available under capitalism, but knowledge and insight are rare and precious under any system.

Knowledge can be bought and sold in a free market, like anything else...

...In all these cases, it was the knowledge that was built up over the years - the human capital - which ultimately attracted the financial capital to make ideas become reality...

Success is only part of the story of a free market economy. Failure is at least as important a part, though few want to talk about it and none want to experience it...Economics is not about "win-win" options, but about often painful choices in the allocation of scarce resources which have alternative uses. Success and failure are not isolated good fortunes and misfortunes, but inseparable parts of the same process.

All economies...are essentially ways of cooperating in the production and distribution of goods and services, whether this is done efficiently or inefficiently, voluntarily or involuntarily...

By portraying cooperative activities as if they were zero-sum contests...those with the power to impose their misconceptions on others through words or laws can create a negative-sum contest, in which all are worse off...

More on prices/knowledge is in Parts X and XI above.

Friedrich Hayek addressed the subject of knowledge in a seminal 1945 article and his 1974 Nobel Prize speech:


The general definition of socialism involves governmental takeover/public ownership of the means of production. While there have been the takeover over several car companies, much of today's actions are more properly described as statist.

In a simplistic layman's nutshell, one could say that the failure of socialism/statism rests on its assuming away the real government incentives problem described in Issue #1 while blocking the flow of knowledge required to enable a free marketplace as depicted in Issue #2.

The bottom line: Incentives matter deeply and drive human behavior. It is a lesson statists and socialists never learn.

If you want to better understand and counter the world view which drives the socialistic mentality, here are some classics which rigorously address the fatal flaws of various shades of socialism and statism:

Parts XVI and XVII above discuss the ethics of redistributive policies and the meaning of social justice, two themes which run through socialistic/statist thought and require the coercive force of government. Part IX above elaborates further on the coercive nature of government. Part XV above discusses the consequences of price controls.


The impact of the confusion regarding Issue #1 has caused the core American principle of liberty to be missing in action in the current public debate.

This lack of focus on liberty can translate into policies which have a repressive definition of equality measured by outcomes instead of the liberating equality of opportunity; see Part XIV above for further thoughts.

More specifically, this lack of focus on liberty has further highlighted the lack of commonly shared beliefs about the proper role of government if America is to remain a free society - a topic discussed in Part VII above, including these excerpts about the role of government:

...The widespread use of the market reduces the strain on the social fabric by rendering conformity unnecessary with respect to any activities it encompasses. The wider the range of activities covered by the market, the fewer are the issues on which explicitly political decisions are required and hence on which it is necessary to achieve agreement. In turn, the fewer the issues on which agreement is necessary, the greater is the likelihood of getting agreement while maintaining a free society.

...a good society requires that its members agree on the general conditions that will govern relations among them, on some means of arbitrating different interpretations of these conditions, and on some device for enforcing compliance with the generally accepted rules...most of the general conditions are the unintended outcome of custom, accepted set of rules can prevail unless most participants most of the time conform to them without external sanctions...But we cannot rely on custom or on this consensus alone to interpret and to enforce the rules; we need an umpire. These then are the basic roles of government in a free society: to provide a means whereby we can modify rules, to mediate differences among us on the meaning of the rules, and to enforce compliance with the rules on the part of those few who would otherwise not play in the game.

...the organization of economic activity through voluntary exchange presumes that we have provided, through government, for the maintenance of law and order to prevent coercion of one individual by another, the enforcement of contracts voluntarily entered into, the definition of the meaning of property rights, the interpretation and enforcement of such rights, and the provision of a monetary system.

The role of government just considered is to do something that the market cannot do for itself, namely, to determine, arbitrate, and enforce the rules of the game...

Parts V and VI discuss what combination of economic freedom and limited government enables liberty for us:

...How can we benefit from the promise of government while avoiding the threat to freedom? Two broad principles embodied in our Constitution give an answer...

First, the scope of government must be limited. Its major function must be to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets...By relying primarily on voluntary co-operation and private enterprise, in both economic and other activities, we can insure that the private sector is a check on the powers of the governmental sector...

The second broad principle is that government power must be dispersed...If government is to exercise power, better in the county than in the state, better in the state than in Washington. If I do not like what my local community does...I can move to another local community, and though few may take this step, the mere possibility acts as a check...If I do not like what Washington imposes, I have few alternatives in this world of jealous nations...

...The power to do good is also the power to do harm; those who control the power today may not tomorrow; and, more important, what one man regards as good, another may regard as harm...

The preservation of freedom is the protective reason for limiting and decentralizing governmental power. But there is also a constructive reason. The great advances of civilization...have never come from centralized government...

Government can never duplicate the variety and diversity of individual action...[see Part XIII above for more on how the individual is the unit of economic action]

It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem...such a view is a delusion...

Economic arrangements play a dual role in the promotion of a free society. On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself. In the second place, economic freedom is also an indispensible means toward the achievement of political freedom...

Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power...competitive capitalism also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other...

Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery. The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development. Political freedom in this instance clearly came along with the free market and the development of capitalist institutions...

History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition...

The relation between political and economic freedom is complex and by no means unilateral...

As [nineteenth-century, not twentieth-century] liberals, we take freedom of the individual, or perhaps the family, as our ultimate goal in judging social arrangements. Freedom as a value in this sense has to do with the interrelationship between a society freedom has nothing to say about what an individual does with his freedom; it is not an all-embracing ethic...a major aim of the liberal is to leave the ethical problem for the individual to wrestle with. The "really" important ethical problems are those that face an individual in a free society - what he should do with his freedom. There are thus two sets of values that a liberal will emphasize - the values that are relevant to relations among people, which is the context in which he assigns first priority to freedom; and the values that are relevant to the individual in the exercise of his freedom, which is the realm of individual ethics and philosophy.

The liberal conceives of men as imperfect human beings. He regards the problem of social organizations to be as much a negative problem of preventing "bad" people from doing harm as of enabling "good" people to do good...

Fundamentally, there are only two ways of co-ordinating the economic activities of millions. One is central direction involving the use of coercion - the technique of the army and of the modern totalitarian state. The other is voluntary co-operation of individuals - the technique of the market place.

The possibility of co-ordination through voluntary co-operation rests on the elementary - yet frequently denied - proposition that both parties to an economic transaction benefit from it, provided the transaction is bi-laterally voluntary and informed.

Exchange can therefore bring about co-ordination without coercion...

...Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce...The preservation of freedom requires the elimination of such concentration of power to the fullest extent and the dispersal and distribution of whatever power cannot be eliminated - a system of checks and balances. By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power. It enables economic strength to be a check to political power rather than a reinforcement.

Economic power can be widely dispersed...Political power, on the other hand, is more difficult to decentralize...if economic power is joined to political power, concentration seems almost inevitable. On the other hand, if economic power is kept in separate hands from political power, it can serve as a check and a counter to political power...


With the framework provided by the points raised in this post, we can assess and join in the public debate about the policy proposals we will see over the next few years. Along the way as we defend the marketplace, we will have to be careful to distinguish between crony capitalism/corporate welfare and the innovation arising from the more competitive entrepreneurial capitalism as well as ask ourselves if our private sector leaders, public sector leaders and citizens are holding themselves to a high enough set of ethical standards and transparency in their public behaviors. I predict that finding a way to do the latter in a way that promotes liberty and personal accountability without increasing the number of laws and regulations will be critical to neutralizing the self-righteousness and influence of those who promote various forms of coercive statism today. In that sense, winning the debate will require a modified strategy from what worked in the 20th century.

Finally, as another part of the discussion, we should also not forget to draw strength from the unique principles underlying our American Founding, including equality before God, as we engage in this ideological struggle to retain our liberty.

May 14, 2010

More from the Gang of Possible Governors

Justin Katz

Ed Fitzpatrick's column from last Sunday, about the gubernatorial candidates' appearance before the left-wing audience of the Women's Fund of Rhode Island and the Poverty Institute, was excellent. Two points thereon, first having to do with a question of abortion purity:

But Lynch also leveled veiled criticism at Caprio's voting record on abortion-related legislation, saying he "unequivocally" supports abortion rights and urging the audience "to evaluate people's records" because "State House folks try to chip away at that basic right."

Later, when I asked what Lynch was referring to, his campaign manager noted that in 2001 the Senate voted 28 to 14 for the Women's Right to Know Act, which The Providence Journal described as "requiring that women who are seeking abortions must wait 24 hours and receive information ranging from health risks to the doctor’s identity." Caprio, then a senator, voted for the bill, the Senate Journal shows.

So "unequivocal support" cannot allow for a one-day wait to have the procedure? Must one advocate for drive-through baby killing?

On the opposite end of the ledger, John Robitaille fares much better, in Fitzpatrick's telling, than in that of the news department:

Robitaille, who was Governor Carcieri's senior adviser for communications, articulated a conservative philosophy without seeming like a skunk at a liberal lawn party. He noted he was a Republican. "But I wasn't born with a silver spoon in my mouth," he said, explaining he was born in a Central Falls tenement.

Robitaille noted Tuesday was Rhode Island Independence Day and said, "Wouldn't it be awesome if we could be here tonight to celebrate true independence for Rhode Island's families, Rhode Island's kids and single moms, to know that we had beaten the war on poverty?” But, he said, "We've lost that war" and "Government has failed us." He said high taxes are driving people out of the state.

The poor will be always with us. The best we can do is to open up paths for advancement and stop sweetening the air in the pit.

The Sickness is Deep

Marc Comtois

The anecdotes provided by John DePetro in this piece are, unfortunately, entirely predictable:

Callers from North Providence were calling in to my show on WPRO regarding the FBI arresting three members from the council. Some of the comments:
* "It wasn't taxpayer money they took."
* "25 grand ain't a lot of money. It ain't like they was greedy."
* "They come from nice families."
* "Everyone in Rhode Island has their hands in the cookie jar."
* "The real bad guy is the rat who went to the FBI".

Why the Federal Health Insurance Mandate Cannot Be Made Constitutional By Calling it Tax

Carroll Andrew Morse

Article I, sections 8 and 9 of the United States Constitution originally defined the taxing authority of the Federal Government...

(s8) The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States...(s9) No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
This creates two classes of taxes 1) "direct" taxes, which must be apportioned according to the census and 2) "indirect" taxes, e.g. taxes on commercial activity, transactions, etc. The Sixteenth Amendment to the Constitution extended the Federal taxing power to allow unapportioned taxes on income...
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
Income has been defined broadly by the United States Supreme Court, in the case of Commissioner v. Glenshaw Glass, as "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion".

Not purchasing insurance is not income under the Court's definition of income because the non-purchase of insurance is not "an undeniable accession to wealth" and therefore cannot be taxed under the Sixteenth Amendment's grant of authority. Nor can the non-purchase of something meet the criteria of being subject to a directly apportioned or indirect tax, meaning that nothing in the Constitution allows the Federal government to tax an individual's non-purchase of health insurance.

But the dubious constitutionality of the Federal health insurance mandate doesn't end with this significant problem.

Congress and the President could have, in a clearly Constitutional manner, used its taxation power to influence the purchase of health insurance by creating a tax-deduction associated with the purchase of health insurance. This idea was, in fact, proposed by officials like President George W. Bush and United States Senator Ron Wyden. However, Congress chose not to go this route.

Given the current Federal tax code, such a deduction would extend an advantage already enjoyed by corporate purchasers of health insurance to individual purchasers of the same products. But in choosing not to create an individual deduction, and opting for a tax on non-behavior instead, Congress chose a mechanism of dubious Constitutionality specifically for the purpose of preserving an advantage that some purchasers of health insurance, i.e. the corporate ones, have over others.

One of the most fundamental purposes of a Constitution is to prevent a government from taking arbitrary actions that would favor some over others. When Congress stretches beyond its clearly enumerated powers, with the specific intent of preserving government created-advantages for some over others, it doubly violates the Constitution's reason for being.

