What Ails Us - Part II

Would he rather work in America? Does our freedom still attract? Why do we need to import this man?

In his State of the Union speech the President alludes to the challenges facing the nation due to globalization and rightfully calls on our nation to rise to the occasion. He then proceeds to lay out small beer as to how to meet the challenge, with government "investment." He skirts the real issues facing our nation. He share the left's fascination with 19th century technology - trains, as if that's the wave of the future, our "sputnik" moment. The fact is, government investment is not what made this country great, nor will it cause us to meet the current challenges. Our problems are not easy to solve, but they are simple to diagnose.

Education

Our schools are being strangled by 19th century methods of instruction and 20th century unionism. In spite of computers and multimedia technology, little has changed in our schools curricula for over 100 years. We have not applied scientific knowledge about brain function with new technologies to change the way our children learn. Why? Because innovation is stifled by massive government control of our schools and union resistance to any innovation.

But just like telecommunications innovation didn't really start until the AT&T monopoly was broken up, so education must be freed of government control. But without government standards, we can't guarantee a quality education for our kids, some argue. Really? The inner city schools of our country have already lost a generation that we may never retrieve. Internationally, kids taught with the same techniques that we have used for decades, but with more intensity, are of course doing better on standardized tests. I don't think those tests necessarily prove that any particular group is more ready to face new challenges, because the tests are necessarily backwards looking. But if they are the only measure, what does it mean that we are falling behind? Innovation will only come from competition. Time to make huge changes to our school system.

Human Capital and Freedom (Personal and Regulatory)

Traditionally, many of our greatest innovators have been immigrants. Why do they come to this country? It isn't because of our love of diversity, but because our way of life, with its greater freedom that so many foreigners have come to call Americans home. Further, the immigrants are much more likely to start up new businesses than the native born. Even now, our nation is still much less regulated and less corrupt than most of the rest of the world. It means that entrepreneurs can keep the fruits of their labors. It means that immigrants won't be jailed for criticizing the President, unlike Russia for instance. Immigrants with drive and education are a source of strength.

To continue to attract immigrants, our regulatory regime must be simple and understandable. This administration is moving in the wrong direction, granting the Secretary of HHS vast new law-making powers under Obamacare, for instance. I grant that some regulation is desirable to prevent harm from coming to individuals, but our approach is out of control. We opt for the complex when the simple will do. Some easy examples:

• To deal with the less than 15% uninsured, we overhaul everyone's health insurance, rather than just dealing with that group.
• We perform elaborate "stress tests" rather than just saying the larger the bank, the larger its required capital reserves.
• We license professions, like those who braid hair, for which there is no rational basis.
• We propose an elaborate cap and trade system, rife with potential fraud (or actual fraud in Europe) rather than a straightforward carbon tax.

Immigration Policy

We desperately need skilled immigrants to counter the deficiencies in our education system and to balance our demographic profile. But because we haven't secured the border we actually have large numbers of unskilled workers as our actual immigrant population. You can argue whether low skilled illegal immigrants a net positive or not, but who would argue that we wouldn't be better off if those were replaced with engineers with advanced degrees or doctors?

The failure of our immigration policy prevents a rational discussion about opening up programs like H-1B, that would increase the inflow of accomplished individuals. Further, by increasing these inflows, we would halt outflows of jobs due to offshoring, because it makes more sense for the other members of project teams to be colocated with the most productive members of the team.

That's most of it. I also agree with KT that lack of intact families is an even more fundamental cause of our problems, but that isn't tractable by government policy. But the President didn't really address any of it. Judging by the snoozefest, no one was excited by trains either.

Susan Davis Flips on Patriot Act

Dean has had a great series of articles, titled WW()D? comparing Obama's administration to Bush's, and failing to find significant differences. On this theme, the President wants a re-authorization of the Patriot Act. Today, the House of Representatives narrowly voted not to reauthorize some provisions on an emergency basis, but it will certainly pass in the normal manner. From Wired Magazine, (H/T Dave Maass) here are the expiring provisions of the act.

