Feeds:
Posts
Comments

Archive for the ‘Economy’ Category

That’s the premise behind an article on CBS news by Aimee Picchi which is based on a book co-written by Sociologist Professor Kathryn Edin of Johns Hopkins University. A sample:

“By one dismal measure, America is joining the likes of Third World countries.

The number of U.S. residents who are struggling to survive on just $2 a day has more than doubled since 1996, placing 1.5 million households and 3 million children in this desperate economic situation. That’s according to “$2.00 a Day: Living on Almost Nothing in America,” a book from publisher Houghton Mifflin Harcourt that will be released on Sept. 1.

The measure of poverty isn’t arbitrary — it’s the threshold the World Bank uses to measure global poverty in the developed world. While it may be the norm to see families in developing countries such as Bangladesh and Ethiopia struggle to survive on such meager income, the growing ranks of America’s ultrapoor may be shocking, given that the U.S. is considered one of the most developed capitalist countries in the world.

“Most of us would say we would have trouble understanding how families in the county as rich as ours could live on so little,” said author Kathryn Edin, who spoke on a conference call to discuss the book, which she wrote with Luke Shaefer. Edin is the Bloomberg Distinguished Professor of Sociology at Johns Hopkins University. “These families, contrary to what many would expect, are workers, and their slide into poverty is a failure of the labor market and our safety net, as well as their own personal circumstances.”

Despite questionable statistics from the U.S. Department of Labor, most Americans do not believe the recovering economy has really boosted their well-being. True, there are more jobs now than in 2009 at the bottom of the recession. However, many of these jobs, as CRI has said here and here and, oh what the heck, just read here, are not the kinds of blue-collar jobs which were lost during the Great Recession. By this we mean jobs which paid at the absolute minimum, $35,000 and helped families earn at least a basic standard of living, even on just one income. The jobs we are seeing growth in are jobs in sectors like retail, restaurant, and tourism, which are generally minimum wage jobs.

The exact numbers receive EBT benefits (also known as ‘food stamps’), TANF (Temporary Assistance for Needy Families), Affordable Housing, student loans, etc., varies from month to month. But one thing that has absolutely happened is, more and more Americans are becoming poor, increasing numbers of working and middle class Americans are finding themselves sliding downward and not up, and the future looks bleak, because our deficit is so large there is no real way to ever pay most of it off. That’s why in poll after poll, the majority of Americans believe the so-called “Millennial Generation” will be the first generation to be worse off than their parents.

It should surprise no one that presidential candidates like Donald Trump and Bernie Sanders are stealing the show. The rhetoric each espouses, while different in ideology, basically says the same thing: the ruling class (Berni’s ‘billionaire class’ and Donald’s ‘political class’) has changed America from a free-market oriented society to one that is a combination of socialism and crony capitalism, the exact same system countries such as Canada, Sweden, Germany, France, the UK, Belgium, the Netherlands, Italy, Spain, and Portugal have. The days when a person could confidently and reasonably believe s/he could work hard, save money, invest wisely, and earn a higher standard of living are fading. Yes, there are indeed people who do overcome the odds and become millionaires or billionaires, even from humble beginnings. But for those who lack some superstar athletic, musical, or coding talent, those opportunities seem more and more distant as the majority of Americans work harder and harder for less value per hour.

The question of who to blame for this economic malaise floats around. People who identify as conservatives or libertarians generally put the blame on the government, believing government policies aimed at keeping people dependent on government, discouraging work opportunities for the poor (this post from ZeroHedge explains it, and mind their language), and federal reserve dollars being pumped into the system causing inflation are the main source. Throw in Statist politicians from both parties taxing and spending and pushing a tax code which actually harms people trying to acquire wealth through work rather than the already-rich and people whose income comes from the stock market, and there’s your answer.

