Legislative Abuses in California

Exactly who do our “public servants” serve, when they abuse legislative rules not once, but three times, to defend something designed to benefit unions at the expense of other Californians?  The answer is not Californians.

The “how a bill becomes law” abuses involve three “gut and amend” (GANDA) bills.  As legislators raced to pass bills before adjournment, legislative kingpins added “new and improved” legislative changes to bills or took unrelated bills and replaced them with completely different bills. Then they rushed them through the last steps, leaving no time for effective scrutiny. 

SB 922 is Exhibit A. Senate President Pro-Tem Darrell Steinberg and Assembly Speaker John Perez morphed it from a measure to add tuberculosis to information that can be disclosed under California’s immunization system to one barring local governments from banning project labor agreements (to checkmate a campaign by non-union contractors to ban PLAs that was showing results in multiple local areas). Supplementary GANDAs include AB 436 and SB 790, which Ben Boychuck reported would “benefit PLAs by exempting local governments from some fees if they require contractors to adopt a project labor agreement and by requiring public utilities to pay into a union-controlled fund actively promoting such agreements.”

What is abusive about PLAs? They give taxpayers much less for their money to pay off unions for political support.

PLAs are agreements negotiated between a government entity and unions (excluding nonunion workers and contractors) prior to accepting bids on a public construction project, which establish the terms and conditions of employment that will be mandated for all workers on the project, regardless of who wins the bid.

PLAs are justified by unions and their wholly- owned Sacramento pets as buying labor peace, “leveling the playing field” for competitors, guaranteeing projects are completed on time, and holding down costs. But they do none of those things. They restrict competition, raise costs, and pick taxpayers’ pockets.

As Wharton Professor Herbert Northrup wrote in the Journal of Labor Research, “restraints imposed by government-directed PLAs are political decisions which have little or no economic rationale, nor can they be defended on the grounds of labor peace, enhanced safety, or other reasonable criteria.” Or as Diana Furchtgott-Roth wrote last year, a PLA “drives out small businesses from competing for these projects; raises their cost to the taxpayers; and funnels a larger stream of union dues from taxpayers’ pockets to union treasuries.”

PLAs are supposed to buy labor peace because they require unions to promise not to engage in disruptive activities. But that promise need not be kept, as shown by recent PLAs in New York and earlier, by the San Francisco International Airport expansion project.

Unions leverage the threat to strike unless a PLA is adopted (supplemented by using environmental laws to halt projects unless PLAs are imposed) into a better deal for themselves. Of course, no-strike pledges would not be necessary for non-union contractors, who comprise the vast majority of the construction industry.  In fact, PLAs punish non-union workers and contractors who would never strike, in order to buy labor peace from unions who threaten strikes–penalizing the innocent (including taxpayers) while rewarding guilty. As the New York Supreme Court held in the Albany Specialties case, adopting PLAs to buy such labor peace “smacks of capitulation to extortion” by unions, not leveling the playing field.

PLA backers assert that they just impose equal labor terms on all project bidders, allowing equal competition. But those “equal” terms involve anything but equal competition between union and non-union workers. For instance, the terms of the San Francisco International Airport PLA included the requirement that even non-union workers had to join the union and pay substantial dues and fees for the project’s duration, as well as contributing to union health and pension funds, although they would get no benefits in return. Even apprentices had to be union members, and new workers had to come through union hiring halls. In addition, union wages, work rules, job classifications, and hiring and grievance procedures were required, raising costs.

Such PLA terms are so onerous to non-union contractors that most will not even bid on PLA projects. And with fewer bidders, particularly non-union contractors who may have lower costs, the reduced competition leads to higher bids.

In 2009, John McGowan estimated that employees of non-union contractors faced take home pay reductions of 20 percent from PLAs, while also increasing non-union employers’ cost by about 25 percent.  This year, a National University System Institute for Policy Research study of public school construction in California, found costs 13 to 15 percent higher with PLAs, consistent with research elsewhere by the Beacon Hill Institute at Suffolk University.

The primary defenses of PLAs stand up so poorly to investigation— including a General Accountability Office investigation that was unable to document any cost efficiencies from PLAs–that unions have invented other equally bogus “benefits” from them.

Unions claim that PLAs benefit minorities.  Some do include special minority employment programs. However, since unions have a far smaller fraction of minority members than nonunion employers, PLAs actually discriminate against minorities. This is reinforced by requirements that apprentices be union apprentices, and restrictions on lower-skilled “helper” employees, because they might undermine union jobs, even though such jobs are the primary means by which many low-income and minority workers learn their way to higher paying jobs. This is why The National Black Chamber of Commerce called PLAs “a license to discriminate against black workers.”