• The "roving wiretap” provision allows the FBI to obtain wiretaps from a secret intelligence court, known as the FISA court, without identifying what method of communication is to be tapped.

• The “lone wolf” measure allows FISA court warrants for the electronic monitoring of a person for whatever reason — even without showing that the suspect is an agent of a foreign power or a terrorist. The government has said it has never invoked that provision, but the Obama administration said it wanted to retain the authority to do so.

• The “business records” provision allows FISA court warrants for any type of record, from banking to library to medical, without the government having to declare that the information sought is connected to a terrorism or espionage investigation.

With proper oversight, the first measure is probably needed in today's environment of multiple devices and forms of electronic communications. But, the last two appear to be unconstitutional to my admittedly untrained eye. The relevant quote you were looking for:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

I think it's fair to say that one's email is the modern equivalent of one's papers?

But notice how Democrats now sound like Republicans. Here is Susan Davis' (D-CA and my congressperson) on why she voted to reauthorize:

“I have faith that President Bush Obama will responsibly use the tools contained in the legislation needed to help prevent terrorist attacks, and not to spy on average Americans. The law also requires a significant level of court and congressional oversight.”

[Strike-through mine.] This sounds suspiciously like the arguments made by Republicans in the Bush era, who argued that the President would use the power wisely. At the time, I asked my conservative friends how a potential President Hillary Clinton might use these powers. That got some traction. Why is the bill so great now, when Susan Davis voted against it in 2006. Mere change of administration? Fabulous logic.

Quote of the Month

From W.C. Varones about the real nexus between Wall Street and Washington that corrupts our politics Democrat and Republican alike: (This was published last month, can't believe I missed this pearl of wisdom.)

The Wall Street - Washington cabal is far too deep and intertwined to be restrained by campaign finance rules, and they will always find a way to push the burden of higher tax rates onto the middle class while buying loopholes for themselves.

The only path to resolution is to simplify the tax code, plug all the loopholes and have a lower flatter rate. Further, the Fed has to have oversight, and stimulus and TARP cash has to be pulled out of the federal budget. This is the straight Tea Party line. What amazes me is that the left will rail against the fat cats, but be in favor of all of the mechanisms like stimulus, cap & trade, and TARP that funnel money to big business and Wall Street.

Renaming the Coronado Bay Bridge for Reagan

Well, officially, the San Diego-Coronado Bay Bridge. There is an effort underway to rename the bridge after former President Ronald Reagan. Great, I'm thinking, honor a great American. There is also a counter effort underway to prevent the name change. David Klowden is heading the counter effort:

“I started this page because I don't want the San Diego-Coronado Bay Bridge renamed the ‘Ronald Reagan Memorial Bridge,’ he writes on his Facebook page. “I know there are many San Diegans who agree with me that this effort by a very partisan right wing individual to politicize a non-political local landmark is unnecessary. Please help me protect the name of the bridge ….”
. . .
Klowden does not see this as a liberal-conservative issue. “This city has a tradition of not having traditions” he said. “When it comes to preservation, I’m fairly conservative.”

So what do you think? At first, I was pretty miffed and it seemed like a typical leftist reaction to the greatness of Reagan. But I also thought, in 1987, San Diego voters voted to restore Market Street to its original name after a short spell as Martin Luther King Way. I'm also still miffed about the Murph being renamed after a local firm beginning with the letter Q. Is this issue so different?

Contrariwise, its only a bridge, not a piece of San Diego history, the way Market Street was. And supposedly serious coin, to the tune of $18 million, changed hands to get the name of Jack Murphy Stadium changed.

What do you think? Please vote in my poll.

Cross posted to sdrostra.com. (Where my career might be short lived, judging by the comments on my last article.)

Cash Sales Invigorating Housing

The housing market appears to be bottoming out due to cash buyers snapping up bargain priced homes in places like Miami and Phoenix, according to the WSJ.