People who identify as liberal or socialist will put the blame on Big Business. According to the Brookings Institute, the average age of a business in America is sixteen years- the highest it’s ever been. Despite claims of “new entrepreneurial activity” by our elected officials, fewer people are attempting startups. The biggest reason, besides bureaucratic red tape and high taxes? Business cronyism, where large firms use the government to rig policies in their favor and against their competitors, especially small competitors. As access to capital for small business owners, especially young people and people of color, declines, you will see fewer people taking risks to create jobs. That leaves us more dependent on corporatism for our daily bread.

In our view, both the left and the right make fair points, which then brings us to the next step: the solution. In our view, only a truly fair marketplace, where a person reasonably believes he or she can compete either for a job or in business, will help people climb the economic ladder. The reason Trump and Sanders are hitting cords with a segment of the population is because (and the political pundits miss this, for the most part) the majority of Americans, whose household income is less than $55,000 a year, are becoming frustrated and resentful that opportunities are being taken away and incomes are declining due to government policies which discourage work and entrepreneurship, and corporate entities who raid the treasury for their own gain, depriving would-be entrepreneurs and workers of the funds they need to either start a business, take care of their families, or save for retirement. The economic mobility ladder is slowly but surely being lifted up by those who already “made it” and are using the government to keep everyone else away, or dependent on the government administrators for their basic needs.

We hope the public at large begins putting the pieces together and starts to vote for candidates who will oppose the so-called Ruling Class and their wealthy financiers, and instead turns to candidates with quality solutions that will give people opportunity and real hope. That is change we could believe in.

CRI will continue to conduct research on policies which we believe best help all Delawareans achieve what they can and believe they can move up the economic mobility ladder. If you agree that Delaware needs a real change in how our government does business, then visit caesarrodney.org and learn about what you can do today to help.

Read Full Post »

photo credit to learnaboutancientrome.weebly.com.

Below is a guest post from Lawrence Reed, president of the Foundation for Economic Education. The Foundation for Economic Education, founded in 1946, is the leader in education, publishing, and the production of ideas related to the economic, ethical and legal principles of a free society. Republished with permission.

More than 2,000 years before America’s bailouts and entitlement programs, the ancient Romans experimented with similar schemes. The Roman government rescued failing institutions, canceled personal debts, and spent huge sums on welfare programs. The result wasn’t pretty.

Roman politicians picked winners and losers, generally favoring the politically well connected — a practice that’s central to the welfare state of modern times, too. As numerous writers have noted, these expensive rob-Peter-to-pay-Paul efforts were major factors in bankrupting Roman society. They inevitably led to even more destructive interventions. Rome wasn’t built in a day, as the old saying goes — and it took a while to tear it down as well. Eventually, when the republic faded into an imperial autocracy, the emperors attempted to control the entire economy.

Debt forgiveness in ancient Rome was a contentious issue that was enacted multiple times. One of the earliest Roman populist reformers, the tribune Licinius Stolo, passed a bill that was essentially a moratorium on debt around 367 BC, a time of economic uncertainty. The legislation enabled debtors to subtract the interest paid from the principal owed if the remainder was paid off within a three-year window. By 352 BC, the financial situation in Rome was still bleak, and the state treasury paid many defaulted private debts owed to the unfortunate lenders. It was assumed that the debtors would eventually repay the state, but if you think they did, then you probably think Greece is a good credit risk today.

In 357 BC, the maximum permissible interest rate on loans was roughly 8 percent. Ten years later, this was considered insufficient, so Roman administrators lowered the cap to 4 percent. By 342, the successive reductions apparently failed to mollify the debtors or satisfactorily ease economic tensions, so interest on loans was abolished altogether. To no one’s surprise, creditors began to refuse to loan money. The law banning interest became completely ignored in time.