A refreshing change

Donald B. Hawthorne

New Jersey Governor Chris Christie destroys reporter for calling him confrontational.

No painting with bland pastels. Courageous. A good thing in times of uncertainty.

Congress Should Lambaste Itself at a Hearing

Justin Katz

It takes more than one entity to blow up an economy, but Congress is auspiciously positioned to deflect the blame that it ought to shoulder. Writes James Pethokoukis:

It's not news that many senators appear to have only a tenuous grasp of the financial industry. But Glassman's larger point is more relevant. It's not just that Congress doesn't understand what Goldman, as a market-maker, does — it's also that elected officials may not recognize that the financial crisis was rooted in Washington as well as Wall Street.

I'd suggest that it would be more accurate to say that they don't care to know. Pethokoukis goes on to cite a study by Brown Professor Ros Levine:

1) Credit Ratings Agencies. While the crisis does not have a single cause, the behavior of the credit rating agencies is a defining characteristic. It is impossible to imagine the current crisis without the activities of the NRSROs. And, it is difficult to imagine the behavior of the NRSROs without the regulations that permitted, protected, and encouraged their activities. … Rather the evidence is most consistent with the view that regulatory policies and Congressional laws protected and encouraged the behavior of NRSROs.

2) Credit Default Swaps. I am suggesting that the evolution of the CDS market, the fragility of the banks, and the Fed's capital rules illustrate a key feature of the financial crisis that is frequently ignored. The problems with CDSs and bank capital were not a surprise in 2008; there was ample warning that things were going awry. Senior government policymakers created policies that encouraged excessive risk taking by bankers and adhered to those policies over many years even as they learned about the ramifications of their policies.

3) The SEC and Investment Banks. Consider three interrelated SEC decisions regarding the regulation of investment banks. First, the SEC in 2004 exempted the five largest investment banks from the net capital rule, which was a 1975 rule for computing minimum capital standards at broker- dealers. Second, in a related, coordinated 2004 policy change, the SEC enacted a rule that induced the five investment banks to become "consolidated supervised entities" (CSEs): The SEC would oversee the entire financial firm. Specifically, the SEC now had responsibility for supervising the holding company, broker-dealer affiliates, and all other affiliates on a consolidated basis. Third, the SEC neutered its ability to conduct consolidated supervision of major investment banks. … The combination of these three policies contributed to the onset, magnitude, and breadth of the financial crisis. The SEC's decisions created enormous latitude and incentives for investment banks to increase risk, and they did.

4) Fannie and Freddie. Deterioration in the financial condition of the GSEs was not a surprise. … But, Congress did not respond and allowed increasingly fragile GSEs to endanger the entire financial system. It is difficult to discern why. Some did not want to jeopardize the increased provision of affordable housing. Many received generous financial support from the GSEs in return for their protection. For the purposes of this paper, the critical issue is that policymakers did not respond as the GSEs became systemically fragile. Again, I am not arguing that the timing, extent, and full nature of the housing bubble were perfectly known. I am arguing that policymakers created incentives for massive risk-taking by the GSEs and then did not respond to information that this risk-taking threatened the financial system.

Although the mildest thing that one can say is that misregulation by the federal government was a key component of the collapse of the financial industry, the solution being proffered by Congress and the President is more regulation. I suppose that, under some circumstances, that might be a rational response, but when Congress clearly has not learned its lesson — by, for example, allowing Fannie Mae and Freddie Mac to dissolve — it's a bit like trying to kill the illness with more poison.

May 13, 2010

Guess it Depends on Who Nominates the Blank Slate

Marc Comtois

October 14, 2005.

The White House [needs to] recognize that, in the absence of any judicial record on her part, in the absence of any significant work that she appears to have done related to Constitutional issues, that she is going to need to be more forthcoming and the White House is going to need to be more forthcoming...[She] is completely a blank slate. ~ Senator Barack Obama on President Bush's nomination of Harriet Miers to the U.S. Supreme Court
I'll grant that Elena Kagan has more "significant work...related to Constitutional issues" than Miers--whose nomination I also opposed because she simply lacked experience--but both are blank slates when it comes to *how* they would actually rule from the bench because, well, neither of them were ever judges. Perhaps there are cases when that's OK (former Chief Justice William Rehnquist was never a judge, for instance), but I don't think that it will really fly in a day and age when we all need the right credentials before we do anything!

Revelation of Another (Alleged) Political Stick Up in North Providence

Monique Chartier

No frog march, though; unlike the other (alleged) stick up, this one failed.

With some ... er, coaxing by Buddy Cianci, Mayor Charles Lombardi alleges (link currently broken) on ABC6 On the Record, to air this Sunday morning, that the RI Senate quashed the city's request for a supplemental tax increase - an increase approved by the House and the Auditor General - because the mayor refused to re-appoint former Senate President Joseph Montalbano to a municipal judgeship.

Now, as it would be highly unusual if North Providence's need for a supplemental tax did not arise out of decades of bad expenditure decisions at budget time (as opposed to a shortfall of revenue), I'm not going to pretend to be disappointed that North Providence taxpayers didn't get a supplemental tax bill. At the same time, the levying of such a tax should not be ensnarled in completely unrelated (alleged) political extortion.

Additionally, how do North Providence municipal workers feel about their wages - okay, more accurately, their possible raises - being suppressed by (alleged) dirty work to benefit the former Senate president? I don't claim to be a major ally of public labor but the Senate president purportedly was. Is this putting the working man first? It sounds more like maybe he was put second to a bigwig trying to keep a good gig.


Mike Stanton at the ProJo interviewed Mayor Lombardi today during which we learn that the current Senate president knows nothing (nothing) about what may have transpired between the mayor and a member of the body which she leads. We also gain a little insight as to why the former Senate president may have been anxious to be re-appointed to the North Providence municipal judgeship.

I was told that the general consensus down there (at the Senate) was that if Joe was reappointed, it would look good for his chances to become a state judge.

Ionic Politicians and What The Really Know

Marc Comtois

Boston's Mayor Menino made one of his typical gaffes the other day when he was describing such "ionic" Boston sports moments like that time Varitek split the uprights for the Patriots. The Assistant Village Idiot (an "iconic" title ;) explained that the sports-knowledge and vocabulary deficiency that Menino displayed is an indicator about politicians' knowledge on most subjects in general:

They know lots of important information about getting elected: what emote-words voters want to hear, what the party breakdown is in various regions, what types of advertising are most effective, what issues are currently hot, whose hands need to be shaken, how to raise money. As many of them are lawyers, they also know legal terminology pretty well. Some don't have much beyond that in knowledge of the law, but there are a fair number who actually do understand it. They know how their own legislative bodies work, who is responsible for what, and something of who the key people are.

That’s about it. You can't count on elected officials at any level actually knowing more than that. Getting sports names and facts wrong is not an interesting oddity--it is a window into the rest of their knowledge. There's nothing wrong with not knowing something about a subject. There is something very wrong about pretending to know a subject when you don't, and then asserting legislative power over it.

Unfortunately, as we rely more and more on government to get through our daily lives, we come to believe that our politicians are experts on almost everything. The truth is, of course, that they're not, so they turn to career bureaucrats--with an interest in maintaining their own relevancy--for guidance. That is, if they deem it necessary and don't think they can get by by faking it.

Pausing During a Sunny Lunch

Justin Katz

It's been a rough week. On top of the bite of local politics and the demand on one's time that being a political insurgent tends to make in the midst of important events, the workdays have been less and less pleasant for the past couple of weeks.

My employer is attempting to make up for shortcomings and errors elsewhere in the company by pushing me to do at least twice as much work as is possible. It's conceivable, of course, that I've just been around slow carpenters, during my years in the trade, and therefore do not realize how very slow I am. Still, accomplishing anything in the range of acceptable quality is a time-consuming, tedious task in century-old houses.

And so, between swear words, I get the request to put in extra hours for free — this not long after hours that I legitimately claimed on my time sheet were conspicuously absent on my paycheck. It's difficult for a person of strong work ethic and accommodating personality to know what to do.

But... and here's where I look up through my windshield at the way the sunlight filters through the leaves around me, all the same color, yet appearing to be a patchwork of different greens... in such tribulations, there is much to learn. There are also experiential contradictions and intellectual curiosities to unravel.

I find carpentry to be a very conservative trade — in the populist, traditionalist sense of conservatism. The carpenter builds something out of nothing. In renovations, he uncovers and respects what was placed before him. It's physical work, often rough, and it is quite clear how competent you are. The trim wood stays, or it does not. The door fits in its opening and swings easily, or it does not. Consequently, advancement has much to do with merit.

Still, if I may be retrogressive, for a moment, it's a very male trade. Shouting and cursing and masculine forms of resolving disputes and testing mettle abound. Given the difficulty of the work, when that masculine quality is driven to abusive degree, nakedly for the financial benefit of the abuser, it's easy to draw from experience in the field for empathy for the liberal view of society. The boss has work and influence, therefore the worker needs something more than talent as influence, if he wishes to live a stable economic life free of the mood swings of the Boss Man.

I intend to spend some time reconciling the two perspectives, but for now, my half-hour lunch is up, and although I'm not intending to work for free, today, I should put in all of the hours to which I've agreed as an employee.

Radio Last Night & This Morning

Justin Katz

On the Matt Allen Show, last night, I gave a quick explanation of circumstances in Tiverton. Stream by clicking here, or download it.

I'll be on the John DePetro Show, this morning at 6:20 a.m. for the same purpose.

May 12, 2010

Two Pieces of Heartening News Out of Massachusetts

Monique Chartier

... for those of us who have watched with consternation the push around the country - and especially in Washington - for expansion of both big government and illegal immigration.

1) Republican Richard Ross (R - again, that's R) has won by a substantial margin the state senate seat vacated by Scott Brown. Ross even won Needham, the home town of his Democrat opponent. While not quite as monumental as Brown's victory one hundred days ago, this is nevertheless a notable development in a distinctly left-leaning, pro-big government state.

2) And the AP via the Boston Herald reports that last night, the Worcester City Council

declined to vote on a resolution calling for an economic boycott against Arizona in protest of that state’s recently passed controversial immigration law

Contrast this with the misguided action of the Boston City Council in voting to cut business ties with Arizona as well as the stated intention of Mayor Menino to poll all companies doing business with the city to determine their views on "immigration". (Note the refusal to use the word "illegal" as well as this potential exercise in thought policing.)

On his blog, Michael Graham makes the point that everyone critical of the AZ law has studiously disregarded.

here’s my question for pro-boycotters like Mayor Menino:

Now that other states are considering similar measures, are you going to boycott them, too? And given that 70 percent of Americans support Arizona’s law, and the law is actually just a state version of federal law right now (unenforced, but the law nevertheless), are you going to boycott the entire United States of America?

The West Warwick Investment Dance Continues

Justin Katz

By way of an update on West Warwick's current public-money scandal:

An Arizona real estate firm has offered to return $3 million to the West Warwick pension board after news of the investment — and the subsequent resignation of the board's financial consultant — triggered a barrage of criticism in recent weeks.

Cole Capital sent the offer to local officials in an e-mail on Thursday. On Friday, a national real estate consulting firm released a report reaffirming repeated concerns raised by the former consultant, P-Solve Asset Solutions, which wrote last fall: "We have rarely, if ever, seen a potential investment that is more inappropriate for an institution than this one."

The people of West Warwick — of all of Rhode Island — should remember that if you keep electing the same sorts of people, you're going to keep getting the same results.

Bringing the Town to the State's Attention

Justin Katz

I've got an op-ed in today's Providence Journal placing Tiverton's budget battles in the context of community and different notions thereof.

