Focusing on local government priorities

Most people expect local governments to pay for items such as police, fire protection, and basic infrastructure. But some local governments turn their attention to issues that have little to do with core government functions.

Julie Tisdale, the John Locke Foundation’s city and county policy analyst, directed the following question to the John Locke Foundation’s Shaftesbury Society: “Do you know what your city and county are doing with your money?”

GSO-WS commuter rail still in the station

A commuter rail line between N.C. A&T State University in Greensboro and Hanes Mall in Winston-Salem was big talk several years ago, but–what a coincidence—talk seemed to die when the Piedmont Authority for Regional Transportation had shall we say a financial setback.

And we might not be hearing about it now if WFDD listener Matthew Feidel hadn’t gotten a little “Carolina Curious” and asked about the Winston-Salem Southbound Railway that passes by Krankies Coffee.

PART planning director Mark Kirstner says:

I think they all see passenger rail as a possibility for the future. They look to our neighbors down in Charlotte and over in the Triangle area, and see the benefits there. But funding, like most public investment projects, is a very key element. And with a lot of other priorities related to schools and what have you, I think that’s one of the main political barriers. ‘How do we fund something like this? And at what point in the future do we reach that tipping point’?

That’s right after Kirstner says this:

The major results [of the ridership study] were that our local transit systems were not designed, and did not have the ridership to support passenger rail. And this would not be atypical. You know, the routes were designed to serve the community and not necessarily to get people to a rail corridor. There was the population in the area to perhaps support ridership, but there would have to be some changes to the local systems first before that could be proven. That’s not unlike the experience that they’ve had in Charlotte. They doubled their bus system first before they put in the passenger rail.

In other words the Triad just doesn’t have the density to support commuter rail. Don’t see it either, especially with the Urban Loop making progress. And it will take of the potential high-density urban dwellers out in Summerfield.

Charter school opponents on the attack

N.C. Policy Watch reporter Billy Ball recently published a lengthy piece attacking former Charlotte mayor, charter school founder, and attorney Richard Vinroot for his one-page overview of charter school data and a few extemporaneous remarks about them.  According to the critics quoted in the story, one of Mr. Vinroot’s most egregious sins was comparing statewide percentages of charter and district students by race.  Ball calls them “distortions.”  A better description would be “incomplete.”

Comparing the two types of public schools – charter and district – is not as straightforward as it may appear, even for those who do not analyze education policy for a living.  Certainly, Mr. Vinroot recognizes that a single table cannot capture the complexity of student enrollment in district and charter schools, but that does not stop charter school opponents of accusing him of “mask[ing] the reality of segregation by race and class.”

School-level differences are determined by two different admissions mechanisms. On one hand, parents must apply for admission to a charter school and, if applications outnumber seats, enter their child into a lottery where a chosen few are selected in a traditional or weighted lottery.  Districts simply enroll all eligible students and assign their children to schools based on geography and other factors.  As such, it is much easier for a district to engineer a “diverse” school because school officials have the power to create attendance boundaries that consider the race, ethnicity, and wealth of the community and assign students accordingly.  Charters are individual entities that are subject to statutory enrollment caps, grade-level limitations, and receive no state or local funding for facilities that could accommodate a larger and possibly more diverse student population.

Nevertheless, around 850 of the state’s 2,432 district schools had a student population that was at least 65 percent white last year.  Likewise, nearly 800 district schools had a student population that at least 65 percent nonwhite.  Some districts are simply racially and socioeconomically homogenous.  Others are intentionally or inadvertently segregated along racial, ethnic, and/or socioeconomic lines.  Regardless of the cause, critics of charter school demographics seldom mention that districts encounter troubling demographic dilemmas of their own or, as some may say, masking the reality of segregation by race and class.

In the end, however, this episode has little to do with Richard Vinroot, his presentation materials, or the content and use of those materials.  It has everything to do with the fact that North Carolina’s charter schools add thousands of new students every year.  And as parents have greater access to high-quality charter schools in their communities, they become more sympathetic to educational alternatives, diverting students (and political power) from the district system that Mr. Vinroot’s opponents venerate.

Forbes ponders relative dearth of billionaires

As his family magazine releases its latest compilation of the world’s billionaires, Steve Forbes asks why the ranks of the wealthy aren’t even larger.

IF GOVERNMENTS, most especially the U.S.’, had pursued sensible monetary, fiscal and regulatory policies over the past 40 years, the number of global billionaires would be 20,000–ten times the 2,043 listed in this issue.

Wealth creation–like veggies, trees, fruits and flowers–flourishes best in benign environments. Since the 1970s, bad policies have too often been the rule.

Money is the most misunderstood topic today. It is still holy writ among economists that manipulating the supply and cost of money can guide economies, the way a steering wheel does a car. In reality the only question about the central banks’ monetary activities is how much damage they will do. A prime example, of course, is the Federal Reserve, whose antics since the 2008–09 economic crisis have suffocated the U.S. economy.