Unions also claim that PLAs increase quality and safety. But a 2001 Ernst and Young study concluded that “There is no quantitative evidence that suggests a difference in the quality of work performed by union or open shop contractors.”  Similarly, no statistical evidence supports claims that PLAs improve worker safety.

Given the support unions have provided for the Democrats that dominate the California legislature (backed by electoral threats against those who deviate from the union line), Sacramento’s support for unions “sweetheart deals” on public construction is hardly surprising.  But doing so harms California taxpayers and the vast majority of our workers. And when legislative leaders blatantly abuse legislative rules to generate “hide and sneak” reinforcements for PLAs, while also claiming to spend every state government dollar as wisely as possible, they simply display their hypocrisy in multiple dimensions.

(Garry Galles is a professor of economics at Pepperdine University.)

An African Family Safari in California’s Wine Country?

Several years ago while camping in the Serengeti of Tanzania with my family, I turned to my wife and told her “doesn’t this feel just like Safari West?”   As the words came out of my mouth I realized how special the about 400 acre hideaway nestled between Santa Rosa and Calistoga at the northern tip of California’s wine country really was.  To have the experience that Peter and Nancy Lang have created at Safari West (www.safariwest.com) so close to the true African safari experience is truly amazing.  (Peter is the son of famed Hollywood director Otto Lang who ‘se work include classics like “Daktari,” “Snows of Kilimanjaro,” “Flipper,” and “Sea Hunt.”)  It’s no wonder we’ve visited Safari West at least a dozen times in the past decade and recommend the experience to all our friends.

When you step out of your car at Safari West you can expect a few things, your cell phones don’t work, you won’t find a TV and you can get ready for a wild exploration of the “Sonoma Serengeti” – the closest thing you’ll get to Africa without a passport.

Safari West is not a zoo or a theme park and not a drive through park.  It is an authentic African Wildlife Preserve and African Tent Camp. Founded in 1979 as a private ranch for breeding and species propagation, my wife refers to the experience as “bourgeois camping” complete with hot showers and heated blankets.  Safari West is a private facility whose primary focus is on conservation through education. They opened to the public in 1993 and have had overnight accommodations since 1999 in real safari tents.

Adventure abounds as you set out in rugged, open-air safari vehicles in search of zebra, blue wildebeest, springbok, Cape buffalo, kudo and more.  Crossing terrain that ranges from steep and rocky to rolling savannah, the journey transports you to an environment much like the exotic and untamed lands of Africa, with herds roaming virtually undisturbed over hundreds of acres.

Unique to the Safari West experience is the opportunity to get close to the animals who origins span the entire African continent, but are found here all in one place!  This diverse species integration, as well as the freedom to move throughout a natural environment, allows the animals to maintain many of their wild instincts and behaviors.  What’s more, you’ll have the opportunity to observe animals such as the scimitar-horned oryx, Nile lechwe and addax which are highly endangered and rarely seen in the wild.

While traversing the natural landscape, highly experienced guides share fascinating stories about the collection of over 700 animals, as well as tales of their exotic counterparts in the wilds of Africa.  During our drives, we’ve encountered Cape buffalo charging up hillsides, seen white rhinos basking in the sun, impala leaping over logs and steams and a herd of wildebeest galloping across the horizon.  One more than one occasion we’ve found ourselve eye to eye with a towering curious giraffe.

The safari adventure also continues on foot with an exploration of the aviary which houses an international bird collection.  You’ll also be able to take a closer look at smaller animals such as African Spurred tortoises, fennec foxes, and Indian crested porcupines. My daughter’s absolute favorites are a pair of antelope (Blue Duikers) no larger than a small puppy.  You’ll spot cheetahs stretching their powerful legs and watch primates enjoying their lush habitat on Lemur Island.

You can make it a day trip, but spending the night hearing all animals through the night makes it a truly “I want to visit again” experience.  My family highly recommends you experience Safari West firsthand.

Gov. Chris Christie Mesmerizes Reagan Library Crowd

Nearly three weeks ago I visited the Ronald Reagan Presidential Library when the venue played host for the GOP presidential candidate’s debate featuring eight Republicans seeking their party’s nomination for the presidency. All of the candidates in attendance, accomplished politicians in their own rights, made an impression on the mostly friendly audience; still none of them, with the possible exception of Texas governor Rick Perry, seemed to really capture the minds and sentiments of the attendees.

