UConn is raising its tuition. Is anyone surprised?
The surprise, if any, might be checked at the door after reading the latest edition of Ted Mann’s magnum opus covering the first year of Connecticut’s first Democratic governor in twenty years.
Both Governor Dannel Malloy and the crowd of Malloyalists surrounding him are highly ambitious. They believe previous governors have been treading water. The state now has a progressive reformist at the helm who wants to “reinvent – his word – the state of Connecticut. As is the case with most modern progressives, education is a political palliative – good for what ails you; when you run out of options, boost education. Reformation, naturally, is costly, but politically popular. In the hands of Mr. Malloy and the Democratic legislature, any reform of education is likely to advance the interests of teachers at the expense of taxpayers.
Jonathan Pelto, himself an ardent liberal, reminds us that Mr. Malloy pointedly did not extend his “Shared Sacrifice” to municipalities when he was hammering out his budget with SEBAC, the union coalition authorized to negotiate union contracts with the state. Shared cost savings from teachers therefore were off the table before bargaining commenced.
Responding to a statement made by Malloy budget director Ben Barnes that cuts at UConn “were comparable to what the rest of state government took,” Mr. Pelto remarks in a careful analysis of tuition increases proposed by recently installed UConn President Susan Herbst, “This statement is blatantly false. In fact, there were a number of government programs that were not cut at all (such as municipal aid), with others that only received minor cuts and even a few programs that received increased state funding.”
The money “saved” by Mr. Malloy in state funding cuts to UConn has now been backfilled by Ms. Herbst through tuition increases.
Behold, Mr. Pelto writes, the Malloy version of “Shared Sacrifice”:
“The Malloy version of ‘Shared Sacrifice’ – More taxes for middle income families and then, as a result of state budget cuts, those same families will now face significantly higher costs to send their kids to college.”
At its best and worst, politics is all about making choices. If Mr. Malloy, the architect of Connecticut’s future, had not chosen to spend nearly $900 million on the UConn Health Center (UCHC), the pinkest of pink elephants, he would have had wads of cash on hand to defray tuition costs at the college proper. Why? Because Mr. Malloy and his Democratic controlled legislature had jacked up taxes sufficiently in their budget to produce the usual Connecticut surplus. And then he spent it on a roll of the dice.
A review of Mr. Mann’s serial account of the first year of the Malloy administration will show that Ms. Herbst was one of the prime movers in the re-invention of the UConn Health Center.
We discover from Mr. Mann’s account that Mr. Malloy at first told Ms. Herbst and Cato Laurencin, the head of UCHC, that he didn’t want to invest money in the rehabilitation of the ailing facility. Mr. Malloy and the Malloyalist had already performed a political audit: “If they were going to ask him to pour more money into that hospital, and take it between the eyes from every deficit hawk and editorial board in the state, well, they need to show him something bold.” It was Ms. Herbst who sold the reinvented UCHC to Jackson Laboratories.
“She's already begun the hard work at UConn of whacking back the weeds,” Mr. Mann wrote, “cutting undersubscribed Ph.D. programs and winnowing unnecessary expenditures to free up more funds for research. They're fundraising, and they're lousy with ‘free labor’: undergraduates desperate to work for course credit and resume-building lab experience. They are, in short, just the sort of forward-thinking host community a lab organization like Jackson ought to be looking for, she says.”
And now UConn now needs additional professors to reduce class sizes from 18 students per professor to 15. The most pampered institution in the state, UConn will now cover putative losses in state aid, said to be about $300 million, by bumping up tuition 6 to 6.8 percent for the next four years.
The stinger here is that we all live in a world of finite choices -- and finite resources. Non-politicians learn to live within those parameters. Political choices have consequences. Those who do not like the consequences should have opposed the precipitating choices. They didn’t. Now, weeping copious tears, UConn students have been saddled with tuition increases. Really, it’s a bit of a crush watching those responsible for spilling the milk weeping crocodile tears over their spilt milk.
