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Archive for the ‘Local government’ Category

I periodically share this poster, in part because it’s funny, but mostly because it’s true.

After all, can you think of many “success stories” involving government?

When I pose this question to my statist friends, I usually get a blank stare in response. Though some of them will offer answers such as the GI Bill, interstate highways, and landing on the moon.

But even if you accept that those policies were successful, it’s rather revealing that folks on the left have a very hard time identifying any success stories from recent decades.

On the other hand, we have a never-ending and ever-growing list of government failures, boondoggles, and screw-ups.

And that’s our focus today. We’re going to look at all levels of government for new examples that confirm Bastiat was right.

Let’s start with Montgomery County in Maryland, where bureaucrats are waging a legal battle against parents who – gasp! – allow unsupervised play for their children.

Here are some troubling passages from a Washington Post report.

The Maryland parents investigated for letting their young children walk home by themselves from a park were found responsible for “unsubstantiated” child neglect…the finding of unsubstantiated child neglect means CPS will keep a file on the family for at least five years and leaves open the question of what would happen if the Meitiv children get reported again for walking without adult supervision. The parents say they will continue to allow their son, Rafi, 10, and daughter Dvora, 6, to play or walk together, and won’t be swayed by the CPS finding. …The case dates to Dec. 20, when police picked up the two Meitiv children walking in Silver Spring on a Saturday afternoon after someone reported them. …The Meitivs said they would not have allowed the one-mile outing from Woodside Park to their home if they did not feel their children were up to it. …The Meitivs, both scientists by training, embrace a “free-range” philosophy of parenting, believing that children learn self-reliance by being allowed to make choices, build independence and progressively experience the world on their own. …Danielle Meitiv said when she first read the decision, she felt numb. As she reread it, she recalled turning to her husband and saying: “Oh my God, they really believe we did something wrong.” …Danielle Meitiv said that in spite of the decision, her children played at a nearby park by themselves Monday, when schools were closed for the snow day.

I confess that I was more paranoid than the Meitivs when my kids were young, so I can’t claim to have followed the same “free-range” approach.

But I also tried to avoid being a “helicopter” parent.

Not that my decisions on child rearing matter. What’s important from the perspective of public policy is that the Montgomery County bureaucracy is trying to dictate how to raise kids. And there’s a very clear implicit threat that it will arrest the parents and/or confiscate the children if the Meitivs don’t acquiesce.

And if you think I’m exaggerating and governments don’t behave this way, check out the story of the mom who was jailed overnight because her kids played outside – while she was watching them!

All of us should be outraged, regardless of our parenting approach.

Now let’s look at an example of a state government in action.

As reported by the Washington Post, the Georgia State Patrol enjoyed a Keystone Cops moment when it raided an old man because…drum roll, please…he was growing okra.

Georgia police raided a retired Atlanta man’s garden last Wednesday after a helicopter crew with the Governor’s Task Force for Drug Suppression spotted suspicious-looking plants on the man’s property. A heavily-armed K9 unit arrived and discovered that the plants were, in fact, okra bushes. …Okra busts like these are good reason for taxpayers to be skeptical about the wisdom of sending guys up in helicopters to fly around aimlessly, looking for drugs in suburban gardens. And that’s not to mention the issue of whether we want a society where heavily-armed cops can burst into your property, with no grounds for suspicion beyond what somebody thought he saw from several hundred yards up in a helicopter.

In some sense, this is an amusing story of government incompetence.

But military-type raids, when the supposed offense involves a possible “crime” with no victims, are a recipe for disaster. Let’s be glad that the cops didn’t accidentally kill anybody in this raid.

By the way, this isn’t the first time cops have seized okra bushes. Or looked foolish because of an inability to identify marijuana leaves.

At the point, I don’t want to miss an opportunity to say that it’s time to end the foolish Drug War. People who abuse drugs may be stupid, but they’re not infringing on the rights of others. The War on Drugs, by contrast, has led to all sorts of policies that do infringe on our rights, from disgusting asset forfeiture policies to pointless snooping on our bank accounts. Or, as we just read, raids on okra growers.

Time now for a look at an example of federal government fecklessness.

But this story from the Washington Times won’t surprise anybody. Because anybody with a pulse already knows that there is a lot of waste in Washington.

Federal agencies across the board are continuing to waste tens of billions of taxpayer dollars on duplicative spending efforts, even after Congress‘ official watchdog has made hundreds of recommendations for cutting back. The spending issues, ranging from Medicare and Medicaid mismanagement to transportation programs to weapon systems acquisitions, cost taxpayers $125 billion in improper payments in 2014 alone, as highlighted in a new report from the Government Accountability Office. …GAO investigators noted in the report that the government can’t continue to sustain its wasteful spending habits… “The federal government faces an unsustainable long-term fiscal path. Changing this path will require difficult fiscal policy decisions to alter both long-term federal spending and revenue,” the GAO analysts concluded. …The GAO report targeted both the Internal Revenue Service and the Department of Health and Human Services for mismanaging programs that saw rampant wasteful spending. …“These programs combined account for over 76 percent of the government-wide estimate. We have made numerous recommendations that if effectively implemented, could help improve program management, reduce improper payments in these programs, and achieve cost savings.”