Just a few hours ago though, New Jersey governor Chris Christie addressed a similar crowd (except twice the size of the presidential debate) also at the Reagan Library in Simi Valley, California but the energy was different—Christie mesmerized the room.

While the current GOP field is diverse and intriguing, none of the candidates have the rock star effect that Christie has among Republicans.

Gov. Christie spoke about leadership and the lack of leadership he sees from the White House and President Obama. He spoke about the Obama administration’s lackluster foreign policy and deficiencies in addressing major national challenges, inferring Obama’s policies have been mostly reactionary and off base. “Real leaders don’t read polls,” Christie said “they change polls.”

That was not the only applause line in Christie’s speech, but the biggest ovation that came during the evening was not from a remark made by Christie, but rather a woman in the audience given a microphone to ask a question. Instead of asking a question, her voice cracking slightly, she made a long yet tasteful and simple plea to the governor of the Garden State to enter the presidential race: “We need you, our country’s needs you.”

Her remarks caused the audience to rise in unison offering a standing ovation.

Christie had already been asked several question about whether or not he would run for president and he referred to his previous answers, but even he seemed taken aback by the way this particular audience member pleaded with him.

What Chris Christie has over the current field of Republican presidential candidates is a rock star following capable of evoking magnified emotion. Even if Christie does not run for the presidency in 2012, he is quite possibly the most powerful messenger for the GOP today.

(Click here to see more coverage of Christie’s speech from Orange County Register Opinion.)

Obama’s Nationalization of Public Schools

Alexis de Tocqueville is famous for his portrait of nineteenth-century America and his philosophic insights on why the American society has flourished — and also where it might go wrong.

It is worth the time to remind ourselves what some of Tocqueville’s insights were. Once we do, we can consider the Obama administration’s current nationalization of K-12 public-school curriculum, with Tocqueville’s insights in mind.

One of Tocqueville’s major insights was that Americans have benefited from popular participation in the large number of churches, charities, clubs, and voluntary associations in our country, as well as in state and local governments, which stand between the individual and the national government in Washington, D.C.

In essence, Tocqueville believed that the civic health of America depended on popular participation in entities like associations to create and maintain religious, private, or charter schools, as well as in local authorities like school districts with fully-empowered schools boards.

Such activity fosters civic virtue and “habits of the heart” and encourages everyday citizens to take on necessary social tasks that in pre-modern society lowly subjects were not allowed to undertake, but were instead the duty of the aristocracy.

When Tocqueville describes nineteenth-century American society he spoke, for example, of township school committees that were deeply rooted in their local communities.  In those days, state control of local public education took the form of an annual report sent by the township committee to the state capital.  There was no national control.

Large sums (much of it taxed from laborers and farmers) were spent by these school committees, and their efforts reflected, Tocqueville thought, a widespread American desire to provide basic schooling as a route to opportunity and advancement.  He admired the fact that in self-activating America, one might easily chance upon farmers, who had not waited for official permission from above, but were putting aside their plows “to deliberate upon the project of a public school.”

At the same time, Tocqueville observed in European countries that activities like schooling that had formerly been part of the work of guilds, churches, municipalities, and the like were being taken over by the national government of those countries.

Tocqueville fears that if either Americans neglected their participation in associations or local governments or Europeans lost their intermediate entities to the national governments, the tendency would be toward a loss of a liberty and a surrender to a soft despotism.

In Democracy in America, Tocqueville describes how in Europe “the prerogatives of the central power” were increasing every day and making the individual “weaker, more subordinate, and more precarious.”

Once, he says, there were “secondary powers” that represented local interests and administered local matters.  Local judiciaries, local privileges, the freedoms of towns, provincial autonomy, local charities – all were gone or going. The national central government “no longer puts up with an intermediary between it and the citizens.”

Tocqueville says that, in Europe, education, like charity, “has become a national affair.”  The national government receives or even takes “the child from the arms of his mother” and turns the child over to “the agents” of the national government.

In nineteen-century Europe, the national governments already were infusing sentiments in the young and supplying their ideas. “Uniformity reigns” in education, Tocqueville says.  Intellectual diversity, like liberty, is disappearing.  He fears that both Europe and America were moving toward “centralization” and “despotism.”

Tocqueville believes that in non-aristocratic societies (like America), there is strong potential for the national government to become immense and influential, standing above the citizens, not just as a mighty and coercive power, but also as a guardian and tutor.