By 133 BC, the up-and-coming politician Tiberius Gracchus decided that Licinius’s measures were not enough. Tiberius passed a bill granting free tracts of state-owned farmland to the poor. Additionally, the government funded the erection of their new homes and the purchase of their faming tools. It’s been estimated that 75,000 families received free land because of this legislation. This was a government program that provided complimentary land, housing, and even a small business, all likely charged to the taxpayers or plundered from newly conquered nations. However, as soon as it was permissible, many settlers thanklessly sold their farms and returned to the city. Tiberius didn’t live to see these beneficiaries reject Roman generosity, because a group of senators murdered him in 133 BC, but his younger brother Gaius Gracchus took up his populist mantle and furthered his reforms.

Tiberius, incidentally, also passed Rome’s first subsidized food program, which provided discounted grain to many citizens. Initially, Romans dedicated to the ideal of self-reliance were shocked at the concept of mandated welfare, but before long, tens of thousands were receiving subsidized food, and not just the needy. Any Roman citizen who stood in the grain lines was entitled to assistance. One rich consul named Piso, who opposed the grain dole, was spotted waiting for the discounted food. He stated that if his wealth was going to be redistributed, then he intended on getting his share of grain.

By the third century AD, the food program had been amended multiple times. Discounted grain was replaced with entirely free grain, and at its peak, a third of Rome took advantage of the program. It became a hereditary privilege, passed down from parent to child. Other foodstuffs, including olive oil, pork, and salt, were regularly incorporated into the dole. The program ballooned until it was the second-largest expenditure in the imperial budget, behind the military.It failed to serve as a temporary safety net; like many government programs, it became perpetual assistance for a permanent constituency who felt entitled to its benefits.

In 88 BC, Rome was reeling from the Social War, a debilitating conflict with its former allies in the Italian peninsula. One victorious commander was a man named Sulla, who that year became consul (the top political position in the days of the republic) and later ruled as a dictator. To ease the economic catastrophe, Sulla canceled portions of citizens’ private debt, perhaps up to 10 percent,leaving lenders in a difficult position. He also revived and enforced a maximum interest rate on loans, likely similar to the law of 357 BC. The crisis continually worsened, and to address the situation in 86 BC, a measure was passed that reduced private debts by another 75 percent under the consulships of Cinna and Marius.

Less than two decades after Sulla, Catiline, the infamous populist radical and foe of Cicero, campaigned for the consulship on a platform of total debt forgiveness. Somehow, he was defeated, likely with bankers and Romans who actually repaid their debts opposing his candidacy. His life ended shortly thereafter in a failed coup attempt.

In 60 BC, the rising patrician Julius Caesar was elected consul, and he continued the policies of many of his populist predecessors with a few innovations of his own. Once again, Rome was in the midst of a crisis. In this period, private contractors called tax farmers collected taxes owed to the state. These tax collectors would bid on tax-farming contracts and were permitted to keep any surplus over the contract price as payment. In 59 BC, the tax-farmer industry was on the brink of collapse. Caesar forgave as much as one-third of their debt to the state. The bailout of the tax-farming market must have greatly affected Roman budgets and perhaps even taxpayers, but the catalyst for the relief measure was that Caesar and his crony Crassus had heavily invested in the struggling sector.

In 33 AD, half a century after the collapse of the republic, Emperor Tiberius faced a panic in the banking industry. He responded by providing a massive bailout of interest-free loans to bankers in an attempt to stabilize the market. Over 80 years later, Emperor Hadrian unilaterally forgave 225 million denarii in back taxes for many Romans, fostering resentment among others who had painstakingly paid their tax burdens in full.

Emperor Trajan conquered Dacia (modern Romania) early in the second century AD, flooding state coffers with booty. With this treasure trove, he funded a social program, the alimenta, which competed with private banking institutions by providing low-interest loans to landowners while the interest benefited underprivileged children. Trajan’s successors continued this programuntil the devaluation of the denarius, the Roman currency, rendered the alimenta defunct.

By 301 AD, while Emperor Diocletian was restructuring the government, the military, and the economy, he issued the famous Edict of Maximum Prices. Rome had become a totalitarian state that blamed many of its economic woes on supposed greedy profiteers. The edict defined the maximum prices and wages for goods and services. Failure to obey was punishable by death. Again, to no one’s surprise, many vendors refused to sell their goods at the set prices, and within a few years, Romans were ignoring the edict.