Notice that HHS and the IRS win the prize for wasteful incompetence.

But don’t laugh. After all, those are the two bureaucracies that got lots of new power and authority as a result of the costly Obamacare boondoggle. So the joke’s on us.

By the way, the GAO’s definition of waste is very narrow. It merely applies to funds that are improperly disbursed.

If you also include monies that are squandered, then the amount of waste includes every penny at the Department of Agriculture, Department of Education, Department of Housing and Urban Development, Department of Transportation, etc.

Last but not least, let’s look at a great moment in foreign government.

I’ve written about the crazy Greek government on many occasions. And given that this collection of misfits does utterly bizarre things (such as giving handouts to pedophiles and requiring stool samples when setting up online companies), I’m never surprised to learn when they adopt foolish policies.

But even I was taken aback to learn about the latest gimmick they concocted to “solve” the nation’s fiscal crisis. Here are some excerpts from a report in the U.K.-based Guardian.

The Greek government has told its eurozone creditors it has a novel way of tackling the country’s chronic tax evasion culture – wiring students, tourists, and housewives for sound and video to spy on tax dodgers while posing as shoppers and customers. …Varoufakis’s plans for a new government-sponsored amateur snoopers’ charter…attracted most attention. …He said the prospects of successfully countering tax dodging were dismal because of the demoralised and understaffed state of the tax inspection service. Instead, he proposed recruiting large numbers of “non-professional inspectors” on short-term casual contracts of no longer than two months who would be paid by the hour. They would be “wired for sound and video”, trained to pose as “customers” and “will be hard to detect by offending tax dodgers.” …Varoufakis said the launch of the amateur snoopers would act as a deterrent, “engendering a new tax compliance culture” in Greece. He added that Athens would need to ask eurozone partners for help with the equipment and the training. Germany has previously offered to send 500 tax inspectors to Athens. …In Athens, news of the undercover tax agents was quick to spark ridicule and widespread disbelief.

Hmmm….so the Germans offered to send 500 tax inspectors? Sounds like a perfect job for ex-Stasi officials.

And there are some bureaucrats in Chicago who almost surely would want to help implement this snitch-on-your-neighbor scheme. And the governor of New York has related experience, though his police-state policy focused on guns rather than tax revenue. Let’s also not overlook the U.K. politicians who have a tax-enforcement-über-alles mentality.

Never mind that all the research shows that low rates are honest government are the best ways of getting high compliance.

So I’m not holding my breath expecting success from this latest Greek scheme.

But I can say it’s a perfect example of how governments operate. Screw up, grab for more money, screw up some more. Lather, rinse, repeat.

It’s almost a shame that there’s no life on Mars. We could make today’s list even longer if there was another layer of government.

Now you know why it’s almost always the right time to mock politicians.

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One of the most important bulwarks of a just society is equal justice under law.

That principle is even etched in stone above the entrance to the Supreme Court.

My belief in equal treatment is one of the reasons I support the flat tax. As an economist, I like the pro-growth impact of tax reform. But as someone who believes in justice, I also support the flat tax because I don’t like class-warfare policies that punish some taxpayers and corrupt loopholes that give preferential status to other taxpayers.

Indeed, my support for equality of law is so strong that I even object to policies that benefit me, such as special TSA lines in airports for frequent flyers.

But sometimes it’s not clear how a principle should be applied. So let’s revive the “you be the judge” series, which asks thorny questions about the workings of a free society, and explore the case of income-based traffic fines.

Check out these excerpts from a BBC story.

Finland’s speeding fines are linked to income, with penalties calculated on daily earnings, meaning high earners get hit with bigger penalties for breaking the law. So, when businessman Reima Kuisla was caught doing 103km/h (64mph) in an area where the speed limit is 80km/h (50mph), authorities turned to his 2013 tax return, the Iltalehti newspaper reports. He earned 6.5m euros (£4.72m) that year, so was told to hand over 54,000 euros. …Mr Kuisla might be grateful he doesn’t earn more. In 2002, an executive at Nokia was slapped with a 116,000-euro fine for speeding on his Harley Davidson motorbike. His penalty was based on a salary of 14m euros.

So is this a case of greedy government targeting people for the sin of success?

Well, I’m sure the government is greedy, but what about the morality of income-based fines?

The driver isn’t happy, but others argue that deterrence doesn’t work unless the actual impact of the fine is the same for rich and poor alike.

The scale of the fine hasn’t gone down well with Mr Kuisla. “Ten years ago I wouldn’t have believed that I would seriously consider moving abroad,” he says on his Facebook page. “Finland is impossible to live in for certain kinds of people who have high incomes and wealth.” There’s little sympathy from his fellow Finns on social media. …person says: “Small fines won’t deter the rich – fines have to ‘bite’ everyone the same way.”

At the risk of sounding like a soft-headed leftist, I’m not overly sympathetic to Mr. Kuisla’s position.

Simply stated, if the goal of traffic fines is deterrence, then the penalties should vary with income.

I remember when I was young, living on a paycheck-to-paycheck basis, a traffic fine sometimes would chew up a non-trivial part of my disposable income. That affected my behavior.