Tocqueville maintains that religion (as a moral anchor) as well as involvement in local government (such as school districts) and voluntary organizations can help America counter the tendency toward tyranny.

Tocqueville says that Americans of all sorts are constantly forming associations — not only businesses, in which many are involved, but also associations “of a thousand other kinds” – to put on entertainment, to build churches, to send out books, or to found hospitals and schools.

Interestingly enough Roger Boesche, one of the world’s most eminent scholars specializing in Alexis de Tocqueville, was President Barak Obama’s favorite professor in college. President Obama studied political philosophy under a teacher who continually draws on Tocqueville’s insights.

Professor Boesche writes in one book (Theories of Tyranny) that the Tocqueville liked voluntary associations and local government for the same reason.  They are venues where Americans can get together with their “enormous and constructive popular energy” to undertake projects and shape their own destinies. Tocqueville believed, according to Obama’s teacher Boesche, that “two the pillars that upheld democratic freedom” in America were associations and local government.

Tocqueville foresaw some of the influences that have transformed the national government from a constitutional republic into a welfare-state administered by a bureaucracy and a technocratic elite.  Likewise, during the Progressive Era (from the 1890s to the First World War), Progressive politicians transformed municipalities and school districts to put bureaucracies and technocratic specialists in charge.

In the case of school districts, this was done through nonpartisan elections, district boundaries that did not match other jurisdictions, holding school elections at times other than that of the General Election, discouraging school boards from participating in curriculum issues, and granting extensive power to local superintendents (similar to that granted to city managers in the same era).

Some people still have a romantic, out-dated image of school districts and local boards. Today, they are not the school committees that Tocqueville saw, but rather, to a large degree, creatures of the Progressive Era. If we want to change that and re-invigorate school boards, we will have to restore avenues for popular participation of the sort Tocqueville sought.  For example, Indiana recently put school elections in November, when more people vote.  Another new promising avenue for popular participation is Parent Trigger, whereby parents can petition to turn a regular public school into a charter school.

President Obama’s favorite professor paraphrases Tocqueville on the perils of “centralization of information” in another book (The Strange Liberalism of Alexis de Tocqueville).  In this book, Professor Boesche says that, according to Tocqueville, once centralization of information is “entrenched,” once a nation relies on a few sources for information, then “freedom of opinion” becomes “illusory.”

Under these centralized conditions, opinion does not develop freely, but is “hierarchically ‘formed”” “Centralized sources tend to give everyone the same opinion.” Tocqueville was thinking specifically of a nationalization of the newspaper industry, but his insight applies to education as well.

Yet for public schools, President Obama is doing precisely what Tocqueville warned against.

President Obama’s Department of Education in Washington, D.C., has been financing a national K-12 curriculum for English and mathematics. The new national curriculum is designed to complement a federally-funded national testing system that will test every public-school student in states across America.

Joseph Califano, President Jimmy Carter’s Health, Education and Welfare Secretary, articulated Tocqueville-style concerns about such centralization of schooling: “Any set of test questions that the federal government prescribed should surely be suspect as a first step toward a national curriculum. … [Carried to its full extent,] national control of curriculum is a form of national control of ideas.”

Unless President Obama’s Department of Education it is stopped, its officials will dismantle what remains of state and local decision-making on classroom lessons and replace it with a new system of national tests and a national curriculum. This policy is Tocqueville’s nightmare: As in Europe, education “has become a national affair” and President Obama is imposing in America a one-size-fits-all centralization like that administered by the National Ministry of Education in France.

Political thought may have been Barack Obama’s favorite class in college, but he didn’t study Tocqueville closely enough.

Bill Evers is a research fellow and member of the Koret K-12 Education Task Force at Stanford University’s Hoover Institution and served as U.S. Assistant Secretary of Education for Planning, Evaluation and Policy Development (2007-2009).

Al Sharpton: MSNBC’s Next Failure

MSNBC hit a new low last week when it debuted a talk show featuring Al Sharpton as host. Subsequently, the network changed its advertising slogan to, “We’ve fallen and we can’t get up.”

Sharpton? Really? Is that the best that liberal “journalism” can offer? If you come from New York, then you have not-so-fond memories of Al Sharpton, publicity hound extraordinaire, standing in the subway tracks and leading a dopey demonstration, Al Sharpton convulsing the city with his Tawana Brawley infatuation, and Al Sharpton parading with a medallion around his neck only smaller than the Fortuna wall clock that Flavor Flav wears.