Showing posts with label UCHC. Show all posts
Showing posts with label UCHC. Show all posts
Thursday, December 22, 2011
Thursday, October 20, 2011
The Resistance, A Self Interview
Q: Whither the Connecticut Republican Party?
A: It’s good question. I put up a blog recently that was a review of a Chris Shays interview with Dennis House on “Face the State.”
Mr. House asked Mr. Shays whether he thought Connecticut had drifted so far to the left as to make it impossible for Republicans to win a seat in the U.S. Congress. Mr. Shays is running as a Republican for Senator Joe Lieberman’s seat. Mr. Shays said “Absolutely,” he thought the state had moved very far to the left.
The blog produced a response from Jon Kantrowitz, a liberal commentator who is himself an articulate unabashed progressive. “By the way,” Mr. Kantrowitz wrote, “it's true - the state has gone too far to the left to elect a Republican - and thank goodness for that!”
There are some few Republicans about who are not as thankful as Mr. Kantrowitz, though it is difficult to disagree with the major premise of his proposition -- namely that the state has moved very far to the left. The entire U.S. congressional delegation is Democratic. The state’s safer districts are occupied by unapologetic progressives like Mr. Kantrowitz, now moving up within the national Democratic caucus food chain. U.S. Reps Rosa DeLauro and John Larson are both pull-no-punches progressives. In what used to be called swing districts, congressional Democrats are a bit more cautious. In the General Assembly, state Democrats had until just recently a veto proof margin in both houses. And during the last election cycle, the Democrats captured the gubernatorial office, previously held by moderate Republicans and one ex-maverick Republican, former senator and governor Lowell Weicker, the father of Connecticut’s income tax. In addition, all the state’s constitutional officers are Democratic. So, I think it is safe to agree, along with Mr. Kantrowitz, that Democrats pretty much own the whole political kit and caboodle, while disagreeing with him sharply that we ought to thank God for this turn of events. While God may not be a Republican, one likes to believe He is no political plutocrat.
Q: Where does that leave Republicans?
A: In a resistance posture. The point of a party surely is to offer resistance to the reigning power. History has not dealt kindly with parties that have cooperated with the prevailing regime. The one party state, like a rolling stone, gathers no moss, but the single party state is an invitation to corruption; which is why, come to think of it, God created the two party system.
Q: Why haven’t Republicans been able to offer effective resistance to what you have characterized repeatedly in your Connecticut Commentary as Connecticut’s one party state?
A: Because Republicans have too often cooperated with the prevailing regime. You cannot cooperate without being coopted. It is important to understand that Mr. Kantrowitz is partly right. The Republican resistance has been washed away in Connecticut. Here and there, one finds brave blades of grass shooting through the concrete. During the last elections, two Republican conservatives – state senators Len Suzio and Joe Markley -- won office, both of whom may be considered part of a resistance vanguard. When Bill Buckley, who used to live in Stamford, started National Review, he proclaimed that the mission of the magazine would be to stand athwart history yelling “Stop!” Rolling stones don’t like that sort of thing.
I’ll give an example. Len Suzio, a conservative Republican who won his seat in a special election, has lately come out against deal made between Mr. Malloy and Jackson Laboratory. The Laboratory is to be attached to the UConn Health Center (UCHC), a business black hole that has absorbed millions of dollars in tax bailouts. Shortly after his budget passed muster with SEBAC, Mr. Malloy handsomely rewarded UCHC by giving it about a billion dollars.
The laboratory, apparently a successful non-profit enterprise that will itself generate no tax revenue, will absorb tax money from both federal and state grants. Mr. Suzio’s objection to the deal was forceful: “This is a lose-lose situation for Connecticut taxpayers. All the risk money is coming from the state of Connecticut. ... We don't get a nickel of interest in the technology that they develop. That is stupid."
