Leviathan Shrugged

pacific-rim-kaiju-otachi-more

Hmmm – I wonder what a boat filled with taxpayers tastes like?

As Americans set course on a journey that would net them two presidential candidates who are the least liked in what appears to be all of history, one or two or thirty things come to mind, regarding the general irrelevance of which party wins the presidency.  Let’s start at the top.

It does not matter who the next president is:  Federal spending will continue to grow faster than the pace of inflation, or population growth, GDP growth (even with federal spending as one of its components), or the growth of my 401k.  Just taking the last 25 years or so, what is reliably and consistently growing, so much so that if it were an investment option, people would be buying it like cakes that are really hot?

Spending.  Spending is king.

fed-spend-and-gdp

“But wait!” gasps the Keynesian.  “Federal spending is needed during recessions to jump-start the economy, and reduce unemployment”.

Sure – but those dollars spent come from somewhere, in the form of taxes and borrowing, and when that happens, those dollars aren’t available for capital spending, investment, savings, etc, all of which actually creates jobs in the private sector.  It doesn’t have the net effect of taking dollars from the private sector to spend them via the public sector, which gains nothing, other than votes for office and an increase in the debt and deficit.

Unemployment increases and decreases independent of expenditures - not because of them.

Unemployment increases and decreases independent of expenditures – not because of them.

The reality is that the unemployment rate is more closely tied to the dwindling labor force participation rate than it is to federal spending – which runs counter to the standard Democrat response to any kind of recession, consisting of mostly “let’s spend even more money than usual under the guise of helping”.

spend-unemp-and-lbr-force

Participation rate goes down at roughly the same pace as unemployment, independent of increases in federal spending.

In fact, if you go back to 2000, the labor force starts dropping dramatically when, exactly?  Let me check – ah, that’s right, as soon as Barack Obama assumed the presidency.  That drop in participation accounts for nearly all the unemployment reductions since the recession started.

Recovery 2009 never looked so good! Thanks Biden!

Recovery 2009 never looked so good! Thanks Biden!

But it does, of course, get worse.  If you look at unfilled job vacancies, going back to 2001 – we still have (slightly) fewer unfilled vacancies as of 2015 as we did in 2001 or so.  Yet federal spending doubled during that time.  If you use vacancies – jobs available – as a barometer of growth, we’ve doubled federal spending for no net gain in available jobs.

unfilled-gigs-and-spend

All of which is just another reason why the person occupying the White House can speak to different policies, preferences, and budget priorities, but every year, spending goes up.  The deficits, once deemed unpatriotic due to their size by Obama, yet doubled under his presidency, and the subsequent debt, are just choices being pushed onto future generations.

Or, better stated – a reduction of choices, for them.  Because they will be footing the bill for what we spend now, and they didn’t even get a chance to vote on the lesser of two evils, whoever you might end up choosing to vote for on Election Day.  The less they have to spend, the less free they are, to make their own choices.  We are choosing for them.

In other words, Leviathan, in the form of the federal government, doesn’t care who wins.  Leviathan will continue to feed off the labor of the citizens (those still working, anyway), and the borrowed future earnings of those not even born yet.  The only way to kill this beast is to starve it, and no modern president, or presidential candidate, seems interested in taking that one sane step forward.

 

 

Vermont’s Six-Year Plan

Recently, Vermont’s unemployment rate ticked up a notch, a tenth of a percent, which seems to generate the standard spasmodic response programmed into the Department

Quite the opposite, actually.

Quite the opposite, actually.

of Labor’s webpage:

The Vermont Department of Labor announced today that the seasonally-adjusted statewide unemployment rate for August was 3.3 percent. This represents an increase of one-tenth of one percentage point from the revised July rate (3.2 percent). The national rate in August was 4.9 percent. As of the prior month’s initial data, the Burlington-South Burlington Metropolitan NECTA was tied for the seventh lowest unemployment rate in the country for all metropolitan areas at 2.9 percent (not-seasonally-adjusted). Overall, Vermont’s unemployment rate was fifth lowest in the country for the same time period.

The bolded section is the good news the state’s trying to slather over the dismal economic record of Peter Shumlin, and the Progressive bloc in general.  Because even though Vermont’s unemployment rate is low, that doesn’t mean Vermont’s economy is doing well.  Unemployment could be at zero, if every employable Vermonter was working for $10/hour selling lift tickets to tourists, but that’s not the Vermont we’re looking for, is it?

Unfortunately, that’s the Vermont you’re getting.  Even the state’s own out-year employment projections, short-term, says that out of the top 15 job types the state sees demand for, only 3 of them would require a Bachelor’s degree as a condition of employment.

That's encouraging.

That’s encouraging.

So why would the Department of Labor continue with its rosy monthly unemployment summaries, making comparisons to national and other KPIs to show that Vermont has a lower rate of unemployment than other places?  Why would it go out of its way not to provide a historical Vermont context for the overall employment picture?

It’s a simple answer, really.  If the DoL did show the data and speak to it openly, it would look bad for the current and prior administrations.  It might, finally, force the state to change its Progressive agenda to something that oh, I don’t know, create a job other than a cashier at an EB5-funded ski resort.

The real reason unemployment is low revolves around one thing only – a shrinking job force.  This is the Labor Force and Unemployment picture from 2010 (the start of Shumlin’s tenure as Vermont’s Governor and Single-Payer Implementer.  Oh, wait, my bad on that last part.  Never mind).

2010

These are the same months in 2016:

2016

If you look at the averages, the labor force in 2010 was larger by 14,000 people.  Yet the average number of employed Vermonters in 2010 was 337,000; in 2016 it was 333,000, a difference of 4,000 Vermonters.  The unemployed number has been cut in half, by about 10,000.

So although the number of unemployed has shrunk by 10,000 or so, we now have:

  1.  A smaller workforce.
  2.  Even fewer people employed.
  3.  A lower unemployment rate!  The economy must be booming!

These numbers alone show a significant negative trend that no amount of mediocre

Hey, at least it's not economics.

Hey, at least it’s not economics.

word-smithing by the Department of Labor can paper over.  That the state doesn’t advertise these numbers is because it demonstrates a massive failure of public policy, that the policies espoused by Shumlin, Shap Smith, et al, have been and continue to be the harbingers of the slow economic death experienced by Vermonters, every day.

For the dwindling number of Vermonters still living there, that is.  There is a choice.  What’s hard to accept is that for Vermonters to thrive, to live in their own homes, and raise their families, maybe the state they grew up in is no longer home.

 

 

The Ministry of Truth-Telling

Finally, at least one agency of the largest employer of the state – the state of Vermont – is telling the truth:  If you want to live in Vermont,

They misspelled "Progressive Party of Vermont" here.

They misspelled “Progressive Party of Vermont” here.

expect a lower standard of living than your parents enjoyed.  If you could use the word “enjoyed” in a state that boasts one of the highest aggregate tax rates and one of the highest costs of living and doing business in the country, and routinely ranks near the bottom of all national surveys on business climate.

