UNLV considering stadium to be paid for with private money
Now there's a "novel" concept: a private developer proposing to build a stadium - in hopes of turning a profit - and suggesting the developer might pay for it without tax dollars.
Shocking, I know. A private company using private capital to try to turn a profit. When has that ever worked before?
Since the Legislature this year rejected a special tax district to fund the $2 billion stadium/dormitory/retail project, university administrators and Majestic Realty Co. have been working on a financial formula and other changes to allow the project to move forward.There are literally dozens and dozens of studies on how government-funded stadiums are an economic loser, but if a private company wants to pay for a stadium, that's great. On a personal level, I'd be very excited for a major-league sports team to come to Las Vegas.
Craig Cavileer, president of Silverton resort and Majestic's representative on the project, said one idea is for UNLV to issue but not underwrite bonds to pay for construction, allowing the university to avoid liability should the project fail and investors sue. Another idea is for Majestic to fund the project.
Regardless of the source of financing, the stadium would be built on public land - west of the Thomas & Mack Center on space now used for parking - eliminating the need to pay hefty property taxes and seek a special state exemption from the tax. [Emphasis added]
Mine or anyone else's excitement about a sports stadium, though, isn't a valid reason to subsidize a private company. As I wrote during the legislative session, when three stadium developers came hat-in-hand asking for taxpayer dollars:
Leaving aside the inherent problem of government giving your money to a private business, this is a perfect example of why government shouldn't pick the winners and losers in the economy.
Instead of pitching the merits of their plans to investors, these developers are going to politicians.
Let's compare how the two processes work. Investors, because they are spending their own money, have a strong incentive to examine whether a project makes financial sense and would bring the best return on their dollars. This process unfolds millions of times every year and is one of the most important - and powerful - features of the free market. Occurring spontaneously among individuals, this process usually prevents poor uses of scarce resources and directs those same resources into the areas individual consumers want the most. Now, this process will produce some failures, but the financial impact of those failures is limited to those who chose to spend their money on it.
Politicians, on the other hand, are spending other people's money - yours and mine. This makes it more likely that a shoddy project will get pushed forward, because, instead of examining whether a project makes financial sense, many politicians (excluding those committed to free-market principles or who have a working knowledge of Nevada's constitution) examine whether a project makes political sense. Those factors include good short-term PR, campaign contributions, quid pro quos with lobbyists or other lawmakers, and getting re-elected.
If a project goes bad, there are very few consequences for individual politicians - they aren't held financially liable and they are regularly able to move on to higher office. And often times they are no longer even in politics when the destruction their decision caused becomes apparent several years down the road. As a result of all of these factors, the politicians make "investments" that private investors would reject as a financial loser. Even if some consider a particular project a "success," you still have the constitutional, economic and philosophical problems of forcing taxpayers to subsidize someone else's business.
Instead of turning to the Legislature and demanding taxpayer dollars to subsidize their businesses, developers interested in building a stadium or arena in Las Vegas should put their (own) money where their mouths are.
Read moreStudy shows AFL-CIO struggles with reading comprehension
I just received a blast email from the AFL-CIO with the headline, "Privatization Doubles Cost of Govt. Work." The email links to an AFL-CIO website that makes the following claim:
In the past year, congressional Republicans and right-wing extremists have ramped up their long-standing campaign against federal workers, claiming their pay is too high and their benefits too generous compared to private-sector workers. A new study shows how wrong they are.
According to the Project on Government Oversight (POGO), the federal government pays more than twice as much to private contractors than it would cost federal workers to perform the same work.
The claim obviously struck me as alarming and as a topic of interest, so I clicked through to the study itself, where I found some noteworthy comments about the study's methodology.
POGO purports to compare compensation rates for federal employees to compensation rates received by workers on federally outsourced projects. However, as the authors admit:
There are a number of factors that potentially limit the accuracy of POGO's findings. For instance, over the course of our investigation, we discovered some disturbing limitations to the federal databases available to us. The most critical limitations are that: 1) the government's coding, classification, and data collection systems are inconsistent and do not allow for reliable cost analyses; 2) government websites do not provide access to agency documents that detail cost estimates and the justifications for outsourcing decisions; 3) the government does not publish information on the number of actual contractor employees holding a specific occupational position under any given contract; 4) the government only lists the ceiling prices that it can be billed by contractors for the specific occupational positions-the government is at liberty to negotiate prices that are lower than those listed, but it does not publish those negotiated rates; and 5) government websites do not disclose what the expected cost savings for service contracts are, nor the actual savings (or lack of savings) that result from those contracts. These shortcomings prevent government officials, as well as the public, from accurately assessing outsourcing costs.
