United States of Japan?
Stop me if this sounds familiar.
A country with a previously roaring economy (due in part to an economic bubble) hits an economic downturn. A recession results. In order to "fix" the economic problems the government spends billions of dollars in economic stimulus and keeps interest rates artificially low.
And that country is ... Japan in the late 1980s. What's happened as a result of this Keynesian approach to the economy?
But the bubbles popped in the late 1980s and early 1990s, and Japan fell into a slow but relentless decline that neither enormous budget deficits nor a flood of easy money has reversed. For nearly a generation now, the nation has been trapped in low growth and a corrosive downward spiral of prices, known as deflation, in the process shriveling from an economic Godzilla to little more than an afterthought in the global economy.The parallel with the United States and the governmental attempts to fix the economy should be obvious, from the failed stimulus to the record-low interest rates. So what to do?
Now, as the United States and other Western nations struggle to recover from a debt and property bubble of their own, a growing number of economists are pointing to Japan as a dark vision of the future. Even as the Federal Reserve chairman, Ben S. Bernanke, prepares a fresh round of unconventional measures to stimulate the economy, there are growing fears that the United States and many European economies could face a prolonged period of slow growth or even, in the worst case, deflation, something not seen on a sustained basis outside Japan since the Great Depression.
If you're Paul Krugman, you call for even more government spending and intervention, because if doing something the first time didn't help, the solution is to throw more money at it. That's what we've been doing for K-12 education for the last 50 years, and look at how well that's turned out.
But Japan's mistake is that it intervened too much, not too little.
Many economists remain confident that the United States will avoid the stagnation of Japan, largely because of the greater responsiveness of the American political system and Americans' greater tolerance for capitalism's creative destruction. Japanese leaders at first denied the severity of their nation's problems and then spent heavily on job-creating public works projects that only postponed painful but necessary structural changes, economists say.Creative destruction is an essential part of the free-market process. Until it is allowed to work - and it works best uninhibited by the government's tinkering and intervention - the U.S. economy will continue to look like Japan's.
Bonus: Enjoy this Keynes vs. Hayek rap contrasting two economic approaches to the boom-and-bust cycle.
Read moreGovernment gone wild: Nevada agencies request a 30 percent spending increase
Of course, in this economy, who isn't increasing spending by 30 percent? Oh, wait. The answer is everyone ... except, it seems, for Nevada's government.
I know budget numbers are boring, so here's a quick overview.
Nevada's General Fund budget for the last biennium was $6.4 billion after reductions made in the special session. For the next two years, government agencies now want to spend $8.34 billion - a 30 percent spending increase. And this is at a time of minimal inflation and little to negative population growth.
Seriously. Look at the numbers yourself.
Now of course, liberals will start making excuses - caseloads went up, the stimulus money ran out, etc. - but in debating the details, don't lose sight of the main point: The government wants to increase spending by 30 percent.
Almost every family and business in Nevada has had items in its budget increase over the last few years while earnings have stayed the same or even decreased. These individuals in Nevada have been forced to prioritize and cut back. Nevada's government needs to do the same.
And that "$3 billion deficit" you've heard so much about? You guessed right - it contains this 30 percent spending increase.
If this all seems familiar, it should. Liberals use the same playbook every year to try and increase spending and take more of your money. Don't be fooled again.
To read the text, you might need to click on the picture to enlarge it. "Waiting for 'Superman'": A monumentally important film, says ... Alec Baldwin
Davis Guggenheim's Waiting for "Superman" is unforgettable.Even better is that this isn't the first time a Huffington Post writer has praised "Waiting for 'Superman.'"
Guggenheim directed An Inconvenient Truth and It Might Get Loud. However, even more so than the issue of global warming (somehow), the questions and concerns raised by Waiting for "Superman" are deep and effect us all. Public education in America is collapsing. Students are not being served, and neither are tax payers. Whether or not teachers' unions are partly to blame is open to discussion, but Guggenheim's film casts a light on that perspective.
And once you get a peek at New York City's "Rubber Room" for outcast teachers, you may never view the NEA and the AFT the same way again.
This is a monumentally important film. My father was a public school teacher for 28 years and I can think of few other areas in our society that deserve this type of urgent scrutiny right now.
"Waiting for 'Superman'" opens next weekend in Las Vegas at Regal Village Square 18. Sadly, I don't think it's showing anywhere in the Reno area.
Once again, here's the trailer. I can't wait to see this film and I hope you'll see it, too.
"I Want Your Money" opens today
"I Want Your Money" is a documentary that compares the competing visions of Ronald Reagan and Barack Obama.
As you can see from the trailer, it looks both economically informative and highly entertaining.
The film is opening today in more than 500 theaters, including four in Nevada.
- Rave Town Square 18
Las Vegas, NV - Century Suncoast 16
Las Vegas, NV - Colonnade 14
Las Vegas, NV - Horizon Stadium Cinema 9
Laughlin, NV
Nevada businesses facing a 50 percent tax hike
Nevada's unemployment tax is about to double.
Happy New Year, Nevada employers.Nevada has already borrowed $526 million from the feds to supplement its unemployment insurance fund.