The Department of Public “Service”, that same wonderful entity that helped bring about the shuttering of Vermont Yankee, which had the happy result of increasing electrical costs and dependency upon non-locally-generated power, now suggests, strongly, that Vermonters start moving into caves:

Giving up some rural landscapes for solar arrays, sharing cars and driving less, and generally using less cheap oil and gas are all in order if the state has any hope of achieving 90 percent renewable energy usage by 2050.

This was the message of the DPS at a public forum held at the Vermont College of Fine Arts on Tuesday morning. Included in the crowd of about 100 were some state legislators and energy professionals.

The forum allowed the public to provide input on the standards the DPS must create per Act 174 of 2016 for ensuring consistency of regional and municipal plans with state energy policy.

In other words, like with schools, you can create your own policy, as long as it conforms to what the state is going to tell you to do anyway.

To do this, the state’s finest in planning professionals (the same state that brought you Single-Payer Healthcare Planning Professionals Who Think Voters Are Stupid) are suggesting the following steps to get to the 90% renewables by 2050 target:

Not pictured: Shumlin

Not pictured: Shumlin

Director of the Planning and Energy Resources Division of the DPS Asa Hopkins led much of the initial presentation. He said that eventually communities should create maps that overlay what he categorized as primary and secondary constraints for alternative energy development.

Oooh!  Maps!  To where the buried energy treasure lies?  Oh, no, wait.  Not the fun kind of maps.  He means anything (more or less) found outside:

Some examples of primary constraints include vernal pools, river corridors, FEMA floodways, rare and irreplaceable natural areas, transportation infrastructure, federal wilderness areas and wetlands. Some secondary constraints include agricultural soils, conserved lands, deer wintering areas, hydric soils and habitat blocks.

So, in other words, you’re required to make renewables part of regional energy planning but you can only do so within the state’s proscribed box o’ places to site said energy sources, like solar, else the sky falls in and bad things will happen.  In the form of penalties.

Hopkins suggested a shift from oil and gas to renewables would mean, from an economic perspective, a shift away from operating costs (primarily fuel) into capital costs (infrastructure). He suggested the overall aggregate of energy costs should stay relatively the same, give or take about 5 percent.

Funny, that’s as much as the electric rates for Vermont Yankee went up (5%) when the Vermont legislature decided that it could decide whether or not Vermont Yankee could continue to operate, because as every Vermonter knows, all legislators are highly experienced energy professionals with decades of knowledge to back up their decision-making:

Vermont’s three largest utilities use about one million more MW/H of “system power” now than in 2011 (before the March 2012 expiration of Vermont’s utilities’ contract with Vermont Yankee which provided about one-third of the state’s power). System power is the term for electricity bought from the New England transmission grid, and is comprised mostly of fossil fuel power (especially natural gas), as well as some nuclear, hydro and renewable power. Green Mountain Power, Burlington Electric Dept., and Vermont Electric Coop use 1.8 million megawatt hours of “system power.” In 2011 the same three utilities used 847,000 Mw/h of system power, according to the “Utility Facts” study released in February, 2013 by the Vermont Department of Public Service.

Over the 12 months from December 2011 to December 2012, Vermont’s electricity prices rose 5.1 percent, according to the EIA. During the same time period, rates in New York and every other New England state (except Rhode Island) decreased.

In the same way that Vermonters are being told that they will a) adhere to the state’s incalculably stupid energy policy (which is really just a

The latest in Vermont's new hi-tech homesteads!

The latest in Vermont’s new hi-tech homesteads!  No power required!

vehicle for politicians to use to get elected), they’re also told that b) it really will only cost 5% more.

Just like when Vermonters were told their health care insurance costs wouldn’t go up much (in fact, they were told it would go down), it would be easier to enroll, and they would have more choices.  In that regard, it’s not so much as accepting the lie itself that the state is telling you, it’s that you get to choose which lie you want to believe in.  That’s classical market thinking, Progressive-style.

Not mentioned by the state’s Progressive Peoples’ Brigade are the hard and unyielding economic realities of cost:  When the cost of something goes up, less of it is demanded, and that rule goes for power, too.  Except for local businesses, which are small and depend upon the general economic vitality of Vermont to keep food on the table – and a booming travel industry – bigger businesses can and will move, to places that aren’t apparently out to shutter them.  While politicians like Peter “Thanks, I’ll Quit While I’m Barely Ahead” Shumlin tout the state as a “great” place for jobs, the hard smack of reality is that the bulk of job growth is in service jobs, which are not well-known for their high rates of pay.

Electricity is a cost in every economic activity, but especially manufacturing.  The price and reliability of electricity are critical factors in the manufacturing business model.  Even the Shumlin administration, which had previously worked to not cut IBM a break, finally decided that the rates were an issue in 2014 – well after IBM had already voiced its concerns.

Chris Recchia, commissioner of the Department of Public Service, said the rate freeze was particularly important this year for IBM.

“It is no secret that they are struggling,” Recchia said. “And a rate freeze for them was going be very helpful for additional planning in the coming years.” Though the freeze doesn’t prevent IBM from leaving the state, he said, “I think they would describe it as every little bit helps.”

No kidding.  You think so, Chris?

IBM said in testimony to the Public Service Board that electricity rates in New York are much lower than they are in Vermont. And New York has “made an aggressive push” to attract high-tech businesses like GlobalFoundries, the tech company rumored to be considering the purchase of IBM’s Essex plant.

“Competitors in other geographic areas are paying electric rates significantly lower than IBM Vermont’s rates,” said Nathan Fiske, an IBM site energy manager, in prefiled PSB testimony on May 30. “Our competitive disadvantage, as a result of the higher electric costs paid by IBM Vermont, is very substantial.”

Which is one of many many reasons why Fab 2000 is now sited in New York, not Williston, Vermont, providing jobs to New Yorkers instead of Vermonters (not including the Vermonters who moved there to find a new job in the new fab, part of Vermont’s economic exodus).

But now, finally, the state has come clean:  It wants a diminished future for Vermonters, mandated from a central planning agency.  How this

Not pictured: Chowderheads frantically dialing the power company when the rolling blackouts start. In January.

Not pictured: Chowderheads frantically dialing the power company when the rolling blackouts start. In January.

translates out to Vermonters in the real world, though, might not quite align so nicely with the Vermont Progressive Utopia:

A recurring theme in one of the discussion groups was “One-size-fits-all is a difficult standard to work with,” as Judith Jackson of Irasburg put it.

State Rep. Joseph Troiano, D-Stannard, reiterated as much. He said Stannard has of a population of only about 150 people, with no paved roads and certainly no public transportation. Residents are spread out and they go to work in different directions, so any notion of ride-sharing is pretty much off the table.

