Category Archives: Public Policy and Governance

Power to the People

Back in the wild and woolly Sixties, “Power to the People” was a slogan often shouted at sit-ins and the other disruptive gatherings that characterized those tumultuous times. We hear similar chants today from those attending “tea party” events.

Reporters covering the various factions of so-called tea partiers tell us that there really is no central issue motivating them; rather, these events are expressions of frustration and anger, fueled by feelings of powerlessness. A sour economy certainly doesn’t help.

It’s easy to dismiss Tea Party folks as fringe malcontents who are being given undue attention by the media; there were all of six hundred people in attendance at the recent national “convention” that received so much coverage. Certainly, it is not a coherent movement advocating any particular goal. But outright dismissal would be a mistake; while most Americans do not share the paranoia, racism and hostility to government that characterize Tea Party gatherings, huge numbers of Americans do share participants’ frustration and their belief that our governing institutions are not working.

Whatever one thinks of Evan Bayh and his motives for leaving the Senate, it is hard to argue with his accusation that extreme partisanship and the influence of moneyed special interests have crippled that institution. Game-playing has replaced policymaking, with the result that efforts to solve our most pressing problems—think healthcare, the environment, job creation—go nowhere. Time and time again, scoring political points or keeping the other party from doing so, trumps doing the people’s business. Time and time again, serving the vested interests trumps serving the people’s interests.

It isn’t only the U.S. Senate. The Indiana Legislature seems equally unwilling or unable to address the issues Hoosier voters really care about—improving education, creating jobs, reforming and streamlining our outmoded government and election systems.

What are Indiana lawmakers—of both parties, it should be noted—spending time on? Well, there’s always time to debate another anti-same-sex marriage amendment to the Indiana Constitution. Or to micro-manage local school board decisions about when school should start.

This year, lawmakers spent time on a bill prohibiting employers “from adopting or enforcing” rules against employees bringing guns to work. Perhaps you didn’t realize what a truly important problem that was—surely, every employee has the right to pack heat on his employer’s premises! The bill says employers have no right to prohibit workers from bringing weapons, so long as they are kept in a locked car, trunk, or glove compartment. Virtually every employer in the state is opposed to this bill, which has sailed through the House 76 to 21, and will easily pass the Senate.

I would suggest we return power to the people by voting these incumbents out of office, but unfortunately, voters no longer choose their representatives. Thanks to gerrymandering and the precision of modern computers, lawmakers today choose their voters.

It won’t surprise you to learn that the General Assembly hasn’t spent much time on proposals to eliminate gerrymandering, or to return power to the people.

Happily Ever After

The last time I babysat my younger grandchildren, we watched one of those age-appropriate Hollywood fairy tales where the good guy defeats the bad guy and then the story ends because—it is understood by all, even five-year olds—that everyone will now live happily ever after.

 Many Americans apply that simple fantasy to politics: once we elect the “good guy,” the story’s over. If we’ve elected the “bad guy,” the story’s still over, but with an unhappy ending.  This childlike belief explains much irrationality on both the right and left a scant year after Obama’s election.  

 Tea party “patriots” and the right-wing fringe are screaming that health-care reform is a Nazi plot and Obama will single-handedly destroy America. Their left-wing counterparts charge Obama with “selling out” to the power structure because he has yet to fulfill all his campaign promises or solve all of America’s problems.

 This may come as something of a shock to both groups, but real life doesn’t work that way. Changing the course of institutions—particular large, entrenched ones—is extremely difficult. Systems matter, and they can favor or smother efforts to change direction for good or ill.

Constitutional constraints on government power are important in a nation that values the rule of law. As the old saying goes, one person’s accountability is another’s red tape. Achieving a workable balance is an ongoing challenge. But political systems also create roadblocks that are neither constitutionally required nor democratically sound.

Let me offer a very few examples.

Gerrymandering frustrates efforts to create a more competitive political playing field, and protects incumbents from constituents who want to retire them. In the Senate, filibusters—as we have seen—allow legislative minorities to frustrate the efforts of majorities, even when those majorities represent overwhelming percentages of the population. Our system gives every state, no matter how thinly or densely populated, two Senators. You can argue the pros and cons of such a system, but love it or hate it, it’s the system we have. As a result, a couple hundred voters from Montana have the power to frustrate a million from California or Texas. One Joe Lieberman can frustrate an entire nation.

The Senate also observes quaint and arguably indefensible “traditions” like the one that allows any Senator to put a hold on any Presidential nomination for any reason. Recently, Senate Minority Whip Jon Kyl decided to show his displeasure with a delay in the enforcement of internet gambling prohibitions. So he put a hold on six of the Administration’s pending nominations to fill positions in the Treasury Department. No one has a problem with the people who’ve been nominated, mind you. But because Jon Kyl wants action on internet gambling, the Treasury Department is operating without needed management personnel during a global economic meltdown.

The moral of this story? Systems matter, and many of ours are broken.

As a result, even when a “good guy” wins, “happily ever after” is likely to fall far short of our fantasies.

Who Can We Trust?

The Indianapolis Star has been advocating rather forcefully for laws to tighten restrictions on the lobbyists who exercise increasing power at the Statehouse. The Star argues that such restrictions are necessary if we are to restore a modicum of trust in our legislative body.

 They’re right.

 My most recent book—“Distrust, American Style”—was an inquiry into the current American “trust deficit.” I learned a lot.