Buyers in markets around the U.S. are snapping up homes in all-cash deals, betting that prices are at or near bottom and breathing life into some of the nation's most battered housing markets.
. . .
Residential real estate has been slower to bounce back than stocks, but the presence of apparent bargains is luring in newly confident buyers.
. . .
A few days later, Ms. Hall-Busch, 62, got a call about a 1918 bungalow with three bedrooms and one bathroom listed for "short sale," which in the real-estate world means at a price lower than what's owed on it. The home had been on the market for $159,000, then dropped to $129,000 and then to $79,900.

"I offered them 50," she said. "I figured, it wasn't like I needed a place to live. I can afford to be a little cocky here."

Ms. Hall-Busch closed in October for $52,500 and began renovations within weeks.

It doesn't matter that I think this is a little premature, a larger principle is at work. When the housing bubble deflates or any other asset bubble, buyers move into the market to snap up bargains. In housing and in many other areas, that initial investment is followed by renovation and restoration, causing an uptick in economic activity. This is why I have repeatedly said that the official policy of the government should be to let housing prices fall to free market levels. Through its various attempts to prop up the market, including the failed HAMP program, they have damaged the economy by delaying the deployment of fresh capital into the market.

Now, if we could just shut down Freddie, Fannie and HAMP, and get on with an economic recovery.

Local GOP Turpitude

As much as I loathe the California Democratic party, I have not been impressed of late with its Republican opposition. Temple of Mut has the goods on the latest move by the county GOP, and quite the move it was. Tony Krvaric appears to be the quintessential self-serving ethically challenged businessman type that often gives the Republican party a bad reputation. Temple of Mut's article is filled with details about the unseemly conduct and ethical lapses by Krvaric in vacating GOP Headquarters at Griswold Corporate Center for an address identical to that of his personal business. She independently confirms a number of aspects of the story by CityBeat's John Lamb.

I also note that a rift with Krvaric drove Kim Tran out of the Republican Central Committee last September. While I didn't think that Kim should have resigned, I respect her contributions to the local community and was very sympathetic to her candidacy for the District 6 city council seat.

I call on Tony Krvaric to resign his position as chair of the San Diego Republican Party. While searching for a picture of Mr. Krvaric to grace this blog post, I found a web site dedicated to getting him to retire. Guess I'm not alone.

Cross posted to sdrostra.com

Happy 100th - Ronald Reagan

Although late in the day, I would like to acknowledge what would have been the 100th birthday of that great American, Ronald Wilson Reagan today. For my part, his legacy consists of two important strands. First, he refused to accept the inevitably of communist triumph. People forget that up to that time, communism had greatly expanded the portion of the globe it controlled, and many of our ruling elite felt that its triumph was foreordained. Reagan recognized that communism was very fragile and would come apart eventually if challenged. His push for "star wars" and the manner in which he challenged the Soviet Union contributed to its eventual demise. The world is a vastly better place for it. We should never forget the hundreds of millions who have died due to the scourge of communism.

Second, Reagan understood that a simplified tax code with low rates would encourage economic growth. Further, although he did not roll back the regulatory state, he stabilized its growth. The certainty that business faced also contributed to growth. He did this in spite of a Democrat controlled Congress. He reached out to Dan Rostenkowski, Chair of the House Ways and Means Committee, to craft a bipartisan revision to the tax code that benefited America.

Thank you Ronald Reagan, we miss you.

I leave you with excerpts from his famous speech in 1964 at the Republican National Convention that nominated another great American, Barry Goldwater.

Quick Note On Egypt

It seems that the administration's response to the situation in Egypt is about as good as could be hoped. Given the circumstances, there are only a limited range of options. I saw Secretary of State Clinton on TV urging that Mubarak step down, eventually, and urging adequate time to prepare for elections. This will give a chance for secular parties to get organized, and hopefully prevent the Muslim Brotherhood from taking power. Meanwhile, the largely American trained Egyptian military is staying out of the fray, except to guard key installations. Getting the military involved in ensuring fair elections is about the only path to success, even if a long shot.

