Category Archives: Public Policy and Governance

You Can’t Make This Stuff Up…

If Democrats were creating a caricature of a Republican extremist–a one-dimensional straw man to run against– it would look a lot like Mike Pence. Unfortunately, Indiana’s zealot Governor isn’t a fabrication by the opposition.

As the IBJ reported yesterday,

Gov. Mike Pence announced Monday that he will expand Indiana’s affiliation with a not-for-profit organization that counsels pregnant women against abortion and pushes abstinence as the only method of birth control.

Indiana Right to Life was reportedly gratified. A Google search confirmed the reason why–not only does “Real Alternatives” (the nonprofit in question) confine its “services” to “counseling” against abortion, it also provides “clients” with the horrifying “facts” about birth control. I found a handy little pamphlet explaining why Contraception Is Not the Answer, filled with misinformation and fear-producing “facts.” (Did you know that injectable contraceptives “drastically increase your risk of invasive breast cancer”? No, and neither do medical experts.)

A blogger in Michigan–where their anti-choice Governor has also contracted with Real Alternatives– detailed the organization’s dubious tactics, many of which were documented in an investigation conducted by a Philadelphia newspaper. The reporter visited a Real Alternative clinic, claiming to be pregnant; she was told that abortion would leave permanent psychological damage, that it often leads to depression, and could interfere with her ever having children– claims thoroughly debunked by reputable medical science.

Groups like Real Alternatives exist throughout the country, mostly funded by anti-abortion organizations like Heartbeat International and individual donations. Real Alternatives, though, is funded almost entirely by the state of Pennsylvania — financed, that is, by you, the taxpayer, and it has received tens of millions of dollars since 1997…

That money, City Paper has found, goes to pay for part of the $199,000 salary (including benefits) of the CEO of Real Alternatives, who has no medical experience. It also funds an army of hundreds of “counselors,” non-medically-qualified personnel whose job it is to dispense the organization’s (sometimes outright inaccurate) information — and who, despite lacking the credentials of nurse practitioners or psychologists, cost the state much more per hour for their services than either.

According to Cosmopolitan magazine, which conducted a year-long investigation of the organization’s operations in Pennsylvania,

Real Alternatives’ contract with the state relies on debunked studies that imply abortion leads to breast cancer and clinical depression. Centers are not allowed to advocate for birth control, much less dispense it. The contract’s directives advise pregnancy-center staff to make an “assessment of the client’s spiritual needs” by asking questions like, “How does your faith impact the choices you make?” (One quarterly report from a center to Real Alternatives refers to clients with the aliases “Mary” and “Joseph.”)

The United Nations Population Fund estimates that one in three deaths related to pregnancy and childbirth could be avoided if all women had access to contraceptive services.

Whatever one’s position on abortion, the use of tax dollars to support “clinics” that offer no medical services— clinics that exist solely to lie to women in order to convince them to forego both abortion and contraception–is immoral.

Our fundamentalist Governor is understandably frantic to mend fences with his Religious Right constituency, after reality and Hoosier businesses forced him to sign the RFRA “fix.” In the echo chamber he inhabits, this contract probably seemed like a good way to do that.

In the rest of the state–even among Republicans– not so much.

John Gregg is looking better all the time.

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Rent Seeking 101

In our highly polarized political environment, we sometimes overlook areas of agreement between otherwise warring portions of the political spectrum. A recent post at Political Animal pointed to one such area between libertarians and liberals: opposition to “rent seeking” aka “corporate welfare.”

Those of us who genuinely value markets and market economies understand that much of what passes for capitalism these days is anything but, and that the influence of the “haves” is routinely used to ensure that they “have” even more. Libertarians protective of true capitalism and market economics see this state of affairs as undermining the integrity of the economic system; liberals note that it exacerbates the widening gap between the 1% and everyone else.

They are both right. Per a lengthy paper by John Teles of Johns Hopkins, a few examples:

Car dealers, for instance, have a sizable presence in the top 1% of earners, have a major lobbying presence in almost every state capital, and have made contributions to almost every member of Congress. That should not be surprising, because regulations (again, often at the state level) protect car dealerships from competition by limiting direct sales, restricting the termination of franchises, limiting the entry of new dealers, and preventing manufacturers from offering preferential pricing to larger franchisees. Together, these rules, economists Francine Lafontaine and Fiona Scott Morton found in a 2010 study, “almost guarantee dealership profitability and survival,” while simultaneously driving up costs to consumers…..

A concentration of high incomes also characterizes the field of government contractors, such as private-prison managers, defense contractors, and for-profit colleges. All these industries are characterized by dependence on government as a nearly exclusive source of revenue, by extraordinary levels of lobbying, and by asymmetries of power between firms and their government counterparts.

