“The Poor You Have Always With You”

A few statistics about my state of Indiana (the state that Vice Presidential candidate Mike Pence brags is “a state that works”); these are facts that should “afflict the comfortable” and motivate the rest of us to support policies that will “comfort the afflicted”:

According to the latest Census numbers: More than 1 in 3 Hoosiers remain below self-sufficiency despite increased employment, 21.5% of Indiana’s children live in poverty, and the number of Hoosiers in poverty persistently hovers around one million.

A report on the Status of Working Families in Indiana 2015, issued by the Institute for Working Families, puts the information in an Infographic including state SNAP & TANF responses to poverty, and highlights what it calls the “21st Century Job Swap” from high & middle-paying to low-skilled, low-income jobs by industry;

The June data available from the Bureau of Labor Statistics shows that Indiana has a 108,400 jobs deficit when population growth since the recession is factored in.

The Annie E. Casey Foundation finds that Indiana ranks #30 in child well-being, having slipped 2 spots relative to other states since 2014.

Women are doing even worse than children in national rankings: Indiana is dead last in Work & Family rankings, 39th in Employment & Earnings, 37th in Poverty & Opportunity, and Indiana received a D- in the National Partnership’s Expecting Better report, “the most comprehensive analysis to date of state laws and regulations governing paid leave, paid sick days, protections for pregnant workers and other workplace rights for expecting and new parents in the United States”

Despite the fact that the minimum wage cannot support even a single adult in any county in the state, Indiana’s legislature has not only refused to raise that wage– but has preempted the authority of cities and counties to do so (or to provide paid leave, or enact environmental regulations, etc.)

To add insult to injury, in 2015, Governor Pence diverted three and a half million dollars of desperately needed TANF funds to  anti-abortion crisis pregnancy centers.

There is much more, but rather than get bogged down in the details of one state’s inability to raise living standards–an inability that, unfortunately, is not unique to Indiana–we “comfortable” Americans need to ask ourselves some hard questions, beginning with one posed by eminent economist Robert Samuelson in a recent column for the Washington Post: Is ending poverty impossible?

Samuelson begins by pointing out that neither Presidential candidate has focused on the poor. Clinton’s proposals to decrease inequality are aimed primarily at the middle class, and Trump’s tax cuts would benefit the rich and upper middle class.

Samuelson cites two reasons for ignoring the plight of the truly poor: Poor people don’t vote (they are a disproportionate percentage of nonvoters); and there is no consensus on anti-poverty policies. (That shouldn’t come as a surprise; these days, when there is consensus on anything, that’s a surprise.)

The lack of will to attack poverty can be traced to attitudes about the poor and lack of faith in government. Americans’ widespread suspicion that social welfare recipients are “playing the system” (despite reams of data to the contrary) can be traced all the way back to Fifteenth Century English Poor Laws that forbid “giving alms to the sturdy beggar.” A bastardized Calvinism reinforced the belief that people are poor because they are disfavored by God, probably because they are morally defective. (Or, to use George W. Bush’s more recent formulation of that patronizing analysis in promoting his Faith Based Initiative, because the poor “lack middle-class values.”)

If we ever get serious about eliminating poverty, we will need to do two things, and neither will be simple or easy. We will need to marshal armies of community organizers who can persuade poor people to vote (despite the formidable barriers to their votes put in place by legislators who would not benefit from their participation); and we will need to educate the “comfortable” about the reality of poverty–and especially about the plight of the millions of hard-working Americans who put in forty hours or more a week for wages insufficient to sustain them.

Unless we can do those two things–and not so incidentally, fix our gridlocked political system–the poor will always be with us.

Comments

Outsourcing Responsibility

Sometimes, I wonder why we bother to elect chief executives, since an increasing number of them are clearly uninterested in that boring activity called…what was it? oh yes…governing. Public administration. Management.

Yesterday’s news highlighted the latest in a series of missteps (a nicer word than “fuck ups”) by the Pence Administration. (Actually, I believe this one dates back to Daniels’ time.)

State officials threatened Wednesday to find a private developer in default of its contract for building a 21-mile section of the Interstate 69 extension in central Indiana after a major subcontractor stopped work over lack of payment.

The Indiana Finance Authority has issued a notice of non-performance to I-69 Development Partners LLC for the project upgrading the current Indiana 37 route between Bloomington and Martinsville.