Vermont is in the bottom half of states for population density.  Add in the fact that for half the calendar year there’s the real possibility of snow and ice factoring into transportation decisions, and you’re not really likely to see someone from Buel’s Gore biking to work in South Burlington, and, well, this “plan” starts to seem irrationally optimistic.

Moving a weak and demographically shaky economy to one that has less predictability in access to electricity, with uncertainty in rates, does not equal a massive influx of speculative capital, in search of Vermont’s next big economic success story.  The Ministry of Truth, in the form of the DPS, is doing a painful disservice, again, to the people of Vermont, that it purports to represent.

In fact, what DPS says in its mission statement, and what it’s telling the public, are two different things:

We work to advance all Vermonters’ quality of life, economy and security through implementation of our statewide energy and telecommunications goals, using sound statewide energy and telecommunications planning, strong public advocacy of the public good, and through strong consumer protection advocacy for individuals.

So which is it?  A reduction in the standard of living to adhere to the bureaucracy’s latest 5-year plan, or working to advance all Vermonters’ quality of life?

Because it can’t be both.

The Screaming Hypocrites

Sen. Bernie Sanders, “independent” Senator from New York, er, Vermont, and is only as “independent” as his paychecks coming from the

Sayanara, suckers!

Sayanara, suckers!

pockets of working people allow him to be, recently demonstrated his solidarity with the proletariat by purchasing a $600,000 lakefront house in North Hero, VT.

For those with some semblance of self-awareness, perhaps even shame, purchasing a house that the vast majority of Vermonters can’t afford,bernie 2% a purchase certainly assisted by his wife’s $200,000 golden parachute earned by financially sinking Burlington College under her tenure as college president, seems, well….mildly hypocritical?  And might seem, to ardent, and occasionally frothing-at-the-mouth Bernie supporters, to be a complete and utter sellout to the values he espoused while happily taking in millions in contributions from their modest barista earnings from the corner coffee shop?bernie 2% calc

If the hypocrisy isn’t perfectly clear, let me shine a bright light on the Dome of Mt. Bernie:

In 2014, Bernie and his wife earned a bit over $200,000.  In Vermont, that puts them in the 2% category.  That’s right, in Bernie’s adopted home state, he’s not quite a 1%-er he’s been railing against for the past several years, but he’s almost there.  This New York 2%-er has spent the bulk of his adult life complaining about rich people.

And now he’s one of them, and he’s going to show it, by buying a house in Vermont that real Vermonters can only drive past, knowing that

Not shown here: Bernie's income.

with Vermont’s median household income slipping, there’s no way, ever, they will find themselves in the kind of surroundings the self-proclaimed “Man” of the people has laughingly ensconced himself.

Oh, and in case it wasn’t clear –there’s a long-standing tradition of feathering the Sanders family nest with money from other people.  Like Burlington College funding classes at a woodworking school, a school run by Jane’s daughter, Carina Driscoll, and one paid $500,000 for

Thanks Mom!

Thanks Mom!

classes from Burlington College.  Those Burlington College classes ceased as soon as Jane left Burlington College.  Did they run out of wood?

 

Or the son of a sitting Burlington College board member, getting his Caribbean “education program” funded by the college?

Burlington College offered its students a study abroad program in the Caribbean, according to tax filings. It reported spending about $47,000 on that program in the tax year beginning in mid-2008.

Around that time, the son of Jonathan Leopold, a Burlington College board member, purchased a small resort in the Bahamas called Andro’s Beach Club and an accompanying hotel, Nathan’s Lodge.

Leopold served with Sanders in the Burlington city government—as mayor, Sanders appointed Leopold city treasurer—before becoming embroiled in scandal involving millions of dollars in payments to a Burlington telecommunications company.

Sen. Sanders has described Leopold as so close a friend as to be considered “family.” He reportedly discouraged Sanders’ socialist impulses early in their careers. Efforts to reach Leopold were unsuccessful.

Shortly after Leopold’s son, also named Jonathan, purchased the resort, Burlington College began writing it large checks for all-inclusive stays for its study abroad students.

Where Jonathan’s job is “Tour Guide, Captain, and Snorkeling Instructor for Burlington College”?

There's a snorkeling major?

There’s a snorkeling major?

 

None of this is necessarily new news, but it is telling that so many Sanders supporters quite happily endorsed a candidate who’s been telling

them one thing, about how they should live their lives, that there’s too many choices of deodorant on store shelves, that rich people are essentially monsters, taking from the working class.  But how he’s lived his life and

provided for himself and his family seems to look, a lot, like how those evil rich people cariacatures he’s demonized all his life live their lives.

 

 

 

Vermonzuela: It’s Either A Cheese Or A State Of Mind

Vermonzuela:  A Progressive cheese that’s so progressive it winds up in your shopping cart without you asking for it, it’s price is

labeled “free”, and it tastes like the ashbin of history?

OK, so it’s not a real cheese.

In what can only be potentially great news for under-employed millennials here in the United States, Venezuela, a country demonstrating just how clever it is by nationalizing industries and implementing massive social welfare programs predicated on revenues flowing from just one commodity, is now taking steps to make its own citizens work in forced-labor camps.

You asked for work, you got it, Millennials!

In a scene that could only make such historical luminaries as Pol Pot, Mao Tse-Tung, and Stalin throw a party:

Fight the power! Er, wait - I am the power!

Fight the power! Er, wait – I am the power!

The government of Venezuela has issued a decree that “effectively amounts to forced labor” in an attempt to fix a spiraling food crisis, according to a new report from Amnesty International.

Nothing fixes a shortage of food like taking people out of their offices and putting them to work in the field, where they will surely create such a massive spike in productivity that prices will inevitably drop, as more food is grown and harvested more rapidly than before, simply by adding more resources to the same level of work.  Even if said resources know absolutely zero about farming, harvesting, transporting, and selling produce of any kind.  And might also be hungry.

This type of thinking has historical precedent.  They’re called “famines”, and the Soviet Union wound up killing millions of people through starvation, based on forced collectivization.  So did Mao in his Great Leap Forward Into Slaughtering Tens Of Millions.

So, for Venezuela to follow this same historical path just sounds like good science.  Unfortunately, this same science is applied in Vermont, on a much smaller scale, with smaller impacts, but the basic premises are the same.  Let’s take a look.

1. Single-payer:  Price controls for Health Care:  As has been called for by some single-payer proponents to make the system “work”, price controls essentially act as a cap on what can be charged for services.  This means that either a) once the number of patients has been seen that gobbles up the budget through the cap limit for the year, no more patients can be seen, or b) you can continue to see patients, but they will only be able to offer reduced services in order to stay under the cap for the year.  You can model this as a per-capita equation, estimating how many people a particular doctor might see based on historicals, but you are completely guessing as to what the real need will be (a big flu season, bad weather causing more accidents than normal, a flood, etc, would throw the budget into chaos).  Odds are good that your variance to that capped budget will exceed the 3.5%-4.0% margin Vermont hospitals generally operate under, annually.