Now that I’m older and making more money (and especially since my kids are mostly done with their schooling!), a traffic fine is just a nuisance (though I still sometimes get very upset).

Though this discussion wouldn’t be complete without also considering the fact that traffic laws and enforcement oftentimes are motivated by revenue rather than safety.

The most compelling evidence comes from Ferguson, Missouri. It seems that what’s driving the mistreatment of black people is government greed.

Here’s some of what Ian Tuttle wrote on the topic for National Review.

The Department of Justice’s “Investigation of the Ferguson Police Department,” released this week…what the material in the report reveals is less a culture of racial animus than one of predatory government: “Ferguson’s law enforcement practices,” states the report, “are shaped by the City’s focus on revenue rather than by public safety needs.” …myriad municipal regulations that, rigorously enforced, nickel-and-dime the citizenry to the local government’s benefit. This is the injustice on which the Justice Department has stumbled, which helps to explain the city’s racial tensions — and which merits urgent correction.

I fully understand why many blacks in Ferguson are angry.

Imagine if you had a modest income and you were constantly being hit with $50 and $100 fines (oftentimes then made much larger thanks to the scam of “court fees”).

This can wreck a family’s budget when it doesn’t have much money. So wouldn’t you be upset?

Particularly since “predatory government” is a very good description of the Ferguson bureaucracy.

In 2010, the city’s finance director encouraged Ferguson police chief Thomas Jackson to “ramp up” ticket-writing to help mitigate an anticipated sales-tax shortfall. …One stop can yield six or eight citations, and officers have been known to compete to set single-stop records. Indeed, within Ferguson Police Department, because opportunities for promotion have been tied to “productivity” — that is, enthusiasm for ticket-writing — officers have perverse incentives to issue citations, and in concert with police and prosecutors, municipal courts regularly enforce the payment of fines in a way that compounds what a single defendant owes.

Now let’s connect Ferguson with Finland.

Our Finnish driver is upset by his giant fine, but at least he probably can relate to the poor people of Ferguson.

But the more successful people of Ferguson, to the extent that they are even targeted by the local cops, have almost nothing to worry about.

…this practice — of police and prosecutors and courts together — disproportionately affects black communities not because they are black, but because they are poor. They do not have the means to escape the justice apparatus, unlike the comparatively wealthy, who can pay a fine and be done with the matter — or hire an attorney, and inconvenience courts that prefer the ease of collecting fees to the challenge of arbitrating cases.

Here’s the bottom line.

If we want a just society, there should be few laws and they should be enforced on the basis of protecting public safety rather than enriching the bureaucracy.

In such a system, income-based fines and penalties are a reasonable way of making sure deterrence applies equally to rich and poor.

Unfortunately, we have far too many laws and they are used as back-door taxes on the citizenry.

So if we adopt income-based fines, the politicians will simply have more money to spend and even less incentive to scale back excessive and thuggish government.

Heck, just look at how asset-forfeiture laws and money-laundering laws have turned into revenue scams for Leviathan.

P.S. Since today’s post ended with a depressing conclusion, let’s share some a bit of offsetting good news.

As reported by The Hill, the spirit of civil disobedience lives even in Washington!

From sledding to snowball fights, dozens of children and their parents took to Capitol Hill Thursday afternoon to protest a controversial sledding ban. Capitol Police have refused to lift the sledding ban, but some parents organized a “sled in” on the west lawn of the Capitol to put a spotlight on the unpopular rule. …Capitol Police pointed out that more than 20,000 sledding injuries occur in the U.S. each year…, but officers on the ground also refused to enforce it. …It’s turning into a public relations nightmare for those who oppose sledding and support the ban.

You’ll doubtlessly be horrified to learn that illegal sledding is – gasp! – a gateway crime to other forms of misbehavior.

…the children were not only sledding but also climbing trees, building snowmen and throwing snowballs at one another.

Oh My God, unlicensed snowmen, unregistered tree climbing, and illegal snowballs! Freedom is obviously too dangerous.

Next thing you know, these kids will grow up to engage in other forms of civil disobedience, just like Arizona drivers and Connecticut gun owners.

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For both moral reasons and economic reasons, we should have small government.

But even a curmudgeonly libertarian like me also thinks it’s important to have effective and efficient government.

Fortunately, there’s no contradiction between these views. Indeed, academic researchers have found that nations with smaller government also have more efficient government. With Singapore being a very powerful example.

This is why I periodically share data looking at how much governments spend compared to how much they deliver.

Though this can be a depressing exercise because – to cite one example – no government in the world spends more on education than the United States, yet we get very sub-par results.

But what if we compare cities inside the United States on this basis? Are there big differences in how much some local governments spend and the results they get?

The answer is yes, emphatically so.

Here are some excerpts from an article in The Atlantic on which local governments do reasonably well – and very poorly – in terms of education outcomes on a per-dollar-spent basis.

…education spending isn’t inherently bad—what matters is the result. Some school districts get lots in return for the amount of money they spend. …the online financial resource WalletHub has crunched the numbers on school spending at 90 of the most-populated cities across the country, revealing which ones are getting the most—and least—bang for their buck. To arrive at the findings, WalletHub divided each city’s aggregate test scores in fourth- and eighth-grade reading and math by its total per-capita education spending. The researchers then adjusted those figures for various socioeconomic factors, such as the poverty rate and percentage of households that don’t speak English as their first language.