Senior advisor and chief spokesman for the governor Roy Occhiogrosso responded that the project was a solid investment in personalized medicine and bioscience. This was a smart rather than a dumb risk: “There's a difference between taking a smart risk and a dumb risk. This is a smart risk. Taking a risk that 10 football games a year will turn the economy around is not that smart. The next thing you know, Senator Suzio will go on the radio to try and convince the people of Connecticut of his view on the flatness of the world. No matter how he tries to spin it, this is the best thing to happen to Connecticut in a long, long time.''
Mr. Suzio did not mention the “B” word on this occasion: Connecticut is broke, broke, broke. But the important political point is this: Even if Mr. Suzio is right, it will not matter – because Mr. Malloy has the votes in the General Assembly to do whatever he likes. If Mr. Malloy wanted to build a Ziggerat in Farmington – which, by the way, would produce a momentary spurt of jobs – he could do it, because the Republican resistance has no battalions. Napoleon’s quip to a pope who offered him a mild resistance was to ask: How many battalions has the pope? Answer: Not enough to resist the prevailing power of the day.
And THAT is the problem for Connecticut.
Mr. Malloy passed his budget through the General Assembly without being put to the inconvenience of discussing the matter with leading Republicans who, unlike union representatives, were wholly shut out of the process. The governor’s budget figures were such as to produce what I have called in the blog and in columns an artificial surplus of about a billion dollars. Real surpluses are produced when taxes are not increased but the state never-the-less realizes an increase in revenue owing mostly to increased business activity. Mr. Malloy’s artificial surplus is now flowing into a series of crony capitalist projects. Mr. Suzio is right about the UConn Health Center: It’s a budget busting black hole the state – which is broke, broke, broke -- can little afford to support. Attaching a non-profit, non-tax generating research center to the UCHC does not make the combination more profitable. This may be the first time in Connecticut’s history that a serviceable neck has been draped around an albatross.
Q: So, What’s wrong with crony capitalism?
A: Glad you asked. Anyone who is a proponent of the free market must be an anti-monopolist. I am here using the word “monopoly” to indicate existing monopolies, many of them stamped “Made in Washington D.C.” – Fannie Mae and Freddie Mac come to mind -- as well as political systems that tend towards monopoly. This is why the free marketer must be an anti-monopolist: Monopolies, which are cornered markets, frustrate competition, and competition is the economic virtue par excellence of a truly liberal society.
In the modern period, monopolies have been facilitated by governments. In a truly free market that fosters competition, cornered markets are less possible. It is when companies are given an opportunity to use government as a tool to gain an advantage over their natural competitors that monopolies flourish.
The process that produces state sponsored monopolies is called “crony capitalism.” The crony capitalist and his facilitators tilt the playing field in favor of large monopolistic enterprises by using presidents, governors and legislators to gain an advantage denied them in a free and fair competition.
This unfair advantage has its analogue in the sports arena. Americans, who like to see the best man or team rise to the top in a fair competition, would react disapprovingly, I like to think, to any “fixed” competition in which the presumed impartial judgment of a referee has been purchased by one side or another; and yet this is precisely what happens when a single political party has captured control of a congress or an executive department or a city or a state or a town.
There are signs all about us that singe party states and governments are infested with corruption. Alert politicians and – as I like to think -- wide awake journalist will be able to read the signs of the times. There is no reason to suppose that reporters, editors and commentators in the legacy media are comfortable with monopolies of any kind, political or economic.
There is an old biblical saying: By their fruits shall ye know them. We are familiar with the bitter fruits of crony capitalism. What applies to business monopolies applies as well to political monopolies.
The government of China, for example, is as much a political monopoly as – just to reach for an example – the government of, say, Bridgeport Connecticut. Of course, the consequences of corruption in China are more severe because there are in that country no mediating democratic institutions, such as a critical press, to soften the iron fist of an unquestioned authoritative regime. The arc of monopolistic political regimes bends towards fascism; they corrupt absolutely because they needn’t worry that their political customers will be able effectively to demand a better service or a better product. Within the one party state, any hope of political competition has been effectively abolished. Political monopolies are nursery beds of corruption, because they permit governments to rent to favored groups instruments of government power that ought to be used for the benefit of all.