Starting Jan. 1, you will be hit with a 50 percent increase in the taxes you pay to provide unemployment benefits to workers, the state Employment Security Council decided Tuesday.
But that won't be the last of your increases.
As early as September, your unemployment taxes are expected to be boosted again to help the state pay back another $300 million it will borrow from the federal government.
The Las Vegas Chamber of Commerce has pointed out that increasing the tax rate will force some businesses to lay off employees. The Chamber is certainly right that increasing the tax rate will cause some individuals to lose their jobs, but there really isn't another immediate alternative here.
The real lesson is that that Nevada's legislators should think twice before raising taxes - again - on businesses, because taxes can't simply be passed on to businesses. Tax increases on businesses will negatively impact employees and consumers.
Terms of proposed contract for CCSD Superintendent Dwight Jones revealed; Updated with audio
I spent this morning at Linda Young's District C Village Meeting, where I learned information on the proposed terms of the contract for new Clark County School District Superintendent Dwight Jones.
Jones' contract is on the agenda for tomorrow night's Board of Trustees meeting and, to the best of my knowledge, the terms of his contract - aside from his initial salary of $270,000 a year - haven't been reported anywhere else.
Young shared this morning that the Clark County School Board of Trustees was briefed on proposed terms of a contract with Jones. The five-year contract starting at $270,000 a year will be subject to annual renewals. His contract would contain several perks, including $15,000 in moving expenses, a $700-a-month car allowance plus mileage (typically 50 cents a mile), and seven more vacation days than other administrators. If Jones' contract is not renewed by CCSD, the contract provides for one year in salary and benefits severance pay.
I'm concerned about the contract length. Nevada law states that an initial contract for a superintendent cannot exceed four years. I'm not legal counsel for CCSD, but I have questions.
Trustee Young should get credit for transparency and openness in this matter. I had previously contacted school board staff to get background materials on the contract that will be discussed tomorrow night, and they had told me that there weren't any. Hmmmmmmmm.
Check out the Parents' Sounding Board later today for a full report on Linda Young's Village Meeting.
Update: Audio of Trustee Young discussing the contract is here and my full Off-the-Cuff report is online as well.
Obama's $787 billion teachable moment
From the New York Times:
He [Obama] realized too late that "there's no such thing as shovel-ready projects" when it comes to public works. Perhaps he should not have proposed tax breaks as part of his stimulus and instead "let the Republicans insist on the tax cuts" so it could be seen as a bipartisan compromise.That's right. There's no such thing as a "shovel- ready project." And we've got the unemployment rate to prove it.
After spending another trillion dollars, I wonder what Obama will learn next.
The chicken and the egg
In contemporary American culture, socialist ideals are frequently met with popular praise. The "Progressive" movement promises abundance for all by penalizing "greedy capitalists" and "fat-cat bankers" who earn "obscene" or "wind-fall" profits which are supposedly earned at the expense of the little man.
My object here is not to address the "abundance for all" fallacy. However, we do live in a world constrained by limited resources where it is impossible to provide everyone with every conceivable pleasure and where the distorted incentives created by a redistributionary regime inevitably distort the production process and lead to lower standards of living for all.
Nor is my objective to address the capitalist "exploitation" fallacy. Yet, it is clear that, under a system of voluntary exchange, no transaction occurs unless both parties perceive a net benefit because their subjective value judgments lean in opposite directions. As such, it is but a small logical step to realize that those individuals who earn high profits under a system of free exchange do so only because their work provides great benefit to their fellow humans. Indeed, this recognition was the foundation of Ayn Rand's Objectivist School, which assigns a moral imperative to profit-seeking because of the benefit that such activity bestows upon society.
The object here is to explore the link between socialist idealism and state control. While many pundits today praise the ideals of a socialist utopia, they simultaneously deplore the police state tactics used by the socialist republics of the Twentieth Century. This viewpoint naively overlooks the fact that, in a world constrained by limited resources, civil liberties MUST retreat in proportion with the growth of government's role in economic planning.
A perfect example to illustrate this point is the health care industry. Even prior to passage of the health care "reform" bills this year, the American health care industry was already dominated by government - with public funds paying 50 percent of all health care costs directly, and extensive government regulation effectively controlling the remainder of the industry. This effective socialization of the industry has imposed low direct costs on individuals for treatment - health care for most individuals is predominantly financed by either tax dollars or through insurance payments. Individuals rarely bear the costs of health care directly. In nearly all cases, there is some socialized risk pool.
Socialized risk gives rise to moral hazard. When one can offload the potential costs of a risky activity onto others, he or she becomes more likely to engage in that activity. Individuals with government-financed health insurance might be more likely to take up smoking, for instance (private insurance companies can at least impose higher premiums on smokers; government-financed plans are compelled to offer care to all on equal terms).
In a world of unlimited resources, this would not pose a problem. However, in a world constrained by limited resources, a government-financed health plan must devise methods of controlling costs, and this means controlling behavior. Hence, we have seen rising health care costs used as justification for punitive cigarette taxes. Proposals have likewise emerged for a "soda tax." Other proposals are now being propagated for some type of "fat tax." After socializing the costs of health care, government is seeking to minimize the impact of socialization and this has a negative impact on civil liberty.