It's nice to see Charles Krauthammer and Hilary Clinton in basic agreement. From Krauthammer's latest piece:

The military is the best vehicle for guiding the country to free elections over the coming months. Whether it does so with Mubarak at the top, or with Vice President Omar Suleiman or perhaps with some technocrat who arouses no ire among the demonstrators, matters not to us. If the army calculates that sacrificing Mubarak (through exile) will satisfy the opposition and end the unrest, so be it.

Odds are still long for a reasonable outcome that doesn't end in massive bloodshed for the Egyptian people and a government not dominated by Islamist extremists.

By the way, this is the way it always seems to end for dictatorships. After our invasion of Iraq, there were complaints that sectarian violence between Kurds, Shiites and Sunnis was the fault of the U.S. In fact, that violence was inevitably waiting to happen as soon as Saddam fell. The presence of the U.S. actually kept it in check.

New Blog in the Family - But Not Political

I have kept this blog largely focused on politics. Mrs. Daddy, although she has strong political opinions, feels more comfortable giving "bachelor tips from a buxom blond" or providing romance advice to guys. Check out her advice at Tiger Lily's Island.

Weekend Music Chill

This weekend I am returning to the music of my youth. Electric Light Orchestra was one of my favorite bands in the day. Here are two of my faves.

You Lie!

Government statistical data that is. The government's official measure of unemployment fell to 9.0% last month. Meanwhile, Gallup reported its own survey showed unemployment at 9.8%. Who are you going to believe. Further, as HotAir points out, only 36,000 jobs were added. These facts do not indicate economic health. I have come to the conclusion that the official unemployment rate is almost meaningless, because it only counts those actively seeking work, a self identification that might be highly subjective. Meanwhile, the underemployment index, U-6 increased from 16.6% to 17.3%.
(U6 = Official unemployment + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently. + Part time workers who want to work full time, but cannot due to economic reasons.)
This is hardly an economy in recovery. At least the administration was smart enough not to trumpet the unemployment data as a major triumph.

Senate Report on Hasan Murders

In November 2009, Maj Nidal Hasan gunned down 13 innocent victims in an attack that was the result of his conversion to a brand of Muslim extremism. At the time, I laid part of the blame at the feet of political correctness in the U.S. Military, Political Correctness Runs Amok - 13 Dead. Yesterday a Senate report of the investigation was finally released, page 4 news of course, that confirmed what I had said.

It charges that evidence of Hasan’s radicalization was “on full display” to his superiors, and that an instructor and colleague “each referred to Hasan as a ‘ticking time bomb,’” but no action was taken to discharge him and his evaluations were sanitized.
. . .
Military supervisors, the report said, had the authority to discipline or discharge Hasan. But it concluded that the Defense Department did not inform or train commanders about how to recognize someone radicalized to Islamic extremism or how to distinguish that from the peaceful practice of Islam.

To repeat myself: From my experience as a veteran officer of 22 years, I know that problems like this are frequently tougher for commander's to deal with than the life or death decisions of war fighting. That is because making the wrong move can wreck your career in a case like this. Tough. Everyday you come to work, your career could be wrecked, it comes with the territory, do the right thing.

Economy Gaining Speed - Unemployment Up

Or so says the Reuters headline. I know everyone is on the Egypt situation 24/7, but with unemployment again rising, despite economic output increasing, I want to keep the focus on the economy. Unemployment is again at 9.8%. The Administration itself has never addressed the unemployment issue other than to make things worse through deficit spending. Meanwhile, Paul Krugman continues to call for deficit spending and loose money.

Krugman also takes conservatives and Paul Ryan to task for misreading the situation in England and Ireland.