Here are the 10 cities that purportedly do the best job on a per-dollar-spent basis.

And here are the cities that do the worst job.

I guess I’m not overly surprised that cities in California and New York generally rank at the bottom.

Though I wonder whether the results would look significantly different if education spending was measured on a per-pupil basis. That would seem a relevant distinction.

But here’s the key takeaway. Some cities spend two to three times as much per capita on education, yet they actually deliver worse outcomes!

Something all of us should remember next time some politician, whether Obama or some local hack, whines about the “need” for more money for schools.

Now let’s look at how wisely – or ineptly – local governments spend money on crime prevention.

Here’s some of WalletHub’s analysis.

With tax season approaching, WalletHub assessed how efficiently the 110 most populated U.S. cities spend taxpayer dollars on police protection. We did so by calculating each city’s ROI on police spending based on crime rates and per-capita expenditures on police forces after normalizing the data by poverty rate, unemployment rate and median household income. …note that “Adjusted ROI Rank” reflects the results of our analysis after controlling for the three economic factors, whereas “Unadjusted ROI Rank” reflects the results before normalizing the data by the same factors.

So which cities get decent bang for the buck?

And here are the 10 cities that get the least value compared to resources devoted to crime prevention.

Gee, what a surprise to see New York City (once again) at the bottom of the list. And I can only imagine how the city will rank after a few years of Bill de Blasio.

And what’s the story with Long Beach, CA?!? Why are they among the worst on both lists?

Anyhow, kudos to WalletHub for producing both these comparisons. This is good factual data that enables people to see whether their city is being competent or wasteful.

Specifically, why are taxpayers in places such as St. Louis and Orlando spending three or four times as much, on a per-capita basis, as taxpayers in cities such as Lincoln and Louisville?

P.S. Returning to the big picture, we’re more likely to have competent and effective government if it is limited in size and scope. Or, as Mark Steyn humorously observed, “our government is more expensive than any government in history – and we have nothing to show for it.”

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I’ve periodically cited the great 19th-century French economist, Frederic Bastiat, for his very wise words about the importance of looking at both the seen and the unseen when analyzing public policy.

Those that fail to consider secondary or indirect effects of government, such as Paul Krugman, are guilty of the “broken window” fallacy.

There are several examples we can cite.

A sloppy person, for instance, will think a higher minimum wage is good because workers will have more income. But a thoughtful analyst will think of the unintended consequence of lost jobs for low-skilled workers.

An unthinking person will conclude that government spending is good for growth because the recipients of redistribution have money to spend. But a wiser analyst will understand that such outlays divert money from the economy’s productive sector.

A careless person will applaud when government “creates” jobs. Sober-minded analysts, though, will wonder about the private jobs destroyed by such policies.

It’s time, though, to give some attention to another important contribution from Bastiat.

He also deserves credit for the pithy and accurate observation about government basically being a racket or a scam.

And what’s really amazing is that he reached that conclusion in the mid-1800s when the burden of government spending – even in France – was only about 10 percent of economic output. So Bastiat was largely limited to examples of corrupt regulatory arrangements and protectionist trade policy.

One can only imagine what he would think if he could see today’s bloated welfare states and the various ingenious ways politicians and interest groups have concocted to line their pockets with other people’s money!

Which brings us to today’s topic. We’re going to look at venal, corrupt, wasteful, incompetent, and bullying government at the federal, state, and local level in America.

We’ll start with the clowns in Washington, DC.

Remember when the unveiling of the Obamacare turned into a cluster-you-know-what of historic proportions?

Well, the Daily Caller reports that the IRS has just signed an Obamacare-related contract with an insider company that recently became famous for completely botching its previous Obamacare-related contract.

Seven months after federal officials fired CGI Federal for its botched work on Obamacare website Healthcare.gov, the IRS awarded the same company a $4.5 million IT contract for its new Obamacare tax program. …IRS officials signed a new contract with CGI to provide “critical functions” and “management support” for its Obamacare tax program, according to the Federal Procurement Data System, a federal government procurement database. The IRS contract is worth $4.46 million, according to the FPDS data.

Just one more piece of evidence that Washington is a town where failure gets rewarded.

And CGI is an expert on failure.

A joint Senate Finance and Judiciary Committee staff report in June 2014 found that Turning Point Global Solutions, hired by HHS to review CGI’s performance on Healthcare.gov, reported they found 21,000 lines of defective software code inserted by CGI. Scott Amey, the general counsel for the non-profit Project on Government Oversight, which reviews government contracting, examined the IRS contract with CGI. “CGI was the poster child for government failure,” he told The Daily Caller. “I am shocked that the IRS has turned around and is using them for Obamacare IT work.” Washington was not the only city that has been fed up with CGI on healthcare. Last year, CGI was fired by the liberal states of Vermont and Massachusetts for failing to deliver on their Obamacare websites. The Obamacare health website in Massachusetts never worked, despite the state paying $170 million to CGI.