As Hamilton Davis argues:

Getting the costs under control will require unprecedented changes in the health care delivery system itself. In the past, ties between elements of the health care system – doctors and hospitals – were limited. They competed with one another to a significant degree and that is still going on.

In the future, they will have to be integrated, tied together, both clinically and financially. The reimbursement system will have to shift from fee-for-service, which is a powerful incentive for overuse, to some sort of per capita financing, rather than financing per medical episode. And the doctors and hospitals will have to take “risk”; they will have to set a price for caring for a group of patients, and if they exceed it, the overage will come out of their pockets.

Right.  And if the overage is more than what goes into their pockets, the practice shuts down – or at best, it starts rationing care in one form or

Is this where the line starts for free college?

Is this where the line starts for free college?

another.  Or the doctor and staff start receiving salary cuts.  Even though some of Davis’s arguments are logical, they fail, utterly, when compared as easily as he does to other industries.  A car mechanic can turn away anyone he or she doesn’t want to work for; a hospital has to take care of the sick immediately, with the financing done later.  That will mean the hospital will have a mix of payers, and some cover the costs, and some don’t.  A cap on what you can spend per patient creates the incentives to do just what cost controls aren’t supposed to do – reduce the amount of care available.  Davis actually states that the doctors will have to set a price – which you have to do either in the market, or in a government-mandated controls situation.  Why is one OK but the other isn’t?  Why would the inevitable reduction in the amount of care available be seen as a benefit?

Oh, and as for examples of price controls not working?  See how Medicare and Medicaid’s reimbursements have been keeping up with actual costs.  How’s that working out?

2.  Venezuela banned GMOs.  I seem to recall some Progressive efforts on this in Vermont recently, but let’s see how Venezuela’s doing:

The Seed Law seeks to consolidate national food sovereignty, regulate the production of hybrid seed, and rejects the production, distribution and import of GMO seeds, according to GMWatch. The law will also ban transgenic seed research.

The law will establish the National Seed System, a central body that will implement the new law. The group will monitor and sanction any agricultural violations, with a focus on the protection of traditional seeds, teleSUR reported.

The legislation, which comes after years of collective grassroots efforts, was promptly signed by Venezuela’s President Nicolas Maduro.

“Approval of the Seed Law was pending since last year after being proposed through a national dialogue process in 2013,” teleSUR reported. “Public consultations have sought popular input on the law, and campesinos [farmers] and environmental advocates have

Clear evidence that nationalization of industries works just fine, thank you.

Clear evidence that nationalization of industries works just fine, thank you.

long urged for its approval.”

Are these “environmental advocates” starving?  Because it looks like the rest of the country is, so much so that they’re going to force people to work in labor camps to produce more food.

3.  Venezuela Bans Private Gun Ownership in 2012:  Not to be outdone, the Burlington, VT, city council banned guns from private ownership.  Despite such niceties as the 2nd Amendment creating headaches for right-thinking city council members, Burlington, at least is choosing the same path to success and individual freedom as Venezuela.

History has no shortage of despots in one form or another banning the private ownership of guns, which obviously makes it easier to control your less-than-thrilled-with-you citizens.  But it clearly sends a signal to Venezuelans that they’re subjects, not citizens, and the choices are being made for them, to them, instead of the people making their own choices for themselves.

Which is what markets, and ultimately freedom, are about.  The more choices are removed, the less free you are.

Looks like Vermont and Venezuela have a lot more in common than I might have thought.

 

Vexit: The Vermont Exit From The Progressive Union

Great Britain, in re-claiming its sovereignty by famously voting to exit the EU, has set a new standard in terms of trying on new political ideas, and finding them wanting.  The difference for Britain and its people, in this case, is that they could disconnect from the EU experiment if they didn’t like it.  As just one maddening example shows, it turns out that the EU defining how olive oil should be served on restaurant tables might not be in anyone’s best interests, except for an EU bureaucracy that seemed to function only to create additional costs for businesses with no

Sorry, that bottle of oil is completely unsafe and might explode.

Sorry, that bottle of oil is completely unsafe and might explode.

discernible benefit to the public good, or to the business itself.

Why would anyone want to put up with this insanity?  As Great Britain demonstrated, if a free people choose to exercise their own power, they will decide not to put up with said insanity.

Vermont’s example shows, however, that it takes more than talk to change a few decades of EU-esque progressivism’s slow but determined encroachment into the decision-making space of every citizen.  The encroachment never happens in one swift stroke.  Incrementalism is the key, and as more layers of bureaucratic power and spending are added, annually, the new norm is established.  The next year’s barnacles are built on the prior year’s established barnacles.

A few of these barnacled examples from Vermont:

Act 250:  What was started as a way to manage growth in Vermont, and to apply a common set of guiding principles and rules has devolved, utterly, into a chokehold on economic growth.  A dilapidated example of which is evident to anyone getting on Interstate 189 off Shelburne Road, in Burlington, where they can see the Vermont’s largest accidentally-funded skatepark, which started construction in 1988, and only last year was the final hurdle cleared in allowing construction to continue.

1988 to 2015.  27 years to build a road.  A 2.9-mile road, one whose planning began in 1965.  Even with a recent green light given by the

You can just *feel* the economic vitality oozing from its unused surface.

You can just *feel* the economic vitality oozing from the unused surface.

Vermont Supreme Court (which tossed out a final appeal to block further construction), the City of Burlington is only targeting construction to begin in 2018.

So call it a 30 year delay in building 3 miles of road to route interstate traffic off the highway, into the city.  10 years per mile, of delay.

And Peter Shumlin has said Vermont is “open for business”?

Speaking of the business-friendly environment Vermonters have come to know and love under the Progressive agenda, one of the icons of small businesses in Vermont, Bove’s, was fined in 2008 for labeling their products in a fashion that the Progressive agenda does not approve of, including (gasp!) the fact that not every component in the sauce is made in Vermont.

The Attorney General’s office says that the Bove’s company sold several types of jarred pasta sauces and other products under the “Bove’s of Vermont” label. But the tomatoes were from California and some of the sauce was made in New York. State law prohibits companies from using the word “Vermont” to market products made outside of the state.

Granted, there is a concern about something being labeled inaccurately, but where is the line drawn?  Does the glass for the jars need to be made in Vermont, too?  The manufacturing tools used at the manufacturing facility – are those made in Vermont?  The jar lids?  The labels?  The oregano?  Modern manufacturing is a worldwide supply chain equation, and the state has no knowledge of, nor expertise in, any one single product, much less everything made in Vermont.

As an example, the state regulates wood.  Well, thank God that that issue has been figured out.  I was concerned that Christmas trees would be mislabeled, and angry Christmas shoppers would riot when this duplicity was discovered.

Vermont's lingering wood question, finally resolved through governmental excellence.

Vermont’s lingering wood question, finally resolved through governmental excellence.