On the eve of the financial crisis, conservatives had nothing but praise for Ireland, a low-tax, low-spending country by European standards. The Heritage Foundation’s Index of Economic Freedom ranked it above every other Western nation. In 2006, George Osborne, now Britain’s chancellor of the Exchequer, declared Ireland “a shining example of the art of the possible in long-term economic policy making.” And the truth was that in 2006-2007 Ireland was running a budget surplus, and had one of the lowest debt levels in the advanced world.

Krugman is in fact correct. Here is what Paul Ryan had said:

Just take a look at what's happening to Greece, Ireland, the United Kingdom and other nations in Europe. They didn't act soon enough; and now their governments have been forced to impose painful austerity measures: large benefit cuts to seniors and huge tax increases on everybody.

Krugman lays the blame on Irish banks.

So what went wrong? The answer is: out-of-control banks; Irish banks ran wild during the good years, creating a huge property bubble. When the bubble burst, revenue collapsed, causing the deficit to surge, while public debt exploded because the government ended up taking over bank debts. And harsh spending cuts, while they have led to huge job losses, have failed to restore confidence.

I agree that the Irish went through a property bubble that collapsed. But he fails to account for the government policy that was significantly to blame. At exactly the wrong moment, the government stepped in to save the banks by guaranteeing bank deposits. From a U.K. Telegraph article in September 2008:

Ireland's government said it will guarantee Irish banks' deposits and debts for two years, seeking to calm investor concern after banking shares fell 26pc in Dublin.

The government said it will safeguard all deposits at six financial institutions in response to turmoil in financial markets.

Predictably the bad debts of the banks were offloaded on to the Irish government, wrecking its finances.

So the real lesson is that the government needs to distance itself from guarantees to banks and exposing itself to the risk in property bubbles. Time to unwind and privatize Fannie Mae, whose purpose was to lift home ownership to above market percentages. Property bubbles driven by bad government policy seem to be at the root of both Irish and U.S. economic hard times.

In Other Good News for San Diegans

In addition to the vote on Walmart, Lorie Zapf tweets that the City Council also voted to move forward on managed competition. Channel 10 News reports:

The San Diego City Council Tuesday approved a plan to bid out the functions of its Fleet Services Department, which maintains more than 4,000 city-owned vehicles, including police cars and fire truckss.
. . .
The city is also putting out its printing division for bid. The mayor said last month that street sweeping, road repair and some functions of the Public Utilities Department will come next.

As I have said, even if the city division wins the bid, they can only do so by instituting savings. Either way, the taxpayers win.

Walmart Ordinance Repealed

The San Diego City Council, as predicted, repealed the big box economic analysis ordinance this afternoon, on a 7-1 vote. The VOSD has an editorial inveighing against the so called subversion of democracy this represents, because somehow Walmart had the temerity to pay for signature gatherers. News flash, they would have got the signatures with out without paid gatherers. I would have volunteered myself. Leftists trying to shut down Walmart underestimate the depth of loyalty of their shoppers.

Marti Emerald (District 7) was on the losing end of the vote and is reportedly angry:

Emerald accused Walmart of lobbing a “constant volley of attacks” on the council’s character and unfairly depicting the supercenter debate as a battle between labor unions and businesses. For example, she said the retailer urged elderly people to call her office to complain that the councilwoman was opposed to them having access to fresh food.

It was a battle between labor unions and business. The patina of "concerned small business owners" was never convincing and the speakers at council hearings did not claim to represent small business:

Numerous times, opponents identified themselves as "worker advocates" and stated, "I didn't vote for Wal-Mart to set policy in this city. I voted for you to do that. I can't fight Wal-Mart alone."

This doesn't mean that new Walmarts will be opening in my neighborhood, but it is a step in the right direction.

Jerry Brown and the State of the Budget

Despite calling his address the State of the State, Jerry Brown's speech was really first, foremost and only about the looming budget deficit. It is unlikely to be papered over one more time, but who knows politicians are such good liars. I missed the speech, but am reading from the transcript.

