Wednesday, January 28, 2015

The Unbearable Lightness Of Being Paid To Teach In South Dakota

Why Is This Man Laughing?
(photo from the Sioux Falls Argus Leader)
      Protestations that the state is not the driving force in teacher salaries in South Dakota notwithstanding, Governor Dennis Daugaard has dropped the leadership ball when it comes to setting the tone for public support of education in this state.  When he noted the labor shortage that was holding back economic development, he made it the state's business to right the problem with a series of "workforce summits" that didn't simply pass the buck to localities. When he noted that our roads and bridges are in tough shape, he didn't tell local governments that it was up to them to fix their own highways.  He put together a statewide plan to get the job done.  But now that everybody understands that glaringly uncompetitive pay in South Dakota has ushered in a serious shortage of teachers in our state, Daugaard's reaction is to call the state's responsibility "indirect" and put the burden for teacher pay levels on local districts.  
     Daugaard's buck-passing reaction shows both a lack of leadership and concern.  The fact is that in real dollars and on a per pupil basis, South Dakota's state support of education is more than 8% lower than it was in 2008. Compared to our surrounding states, South Dakota has been a piker, indeed.  All but Montana (which is just 2% lower) have shown real dollar increases since '08 and probably not
SD--Last In The Region . . .
. . . Again
(graphic from cpbb.org)
coincidentally have significantly higher teacher salaries to show for their added commitments. Considering that the state's public school enrollment numbers have increased by about 10,000 students between '08 and '14, that 8% reduction in South Dakota's support for education affects even more families than ever.  It needs to be restored.  
     Before we can buy Governor Daugaard's claim about the state not bearing any direct responsibility for low teacher salaries, we should expect him to bring state spending on education to the level that it was less than a decade ago. This would at least show a good faith effort at maintaining a competitive balance with our adjoining neighbor states. We can not keep losing ground in this contest, as I believe that the incipient teacher shortage problem will morph into a crisis. Considering that he had no compunction about seriously raising taxes in order to address our roadway deterioration needs, I think Daugaard can make just as compelling a case to raise taxes in order to support what should be our most prized asset--public education.  
     If the Governor really cares, which I'm beginning to seriously doubt, he can make the rest of us care.  
Never Mind The Embarrassment.
What Do We Do About The Teacher Shortage?
(graphic from The Washington Post)

Tuesday, January 27, 2015

When Does "The Will Of The People" Become "The Tyranny Of The Majority?" When It Suits Your Political Bias, I Guess

       An effort at weakening South Dakota's recently passed and just installed increase in
The SD Minimum Wage Meme
The biz guy in the pic is looney, imo
(cartoon from www.dineshbakshi.com)
minimum wages surfaced in the state's legislature yesterday.
Numbered House Bill 1094, it would remove the provision in the new minimum wage law stating that "in no case shall the minimum wage be decreased." Though there's a certain amount of silliness to the effort, considering that inflation is endemic to the American economy, the sponsors of the bill do have a point: as long as a cost-of-living adjustment is in the bill, it seems consistent to adjust wages downward as well as upward to match changes in the cost of living.  I really can't fault the logic of the Republican sponsors, though the political motivation of their maneuver is fairly transparent.  I am a strong supporter of SD's minimum wage law and consider this legislative challenge to be a muscle-flexing exercise by South Dakota Republicans who are probably intent on chipping away at the new law, which was handily passed by voters last November by a 55-45 margin.  

     Outraged supporters of the law are nonetheless getting a bit carried away with their "will of the people" defense of it. Sponsors of HB 1094 are acting well within their capacities to mount this challenge, and do so at some political risk. I say go for it. The minimum wage law merits a vigorous public examination, if only because of its pervasiveness. What irks me about the criticism of this challenge is the rhetorical argument that it somehow violates "the will of the people."  Seems to me that some of these critics are the same ones who are mad at South Dakota Attorney General Marty Jackley for defending the gay marriage ban that was put into place by South Dakota voters in 2006. Jackley has repeatedly noted that he is constitutionally bound to defend state law, an argument that I accept, particularly as the ban was passed at the ballot by a 52-48 majority.
     Outraged opponents of Jackley's persistent defense of South Dakota law consider him to be defending the "tyranny of the majority." That phrase is actually part of the complaint filed
The Word "Marriage" Is Gender-Neutral
Neither the majority nor history can change that
(photo from The Chicago Tribune)
against South Dakota's law by the plaintiffs in the case.  I agree with and unequivocally support the plaintiffs in the South Dakota proceeding, but wonder why the "will of the people" should characterize the minimum wage law while the "tyranny of the majority" is the way the gay marriage ban is described. Both laws were the outcomes of elections, not legislative fiat.  So how does the "will" of one become the "tyranny" of the other?