Money is not wealth. It facilitates the buying and selling of products and services. It measures their value the way a clock measures time. It is similar to a claim check. A gold standard, which the U.S. abandoned in 1971, keeps currencies stable better than any other system. Stable money facilitates productive investing, without which we have no wealth creation.

Taxes are a burden. High rates hinder economic growth. When Europe imposed supersales taxes called value added taxes (VAT) in the late 1960s and 1970s, coupled with sky-high income taxes, growth rates plummeted.

Critical question: Will the U.S. make Europe’s mistake by imposing a quasi-VAT of 20%, called the border adjustment tax? Incredibly, many Establishment Republicans are pushing this anti-working-families exaction.

Economy-crushing regulations have spread like weeds. Fortunately, the Trump Administration seems serious about waging unrelenting war on these tax equivalents.

Praise for the Freedom Caucus

Reihan Salam doesn’t always agree with the U.S. House Freedom Caucus. In the case of the American Health Care Act, though, he’s offering the conservative group kudos.

As far as [House Speaker Paul] Ryan and his allies are concerned, the HFC is a gang of reckless rebels who’ve jeopardized Republicans’ best chance to undo Obamacare and to establish a better, more sustainable health system. And it’s not hard to see why Ryan wants to lay all the blame for the AHCA debacle at the feet of the House’s hard-liners. There is no question that the HFC has tended toward unreasonableness, most notably when the caucus very nearly forced the federal government to breach the debt ceiling, a prospect that terrified a large majority of House Republicans and the country at large. Over the past few weeks, however, the HFC has actually acted quite reasonably. When Mark Meadows, the chairman of the Freedom Caucus, told reporters on Thursday night that he was “desperately trying to get to ‘Yes,’ ” he was telling the truth. Ryan and the rest of the House GOP leadership have been trying and failing to strong-arm the HFC and other Republicans into swallowing shabbily crafted legislation that no one really understands. As strange as it might seem, it is the Freedom Caucus that has been fighting for a more deliberative, thoughtful approach that might yield a more coherent set of reforms.

How exactly did we get here? In October 2015, shortly after members of the HFC forced then-Speaker John Boehner into an early retirement, Ryan managed to win over the Freedom Caucus by promising to honor the “Hastert Rule,” in which legislation would move forward only if it commanded the support of a majority of the members of the majority party. Ryan also vowed to open up the legislative process so the House Republican leadership would have less power while committees and individual members would have more. …

… When Donald Trump was elected president and Republicans won a razor-thin majority in the Senate, it was only natural that the Freedom Caucus expected a seat at the table. That’s not what happened. If the HFC had one non-negotiable demand, it was that Obamacare would be repealed root and branch, or at least as thoroughly as possible under the rules of budget reconciliation. The idea was that Republicans would repeal Obamacare first and then worry about replacing it later, a strategy known as “repeal and delay” or “repeal and start over.” Inevitably, many moderate Republicans had cold feet about repeal and delay, recognizing that it would likely lead to a meltdown of the individual insurance market. President Trump expressed doubts about the strategy as well, which sent Ryan scrambling to cobble together a reconciliation bill that would endeavor to replace Obamacare.

What Ryan failed to appreciate is that his mad dash to draft a replacement would end up alienating Freedom Caucus members who wanted to play an active role in shaping it. Repeal and delay was compelling to those on the Republican right who wanted to have a more open, inclusive process in which all elements of the GOP would take part in crafting successful legislation. Did it make sense to believe you could repeal Obamacare and then take your sweet time with a slow-moving, deliberative process designed to reconcile the seemingly irreconcilable positions of moderate Republicans and the members of the HFC? Maybe not. But Ryan didn’t really make that case. Instead, he pivoted right back to the highly centralized, secretive process that drove the Freedom Caucus crazy in the first place.

The result has been disastrous, and predictably so.

Safe spaces and alternative bureaucracies

Mitch Pearlstein writes at the Center of the American Experiment about a key source of the current college campus craziness.

I’ve just read the most insightful essay I’ve ever seen on a key source of political correctness in American higher education and the intellectual and other absurdities that have flooded ever after.

The author is Neil Gilbert, the Milton and Gertrude Chernin Professor of Social Welfare and Social Services at the University of California, Berkeley. …

… The core of Neil’s argument in “Institutionalized Discontent” (Society, August 2016) goes like this:

“Over the last several decades federal regulations and funds have created an alternative bureaucracy within universities that is devoted not to the core academic mission of teaching and research, but to improving the social climate of university life.” The “legitimacy and power” of this new bureaucracy, he writes, “depend on heightening the perception that academic life involves a dangerous environment, from which students need protection.” This perceived need, he continues, has led to campaigns for “safe spaces”; efforts to help students “recognize micro aggressions”; educating and training them in “sexual assault prevention”; and demanding faculty participation in “sensitivity training.” Among other rote requirements.