In recent decades, old-fashioned corruption and greed combined with regulatory dysfunction to undermine business ethics. Enron, WorldCom, Halliburton, the sub-prime housing market meltdown—these and so many others are the stuff of hourly news reports. Many business scandals were enabled by failures of federal regulatory agencies; others were traced back to K Street influence-peddlers.

But it goes well beyond Wall Street greed and government incompetence.

Religious organizations haven’t been covering themselves with glory, heavenly or otherwise. Revelations ranging from misappropriation of funds to protection of pedophiles to the “outing” of stridently anti-gay clergy have discouraged believers and increased skepticism of organized religion. In that other American religion, major league sports, the news has been no better. High profile investigations confirmed widespread use of steroids by baseball players. An NBA referee was found guilty of taking bribes to “shade” close calls, and others have been accused of betting on games at which they officiate.  Michael Vick’s federal  indictment and guilty plea on charges related to dog fighting was tabloid fodder for weeks.

Scandals have even involved charitable organizations; a few years ago, United Way of America had to fire an Executive Director accused of using contributions to finance a lavish lifestyle, and other charities have been accused of spending far more on overhead than on good works.

In short, the institutions of our common civic life have seemingly unraveled.

Perhaps—as my more cynical friends believe—things have always been this way. But in earlier times, we did not have 24/7 cable news, millions of blogs and assorted broadcast pundits constantly telling us about it. If Americans are less trusting than we used to be, it’s no wonder.

Unfortunately, when citizens don’t know who they can trust, everything becomes fodder for suspicion and urban legend. Eventually, government grinds to a halt, and even the most routine tasks fall victim to conspiracy theories and fear-mongering. We are perilously close to such a meltdown in American civic life.

Our system of government was deliberately structured around the notion of checks and balances. The founders recognized that not all public servants would be trustworthy; their response was to create structures and competing power centers that would force accountability and transparency—to create a system we could trust, even when some people in that system weren’t trustworthy.

Perhaps the Indiana legislature is filled with the innocent do-gooders that Pat Bauer and Brian Bosma touchingly describe. But many of us have our doubts. The modest reforms supported by the Indianapolis Star would be a welcome step toward removing those doubts and restoring a measure of  trust in our governing institutions.

Begging to Differ

David Brooks is one of the few remaining conservative columnists whose commentary is always rational. I may agree or disagree with the substance of any given column, but Brooks is a remnant of the days when liberals and conservatives disagreed about aspects of a shared reality–unlike today, when they appear to inhabit different solar systems.

It is in that vein that I want to take issue with a column Brooks wrote earlier this week, in which he suggested that the health reform debate is really a debate over competing values, which he defined as additional security on the one hand versus social “vitality” on the other. He seemed to be echoing (albeit in a far more reasonable fashion) cultural arguments over the  “Europeanization” of America–the argument that our entreprenuerial energy will slowly give way to a wave of genteel European social welfarism, and in the process will somehow destroy our “special” American character.

I get the argument, but I think Brooks’ central assumption is faulty.

As any economist will tell you, the largest single drag on job creation and entreprenuerial activity in the US today is the cost of providing health care. We are currently the only advanced country where health insurance continues to be provided primarily through employers–an aspect of the current landscape that current healthcare reform proposals will not change, unfortunately.

The business sector currently spends an amount in excess of its net profits to provide  health insurance for employees. The difference between what it costs an employer to create a new position and the amount that employee actually receives is sometimes called the employment “wedge.” As health costs and insurance premiums escalate, the wedge grows larger, and inhibits hiring additional workers. In good economic times, that is troubling; in times like these, it can be catastrophic.

For the shrinking number of companies that can afford to offer health insurance, negotiating and administering medical benefits, and complying with the government regulations attendant to them, consumes untold hours of HR time. This is a drag on productivity—a generator of overhead costs that reduce profits and divert effort away from the core business operations. Single-payer would remove those costs and that burden, but even the inadequate proposals contained in the Senate bill would significantly ameliorate them.

Then there is competitiveness. If you don’t think that healthcare reform would be economically significant, let me share an example. In the case of our struggling auto industry, amounts paid for employee health add somewhere between 1800 and 2000 of the price of each new car. No wonder American automakers have found it difficult to remain competitive! (In the single payer systems with which we compete, not only are those product costs eliminated, but  doctors’ expenses are reduced as well: currently, medical offices spend considerable sums on personnel whose only job is dealing with insurers—confirming coverage, complying with insurer regulations, submitting claims on multiple different forms and collecting amounts due.) Doctors and employers alike could save millions of dollars each year just by standardizing insurance forms!

Smaller companies—the real engines of economic growth and job creation, the “entreprenuers” about whom Brooks is so worried—are increasingly unable to offer benefits, and that puts them at a competitive disadvantage when they try to hire good employees. If health coverage were de-coupled from employment, the United States would become a much more attractive location for new businesses, and incentives to outsource production to overseas workers would be reduced. (Not too long ago, Toyota was looking for a site for a new factory in North America. Several southern states were offering tax abatements, infrastructure improvements and other incentives worth millions. Toyota decided to go to Canada, which was not offering anything. When asked why, the company explained that in Canada, they didn’t need to provide healthcare.) We aren’t going to solve that problem any time soon, but almost everyone I know has a story about someone who wanted to start a business, but couldn’t due to an inability to get reasonably-priced health insurance, or any at all.

Contrary to Brooks’ assumption, rationalizing American healthcare, and removing the burden of providing insurance from employers, would unleash a new era of productivity and usher in an entreprenuerial renewal.

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