 

EB-5:  Long a darling of the Shumlin administration, the EB-5 program was designed to attract foreign investment in Vermont capital projects, of which there is something of a shortage.  Like water in a desert, Vermont needed a federal program to let dollars rain down on its citizens, because without Progressive leadership to fix Vermonters’ problems for them, where would they be?

Well, they wouldn’t be investigated by the SEC for fraud, for one thing.  But hey, what’s a few hundred million in loans floated around in what seems to be a Ponzi-like effort to leverage investor dollars in every place but the capital project itself?  As others have noted, when campaign contributions come from people benefiting from public dollars, even a thin veneer of deniability shatters upon closer inspection:

Wait. You did *what* with the money?

Wait. You did *what* with the money?

The current circumstances at Q Burke and Jay Peak are a blow for the entire state of Vermont. Economic development in communities which have been historically neglected is absolutely essential to the financial vitality of our state. The fact that the EB-5 funding scandal is the product of, in this case, a handful of angel funders who have little connection to Vermont speaks loudly to the desperation of public officials who wanted to believe that the primary developers of these projects, Ariel Quiros and Bill Stenger, were white knights. They weren’t.

Many will point to the fact that the alleged fraud in this case was eventually uncovered and point to the hard-working forensic accounting specialists who largely go unheralded as evidence that our system of oversight worked. To the extent that these alleged white collar crooks dipped into the public till and enriched themselves at the expense of all Vermonters that is in fact true. But, we should have never, EVER gotten to this point.

Campaign contributions showered the state Democratic party and its leaders, most notably Gov. Peter Shumlin and Sen. Patrick Leahy. Quiros and Stenger did not make those contributions out of the goodness of their hearts. They expected something in return for those campaign monies. While unseemly, under our system that kind of relationship between elected officials and supporters looking to gain or sustain influence is not illegal.

Single-Payer:  Another Progressive fantasy, “Single-Payer”, which mostly involves getting other people to pick up even more costs in addition to what they’re already covering due to the cost shift and Medicaid block grants, wound up being mightily flushed into the outhouse of Vermont’s history, along with a couple hundred million in taxpayer dollars to pay for a site the state did not need, but Peter Shumlin did in order to raise his political profile to national levels.

So Vermont spent someone else’s money, again, for nothing.  Although the fact that it failed in Vermont, and Shumlin had to admit to its failure, which probably contributed to him not running for office again, might have been worth the investment.  In a jaw-dropping turn of

Hey, who's got $2.6 billion I can borrow?

Hey, who’s got $2.6 billion I can borrow?

phrase, though, Peter keeps the Progressive dream alive, by using phrasings like “Vermont’s not ready yet”, as if there’s an as-yet untapped pile of Vermonter-hidden gold in the $2.6 billion dollar range that’s just lying around, ready to be used for single-payer.

Instead, Shumlin hid his financing “plan” until after an election.  Why?  Because that’s just good science, Vermonters!

The governor kept the development of his financing plan under wraps for several years and had come under increasing pressure to include members of the public in the process. He waited, however, until after the election to make his move. The delay may have cost him voter support as he narrowly defeated an relatively unknown Republican challenger, Scott Milne, by only 2,434 votes in November.

The reality was that the Progressive dream Peter touted was not even remotely possible, under any set of financial circumstances, yet Shumlin rode the wave of its popularity to successive elections until even he could no longer hide from facts, or hide the facts from the public.

“We obviously wish that the numbers were different. It’s a huge disappointment for me, it’s the biggest disappointment of my public service so far, but we’ll make progress by pushing forward in other ways,” Shumlin said.

What should be disappointing to Vermonters is how he spent millions of taxpayer dollars on a vehicle to national office, yet Vermont was still stuck with him.

Now it’s easy to complain, so what’s the cure for Vermont’s ills?  Is there a federal grant program that could be tapped to repair what might have become an irreparably broken Vermont, after decades of abuse?

Or, instead, can Vermonters figure this out on their own?  Here’s a few suggestions that might help the state change course:

Cut taxes:  Match other states that have similar population size, demographics, geographics, etc.  New Hampshire comes to mind here.  It turns out that their aggregate rate of state and local taxes (as of 2011) ranks them 44th (at 8%), and Vermont 9th (at 10.5%).  Here’s an idea:  If people have more of their own money to spend on goods and services, aggregate demand goes up.  The economy grows.  That’s how it’s supposed to work.

Encourage business:  The costs of business can be broken down into some simple cost drivers:  Labor, materials, and energy.  What did Vermont do for its businesses in those categories?

a.  Increased the cost and reliability of energy by shutting Vermont Yankee.  Shumlin took pains to make sure he was credited for increasing business costs for Vermonters.

b.  Increased the already-high cost of labor by mandating health insurance coverage categories for everybody, essentially, mandating a Cadillac plan.

c.  Increased the cost of gas by raising taxes on it, a cost which every business uses in one way or another, and Vermonters use to drive to work and to drive to places where they might, oh, buy wood.  This cost is passed on to the buyer at every level of a business’s operations, for everything they purchase.

Cut Taxes:  Did I mention cutting taxes?  Vermont is ranked 49th for economic outlook, which, unless I’m doing my math wrong here, means Vermont is near to reaching Progressive nirvana, by being next to the best at being worst:

Only New York is worse than Vermont when it comes to tax and regulatory policies that foster economic growth, according to a new report on economic competitiveness between states.

According to the eighth annual Rich States, Poor States, Vermont is 49th out of 50 states on economic outlook due to the state’s ratings on 15 different variables, including tax rates, labor policies and overall regulatory burden.

Oh, and cut taxes.

Finally, there’s a broader, more philosophical argument to make, one that aligns with what used to be something of a political signature for Vermont, the town meeting.  The idea of subsidiarity, essentially meaning a de-centralization of political control, kicks all the way back to de Tocqueville, but is anathema to today’s Progressivism.

Alexis de Tocqueville‘s classic study, Democracy in America, may be viewed as an examination of the operation of the principle of subsidiarity in early 19th century America. De Tocqueville noted that the French Revolution began with “a push towards decentralization… in the end, an extension of centralization.”[1] He wrote that “Decentralization has, not only an administrative value, but also a civic dimension, since it increases the opportunities for citizens to take interest in public affairs; it makes them get accustomed to using freedom. And from the accumulation of these local, active, persnickety freedoms, is born the most efficient counterweight against the claims of the central government, even if it were supported by an impersonal, collective will.”[2]

Virtually nowhere in the Progressive agenda do you find calls for a reduction in power, or control.  Every Progressive item in Vermont, and at the national level, is to either take control of decision-making from the citizens, or to reduce their Constitutionally-based rights, if it furthers

Town Meeting in Charlotte, Vermont. Not in Washington, DC.

Town Meeting in Charlotte, Vermont. Not in Washington, DC.

the Progressive agenda, and garners more votes, which equates to an even further increase in control.

