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What Works for the Dead Won’t Work for the Living

A short Wall Street Journal article about a forthcoming Grateful Dead documentary contains the following interesting insight:

The biggest obstacle [to making the documentary], Mr. Bar-Lev says, was the Dead’s communal philosophy, which extended to business decisions. That approach persisted after 1995, when the group ceased to exist following the death of Jerry Garcia, its best-known member. The Grateful Dead organization “moves in an extremely egalitarian, consensus-oriented way, which means that nothing ever happens,” Mr. Bar-Lev says. In addition, the band is “mistrustful of anything that would nail them down to one meaning, so a documentary film had strikes against it right there.” Persistence, a shake-up at a record company and a nod from Martin Scorsese finally cleared the path.

For a labor of love, “an extremely egalitarian, consensus-oriented” methodology is fine, but as an economic plan, not so much.  The whole world can’t depend on being the Grateful Dead; indeed, one could argue that the fact of being unique was key to the Dead’s success.

A “communal philosophy” requires at least one of two preexisting conditions:  either a preexisting conformity of belief that the method of decision making must supersede the community’s ability to accomplish goals (meaning a willingness to suffer for the belief) or sufficient economic potential that much of it can be squandered.

Artists of a certain type will often be willing to suffer for their beliefs, and the Grateful Dead obviously had huge economic potential.  However, just as we shouldn’t go so far as to proclaim that the go-getters have a right to impose their beliefs on the communal types, we can’t insist that everybody conform to the latter’s beliefs.

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What Are City Governments’ Real Priorities?

Ted Nesi reports (if I may paraphrase) that Rhode Island cities have been crawling over each other to slurp from the sluice some money from the Boston Federal Reserve:

Federal Reserve Bank of Boston President and CEO Eric Rosengren visited Rhode Island on Thursday to award $400,000 grants to three local cities through the bank’s Working Cities Challenge.

The program aims to promote collaboration between local leaders to address socioeconomic challenges. The three Rhode Island winners are Providence, Cranston and Newport. Eight other cities submitted applications but did not win grants, which are funded by public and private contributions, not the Fed. …

Appearing on this week’s Executive Suite, Rosengren said the four-year-old program grew out of research conducted by the Boston Fed that showed efforts to tackle cities’ challenges worked best when leaders from different groups worked together toward a common goal.

Readers may recall that the Boston Fed’s involvement with Lawrence, Massachusetts, under a project in the same program is what kicked off my thinking about the “company state” or “government plantation” model, whereby government services become an area’s core industry, with the revenue coming from other taxpayers or higher levels of government (such as state or federal taxpayers).

With these new grants, we should also put the matter in the context of political structures and incentives.  Here we have cities competing to charm “public and private” outside interests with their proposals.  That is, they’re competing to match the values of the Boston Fed and the people or groups funding the project.  Sure, these “community” projects have local advocates (most often ideological activists, special interests, and other insiders), but ultimately, these projects are things being done to local constituents, not for them.

It’s time we stop seeing money that our governments manage to collect from other sources as money that we’ve somehow received.  It isn’t.  That’s especially true when it’s used for projects that the government wouldn’t otherwise have bothered to do.  It’s money that goes to the sorts of people who know how to get government money and spent in order to shape our society in ways that other people want, not us.

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We Had the Logic, Now We Have an Example, Too

Rhode Islanders, especially, should heed the admonition of The American Interest that Puerto Rico may be a final warning lesson to states within the United States:

This [bankruptcy] could have been avoided by sensible and timely cuts, by turning a deaf ear to public sector union demands for wages and salaries, by a series of small but definite steps away from the blue model, welfare state governance. But the press, certainly including the NYT which is now reporting the disaster, would have attacked any politicians taking these steps as “harsh”, or “cruel to the poor”.

Now Puerto Rico is in a deeper hole, with much more suffering than any of the moderate cuts would have imposed.

Just look at the false rhetoric permeating the debate over some overly mild reforms to the disastrous ObamaCare entitlement system for a timely illustration.  Any restraint on government programs is declared to be a “draconian cut” that will hurt or kill people, marking politicians who support reforms as evil.  This will not end well, but just like junkies, supporters of big government just want that one more fix, and let tomorrow take care of itself, somehow.