The legislature is overwhelmingly Democratic. And it may seem to some who are paying attention that the remarks made several times by Governor Dannel Malloy to unions to the effect that he will never forsake them – “Oh, my darling” -- indicate that unions need not tailor their interests to the general interest, so long as both the governor and the General Assembly have their back. Indeed, it seems that unions were not made for the state; the state, rather, was made for unions. The very last party to sign off on Connecticut’s budget was not the legislature, the preeminent organ of government in democracies and republics, but SEBAC, a coalition of state unions that one commentator has called Connecticut’s fourth branch of government.
So then, we have in Connecticut a Democratic governor, a General Assembly dominated by Democrats – one of whom, Speaker of the House Chris Donovan, himself unusually friendly to union interests, is running for the U.S. House in the 5th District – a media blithely undisturbed by the prospect of a one party state, and a U.S. congressional delegation composed entirely of Democrats.
That is a recipe for, among other things, crony capitalism and its attendant corruptions.
In connection with politicians – the crony capitalist makers – the age old question arises: Qui Bono? Or to put it in the modern idiom: What’s in it for them?
Lots. They are given an edge on their competitors, usually smaller fry, and they have arranged with the politicians to share sacrifices: Taxpayers will share in the paying of their debts when their companies fail; and they will take the lion’s share of profits. Given these arrangements, is it any wonder that the public has soured on businesses too big to fail and those politicians who have contributed their mites to the creation of monopolistic enterprises?
I’ve been amused by the notion that Republicans have a lock on millionaires. Within the Democratic Party, we are invited to think, there are no millionaires: no Dick Blumenthals or Rosa DeLauros, both of whom are millionaire Democrats coasting along in seemingly impregnable Democratic districts.
According to the myth peddled by Democrats, businesses in the United States prop up Republicans with generous campaign contributions – but rarely Democrats. Nothing could be further from the truth. The late Senator Ted Kennedy could depend on regular infusions of campaign cash from captains of industries in the United States: Ditto former Senator Chris Dodd, showered for years by financial groups that he was supposed to be regulating as chairman of the banking committee. Mr. Dodd has now cashed in on his many years of experience in the U.S. Senate by becoming a lobbyist for Tinsletown. Mr. Dodd’s Hollywood adventure began only a few weeks after he had shaken the dust of the U.S. Congress from his feet, about a month after he had told his supporters on the left that he would never, ever become a lobbyist.
Money continues to be the Mother’s Milk of politics, and mouths are everywhere. So long as crony capitalists feel that they can be assisted in cornering markets by politicians, they will continue to buy politicians. In the last Republican-Democratic campaign in the 1st District, the incumbent Democrat, John Larson raised $2.7 million, much of it from financial interests; his Republican competitor, Ann Brickley, managed to get along with a slender $250,000.
If one may be so bold as to measure the wealth of a politician by the contributions he receives, we should conclude that Mr. Larson was the millionaire, while poor Mrs. Brickley was in financial campaign rags. Mr. Larson was in this race – and indeed, in all his races – the Mr. Bumble of the Democratic workhouse, while Mrs. Brickley was Oliver Twist, begging for more workhouse gruel. It’s wonderful – to me anyway – how desperately people who have been writing about politics in the state most of their adult lives cling to these myths, the work, for the most part, of ideological ad-men and Orwellian spin-masters.
In late September, as FBI agents were carting boxes of information from Solyndra -- the environmentally friendly, technologically advanced, politically correct, and now bankrupt company into which the Obama administration had poured its heart, soul and taxpayer money – administration officials, including the president, were avoiding comment. We may wonder why. The media, so far, has focused its attention on the vast sum of money “invested” in the now bankrupted solar panel producer. That focus is not misplaced. But we ought not to forget several other important points.