According to bids submitted for the project in 2013, I-69 Development Partners consists of OHL Concesiones of Madrid, Star America Fund LLC of Roslyn, New York, and UIF GP LLC of Delaware.

The dispute comes after Crider & Crider Inc., the contractor responsible for the project’s earth-moving operations, halted work this week.

For the past several decades, public officials–especially but certainly not exclusively Republican elected officials–have had a love affair with so-called “privatization.” I say “so-called,” because genuine privatization involves government’s withdrawal from a given activity (Margaret Thatcher selling off steel mills to the private sector, for example.) In the U.S., what is usually called privatization is actually outsourcing–the practice of choosing a for-profit or nonprofit surrogate to manage a job or provide a service on behalf of a government agency.

I have written extensively about the issues involved in outsourcing, and I’m not inclined to belabor the issue here. Suffice it to say that agencies of government may contract with private entities to provide government services, but they cannot contract away their ultimate responsibility for seeing to it that the project or service is appropriately managed or delivered.

When government hires a contractor to perform a service–in this case, to build a road–it still has the obligation to supervise that contractor’s performance. Effective and competent outsourcing requires that the relevant government agency retain sufficient capacity to manage and monitor the contractor.

Some government functions, of course, simply should not be outsourced. (Private prisons come to mind.) Reasonable people can argue about the wisdom of contracting with private developers to manage the building of roads, but those reasonable people will usually agree that the state retains an obligation to supervise and control its contractors, who are, after all, being paid with tax dollars.

In this case, clearly, that supervision was lacking. And we all know who pays the price when government fails to discharge its most basic responsibilities, one of which is infrastructure:

State Rep. Matt Pierce, D-Bloomington, said many people are frustrated with the traffic delays on Indiana 37 caused by I-69 construction and that he’s not been able to get answers from state officials or the developer.

“People don’t understand why they’re driving through miles and miles of traffic barrels and seeing little, if anything, getting done,” he said.

About 95 miles of the I-69 extension have opened since 2012 between Evansville and Bloomington through southwestern Indiana. The total cost of the I-69 extension is estimated at $3 billion, but the cost of the final leg from Martinsville to Interstate 465 has not been determined.

When that cost is determined, we all know who will pay it.

Comments

A Really Important History Lesson

At Dispatches from the Culture Wars, Ed Brayton highlighted a truly important segment from Rachel Maddow’s show, in which she traces America’s history of xenophobia and anti-immigrant hysteria.

Many readers of this blog are familiar with the broad outlines of America’s nativist history–the periodic eruptions of movements like the Know-Nothings and later, the Klan. But in this explanatory segment, Maddow ties these episodes to the nation’s political history in a way that I, certainly, had never considered, and shows how Donald Trump’s increasingly explicit and ugly fact-free rhetoric fits into that history–and what it means for the Republican party and the American two-party system.

No summary of this extraordinary history lesson could do it justice.

Watch it.

Comments

The (P)art of the Deal

Economic development efforts often seem like a zero-sum game; Indiana offers training funds or infrastructure improvements or property tax abatements to businesses relocating from, say, Illinois, and Illinois does the same for businesses coming from Indiana.

Even within the state, municipalities try to lure employers to City A from City B by offering tempting “goodies.”

There are lots of problems with this state of affairs. It tends to be unfair to small businesses that have been longtime corporate citizens, and all too often, the relocation would have occurred without the (legal) bribe represented by these incentives. Worst of all, however, is the reluctance of the state to require or enforce appropriate “clawback” provisions.

When state or city government offers incentives to businesses, it is in return for that business undertaking to create a certain number of jobs. The idea is that the government will recoup its up-front investment in the form of additional taxes paid by a growing workforce. The agreement, or contract, obligating the unit of government to provide the incentive should include provisions protecting the government in case of default; in other words, if the business fails to create the promised jobs, or moves its operations elsewhere, it should be required to repay the amounts advanced.

Fair enough. You do what you say you will do, or you pay us back. The Pence administration, however, pursues a narrow version of the clawback.

An IndyStar analysis found that the Indiana Economic Development Corporation — which Pence leads — has approved $24 million in incentives to 10 companies that sent work to foreign countries. Of those incentives, nearly $8.7 million has been paid out so far.

During that same period, those companies terminated or announced layoffs of more than 3,800 Hoosier workers while shifting production to other countries, where labor tends to be far less expensive.