In one version of "community," it's a good thing to be a slob, thereby creating a need for other residents to pay somebody to clean up, and it's a bad thing to take an idle moment to clean where children play.

May 11, 2010

Some Tiverton Facts and Arguments

Justin Katz

I've spent the past six months or so learning the details of current debates in Tiverton government, so I've got quite a bit of information to get out into the public during this week between assemblies of the financial town meeting. Here are three posts I've put up, this evening:

Best Rhode Island Public High Schools

Marc Comtois

New (Citadel?) media site GoLocalProv has compiled a ranking of the Rhode Island Public High Schools. The top 10 comprise some of the usual suspects and some that may surprise:

1) East Greenwich
2) Block Island
3) Narragansett
4) Barrington
5) South Kingstown
6) Classical
7) Exeter-West Greenwich
8) Lincoln
9) Middletown
10) Mt. Hope

Their methodology:

HOW WE DETERMINED VALUE: Our rankings were computed by a statistical method created at Babson College and utilized by Boston Magazine in its annual rankings of schools. We gathered data on area schools by consulting school officials and Web sites, as well as the Rhode Island Department of Elementary and Secondary Education. With this information, we calculated mean scores for each data category and then ranked schools based on their distance from the averages.

For schools that did not provide figures, the average was used as a placeholder when computing the rankings.

Public Schools Category Weight Breakdown
* Student/Teacher Ratio 15%
* Per Pupil Spending 15%
* NECAP-English 10%
* NECAP-Math 10%
* NECAP-Science 10%
* SAT-Verbal 10%
* SAT-Math 10%
* SAT-Writing 10%
* Graduation Rate 10%

One quibble I have is with their weighting of Per Pupil Spending at 15%: at some point going too far above the state average isn't necessarily a good thing, is it? That could also apply--if less so--to the student/teacher ratio. For example, Narragansett came in third overall, but with the exception of Reading SAT (5th), it is no better than 9th in the other academic categories. But it is fifth in per pupil spending ($17,587) and second in student/teacher ratio (7.5/1), which, thanks to the positive weighting that fewer students, more teachers and more cost GoLocalProv has assigned, put it in the top 3. Is that cost effective or an adequate return on investment?

On the other hand, East Greenwich was middle-of-the-pack in both the student/teacher ratio (a little better than average) and per pupil spending (a little below average) categories, but in the top three in each of the academic categories. Finally, Coventry was the average RI High School--average scores, average student/teacher ratio--though they spend a couple grand less/student than average, which could be viewed as getting more than you paid for, I suppose.

Where the West Is Going

Justin Katz

It's a much broader topic than I've time to explore, just now, to say why I see these apparently small-scale local battles to be along the same line as global events, but by way of checking in on the state of Western civilization, here's Mark Steyn:

A while back, Wilders was asked what his party would do in its first days in office after winning the election (to be held later this year). He replied that it would pass a bill ending "non-western immigration" to the Netherlands. This remark is now one of the "crimes" listed on the indictment against him. So the Dutch state is explicitly prosecuting the political platform of the most popular opposition party in the country. Which is the sort of thing we used to associate with your average banana-republic caudillo rather than free societies.

Regulation of speech — regulation in general — is shaping up to be the method by which unaccountable bureaucrats gain power over the elected representatives who are actually supposed to run the show. To oversimplify the resulting situation: Those bureaucrats benefit when the society sees itself as weak and in need of stable, government control, but in any sense related to authority and resolve, the bureaucrats, themselves, are weak and will ultimately be displaced by those who do not share the good intentions that they attribute to themselves.

The Anti-Information President

Carroll Andrew Morse

President Barack Obama, speaking this past weekend at the commencement ceremony at Hampton University...

And with iPods and iPads; and Xboxes and PlayStations -- none of which I know how to work -- (laughter) -- information becomes a distraction, a diversion, a form of entertainment, rather than a tool of empowerment, rather than the means of emancipation. So all of this is not only putting pressure on you; it's putting new pressure on our country and on our democracy.
...combined two of the uglier strains of thought that have succeeded over the past century in knocking the classical liberalism out of modern liberalism, namely...
  • That regular folks need to be protected from information because, unlike the elites who have had truth revealed to them, common folks cannot be expected to separate information that is important from information that is not, and
  • That the flow of information must be controlled in a way so that what does reach the people is in service of a proper revolutionary purpose.
Both the left and the center in this country really need to give some consideration to what it means for the leader of the free world to be telling college students that the free flow of information is dangerous to democracy.

Everything's Negotiable in the Race to the Top

Justin Katz

I'm not a fan of saying, "How high?," when the federal government says, "jump," and waves around a bunch of money. It's also detrimental to begin seeing federal dollars as some sort of cost-free windfall.

That said, the Race to the Top matter has brought forward the true face of labor unions and highlighted their strategies and motivation:

Recently, union officials have told Gist they want her to intervene in union-management strife in Central Falls and East Providence. While those two disputes continue, they said, they can't support the aggressive reforms Gist says are needed to fix failing schools. Gist and other state officials have said repeatedly that they cannot intervene. In Central Falls, the union local is fighting plans by Supt. Frances Gallo to terminate the entire teaching staff of the low-performing high school and hire back only 50 percent. In East Providence, the union is outraged the local school committee unilaterally cut teacher salaries and forced teachers to pay more into their health insurance. Both cases are currently in the state's courts.

"You want that $75 million? Well, make these two little problems go away. Make it clear who runs the show around here." (Not an actual quotation, by the way.)

Rhode Island's educational system is failing children and costing residents far too much — to the point that, in combination with other factors, it's strangling the state's economy. The law will decide what local remedies are allowed. To unions, though, that's not good enough. Any chance to extort for the result they want is legitimate, in their eyes.

And that, in case you needed further example, is why it's so dangerous to look toward consolidation and the movement of governing authority to higher tiers of government.

May 10, 2010

Ed. Commissioner Gist Speaks Directly to Educators

Marc Comtois

In a video posted today (at the previously-unknown-to-me RIDETV website), RI Education Commissioner Deborah Gist speaks directly to educators regarding Race to the Top (RTTT) and how, regardless of whether or not RI wins this round of RTTT, there will be a new teacher evaluation system implemented.

The system will be used to evaluate all educators--teachers, superintendents, etc. She also explained that specific details were unknown because the current plan is to design the evaluation system with educators from across the spectrum. The state model would be the standard, but other, local districts could exceed that minimum.

As per the Board of regents, the evaluations will be weighted 51% towards student performance and commissioner Gist stressed that there would be multiple aspects that will go into measuring that 51% (in other words, not just NECAP results, for instance). She did say that the 4 ratings would be "highly effective", "effective", "minimally effective" and "ineffective", but expected that "very few" would receive the "ineffective" designation. (I'm sure it's not an accident that three out of the four ratings include the positive connotation of "effective"). The reason that RTTT is important, says Gist, is because that money ($75 million) would be put to good use in developing and implementing the evaluation system (including training of evaluators).

Gist stressed that it was important for districts, school committees and teacher unions to sign onto the RTTT Memorandums of Understanding (MoU). She explained that if they didn't, and RI's bid for RTTT funds was successful, then the non-MoU filers wouldn't be eligible for the funds. Further, regardless of whether or not RTTT funds are awarded, those districts who sit out will not be invited to the table when it comes to developing the evaluation system. Finally, she explained that all of the RTTT initiatives have to be collectively bargained as per RI State Law and the MoU's.

Video embedded after the jump.

A Threshold for Debt

Justin Katz

Folks fond of those politically motivated "clocks" that show how much something has cost or how long we have to some catastrophe should update their debt clocks. According to Moody's, the United States could be just a few years from a credit rating downgrade:

Spiraling debt is Uncle Sam's shock collar, and its jolt may await like an invisible pet fence.

"Nobody knows when you bump up against the limit, but you know when it happens it will really hurt," said fiscal watchdog Maya MacGuineas of the Committee for a Responsible Federal Budget.

The great uncertainty about how much debt is too much has tended to make fiscal discipline seem less urgent, rather than more. There is no obvious threshold beyond which investors will demand higher real yields for holding U.S. debt. Vague warnings from ratings agencies about the loss of America's 'AAA' status haven't added much clarity #151; until recently.

Estimates are that the threshold comes when debt service equals about one fifth of revenue. The Congressional Budget Office puts that date at 2018, but changes in circumstances — such as increasing interest rates — could move it up to 2013. In other words, debt cannot be a solution much longer, and given that a government that has spent the last year in a final flamboyant push of decades of spending increases will not be likely to undo what it has just accomplished, revenue will have to be raised.

And we know what that means.

Gov Calls on AG to Join Other States Challenging Healthcare Reform

Monique Chartier

I'd like to second this, along with Justin's reservations about "Obamacare". (The gov's office issued this press release a couple of hours ago.)

Governor Donald L. Carcieri today urged Attorney General Patrick Lynch to join 14 other states that have filed a complaint in the federal district court challenging the constitutionality of the federal healthcare legislation citing the new law as “a violation of the equal protection and commerce clauses and the 10th amendment, among other constitutional provisions.” In a letter to the Attorney General, Governor Carcieri writes, “Among the provisions of the recently enacted federal health care legislation is one which forces the citizens of Rhode Island to purchase health insurance and the state itself to form and participate in insurance exchanges; failure to comply can result in substantial fines.”

The Governor called upon the Attorney General to “exercise its discretion to protect our citizens from this unnecessary and probably unconstitutional intrusion of the federal government into the lives of Rhode Islanders whose freedoms to make their own choices about health care should be preserved and protected.”

Governor Carcieri cites the 10th amendment of the United States Constitution, which clearly defines that there are limits to federal powers and places where only the State and its citizens have authority to act.

A critic of the process by which the health care legislation was passed, Governor Carcieri reinforced his concerns that the law will “raise the costs of health care to Rhode Islanders, lower the quality of care, and shift another unfunded mandate on a state already overburdened with budget deficits.”

Insurance Doesn't Mean Health

Justin Katz

Duncan Currie explains why it is speculation to assert that increasing health insurance coverage will mean improving health and decreasing avoidable deaths (subscription required). For the most part, it's a problem of separating data points. This part, however, moves beyond the immediate question and gives some reason to worry about the effects of ObamaCare, moving forward:

Here's another reason we should not expect the landmark bill to yield major health gains: A hefty chunk of the newly insured under Obamacare — anywhere from 15 million to 18 million people, according to projections — will rely primarily on Medicaid for their insurance. Unfortunately, the fact that Medicaid reimburses participating providers at low rates has made it increasingly difficult for recipients to find doctors. In a 2008 survey, only 40.2 percent of physicians told the Center for Studying Health System Change that they were accepting all new Medicaid patients, and more than a quarter (28.2 percent) said they weren't taking any. It can be even harder for Medicaid patients to locate dentists.

And yet this is the program that will soon be flooded with a massive wave of new enrollees. Dr. Edward Miller, dean and CEO of Johns Hopkins Medicine, has written that "without an understanding by policy makers of what a large Medicaid expansion actually means, and without delivery-system reform and adequate risk-adjusted reimbursement," Obamacare "will have catastrophic effects on those of us who provide society's health-care safety-net."

One foreseeable government "fix" will be a requirement that doctors not consider the type of coverage that potential patients have, forcing them to take all comers for whom they have room in their schedules (probably with regulations of how many patients doctors must accept). If that comes to pass, established doctors may just stop taking new patients at all, they might charge privately insured patients even more, or they might just quit the field.

Eventually, We'll Have to Stop Hoping That Time Hasn't Run Out

Justin Katz

At some point, it has to stop being relevant to argue about what Rhode Island has to do to "break out of its death spiral," as former Economic Development Corp. head Michael McMahon puts it, and start talking about how to rebound from the collapse. There's something of a sense of fruitless repetition to McMahon's suggestion for Rhode Island:

The only costs that are meaningful enough to have an impact are costs related to employment and social services. Some may challenge this approach on "moral" grounds. But this is not a moral issue. Rather, it is economic reality.