The e-mails now pouring out of the scandal suggest that the whole business was an improperly vetted photo opportunity for the president and vice president. Any kid selling lemonade from a lemonade stand might have told any one of the financiers in the Obama administration now busing themselves with ending a seemingly intractable recession that when a product’s cost of production exceeds the amount of money one expects to receive through sales, the company is incurring a risk of bankruptcy. In an S-1 filing a year ago, Solyndra reported its average sales price was over $3.20 a watt, about 65% more than leading crystalline-silicon PV manufacturers. Its cost of manufacturing was an astounding $6 a watt. These figures are irreconcilable.
Solyndra was not one of those companies in the United States deemed too big to fail, and so it failed – which means, a bankruptcy judge will be assessing the company’s assets and selling them off, parceling out a portion of redeemed value to the company’s investors. In Solyndra’s case, about a half billion dollars of tax money was frontloaded into the collapse. The Solyndra loan was part of a $38.6 billion program to aid green energy that the Washington Post says has created exactly 3,545 jobs, about $10,888,575 in loans per job – all vanished. Perhaps, with the FBI on the case, someone will go to jail. In the case of Fannie Mae and Freddie Mac, the tax money was both frontloaded and backloaded; the company is now bigger than ever, and no one went to jail.
The government financing of select companies it chooses as prospective winners in a competitive market place is wrong for multiple reasons. Government intervention in decisions generally made by consumers distorts demand signals and creates moral hazards for investors. Government is notoriously inept at choosing winners; increases in the price of stamps have not prevented the U.S. Post Office from painful consolidations. But the most objectionable feature of Crony capitalism is this: It funnels profits to private investors and shifts debts to taxpayers.
Somehow, something in my bones tells me that millionaire Democrats in safe districts like Mr. Larson, or private business- punishing former attorneys general like Senator Dick Blumenthal or tax the millionaire proponents, who continually deny that our country and state are beset with a spending rather than a revenue problem, do not pass their days worrying about such things. But the people of Connecticut should – because we are living in a time in which our problems will kick in our front doors if we ignore them. They are coming to sleep with us in our beds; they will be sitting in a chair next to us at our work sites. They will be sitting in the passenger seats of our cars.
We no longer have the comfort of ignoring them.
The chief difference between Republicans and Democrats in the coming campaign will be this: Republicans are interested in increasing prosperity through a series of painful but necessary reforms. They want small, efficient and responsive federal, state and municipal governments and an expanding economy. Democrats want to expand the range of influence the government has over our lives. One party would shrink the private sphere and expand the public sphere; the other would do the opposite. We must never forget that in democracies and republics the citizenry gets the kind of government it votes for. Having crossed the bar to the 21st century, we should wonder and worry whether the challenge thrown down by Ben Franklin at the founding of the republic will be properly answered. When asked by a woman what kind of government the founders at the close of the Constitutional Convention of 1787 had given to the country, Franklin said, “A republic madam – if you can keep it.”
We are under a moral obligation to those who came before us and to those who will succeed us – to keep it.
A: It’s good question. I put up a blog recently that was a review of a Chris Shays interview with Dennis House on “Face the State.”
Mr. House asked Mr. Shays whether he thought Connecticut had drifted so far to the left as to make it impossible for Republicans to win a seat in the U.S. Congress. Mr. Shays is running as a Republican for Senator Joe Lieberman’s seat. Mr. Shays said “Absolutely,” he thought the state had moved very far to the left.
The blog produced a response from Jon Kantrowitz, a liberal commentator who is himself an articulate unabashed progressive. “By the way,” Mr. Kantrowitz wrote, “it's true - the state has gone too far to the left to elect a Republican - and thank goodness for that!”
There are some few Republicans about who are not as thankful as Mr. Kantrowitz, though it is difficult to disagree with the major premise of his proposition -- namely that the state has moved very far to the left. The entire U.S. congressional delegation is Democratic. The state’s safer districts are occupied by unapologetic progressives like Mr. Kantrowitz, now moving up within the national Democratic caucus food chain. U.S. Reps Rosa DeLauro and John Larson are both pull-no-punches progressives. In what used to be called swing districts, congressional Democrats are a bit more cautious. In the General Assembly, state Democrats had until just recently a veto proof margin in both houses. And during the last election cycle, the Democrats captured the gubernatorial office, previously held by moderate Republicans and one ex-maverick Republican, former senator and governor Lowell Weicker, the father of Connecticut’s income tax. In addition, all the state’s constitutional officers are Democratic. So, I think it is safe to agree, along with Mr. Kantrowitz, that Democrats pretty much own the whole political kit and caboodle, while disagreeing with him sharply that we ought to thank God for this turn of events. While God may not be a Republican, one likes to believe He is no political plutocrat.