This is a man whose opinions are worth listening to?

In fairness to MSNBC, anybody trying to do liberal talk radio is playing a losing hand. Michael Medved said it best many years ago when he was talking about Michael Jackson, the preeminent voice of liberal talk radio whose erudite, entertaining, and eminently fair show aired weekday mornings on KABC in Los Angeles. As Medved said, if Michael Jackson (the talk show host, not the singer) couldn’t draw an audience, no one in liberal talk radio can.

And that’s the problem. Conservatives pretty much sing from the same hymnal. There are a handful of issues that most conservatives agree on–limited government, opposition to unions, controlling the border, that sort of thing.

Liberalism, by contrast, is a big tent, with as many liberal opinions as there are liberal voters. You pretty much can’t say anything to a group of liberals without inflaming the rest.

Sharpton is a perfect example of this. I don’t know exactly who his constituency is, aside from his own ego. But to the extent that he represents anyone or stands for anything, he is an anathema to Jewish voters, who recall him fanning the flames in a Black-Jewish situation in Brooklyn many years ago. Liberals are a lot like rugby players–they eat their young. It’s amazing they stood by Obama this long, considering how much he has waffled on their agenda. They just can’t be satisfied.

The really sad thing about putting Sharpton on the air is that it demonstrates just how pitiful thought leadership is on the Left. Is this really the best that a liberal news network can offer? Isn’t there anyone out there untainted by scandal, who might have something to say to a liberal audience? I guess not.

Don’t tell me that just because Sharpton has given up the medallion and the track suits, has lost a bunch of weight, and now dresses like a grownup, it means that he’s some sort of new Al Sharpton. It’s the same old demagogic blowhard, just nattily attired. Is he actually going to draw ratings? Does he really have anything worth saying? Or does his elevation to talk show host status simply demonstrate that every bottom has a trap door beneath it?

You’ve probably figured out that I won’t be TiVoing Al Sharpton any time soon. If this is the best the Left can find to promote its values and champion its beliefs, then I just feel bad for liberals. Sharpton isn’t a commentator; he’s a sideshow. He’s a circus act. Although putting him on television does achieve the seemingly impossible: his presence on the tube makes Geraldo Rivera look like Walter Cronkite. 

Don’t let the fancy clothes fool you. Sharpton’s show simply means that we have to revise what Andy Warhol said: In the future, everybody’s going to have his fifteen minutes. Right alongside Keith Olbermann.

Wake me when it’s over.


( New York Times Bestselling Author Michael Levin runs www.BusinessGhost.com, America’s leading provider of ghostwritten business books. )

MSNBC Goes Further Left

Restrict Government, Not Superstores

California has long been in the forefront of attempts by unions and their liberal allies to legally protect themselves against more efficient competitors, despite the inherent harm to consumers.  One illustration of their determination to persist until they get their way is SB469, the fifth attempt in the last dozen years to stymie the opening of new superstores, which now awaits Governor Jerry Brown’s signature.

It applies to stores over 90,000 square feet, with over 10% devoted to items exempt from state sales tax (i.e., food and prescription drugs), but excludes membership stores.  In other words, it targets Wal-Mart and Target (without having to single them out by name), whose superstores can offer consumers substantially lower prices than unionized competitors.

According to the Los Angeles Times, the bill would require studies to “gauge the effect that a proposed superstore would have on almost everything nearby—businesses, jobs, schools, traffic, housing, parks, playgrounds and day-care centers.”

SB469’s author, State Senator Juan Vargas (D-S.D.), says “it makes these super-boxes prove they are a good thing.”  But in fact, like multiple previous incarnations, it is actually designed to create an impossible hurdle to new superstore approvals.

It puts an unattainable burden of proof on supercenters.  SB469 would essentially require companies like Wal-Mart to prove a negative–that a supercenter would not have a harmful effect on “the community.” But as any logic student knows, it is all but impossible to prove a negative, because it requires establishing beyond doubt that in every potential scenario, something is true. No one can prove, in advance, that in every possible circumstance, a supercenter will not harm anyone, however remote the connection. Of course, the stores now in existence and eager to restrict supercenters could not have met that criterion, either, if it was applied to them.

The burden of proof is heightened by the ambiguous nature of the way the term “the community” is used.  Any individual or group threatened by competition can claim that “if I am hurt, the community that includes me cannot be better off.” That is, it provides every existing interest group a plausible sounding argument to veto a prospective competitor.