If Rhode Island is to break out of its death spiral, it must be prepared to do the following:

  • Reduce existing pension and health-care costs to retirees by 10 percent across the board.

  • Change retirement-benefit plans for all current employees from defined-benefit to defined-contribution and increase the age at which workers can begin receiving benefits to 65.

  • Require all workers to pay 20 percent of their health-care costs.

  • Consolidate Rhode Island's school and municipal districts (fire, police, mayor/town manger etc.) into five entities, roughly along existing county lines — Providence, Kent, Washington, Bristol and Newport.

  • Reduce social-service payments by 3 percent per year over the next five years.

I'm increasingly persuaded that the numbers destiny is written — meaning that there are just not enough people left in Rhode Island's "productive class" (upwardly mobile working and middle class private sector residents) to force change through political means. That leaves only revelation; enough of the people invested in the system have to be persuaded that they're going to lose more by not fixing the problems than by accepting the fact that their own deals with the system are the problems.

Pensions, social service payments, all of it, will be gone when the state collapses. It's not an either or. You cannot keep what you're getting, and the only question is whether the state has to collapse around you or you make yourself part of the solution.

But it's very, very hard to take make that leap of faith. Before Tiverton's financial town meeting, I had a pleasant and interesting conversation with a teacher with whom I last spoke during last year's contract negotiations. He understands that the state needs to change the way it does business, but he's not persuaded that it should begin, as I always say, from the bottom up. That is, from his union's concessions up through the State House's policies.

In the comments to my initial post about the financial town meeting, a local parent explains that he's made the decision to back his children's education. But that backing quickly becomes indistinguishable from backing the system as it stands — the system that has locked our public schools into a failing model and our economy into decline. If he accepts a 10% increase in taxes every year, as he claims to be willing, for the sake of his children, he'll rapidly be paying more than a private school tuition each year in additional taxes just to support growing labor costs. And if we should have learned anything over the last decade, it's that public sector unions controlling the levers of government will never say, "OK, we've got enough."

Which, I guess, is to say that Rhode Island is done. We can and should keep writing the same essays over and over again, about how to fix the problem, but at this point, they're all objections for the record. Our fervent hopes should focus, instead, on a quick collapse and rapid recovery.

May 9, 2010

Charlie Hall Checks out the Facebook Page of the C.F. Mayor ...

Monique Chartier


Courtesy Ocean State Follies, where we learn, by the way, that Charlie recently opened a gallery and gift shop in North Providence. In light of this week's events in North Providence, the question naturally arises: did you have to take care of somebody, Charlie, to get your gallery open??

May 8, 2010

A North Providence Coincidence?

Carroll Andrew Morse

Last year, as reported upon by Mark Reynolds of the Projo, the concerned public servants of the North Providence Town Council approved a forensic audit of their town's school system...

The Town Council wants to develop a formal proposal for a forensic audit of the school district's finances.

Councilmen also want the School Department to provide access to three years of checks and other financial records.

In a 6-to-0 vote Tuesday night, the council ordered the preparation of bid specifications for a forensic audit.

At the time it may have seemed to be a minor detail, but on the same August 4 evening on which the Council approved the school system audit, they also took a vote on extending it to the municipal side of government...
Councilman Manfredi requests discussion concerning meeting and forensic audit.

Councilman Manfredi spoke stating that after looking over things and speaking to Bob Civetti from Braver and Associates (the auditing firm for the town), he believes that the School Department problems are not criminal but mismanagement of funds instead. He does not believe that we need a forensic audit right now because the School Department was open to all changes and he believes that we should give them the opportunity to respond and correct the way the money is being managed. Douglas spoke stating that he did not believe that there was criminal activity going on, but instead mismanagement and the school department employees learning to use the new MUNIS system. There was much discussion amongst the council members regarding going out to bid for a forensic audit for the school department and a resident spoke.

...and in light of events that occurred this week, the breakdown of the vote NOT to audit the municipal side of North Providence government can't help but be eye-catching...
1) MOTION FAILED: (Caranci made a motion, seconded by Giusti we should include the municipal side in the audit. Upon a roll call vote of 3 ayes (Caranci, Giusti and Manfredi) and 3 nays (Zambarano, Douglas and Burchfield) THE MOTION FAILED.)
It is reasonable to ask if the votes on either side of this issue were driven more by a general sense that an audit of North Providence might turn up something unusual -- or if there were concerns and suspicions about specific items that might be revealed.

2010 FTM, Volume 1

Justin Katz

My summary report from the first 2010 Tiverton Financial Town meeting is now up. I'll get around to posting video, at some point, but since I was so active at the meeting, I didn't turn the camera at all, so it might be more useful to think of it as audio with a related picture.

Punch Drunk from Local Politics

Justin Katz

I just got home from Tiverton's financial town meeting and a lunch decompression session. I'll attempt a more thorough report for the TCC Web site once my disorientation dissipates. I'll say this, for now: I really did not imagine how far — how dirty — the Democratic Town Committee/union coalition was going to be willing to go. Their strategy, as it emerged, was to scare parents into showing up, delay away half the allowable meeting time, rearrange the order of the meeting in completely convoluted ways. distort the meaning of adopted rules to erase all distinctions between amendments and motions so as to pass their preferred budget, get in one talking point about all the horrible things that will happen if they lose, shut off debate on the expenditure of $25 million — by far the greatest expense of the town — so that their newly frightened contingent (parents) wouldn't have a chance to hear contrary arguments, and vote for more money for themselves and their pet causes.

If you've been to a heated school committee meeting during negotiation season, this was that on steroids. As it happened, we didn't actually get to a single budgetary vote. But that's more of a summary than I intended, for now. My intention was to mention an anecdote from the end that will likely amuse Anchor Rising readers:

Not wanting to fight the traffic on the way out, I was hanging around the gymnasium while the crowd dissipated, and I couldn't believe the amount of trash that people just left lying around. So, I grabbed a garbage bag that was hanging next to a barrel and began walking the bleachers policing the area, as we used to call it in Boy Scouts.

This is so predictable that I wouldn't dare make it up: An older guy (clearly with family under the town's employ) berated me, in front of a janitor, for doing his work for him. I remarked how selfish the people who took their garbage with them must have been, at which point, a woman in the same group let loose the common riffs: if you hate the town, leave it, etc. She suggested that I send my children to private school, to which I agreed, if she'd vote for a voucher system.

On Anchor Rising, we talk a lot about the high perspective manifestation of this mentality, and we debate the folks in ties and the organizers, but it's really something to physically step into a world in which it is actually poor etiquette to get off your butt and pick up trash in the school gymnasium. Not surprisingly, that's the same world in which opposing people who threaten to cut every program in the district unless they get money to float around to the unions is evidence of hating the town.

I have to say though, that I had it easy, even as one of the most vocal folks on my side. The town moderator and budget committee chairman actually needed uniformed protection as the meeting dissipated.

Ladies and gentlemen, that's quite a face for the people who "love this town" to put forward. And now we have to do it all again next Saturday.

Please Don't Turn Woonsocket's Finances Over to the State

Monique Chartier

This was the prospect raised at a meeting Wednesday between Mayor Leo T. Fontaine, the city's finance director and state officials.

Granted, the state already funds 75% of the Woonsocket school budget. And yes, the School Committee has an almost comical approach to bookkeeping.

School officials, who were predicting an $800,000 surplus just weeks ago ...

Except that, "just weeks ago", the school department was already three months behind on health insurance premiums to the tune of over $2.5 million and had issued $2 million of payroll checks that were no good. (Citizens Bank made good on most of them but from now on would like the money in advance, please.) It's not clear how how it's possible to project a surplus as you're looking at $4.5 million of red ink on the ledger.

And there's no question that the multi million dollar deficits that the school department, as directed by the school committee, has been running for several years has not enhanced Woonsocket's financial problems. Moody's even cited the school department's over-spending as a factor when they downgraded Woonsocket's borrowing to junk bond status last week (ouch), one of the reasons for Wednesday's meeting between the city and the state.

So clearly, the school committee has not been helping in all of this, which is why I would not be averse to its dissolution, presumably a side effect (see Central Falls which has a Board of Trustees rather than a s.c.) of the state stepping in.

That, unfortunately, might not be the only side effect. Another one could well be the state hauling out its own (overdrawn) checkbook to kick in even more money to the city at some point. While I'm very appreciative of the considerable efforts of the City Council and the current - emphasize current - Mayor to deal with this matter in a responsible manner and sympathetic to the plight of the city's taxpayers, with the state's shortfall at $220 million this year, $440 million next year and three quarters of a billion in 2012, more state aid to any municipality is simply not a remotely feasible option for the foreseeable future.

May 7, 2010

Taking Stock

Marc Comtois

In his latest, Victor Davis Hanson admits that he's beating a dead horse when it comes to "media polarities" that "are getting to the point of absurdity." Perhaps so, but its worth taking stock every now and again and doing the ol' compare and contrast:

Bush, the lazy golfer while we were at war; Obama the engaged commander-in-chief playing golf for needed relaxation more in one year than in Bush’s eight. Katrina, the emblem of federal inaction and culpable incompetence; the BP slick, either a result of private greed overwhelming noble federal auditors or proof of the Obamian competent response. Bush’s illegal war clearly alienating Muslims and thus creating terrorists daily; laughable excuses from a terrorist that Obama’s stepped-up targeted Predator assassinations “created” would-be killers such as himself. Right wingers in bed with Wall Street oligarchs greedily crafting federal policy for the exploiting class; Obama for some odd reason, no doubt in the end a noble reason, taking more money from the likes of Goldman Sachs and British Petroleum than any politician in history. The Bush-Cheney nexus shredding the Constitution with the Patriot Act, Guantanamo, Predators, and renditions; Obama the civil libertarian reluctantly forced to maintain or expand such protocols, albeit at last under a watchful liberal eye. Bush’s “lost” war in Iraq miraculously soon to be Obama’s “greatest achievement.”

What is the theory behind all this other than partisanship or cynicism? I think it involves the power of faith and the irrational, in some cases not confined to the left. (e.g., I once got a prominent conservative angry at me when I suggested Reagan embraced large deficits, signed an amnesty bill, wanted nuclear disarmament, and raised payroll taxes). Politics is a religion, never more so than in the case of Obama. And true believers always prefer the saintly explanation rather than the most logical.

That we're all guilty of having the ideological blinders on at one time or another is true enough. But I also think that it's a basic human characteristic that we don't like to admit we were wrong or were mistaken in our judgment (like in who we support politically) and this is made worse by a tendency to go "all in" with someone and being unable to tolerate acute criticism when warranted.

Get Those Taxes in Early, or The Refund May Be Late

Justin Katz

Here's a telling turn of events:

The state has delayed the payment of thousands of Rhode Island income-tax refunds because of cash-flow problems.

The delays involve more than 65,000 individual income-tax refunds, as well as some refunds of the state business-corporations tax, that were processed and ready to be issued in April.

State officials decided to hold back those refunds, totaling about $39 million, and release them over time.

The delays were disclosed on the fourth page of a six-page state revenue report issued Thursday.

The justification for the move is at least understandable: The state delayed the filing deadline because of the flooding calamity, and since people who are getting money back file early, while people who owe money file late, the cash flow is out of balance.

The adjustment does highlight the central fact of Rhode Island governance, though: the state is run so poorly that we're not in a position to absorb unexpected difficulties without disrupting basic operations, like returning tax money to people from whom the state took too much in its interest-free loan from workers' paychecks.