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Why Real Insurance Is Preferable to Centrally Managed Health Care

In The Washington Times, Cheryl Chumley tells the 2008 story of her husband’s sudden illness and brush with death.  Her insurer at the time, Blue Cross Blue Shield, didn’t deny any bills, even though the doctors keeping her husband alive told the family to prepare for his imminent death.

It was a few months after my husband left the hospital from his heart attack that we ran into one of the nurses who cared for him — at a presidential campaign event, no less. One chat led to another and the subject of socialized health care was raised. And this is what the nurse said: Had my husband been on Medicare or Medicaid at the time of his heart attack, the doctors would have quit their life-saving efforts long before his 10 comatose days had ended. Why? Because the government health care plan wouldn’t have paid for the around-the-clock intensive care. The situation would’ve quickly evolved into a pull the plug, wait and see what happens type of deal.

It occurs to me that, in a competitive market, of course this would be true.  The insurance companies are selling insurance, which means everybody who buys insurance is thinking of these sorts of horrible circumstances.  If it gets out that a particular insurance company doesn’t cover them, then the value of insurance for that company and generally goes down.

So, it’s in their interest to accurately price risk so as to charge a rate at which they can maintain their value proposition.  They do this with a mix of pricing features, including premiums, deductibles, and maximum out-of-pocket limits.  A consumer with a low tolerance for risk may choose to pay a high premium, while one who wants to save money understands that risk is part of the equation.

Central planning is a completely different thing.  In that scenario, supposed experts are figuring out how best to distribute resources.  They don’t have to have attractive products, because nobody has a choice.  ObamaCare’s hybrid system of planning and choice transforms the insurance incentives into hiding costs, not accurately assigning them.

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Universal Pre-K, Another Way Government Makes Business for Itself

Susan L.M. Goldberg writes on PJMedia:

A scathing report, highlighted in the UK Daily Mail, details the findings of the Institute of Economic Affairs regarding Britain’s universal free childcare program. The bottom line: researchers have concluded that a government-funded, government-mandated universal daycare and pre-K program has done nothing more than bankrupt the middle class while failing to serve the country’s poor. What’s worse, government involvement has led to excessive regulation that not only drives up programming costs, but limits parental choice when it comes to how they would like to care for and educate their own children.

Goldberg suggests that universal pre-K plans have “everything to do with providing glorified daycare services so that parents can go to work.”  That’s only partly true.  Such programs also have to do with creating more unionized jobs that rely on government mandates and subsidies.

We’ve reached the point that government is acting entirely as a self-interested business, using its metastasizing ability to tell people what to do and how to live (backed by its authority to tax, jail, and kill) to generate business for itself, in a cycle of kickbacks and political quid pro quo.  In the name of doing good, by providing services that it insists people need, too-big government is undermining the very things that define good in life, from freedom to family.

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Why Knowledge Is Important (Pre-Existing Conditions)

Josh Blackman highlights one of those political truisms that still surprises when one sees evidence.

First, he cites a 2009 Kaiser Family survey finding that support flips for an ObamaCare provision that makes it difficult “for insurance companies to drop your coverage when you get sick or water it down when you need it the most” when people are informed that it would increase their own premiums.  Next, he cites the same phenomenon in a more recent Cato/YouGov survey, concerning the “community rating” provision that forbids adjusting premiums based on medical history.

This is why it makes a difference how surveys are worded and, even more, what points news stories present.  It makes progressive policies look much, much more attractive if there’s never any cost associated with the feel-good legislation.  Every story should contain a micro-lesson on basic economics.

Making this tendency more tragic, in this case, is that these small populations of exceptions could be addressed in ways that are much more fair and much better economically and with regard to outcomes.

Knowledge, as they say, is power, which is why the Left spent decades corrupting institutions like the media and higher education by which Western Civilization transmits its information.

(Via Instapundit.)

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A Tax Lesson Next Door

Well, the WTNH headline out of Connecticut is just about all you need to know: “Income tax revenue collapses; Malloy says taxing the rich doesn’t work,” but here’s a brief explanation:

Connecticut’s state budget woes are compounding with collections from the state income tax collapsing, despite two high-end tax hikes in the past six years. …

It’s happening because the state of Connecticut depends too much on its wealthy residents, and wealthy residents are leaving, and the ones that are staying are making less, or are not taking their profits from the stock market until they see what happens in Washington.