Q: Where does that leave Republicans?
A: In a resistance posture. The point of a party surely is to offer resistance to the reigning power. History has not dealt kindly with parties that have cooperated with the prevailing regime. The one party state, like a rolling stone, gathers no moss, but the single party state is an invitation to corruption; which is why, come to think of it, God created the two party system.
Q: Why haven’t Republicans been able to offer effective resistance to what you have characterized repeatedly in your Connecticut Commentary as Connecticut’s one party state?
A: Because Republicans have too often cooperated with the prevailing regime. You cannot cooperate without being coopted. It is important to understand that Mr. Kantrowitz is partly right. The Republican resistance has been washed away in Connecticut. Here and there, one finds brave blades of grass shooting through the concrete. During the last elections, two Republican conservatives – state senators Len Suzio and Joe Markley -- won office, both of whom may be considered part of a resistance vanguard. When Bill Buckley, who used to live in Stamford, started National Review, he proclaimed that the mission of the magazine would be to stand athwart history yelling “Stop!” Rolling stones don’t like that sort of thing.
I’ll give an example. Len Suzio, a conservative Republican who won his seat in a special election, has lately come out against deal made between Mr. Malloy and Jackson Laboratory. The Laboratory is to be attached to the UConn Health Center (UCHC), a business black hole that has absorbed millions of dollars in tax bailouts. Shortly after his budget passed muster with SEBAC, Mr. Malloy handsomely rewarded UCHC by giving it about a billion dollars.
The laboratory, apparently a successful non-profit enterprise that will itself generate no tax revenue, will absorb tax money from both federal and state grants. Mr. Suzio’s objection to the deal was forceful: “This is a lose-lose situation for Connecticut taxpayers. All the risk money is coming from the state of Connecticut. ... We don't get a nickel of interest in the technology that they develop. That is stupid."
Senior advisor and chief spokesman for the governor Roy Occhiogrosso responded that the project was a solid investment in personalized medicine and bioscience. This was a smart rather than a dumb risk: “There's a difference between taking a smart risk and a dumb risk. This is a smart risk. Taking a risk that 10 football games a year will turn the economy around is not that smart. The next thing you know, Senator Suzio will go on the radio to try and convince the people of Connecticut of his view on the flatness of the world. No matter how he tries to spin it, this is the best thing to happen to Connecticut in a long, long time.''
Mr. Suzio did not mention the “B” word on this occasion: Connecticut is broke, broke, broke. But the important political point is this: Even if Mr. Suzio is right, it will not matter – because Mr. Malloy has the votes in the General Assembly to do whatever he likes. If Mr. Malloy wanted to build a Ziggerat in Farmington – which, by the way, would produce a momentary spurt of jobs – he could do it, because the Republican resistance has no battalions. Napoleon’s quip to a pope who offered him a mild resistance was to ask: How many battalions has the pope? Answer: Not enough to resist the prevailing power of the day.
And THAT is the problem for Connecticut.
Mr. Malloy passed his budget through the General Assembly without being put to the inconvenience of discussing the matter with leading Republicans who, unlike union representatives, were wholly shut out of the process. The governor’s budget figures were such as to produce what I have called in the blog and in columns an artificial surplus of about a billion dollars. Real surpluses are produced when taxes are not increased but the state never-the-less realizes an increase in revenue owing mostly to increased business activity. Mr. Malloy’s artificial surplus is now flowing into a series of crony capitalist projects. Mr. Suzio is right about the UConn Health Center: It’s a budget busting black hole the state – which is broke, broke, broke -- can little afford to support. Attaching a non-profit, non-tax generating research center to the UCHC does not make the combination more profitable. This may be the first time in Connecticut’s history that a serviceable neck has been draped around an albatross.