Going Negative on the Public

Justin Katz

With Tiverton's financial town meeting tomorrow, I've been incapacitated with activity, over the past couple of days, but there's always time for a chuckle. A couple of National Reviews ago, Rob Long's "The Long View" column imagined a go-negative strategy that the Democrats might attempt against their main opposition, the American people (subscription required):

GENERIC NEGATIVE #1: "What do we really know about . . . ?"

FADE IN: Grainy, out-of-focus footage of normal Americans getting in and out of minivans. Maybe some sinister-looking children. We'll shoot some old people from underneath, to highlight their jowly, untrustworthy look.

VOICE OVER: "What do we really know about American voters? Are they racist bigots? Are they dangerous domestic terrorists? When President Obama and the Democrats in Congress tried to create jobs and save the economy, the American voter said NO! When President Obama and the Democrats in Congress offered them historic legislation that provides health care to everyone, the American voter said NO! What do we really know about the typical American voter? Not enough. It's time for us to say NO! to the American voter."

CUT TO: A waving flag (could be American, but could also be a stylized "neutral"-type banner) and a smiling President Obama. (Note: We could just use the flag and drop the Obama cut-in if that's the way the testing goes.)

VOICE OVER: "Paid for by the Committee to Restore the Government."

May 6, 2010

The Frog March Parade Moves to Municipalities

Justin Katz

My delay in posting this news derives from the swamp of low-grade political shenanigans through which I've been fighting local pro-tax forces in Tiverton, but it's worth noting some FBI arrests of North Providence Town Council members, President Joseph Burchfield, John Zambarano, and Raymond Douglas for alleged full-on extortion:

First Burchfield, then Councilman John A. Zambarano, and, last, Councilman Raymond L. Douglas III, were charged with the extortion of another person and receiving a bribe of more than $5,000.

The case involves a proposal to build a Stop & Shop supermarket on a former junkyard across from the North Providence High School, according to an FBI affidavit and a press release from U.S. Atty. Peter F. Neronha.

Move Left for Lefties, Right for Righties

Justin Katz

So, yeah, it's the nature of politics that candidates move as far toward the ideology of a given audience as they think they can get away with, which increases the appearance of their agreement. Still, there are two additional — and worrisome — factors at play when the Providence Journal can describe the performance of six candidates for governor at a progressive event:

On many fronts, there were more similarities than differences among the slate of candidates that included two Democrats, two Republicans, a Moderate and an independent.

The first factor is that the candidates are, in fact, too close to each other, politically. At least, it can be said that so many things are considered to be relevant to government, at this point in our state and country history, that there's always plenty of room to emphasize agreement. As an exception that proves the rule, consider this odd moment:

Republicans Victor G. Moffitt and John Robitaille were not asked about their positions on sex education or abortion, although both have described themselves as antiabortion.

I don't know whose decision it was not to ask the two Republicans those questions, but it can't be healthy. Either they didn't want to say or the event hosts didn't want their audience to have to hear something with which they disagreed.

The second factor is that the political tracks are too well worn, especially in Rhode Island. The candidates know what they're supposed to say to whom, and for the most part, the various constituencies are content to hear it. And there we go. Business as usual continues. How else to interpret this from Robitaille?

Robitaille, Governor Carcieri's former communications director, went the furthest when he endorsed the creation of a task force to improve the state's cash-assistance program, known as welfare.

"I don't think throwing more money at a problem is going to solve it," he said. "I'm not talking about cutting programs. I'm talking about making them better."

The AG and the C.F. Board-Up Bonanza

Monique Chartier

A couple of points to lightly touch upon now that the feds have joined with the State Police to do the heavy lifting.

- The Attorney General has been patting himself on the back this week for recusing himself and purportedly handing the matter of his friend, the mayor of Central Falls, king of the prolonged rip-off board-up emergency, over to a prosecutor in his office in January. This would be more impressive if action of any kind - and it is clear from the conduct of the State Police who have set up shop at C.F. City Hall that there was something here to follow up - had been initiated by the AG's office in the last three months. Instead, we are left with the distinct impression that the Attorney General's loud and repeated proclamation on the Lively Experiment and elsewhere that he would keep this matter at arms length was as much second person imperative to his staff as first person declarative of his own intentions.

- In view of recent developments, it appears that the theme of Patrick Lynch's upcoming fundraiser - "Countdown to Victory" - is either a tad premature or partially misnamed. (There's certainly a countdown taking place, though possibly not in the process or to the outcome referenced by the Lynch campaign.)

- Finally, an O/T request of Mr. Lynch from all of his political opponents: please continue to not tip or under-tip when you entertain, eat out or hold a fundraiser in a public venue. Nothing will ... endear you more to former and current wait staffers and their family and friends than this display of parsimony.

What Reamortization Means to a Future Business Owner

Justin Katz

Andrew gave listeners to the Matt Allen Show a quick and easy way to conceptualize the effects of reamortizing the state's pension debt.. Stream by clicking here, or download it.

May 5, 2010

Explaining Why the Pension System Should Not Be Reamortized

Carroll Andrew Morse

To rigorously show that reamortizing a pension system costs almost all taxpayers more money, you would begin with the risk-free rate of return on money and the expected return from the pension fund (which are two separate quantities) and then apply an appropriate discounting formula to the appropriate combination of the two. However, going strictly by the percentages overlooks an important point, related to a famous quote from economist John Maynard Keynes...

The long run is a misleading guide to current affairs. In the long run we are all dead.
In deciding whether to reamortize a pension system, we must take into consideration both the fact that our lives have finite end dates and as well as finite start dates, i.e. taxpayers do not exist from the beginning of time.

If a pension system is properly designed, funded and not raided, the state maintenance contribution -- the part that goes to the fund from taxpayers without passing through an employee paycheck first -- should only be at most 2-3% of payroll. In many years, it should be around 1%, and it never should reach the 20-25% that Rhode Island taxpayers will be paying through the year 2029 on the current funding schedule. The good news is that after 2029, if Rhode Island doesn't reamortize (and benefit levels are rationally aligned with contributions and realistic estimates of interest growth), the taxpayer contribution should be in the range of 1%-2%-3% of payroll going forward from then on.

However, if the system is reamortized under a new 30-year plan (and benefit levels are not adjusted), the state contribution will remain a double-digit percentage of payroll through the decade of the 2030s. The result will be that RI citizens in the 2030s, some collecting the first paychecks of their lifetimes in that decade, will be burdened by higher tax rates than or service levels from what they would experience under a non-reamortized system. These citizens -- amongst whom will be many individuals yet to be born -- will be left with fewer resources for addressing their own needs, because we will have decided to make them help pay for what at that time will be decades-old mistakes made by our generation and the generations prior.

To progressives like gubernatorial candidate Patrick Lynch, passing the problems we've created to people 20 years down the road is the "fair" way to deal with the situation. The lesson, as always, is that progressives and public finance don't mix.

Investing Is Gambling, by Definition

Justin Katz

The necessary qualifier is that I agree with Mark Patinkin about the immoral behavior of Goldman Sachs. If I had money to invest, I would most definitely invest it elsewhere, and if I already had that money with Goldman, I'd move it. There's a moral obligation to punish companies, in that way, and it's the credulous person, indeed, who can trust Goldman Sachs in particular.

But truth be told, it's a credulous person who trusts Wall Street players more than is absolutely necessary, to begin with. They've been greedy villains in the popular mind at least for decades. Yet, Patinkin writes:

Some have said it's different for Goldman’s individual clients — those who give their personal portfolios to Goldman to manage.

But in truth, there are conflicts even on that level. Goldman doesn't just put such clients into the same mix of stocks and bonds the independent broker down the block might pick. Houses like Goldman are known to push their own in-house funds on investors — including hedge funds. That's a good deal for Goldman, since they charge a few percent in fees on the investor's portfolio value — as well as a staggering 20 percent of profits the investor gets if the hedge fund goes up. You'd think such outsized profits would mean clients, out of fairness, get a break if the hedge fund goes down, or underperforms. Hardly. It's a heads-they-win, tails-you-lose game. If the funds tank, the firms still take percentage fees for their bad work. And worse, clients aren't able to get out of those bad hedge funds for months or more, since the rules lock them in for set periods. So if Goldman's fund managers place stupid bets, as they certainly have in the recent past, investors have to keep riding them downhill.

The heads I win, tails you lose, game was written into the rules from the beginning. The problem, over the past couple of decades, is that we began to persuade ourselves that they were suspended by success. With government backing giving a sense of security to risky mortgages and with the same individual daydream that keeps people funding governments through lottery revenue, we thought we could play the investors' game without real risk, and without the careful bet hedging and self preservation that characterizes the large firms.

If we're to learn from current events, we must not only investigate the factors that kept us from having information that we could have used, but ponder the factors that kept us from acting on information that we already had.

Not Letting Division Define the Discourse

Justin Katz

I've been in communication with Rhode Island Log Cabin Republicans Chairman Raymond Beltran since his emergence at a recent Rhode Island Voter Coalition meeting, and expect to work with him as the local political machinery moves forward. It's important, though, to counter the liberal and mainstream media tendency to sow division where there is none — or no more than exists in any heterogeneous group. Says Beltran, in this week's Political Scene:

"The perception of the GOP being bigoted and narrow-minded -- at least in Rhode Island -- is hopefully coming to a close," Beltran said. "We're a very different breed in Rhode Island in many ways. We have one of the most forward-thinking Republican parties in the country."

The tricky word, here, is "perception." The perception should change, is changing, but the baseline for the markers of bigotry should not adjust along with them. Party Chairman Gio Cicione also swings close to this edge:

Cicione, meanwhile, acknowledged that "there are factions of every party that are intolerant," but that he was glad to have the Log Cabins on board.

"I can't imagine there are any significant numbers there," he said of the critics.

Again, we have to be clear about the boundaries of "intolerance." I'm glad to have Beltran and the Log Cabin Republicans stepping forrward as a visible component of the Republican Party — emphasizing, of course, that I'm more of an ideological conservative than a partisan Republican — and I expect them to advocate for whatever positions they determine to define their mission. No doubt traditionalists like me will work with them in some cases and spar with them in others. And at no point will bigotry and intolerance be a factor.

Rhode Island's Beef with Business

Justin Katz

When the "public option" fell out of the healthcare debate, I made the point that the legislation was the public option. The rules and restrictions under which our healthcare system must operate and bureaucratic presumption of dictating rates and expenditures make it, de facto, a creature of government design. There's something similar hindering business operation in Rhode Island.

Michael Morse's Engaged Citizen post, the other day, gave the worthwhile testimony that initial paperwork and fees weren't excessively burdensome. Of course, that's from the point of view of a man with some savings who determined to open a full-time storefront business. The calculation changes for folks with more drive than resources who want to ease into a business as a part-time affair.

More importantly, Michael's argument, like a legislative package that the General Assembly unveiled yesterday to make "it easier to do business in Rhode Island," is largely beside the point. In the General Assembly's case, one could argue that it's a smokescreen.

Assuming all of its components make it through the legislative gauntlet, the package makes some common sense changes, such as combining required paperwork into an online form and allowing government agencies to operate together and simultaneously when handling incipient businesses. But mention of taxes is nowhere to be found, and easing of mandates and regulations is danced in a circle. Consider the provision dealing with "Fire Code reforms":

... this legislation provides that fire alarm, smoke detection and carbon monoxide plans would have to be approved or denied within 15 days, instead of the current 90 days. To ensure that the fire code is enforced consistently, all assistant and deputy fire marshals would be required to participate in standardized national training and certification as determined by the state fire marshal. Approval of plans and construction of some buildings could be expedited, with the approval of the State Fire Marshal, if prepared and supervised by a professional engineer or architect. All other inspections and approvals would be conducted within timeframes to be established by the State Fire Marshal, not to exceed 90 days.