For a company like this to stay in business, you have to wonder how many bribes, pay-offs, and campaign contributions are involved.

Now let’s look at an example of state government in action.

Kim Strassel of the Wall Street Journal has a column about a blatantly corrupt deal between slip-and-fall lawyers and the second most powerful Democrat in the Empire State.

New York Assembly Speaker Sheldon Silver was last week arrested and accused by the feds of an elaborate kickback scheme. …Mr. Silver is alleged to have pocketed more than $5 million in a set-up in which he directed state funds to the clinic of an asbestos doctor, who in turn provided him with patients who could be turned into jackpot plaintiffs. Weitz & Luxenberg, a class-action titan, paid Mr. Silver huge referral fees for these names, off which the firm stands to make many millions. …when the Silver headlines broke, Weitz & Luxenberg founder Perry Weitz said he was “shocked”… The firm quickly put the Albany politician on “leave.”

A logical person might ask “on leave” from what? After all, he didn’t do anything.

But he did do something, even if it was corrupt and sleazy.

…here’s the revealing bit. Queried by prosecutors as to what exactly the firm did hire Mr. Silver to do—since he performed no legal work—Weitz & Luxenberg admitted that he was brought on “because of his official position and stature.” In other words, this was transactional. Weitz & Luxenberg gave Mr. Silver a plum job, and Mr. Silver looked out for the firm—namely by blocking any Albany bills that might interfere with its business model.

So workers, consumers, and businesses get screwed by a malfunctioning tort system, while insider lawyers and politicians get rich. Isn’t government wonderful!

Just one example among many of how state governments are a scam. Perhaps now folks will understand why I’m not very sympathetic to the notion of letting them take more of our money.

Last but not least, let’s look at a great moment in local government.

As we see from a report in USA Today, a village in New Jersey is dealing with the scourge of…gasp…unlicensed snow removal!

Matt Molinari and Eric Schnepf, both 18, also learned a valuable lesson about one of the costs of doing business: government regulations. The two friends were canvasing a neighborhood near this borough’s border with Bridgewater early Monday evening, handing out fliers promoting their service, when they were pulled over by police and told to stop. …Bound Brook, like many municipalities in the state and country, has a law against unlicensed solicitors and peddlers. … anyone selling goods and services door to door must apply for a license that can cost as much as $450 for permission that is valid for only 180 days. …Similar bans around the country have put the kibosh on other capitalist rites of passage, such as lemonade stands and selling Girl Scouts cookies.

Though, to be fair, it doesn’t seem like the cops were being complete jerks.

Despite the rule, however, Police Chief Michael Jannone said the two young businessmen were not arrested or issued a ticket, and that the police’s concern was about them being outside during dangerous conditions, not that they were unlicensed. “We don’t make the laws but we have to uphold them,” he said Tuesday after reading some of the online comments about the incident. “This was a state of emergency. Nobody was supposed to be out on the road.”

But the bottom line is that it says something bad about our society that we have rules that hinder teenagers from hustling for some money after a snowstorm.

Just like these other examples of local government in action also don’t reflect well on our nation.

Let’s close with my attempt to re-state Bastiat’s wise words. Here’s my “First Theorem of Government.”

And if you think what I wrote, or what Bastiat wrote, is too cynical, then I invite you to check out how politicians are bureaucrats are squandering money on Medicare, the Veterans Administration, the Agriculture Department, Medicaid, the Patent and Trademark Office, the so-called Consumer Financial Protection Bureau, the National Institutes of Health, Food Stamps, , the Government Services Administration, unemployment insurance, the Pentagon

Well, you get the idea.

Which is why this poster is a painfully accurate summary of government.

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As a taxpayer, I don’t like the fact that government employees get paid more than folks in the private sector.

But the big difference between bureaucrats and regular workers isn’t so much the pay, it’s the fringe benefits.

And perhaps the  biggest difference of all is that government bureaucrats get far more  lavish retiree benefits.

Sounds like a sweet deal, at least if you get a coveted job (or even six jobs!) with a state or local government.

It’s not a good deal for taxpayers, though, and the entire system is rather unstable because politicians and union bosses have conspired to create huge unfunded liabilities that threaten to create a death spiral for state and local governments.

Simply stated, why should productive taxpayers continue to live, work, and pay taxes in places where a huge chunk of money is diverted to pay off past promises rather than to deliver goods and services (education, parks, trash pickup, police, etc) that have some value?

Indeed, this is a big reason why places such as Detroit already have collapsed. And I fear it is just a matter of time before other local government (as well as some states such as California and Illinois) reach the tipping point.

But perhaps you think I’m being too dour? Yes, I’m prone to pessimism because of my low level of faith in the political elite. In this case, however, any sensible person should be very worried.

Let’s look at what some experts have to say about these issues.

Here are some passages from Steve Malanga’s Wall Street Journal column from earlier this month.

He starts by explaining that Jerry Brown’s big tax hike for education actually has very little to do with helping kids to learn (not that more money is the recipe for better education, as shown by this jaw-dropping chart, but that’s a separate issue).

Instead, the money is being diverted to finance the lavish pension system.