     I unequivocally support the minimum wage law, including its provision that the wage shall never be decreased.  I unequivocally support the right of same-sex couples to be married, in every legal, social and religious sense of that word. But the use of hackneyed political bombast like "the will of the people" and "the tyranny of the majority" as cheap rhetorical political devices that substitute sloganeering for clear and informed thought?  The discussion deserves better.  
     

Sunday, January 25, 2015

Thune Gets It Right On Cap Gains, Wrong On Minimum Wages

     Our Senator John Thune's reflexive rejection of a couple of Obama administration initiatives on taxes and wages demonstrates his partisan consistency but doesn't fit in with a general scheme of doing something about the wage/wealth gaps between working stiffs and rich
Senator John Thune
C'mon, Senator.  Be Reasonable.  You Can Do It.
(photo from wikipedia.com)
folks.  
He's right as rain with his opposition to Obama's State of the Union tax proposal that would jack up the tax rates on capital gains and cut taxes for the middle class.  The most irksome word about the President's idea is "fairness," because it overlooks the most crucial element of an investor's decision to put money into a business.  That element is "risk." As a card-carrying Republican and a longtime investor since the day I first donned a trading jacket and made my first market on the trading floor of the Chicago Board Options Exchange (1978), I've known "risk" to be a 4-letter word that defines what entrepeneurship is all about.  

     Like it or not, a capitalist culture is built on risk.  The growth of the economy's pool of risk capital should be one of the top priorities of government tax policymakers, and while it's true that cap gains are taxed at lower rates than ordinary income, I believe that's because it's a pragmatic, not a "fairness" issue.  If you want entrepeneurs to invest vigorously in the kinds of start-ups that for more than two centuries have driven the growth of this country's economy, a marginal tax break is a reasonable incentive to get them to do so.  In effect, society is giving them a break in order to compensate for the losses that are often incurred when their risks go sour.  That goes, big time, for the many farmers, ranchers and small business people that dominate the economy of a state like South Dakota.  I've seen many of my compadres, both in the country and in town, just barely hanging on for dear financial life, sometimes for years on end, in order to make their investments in their ag operations and businesses pan out.  In the process of doing so, they've been the economic engines of their communities, hiring workers, buying goods and services from local merchants, collecting sales taxes, paying local taxes, and supporting their community schools and organizations. Their reward?  A decent profit on their land or businesses, either via their estates or through outright sales while they're alive.  
     Thune's got it right on this one.  Beating up on South Dakota's entrepeneurial class in order to give tax breaks to working, middle-class people is no way to show some understanding of what it takes to amass decent capital gains in the first place.
     What the Senator apparently doesn't get, though, is that the infamous wage gap we've accrued in this country is just getting wider, with middle income earners basically stagnating while higher income earners maintain their upward arc.  Is this fair?  I don't know--my attitude is
We Need To Kick Up Wages In This Country
Transferring Money From One Class To Another Is Creepy & UnAmerican
(graph from www.economist.com)
fair, shmair. I leave the value judgement to others. My view is a practical one. In this consumer-driven economy a much better way of improving the lot of working folks is by making sure they get paid more money, which in turn makes the rest of the world go 'round.  Thune opposes a federal minimum wage hike because he thinks it will lead to job losses, a theory that may have some currency among his fellow conservative Republicans but one which in practice has been shown to be a myth. The U.S. Department of Labor put out a document to that effect last year.  Last November South Dakotans ignored Republican exhortations against a minimum wage hike and passed one handily at the polls. Voters understood that people need to make more money.  They don't need to be enriched at the expense of others. Heck, even the seminal laissez-faire economist John Stuart Mill argued in the 19th century that regulating people's working hours and wages by law was a justified departure from laissez-faire.  

     Besides the obvious political imperative, Thune's thinking on minimum wages is antiquated and unsupported by research and history.  Nice, reasonable guy that John Thune is, I'm confident that if we keep working on him he'll come around.  

Thursday, January 22, 2015

My Letter To The British Columbia Securities Commission Regarding Azarga Uranium's Public Characterization Of The Status Of Its Permitting Process Involving Its Proposed Uranium Mine In The Black Hills. I Believe Azarga's Announcements Are Incomplete, At Best, Misleading, At Worst.