Certainly, this is not the most extreme example. During the 1930s - the Progressive movement's heyday when the federal government controlled virtually all economic activity - the National Recovery Administration established fixed prices and wages for nearly all industries. Entrepreneurs who attempted to sell at prices lower than the official NRA prices were jailed. In a famous case, Jack Magid was thrown in jail for charging 35 cents to press a pair of pants instead of 40 cents.
In another case, the Supreme Court convicted Roscoe Filburn of violating the Interstate Commerce Clause under a regime of agricultural price-fixing because he was growing wheat for his own family to eat. Filburn's non-commerce, according to the Court, affected supply and demand and therefore undermined the government's price-fixing scheme. Filburn was required to pay punitive fines for trying to feed his own family.
The lesson of history is clear: civil liberty declines in direct proportion to the degree of socialization. Constrained by limited resources, the provider-government must control costs and this means controlling behavior. It is inconsistent to offer praise for socialist idealism while simultaneously deploring police-state tactics. The two must go hand-in-hand.
Arguing that one can exist in isolation is tantamount to arguing that the chicken can exist without the egg.
Off-the-cuff: Karen Gray's analysis of CCSD's Superintendent search
NPRI's Karen Gray is an expert on the Clark County School District and its Board of Trustees. She's also broken several stories involving open-meeting law violations.
Karen's been attending Clark County School Board meetings for years. In order to facilitate a discussion among parents about education in general and the School Board specifically, recently she's decided to write brief summaries of the meetings for the thousands of parents who aren't able to attend the meetings, but are enormously interested in them. Also, if you're interested in Clark County education, check out the Parents' Sounding Board - a free discussion forum for parents to discuss education.
These are Karen's thoughts on the School Board meeting on September 29, 2010, which was the meeting where the School Board selected Dwight Jones as CCSD's next superintendent.
Bizarre, just bizarre...Karen's insights on previous board meetings are at the Parents' Sounding Board. Check it out.
Tonight, trustees are picking the next superintendent to lead the nation's fifth largest school district - no doubt one of the most important decisions they will make over the next five years. And yet, trustees are hurrying through their comments. Of course, that's been the theme for this search process all along, so why should tonight be any different? But it just seems weird that trustees would be rushed, giving their own input.
OMG, I can't believe what I'm hearing. Three trustees did due diligence and actually investigated the finalists on their home turf. And now, Board President Terri Janison just told them to make their reports to the board short.
If you regularly watch school board meetings, you're going to find this next item really funny: Young just set the speaking timer on herself.
Ah... now I get it. It appears that Mr. Jones, our next superintendent, wasn't entirely "transparent" during his interview with trustees. One might even opine that he lied.When asked whether he had met with CCSD personnel or community members prior to his interview, Jones told Trustee Linda Young he hadn't had that opportunity, really, but he did speak with two people not in Clark County. In reality however, we learn tonight, Jones had plenty of opportunity to research the district. In fact, Jones had traveled to Vegas and met with some local people. Who were they? No one has shared.
But this, say trustees, really is a non-issue. After all, Hinojosa visited Vegas too, says Janison. Is she serious? Jones came to town and met with stakeholders and then lied about it when asked by a trustee in his job interview. Okay, so Jones fessed up after getting caught. But, really, is that the honesty and trustworthiness CCSD is seeking in a superintendent?
I guess so because trustees voted to hire Jones tonight. Only Linda Young voted no - because she was uncomfortable with the process.
I don't know what's more bizarre - Jones' prevarication, the trustees' whitewashing it, or Linda Young setting the speaker timer on herself.
Vouchers and regulations
School vouchers have long divided the free-market/libertarian movement.
On one hand, vouchers grant greater choice to parents regarding the education of their children and can break up the state-controlled educational monopoly in favor of a dynamic educational environment that fosters efficiency and innovation.
On the other hand, vouchers are a grant of state money and, as such, could conceivably inspire lawmakers to attach numerous conditions to their use. Many libertarians regard the impact that federal funding and loans have had in fostering an onerous regulatory framework within the higher education arena as a warning for the K-12 sector. From this viewpoint, the voucher movement is a threat to the integrity of private education.
Recognizing this divergence of opinion, Andrew Coulson of the Cato Institute has authored a new study that is the first to empirically examine the impact of voucher programs on private school regulation. Coulson's findings show that:
While vouchers impose a substantial and statistically significant additional regulatory burden on participating schools, tax credit programs do not.
This study should command a central place in the school reform debate as it indicates that reform-minded individuals should place a higher priority on tuition tax credit programs as a method of increasing school choice in lieu of direct vouchers.
Fittingly, Coulson, in a 2009 study for NPRI, has already modeled the impact that a tuition tax credit program would have on Nevada. He shows that such a program could save Nevada taxpayers $1 billion over its first 10 years of operation while dramatically expanding the choice and quality of public education in the Silver State.