California Gov. Jerry Brown sold a $6 billion tax increase to voters in 2012 by promising that nearly half of the money would go to bolster public schools. …Last June Mr. Brown signed legislation that will require school districts to increase funding for teachers’ pensions from less than $1 billion this year in school year 2014-15, which started in September, to $3.7 billion by 2021, gobbling up much of the new tax money. With the state’s general government pension fund, Calpers, also demanding more money, California taxpayer advocate Joel Fox recently observed that no matter what local politicians tell voters, when you see tax increases, “think pensions.” …When California passed its 2012 tax increases, Gov. Brown and legislators promised voters the new rates would expire in 2018. But school pension costs will keep increasing… Public union leaders and sympathetic legislators are already trying to figure out how to convince voters to extend the 2012 tax increases and approve “who knows what else” in new levies

Sounds grim, but Mr. Malanga warns that “Californians are not alone.”

Decades of rising retirement benefits for workers—some of which politicians awarded to employees without setting aside adequate funding—and the 2008 financial meltdown have left American cities and states with somewhere between $1.5 trillion and $4 trillion in retirement debt. …the tab keeps growing, and now it is forcing taxes higher in many places.

Such as Pennsylvania.

A report last June by the Pennsylvania Association of School Administrators found that nearly every school district in that state anticipated higher pension costs for the new fiscal year, with three-quarters calculating their pension bills would rise by 25% or more. Subsequently, 164 school districts received state permission to raise property taxes above the 2.1% state tax cap. Every one of the districts cited rising pension costs.

And West Virginia.

In West Virginia, where local governments also face big pension debts, the legislature recently expanded the state’s home rule law—which governs how municipalities can raise revenues—to allow cities to impose their own sales taxes. The state’s biggest city, Charleston, with $287 million in unfunded pension liabilities, has already instituted a $6 million-a-year local sales tax devoted solely to pensions, on top of the $10 million the city already contributes annually to its retirement system. At least five more cities applying to raise local sales taxes, including Wheeling, also cited pension costs.

The column also has lots of material on the mess in Illinois.

Here’s just a sampling.

The city of Peoria’s budget illustrates the squeeze. In the early 1990s it spent 18% of the property-tax money it collected on pensions. This year it will devote 57% of its property tax to pension costs. Reluctant to raise the property levy any more, last year the city increased fees and charges to residents by 8%, or $1.2 million, for such items as garbage collection and sewer services. Taxpayers in Chicago saw the first of what promises to be a blizzard of new taxes. The city’s public-safety retirement plans are only about 35% funded, though pension costs already consume nearly half of Chicago’s property-tax collections.

All this sounds depressing, but it’s actually worse than you think.

We also have to look at the promises that have been made to provide health benefits for retired government employees.

Robert Pozen of Brookings has some very sobering data.

Public-pension funds have garnered attention in recent years for being underfunded, but a more precarious situation has received much less notice: health-care obligations for public retirees. …only 11 states have funded more than 10% of retiree health-care liabilities, according to a November 2013 report from the credit-rating agency Standard & Poor’s. For example, New Jersey has almost no assets backing one of the largest retiree health-care liabilities of any state—$63.8 billion. Only eight out of the 30 largest U.S. cities have funded more than 5% of their retiree health-care obligations, according to a study released last March by the Pew Charitable Trust. New York City tops the list with $22,857 of unfunded liabilities per household. …Total U.S. unfunded health-care liabilities exceeded $530 billion in 2009, the Government Accountability Office estimated, but the current number may be closer to $1 trillion, according to a 2014 comprehensive study released by the National Bureau of Economic Research.

By the way, these retired government workers are covered by Medicare, but Pozen explains that the unfunded liabilities exist because so many of them retire before age 65.

And their health plans sometimes cover Medicare premiums once they turn 65.

State and local governments typically pay most of the insurance premiums for employees who retire before they are eligible for Medicare at age 65. That can be a long commitment, as many workers retire as early as 50. Many governments also pay a percentage of Medicare premiums once retired workers turn 65.

But there is some good news.

States are trying to deal with this healthcare-driven fiscal Sword of Damocles.

Since 2010 more than 15 states have passed laws to reduce health-care cost-of-living adjustments—automatic benefit increases linked to the consumer-price index. Courts in eight states upheld these reductions on grounds that cost-of-living adjustments should not be considered a contractual right. Only Washington’s law was struck down in 2011, and the case is now on appeal. Some state and local governments—Nevada and West Virginia, for example—have increased deductibles and scaled back premium subsidies. Others like Ohio and Maine have reduced the health-care benefits provided to retirees. Several years ago Pennsylvania changed early retirement eligibility to 20 years of service from 15.

In many cases, though, I fear these reforms are a case of too little, too late.

So long as the fiscal burden of providing pensions and healthcare expands at a faster rate than the private economy, states and localities will push for more and more taxes to prop up the system.

But people won’t want to live in places where a big chunk of their tax payments are diverted to fringe benefits. So they’ll move out of cities like Detroit and Chicago, and they’ll move out of states like New Jersey and Illinois.

So the bottom line is that politicians and government employee unions engineered a great scam, but one that ultimately in many cases will self destruct.