The idea that others represent us politically becomes less and less realistic the further away from us they get, both physically and philosophically.  Ideally, however, the opposite should be true:

The laws you live under should be made by the people you live with.

Progressivism, in its most modern sense, is a champion of centralized control.  Great Britain has learned that lesson.  As Churchill once said, the US will be sure to do the right thing, eventually, after we’ve exhausted all the other possibilities.

Let’s hope that doesn’t take too long.

PMOs: Politically Modified Organisms

In a state that ranks 41st for business, nothing sells better politically than taking a stand on…food?

Vermont, a state with apparently nothing better to do,  has recently become the 1st state to require food labeling on product made with genetic engineering.  Vermont’s champion of all things natural (including his own hairstyle), Peter Shumlin had this to say about Vermont’s chicken gmo
historic moment:

“This is a true David and Goliath story, a small state fighting big food, big agriculture, big business and big money in Washington,” Gov. Peter Shumlin said.

No mention from Peter about how instituting single-payer in Vermont bends the state over (backwards, mostly) in terms of bowing to big business and big money in Washington.  But let’s get to food!

  1. All food is genetically modified.  Corn, wheat, soybeans, you name it, have all been bred for centuries so the most desirable traits in the product are prevalent.
  2. The state does not address meat or dairy, because, obviously, the dairy industry has a healthy interest in modifications made to cows so they can produce more milk.  I guess some GMOs are more equal than others, in the political science realm.
  3. Making crops virus-resistant  (as many genetic modifications do) improves yields and drives cost down, making food availability more widespread and cheaper.  Humans are injected annually with the flu vaccine.  Should we stop vaccine production immediately?  Should vaccinated humans be removed from store shelves immediately?
  4. Kale, (sorry hipsters) is a GMO.  Just ask the Smithsonian!  And Peter “Kale Boy” Shumlin!

    So he signs an anti-GMO law, but touts a GMO. If you're looking for consistency, look away from The Face Of Shumlin.

    So he signs an anti-GMO law, but touts a GMO. If you’re looking for consistency, look away from The Face Of Shumlin.

As others have noted, there’s a host of reasons why GMO opposition exists, and it ignores the realities of the current food supply, and how food that today isn’t under the GMO labeling requirement has long been modified.

Ian Godwin, University of Queensland Professor in Plant Molecular Genetics, told Coach that a lot of the opposition to GMO foods stems from the fact big American multinational companies were some of the first to start using them.

“Part of it is an ideological thing against large multinationals, which was aided and abetted by the European Union because it seemed US seed companies were going to take over the seed industry in Europe,” he explains.

Secondly, the fact that organic certifying organisations refuse to certify GM products organic, has contributed to the belief that GM foods are less healthy or good for the environment.

“I have argued that [organic certification] shouldn’t just accept it or reject it –look at it on a case-by-case basis,” Professor Godwin says.

“If there is one that will allow us to not use [pesticides or insecticides] to control fungal diseases on tomatoes and potatoes, environmentally that might be a good thing.”

Australian Organic argues that there is not enough understood about GMOs and, “with many safe and proven forms of farming already available, the organic farmer believes it is important to allow Mother Nature to provide us food the way nature intended”.

But Professor Godwin counters that our current food supply is a far cry from how Mother Nature originally designed it.

“We have to recognise that agriculture is not natural,” he points out.

“We are taking one species and trying to make that the only species that grows on a hundred hectares of land. That doesn’t occur in nature.”

Professor Godwin says that apples naturally would be bitter and the size of cherries, while maize grasses were carefully selected by humans to find ones with more seeds to produce more yield.

“Wild maize has maybe 20 seeds in each cob but through domestication we selected bigger cobs that have 800 seeds,” he points out.

“We have done a lot with domestication of plants to make them unable to survive in nature.”

But what’s the short-term impact of the labeling requirement in Vermont?  Food taken off shelves by grocers, that know they are not in compliance with Vermont law.

Price Chopper, one of Vermont’s leading chains, announced Friday that it would no longer sell about 3,000 products manufactured by companies which refuse to put the Vermont label on their product.

So, when the average Vermonter goes to buy groceries, what they can choose to purchase is reduced, meaning someone else is making their

It must be great if there's a line, right?

It must be great if there’s a line, right?

choices for them, again.  Politicians are making the choices for them, so the politician can yet again buy votes by appealing to a demographic slice that wants nothing more than to dictate how Vermonters live their lives, and what the “right” choices are.  As Venezuela is ably demonstrating, centralized planning as to what you can get, when you can get it, and price controls on crops, etc, result in utter chaos and shortages.

When the politicians are making the choices for you, everybody loses.  Like single-payer in Vermont, where you get all the options to choose from that you want, as long as you choose this option.

Why do all of Shumlin’s political victories make Vermonters worse off?  Single-payer.  Vermont Yankee.  GMO labeling.

And why did they keep voting him in?

 

 

 

 

Vermont GDP: Gross Disaster Product

Art Woolf, longtime economics professor at the University of Vermont, recently wrote about Vermont’s GDP being the lowest in the nation – even lower than a state with a smaller population than Vermont:

The best summary statistic we have to describe a state or nation’s economy is gross domestic product, the total dollar value of all goods and services produced within its borders.  Vermont’s GDP — $30.4 billion in 2015 — pales in comparison to the U.S. total of $17,800 billion.  That’s usually referenced as $17.8 trillion, but it’s hard enough for me to conceptualize a billion dollars, much less a trillion, and comparing Vermont’s GDP to the nation is best done using the same units of measure.  We could also say that Vermont’s GDP is $0.0304 trillion, but that’s even harder to conceptualize. At any rate, Vermont’s GDP is the smallest of any state in the nation, below even Wyoming, the only state with fewer people than Vermont.  At the other end of the list, California leads the nation with a GDP of $2.5 trillion.

As we’ve noted before, Vermont has been at the very tail end of economic growth as compared to the other 49 states (or 56 if you’re Obama, who really kills it at math).

But worse, even when comparing a barely anemic growth rate in GDP in Vermont to New Hampshire’s more robust rate, there is much more compelling economic evidence that the state is trending downward.  In a very critical category:  Income.

GDP goes up in both states, but incomes go down in Vermont. Shocking.

GDP goes up in both states, but incomes go down in Vermont. Shocking.

Vermont’s median household income has never been higher than New Hampshire’s, at least going as far back as 2000 (earliest year of the FRED data).  New Hampshire’s population is roughly twice that of Vermont’s, but on the median household income basis, that population factor is accounted for.

Why?  Why are Vermont incomes lower, and even trend negative starting in 2013?  If those trends are negative in 2013, why would Vermont’s sitting governor, Peter Shumlin, declare Vermont to be a “great” place for jobs in 2014?  How “great” can it be if incomes are going down?

Worse, the trend in Vermont is increasing spending and employee hiring in the public sector, while NH has been trimming the number of employees in the public sector.  Vermont’s answer to stagnation is to hire more employees; New Hampshire’s seems to be the opposite.

