Leef explores Obama administration’s decision to kill college chain

George Leef’s latest Forbes column focuses on the Obama administration’s effort to put a college chain out of business.

When the Department of Education was established in 1979, no one would have thought that it was authorized to administer the death penalty to colleges that bureaucrats wanted to get rid of. But that is exactly where we are today.

The demise of ITT Tech illustrates the unchecked power of federal regulators under our administrative law system wherein bureaucratic agencies get to act as lawmaker, judge, jury, and executioner all rolled into one. That concept is completely at odds with the way the Founders thought government should function, a point made with great power by Professor Philip Hamburger in his recent book Is Administrative Law Unlawful? (He answers that it is.)

Back in September, ITT announced that it was closing its 130 campuses located in 38 states. The company had come under fire from several state attorneys general and the Consumer Financial Protection Bureau, with allegations that students had been misled, taken unfair advantage of, and defrauded by ITT.

With those allegations hovering over the company, in August the Department of Education decided to require ITT to put up over $247 million as surety in to cover the taxpayers in the event that it would close and thus trigger student loan defaults. When it couldn’t do that, the Department moved to “protect” students from ITT by forbidding the company to enroll any new students for this academic year who would pay with federal student aid funds.

Minnesota governor regrets telling truth about Obamacare

Paul Demko reports for Politico on the political fallout linked to Minnesota Gov. Mark Dayton’s admission that the Affordable Care Act is failing.

Minnesota Gov. Mark Dayton Friday expressed “regret” that Democrats are being attacked over his comment that Obamacare is “no longer affordable,” and he called on his state to approve emergency measures to help people facing huge rate hikes next year.

Republicans across the country had seized on his remarks, which came just days after Bill Clinton raised similar concerns about Obamacare’s ongoing affordability problems.

“Last week I said that the Affordable Care Act ‘is no longer affordable to increasing numbers of people.’ I regret that my statement was wrongly used against Democratic candidates in Minnesota and elsewhere,” Dayton said in a statement. He said he stands by his remarks that more and more people are unable to afford Obamacare coverage.

Minnesota insurers are jacking up rates by at least 50 percent for individual plans next year. The state’s largest insurer, Blue Cross and Blue Shield of Minnesota, has pulled its most popular product, with more than 100,000 enrollees, from the state’s exchange.

The drumbeat of bad health care news has become a central issue in Minnesota’s state legislative races with all seats on the ballot this year. Democratic lawmakers, who control the state Senate but not the House, have pushed Dayton for to call a special session to blunt the impact of rates hikes.

Growth management does more harm than good

The next time you hear someone decry “urban sprawl,” you might want to reacquaint yourself with key findings from the research of Randal O’Toole of the Cato Institute.

Growth management takes away people’s property rights in the name of controlling urban sprawl.

Advocates of growth management say that it produces many benefits, including preservation of farm lands, energy savings, reduced air pollution, and lower infrastructure costs. In comparison with the dubious benefits of growth management, the costs are overwhelming. The most quantifiable cost is the effect on housing prices. Housing typically costs two to five times more in states with growth-management laws than in states without such laws. Overall, growth management slows regional growth, exacerbates income inequality, and particularly harms low-income families.

It is imperative that states repeal laws mandating or authorizing city, county, and regional governments to practice growth management. Local and regional governments that practice growth management should abolish their plans.

A quarter century of charter schools

Andy Smarick uses the 25th anniversary of the charter school movement to remind American Enterprise Institute readers about the important concept underlying charter schools.

Charter schools explicitly shifted power from the government to individuals and neighborhood organizations. They prioritized local needs and local decision-making. They trusted families and practitioners to have better information and more wisdom than technocrats. They made room for entrepreneurialism and innovation. They cultivated a diversity of school options to suit a pluralistic society. They focused governments on outcomes instead of inputs. They emerged from piecemeal reform of a longstanding institution, which proceeded slowly from modest community initiatives, not all at once in accord­ance with grand plans devised by experts.

Though welfare reform is perhaps conservatism’s most visible domestic policy success of the last generation, charter schools may be more significant, and may have more ripple effects in the future. At a time when Donald Trump has tempted the Republican party and conservatism towards an embrace of statism, strong central leadership, and bellicose certainty, charter schooling represents a textbook case of the opposite: how individual empowerment, an enlivened civil society, and a modest skepticism about complex, centralized solutions can change lives for the better. Indeed, the story of charter schooling, a national movement that grew from an early-1990s Minnesotan pilot program, could serve as an inspiration for conservative policy leaders in the months and years ahead.

In 1990, there were no charter schools. Public education was still defined by the traditional school district’s “exclusive territory franchise”—its right to own and operate every single public school in its area. But in some reform circles an idea had been percolating. Perhaps educators and community leaders could partner and run public schools outside the traditional system. In 1991, Governor Arne Carlson of Minnesota signed legislation that would allow up to eight “outcomes-based schools.” …

… Chartering is premised on a basic if provocative idea: The principles of public education allow state leaders to cast the government in a role very different from the one it occupied for a century. Instead of serving as the monopoly public-school operator, government can also (or instead) oversee public schools operated by others. Rather than creating school districts that provide all of a locality’s schools, the state government can create “authorizers” to empower and then monitor nonprofit groups that start, run, and grow schools.