So...the authors are saying that, for the contracts examined, they cannot know the number of workers employed on the project, the reasons the project was outsourced, nor the what it would have cost the government to perform the task. Given these limitations, it should become virtually impossible to develop a meaningful labor cost comparison.
But wait...it gets better. Since most outsourcing contracts do not itemize expenditures to a high degree, POGO examined only the total dollar value of contracts (including expenditures on materials, facilities, labor, etc.) and compared this to only the labor cost component that would be faced by the federal government. The authors explicitly admit:
POGO is aware that its methodology does not incorporate some governmental cost factors: i.e., non-directly associated overhead (e.g., executive management and administration, information technology, and legal support), material and supplies (e.g., insurance and maintenance), or facilities (e.g., depreciation, rent, insurance, maintenance and repair, utilities, capital improvements).
In other words, POGO admits that it is impossible, based on available data, to compare federal employee compensation to contract employees' compensation and so they instead compare only federal labor costs to the total expenses faced by contractors. That's as apples-to-oranges as it gets.
Now, I have no doubt that the folks at the AFL-CIO were willing to overlook these limitations when they decided to trumpet POGO's report, given that their mission is far more political than academic. However, they might have thought otherwise had they paid more careful attention to the reports' findings. Specifically, the authors acknowledge in a passing statement:
POGO confirms the results of studies that compared the public with the private sector, finding that federal employees generally make approximately 20 percent more in salary and full compensation than do their counterparts in the private sector.
Oh...so the report actually finds the exact opposite of what the AFL-CIO is claiming! Federal employees are overcompensated relative to their peers performing similar jobs in the private sector...which is also to say that there is a labor cost savings from federal outsourcing. Huh.
Can't wait to see that in the AFL-CIO's next blast email!
Chris Matthews: Social Security is a ... Ponzi scheme
Transcript via HotAir:
Matthews first put forth what he thought Social Security was originally intended to be: "You pay for it while you work. When you retired and have no other form of income, this will help you out. In fact, a lot were impoverished in the old days without Social Security. It's a great anti-poverty program. But then people started to live past 65. Even the great Franklin Roosevelt didn't make it to 65. In those days, if you made it to 65, you were lucky. You got a few bucks on Social Security."And here is Cato's Michael Tanner spelling out exactly how it's similar to a Ponzi scheme - although, he notes, other Ponzi schemes are optional.
Then he put forth what it has become: "Today, lots of people fortunately make it past 65," he said. "They live into their 80s and 90s. They're still getting checks. The system doesn't work that way anymore. It's not as healthy as it once was. So, how does a Republican deal with the fact it is a Ponzi scheme in the sense that the money that's paid out every day is coming from people who have paid in that day. It's not being made somewhere." [Emphasis added]
Social Security, on the other hand, forces people to invest in it through a mandatory payroll tax. A small portion of that money is used to buy special-issue Treasury bonds that the government will eventually have to repay, but the vast majority of the money you pay in Social Security taxes is not invested in anything. Instead, the money you pay into the system is used to pay benefits to those "early investors" who are retired today. When you retire, you will have to rely on the next generation of workers behind you to pay the taxes that will finance your benefits.At the end of the above clip, Matthews wonders why Texas Gov. Rick Perry is using the term "Ponzi scheme" and why Texans like that type of language. His guest, Todd Harris, a Republican strategist, responds that they like it because it's "aggressive" and has "swagger."
As with Ponzi's scheme, this turns out to be a very good deal for those who got in early. The very first Social Security recipient, Ida Mae Fuller of Vermont, paid just $44 in Social Security taxes, but the long-lived Mrs. Fuller collected $20,993 in benefits. Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it. In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.
As with Ponzi's scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits. Those early windfall returns are long gone. When today's young workers retire, they will receive returns far below.
Eventually the pyramid crumbles.
I think Harris is dead wrong here. People like that kind of language because it's true. And it's true in the same way Judge Judy once noted, "Don't pee on my leg and tell me it's raining." Claiming Social Security isn't a Ponzi scheme insults the intelligence - and wallets - of taxpayers.
And for far too long, you've had politicians either denying that there's a problem or underselling the scope of the problem, because they're afraid of political backlash.
Now, you can deny there's a problem - and for some it might be politically expedient in the short run - but Social Security is still broke.
It's broke, and the trust fund is already spent. No amount of denial will change either of those facts.