Or consider the field of management consulting, which attracts an extraordinary percentage of Ivy League college graduates. As Christopher McKenna shows in his book, The World’s Newest Profession, the outsized incomes of consultants do not come from their ability to recommend innovative practices to firms. Instead, they come from the rent they extract from performing a legally mandated due-diligence ritual for firms or from performing tasks that could otherwise be done at lower cost by public employees. These are not, in short, meaningfully “private” firms at all, despite their high profitability.

You should really read the whole thing….

There is a compelling case to be made for properly operating market economies—“properly operating” meaning markets operating in economic areas where buyers and sellers have equal access to relevant information (a characteristic that would exclude health care and other goods and services involving inescapable asymmetries of information), and where the sorts of creativity, hard work and entrepreneurial prowess that improve life for everyone are incentivized and rewarded.

There is no case—compelling or otherwise—to be made for the rent-seeking that characterizes American economic activity in the 21st Century.

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The Complicated Perquisites of the 1%

It’s amazing what you can learn from research. Recently, the Brookings Institution took note of the oft-made assertion that the corporate tax rate in the U.S. (at 35%) is too high. The usual response is to point out that 35% may be the statutory rate, but many of our largest and most profitable corporations take advantage of tax breaks that substantially reduce–or even eliminate–federal taxes.

This report, however, looked at a different issue.

Corporations used to be the dominant form in which business was done. Partnerships and other “pass through” entities–so named because the income “passes through” and is taxed as the partners’– were far fewer.  In 1980, only 20.7% of all business income was earned by pass-through entities; in 2011, the share had grown to 54.2%.

So a band of number-crunching economists at the U.S. Treasury and some academic partners, with access to far more data than outside researchers can see, set out to answer two simple questions: Who is getting all this partnership income? And what tax rate do they pay? They offered their answer Thursday in a paper presented at a National Bureau of Economic Research conference in Washington.

The findings are significant. And troubling.

*Pass-through business income is even more concentrated among the richest Americans than traditional corporate profits. “Overall, 69% of pass-through income earned by individuals accrues to the top-1%. Corporate income is similarly concentrated, but other business income (typically considered very concentrated) is substantially less concentrated.

* The average federal income tax rate paid by individuals who report pass-through business income was 19% in 2011. In part, that’s because so much of that income is considered capital gains or dividends, which are taxed at preferential rates.

* Across all business entities except for sole proprietorships, the average tax rate of U.S. business income in 2011 was 24.3%, they estimate. That’s lower than is often assumed in debates over corporate tax reform.

* “The migration of business activity out of the C-corporate sector and into the pass-through sector has likely substantially reduced U.S. tax revenue,” the economists conclude. If pass-through activity had remained at the (low) level of the 1980s, then the average tax rate on total U.S. business income in 2011 would have been approximately 28% rather than 24%, and tax revenue would have been at least $100 billion higher.

Who was it who used to say “A billion here, a billion there–pretty soon, you’re talking real money”?

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Go Back to Wherever You Came From is Not a Policy and Not in America’s Interests

Pew recently issued the results of its in-depth research on immigration.

First, a few “factoids.”

When we include the children and grandchildren of those who have immigrated to the U.S. since 1965, immigrants have accounted for 55% of America’s subsequent population growth. (They’re projected to account for 88% of the population increase over the next 50 years.)

Nearly 14% of the population is foreign born.

Compared with U.S.-born adults, recent arrivals are less likely to have finished high school, but they are more likely to have completed college or to hold an advanced degree.

As with so many other issues, American attitudes are polarized: Some 45% of adults say immigrants in the U.S. are making American society better in the long run, while 37% say they are making it worse.

A recent op-ed in the New York Times offered some useful perspective on the issue:

History provides some clarity about the relative costs and benefits of immigration over time. Fifty years ago this month, Lyndon B. Johnson signed the Immigration and Nationality Act of 1965 at the foot of the Statue of Liberty. By any standard, it made the United States a stronger nation. The act was endorsed by Republicans and Democrats in an era when cooperation was still possible. Indeed, the most serious opposition came from Southern Democrats and an ambivalent secretary of state, Dean Rusk. But it passed the Senate easily (76-18), with skillful leadership from its floor manager, Senator Edward M. Kennedy, and Johnson himself….

The flood of new immigrants also promoted prosperity in ways that few could have imagined in 1965. Between 1990 and 2005, as the digital age took off, 25 percent of the fastest-growing American companies were founded by people born in foreign countries.