The governor makes some good points.

My plan to rebuild California requires a vote of the people, and frankly I believe it would be irresponsible for us to exclude the people from this process. They have a right to vote on this plan. This state belongs to all of us, not just those of us in this chamber. Given the unique nature of the crisis and the serious impact our decisions will have on millions of Californians, the voters deserve to be heard.
. . .
But I also understand that redevelopment funds come directly from local property taxes that would otherwise pay for schools and core city and county services such as police and fire protection and care for the most vulnerable people in our society.
. . .
We have the inventors, the dreamers, the entrepreneurs, the venture capitalists and a vast array of physical, intellectual and political assets. We have been called the great exception because for generations Californians have defied the odds and the conventional wisdom and prospered in totally unexpected ways. People keep coming here because of the dream that is still California, and once here, their determination and boundless energy feeds that dream and makes it grow.

I knew it was unlikely that the budget deficit would be closed with spending cuts alone, even though they should be much higher priority than new taxes, or even extensions of temporary taxes now in place. But the governor mentions pensions exactly once in the speech, at the end, with a vague promise of fairness. The pensions are a big cause of the current mess; his failure to address pension reform is irresponsible. Unless this issue is addressed, any plan will not be a long term success. From Adam Summers writing in the OC Register last December:

California's public pension and retiree health and dental care spending has quintupled since fiscal year 1998-99, increasing to $5 billion in 2009. And retirement spending is expected to triple again – to $15 billion – within a decade. The coming wave of baby boomer retirements and steadily increasing health care costs ensure that this burden will continue to grow rapidly. California will be spending more and more for state retirees' benefits, leaving less and less for other budget items such as public safety, education, and transportation.

The state budget passed in October takes state pension benefits back to 1999 levels – for future/new state employees – and the Schwarzenegger administration estimates the tweak will save up to $100 billion over time. That's a minor fix at best.

The state has tried this before. In 1991, California created a second tier of lower benefits in an effort to stem rising public pension costs. Less than a decade later, the Legislature passed, with virtually no opposition, the infamous Senate Bill 400, which not only massively increased state employees' pension benefits but also made those increases retroactive. It would simply be too easy for legislators, with the support and pressure of government workers' unions, to do it again.

The Republicans are right to demand that the Governor not hold a special election on extending the current, temporary, tax increases unless he is willing to put forth serious pension reform. A crisis of this magnitude shouldn't go to waste. I know that sounds facetious, but a failure to address a crisis' root causes while it is in the forefront in the minds of the public, is a failure of leadership.

Cross posted to sdrostra.com

National City Schools - Central Falls Deja Vu?

Item 1. I wrote yesterday, but posted this morning, on the schools and municipal situation in Central Falls, RI. Right on cue, this morning's headlines detail some issues locally that mirror the issues back east. It appears that the National City schools are bracing for a strike, as teachers reject budget cutting measures like six furlough days per year. From this morning's U-T:

Faced with a $3 million deficit, the National School District said it was forced to take drastic measures by imposing six furlough days and raising class size caps this year to balance its budget — without the union’s consent. But labor leaders say the district is hording millions of dollars in its reserve account, exploiting the bad economy and bullying teachers to drive down wages and benefits.

Another case of defiant teachers clinging to their privileges and not recognizing the new political realities? Maybe. But here is what I found curious in the article. Management had a chance to settle on terms close to their desires:

When an independent fact-finding mediator issued a report that included a proposed settlement on July 19, the union’s representative signed off on the proposal that — among other things — called for five furloughs, representing a 2.7 percent pay cut.

A lawyer representing the district signed the same document, but said the district would not agree to all of the recommendations. The school board met in closed session the next day and rejected the proposal, in part because it called for a two-year contract when the district wanted a three-year agreement.