And the lesson for the rest of us is that government bureaucrats should not get special goodies, particularly when they are financed by nothing other than promises to screw future taxpayers.

Pensions for government workers should be based on the defined-contribution model, and healthcare promises should be more limited and in the form of health savings accounts.

But how do you get these much-needed reforms when the government unions finance the politicians who are on the opposite side of the negotiating table?!?

P.S. Here’s a good joke about government bureaucracy. Here’s a similar joke in picture form. And we find the same humor in this joke, but with a bit more build up. And now that I’ve given it some thought, there’s more bureaucrat humor here, here (image near bottom), and here.

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Like the good people of Arizona, I despise speed cameras.

But not because I want reckless driving. Instead, my disdain is based on the fact that governments set up cameras where speed limits are preposterously low in order to generate revenue. And I speak from personal experience.

Like the good people of Houston, I also despise red-light cameras.

But once again, this isn’t because I want jerks racing through red lights and endangering innocent people. Instead, my opposition is based on the fact that greedy governments – operating recklessly – use such cameras as tools to fleece drivers.

Holman Jenkins has a column in today’s Wall Street Journal, explaining how the industry was supposed to operate.

A promising industry betrayed by the behavior of its customers—that’s the story of the red-light camera business. …Redflex Traffic Systems, leading practitioner of the once-sparkling business of setting up automatic traffic-enforcement systems for municipalities. The company and its industry were set to grow. The product improved traffic safety, freed up officers for more important work, and paid for itself. Towns and cities didn’t even have to budget a dime upfront because Redflex assumed the costs and risks of setting up cameras at designated intersections.

But in the real world, that’s not what happened. Politicians all over the nation used cameras as revenue-generating devices.

…serial revelations by the Chicago Tribune about the city’s buccaneering ways—running its camera system for profits rather than safety. …New York state conspicuously authorized cameras at various upstate locations in 2010 to close a budget gap. When New Jersey last week let a five-year experiment lapse amid a voter backlash, Moody’s called the decision a “credit negative” for local treasuries. In California, public acceptance steadily eroded as politicians kept piling on “surcharges” that turn a hundred-dollar traffic offense into a $500 fine in the mail. …the Trib cited the city’s “long-standing reliance on using the lowest possible yellow light time” to maximize revenues even at the cost of encouraging more accidents. …a universal peeve of motorists, being fined for a harmless rolling right on red.

At this point, some people may be thinking that this is no big deal. After all, they might argue, at least the cameras make the roads safer.

But according to research commissioned by the Chicago Tribune, the cameras simply replace one type of accident with another, at least in part because the city government rigged the system to maximize revenue rather than safety.

Here are some excerpts from a report published by Reason.

Chicago’s red light camera program hasn’t made driving in the city any safer and has replaced one type of car crash for another. The cameras are there obviously to make money for the city, not for the benefit and safety of the residents. The Chicago Tribune commissioned a study to break down the city’s claims that cameras have reduced right-angle crashes at intersections by 47 percent and calls the number nonsense. They calculate that it actually dropped the rate of crashes that caused injuries by only 15 percent. That wouldn’t be such a terrible number if engineers hadn’t also calculated that their cameras didn’t also cause a 22 percent increase in rear-end collisions that caused injuries. …the Tribune story makes sure to point out how much revenue the city has gotten from the program—$500 million over 12 years. The Tribune also reminds readers of the many, many, many scandals and issues the program has faced, like tickets handed out for lights that had yellow signal times below the national standard, unexplained ticket surges, and outright bribes from a company operating the cameras to city officials.

By the way, this data from Chicago isn’t an anomaly. Radley Balko has reported on similar accident-causing scams all over the nation.

So now, perhaps, you’ll understand why I wrote more than three years ago that Jay Beeber is a hero.

And why I expressed admiration for England’s NoToMob.

But I confess I’m nonetheless conflicted about cameras. Simply stated, I don’t want morons driving 60 miles per hour on residential streets. And I don’t want narcissistic jerks zipping through intersections a couple of seconds after a light has turned red.

Cameras, if properly operated, could discourage genuinely dangerous behavior.

So here’s the libertarian quandary (actually it’s a quandary for everyone who wants a sensible society). How can you give government the power to enforce legitimate laws without simultaneously giving government the power to abuse people?

This is the puzzle that America’s Founding Fathers tried to solve with a set of rules that limited the power of government. As Thomas Jefferson wrote, “ let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution.”

Unfortunately, courts haven’t done a good job in recent decades of constraining the federal government. And the only halfway decent constraint on state and local governments is jurisdictional competition, and that’s a necessary but far from sufficient condition for good policy.

Returning to the narrow issue of cameras, part of the solution is to reduce government’s role in transportation. We already have lots of privately built and privately operated highways in America (and even in the United Kingdom). And private developers also build and operate some local roads. So why not let them set – and enforce – the traffic rules?

Such a system wouldn’t be perfect, of course, but I’m guessing we would have better rules than the ones imposed by politicians.

Or we can let politicians use new technologies to further monitor and control our lives (and empty our pockets).

P.S. If some brave citizen got arrested for busting a bunch of revenue cameras and I somehow wound up on the jury that decided the case, you can probably guess what I would do.