    Here's the text of my e-mail (I invite Azarga reps to respond here):

     This letter is in regards to Azarga Uranium, which is listed on the Toronto Stock Exchange using the symbol AZZ.TO. On January 19, 2015, Azarga issued a press release regarding a change in its Board of Directors along with a brief summation of its activities regarding its proposed uranium mining site (known as "Dewey Burdock") in the Black Hills of South Dakota.  You can find the entire press release here.
     My concern is with the concluding statement that "The Dewey Burdock Project in South Dakota is the main initial development priority, which has received its final NRC [Nuclear Regulatory Commission] License."  I believe this statement is incomplete, at best, misleading, at worst, as it gives potential investors the impression that the Dewey Burdock Project has received "final" approval to move ahead with this project, an impression that is reinforced by the company's website that states the Dewey Burdock Project "is on track to be developed for first production within two years."  Actually, the NRC license is anything but "final," and the company is not on track to develop this project within two years or any other specific time frame.  The permitting process is far from finalized.  Per local experts, The 'final' license was issued by NRC staff last April.  But the Atomic Safety and Licensing Board hearing process is still underway.  The ASLB judges will issue an initial decision probably in March.  They can invalidate the license, impose conditions, or remand it back to NRC staff for more work, including redoing the EIS [Environmental Impact Statement].  It’s almost certain that the initial decision – whichever way it goes – will be appealed to the NRC Commissioners.  That will add several months to the process.  The decision by the commissioners will likely be appealed in federal court.  At this point, no one knows if the state [of South Dakota] will restart their hearings after the ASLB’s initial decision and the issuance of permits from the EPA (draft EPA permits have not yet been issued).
     In my view, Azarga is presenting investors with an incomplete picture of the status of its permitting process.  As a former SEC registered Broker-Dealer, former member of the Chicago Board Options Exchange, and a former Introducing Broker affiliated with a member firm of the Chicago Mercantile Exchange and the Chicago Board of Trade, I'm well-versed in disclosure requirements when it comes to publicly traded companies.  Azarga's incomplete representation of pending permitting applications, which are being challenged at every step in the process, does not fulfill reasonably expected disclosure requirements as I understand them in the United States.  Canadian standards may be different, but I believe common sense should prevail and require Azarga Uranium to state that it still must clear some significant hurdles before it can begin mining uranium at Dewey Burdock.  Investors need to be aware of the permitting risk before they put their money into this company.
     Thank you for looking into this matter regarding one of your TSE listed stocks.  Sincerely, John Tsitrian   6144 Wildwood Drive, Rapid City South Dakota 57702 (605-341-6411)  

Tuesday, January 20, 2015

What Gives With Daugaard And His Inconsistent Approach To Regulating South Dakota's Environment?

     Queried by the Rapid City Journal this morning as to whether South Dakota should re-examine the 2008
An Abandoned Uranium Mine In The Black Hills
Such A Pretty Sight, Hey?
(photo from sdsmt.uranium.edu)
move to weaken its environmental regulatory laws, Governor Daugaard came up with a head-scratcher of an answer.  
The 2008 action by South Dakota's legislature to weaken its regulatory oversight of proposed in situ uranium mining operations in the Black Hills has long been criticized as a giveaway of South Dakota's inherent right to be involved in decisions affecting our state's environment.  Daugaard told the Journal today that "I don't like the notion that the state duplicates federal regulation.  So to the extent that the Atomic Energy Commission or the EPA is looking at this, I think we should let it run its course.  I don't think it makes sense to disregard scietists, simply because they are not from our neighborhood."  
In Situ Uranium Mine In Australia.
Ugh.
(photo from decarbonisesa.com)

     Besides wondering why Daugaard doesn't know that the Atomic Energy Commission was dissoved 40 years ago, I find his statement to be not only outrageous on the face of it, but completely at odds with his loudly trumpeted resolution that was passed by the Western Governor's Association last June.  Quoting from Daugaard's press release dated last June 13, Daugaard said that "states should be treated as co-regulators of the environment."  Get that?  "States should be treated as co-regulators of the environment."   This is a position I strongly endorse, along with the many outstanding stewards of South Dakota's soil and water (aka ranchers and farmers) who are rightfully fed up with constant EPA intrusion and enforcement of laws that are unnecessary and burdensome as applied to situations that are unique to South Dakota. 
In Situ Mine In Czech Republic
Sure Blends In, Doesn't It?
(photo from Wikipedia.com)(


The Southern Hills.  Leave 'Em Alone.
Uranium Mine?  We Don't Need No Stinkin' Uranium Mine.
(photo from chspineneedle.com)  P.S. Way to go, Central Cobblers!
     I'm certain that Governor Daugaard is of the same frame of mind, which makes me wonder why on earth he isn't applying that principle to analyses of water quality and contamination issues regarding the proposed uranium mine in the southern Hills. Sounds to me like Daugaard is abandoning his insistence on our state being a "co-regulator" by taking an a priori position that South Dakota would be "duplicating" federal regulations based on outside scientific
 An In Situ Mine In Nearby Crawford, NE, 2012
Good Grief.  Somebody Wants To Do This To The Black Hills?  Yecch.
(photo from The Rapid City Journal 12/23/12)
analysis. After rejecting EPA science as the final word on environmental regulations in South Dakota, Daugaard is suddenly willing to accept the science of federal regulators when it comes to uranium mining? This is about as consistent as baloney.   