One of these trends is not like the other.

One of these trends is not like the other.

In fact, between the peak of government employees for both states in the January 2010 timeframe (above), until January 2016, here’s how NH and VT compare:

 

nh vt govt employee split

Incomes do not go up when state spending increases to hire more people.  The dollars spent on state employees come from the private sector, and the higher the private sector is taxed, the slower the economy will grow.  So how does VT and NH compare, in total taxes?  Vermont is ranked 12th in total taxes; New Hampshire is ranked 49th.

This is not a race you want to be first in.

This is not a race you want to be first in.

In other words, if you’re looking for growth prospects, higher incomes, and opportunity for yourself and your family, Vermont might not be the state you’re looking for.

obi meme

The Power of No

What happens when you have the power to deny, to say “no”?  Then you are in control.  The person denied has no control, no power, no other option.  The power to say “no” is like being an umpire in a baseball game.  You can complain all you want, yell, kick some dirt (if you’re a

When good people hear the word "No". OK, marginally good people.

When good people hear the word “No”. OK, marginally good people.

former Yankee manager), or throw second base, but 99.9% of the time, you will not get what you want.  You’ll go back to the dugout (and like it), or you’ll get ejected.

Those are your two options.  That’s it.  Neither option satisfies the complaint.

In markets, competition means choices for the buyer, of whatever product or service they’re interested in acquiring.  With competition comes incentives for the business to provide a better service at a lower price, in order to gain more market share.  Choice erases the power to say “no”, because if you don’t like what you’re offered, you can take your business elsewhere.  Now the customer has the power to say “No”.

But what if you’re the only game in town?  A monopoly?  Those are generally illegal, which is why the government spends so much time enforcing antitrust laws.  In fact, they helpfully define them:

Many consumers have never heard of antitrust laws, but enforcement of these laws saves consumers millions and even billions of dollars a year. The Federal Government enforces three major Federal antitrust laws, and most states also have their own. Essentially, these laws prohibit business practices that unreasonably deprive consumers of the benefits of competition, resulting in higher prices for products and services.

But what the DoJ does not do is enforce antitrust laws against the US government, which has the market cornered (so to speak) on cornered markets, especially for health care, in Medicare and Medicaid, and other recipients of federal…care.

In fact, for some on the receiving end of the government’s monopoly on health care for their particular demographic, not being able to shop for better coverage means you’re stuck with whatever the government gives you.

In some cases, that means much more than sub-standard care.  It means catastrophically bad care, which is why only the US government could be the entity providing “care” to veterans, and have them die on their watch.  In the very place that’s been created and funded specifically for their needs.

Who has had the responsibility and oversight for this organization, the Veterans Administration?  Politicians.  More specifically, a politician who sat as the Chair of the Veterans Affairs committee from January 3, 2013, through January 3, 2015, and still sits as a member today?

Bernie celebrating his victory over Hillary Clinton.

Bernie celebrating his victory over Hillary Clinton.  (Ahem)

Bernie Sanders.  The politician that wants to expand the size of government, in order to expand its power – its power to say “no” to the people it’s supposed to represent.  The same politician who failed to oversee his own agency’s power to deny care.

But it’s not just veterans that fall before the power of “No”.  Medicaid and Medicare, both bright, shining examples of your government working for you (sort of), has a long and distinguished history of saying “no” to applicants, to people appealing decisions, and have gotten pretty good at saying “no”.

In fact, let’s take a look at the sweet KPIs HHS is compiling on appeals.  Looks like there might be one or two people out there unhappy with the one, single choice they have for health care, in Medicare (below).  For example, through FY2015, the average processing time for appeals decided (both for or against the person appealing) was 547.1 days.

That's a hot new trend in government service.

That’s a hot new trend in government service.

Now I’m no rocket surgeon, but a year and a half or so of waiting for the lumbering apparatus of those entrusted with tax dollars to disburse them to those who need them seems like, maybe, just a bit longer than is reasonable?  Especially if death is a more probable outcome if an issue goes untreated, thanks to your friends at HHS?  Especially considering those people on Medicare are typically retirees and the elderly?

So how does HHS measure itself against these appeals to power?  What do the results of these appeals look like – what are the outcomes? From the chart below, more than half are Unfavorable or Dismissed.  The power of “no” in action.

Kind of a "read 'em and weep" chart here.

Kind of a “read ’em and weep” chart here.

Even if one does receive a favorable appeal, there is one final, telling stat, the Average Processing Time.  A stat that if it was shown at a high enough leadership level internally in an organization other than one run by the USG, would result in one of the following:

  1. Firings of leadership.
  2. Money thrown at the problem to alleviate the downward trend and mediate loss of market share.
  3. Both #1 and #2.

Even if a favorable outcome is decided, the person appealing might have have outcomes other than favorable already.

As far as trends go, this is Not A Good One.

As far as trends go, this is Not A Good One.

Bernie Sanders, in order to fix what he thinks is wrong, wants the government to increase spending by 2X the current debt of the United States, or another 18 trillion in entitlements of one kind or another, but specifically in single-payer.  Given the examples above, and the power ceded to a government agency that can then tell you what you can’t have, how can Bernie argue on one hand that this is good for all Americans, while on the other, he’s removing choice from the equation?  How are people empowered when they have no choice?

Were veterans empowered while they sat on secret waiting lists for the care they deserved more than anyone else?  Or were they trapped in a

The Power of Choice - you're free to choose the one option.

The Power of Choice – you’re free to choose the one option.

system, one with no options, and left to suffer the consequences?

No.  If you can say no, that’s when you know you’re in charge.  Bernie wanted to be in charge of the biggest government apparatus in history, one with the largest and most expansive power, ever, to say “no”, and he effectively sold this idea to tens of millions of people.  The same politician who decided, on his own, that there are too many types of deodorant for sale, was telling everyone exactly what he thought of their power to choose.

Which begs the question:  Why let anyone make choices for you?

 

 

 

 

Huff ‘n Puff and Economic Stuff

A few months ago, the Huffington Post decided to try its hand at economics and was found wanting.  More specifically, this article by Carl Gibson on the Minnesota economy argued that Mark Dayton, Minnesota’s new governor as of January 2011, instituted policies of higher taxes that resulted in economic growth.  Which somehow, magically, destroys the argument that only lower taxes and lower wages (meaning being against raising the minimum wage) lead to economic growth.

Well.  While Gibson throws some good stats out, he’s missing a few things, like the economic context, and recessions, etc.  And reality.  But let’s let him speak for himself:

When he took office in January of 2011, Minnesota governor Mark Dayton inherited a $6.2 billion budget deficit and a 7 percent unemployment rate from his predecessor, Tim Pawlenty, the soon-forgotten Republican candidate for the presidency who called himself Minnesota’s first true fiscally-conservative governor in modern history. Pawlenty prided himself on never raising state taxes — the most he ever did to generate new revenue was increase the tax on cigarettes by 75 cents a pack. Between 2003 and late 2010, when Pawlenty was at the head of Minnesota’s state government, he managed to add only 6,200 more jobs.