Enormous entitlement programs also became the norm in old Rome. At its height, the largest state expenditure was an army of 300,000–600,000 legionaries. The soldiers realized their role and necessity in Roman politics, and consequently their demands increased. They required exorbitant retirement packages in the form of free tracts of farmland or large bonuses of gold equal to more than a decade’s worth of their salary. They also expected enormous and periodic bonuses in order to prevent uprisings.

The Roman experience teaches important lessons. As the 20th-century economist Howard Kershner put it, “When a self-governing people confer upon their government the power to take from some and give to others, the process will not stop until the last bone of the last taxpayer is picked bare.” Putting one’s livelihood in the hands of vote-buying politicians compromises not just one’s personal independence, but the financial integrity of society as well. The welfare state, once begun, is difficult to reverse and never ends well.

Rome fell to invaders in 476 AD, but who the real barbarians were is an open question. The Roman people who supported the welfare state and the politicians who administered it so weakened society that the Western Roman Empire fell like a ripe plum that year. Maybe the real barbarians were those Romans who had effectively committed a slow-motion financial suicide.

read the original post at the FEE website here

Read Full Post »

Earlier today, the Department of Labor published a new rule requiring overtime pay for workers who make up to $50,400 a year are eligible for overtime pay if they exceed 40 hours a week.

The idea, championed by President Obama, is this: If more employees are eligible for overtime pay (the average American worker makes less than 50 grad a year), then businesses will either pay their hardest-working employees more, or hire more workers to avoid paying the additional overtime penalty. The DOL estimates about 5 million people will benefit from this new ruling.

So this is wonderful, right? It’s well-known that for many people, employers can require more than 40 hours a week at no extra pay because employees are salaried and not hourly. The Cato Institute offers an opinion:

“In the very short run, employers affected by this expansion may have little choice but to pay their employees higher total compensation; in the very short run, employers have few ways to avoid this added cost.

But in the medium term, employers will invoke a host of methods to offset these costs: re-arranging employee work schedules so that fewer hit 40 hours; laying off employees who work more than 40 hours; or pushing such employees to work overtime hours off the books.

And in the longer term, employers can simply reduce the base wages they pay so that, even with overtime pay, total compensation for an employee working more than 40 hours is no different than before the overtime expansion.

So, expanded overtime regulation will benefit some employees in the very short term; cost others their jobs or lower their compensation in the medium term; and have no meaningful impact on anything in the long term.

Is that a victory for middle class economics?”

We at CRI agree with Cato. Just like with every other “well-intentioned” government law, those who are likeliest to “suffer” from it (in this case, employers), will find a way around it, especially in the long-haul. Employees who demonstrate clear value will likely not have to worry about their jobs, but anyone who doesn’t demonstrate clear value should be concerned. While many will benefit right away with the increases in pay, new hires may find their base pay is lower, so their potential overtime is lower. After all, time-and-a-half for a worker at $8.50 an hour is much less than at $15 an hour.

Plus, those who benefit now could see hours cut or, if the overtime pay began to turn business revenues from a profit to a loss, the businesses will lay off employees to stay in the black. This is what’s happened for many people as a result of the ACA: turning full-time workers into part-time in order to avoid the penalty, or simply paying the penalty and dumping people into the health exchanges, since that’s cheaper than offering health insurance. And with insurance companies asking for premiums increases, things are not looking up for American workers.

Read Full Post »

The lifeblood of Delaware is the multitude of businesses incorporated in the state, some of which do not even exist within Delaware’s borders beyond a P.O. Box in Wilmington, and yet they pay taxes that make up a substantial portion of the state’s revenue. For years Delaware has been the premier place for a company to incorporate, and over half of all U.S. corporations are incorporated in the first state, in large part thanks to the state’s first rate court system that deals with businesses fairly and expediently. This means that it is cheaper to go to court in Delaware, and that means less costs that businesses have to absorb into their bottom lines or pass along to their customers. Although Delaware’s business court system remains the best in the country, other states are catching up.