Monday, January 19, 2015

Kayabonga! The Daugaard Dude Unleashes A Tsunami Of Tax Hikes. Will A Set Of A-Frames* Wash Away The Failures Of His First Term?

          Gnarly.  There's no other word to describe it.  Just a week into his second term, Governor
Fleeee!  The Daugaard Tax Tsunami Is Coming!!!
He'll Hang Five, Hang Ten, Hang Even More Taxes On Us!
(photo from www.flickr.com)
Dennis Daugaard does a one-eighty on taxes and sets off waves of tax increases that are as significant as they are widespread. He offset his commitment to no new taxes during his 2011 entree into the Governor's mansion by whacking spending to levels that set off an infrastructure  maintenance crisis in two of the state's most crucial capital assets--education and roads.  Now, apparently understanding the folly of his inflexibility on tax hikes, he has to play catch-up and will try to make up for a lot of lost time and revenues  by sticking it to all of us. 

     By downplaying--or avoiding altogether--any public attention to our deteriorating roads, Daugaard failed in his role as Governor.  In fact, as recently as his January 2013 State of the State address, Daugaard was actually bragging on the condition of our roads when he said "South Dakota's 8,000 miles of paved state highways rank a 4.4 out of 5 for quality and our state bridges rank 91 on 100-point scale."  Just a few months later this ridiculously rosy outlook turned out to be baloney, as the talk in Pierre turned to the road-condition crisis that was actually at hand. This is pretty sorry stuff, considering that it was crystal clear by the time Daugaard took office in 2011 that South Dakota was looking at hundreds of millions of dollars worth of repair work.  The sense of urgency that should have been at the forefront early on in his administration didn't surface until the last few months of that term.  
Why Is This Man Laughing?

    I believe we're seeing a widening of Daugaard's credibility gap with his announcement that fees to a wide array of businesses and every driver in the state will take double-digit percentage leaps if his proposal to the state legislature gets the nod.  I don't argue against the need for funding necessary services in this state, but I don't like the way the taxes are being implemented. Daugaard failed to give South Dakotans a heads-up during the course of his first term that state services were being seriously underfunded by his stubborn commitment to hold the line on taxes.  Now that he's safely settled into his second (and thank heavens his last) term as Governor, Daugaard suddenly touches off
More Of The Same In South Dakota
The Regression Goes On
(graphic from The SD Budget & Policy Institute)


tidal waves of new taxes--no political liability in sight. Meantime, guess who bears the brunt of these suddenly jacked-up tax burdens. Businesses? Hardly. Like every other entrepeneur in this state I'll be passing them along to my customers. The regressive nature of South Dakota's tax system goes on.

     
     

      


*Per surferdude-onics, "A-Frames"=perfect waves    

Thursday, January 15, 2015

Is South Dakota Headed For A Civil War?

   
What We City Slickers Think
(cartoon from http://www.interest.co.nz)
    Mmm, most likely not.  But given the standoff emerging between Governor Daugaard and State Senator Mike Vehle (R-District 20) over how (and by how much) to fund South Dakota's suddenly discovered major highway repair job, there sure seem to be some classically contentious elements, mainly rural vs. urban interests, emerging from the argument. Daugaard wants to raise $50 million by spreading the cost throughout the state via increased gasoline taxes, license fees and other sources.  Vehle wants to come up with $100 million (calling Daugaard's plan "too frugal") by adding fuel and vehicle assessments directed mainly at agricultural producers.
     As you might expect, ag interests aren't particularly pleased about this. But then, farmers in this state have been getting a sweet deal when it comes to taxes for a good long while, probably since the inception of the state. The South Dakota Department of Revenue in 2013 came up with a list of sales tax exemptions by industry that totals nearly $600 million a year.  More than a third of that, $221 million, is given up by the state to ag industry interests.  That these exemptions are probably so politically and historically entrenched as to make them sacrosanct is well known.  I'm sure that the reason farmers will be fighting hard against Vehle's proposal is that it could be seen as a first blow against a tax structure that has favored them for many years.  
     For their part, farmers can make a pretty good case that these tax breaks are needed by an

Farmers Get It
(cartoon from www.cartoonstock.com)   

industry that goes through wild price swings that few urbanites can understand. I'm generally sympathetic, but I've argued here before that given the risk management tools and outright subsidies that are widely available and used by ag producers, a thorough analysis of the tax breaks that farmers in South Dakota get is way overdue.  That goes for every one of the special interest business groups that get sales tax exclusions, of course, so farmers shouldn't feel like the Lone Rangers in this drama.  I'm confident that we urbanites will discover that many of these breaks are justified, if only because we're fundamentally ignorant about what it takes to put food on our tables.  I certainly fed enough cattle during my commodity brokerage days to know that to be a fact.
     Meantime, if there actually is an incipient rural vs. urban face-off developing, this might be a good time to open up some dialogue.  That confrontation has characterized the civil wars among English-speaking folk for centuries (read Historian Kevin Phillips' "The Cousins Wars" for a thorough and copiously documented tome about that), so it comes as no surprise that equitably paying for our desperately needed road repairs will set up some squabbling in South Dakota.  We'll stop short of shooting, of course, but the hard feelings that are likely to erupt could last a lot longer than necessary.  