The problem with fire code regulations is that they're too onerous. For a non-business example, Tiverton has spent millions of dollars on new school buildings because recent changes to the fire code made them unsuitable for their intended purposes. In both the private and public sectors, requirements for construction add thousands of dollars to any project. If anything, this legislation increases mandates by requiring towns to hire new staff to meet requirements and ensure that employees can attend all necessary training.

The only component of the legislative package that actually touches on changes to regulations and mandates — as opposed to applying them more rapidly — is that old do-nothing mechanism of a panel to make reports:

This legislation, sponsored by Sen. Walter S. Felag, Jr. (D-Dist. 10, Warren, Bristol, Tiverton) and Rep. Peter F. Martin (D-Dist. 75, Newport), establishes the Office of Regulatory Reform within the EDC, to review Rhode Island’s regulatory processes and permitting procedures for businesses in an effort to further improve them. Each municipality would be granted the authority to appoint a liaison responsible for coordinating with the Office of Regulatory Reform. The Office will publish an annual report on the regulatory processes of state and municipal agencies and permitting authorities for the purpose of: encouraging agencies to improve procedures and reduce paperwork burdens impacting small business; making recommendations for simplification of regulatory processes, and making proposals to any agency for consideration of amendment or repeal of existing rules or procedures which may be obsolete, harmful or burdensome. The Office of Regulatory Reform would have the authority to intervene in regulatory or permitting matters before state agencies and municipal boards, commissions, agencies and subdivisions for the purpose of assuring efficient and consistent implementation of rules and regulations in order to foster the creation and retention of jobs in Rhode Island.

The wording of the statute could make a big difference, but this new office seems only to add one more government official into the mix of manipulation and noise-making. The reaction of big government to complaints that it isn't responsive to a particular constituency is too often to create another bureaucratic entity in the name of the unheeded group. Legislators, themselves, are supposed to be the people's voice in government, and this package does nothing about representatives who continue to present legislation with a "there oughtta be a law" mentality and refuse to ease up on their own financial demands in order to lower taxes.

May 4, 2010

The Healthcare Bill Due to Come Due

Justin Katz

A recent essay in National Review by Avik Roy takes up the topic of healthcare inflation resulting from ObamaCare (emphasis in original):

Consider the numbers: Based on the gimmick-free assessment of former Congressional Budget Office director Douglas Holtz-Eakin, from 2010 to 2019 the act will increase the debt by $562 billion — almost $5,000 per household. Not great news, to be sure. But a PriceWaterhouseCoopers analysis projected that, over the same ten-year period, Obamacare will increase the cost of health insurance by approximately $20,000 per family.

This cost will be borne primarily by the young, who will be forced to subsidize the care of the middle-aged; by freelancers and small-business owners, who will not benefit from the exemptions afforded to large, self-insured employers; and by middle-class families, who will most feel the squeeze of higher insurance costs yet will also be expected to finance the health care of others.

The effects of this legislation on the debt are worrisome indeed. But, barring a Weimar-style collapse of the U.S. economy, they will be less visible to the typical family than health-care inflation will be. Rapidly rising insurance premiums will blow a hole directly in the monthly paychecks of tens of millions of middle-class households.

Mandates, consumer incentive to avoid "insurance" until it's actually needed, redistribution of costs from people in public programs to people with private insurance, and protection of monopolistic players are some of the ways in which the Democrats' big-government variation of "reform" will only exacerbate our healthcare system's current problems.

When polls ask about support for reform, respondents mean (or ought to mean) government action in pretty much the opposite direction from that which the Democrats have taken. That's why even in Rhode Island a majority supports repeal of ObamaCare.

A Framework for School Work

Justin Katz

Julia Steiny describes the sort of data that school teachers can use to improve instruction:

Per the data-collection protocol, [Lonsdale Elementary School Principal Jeannine] Magliocco asks the kids at one table what they are learning today. As two girls speak over one another, we learn that this is a math class. They explain that while they need to be correct about the science they're using to determine the space for each habitat, the lesson for right now, they emphasize, is about finding and plotting area and perimeter.

Magliocco scans her check list, finds "learning objectives are evident to the students," and checks "evident." The girls dive back into their work. I mention that the kids seem remarkably on task. Magliocco confirms that their teacher, Mike Maloof, is one of her most skilled.

The data collection process, though, doesn't attempt to create a rigid, objective lever for evaluation. It does what must be done in an organic profession like education (perhaps any profession, ultimately) and creates a framework for subjective analysis of performance. People with knowledge of student-specific factors have to figure out where shortcomings exist and whether they represent failures, given the context in which they appear. (A classroom with significant extra-curricular problems might be doing very well even though another class performing at the same level would be doing poorly. Likewise a teacher with inadequate resources.)

In a final analysis, success will require a level of administrative authority and employee accountability that collective action and longevity — the claim that all measures must be objective and mechanically operable — just do not allow.

"Do you have to love labor unions to be a good Democrat?"

Marc Comtois

Blogger Mickey Kaus is running for U.S. senator in the Democratic primary in California and thinks its time for the Democratic Party to re-think their relationship with unions (h/t).

It's time for Democrats, even liberal Democrats, to start looking at unions and unionism with deep skepticism.

I don't mean we should embrace the right-wing view that unions are always wrong. Unions have done a lot for this country; they were especially important when giant employers tried to take advantage of a harsh economy in the last century, not only to keep down wages but to speed up assembly lines and, worse, force workers to risk their lives and health. If you think about it, unions have been the opposite of selfish. By modern standards they've been stunningly altruistic, lobbying for job safety rules and portable pensions and Social Security and all sorts of government services that, if they were really selfish, they might have opposed, because if the government will guarantee that your workplace is safe and your retirement is secure, well, then you don't need a union so much, do you?

I agree. Unions fought the good fight "back in the day" and served as a much-needed check on corporations as they gained hard-won victories for workers. Government regulations and oversights were instituted. But once those battles were won, union leaders expanded the definition of "union rights" and warned of bogey men so that they can keep the membership always fighting for something more and keep themselves in power. But this has led to problems for private sector unions whose demands resulted in a sort of workplace stasis.
At the same time unions were winning government protections, changes in the economy were making mainstream unionism itself an impediment to growth. We are no longer living in a World War II world in which big, slow-moving bureaucratic organizations are the engines of prosperity. Only fast-moving, flexible organizations prosper today. Technology changes too rapidly. Firms have to be able to make snap decisions: expand here, contract there, change the way they work every day. That was the lesson of Japan--how 1,000 little improvements in productivity can add up to a big advantage.
As Kaus explains, too many unions are stuck in the 1950's and their solution is to keep doing what worked in the '50's. Yet, even though times have changed, more strident unionism is "the official Democratic Party dogma. No dissent allowed." As market forces have shrunk private sector unions, government unions continue to grow, funded by tax dollars appropriated by the Democrats they've hired. In particular, Kaus is no fan of the modern teacher unions:
When I was growing up in West L.A., practically everyone went to public schools, even in the affluent neighborhoods. Only the discipline cases, the juvenile delinquents, went off to a military academy. It was vaguely disreputable. Now any parent who can afford it pays a fortune for private school. The old liberal ideal of a common public education has been destroyed. And it's been destroyed in large part not by Republicans but by teachers unions.
He also knows that some Democrats recognize the problem:
"The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians, pushed by our friends in labor, gradually expanded pay and benefits...while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers. Talking about this is politically unpopular and potentially even career suicide...but at some point, someone is going to have to get honest about the fact."

That quote is from Willie Brown, a Democratic hero, explaining why the state may go the way of Vallejo and General Motors. Easy for him to say; he's retired. But you won't catch any Democrats who are running for office saying it. They're too dependent on organized labor's money and muscle.

I doubt that Kaus will win his bid for Senate and I also doubt that there will be a serious rift between the union leaders and Democrat politicians any time soon. After all, the system works for them.

The Gang Striving for Cap and Trade

Justin Katz

Sometimes you get a glimpse behind the closed doors of powerful people's decision-making rooms, and it's interesting how familiar names keep popping up. An Investor's Business Daily editorial on the Chicago Climate Exchange provides such an inkling.

The CCX is up and running as a mechanism for trading offsets for "all six greenhouse gases." It was initiated with start-up grants from the Joyce Foundation, on whose board Barack Obama sat at the time. The organization has since been purchased by the British company, Generation Investment Management, of which Al Gore is a co-founder.

Other founders include former Goldman Sachs partner David Blood, as well as Mark Ferguson and Peter Harris, also of Goldman Sachs. In 2006, CCX received a big boost when another investor bought a 10% stake on the prospect of making a great deal of money for itself. That investor was Goldman Sachs, now under the gun for selling financial instruments it knew were doomed to fail.

The actual mechanism for trading on the exchange was purchased and patented by none other than Franklin Raines, who was CEO of Fannie Mae at the time.

In a way it's disappointing to think how much of our heated political culture ultimately comes down to the crass motivation of personal financial gain. It's frustrating, too, because once it all gets bound up in ideology and politics, the schemes become disguised in other people's battles about other matters.

Basically, these glimpses ought to be taken as reason to resist large, centralized government, especially at a global level.

May 3, 2010

Incentive to Unload the Kids

Justin Katz

Any strategy that increases the opportunities for families to choose the schools in which their children will be educated is worth a look, and Governor Carcieri's proposal to do so by increasing private donations for scholarships appears to be a good one. The dark lining, though, is that it only emphasizes the perverse incentives that public schools have:

With public schools facing a budget crisis of epic proportions, Governor Carcieri on Wednesday called for the General Assembly to double the state tax credit for businesses that donate scholarship money to private and parochial schools.

Carcieri wants to raise the total amount that businesses can donate from $1 million to $2 million at a time when the state faces a projected $220-million deficit this year and a potential deficit of almost twice that much in the coming fiscal year.

"I'm a huge believer that the ladder up is education," Carcieri told about 200 independent school students, teachers and principals who rallied at the State House on Wednesday. "It's clear to me that the need is enormous."

With Tiverton's financial town meeting scheduled for this coming Saturday and the School Committee's projected budget currently about $1.5 million or more over what the town can legally provide it, without seeking a special waiver to increase taxes into the double digits, the district has been promoting the notion that it will have to close a grade school and eliminate just about everything outside of the regular classroom in order to make ends meet. I know of at least one family that took the threat of their children's school closing as the final warning to shift to private school next year.

One might think that school officials would be discouraged at such news, but it doesn't take much reflection to realize that the incentive is actually for districts to shed students. That alone ought to convince us all that the system is well beyond broken.


With family members having just returned home from out and about, make that at least two families that have interpreted the school district's signals as reasons to flee.

Slipping an Internet Grab in Under Cover of Wall Street Theater

Justin Katz

It's quickly becoming the signature move of Obama and the Congressional Democrats: slip an unrelated power grab into law under cover of a larger power grab. Most recently, over the Internet:

Earlier this week, the Washington Post reported on another little Easter egg in a bill cruising through Congress that would normally have followed Nancy Pelosi's policy of discovery ex post facto. Democrats have pushed hard to get the financial-regulation reform bill unstuck in the Senate, mainly playing on class-warfare themes in painting the GOP as the party of eeeeeeevil Wall Street robber barons. However, the House version of the bill contains provisions that would put the Federal Trade Commission in position to start issuing rules on Internet transactions that would not only slow down business growth but also have no relevance at all to the financial collapse that prompted the bill

As Ed Morrissey goes on to state, it's also becoming a signature move to hand off legislative functions to regulatory, administrative offices — as with the EPA's claim of authority to regulate carbon dioxide. In summary, elected officials are granting increasing power to unelected bureaucrats, and they're doing so by sneaking legislation through the process in the shadow of larger topics. Self-governance, we hardly knew ye.