State lawmakers have done their best to offset the savings offered by Delaware’s efficient court by creating ludicrous financial burdens on businesses and their employees that keep them away from the state. Because of these costs, many companies decide it is not worth it to open up actual offices in Delaware and subject themselves to the high taxes imposed by Delaware. Furthermore, many employers stay out of Delaware because their employees do not want to live there, because of failing schools and high crime, especially in Wilmington. Hundreds of millions of dollars in wealth has fled New Castle County in the past 15 years, undoing much of past efforts to attract business into the state. The state should be leveraging its accommodating courts to attract businesses to establish an actual presence in the state, rather than scaring them off with high taxes and unattractive communities.

Other states have also begun to attempt to reform their courts to make them more business friendly; both Nevada and North Dakota have improved the regulatory burdens they impose on states, and North Dakota especially has worked to reduce the tort costs inflicted upon its companies. In all likelihood the measures taken by theses states will poach some corporations from Delaware and will cut into growth in the number of new incorporations in the first state. It is a testament to the success and foresight of Delaware’s model that other states are attempting to emulate it and in a sense beat Delaware at its own game. For now Delaware’s courts still remain the most accommodating in the country, but other states are working to provide their own alternatives. Given the state officials complacency in making Delaware competitive, the possibility of other states surpassing Delaware grows by the minute.

States like North Dakota offer a vastly more hospitable tax climate compared to Delaware. North Dakota is making the smart decisions Delaware is not, attracting companies into the state with a potent combination of friendly courts and a sensible tax policy, that work in tandem to create a great offering. Meanwhile Delaware’s tax burdens offset the benefits its courts offer, wiping out any net-gain the courts might provide to a company looking for a place to start or expand. Overall it often makes more sense for a company to do business in North Dakota than Delaware, when one combines the combined effects of the states’ regulatory and tax policies. North Dakota is working to attract the P.O. Boxes and then turn them into offices, while Delaware only expands the financial burdens of doing business in the state and watches those P.O. Boxes disappear.

Jack Massih

CRI Intern

Read Full Post »

This guest post is provided by Jack Massih, CRI’s summer intern. This is his debut post.

Connecticut recently decided to walk off of a cliff with its tax hike on businesses, and unsurprisingly the affected companies are looking to move to friendlier climates. Governors from Florida, Texas, Georgia and even New York quickly jumped at the opportunity, calling CEO Jeffery Immelt to explain why their state is the best place for GE’s new home. Delaware, with its business friendly reputation, ostensibly seems a natural place for GE to plant its new headquarters, but Delaware has fallen behind other states in offering a pro-business atmosphere, and if GE does decide to move, it is a near certainty they will not relocate to Delaware. For a State that has historically acted to accommodate businesses, this is a troubling development, indicative of the disastrous path state leaders have charted for Delaware.

As the current General Assembly looks to raise the personal income tax on the state’s wealthier families and raise the gross receipts tax on businesses, it is easy to forget there was a time when Delaware actually cut taxes and streamlined regulations to attract businesses and their employees to the first state. Lawmakers and Governors worked hard to woo the banking industry into Wilmington, and they adroitly maneuvered to land AstraZenica’s corporate office. Such policies paid off massively for Delaware, and even though tax rates were decreased, revenues grew as people and businesses flocked to the first state. In recent years many other states have prospered thanks to this pro-growth model, and Delaware was the pioneer of such policy, but state lawmakers have forgone this proven path to success in favor of increased taxes and ever expanding regulations.

One merely needs to examine the wealth migration into and out of Delaware to understand that families and companies vote with their feet. Money is still coming into the state from surrounding states in the mid-Atlantic and northeast, but much of it is offset by wealth leaving the state for even sunnier financial climates in the south. Delaware seems to be nothing more than a layover on the flight of money out of the region, rather than a permanent destination. Smart decisions to cut taxes sensibly will entice that money to stay within the state, boosting revenues and infusing communities with cash, while reckless tax hikes and wanton government spending will permanently scare it away. Delaware is straddling the line between being a winning state or a losing state, and current decisions by the General Assembly threaten to push it into the losing camp.