Wednesday, January 14, 2015

Dennis Daugaard, Road Warrior

Good Luck With That Pothole
Now, About The Rest Of That Road . . .
(photo from Sioux Falls Argus Leader)
     So suddenly it's all about urgency?  Governor Dennis Daugaard's long and wonkish recitation of the sorry state of our roads during his State of the State address yesterday seemed more a mastery of the obvious than the burst of awareness it was intended to be.  And Daugaard's emotional appeal for higher taxes to fund this mandatory need for repairing our highway system came across as more demand than plea, which, of course, is a stark repudiation of a campaign pledge made in 2010 when candidate Daugaard said "I will not raise taxes as governor. I will not support any new taxes or any increases in existing taxes. I would only consider a tax increase in response to an emergency, such as the temporary gas tax increase to pay for snow removal after the blizzards of 1997."
     I guess positing the deplorable shape of South Dakota's roads as an "emergency" is probably the only way that Daugaard can justify going back on his campaign promise, but I don't think it'll wash.  Why?  Because this road maintenance situation has been a known feature of South Dakota's long term obligations for many years.  Cripes, in 2011, Daugaard's first year in office, there was plenty of awareness of the situation.  As far back as 2008, during then-Governor Rounds' tenure, "the deferred maintenance and construction needs in South Dakota’s transportation system amounted to $756 million," according to that year's report card put out by the American Society of Civil Engineers, as quoted by Dakotafire.  
     So now we're stuck with a massive bill, amounting to hundreds of millions of bucks spread out over the next few years.  Daugaard, safely esconsed in his final term as Governor, need not answer to the citizens of this state who question his lack of attention to our road problem.  Nor does
Why Is This Man Laughing?
Because He Doesn't Have To Explain Why He Reneged On Taxes?
(photo from the Sioux Falls Argus Leader)
he have to explain why he's breaking one of his signature campaign pledges.  That he doesn't need to, and probably won't, explain is something we have to accept. My hope is that some of his supporters could step in and provide answers.  The comments section is theirs for the asking. I'm also reachable at the e-mail address on the right.  Your explanations, Daugaard supporters?






ADDENDUM (added @1247 1/14):  Daugaard effectively retracted his "no-tax while Governor" pledge on 10/24/14 when quoted in the Sioux Falls Argus Leader:  "When I first ran four years ago I promised to oppose all tax increases as we recovered from the recession, and I kept my promise, but earlier this year, you know I announced everything is on the table when it comes to roads, including taxes. It doesn't mean I'm promising to support a tax increase, but it does mean I'm not promising to oppose one either."   The retraction occurred during his first term, the reality struck yesterday, just two days after the beginning of his second.