Rhode Islanders should consider that this goes in reverse, too.  Lower, broader taxation will foster the import of wealth and productive activity within the state.  For a quick lesson, see Thomas Sowell’s latest post-retirement essay.

For progressive governments in the Northeast, the whole purpose of a civic entity (like a state) is to construct the perfect society as they see it.  This doesn’t work.

For classical liberals (now called “conservatives”), the purpose of a civic entity is to provide some structure and security for the society as a whole (as distinct from the security of an individual or particular organization).  This does work, and should be the focus of our state.

Government should be small enough in scope that a broadly applied tax won’t hurt the less advantaged.  In that way, we’ll have prosperity and greater economic mobility, or opportunity for people to climb the ladder.

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Are RI’s Wealthy Liberals Willing to Pay Their Fair Share?

The American Interest highlights an issue that ought to be a big topic, in Rhode Island, related to President Trump’s tax reform proposals: the federal tax deduction for state and local taxes.

The deduction overwhelmingly benefits six-figure earners. The benefit is largest for affluent people living in states that impose high income tax rates, which are much bluer than average. …

Some SALT opponents will claim that the measure would create a system of “double-taxation,” and they aren’t entirely wrong. But if this were really the concern, states could address it by making federal tax deductible from state tax bills. Of course, that would impose new costs on states, just as SALT imposes costs on the federal government. This is at its core a fight over resources, and it’s one that the working class deserves to win more than coastal high-flyers.

Rhode Island would take a hit if this proposal were to pass, but it’d be deserved.  More importantly, it has the easy remedy of lowering spending and local taxes.  Ta-da!  Problem solved!

The post makes another significant point:  The deduction takes the pressure off of relatively wealthy Rhode Islanders to get involved and hold their government accountable.  After all, the additional taxes that result are deductible on their federal taxes.  If it were not, such folks would have more incentive to take an interest in how things really run around here.

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One Way the Left Gets Turned Around on Misanthropy

David Harsanyi finds the ghoulish worldview of self-styled “science guy” Bill Nye objectionable.  This particular paragraph of Harsanyi’s, though, allows for an interesting tangent into how the Left and Right think:

We live in a world where Ehrlich protege John Holdren — who, like his mentor, made a career of offering memorably erroneous predictions (not out of the ordinary for alarmists) — was able to become a science czar in the Obama administration. Holdren co-authored a book in late 1970s called “Ecoscience: Population, Resources, Environment,” which waded into theoretical talk about mass sterilizations and forced abortions in an effort to save hundreds of millions from sure death. Nye is a fellow denier of one of the most irrefutable facts about mankind: Human ingenuity overcomes demand.

This is just a single example of progressives’ comfort with concepts like forced sterilizations and forced abortions.  Harsanyi also quotes progressive Supreme Court Justice Ruth Bader Ginsburg as saying, “Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don’t want to have too many of.”  Other examples would easily be found.

What comes immediately to mind for a contrast is the Left’s reaction to Charles Murray.  Anybody who has read Murray’s original flash-point for controversy, The Bell Curve, would know that the book…

  • acknowledged differences in intelligence,
  • reported that in current circumstances, these differences do relate statistically (although not inevitably) to racial groups, and
  • warned about the future consequences of allowing such trends to develop.

Murray and co-author Richard Herrnstein were concerned about the development of a “cognitive elite” in proverbial gated communities lording it over everybody else.  In order to avoid that in the future, they said, we must honestly address the data and answer thorny questions of culture and political philosophy.

Think about that.  Murray is attacked as a “white supremacist” by the Left for arguing that we’re headed toward a divided, dystopian future that we should strive to avoid.  Meanwhile, voices on the Left are lauded despite their openness to divisive, dystopian policies in the present.

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The Cheese Sandwich Lesson for Socialism in Schools

It’s difficult to believe that Bob Plain isn’t trying his hand at parody with an interesting article on RI Future today about “lunch shaming”:

It’s known as lunch shaming. Students are subjected to special, sometimes embarrassing, treatment because their parents didn’t pay the school lunch bill. “Some provide kids an alternative lunch, like a cold cheese sandwich,” according to a recent NPR story. “Other schools sometimes will provide hot lunch, but require students do chores, have their hand stamped or wear a wristband showing they’re behind in payment. And, some schools will deny students lunch all together.”