It's precisely because fiscal conservatives care about "grandma" that they're leading the charge to change Social Security.
If we don't enact substantial change, like personal retirement accounts, to Social Security now, those people who depend on Social Security now will be the ones who suffer most when the money dries up.
9/11/11 Tribute: Never forget, never surrender
Harry Reid calls NPRI "right wing zealots"
Now, Reid said that in 1998, but this is too awesome not to highlight now (and probably many times in the future - how great is that headline?).
A conservative Nevada think tank that has blasted Democratic Sen. Harry Reid on the radio has been ordered by one broadcaster to lay off the attacks -- a move prompted by complaints by Reid's staff."Right wing zealots"? Coming from Sen. Reid, that's one of the biggest compliments NPRI's ever received.
Democratic Party officials are now threatening to challenge the tax exempt status of the group, which buys air time on KNUU-AM 970 radio for its daily commentaries.
Reid described the Reno-based group, the Nevada Policy Research Institute, as "right wing zealots trying to help the far right." [Emphasis added]
And if you like the "right wing zealots" here at NPRI, may I encourage you to donate to NPRI?
You can do so safely and quickly online right here. All contributions are fully tax-deductible under Section 501(c)3 of the Internal Revenue Code to the extent allowed by law.
Inevitable: Rhode Island considering reducing pension benefits to current retirees
Why should pension reform matter to state workers - as much as, if not more than, to taxpayers?
Because once a state or local government runs out of money, those "guaranteed" retirement benefits aren't so guaranteed after all.
State Treasurer Gina M. Raimondo (D) said that per capita, Rhode Island has the nation's largest unfunded pension liability. But if the Ocean State's pension problem is among the country's most severe, so are the remedies being considered to solve it.The discussion over state and local pension programs, like - I predict - the debate over Social Security, is becoming less of a debate and more about understanding and accepting hard truths - hundreds of states and cities have huge unfunded liabilities in their retirement programs, and they don't have the money to pay what was promised.
An ongoing pension reform effort is likely to result in reduced benefits for 51,000 public workers and retirees. Officials are pondering lowering retirement payments, replacing part of the guaranteed pensions with 401(k)-type accounts, and sharply reducing generous cost-of-living increases enjoyed by retirees. The Rhode Island legislature is expected to consider changes next month during a special session.
Until recently, most states, including Virginia and Maryland, have attacked their pension problems by cutting benefits for new hires while preserving retirement packages for current employees. Others have rolled over their pension debt by taking out loans or papering them over with what some have called unrealistic projections about investment earning and life expectancy.
But with states facing, by one estimate, a combined $3 trillion in unfunded pension liabilities and the economic downturn continuing to dampen government tax revenue, states are beginning to make changes once considered unthinkable - such as cutting pensions for people in retirement. ...
Last year, South Dakota, Colorado and Minnesota moved to reduce cost-of-living increases for retirees in their public pension systems. Similarly, New Jersey and Maine this year cut cost-of-living increases in their plans. All of those changes have been met with court challenges. [Emphasis added]
If I were a public employee - especially one under 35 - pension reform, like converting all government retirement plans to a defined-contribution system, would be my top priority. Otherwise, in some cases, your "retirement" money isn't going to your retirement at all.
The burden is also heavy for participants in Rhode Island's pension system. Teachers contribute nearly 10 percent of their salaries to pensions, and other employees contribute slightly less. But the generous benefits promised by the government and the huge unfunded liability mean that most of that money goes to keeping up with payments to current retirees. That leaves little for future retirees and endangers the system overall.Even pensions aren't immune from reductions when the government runs out of money, and governments at all levels are quickly running out of money.
White House says unemployment to remain at 9 percent through election
New projections from the White House's Office of Management and Budget last week predict that the national unemployment rate will remain around 9 percent throughout the next 16 months and will not again approach 6 percent until 2016. Those numbers now approximate what the Congressional Budget Office has said. Yet, even those numbers are rosy compared to what Wall Street analysts have forecast.
This stormy vision of the future is being laid out in spite of massive deficit spending designed to "stimulate" the creation of new jobs. In fact, the White House is explicitly acknowledging such prognostications even as the president plans to take to the airwaves to make a speech advocating even more "stimulus" Thursday night.
The latest official acknowledgement by the White House reminds me of a quote from President Franklin Delano Roosevelt's Treasury Secretary:
We have tried spending money. We are spending more than we have ever spent before and it does not work. ... We have never made good on our promises. ... I say after eight years of this Administration we have just as much unemployment as when we started ... and an enormous debt to boot!