Let’s start with jobs.  Pawlenty came into office in January 2003, in the middle of the post-9/11 recession.  As the FRED chart shows, the unemployment rate in Minnesota was already climbing prior to Pawlenty’s term, likely due to the post-9/11 recession.  A few years into office, and the unemployment rate actually decreases, but the 2nd recession then hits in 2008 and unemployment increases again.

minnesota unemploy

In Pawlenty’s final year, both the civilian labor force starts increasing, and the unemployment rate starts dropping – just in time for Gibson to make the claim that Dayton’s policies, not yet enacted, are responsible for the gains in Minnesota’s economy.  In fact, it’s more likely that the economy has improved despite the tax increase, rather than because of it.

That Pawlenty managed to add any jobs at all, post the 9/11 recession and a 2nd recession, is probably more noteworthy than a governor coming in during an economic recovery and claiming all economic success is directly attributable to him.

Between 2011 and 2015, Gov. Dayton added 172,000 new jobs to Minnesota’s economy — that’s 165,800 more jobs in Dayton’s first term than Pawlenty added in both of his terms combined.

Again, Dayton is benefiting from not being governor during a recession.  The unemployment rate started dropping during Pawlenty’s term – which means it’s the results of Pawlenty’s policies that Dayton is benefiting from, not his new taxes on the rich.  It’s unclear how raising taxes on the rich would actually create jobs, other than government jobs, but Gibson doesn’t bother himself with asking that question.  The fact that taking money out of the private sector and transferring it to the public sector doesn’t magically cause private-sector job growth – in fact, it’s just the opposite – seems lost on Gibson.

Where do rich people put their money?  In mattresses?  No, it’s invested, in savings, stocks, bonds, real estate, equities, etc.  What happens when dollars are saved in a bank?  The bank has more money to lend to borrowers.  What happens when dollars are invested in stocks?  Companies have more capital to spend on new projects, software, facilities, manufacturing plants, hiring, etc.  In other words, those investments are are fuel for the economy’s engine.

What happens when the government taxes more and spends more?  More government jobs are created, simply taken out of the private sector – and then must be funded again, next year, in next year’s larger state budget.

One presumes that if the core of Gibson’s argument is sound, you could simply tax the rich at 50% or 100% and job growth would therefore increase all the more – because he argues that the state is growing because of the tax increase.  If that were true, why not argue the state increase taxes to much higher levels, on everybody, since the net result is jobs?  Why not tax the poor, just a little bit, because it creates jobs?  Tax the poor, then give them a new job to pay the taxes that created their new job?

Now, to add just a touch of context, the year over year percentage changes in employment show that Pawlenty’s years, even during recessions, matched the highest year over year percentage increases that Mark Dayton is now enjoying.  Note that Dayton is not in a recession.  Pawlenty’s shown employment growth even during a recession.  How could Dayton not enjoy employment growth when he’s not in a recession?  He could do nothing and employment would improve.

MN unemploy percent

Hey, employment improves when you’re not in a recession! Gasp!

All that said, Minnesota’s economy has improved – remarkably so, as Gibson details:

By late 2013, Minnesota’s private sector job growth exceeded pre-recession levels, and the state’s economy was the fifth fastest-growing in the United States. Forbes even ranked Minnesota the ninth best state for business (Scott Walker’s “Open For Business” Wisconsin came in at a distant #32 on the same list). Despite the fearmongering over businesses fleeing from Dayton’s tax cuts, 6,230 more Minnesotans filed in the top income tax bracket in 2013, just one year after Dayton’s tax increases went through. As of January 2015, Minnesota has a $1 billion budget surplus, and Gov. Dayton has pledged to reinvest more than one third of that money into public schools. And according to Gallup, Minnesota’s economic confidence is higher than any other state.

But Gibson makes the causal argument that there’s a correlation between two small, unrelated policies, as the impetus for the state’s growth:

The reason Gov. Dayton was able to radically transform Minnesota’s economy into one of the best in the nation is simple arithmetic. Raising taxes on those who can afford to pay more will turn a deficit into a surplus. Raising the minimum wage will increase the median income. And in a state where education is a budget priority and economic growth is one of the highest in the nation, it only makes sense that more businesses would stay.

Or lowering spending would turn a deficit into a surplus, and keep the dollars in the private sector where true job growth can occur.  Imagine the numbers above if the state had trimmed spending instead of taxing people more – you’d get twice the bonus in your deficit reduction and increased job growth.

Raising the minimum wage increases median incomes, very slightly for those still employed, but will increase unemployment at the lowest end of the economic scale.  In other words, it will make the economic situation worst for those least able to absorb a job loss.

It doesn’t “only make sense” that businesses will stay, as Gibson argues above.  If you raise the cost to do business – by raising the cost of labor – that increase has to be passed on to the consumer buying the product or service.  When prices go up, demand goes down, and fewer products or services are purchased – which means fewer people will get hired.

There’s no free lunch here.  Minnesotans at the top end of the scale that have their income taxes increased – whether they can “afford” it or not, as determined by a politician – will inevitably start making economic choices about where to put their dollars.  Dayton’s policy is arguing that increasing state spending on the backs of a small number of people is fine, and that there will be no consequences to behavior or revenues.

So what happens if the rich move?  Where will next year’s magical increase in tax revenues come from?  From the wallets of struggling journalists who are OK with increasing the taxes on other people, just not themselves?  Will they, the journalists, pick up the slack in revenues out of their own pockets because they’re convinced it creates jobs?  Following Gibson’s thinking, will he be willing to toss in a few thousand more per year so someone else can have a job at his expense?

That’s where Gibson’s logic leads.  That there is no end to the benefit of taxation, and that the dynamics of behavior will remain the same, and that there is always universal net benefit by the government spending other peoples’ money.  If that were true, we could tax everyone at 100% and everyone would have a job, with zero unemployment, and I look forward to Gibson providing a real-world example of that in action.

Oh, and that statement about plowing dollars into education?  Dayton cut it, in 2015.  Even Pawlenty didn’t do that, during a recession.

mn education

Look at all that sweet rich guy revenue going into education. Not.

Oh, and Dayton’s increasing spending at double-digit rates over the biennium (Minnesota’s budgeting operates on a 2-year cycle).  That growth in spending is probably somewhat higher than median household income growth.  Oh, look.  It is!

mn median household income

So jump spending by 10% while incomes are going up between 2% and 5%. Makes sense. It’s good science.

Dayton’s philosophy is not a new one.  Demonize the rich, and he’s OK with that because he was one, but now he’s going to spend their filthy lucre, which will create jobs.  That same idea is being realized now in countries like Venezuela.  I’m assuming most Minnesotans aren’t finalizing travel plans to move there just yet.