More importantly, the nature of competition makes the burden of proof impossible. Competition is simply the process of discovering who can best cooperate with (i.e., benefit) others. But whenever a customer picks one seller over another, benefitting both, the out-competed supplier is necessarily made worse off.  If damage to such a rival is sufficient reason to restrict competition, all competition, and all the progress that it causes, would be stopped.  In addition, any resulting change in shopping patterns will also necessarily increase traffic somewhere, so that objections to congestion can act as universal supplementary excuses to exclude supercenters.

As Frederic Bastiat so frequently illustrated in his writings against protectionism, applying an argument being put forward in one particular case to other circumstances can help reveal the strength of that argument.  So what if we were to apply SB469’s approach elsewhere?

If no choice could be made until after it could be conclusively proven to leave everyone involved better off in every conceivable situation or circumstance, no new choice could ever be made.  If dating was banned until it was proven in advance that both parties would feel they were better off after the fact, there would be no dating.  And just imagine if we tried to apply that same standard to questions of marriage, having children, investment decisions, career choices, or a host of other issues.  Any politician proposing to use such a standard in any of those areas would be quickly be ridiculed out of office (although sometimes I think that California might be an exception to that conclusion).

Despite SB469’s nonsensical logic when applied to almost any issue of voluntary arrangements, there is one area in which SB469’s logic might actually benefit citizens.  What would happen if we required that no political change would be allowed to take effect until it was proven beforehand that it would benefit every member of society?  If anyone objected, it would be rejected.

Under that standard, no politician would be allowed to ever take office, no bill could be passed, no new agencies could be created or administrative appointments made, etc., short of unanimous approval. Government could then do very little, because every form of robbing Peter to pay Paul, the primary “product” offered by politicians, would disappear.  Citizens would benefit greatly.  But politicians who restrict those who compete with their “friends,” with undeniable harm to consumers, would never accept the exact same restrictions as legitimate limits on their actions.

SB469 is nothing but the latest iteration of the almost uncountable ways special interests use political coercion to protect themselves against competitors.  It would keep Californians from making the mutually beneficial market relationships they would choose.  It would deny many the ability to accept the terms superstores would offer, for both jobs and goods, which they find more attractive than their alternatives.  And similar efforts are afoot in many other states, threatening to spread the consumer carnage.

Those pushing government restrictions such as California’s SB469 may not want to harm consumers (something they assert frequently), but consumer harm is the inevitable collateral damage of such efforts to protect their own bottom lines by restricting competition.  It guarantees harm to the vast majority of Californians, who politicians claim to serve, in the name of preventing harm.  But the only harm they prevent is to the special interests they really serve at our expense.


(Gary Galles is a professor of economics at Pepperdine University)

Obama Stimulus is Paid for by Political Predation

During his Presidential campaign, Barack Obama derided John McCain’s tax and spending proposals for not adding up, claiming ethical superiority because his plans were “fully paid for.” Then ram-rodded through the largest unfunded government expansion in history.  The same mantra was used for his trillion-dollar plus health initiative, backed only by carefully timing the phase-in to manipulate Congressional Budget Office rules for scoring fiscal proposals.  And now his latest stimulus plan is “paid for” at his every stop.

            Unfortunately, pushing allegedly “paid for” programs does not justify ethical preening.  Even when true, which is far from being demonstrated in any of these instances, plans whose central feature is taking large amounts from some to give to others violate universally-accepted moral norms (e.g., “you shall not steal’), even if they identify who will be victimized and the extent of that victimization.

            In one sense, spending expansions that lay out how they would be financed are more honest than ones that don’t.  If complete, rather than leaving who will bear the harm ambiguous (as with deficits), they reveal who will be forced to pay and how much.  However, that does not make the coerced imposition of harm—called robbery if done privately–ethical.

            “Paid for” plans can be politically courageous, because they risk disadvantages avoidable through undefined funding.  Notifying “mandated donors” can create more opposition than leaving the burdens vague. But Obama’s plans minimize that risk by going after those who can be demonized—like corporations– or exploited through others’ envy—like “the rich.”

“Paid for” plans to dispense benefits to political constituencies, which clearly characterizes Obama’s latest stimulus plan, are only ethically superior to the extent that announcing the intended victims in advance makes theft less unethical. But slightly more forthcoming thieves are still thieves.  Naming who will be plundered does not justify plunder.  The ethical emphasis on “paid for” plans, which turn out not to be, merely contrasts the ethical high ground claimed with the ethical low ground actually pursued.