The risks of Delaware’s loss in competitiveness go beyond families and businesses leaving the state, there is also the loss in growth due to companies choosing not to relocate or expand into Delaware. Not only does the state run the risk of turning away established businesses and residence, it stands to lose out on the next generation of AstraZenica’s and banking firms. As firms like General Electric looking to relocate pass over Delaware, the state will lose out on the important revenue growth these income-earners and employers will bring, and its options to meet its ever growing spending commitments will invariably shrink to increasing taxes and/or making drastic discretionary cuts to state services. Both unsavory options inevitably push people out of the state and leading to an increasingly vicious cycle of austerity as people abandon the state and the tax base decreases further.

In order to avert such a scenario state officials need to drop their current tax and spend predilections and carefully examine their options to make Delaware more competitive. The bad news is that in many respects Delaware is lagging behind many other states; its tax burden is one of the highest in the country, and it is one of the few states that levy both a corporate income tax and a gross receipts tax. However this also means Delaware’s lawmakers have many routes to take in order to make Delaware more attractive to businesses. What Delaware should do is examine the states that have lined up to court General Electric and attempt to recreate their environments. In many cases these states have no personal income tax or no corporate income tax, a lower overall tax burden, and sensible regulations that make it easier to conduct business.

Delaware was once an expert at making itself hospitable for businesses and workers and it must rediscover that talent or it will lose out to states that recognize the need for sensible regulations and tax policy. The beauty of the federal system is the competition it engenders between the many states, encouraging creativity and common sense while punishing irresponsibility and complacency. If Delaware wants to keep its reputation as the first state for business, it must abandon its current self-defeating policy of constantly raising taxes to meet swollen budgets, and it must instead make itself attractive to business through the pursuit of pro-growth policies that will allow the state to reap the advantages of a healthy economy. The sooner citizens come to this realization the sooner Delaware can work to restore its waning competitiveness.

Read Full Post »

This article is based off a column originally published in FEE

If this was yours, would you complain? nauticexpo.com

The presidential race is heating up and both major political parties have populist candidates- that means candidates who are running on the kind of anti-establishment, anti-greed platform the left, middle, and right generally agree on.

One of these candidates, the avowed Socialist Bernie Sanders, believes the world is a zero-sum game: If I have, then you don’t, and vic-versa. He does not see the potential for us both to have, but sees the possibility that I can take from you and vice -versa. In a recent speech, Sanders lamented that people are spending money on deodorant or sneakers when children are hungry. He literally said:

“You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country. I don’t think the media appreciates the kind of stress that ordinary Americans are working on.”

Not to be outside, a comedian named Louis C.K. followed up with a joke on a similar note:

“My life is really evil.

There are people who are starving in the world, and I drive an Infiniti. That’s really evil…. There are people who are like born and then they go, “Oh, I’m hungry,” and then they just die, and that’s all they ever got to do.

And, meanwhile, I’m in my car — boom boom, brrr! — like having a great time, and I sleep like a baby…. I could trade my Infiniti for like a really good car, like a nice Ford Focus… and I’d get back like twenty thousand dollars, and I could save hundreds of people from dying of starvation with that money.

 And every day, I don’t do it.

Louis C.K’s joke reflects a common complaint about markets—that markets enable people to purchase luxury goods while other people starve.”

This article is about debating whether it’s bad to purchase big-ticket items, especially when roughly 47 millions Americans are receiving SNAP benefits (aka food stamps), when so many young people live in crime-ridden areas and have parents who cannot afford to move their child to a safer school, 93 million-plus working-age Americans do not have a job, and median household incomes have fallen since 2008. When you look at the hundreds of millions of us struggling in this economy, it’s easy to get disgusted with the wealthy, some of whom probably don’t deserve their wealth (like if they earned it illicitly or obtained it by some other means than honest work), and who go drink $900 a bottle wines in restaurants in the swanky parts of Manhattan or who fly around in private jets that the rest of us can only see from the ground.