Much of the growth of the last two decades has stemmed from the vast capacity that was delivered by the Internet and the personal computer, each of which was accelerated by immigrant ingenuity. Silicon Valley, especially, was transformed. In a state where Asian immigrants had once faced great hardship, they helped to transform the global economy. The 2010 census stated that more than 50 percent of technical workers in Silicon Valley are Asian-American.

Not to mention that our food choices have improved immeasurably….In short, any rational analysis demonstrates that immigration has been (and continues to be) incredibly beneficial to the country.

I suspect that it is another “factoid” from the Pew survey that really explains “the Donald”– and for that matter, most opposition to immigration: By 2055, the U.S. as a whole is projected to have no racial or ethnic majority.

Let’s be honest: much of the animus expressed toward immigrants (and protestations to the contrary, that animus is not limited to those labeled “illegals”) is based upon the “otherness” of some of them. To be blunt, much of it is racist.

As I’ve noted previously, my son-in-law is a (legal) immigrant, and in his thirty-plus years in America, has never experienced that animus. I’m sure it’s just coincidental that he’s a very pale Brit….

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What Makes a Community?

Last night was the second in our three-part series “Electing Our Future.” The panelists were great, and I will post a link when WFYI uploads the video. In the meantime, here are my opening remarks introducing the panel:

What is the difference between cities that are collections of homes and businesses and cities that are genuine communities?

The last forum in this series described the systems we’ve developed—sometimes intentionally, sometimes not—to govern Indianapolis. That forum tried to answer the question: what does Indianapolis look like today? What’s its structure? How do we elect the people who manage the services we expect government to provide? How do we decide what those services are, and—not so incidentally—how do we pay for them?

Whatever we think about our city—what works well, what doesn’t, what isn’t getting done, what is getting done that perhaps shouldn’t be—one fact is inescapable: there aren’t enough resources to do everything that everyone would like to see our City do. Indeed, increasingly we find ourselves trying to stretch limited dollars just to do the very basic sorts of things that all citizens expect.

All cities have to set priorities, and we in Indianapolis are no different. Those priorities need to be informed by those of us who live here. And I want to suggest that those priorities tell the people who live here and the people who might want to start businesses here or live here or even visit, a great deal about us.

If we want Indianapolis to be a genuine, healthy community, rather than a collection of unrelated inhabitants—if we want to marshal the talents and goodwill of our neighbors in ways that will build on our strengths and compensate for our weaknesses—we need to consider what it takes to create that community, and we need to ask ourselves which of those tasks are properly the job of our municipal government.

Setting priorities requires us to agree on the elements that make for a good quality of urban life. In an era of scarce resources, that process also requires us to decide which services are essential, and which fall under the category of  “would be nice if we could  afford it.”

The process of setting priorities requires us to decide what trade-offs are worthwhile, and which ones shortchange us as a community.

Most of us want to feel safe in our homes and on our streets—but we don’t want that security to come at the cost of people’s civil liberties. 

We want to send our City’s children to schools that will prepare them for life in the 21st Century, that will give them critical thinking skills, because we know that great cities don’t exist without great schools and educated populations.

We all want a government that represents us, that is trustworthy and transparent and responsive to its constituents.

Most of us want to live in a city that is inclusive and welcoming, with a citizenry that sees diversity as an opportunity and difference as enriching, rather than a city that is a collection of separate communities walled off from and suspicious of each other.

And most of us want the amenities that make cities such wonderful places to live and work: parks and trails, libraries, museums, great public transportation, clean air and water, well-tended streets, roads and bridges—the social and public infrastructure that facilitates urban well-being.

The question is: how do we pay for all that? And if we can’t pay for it all, which of those public goods must take priority?

Our panelists have been selected because they are in positions that make them ideally suited to address those questions.

Julia Vaughn has been working with Common Cause to fight for good government for many years. She has been a voice for ethical governance and sanity at the Indiana Statehouse and in City Halls around the state.

Kelly Bentley, who is serving her 4th term as a member of the Board of Commissioners of IPS, has been a longtime ardent supporter of public education and educational reforms that serve our city’s children.

Judge David Shaheed recently retired from the bench; he has long been one of the most thoughtful observers of issues in the community involving re-entry,  disadvantaged populations, and diversity in general.

Troy Riggs recently left his position as Indianapolis’ Director of Public Safety, and has a uniquely informed perspective on the issue of crime in our city.

Through her work with Health by Design, Kim Irwin has come to understand that civic health involves far more than the physical health of its inhabitants, important as that is; healthy cities are cities with a great quality of life.

And finally, John Ketzenberger of Indiana’s Fiscal Policy Institute knows better than most of us the challenges we face in paying for our priorities and funding that good quality of life.

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