             Obama’s plans are only “paid for” by assumption.  He cannot actually know what will happen under yet-to-be-implemented plans, because he cannot anticipate all the responses to the many incentives that will change.  His administration’s seldom-analyzed underlying assumptions are also frequently preposterous.  And hyping plans as solutions, when one cannot actually know their effects, is also ethically questionable.  That infirmity is expanded by the fact that by the time his proposals are to be fully implemented, it might be all but impossible to undo the damage from misguided centralization.

            Political posturing aside, whether a proposed expansion of government benefits for some is “paid for” is not the primary question.  That question, made clear by the Preamble to the Constitution, is: Will it advance Americans’ General Welfare?  When income redistribution is the primary result, that test cannot be met.  Some citizens’ benefit by imposing harm on others.

            If President Obama really believed that “paid for” was the touchstone of successful policy, he would not be ballooning the scope of the federal government everywhere he turns.  Further, he would not run roughshod over so many voluntary market arrangements, for the simple reason that there, absent fraud (whose prevention is a legitimate government job it routinely fails at, as recent experience amply demonstrates), benefits are always paid for.  No one can force harm on others when exchanges must be voluntary.  All parties gain, which cannot be said plans that intentionally take from his “targets” to give to those he favors.  And ethically, paid for without theft trumps paid for by political predation.  Over and over, President Obama’s policies reveal not ethics, but ethical violations, reminding me of Will Rogers’ quip that “I can remember way back when a liberal was generous with his own money.”


(Gary Galles is a professor of economics at Pepperdine University)  

Mr. Obama, Just Create One Job

President Obama is all about job creation. Although if you look at the fine print of the legislation he’s proposing, it mostly serves to shore up government employment–essential workers like firefighters, police officers and teachers. (My kids would argue with whether teachers are essential, and quite frankly, so do I.)

The President intends to fund this half-billion-dollar experiment by taxing employers personally. In other words, he’s robbing Paul to pay Paul.

President Obama, I know your intentions are sincere–that you’d like to see more people back to work, especially people who vote Democratic (the state workers ). And I know that you have serious doubts about the morality of the private sector, so you’d like to see more and more people employed by the government.

But I’ll tell you what would make me really happy.

Instead of trying to create millions of new jobs, just create one.


Your presidency has been nothing short of mystifying.

You have presided over the greatest economic meltdown in eighty years, which you sought to “solve” by printing up billions of dollars, handing it over to your supporters, to strengthen the pension funds of state workers.

Not to mention the balance sheets of banks that, once they got money, refused to lend it.

Abroad, you took a sledgehammer to our already-fragile standing in the community of nations. Who can forget those excruciating and humiliating deep bows that you made to the emperor of Japan and the leader of Saudi Arabia?

Commentator Dinesh D’Souza came up with the best interpretation for your desire to take the syllables “super” out of “American superpower.” D’Souza posits that you are simply fulfilling the agenda of your father, who hated colonialists and wanted to cut them down to size.

To quote George W. Bush, “Mission accomplished.”

I understand that you grew up in straitened economic circumstances, and maybe that’s why you like to play poor-mouth with the American people. But a lot of presidents grew up impoverished–Nixon, Reagan, Lyndon Johnson, and Bill Clinton, to name a few–and yet each of them recognized that business is the engine of growth in our society, a lesson somehow lost on you.

I don’t doubt your intellectual abilities. You attended my alma mater, Columbia University, and while you were there, you are said to have read a very large number of books about socialism.

My sense is that, given your apparent hatred of private business, you never read any of those books on socialism all the way to the end.

Your guardianship of our nation has been more moronic than Platonic.

You promised to end wars, and yet the wars, which we can’t afford, rage on.

You promised to shut down Gitmo. I know you’ll get around to it soon. Unless you’ve decided to move from waterboarding those bad guys to offering them a path to citizenship.

Maybe I’m just bitter. Maybe I’m just one of those small-town Americans who clings to his religion and his guns, as you told that clubby little set in San Francisco in an unguarded moment during a campaign.

To take you back even further, when you came off the stage after your triumphant speech at the 2004 Democratic National Convention in Boston, you proclaimed, loud enough for reporters to hear, “I’m LeBron, baby!”

You got that one right. You took your talents to Washington, just as LeBron took his to South Beach, and you both lost. At least LeBron knew when to stop shooting in the fourth quarter. At least he knew to quit asking for the ball.