Changing the Rules for "The Next Big Thing"

Justin Katz

Special deals. Special laws. Once the state starts taking this sort of step, we're well past the point of reasonable accommodation for an incipient industry:

State lawmakers are attempting to breathe new life into a stalled proposal for an eight-turbine wind farm in waters off Block Island through legislation that would allow the project to bypass a difficult regulatory hurdle.

A bill filed late Wednesday would make it possible for developer Deepwater Wind and National Grid, the state's main electric utility, to enter into a power-purchase agreement without having to win approval from the state Public Utilities Commission. ...

Instead of the PUC, approval of a new contract for Deepwater would be in the hands of the appointed directors of four other state agencies: the Division of Public Utilities and Carriers, the Economic Development Corporation, the Office of Energy Resources and the Department of Administration. All four agencies would have to certify an agreement for it to go into effect, but they would each be given very narrow parameters for their review.

Deepwater and its government supporters didn't get the result they wanted through the normal path — permission to force energy consumers to pay three times the going rate of electricity for its product — so the latter are changing the regulatory path and putting blinders on the regulators. Whatever good intentions may lie behind such initiatives, this sort of special treatment should be a red flag for voters and legislators and is a bright beacon for corruption.

Amy Kempe, Carcieri's spokeswoman, said the introduction of the bill had no connection to the Cape Wind decision. Approval of the Massachusetts project, she said, only buttressed the belief held by Carcieri and House and Senate leaders in the promise of a national offshore wind industry.

"Yesterday's announcement shows that this is a viable industry," she said Thursday. "It is going to be moving forward."

It appears that Ms. Kempe misses the distinction between evidence that an industry is viable and evidence that it is politically popular. The former means that people are willing to allocate their own money for a good or service; the latter means that elected and bureaucratic officials are willing to allocate other people's money for it. The standards for success are clearly quite different.

Michael Morse: Doing Business in Rhode Island

Engaged Citizen

Nobody said starting a business would be easy. I didn't expect it to be. Nobody told me I would get rich. I probably won't. A lot of folks said it would be impossible. Opening a business is not cheap. I needed every penny of equity from my home to make it happen. I've lived a simple life. I have no credit card debt. I drive a 1992 Toyota. My idea of an extravagant vacation is a weekend in New Hampshire. I've established good credit. I know how to work long hours with little sleep.

Along with my quest for independence comes a stubborn need to find things out for myself. An opportunity presented itself. I did some homework. I took an inventory of my current obligations. I ignored the incessant barrage of negativity that pervades the stream of consciousness of Rhode Island. I decided to act. My wife and I bought a tanning salon.

"Are you crazy?" was the reaction we encountered most. There are too many regulations! The economy is terrible! The government will tax you out of business!

Friends and family were amused by our latest idea. Though encouraging, I think some secretly hope we'll fail, if for no other reason than to prove to themselves that it can't be done, at least not in Rhode Island.

The closing was in late October. We incorporated in November. Filled out the state sales tax form, applied for a building permit and certificate of occupancy and went to work.

We planned on opening December 1st. We applied for a permit from the Department of Health. The Health Department paperwork took about a half hour to complete and cost two-hundred and thirty dollars. The people there were efficient and helpful. The only trouble we had was with our own unrealistic expectations. December 1st came and went, our place was a disaster. We worked through the holidays.

We finished construction of our store on January 12th. The people at Warwick City Hall helped us navigate the inspection process. In one day, the fire alarm, mechanical, plumbing, electrical and building inspections were done. We received the certificate of occupancy in the mail a week later. The entire process cost $50 and about three hours of our time. Somehow, the fact that we still needed a license to operate from the City of Warwick slipped our minds. We applied, and I had it the next day. We needed another license to do business on Sundays. A day later it hung on the wall of our new business, next to the Health Department license, the permit to make sales at retail and the CO.

We paid the State of Rhode Island a total of $740: $500 to incorporate, $230 for a license to operate from the department of health, and ten bucks for a permit to make retail sales. The City of Warwick got us for $150. This March we have to pay another $500 to the state to stay incorporated, the yearly fee of $230 to the Department of Health for our license, another $10 to keep our retail sales permit, about $1,000 to the City of Warwick for inventory taxes and the $100 for our sales licenses.

Insurance is costly, about $2,000 a year. Workers compensation another $400. I have to pay weekly payroll taxes of about $50.

Expensive, yes, but hardly onerous. Not quite the roadblock I had expected. It wasn't cheap or easy, but if it were, everybody would do it. The cost of doing business in Rhode Island is not a reason to not do business in Rhode Island. I needed to spend some money to make some money.

Now, I hope people come to my place and spend some of theirs!

Mainly a Question of Power

Justin Katz

My Rhode Island Catholic column for April takes up the interaction of Jesus and Pilate, with its lessons about power:

The striking thing, if Jesus told Pilate to label Him as he did, is that Caesar's representatives clearly had the power to kill the corporeal King of the Jews. Moreover, the fact that Jesus did not, after His resurrection, take Jerusalem by storm and expunge the Romans suggests that secular power over the material is not a force that Christians should deny.

American writer H.L. Mencken once quipped that "the god in the sanctuary" was proven "a fraud" by "fellows who heaved dead cats into sanctuaries and then went roistering down the highways of the world." They faced no Earthly repercussions for their sacrilege, the thinking goes, so clearly, a god who promises to punish such behavior has no real power over them or does not exist.

Christians must own up to the individual and collective error of repeatedly reverting to a before-Christ understanding of God as a guarantor of eventual success in this world. To such lapses, those others who are skeptical, or even hostile, have replied, "Well look how much power we have over your God and His people --- to deny Him, to ensnare them in dependency and corruption, to crucify the Risen Lord again and again with disproof of His existence." On that particular cross, they inscribe "Faith, the Theory of Believers."

May 2, 2010

Big government, crony capitalism and the latest from Government Motors

Donald B. Hawthorne

Big government, whom some foolishly think is the pathway to so-called social justice for the little guy, actually has the opposite effect. It incentivizes big corporations, big unions and other powerful organizations to feed at the enlarged government trough to buy favors at the expense of those unable to pay for a place at the trough. This leads to what used to be called "corporate (or union) welfare" and some now call "crony capitalism."

Whatever the label, the result is the same: Transparent competition in the marketplace that benefits consumers is trumped by the non-transparent buying of legal or regulatory favors that benefit the few at the expense of the many. In other words, big government enables the powerful to prey on others, as predicted by public choice economic theory. How ironic it is then that when the structural incentives created by big government cause the forecasted negative outcomes, the advocates for big government call for yet more of the same.

Why do these negative outcomes surprise any of us? Take ObamaCare, where the Congress passed and the President signed a 2,200-page bill that no one had read. Forget for a moment how passing such a large bill that no one read should startle all of us into loud protests. The bill now goes to unelected, unaccountable, nameless, faceless bureaucrats for the development of endless pages of regulations, the existence of which will only further ensure their job stability. Does anyone really think those uniform regulations drafted in the vacuum of government office buildings in the nation's capital will provide easier access to better healthcare services by being responsive to the differing needs of a cross-section of citizens in, say, Peoria, Illinois, Chandler, Arizona, Tucker, Georgia, and Yakima, Washington? But you can be assured that large insurers and medical service companies will have their lobbyists walking the hallways to influence the regulations in ways that are responsive to their own economic needs. Again, the irony: These companies do it not because they are evil but because they are responding rationally to their adjusted self-interest as determined by the new economic incentives created by the ObamaCare legislation.

So when government seeks to play God and takes over activities best done by the free market, there are adverse consequences. (Just like so-called "campaign finance reform" in an era of big government has created its own set of perverse incentives that result in more money flowing into politics in different and often less visible ways.)

Government Motors, aka General Motors, is merely one recent example. Taxpayers' money was used to bail them out, allowing them to avoid the hard choices of restructuring the company to profitability - either on their own or in a traditional bankruptcy process. Now GM touts in a very public ad how they have paid back their government loan ahead of schedule and with interest. And GM went even further with their CEO writing a WSJ editorial entitled The GM Bailout: Paid Back in Full - The investment of U.S. and Canadian tax dollars worked. Except (with H/T to Instapundit) they misled everyone by not disclosing that the loan was only a small part of the total bailout and they repaid it with other federal government-provided funds that were sitting in a separate escrow account available for their working capital needs. (More on the government dollars that flowed to GM.) It gets worse: Apparently this ad is part of a campaign to lay the groundwork for GM to get billions more of DOE government aid at a lower interest rate, again funded by the taxpayers at a time of record budget deficits.

Contemplate the perverse incentives created by these unfolding developments. How would a corporation ordinarily fund new projects? Usually out of positive operating cash flow generated from profits of the business, a scenario that would only happen after the project successfully competed against other internal capital project alternatives advocated by other executives through showing more compelling projected financial returns. (Of course, this funding approach would require GM to be profitable and generating positive cash flow, but I digress.) Alternatively, GM could get the money from new equity investors or lenders. Which means they would have to convince those investors or lenders to bet on their plan, in part based on the merits of the plan and in part based on management's past track record. In parallel, these investors and lenders are getting measured quarterly by their own funding sources based on the quality of their performance in comparison to other current investment alternatives available to the funding sources. If equity investors or lenders enter into bad deals, their funding sources will pull back, adversely impacting their business. So the equity investors and lenders have an incentive to deeply scrutinize a GM deal and evaluate its merits in competition with all the alternative deals they could do at the time. But that is not how crony capitalism works: GM only has to privately curry favor in Washington, D.C. among bureaucrats who become more influential when they respond favorably to such behavior, who become even more influential when they have larger projects like the new DOE loans, who have no effective mechanisms for oversight and accountability, and who suffer no adverse consequences if they enter into bad deals.

By the way, to add insult to injury for taxpayers, the political pressure to rush through bankruptcy without the requisite time for an adequate restructuring of their cost structure no doubt contributed to GM (and the other ward of the state, Chrysler) losing billions of dollars last quarter in their first quarter after exiting bankruptcy. For all we know, the rationale for the DOE loan could be to fund changes that ordinarily would have been accomplished in a proper bankruptcy restructuring. Meanwhile Ford, which faced market realities the free market way, turned a profit.

The loss of liberty and cost to taxpayers are profound when you look at the particulars of crony capitalism created by big government.

Why do we tolerate this erosion of our freedom?


With another H/T to Instapundit, Megan McArdle on Department of . . . Huh?:

It was bad enough that we had to bail out the banks, but at least you could make a reasonable argument that we had to--we know what happens when you allow widespread bank runs, and its generally pretty disastrous for the citizenry. But you know what happens when a large auto manufacturer fails? Its employees and customers have to do business somewhere else...

It was sheer political theater, and incredibly corrosive to public trust in our government institutions, as well as a gross misallocation of economic resources. The role of the state is to prevent human suffering, not prop up failing enterprises that happen to have politically well-connected employees. I am genuinely struggling to come up with what principled argument Andrew might be making in his head for what has always struck me as a pretty blatant handout to a powerful Democratic interest group.


With an updated H/T to Instapundit, Hot Air writes NY Times: GM, Treasury lied about bailout repayment:

This article by Gretchen Morrison in the New York Times is significant for two reasons. First, the Times has decided to give this significant coverage, which means the story of GM's misleading claim of paying back the taxpayer-funded bailout will continue to have some legs. More importantly, it also points the finger at Treasury and the Obama administration for its complicity in allowing CEO Ed Whitacre to make those claims without challenge...
[quoting from the Times' article]: G.M. also crowed about its loan repayment in a national television ad and the United States Treasury also marked the moment with a press release: "We are encouraged that G.M. has repaid its debt well ahead of schedule and confident that the company is on a strong path to viability," said Timothy F. Geithner, the Treasury secretary.

Taxpayers are naturally eager for news about bailout repayments. But what neither G.M. nor the Treasury disclosed was that the company simply used other funds held by the Treasury to pay off its original loan.