How big is this new bureaucracy? Neil reports that between 2000 and 2015, “the number of full-time, ladder-rank teaching faculty at Berkeley increased by 1%, while the number of full-time staff providing student services and health care increased by more than 100%, at which point they outnumbered the teaching faculty by 13%.”

Or from another angle, in addition to “inhibiting spontaneity, humor, and controversial ideas, the social climate bureaucracy” at Berkeley consumes a fortune, as costs “include not only outside consultants’ fees and faculty time, but the addition of 700 professional staff offering student services hired over the last 15 years, during which time only 70 positions were added to the roster of full-time ladder-rank faculty.”

To the question, by the way, has Professor Gilbert been called nasty names, and have other not-nice things been done to him over the years for raising issues like this, the answer is, what do you think? There was the time in about 1990, for example, when he critiqued what was manifestly inaccurate but exquisitely politically correct research about sexual assaults on campus. In response, he writes, students “organized a candlelight vigil” and fliers invited others to join in. “By all accounts,” he recounts, “it was a lively affair during which they marched around campus chanting ‘Neil Gilbert cut it out or cut if off.’” A short time later, “a creepy anonymous threat was slipped under my office door and a student petition was sent to the administration asking them to censure my work.” To its credit, the administration never said a word to him about it.

The minimum wage and employment

Ben Gitis of the American Action Forum explores employment data in states that have raised their government-mandated minimum wage.

At the beginning of January, 19 states increased their minimum wages. Twelve of the minimum wage increases were due to new laws and seven were annual inflation adjustments required under previous laws. Previously, the American Action Forum (AAF) estimated that this year’s minimum wage increases could alone cost 383,000 jobs. In addition, the minimum wage increases scheduled to go into effect over the next few years could cost 2.6 million jobs.[1] Last week the Bureau of Labor Statistics (BLS) released its January State Employment and Unemployment report.[2] While it is still very early and the data are limited, this report gives us a first look at how those states’ labor markets are responding to the January minimum wage increases. According to the BLS data, month-to-month private sector job growth slowed substantially between December and January in states that implemented new minimum wage laws, and employment in the leisure and hospitality industry declined. …

… 32.5 percent of all employed people in the US private sector worked in one of the twelve states that implemented new laws raising the minimum wage. However, in January private sector employment in those states increased by 61,300, only representing 21.4 percent of all jobs added that month. So despite containing about one-third of all private sector workers, those states under performed and only created about one-fifth of all new jobs in January. Moreover, this is a substantial decline from recent years, when those same states represented 33.6 percent to 37.4 percent of private sector jobs added in January.

Pivoting from health care to tax reform

No health care deal? President Trump can turn his attention to another pressing federal government issue. Randall Forsyth of Barron’s recommends one.

The assumption in Washington and Wall Street was that the AHCA’s failure is a defeat for the GOP. The opposition suggests this represents an ignominious retreat for Trump, who had campaigned on the promise to repeal and replace Obamacare virtually on day one of his term.

But there is an alternative narrative from Chicago, whence hails John Brady, managing director at R.J. O’Brien & Associates. While Obamacare isn’t currently collapsing, why would the Republicans want to remove that albatross from the neck of Senate Minority Leader Chuck Schumer (D-N.Y.) and the rest of the Democratic opposition? The Dems would then own the program in next year’s midterm election, by which time the financial strains on it would probably worsen.

The stock market’s spurt of 10% since Election Day has been the product of roughly equal parts optimism over the Trump agenda and momentum from the moderately expanding global economy. Perhaps a bit more could be ascribed to the former than the latter. Whatever the case, the underlying pro-growth optimism that Trump brings remains.

The defeat of the AHCA represents the rejection of legislation disliked by both the left and the right. By contrast, who doesn’t like tax cuts? Reform would probably attract sufficient support among members of the Freedom Caucus to pass the House and then get through the Senate. Bulls would suggest that this is really what the stock market wants, and that shelving the health-care bill lets the Republicans go on to the issue they ought to have tackled in the first place: taxes.

The decision to set aside the AHCA means that tax reform will be taken up immediately, according to Anthony Karydakis, the chief economic strategist at Miller Tabak & Co. That might lead to a speedier outcome, since Trump’s ability to push it through would be only moderately compromised by having cut his losses early and shifting the blame for the defeat to Congress.

Whether that line of thinking holds up after Trump’s first and loudest election vow has gone down to defeat at the hands of his own party remains to be seen. Other legislative initiatives also remain, including the nomination of Neil Gorsuch to the Supreme Court. And the AHCA fight offered another benefit: It overshadowed the other controversies swirling around the White House, which don’t need recounting here.