You must have had a ball yourself, Mr. President, these last few years, diminishing America at home and abroad, pursuing an agenda that could best be described as anti-American.

I saw your new campaign slogan–“Let’s change the world again.”

Enough already. For most Americans, the only change you’ve created…is spare change.

Create one job. Resign. Give it over to Joe. (Biden, not Stalin.) Or even let Hillary take over.

In that sense, you’ve done the seemingly impossible. You’ve made conservatives nostalgic for a President Hillary.

Like most Americans, I don’t understand how taxing the people who create jobs will create jobs. It’s time we had a grownup running the country again.

In 2008, you campaigned on a slogan of, “Change we can believe in.”

Hit the road, Mr. President. That’s the only kind of change your fellow Americans could possibly believe in now.

(New York Times Bestselling Author Michael Levin runs www.BusinessGhost.com, America’s leading provider of ghostwritten business books.)

Cronyism and Mitt Romney’s Massachusetts Healthcare Legacy

Cronyism Is Endemic in Contemporary Politics

“Cronyism.” That word is likely to be thrown around a great deal over the coming months in the Republican primary battle. Cronyism is bad when, for example, it’s done to lure companies to locate in a particular state, but it’s worse when used to increase government intrusion into people’s lives. That’s what happened when former Massachusetts governor Mitt Romney pressed to get support for his health care plan, the widely acknowledged model for Obamacare.

According to a 2008 report by The Heritage Foundation, at the time of Romneycare’s passage the two largest safety-net hospital systems in Massachusetts—Boston Medical Center (BMC) and Cambridge Health Alliance (CHA)—had “become dependent on direct subsidies” and were concerned that, even accounting for the significant rate increases allowed under the new law, a shift to Medicaid managed care would hurt their bottom line.

To get the law passed, Romney and his allies agreed to a host of annual payments—including “MCO supplemental payments,” “disproportionate share hospital payments,” and special “hospital supplemental payments,” targeted just for the two systems. At the last minute, more than $540 million in so-called “Section 122 payments” were inserted into the law, designed to supply BMC and CHA with an even bigger financial cushion over the next three years.

In practice, these funds—which included federal, state, and local taxpayer money—served as direct subsidies for the two providers’ expansion. According to MIT Professor Jonathan Gruber, “The federal government was essentially supplementing the expansion of these inner city hospitals.” When some lawmakers suggested cutting back on the amounts, provider officials complained about all the great programs they’d have to shut down—such as BMC’s “food pantry.”

As it turned out, the cost of these subsidies made the difference for Romneycare’s financial stability, at least in the short term. As the system faced higher than expected enrollment, the Section 122 payments forced Massachusetts to prioritize more money for the required earmarks to BMC and CHA—money that might otherwise have been used to cover costs of patient care. According to The Heritage Foundation, in 2008 “Section 122 payments come to $180 million, while Commonwealth Care overruns are $153 million. … In effect, the state was subsidizing institutions, not patients.”

In the long run, the institutional subsidies and ever-increasing costs of coverage—Massachusetts’ premium costs have skyrocketed since Romneycare’s passage and are now the highest in the nation—are taking their toll on the fiscal sustainability of Romney’s plan. The latest estimates indicate that over the next decade the law will cost $2 billion more than Romney and his allies predicted.

Such corporate cronyism abounds in government today. When states are competing for new jobs from prospective employers, governors of all political stripes use special favors to try to woo business to their state. Nearly all governors have slush funds of various sizes to deploy for such occasions, consisting of tax abatements, credits, and other incentives.

These favors don’t deliver public benefits. After all, if Texas’s roughly $200 million slush fund were the reason the state has produced four of five net new private-sector jobs in the United States in the past five years—with 88 percent within the past two years coming from the private sector—every state would have similar success in job creation.

There’s a right way and a wrong way to try to attract jobs. The right way is by ensuring a transparent legal and regulatory environment, with low taxes and a solid educational system, and creating an educated populace well prepared to fill jobs for generations. The wrong way is by picking winners and losers directly in the halls of government—preventing competition, rewarding rent-seeking behavior, and enshrining into law direct transfers from the taxpayers to corporations.

This is a lesson the federal government could stand to learn, along with state and local governments. Creating a friendly climate for business and job creation takes a lot more than writing a check with somebody else’s money.


(Benjamin Domenech (bdomenech@heartland.org) is a research fellow at The Heartland Institute and managing editor of Health Care News.)