Why is the school board so adamant about getting all of their demands met? Can't answer that, but the fact that the teacher's union reps signed off so quickly makes me wonder about what is really going on. It may be that management is overplaying their admittedly strong hand. What is clear is that the district has serious budget difficulties, to the tune of $3 million dollars in the current school year budget. At least some of the pain to be endured must come from the teachers, but it remains an open question as to whether the school board erred in not taking the deal offered by mediation. Either way, fiscal realities like this are going to start impacting districts across the nation, causing reductions in pay for government employees such as teachers.

Item 2. Mayor Sanders not yet released plan to convert new city employees to a 401(k) style retirement plan is already drawing criticism. Public employee pensions are at the heart of the Central Falls post as well. One criticism is that by keeping new workers out of the old plan, there won't be fresh cash to keep the old system afloat. Said criticism is an implicit acknowledgement that the current system amounts to a Ponzi scheme. If the current system were properly accounted and funded, this change wouldn't matter. The other criticism comes from Michael Zucchet, union leader and former council member, saying that a properly funded 401(k) that has to include a decision on whether to account for placing the new workers in the social security system (current workers are exempt), would not save appreciable amounts of money. Maybe so, but that is totally beside the point. First, such a system insulates the city from the risks of investment fluctuation. Second, the workers themselves are better off because it forces the city to fully fund its contributions in the year earned, preventing a later reneging on promises. That Michael Zucchet would be opposed only shows that he has an agenda different from actually helping city employees.

Cap and Trade Fraud

Capitol Commentary (H/T Harrison) has a must read about the "theft" of carbon credits in the EU. That we would consider implementing a similar system that has been rife with fraud is beyond me. Oh wait, that's a feature, not a bug, got it. Handing out "credits" to your buddies who can then sell them on open or black markets, that's a great feature. From Capitol Commentary:

How much would you pay for something which doesn’t really exist but yet has enormous value? That’s the question many in Europe are asking themselves as it was revealed that over €30 million Carbon Credits were “stolen” by hackers and quickly moved into other peoples’ accounts. . . . Carbon Credit trading is huge in the crazy parts of the world where Liberals think naturally occuring gasses destroy the planet. In Europe, this Carbon Credit trading rang up €90 billion in 2009! These credits are bought and sold throughout the European Union among 10,000+ different businesses. The money is so good, Al Gore became a part of a Carbon Credits trading company back in 2008.

Maybe that's all we need to know about the whole scheme. As I have said before, if the left were serious about reducing CO2, they would have gone for a carbon tax, with a revenue neutral income tax offset. But since this is really about political payback and a way to extort campaign cash and actual cash, cap and trade it is.

Central Falls Rhode Island - Harbinger?

Yesterday's WSJ highlighted the disasters facing a small poverty stricken city in Rhode Island, Central Falls. If you click the previous link, you will note the "Receiver's Report." That's because this town tried to file for bankruptcy, but was prevented from doing so by the state's legislature, who appointed a Receiver to straighten out the city's finances. Trouble is, it is a fool's errand unless pension benefits to city employees are redefined, which only a bankruptcy could have discharged. This little city of 19,000 has $80 million in liabilities. The Providence Journal reports "The median household income during 2005 to 2009 stood at $33,520, well below the statewide median of $55,569." Assuming an average household of four people, that's $16,842. Given the high level of poverty in the city, and the ability of those with income to leave, that doesn't bode well for any kind of rational fix.

How did this mess get going?

It's hard to pinpoint the exact moment when the town started deteriorating, says City Council President William Benson, but "it started with the John Hancock [pension] plan," named after the company that administers the benefits. In 1972, the city created a new pension plan for public-safety officers that allowed them to retire after 20 years and earn 50% of their final year's salary thereafter. What the city didn't anticipate was that firefighters would use the minimum staffing requirements that were part of their collective-bargaining agreement to rack up overtime and increase their last year's salary. Or that nearly a third of police officers would retire with a higher-paying disability pension.