Politicians often find the Keynesian economists who advocate on behalf of so-called government "stimulus" politically convenient in that they provide a rationale for insane amounts of spending on political pet projects. Because of the high degree of aggregation in Keynesian analysis, little attention is given to the fact that individuals and families are forcibly deprived of the means with which to provide for their unique wants and needs. Instead, Keynesian analysis gives politicians carte blanche to confiscate real wealth in order to spend on government projects.
Policymaking of this sort carries more danger than the non-economist will immediately realize. Keynesianism facilitates the concentration of power. In fact, Keynes himself declared, in writing to the Germans in 1936, that his recommendations for increasing the size and power of government would facilitate the consolidation of Nazi power. As he wrote, his theory "can be much easier adapted to the conditions of a totalitarian state."
Aside from the obvious political danger, the unjustified levels of aggregation in Keynesian analysis lead its advocates to overlook the composition of various economic indicators. When the government hires workers to dig ditches and fill them back in, for example (a favorite Keynesian example), nothing of value is produced even though aggregate "employment" numbers might see a temporary boost. A good economist should recognize that people don't want to work simply for work's sake - they work to produce something that improves their quality of life (e.g. microwaves, refrigerators, air conditioning, etc.)
In the simplest economy, individuals produce for their own consumption (e.g. subsistence farming). In complex, modern economies individuals produce items that others value and trade to fulfill their own individual needs. Keynesian "stimulus" theories ignore these basic truths about the purpose of work. Under this paradigm, government spending need not produce anything that private individuals would value enough to freely purchase because policymakers can force the transaction through higher taxes, borrowing and/or inflation. Hence, Keynesian analysis is a tool to force the will of the ruling class down upon private individuals - turning them into slaves who must work toward the fulfillment of politicians' vision and not toward the improvement of their own lives.
Likewise, Keynesian analysis treats all of society's capital resources as a single, homogenous substance. Keynesian equations assume that a Nike factory, for instance, is the same thing as a Ford dealership. This aggregation of capital conflates sound investments with poor investments and clouds Keynesians' ability to see that it is precisely a distortion within society's capital structure that causes systemic unemployment.
Austrian economists recognize that the current recession flows directly from such a distortion in the investment of capital resources - one that was compelled through government meddling in the housing sector and monetary sphere. Until policymakers become willing to accept this truth, they will remain blind to the corollary truth: the only means of recovery is to allow the market to correct for policy-induced mistakes through quick and orderly liquidation.
Instead, Keynesian-inspired politicians are forcing society to throw good money after bad in order to perpetuate a broken capital structure. This course of action will inevitably result in persistantly high unemployment and will lead down a dangerous road.
Job growth at ZERO
With news today that ZERO net new jobs were created nationwide during August, there's not much to say that I haven't already been saying for months...years, even. Truth is, I'm not surprised at all. And nobody who follows NPRI's work should be either. I hate to say, "I told you so," but...
Why Unemployment Persists: Part I
Why Unemployment Persists: Part II
Why Unemployment Persists: Part III
Why Unemployment Persists: Part IV
Video: Is government 'investment' necessary for economic growth?
I cannot recommend this video highly enough.
One of the issues at the heart of the debate over green energy is the question: Is government intervention, called "investment," of course, necessary for economic growth?
On Tuesday, Energy Secretary Steven Chu didn't just say yes to that question - he said that government has "played an incredibly intimate role in all the technologies that led to prosperity in the United States.
Liberals have cheered Chu's conclusion, with Las Vegas Sun columnist J. Patrick Coolican even jokingly endorsing Chu for President, because of his "powerful history lesson."
So what's a conservative to do? Instead of blindly accepting Chu's embarrassingly inaccurate version of history, learn the truth. And this video, a lecture by Dr. Burt Folsom of Hillsdale College, contains a lot of history you won't learn from Sec. Chu or liberal columnists.
It also shows why government picking the winners and losers, through "investment," regulation or other interventions, harms - not helps - economic growth.
For more, check out Dr. Folsom's blog.
'Green' jobs success story of the day: $20 million for 14 jobs in Seattle
Via the Washington Policy Center:
Not to be outdone, Nevada recently spent $12 million to create 5 "green" jobs.
A much better plan would be for government to stop picking the winners and losers in the economy and provide a low and uniform tax and regulatory burden. In that type of economy (also known as a free market), businesses would succeed or fail on their merits, not their ability to get taxpayer handouts.