Monday, January 12, 2015

Expand Medicaid In South Dakota. My Column In Yesterday's Rapid City Journal

 
Taking A Pass On This Deal Makes No Sense
   
We've institutionalized irrationality in this state.  Why South Dakota hasn't grabbed this thing called Medicaid expansion for all it's worth is a study in political imperatives and social value judgements trumping a realistic and hard-headed approach to analyzing a deal that by any measure is a good one for us.  The gist of it is that by accepting federal money via the Affordable Care Act (ACA) to expand Medicaid coverage for tens of thousands (somewhere around 45 thousand seems to be the most commonly used estimate) who fall into a "coverage gap," South Dakota stands to gain huge sums of money in return for a relatively small sum that it has to put up in order to participate in the plan.  The "coverage gap" exists among those who make too much money to qualify for conventional Medicaid but not enough to afford ACA-subsidized coverage.  When people in that "gap" group need healthcare, it's usually received at local ERs and paid for by a combination of taxpayer dollars and insurance premiums adjusted to fit the cost of that care.
     What Medicaid expansion will do is shift most of the cost of that care to the federal government. And just what kind of money are we talking about?  The non-partisan South Dakota Budget and Policy Institute (SDBPI) calculated this last year and concludes that if we had been doing it since 2013, our state would stand to receive $2.1 billion (yes, billion with a "b") from Medicaid, with South Dakota kicking in a whole $157 million (million with an "m") for its share of responsibility.  
     The political imperative at play here?  You saw it morph into the anti-Obamacare pitch that characterized Senator-elect Mike Rounds' recent campaign, during which his disdain for everything about Obama surfaced as a promise to end the ACA.  I believe this contempt for Obama and his groundbreaking healthcare initiative is common throughout Republican circles in South Dakota.  But realistically, a reasonable retort to those who would reject Medicaid expansion because they think ACA will be dismantled or that the funds for it will dry up is this:  If it withers on the vine we return to the status quo, which we've been living with anyway.  And even if the program endures the many political gauntlets that it is likely to go through, SDBPI's report notes that South Dakota can always change its mind and junk the whole idea.  It’s not an irreversible decision.
     That some resistance to expansion comes from a deep-seated loathing to help out fellow South Dakotans who believe they need some help is revealed in Governor Dennis Daugaard's comments in 2012, when he told the state legislature that he didn't want to put some 48,000 "able-bodied adults" on the Medicaid rolls.  I wonder if Daugaard understands that these are working people who don't make enough money in our chronically low-wage state to qualify for subsidized health insurance. This is an observation echoed by Dan Heinemann of the SD Medical Association when he calls the potential beneficiaries of expansion "the working poor."
     Let’s expand Medicaid 

Addendum (added @1731 1/16/15:  Here's a link to an excellent column on this subject written by Rapid City physician Dr. Kevin Weiland for the Rapid City Journal a couple of years ago.  

Wednesday, January 7, 2015

Radically Reforming Welfare. A Guest Post By @nosaintjoe

Welfare Reform:  Time To Remove The Middleman?
Close down the bureaucracy and give these folks cash
(photo from The Atlantic)

A piece titled "The Conservative Case For A Guaranteed Basic Income" in the Atlantic last Summer cooked up plenty of food for thought. Given the self-evident failures of existing welfare programs at every level of government to substantially reduce, much less eliminate, poverty in this country, some radical thinking is in order. The Atlantic piece took a look at some efforts to shake things up both here and abroad. A guaranteed basic income is indeed a radical scheme, but one worth considering. Before you reflexively write this off as another looney liberal idea, consider that the laissez-faire icon Friedrich Hayek endorsed the plan in the 19th century. So did Milton Friedman of much more recent vintage. Based on some personal experience with Lyndon Johnson's anti-poverty programs from the 1960s, which I might elaborate on if the discussion advances from here, I'm inclined to consider it. Meantime, from a friend who knows the story first hand as an urban social worker, comes this missive: "What I think is we need to radically reform the American welfare state as we know it. That does include eliminating / gutting / redirecting gov’t funds & services from the programs you mentioned like SNAP, Medicaid, Section 8 to support a universal income program that is sufficient enough to cover the costs of food, healthcare, housing, etc for a family.
Now I know how hard it will be for America to swallow that pill. Not to mention the politics surrounding the subjectivity of “basic”.
The inconvenient truth is liberal bureaucracy is part of the problem. Good intentions are wasted when a challenge comes along that puts their self interest and the preservation of their programs / institution against the welfare of those they are claiming to serve. In my personal experiences, they’re always an opportunity to scapegoat the failure of your program on the shortcomings of those being aided or on the funding stream.
We’ve been operating under the basic assumption, that a dollar spent by an agency does more social good than a buck given directly to the needy. But that theory hasn’t been seriously tested until recently, there’s finally studies being done comparing direct and indirect welfare spending.
Culturally, we don’t trust each other, especially the poor, ironically (imo) because they “do what they must” to keep afloat. People work the systems, try to outsmart the bureaucracy (which is easy to do, because it’s slow and dumb). All this makes it hard (and resource intensive) to sort the bad apples and those truly deserving.
What I like about universal basic income is it controls an extremely important variable: where / when the next paycheck is coming from. It will be steady and will cover one’s basic needs making any taboo social behavior (fraud, slinging, crime, etc.) much less rationale / justifiable. And with that we can address / sort what might social ills are rooted in individual habits / mental health issues and what might be hard circumstance.
A good social worker, one who is honest about their intentions, knows their goal is to work themselves out of a job. Unfortunately, what I often encounter are self-preservationists.
Still, this policy will not solve issues like drug abuse, crime, employability, even homelessness, because undoubtedly not all people will use their basic income appropriately because of whatever (but I’d be confident in saying there would be a hell of a lot less of those problems) so their still be a place for social workers and social service agencies.
Lots left to say but there's my start. Anyone want to talk about incentives to do x, y, or z if I have sure money coming my way should bring tested facts not assumptions. I’m going to get back to my grad school app."