Hot Air also references a Power Line post where Scott Johnson wrote:

Whitacre and GM omitted two facts that render their public relations blitz highly misleading. They are the kind of omissions that constitute securities fraud when made by a company in connection with the purchase or sale of a security or when a company reports its financial results...

GM's fraudulent public relations blitz took place with the support of the Obama administration, up to and including Secretary of the Treasury Timothy Geithner. Geithner's participation makes his tax cheating and related testimony pale in comparison.

In retrospect, it is obvious that GM undertook the blitz at the behest of the Obama administration. It is symptomatic of the era of national socialism in which we find ourselves, and for which GM is a leading indicator.

Apparently crony capitalism makes reality optional and accountability non-existent. And liberty is reduced.


Mark Tapscott's Did Obama administration tell GM to lie about its TARP repayment? provides links to written Congressional requests for more information about what happened, including these words from Senator Grassley to Treasury Secretary Geithner:

In reality, it looks like GM merely used one source of TARP funds to repay another. The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government's ability to sell GM stock in the future. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. A debt-for-equity swap is not a repayment.

I am also troubled by the timing of this latest maneuver. According to Mr. Barofsky, Treasury had supervisory authority over GM's use of these TARP escrow funds. Since GM's exit from bankruptcy court, Treasury had approved the use of the escrow funds for costs such as GM's obligations to its parts supplier Delphi.

Tapscott concludes with this observation:

...Accusations and worries of improper government interference with business are inevitable results of government picking winners and losers in the private economy, as was done with the trillions of tax dollars used by the Bush and Obama administrations to bail out Wall Street investment firms, GM and Chrysler, insurance giant AIG, and multiple banks.

There is a name for the kind of regime that allows private ownership of businesses but effectively tells them what to produce and sell. It's called Fascism. America is far from there, but becoming a bailout nation is a significant step in the wrong direction.


Competitive Enterprise Institute: General Motors Deceptive Advertising Challenged by Watchdog Group in FTC Filing.

Reform? or Abolish? What is the Real Goal?

Monique Chartier

A couple of points for commentators and advocates who are happily parroting the lies of the msm (Heather MacDonald at City Journal sets the record straight) to vilify the new Arizona law and, purportedly, to demand reform of our federal laws.

1.) The Arizona law was carefully written to mirror federal immigration law, which had already included the requirement, for example, that legal immigrants carry papers on them at all times and specifically does not permit arbitrary fishing expeditions for illegal immigrants, whether they are driving down the road or out for ice cream with their family. (Shame on you, Mr. President, for creating this myth.) This leads inexorably to the question: is the real objection here to the existence of any kind of immigration law?

2.) Foreign Policy magazine points out that, despite what you might think from all of the wailing and breast-beating, neither the United States nor Arizona has particularly harsh immigration laws. On their list - which inexplicably does not include Mexico - of the top five, they name Italy and Switzerland, but not the US. Again, is it possible that what advocates find harsh is the mere existence of borders and a very reasonable immigration law?

How the Accommodating Institution Declines

Justin Katz

Apparently, in fields that debate such things, there's been an attempt to apply economic principles to explain the ebbs and flows of attendance in different churches. John Lamont does some difference splitting and paints a persuasive picture (subscription required). Because "the rewards of religion are supernatural and, therefore, unseen," the healthy religion, he explains, requires a different form of evidence, which is more visible where it is more distinctive:

Zeal and commitment are also necessary to lessen the "free rider" problem that plagues all voluntary groups — the problem of members who take the benefits of membership without contributing themselves. One can add to these considerations the fact that much of the appeal of religion comes from its providing moral principles with which to structure one's life. Such principles are far more effective when one sees that most of the people around one are following them. A community of people who, by and large, follow the principles of a morally demanding religion is far more effective moral educator than any amount of preaching — a factor that is especially important for parents. Thus, a church has to set high standards for membership in order to be attractive, and the churches that set high standards are the churches that will grow. Those with low standards will shrink because low standards reduce the rewards for religious commitment below the required cost in time and effort. This is why, as Finke and Stark assert, "the churching of America was accomplished by aggressive churches committed to vivid otherworldliness."

The problem arises with each incremental argument that this or that rule is arbitrary and may be discarded, often with the ultimately erroneous expectation that the church might be more attractive if its costs were lower. Lamont quotes from The Churching of America, 1776–2005: Winners and Losers in Our Religious Economy, by Roger Finke and Rodney Stark:

... other things being equal, people will always be in favor of a modest reduction in their costs. In this fashion, humans begin to bargain with their churches for lower tension and fewer sacrifices. They usually succeed, both because it is those with the most influence — the clergy and the leading laity — who most desire to lower the level of sacrifice and because each reduction seems so small and engenders widespread approval.

This perspective applies, to some degree, to cultural matters, as well. With marriage, for example, a great many people who formed their fundamental understanding of the institution long ago don't see why an easing of divorce, here, and the erasure of gender rules, there, ought to have any effect on their own marriages. As the rules ease, though, and boundaries of the institution become less clear, those who are not already formed in their perspectives have less reason to follow the well-trodden path.

The benefits to the individual spouse are, as with religion, supernatural, but they're also social and cultural. (Of course, the benefits to children born into stable marital homes are quite tangible.) If people don't draw the satisfaction of feeling a part of something greater, upon which participants agree — that is, if an institution merely provides a title for something that each participant defines for him or herself — the calculated rewards for forming relationships that are insoluble even when difficult or for devoting time and energy to religious practices even when disruptive become more and more difficult to reconcile.

The Far-Left Moderate

Justin Katz

When Ken Block first began putting together the Moderate Party, he gave me some practical reasons that he was participating more in discussion on RI Future than here. I wasn't particularly concerned, whatever the justifications, but as his candidacy for governor has brought forward, and as the transcript of his Projo chat palpably illustrates, part of the reason was surely that he's pretty radical in his social beliefs. In other words, he's got some good-government instincts, and he may be "moderate" on fiscal matters, but he's arguably as far left as any other candidate in the race on most other matters.

We've already heard his desire to sign same-sex marriage into law, but consider this answer on immigration (emphasis added):

I was in Arizona when Gov. Brewer signed her immigration bill into law. I am against this type of immigration reform. It is open to profiling and smacks of xenophobia. Illegal immigration is a serious problem and has a large associated cost to society. We need the federal government to significantly change our current immigration laws and postures and then follow up on that change with appropriate changes at the state level. I am for E-Verify and use it in my businesses.

Well, we don't want Americans to "smack of xenophobia," I guess, least of all in a border state that's beginning to see social turmoil and drug wars spill over our open border.

The more I hear from Ken, the less I'm sure what he would bring to the table, as governor. The top executive position, in this state, isn't really empowered to do much about our fundamental problems. That's especially true of a "reform" candidate who says such things as this:

I am a concensus builder - there are a lot of disaffected legislators in our General Assembly who would be willing to work with the right Governor - a Governor open to dialog and realsistic solutions to the problems plaguing our state.

Ah, yes. If only Governor Carcieri were more of a consensus builder, then all of those well-intentioned legislators would come around. Baloney! The General Assembly will dialogue all day — all year — even as the state falls apart. Governor Block would be rolled on every substantive issue, while he makes same-sex marriage the law of our little land and backslides on immigration.

I'd love to hear why I'm wrong, but in the meantime, I suppose we can thank Ken for ensuring that there's a broad swath of political space to the right of center in this race. Block, Lynch, Chafee, and Caprio cluster pretty closely on the left, as far as I can see.

May 1, 2010

Rethinking Paul

Justin Katz

From college-level religious history courses to tracts on same-sex marriage, one hears of St. Paul as the strict counterpoint to Jesus' universal acceptance. I'd argue that the image of Jesus as the undemanding forgiver is fundamentally flawed, but Sarah Ruden — here, as summarized in a review of her book by John Wilson — puts Paul in his historical context to prove that Paul isn't the strict progenitor of strict, primitive dogma, either:

... consider the much-abused passage from I Corinthians 7, in which Paul talks about the marriage relationship. Is this the testament of a killjoy, a hater of women? Hardly. This misreading makes sense only if we assume (falsely) that "erotic, mutually fulfilling marriage was a ready option for Paul's followers, when actually he was calling them away from either the tyranny of traditional arranged unions or the cruelty of sexual exploitation, or (in the case of married men exploiting the double standard) both." Here and in many other passages, we find a forthright rejection of the "unmitigated chauvinistic attitudes Paul would have found in Greco-Roman households, both in his boyhood Tarsus and anywhere he would have traveled in the Roman Empire later."

Paul created an honored place for celibacy as well as "putting brand-new limits on male desire" and "licensing female desire, which had been under a regime of zero tolerance" (women, you see, "were supposed to stop at nothing once they got started," but Paul regarded male and female desire as equal and reciprocal).

The popular hostile view of Paul, in other words, stands as an example of the modern tendency to judge all of the historical figures who stand along our gradual road toward the civilized present against their distance to our current height. Oddly, that tendency seems strongest among those who reject notions of absolute truth.

I say "odd" because if one believes in Truth, then it's perfectly natural for its revelation to occur incrementally over millennia, as human society figures it out, despite our limitations. Yet, if one disbelieves in Truth, there is no basis to judge historical figures in or out of context.

Of course, those in the latter group don't really disbelieve in objective standards. They just don't like the conclusions toward which the Truth that freed their culture from its primitive chains rightly points.

Association Ain't Nothing

Justin Katz

Ed Fitzpatrick takes a look at the controversy surrounding Central Falls Mayor Charles Moreau from the perspective of Attorney General Patrick Lynch's office:

... Attorney General Patrick C. Lynch, a Democrat running for governor, is a longtime friend of Moreau's, and Moreau's spokeswoman is Lynch's girlfriend and former legislative director, Cynthia Stern. ...

Lynch, who is divorced, confirmed Stern is his girlfriend. "She is working for a mayor who needs a spokesperson," he said. "If behind that, there is a suggestion that I'm not doing the right thing, that's not true. I ethically, professionally and personally decided immediately that I shouldn't be involved in the case," he said. "I am as far away from it as I can be."

Well, as far away from it as one can get from one's closest group of friends. One can only hope that we don't wind up having to admit that "only in Rhode Island" can a politician be so intertwined with political corruption and remain a viable candidate for governor.

As We Swing into Campaign 2010, Some Real Life Comportment "Don'ts" for the Candidate

Monique Chartier

How not to interact with a member of the public.

How not to interact with a member of the media. [Warning: language.]

And an oldie but a goodie in the spirit of bipartisanship: how not to interact with another dignitary.

Separation Doesn't Mean That One Silences the Other

Justin Katz

By way of follow-up on an issue that I've mentioned, before, the Supreme Court has ruled that a plain cross on public land in the middle of the desert does not constitute an establishment of religion:

By a 5-4 vote, the justices reversed lower courts in California that ordered the U.S. Park Service to remove an 8-foot-tall cross that has stood in various forms in the Mojave National Preserve since 1934 as a memorial to the soldiers of World War I. ...

In the past, the high court, led by O'Connor, has said a city or state's display of a religious symbol was unconstitutional if it could seen as an official "endorsement" of a particular faith. In June 2005, a 5-4 majority cited this reason for striking down the display of the Ten Commandments in Kentucky courthouses.

But days later, O'Connor retired and was replaced by Alito. On Wednesday, he joined with Kennedy and Roberts. They agreed that if a religious display carries other meaning, it can be upheld. The cross "evokes far more than religion," said Kennedy, speaking for the divided court. He faulted the judges in California for having "concentrated solely on the religious aspects of the cross, divorced from its background and context." Justices Antonin Scalia and Clarence Thomas joined to form the majority. They said they would have gone further and ruled that the former park service official who sued had no legal standing to object to the cross.