But what is a “luxury good”, and why are we taxing it? Most people would not argue that a private jet is “luxury”. What about deodorant? Most of us need that! And if one deodorant is $5 and one is $50, is the $50 deodorant “luxury”, how about Hermes belts, some of which run into the four digits. Are these luxury, or necessity, since all of us who wear pants need belts?

The reason classical liberal economic policies, such as the ones CRI advocates for, work is because the true value of an item is determined by those who buy it, not by society at large, and not by government officials who are taking guesses. There is no one item everyone in America owns, not by brand, and not by type. Most people have cars and car insurance, but not everyone does. Certainly there is no book or movie everyone’s seen or dog/cat food all dog/cat owners use, if they use it at all. Those who use or consume a particular product figure out what the value is and pay accordingly. if the collective value becomes too high for us, and we determine we don’t need or want that product or service anymore, we just say no (unless the government mandates it). If Hermes wasn’t making money selling belts for thousands of bucks, they’d stop doing it. Clearly, some are willing to pay for that, so they keep making it, and thus keep their workers employed.

Those goods and services we value more will end up having more people working in those industries, and the industries will less support lose ground. This is why there are lots of gun manufacturers, but far fewer bow and arrow makers. Or, more car manufacturing plants, but fewer horse and buggy plants. Why some people decide to fly first-class as opposed to economy on the same airplane, or even choose one airline over another, or to fly or not to fly. Market forces generally determine that the lower something costs, the more it will be purchased. For the same reason those of you who buy books on your book reader might stock up on paid books under $5, but if books were all $25, you’d buy far fewer of them (we assume you aren’t addicted to ‘free-books). When goods and services are cheap, we can consume more of them, building more industries and making more people prosperous. This is why keeping tax rates as low as possible is so important- the more cost you add, the less people can and will purchase something. This is how a person with just a two hundred dollars can buy a DVD Player, two six-packs, chips and dip, and still have enough for a month’s electric and water bill while $200 wasn’t enough to buy a DVD player when they first came out. So if you managed to buy one, you didn’t have left-over for anything else.

Therefore, it’s unreasonable to suggest that buying luxury goods is somehow bad. Yes, a millionaire could give $25,000 to a charity, or to the government, to feed, clothe, or house poor families. But if that millionaire purchased a new car at $25,000, that would help keep the auto workers, the truck drivers, and the car dealer owner and his/her employees employed. Diffusing the money among them is no different than diffusing money among the millions of hungry kids. Yes, some businesses don’t always pay or treat their workers fairly, but these businesses are absolutely in the minority.

So the next time a politician tries to tell you that luxury items are evil because they are expensive,and redistributing the wealth is the only logical solution, walk away.

Read Full Post »

A few weeks ago President John Stapleford (yea, that has a nice ring to it) published an article praising Governor Markell for making the decision to ask state employees to contribute a little more to their healthcare plans. He wrote:

“State employee and retiree health care costs have been rising exponentially and are not sustainable. The claims have jumped 20% over the past three fiscal years and the latest Pew Trusts analysis estimates that the State of Delaware has unfunded long term health care liabilities of $5.6 billion.

Data from the U.S. Bureau of Labor Statistics shows what the Governor proposes is not onerous. The State pays for almost 91% of the employee’s health care premium. Nationwide, state and local governments pay 87% and the average in the private sector is just 79%.

According to the BLS, the average pay for workers in service-providing industries in Delaware was $51,647 in 2013 while the average pay for Delaware state government employees that year was $53,450. The 2013 BLS occupational wage survey for Delaware shows an average wage of $39,130 for full time workers in protective service occupations while 2013 State of Delaware payroll data shows annual pay for full time workers in the Department of Corrections to be over $46,800.”