My Note: You can follow my good friend at twitter.com/nosaintjoe

Some additional and provocative thoughts from Tasiyagnunpa Livermont  "My only concern is for people who have never had money of their own, even those who have, and don't know how to manage it. In third world settings, influx of cash often ends up in drug problems, especially meth and according to law enforcement I've heard that it can lead to first time use. The stigma would also need to be eradicated somehow. Fortunately there are many good economic development entities and credit unions working in our communities who could perhaps be worked with to provide opportunity for financial education. They are already doing the work, but often people have no freaking money to manage! Trust me, you can't budget if you have less than you need. I also don't think this will work if we eradicate housing vouchers and low income housing or count this towards it. Rents have skyrocketed and many developments count on low income cash and loans as part of their business. Those would need to be left in place. I do think this is probably the BEST thing for those who want to start their own businesses and yes, employers may need to offer more money to entice people (women especially) to leave home to work for them. However, the more people with time the more we have opportunity to rebuild our communities through volunteer work. People could return to school or otherwise skill up, start businesses, etc. I also think we should run a cash incentive for not having children. Sounds crazy, I know, but I think we need to provide a basic income to young people if they don't have children. If they choose to do so, then the family type basic income comes into play, but perhaps there's strings attached (for daycare assistance or something). IDK. I think we live in a post-child society and need to make adjustments without leaving children and their parents in the cold. Young people who know they want children could save that income and receive matching grants for when they do have children...a dowry of sorts for men and women. Child support, mostly for men, is also crippling our society and forces parents to sue each other often to receive basic government services to begin with. That must stop. The war on poverty (and against welfare) became a war on fathers."

Tuesday, January 6, 2015

Enough With The Secrecy, Already. This Trade Thing Is Too Important To Be Kept Under Wraps. Senator Thune, Are You Listening?

An Ironic Symbol Of Our Booming Asian Trade:
China's COSCO Terminal In Long Beach, CA.  
The Irony:  This Was Once A Homeport Of Our Pacific Fleet
(photo from www.coscoamericas.com)
       This "trade thing" is an agreement, still being hammered out, called the Trans Pacific Partnership (TPP), and it stands to be a good deal for South Dakota.  If TPP, which includes most of the "Pacific rim" countries (China excluded) comes to pass, it will create a trading zone that accounts for about 40% of the world's trade and make South Dakota's principal exports--grain and livestock--all that much easier to sell to some already pretty good customers, Japan in particular. The National Cattlemen's Beef Association (NCBA) is positive about it, and with good reason.  Japan and the rapidly growing cluster of southeast Asian nations signing on to the deal are great and potentially greater markets for American beef.  Same goes for the National Corn Growers Association (NCG), which is particularly pleased that Japan is included in the mix. Basically, South Dakotans should feel pretty good about TPP's prospects.
      Only problem is that the negotiations are being conducted so secretly that nobody seems to know much about the details of the deal, where the devil resides.  I got the sense from our Senator Thune's op-ed in the Rapid City Journal yesterday that he puts concerns about American exporters being on "an equal playing field" with their counterparts and competitors in the global marketplace at the top of his priorities for 2015.  Who can take exception to that?  My Q for the Senator regarding this is:  How carefully is he following a deal that is being shaped up in such intense secrecy?  There is much to be concerned about in deals of this magnitude, and Congress has been resisting giving President Obama "fast track" trade authority that would give Obama the right to sign off on it with only cursory review by Congress.  
     If Thune is sincere about his prioritizing that "equal playing field" concern he wrote about in RCJ, I would think he'd be among the first to insist on Congressional scrutiny and input on a deal as far-reaching as this one. Senator Bernie Sanders (I-VT) is particularly miffed that leading American corporate interests are directly involved in the negotiations that have essentially excluded
C'mon Senator Thune.  Let Us In
On The Trade Deal.
(photo from rapidcityjournal.com)
our elected representatives in Congress.  It's hard to argue with Sanders' point when he says: 
“It is incomprehensible to me that the leaders of major corporate interests who stand to gain enormous financial benefits from this agreement are actively involved in the writing of the TPP while, at the same time, the elected officials of this country, representing the American people, have little or no knowledge as to what is in it. In my view, this is simply unacceptable.”
     I think we South Dakotans should also get a sense of how this deal will affect our agricultural trade with Canada and Mexico, who are part of the proposed trade group. NCBA's and NCG's unqalified endorsements notwithstanding, South Dakota ag interests should have a direct sense of how this deal is shaping up before joining lock-step with their organizational honchos in getting behind it. As a good, card-carrying, free-trade promoting Republican businessman I'm inclined to be supportive of deals like this. As a guy who agrees that skepticism about NAFTA more than 20 years ago has long since been justified, I want to know more about this TPP thing before we give it the go-ahead.  

     



     

Saturday, January 3, 2015

Warning! Forecast Safely!. . . Economists Ahead.