Chartering is a reimagining of the state’s part in an essential public enterprise. It follows from David Osborne and Ted Gaebler’s Reinventing Government credo, that when there’s collective work to be done, the state can “steer” instead of “row.” It can generate public value by establishing principles and goals but give others the authority to do the work.

Ignoring the federal debt

Gene Epstein‘s latest “Economic Beat” column in Barron’s explores Hillary Clinton’s and Donald Trump’s disappointing responses to critical long-term fiscal challenges.

In last Wednesday’s third and final debate between the two main presidential candidates, questions posed about the economy touched off an intellectual race to the bottom that can only be judged a dead heat.

Chris Wallace of Fox News asked the two candidates about “the national debt,” correctly noting that federal debt held by the public had ballooned to 77% of gross domestic product, “the highest since just after World War II.” And yet the fiscal plans of both candidates would raise the debt-to-GDP ratio even further, prompting his pointed question, “Why are both of you ignoring this problem?”

Donald Trump’s non-answer took the form of declaring that “you don’t have to bother asking your question” because his policies would bring annual economic growth of “5% or 6%,” which would presumably make it possible to cover all budgetary obligations. Over the past four decades since the mid-1970s, there has not been a single 10-year period in which growth even ran as high as 4% annually, partly because recessions tend to occur. If the fiscal crisis of the state can only be averted by fulfilling Trump’s outlandish claims about potential growth, then we should really be alarmed.

Hillary Clinton’s non-answer took a more subtle form. She insisted that her ambitious spending proposals would “not add a penny to the national debt” because she plans on “going where the money is” by getting the “wealthy and corporations to pay their fair share.” Since new spending programs generally underestimate costs, while taxing programs tend to overestimate revenues, that not “a penny” will be added to the debt from her tax-and-spend proposals sounded equally outlandish.

MORE TO THE POINT, however, Clinton ducked the question by claiming only that she would not make the problem worse. But unless something is done, the debt-to-GDP ratio will continue to climb to dangerous levels. In the July report on the long-term budget outlook released by the nonpartisan Congressional Budget Office, the baseline scenario projects a rise in the ratio to 86% by 2016 and to 141% by 2046, a record level that the CBO believes could trigger a fiscal crisis.

The agency’s baseline scenario assumes that nothing will be done to tame the soaring debt. By proposing only to spend more and tax more, Clinton in effect claims she’ll do nothing at best, but more likely she will add to the debt.

Clinton, Trump, and the future economy

Thomas Donlan of Barron’s explains in his latest editorial commentary why both major-party presidential candidates miss the mark in their approach to American manufacturing jobs.

[O]ne of the most significant issues of the presidential season is one on which the two major party candidates do agree: manufacturing. They say the U.S. should regain its lost dominance in manufacturing.

Donald Trump has talked strong-armed protectionism. “We’re going to get Apple to build their damn computers and things in this country instead of in other countries,” he said last January. And while campaigning in Pittsburgh more recently, he said, “We are going to put American-produced steel back into the backbone of our country.” He claimed, “This alone will create massive numbers of jobs.”

Hillary Clinton has a different strategy but the same goal. Although she has madly backpedaled from the Trans-Pacific Partnership, protectionism is not her primary focus. As she said in last week’s debate, she wants to help business with “the biggest jobs program since World War II, jobs in infrastructure and advanced manufacturing. I think we can compete with high-wage countries, and I believe we should. New jobs and clean energy, not only to fight climate change, which is a serious problem, but to create new opportunities and new businesses.”

She also wants to raise the national minimum wage, which will help those who have jobs at the expense of those who need jobs. She wants more technical education to prepare people for the jobs of the future, though there’s no crystal ball of knowledge about the future and its jobs.

Neither side has the courage to present and defend economic facts and principles.

The major fact is that manufacturing is not leaving the U.S. economy. Yes, jobs in manufacturing are down 30% since 1987, (leaving 12 million last year), but America’s remaining makers make more stuff, of higher value, than ever before. Manufacturing output, adjusted for inflation, rose 85% in the same period. …

… To turn to principle, no country, not even the U.S., can successfully rely on its government to maintain international superiority of its businesses. Remember how Japan Inc. was winning the technology race? No matter how fast we seem to be losing some kind of national race, we should understand that profit and prosperity are private matters that do not respond to stimulus, management, or investment by an omniscient government.

The largest problem with imposing political changes on the manufacturing economy is that we all need trade to prosper. The U.S. cannot close its doors to imports of things it needs, whether cheap or expensive, low-tech or high tech. If the government tries to do so on a large scale, it will raise costs and lower quality in its other industries.

New Carolina Journal Online features

Michael Lowrey profiles the N.C. House District 92 election for Carolina Journal Online.

John Hood’s Daily Journal explores reasons for Pat McCrory’s “Carolina Comeback” in his own re-election bid.

It’s hard to be a fan of Team Europe

In an amusing National Review piece about the unifying nature of America’s latest Ryder Cup win, Heather Wilhelm offers the following assessment of a basic challenge for European fans:

European golf fans also face a relative dearth of iconography to draw upon when concocting a goofy costume for an over-the-top golf event. A few spirited Euro souls showed up this year with blue starry globes enveloping their heads. How can one truly and cheekily represent the vague, newish, and faltering conglomeration that is the European Union? A slightly depressed tulip salesman half-heartedly clutching a baguette? A dancing beerhall maiden with a fancy watch and a sagging Acropolis tourist hat? A nondescript guy just standing there, trying his very best to ignore Russia, who is hovering next to him?