The so-called cheese sandwich policy seems popular in suburban Rhode Island: Bristol/Warren, South Kingstown, and East Greenwich all use it.

From Bob’s article it appears that we’re talking debts in the amounts of $5 or $10, which seems like a paltry amount that districts could find some way to accommodate.  I’m trying to imagine a working-to-middle-class private school taking such steps.  In a transaction in which one side actually has the option to leave, other approaches have to be considered, whether a mandatory up-front fee, a deposit of some kind, a credit card on file, mandatory use of a payment processor that handles the collection, or a slight increase to all lunches in order to generate a reserve fund that provides a buffer for this sort of “debt.”

Putting aside the “what would the private sector do” comparison, though, think of what this little story says about the relationship of government to the people.  Adults in position of authority over school districts with budgets in the tens or even hundreds of millions of dollars are agonizing over ways to embarrass children so as to extract a few owed dollars from their parents.  That doesn’t indicate a mindset of provider-client or public-servant–beneficiary.  Rather, it indicates the dynamic of ruler-subject similar to a Dickensian orphanage.

Suffice to say it takes a series of monumentally bad social and public policy decisions to get us to the point at which the proverbial lunch lady is scornfully handing a child some bread and cheese over $5 owed.  We should start unraveling those decisions.

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Live by Cronyism, Die by Cronyism

GoLocal is reporting that Blue Cross Blue Shield of Rhode Island plans to move a good chunk of its Providence workforce to East Providence:

Despite making promises to the City of Providence in 2007 to centralize its work force in its gleaming $125 million tower, Blue Cross Blue Shield of RI confirmed late Tuesday that it will be moving more than 125 jobs out of Providence to East Providence.

The Blue Cross Tower is assessed at $46 million, but only pays a portion of its tax obligation because of a generous twenty-year tax stabilization.

Average residents tend to get caught up in rhetoric and lose sight of basic realities like incentives.  Although individual workers and executives do take morality and personal fulfillment into consideration, private businesses ultimately exist to make money (whether for profit or non-profit).  If they don’t do that, they don’t get to do what it is they do.  Likewise, politicians’ have to gather votes and political support, otherwise they lose both their livelihoods and ability to accomplish what they want.

So, when a particular arrangement is no longer optimal for a business, given other opportunities, it will walk away from deals.  And when a politician comes into office who didn’t make a particular deal and is building a different base of support, the dynamic changes from that direction.

Public policy should therefore build beneficial incentives and then let people work out their deals in a free market.  From cutting deals for office buildings to reshaping an entire population for the benefit of a sugar-daddy industries (through, for example, “free tuition”), it is utter folly to accept central planners’ promises that the people can make out in the long run.

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Work Requirements for Medicaid in Maine

The Wall Street Journal’s Jennifer Levitz reports that the GOP-governed state of Maine is looking to add work requirements to the Medicaid program for those enrollees who are able-bodied adults.  When the state did the same with the food stamp (SNAP) program, enrollees dropped 90% and analysis suggested that the group of people who had been on food stamps actually saw an increase in wages.

The argument against such reforms shows the completely different starting point of each side:

But Maine’s approach is drawing criticism from advocates for the poor, who say jobs, volunteer positions and transportation to either of them can be hard to come by in rural pockets​with persistent unemployment. They say those losing the assistance turn to charities instead, increasing demand at food banks.

To which I would ask:  So?  Whether society provides food for the poor through a government program or private charity, we’re still supporting our neighbors.

The implied difference is that private charity has the feel of relying on the goodness of others while government programs have the feel of society’s handing over what it owes — an entitlement, in other words.  That difference is critical, and right in line with the work requirement.

What we owe each other is the chance of personal development and fulfillment, which comes from working, including being part of a self-supporting family team, even if not everybody within it works.  For those who really can’t work and who aren’t part of family that can address the greater challenges it faces, we should offer help in a way that shows genuine concern and community, not forced entitlement.

The attitudes and mechanics of welfare affect each other.  There’s a difference between the obligation to care for other people and a right to be cared for.  When a third party — government — asserts the authority to impose the obligation and bestow the right, it harms those who face adversity and deprives those who contribute of the benefits of being charitable.

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