  Nothing against Economists. Heck, my daughter Emily has a degree (ahem, with honors) in Economics from the University of California at Berkeley.  But given that, I'm sure Emily will be the first to agree that like all the social "sciences," Economics is as much art as analysis, especially when it comes to forecasting. Having just read the forecast for South Dakota's economy made by a team of Economists at Creighton University in Omaha, Nebraska, I'm more cognizant of that than ever. The Creighton U. team, headed by Dr. Ernie Goss, puts out a much-followed forecast for a cluster of states in the middle of the country.
King Corn.  Forecasters missed the effect of the '10-'11 run-up
and the '13-'14 selloff.
 
(graph from www.agriculture.com)
      Their just-released December outlook for the next  couple of quarters gives an Economist's equivalent of a "thumbs up" to South Dakota. By itself that's encouraging, but before we--and any economic planners in our state government--break out the bubbly, let's review the analysis and look back to the Creighton U. forecast made in early 2014.  The study itself is basically a compilation of traditional indicators relied upon by economists.  From the current report: "After moving below growth neutral in November of 2012, South Dakota’s leading economic indicator has been above growth neutral 50.0 each month since. The Business Conditions Index, from the monthly survey of supply managers, increased to 52.4 from November’s 51.5. Components of the overall index for December were new orders at 47.1, production or sales at 64.7, delivery lead time at 64.3, inventories at 34.7, and employment at 51.3. “For 2014, South Dakota manufacturing tied to energy pushed state growth into a healthy range." In standard qualification typical of econo-speak, Goss adds.  "However, the sharp cut in oil and agriculture prices will reduce South Dakota’s growth for the first half of 2015. Even so, I expect growth to remain positive for the first half of the year."
     That last nod to commodity prices was actually a pro-forma, if unquantified by analysis, hedge by Goss.  I believe he realizes that his team completely missed the impact of the grain markets in its way overly optimistic report last Spring. As I scan that set of current indicators I wonder how Goss and his team could be relegating the obvious, namely the price of commodities, to an afterthought.  To my "informed layman's" eyes, it seems to me that the economic fortunes of an agriculturally saturated economy like South Dakota's all start, literally, from the ground up.  The numbers relied upon by the Creighton team look like indicators that I would expect to find in analyses of economies that are manufacturing- and service-oriented, not those in which commodity production is at the core. I think Goss's work doesn't put enough weight on the effect that grain prices have on South Dakota's economy, a conclusion I come to after having spent a couple of decades successfully trading grain and livestock, both at the exchanges in Chicago and right here in South Dakota.  It was especially clear to me when I visited our office in Brookings, where the corn and bean markets virtually defined the economic conditions of the region.  
     I recall being dismayed in early '11 by Governor Daugaard's slashing of his first state budget because of grim economic forecasts (I'm guessing created by the Goss team).  It seemed nuts to me at the time because grain and livestock markets were clearly running up to their best prices ever, an economic boost that I was certain would result in better than forecast conditions for growth and render Daugaard's strapped-for-cash scenario overly miserly.  As it turned out, taxable sales in '11 were up a stunning 9.2%, the surest indicator of how our state's economy is getting along.  
Economist Dr. Ernie Goss, Clairvoyant In Good Standing
(photo from nebraskaradionetwork.com)
       None too surprisingly, Governor Dennis Daugaard probably used the Goss team's overly optimistic numbers from early 2014 to paint a politically advantageous picture of South Dakota's rosy outlook. Certainly Daugaard and his staff did nothing to distance themselves from the unjustifiably bright outlook prepared at Creighton. Note Goss's conclusion: "Based on our survey results, I expect the rate of growth to quicken in the months ahead."  In fact, growth slowed dramatically following the report.  More relevant to state policy, it's reasonable to conclude that Goss's scenario was the basis for Daugaard's perky outlook for South Dakota's economy last January, which turned into a badly missed  set of projections that were laid out during Daugaard's grim recitation of one slashed forecast after another during the Governor's budget address a month ago.  Both Goss and Daugaard just plain got it wrong.  
Me, Wooing Dr. Christina Romer, Former Chair Of The
President's Council Of Economic Advisors.

See?  I Like Economists.  I Really, Really Do
(Photo taken at UC Berkeley by Emily Tsitrian)
     And now for an afterthought of my own: why doesn't Daugaard reach out to home-grown and -nurtured analysts who have a better feel for economic conditions in South Dakota? Probably because our state's university system can't provide them.  The USD Economics Department stresses teaching.  The SDSU Econ Dept stresses applied research, mainly in connection with agricultural industry needs, which covers plenty of micro- territory and does it very well, I'm sure. But when it comes to macro research and analysis for use by public policy makers?  That's a missing component from both departments. A glaringly missing component.