The state has clawed back or put a hold on some or all of the incentives in four of those cases, returning $746,000 in taxpayer subsidies. But in the other six cases, the companies faced no consequences.

The primary reason: The job creation and retention requirements in the state’s incentive agreements are usually narrowly tailored to a single facility, leaving workers at other sites owned by the same company vulnerable to offshoring.

During the last legislative session, House Democrats  authored language that would have required corporations that move facilities out of Indiana to re-pay any property tax incentives they had received, and also would have prevented those companies from receiving other state tax breaks. The proposal–which was an amendment to another bill–ultimately went nowhere.

Meanwhile, as the Star reported, the state’s much-touted job growth figures pale in comparison to the jobs lost to offshoring.

Those records show that the same 10 companies or their related subsidiaries have laid off or plan to layoff more than 3,820 workers in Indiana because work has been shifted to other countries since 2013.

Those losses are more than three times larger than the number of jobs that would have been created under the state’s incentive agreements, even if they had all come to fruition.

Here’s the thing: companies have the right to move their operations. But that shouldn’t mean they have the right to move and keep the tax dollars that Hoosiers forked over in the expectation that they would honor their commitments, stay in the state, and create jobs.

A deal is a deal–and the state should play hardball, not wiffle-ball.

Comments

Beer, Wine and Cronyism

I rarely follow the ins and outs of liquor permitting in the Hoosier state (or elsewhere, for that matter). To be candid, I consider the complex web of restrictions governing the sale of alcohol to be an unfortunate “leftover” from America’s more Prohibitionary times and impulses; aside from reasonable restrictions on sales to minors, I see no legitimate reason for most of these rules.

However, a lawyer friend suggested I read the court order recently issued in the case of “Spirited Sales v. Indiana Alcohol and Tobacco Commission.” It was an eye-opener.

The take-away lesson will confirm the suspicions of both cynics and libertarian-minded citizens: arcane and excessive regulatory processes can be manipulated if you have friends in high places. (And I might note that with the loss of  reporting on local government agencies, the manipulators have become bolder.)

The 50+ pages of the Marion Superior Court’s order detail how favoritism and cronyism benefitted competitors of Spirited Sales, whose parent company is owned by shareholders of Monarch Beverage, a beer and wine wholesaler.

Spirited Sales had applied for a liquor wholesaler’s permit. The rules (for some unknowable reason) prohibit beer and wine wholesalers from also being liquor wholesalers. The permit was denied, ostensibly due to the “common ownership” of Monarch and Spirit’s parent, although the Court noted in excruciating detail the reasons that the companies were clearly separate under relevant law–and more separate than at least eleven cases in which the Commission had awarded permits to affiliated entities.

The court acidly noted that the only opposition to the permit came from the company’s competitors: No alcoholic beverage producers, retailers, persons interested in public health or morality, no persons concerned about collection of taxes, and no public officials opposed the permit.

Just the competitors.

Despite the clear impropriety, those competitors were allowed to take part in the proceedings as if they were parties; and they had numerous “inappropriate and concerning ex parte communications with the Commission,” which the Court meticulously listed.

The Court also listed all of the ways in which the hearings deviated both from the rules and from the way other hearings were conducted–unexplained delays, refusals to provide information to which the petitioners were entitled,  acceptance of “evidence” offered by competitors, refusal to allow Spirited to cross-examine competitors’ witnesses, and much more.

So–why? What explained this highly inappropriate treatment of a petitioner?

Evidently, people on the Governor’s staff “harbored animosity” toward Monarch and its President, and freely communicated to the Commission their desire to see the petition denied. Several of those discussions are referenced in the Court’s order, and they display a shared intent to deny Spirit the benefit of the impartial hearing to which they were entitled, and a smug satisfaction in their ability to (forgive the language) screw them over.

After ruling that the denial had been “arbitrary and capricious” and that Spirited was entitled to its permit, the Judge wrote

 this Court considers the relationship between members of the Commission, staffers of the Governor’s office, the Hearing Officer, and the Remonstrators as evidenced by emails submitted to the Court, to be disturbing and inappropriate…Such discussions challenge the integrity of the application process and raise questions about the Commission’s willingness to serve all citizens of Indiana equally, fairly and without bias.

This is precisely the sort of cronyism and influence peddling that undermines the rule of law, and gives rise to the belief that “it isn’t what you know, it’s who you know…”

Comments