After publishing this article, we heard back from state employees, upset by our article. Some unfriended us on Facebook. Others unsubscribed from our e-mail blasts. I even received on particularly upset letter with a five-dollar bill saying the following:

“As a State of Delaware employee, I work hard for my paycheck. I do not have a flashy job and am not in a position where I will ever receive accolades for my wondrous feats. When I retire, no one of acclaim will come to speak at my send-off party, if I’m lucky enough to have my friends pay to have one. I am grateful to have the ability to contribute to a retirement plan that will help supplement the meager social security check that I will receive when I am eligible under the rules of the Federal Social Security Administration….I am a fan of your organization, but would love to see some positive support for the hardworking State Employee.”

This particular letter is upset over our Transparent Delaware website, where we wrote:

“Caesar Rodney requested the State Pension Data as part of our Freedom of Information Act (FOIA) effort and received this response from the State Office of Management and Budget.

“The release of pensioner information is addressed in Delaware Code.  Specifically, 29 Del. C §8308 (d) states as follows:
‘(d) All records maintained by the Board or the Office of Pensions and Investments relating to the pensions or pension eligibility of persons receiving pensions from the State or other post-employment benefits and who are not presently employed by or serving as officers of the State or its political subdivisions shall be confidential.’

Accordingly, your request for state pensioner information as contained in your December 16, 2011 request cannot be fulfilled.”

Many other states now release State Pension information for public use.

Caesar Rodney would have to go to court to secure the release of the Pension data even though the release of that data is forgone because it is taxpayers’ money. ”

We have a large number of supporters who are current and retired state employees, so let’s set the facts straight and respond to our letter writer.

No one at CRI hates state employees. Nor do we assume they are collectively a lazy, undeserving bunch. Delaware needs some number of competent, hardworking state employees, and this letter writer is correct that most of them receive middle class wages and not the six figures much of the leadership gets.

But what this letter writer misses, and what many state employees miss, is that they are receiving their salaries from taxpayers in the private sector. Regardless of where it comes from, if the government provides it, the private sector paid for it in some way. If government were completely honest about spending, we would not need to threat a lawsuit. But we as taxpayers have a right to know what they are giving to others, and while this letter writer may believe his or her pension is too meager to be noticed, the collective pension total of all state employees is very high- just how high, we don’t know.

AS for the complaints that Markell was wrong to ask state employees to contribute more to their healthcare plans, they are not being asked to pay more than anyone in the private sector, nor do we want it taken away in its entirety. But for many people, it’s difficult to see past their own personal lives. Most of those who voted in our poll to say taxpayers should pay more because state employees haven’t received COLA raises since Markell took office are missing the point that their private sector counterparts aren’t doing much better.

The reality is, Delaware spends too much money. Unfunded liabilities are a problem and private sector tax collection from individuals and businesses has declined the last two years, not even counting the casino troubles. This is a big reason why most of the referendums to raise property taxes to pay for the public schools were voted down- it isn’t because people hate teachers or don’t want to see the local public school succeed. In fact, all of us at CRI join the majority who want to see public schools do well because when all schools succeed, all children have the opportunity to succeed to. This success can and should include traditional public schools.

But people are tired of paying money into a system with mediocre to poor results. They are tired of being excluded from the policy-making process, all while told they need to cough up more or else they’ll prove they don’t like teachers, et. al. Why should taxpayers continue giving money to a system which has failed?

If state employees feel disrespected, they should understand the current system is the problem. The way we do business is simply unsustainable and unless changes are made, we really will collapse, and this is not a blog for conspiracy theories or nihilistic predictions. CRI is a government accountability organization, and as long as our state government officials are not held accountable for their actions, then CRI will continue to support policies which reduce the burden on the private sector and hold the government accountable for how they spend our money.

Read Full Post »

Older Posts »

Follow

Get every new post delivered to your Inbox.

Join 429 other followers