P.P.S. I shared a chart back in 2010 to show that economists are terrible forecasters.

Now we have more evidence. But instead of looking at growth predictions versus reality, here’s what economists predicted about interest rates compared to what actually happened.

This chart helps to show that economists shouldn’t try to make short-run predictions, which good economists already understand.

Whereas the bad ones are easily confused with con artists.

No wonder it’s so easy to make fun of us.

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I like to think that I occasionally put together interesting and persuasive charts on fiscal policy.

For instance, I think it’s virtually impossible to make a credible argument for tax hikes after looking at my chart showing how easy it is to balance the budget with modest spending restraint.

But I’ll freely confess that no chart of mine can compare to this powerful image created by my Cato colleague, Andrew Coulson, which shows how spending and staffing for the government school monopoly have exploded while enrollment and performance have been stagnant.

As far as I’m concerned, no honest person can look at his chart and defend the current system.

But some folks may need some more evidence about the failure of government schools, so let’s look at stories from both ends of America.

We’ll start on the east coast. Writing for the Daily Caller, Eric Owens reports that bureaucrats in a New Jersey town are being handsomely rewarded for not educating students.

Only 19 students in the public school system in Paterson, N.J. who have taken the SAT scored high enough to be considered college ready, local Fox affiliate WWOR-TV reports. At the same time, 66 employees in the Paterson school district each soak taxpayers for salaries of at least $125,000 per year, the Paterson Press reports. …Paterson is no tiny town. It is, in fact, the third-largest city in New Jersey. The population is roughly 146,000 people. …The city boasts some 50 public schools altogether. There are over 24,000 total students in all grades.

But the folks in Paterson can be proud of their government schools. After all, they’re doing much better than Camden.

In December 2013, Camden’s then-new superintendent of public schools announced that only three — THREE! — students in the entire district who took the SAT during the 2011-12 academic year scored high enough to qualify as college-ready.

Last but not least, the story notes that the school district has concocted a clever strategy to avoid any more embarrassing stories.

You’re probably wondering whether this means school choice? Rigorous standards? Better discipline?

Nope, nope, and nope. Remember, we’re dealing with government bureaucracy.

Back in Paterson, school officials say they have cleverly dealt with their nearly complete failure to prepare students for college entrance exams by no longer using the SAT to assess student achievement.

I actually hope this is a joke, though there’s no indication in the story to suggest the reporter is being satirical.

So we have bureaucrats getting vastly overpaid in exchange for not educating kids.

Now let’s travel to the west coast, where Los Angeles schools also have overpaid officials who do a crummy job of educating students, but they have figured out very novel ways of squandering tax dollars.

As Robby Soave reports in Reason, the LA school district first tried a failed scheme to give every student an iPad, which led to predictable fraud and misuse with no accompanying educational benefit. Now they want to double down on failure with a new proposal that gives various schools the option of which bit of high-tech gadgetry to mis-utilize.

Who could be against choice? That’s the argument Los Angeles school district administrators are now employing to push their latest round of expensive technology upgrades. Schools will be given the choice to receive Chromebooks instead of iPads—and some schools will get laptops, the most expensive option of all.  …The idea is to eventually place such a device in the hands of every child in the district.

Needless to say, there’s no strategy for avoiding the mistakes that plagued the earlier scheme.

The problem administrators encountered when rolling out the iPad plan, however, was that kids kept losing or breaking the devices. What happens then? Do parents pay, or does the district? Do kids get a replacement? Teachers also struggled mightily to incorporate the technology into their lesson plans, and concerns about kids using iPads for unsanctioned purposes caused headaches. The initial iPad deal unravelled after allegations of an improper relationship between then District Superintendent John Deasy, Apple, and curriculum company Pearson.

The reporter is understandably skeptical about what will happen next.

I have little reason to believe that the individual schools will be more responsible stewards of the taxpayer’s money than the district was. Indeed, 21 schools decided to go with an even more expensive option: laptops. Steve Lopez of the LA Times argued persuasively in October that the iPad fiasco was a costly diversion from the district’s real problems. Schools can’t even find the money for math textbooks, but administrators want to force unneeded technology on them and impose computerized tests. The district should prioritize basic instruction before deciding to purchase thousands of fancy gadgets.

Gee, it’s almost enough to make you think that government schools don’t work very well and that we should instead allow parents to have real choice over how to best educate their children.

P.S. You won’t be surprised to learn that Obama’s silly common core proposal appears to be driving some of these bad results.

P.P.S. Though remember that Bush’s no-bureaucrat-left-behind scheme was also a flop.

P.P.P.S. School choice doesn’t automatically mean every child will be an educational success, but evidence from SwedenChile, and the Netherlands shows good results after breaking up state-run education monopolies.

And there’s growing evidence that it also works in the limited cases where it exists in the United States.

P.P.P.P.S. Or we can just stick with the status quo, which involves spending more money, per student, than any other nation while getting dismal results.

P.P.P.P.P.S. This is a depressing post, so let’s close with a bit of humor showing the evolution of math lessons in government schools.

P.P.P.P.P.P.S. If you want some unintentional humor, the New York Times thinks that education spending has been reduced.

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