Over time, such labor costs have swamped the city's budget. In 1991, the state took over the schools because the city could no longer afford to fund them. But that didn't solve the problem of costly and restrictive collective-bargaining agreements.

Further, the schools are also a mess. Teachers were unwilling to accept a collective bargaining agreement that would push school reforms. Eventually the entire teaching staff was fired. But even after their return, things are getting ugly in the schools.

Many teachers aren't showing up for work, often calling out sick. Several abruptly quit within the first few weeks of the school year. Administrators have had to scramble to find qualified substitutes and have withheld hundreds of student grades because of the teacher absences.
. . .
"The teachers have taken advantage of their sickness days. Almost every day they're absent, so students don't get a lot of education," said Jose Ortiz, as his daughter, Kyara, a Central Falls student, translated from Spanish. "The students don't pay attention in class because the teachers don't help them."

Parents have taken to patrolling the schools themselves.

. . . a growing number of parents who spend time at the school every day. They patrol hallways, assist teachers in classrooms and help administrators with detention. They are coming at the invitation of Supt. Frances Gallo and school leaders who believe parents play a central role in improving schools and educating their children.

Merging the city with other cities in the area doesn't appear to be a good option either, as those cities are in bad shape as well.

Image courtesy of Jon Lausten's Blog.

The Freedom Coalition and Protests in the Muslim World

Protests in Egypt, Tunisia and Yemen present a real challenge to United States foreign policy. On the one hand, leaders of these mostly repressive regimes have been somewhat cooperative with the United States. However, their years of repression and corruption have turned their countries into powder kegs, ripe for agitation by radical Islamists. Not only is this a challenge for the United States, I think it is a challenge for all who believe in freedom. If the radical Islamists succeed in toppling the governments in those countries, then we might end up with a replay of Iran in 1978, the end result being an even more repressive regime that is fundamentally opposed to the interests of the United States, and indeed against the concepts of liberty and democracy themselves.

In my last update to the Freedom Coalition Agenda, which predates my participation in the Tea Party, I stake out the following principle:

• Support Freedom Abroad. Newly liberated peoples the world over have shown a propensity to embrace freedom and markets when the yoke of tyranny has been lifted. The policy of America should be to actively work against dictatorship in all its forms (Islamic, Socialist, Fascist and Communist). We should seek to advance the cause of freedom, not through force of arms, but through steady pressure. Every piece of foreign policy should be weighed against this end. Further, we are also ready to use force of arms in this cause when defense of our national interest requires it. Americans resonate with the concepts of helping to liberate peoples from tyranny, this is a winner. We especially decry the pathetic kow-towing to dictatorship in our own hemisphere in the shameful treatment of Honduras by the Obama administration.

Supporting Hosni Mubarak, and his ilk does not accord with my principles. What then, should we recommend? I don't think there is any easy answer, but focusing on Egypt, I think that we have to use the crisis to pressure Mubarak into real reforms. That would mean fresh elections, probably unbanning of previously banned political parties. The President got it at least partly right:

"Egypt's been an ally of ours on a lot of critical issues," Obama said. "President Mubarak has been very helpful on a range of tough issues in the Middle East. But I've always said to him that making sure that they're moving forward on reform, political reform and economic reform, is absolutely critical to the long-term well-being of Egypt. And you can see these pent-up frustrations that are being displayed on the streets."

Unfortunately, several reports I have read make it clear that the protesters do not consider the United States their friend, despite Obama's Cairo speech in 2009. At this late date, it is unlikely that this perception can change. If the protests overwhelm the government, it could easily lead to an anti-U.S., anti-Israeli regime that could unleash a new round of bloodshed in the Middle East. No wonder the stock market fell yesterday.

My answer is that we have to encourage reform, and use the example of Egypt to warn Muslim dictators in the region that they could be next if ending corruption and giving the people a voice through true democracy. In the short term, I am not sure if much can be done.

Picture at right from NYTimes, taken outside of the United Nations on Saturday, January 29.