Q: So, What’s wrong with crony capitalism?
A: Glad you asked. Anyone who is a proponent of the free market must be an anti-monopolist. I am here using the word “monopoly” to indicate existing monopolies, many of them stamped “Made in Washington D.C.” – Fannie Mae and Freddie Mac come to mind -- as well as political systems that tend towards monopoly. This is why the free marketer must be an anti-monopolist: Monopolies, which are cornered markets, frustrate competition, and competition is the economic virtue par excellence of a truly liberal society.
In the modern period, monopolies have been facilitated by governments. In a truly free market that fosters competition, cornered markets are less possible. It is when companies are given an opportunity to use government as a tool to gain an advantage over their natural competitors that monopolies flourish.
The process that produces state sponsored monopolies is called “crony capitalism.” The crony capitalist and his facilitators tilt the playing field in favor of large monopolistic enterprises by using presidents, governors and legislators to gain an advantage denied them in a free and fair competition.
This unfair advantage has its analogue in the sports arena. Americans, who like to see the best man or team rise to the top in a fair competition, would react disapprovingly, I like to think, to any “fixed” competition in which the presumed impartial judgment of a referee has been purchased by one side or another; and yet this is precisely what happens when a single political party has captured control of a congress or an executive department or a city or a state or a town.
There are signs all about us that singe party states and governments are infested with corruption. Alert politicians and – as I like to think -- wide awake journalist will be able to read the signs of the times. There is no reason to suppose that reporters, editors and commentators in the legacy media are comfortable with monopolies of any kind, political or economic.
There is an old biblical saying: By their fruits shall ye know them. We are familiar with the bitter fruits of crony capitalism. What applies to business monopolies applies as well to political monopolies.
The government of China, for example, is as much a political monopoly as – just to reach for an example – the government of, say, Bridgeport Connecticut. Of course, the consequences of corruption in China are more severe because there are in that country no mediating democratic institutions, such as a critical press, to soften the iron fist of an unquestioned authoritative regime. The arc of monopolistic political regimes bends towards fascism; they corrupt absolutely because they needn’t worry that their political customers will be able effectively to demand a better service or a better product. Within the one party state, any hope of political competition has been effectively abolished. Political monopolies are nursery beds of corruption, because they permit governments to rent to favored groups instruments of government power that ought to be used for the benefit of all.
The legislature is overwhelmingly Democratic. And it may seem to some who are paying attention that the remarks made several times by Governor Dannel Malloy to unions to the effect that he will never forsake them – “Oh, my darling” -- indicate that unions need not tailor their interests to the general interest, so long as both the governor and the General Assembly have their back. Indeed, it seems that unions were not made for the state; the state, rather, was made for unions. The very last party to sign off on Connecticut’s budget was not the legislature, the preeminent organ of government in democracies and republics, but SEBAC, a coalition of state unions that one commentator has called Connecticut’s fourth branch of government.
So then, we have in Connecticut a Democratic governor, a General Assembly dominated by Democrats – one of whom, Speaker of the House Chris Donovan, himself unusually friendly to union interests, is running for the U.S. House in the 5th District – a media blithely undisturbed by the prospect of a one party state, and a U.S. congressional delegation composed entirely of Democrats.
That is a recipe for, among other things, crony capitalism and its attendant corruptions.
In connection with politicians – the crony capitalist makers – the age old question arises: Qui Bono? Or to put it in the modern idiom: What’s in it for them?
Lots. They are given an edge on their competitors, usually smaller fry, and they have arranged with the politicians to share sacrifices: Taxpayers will share in the paying of their debts when their companies fail; and they will take the lion’s share of profits. Given these arrangements, is it any wonder that the public has soured on businesses too big to fail and those politicians who have contributed their mites to the creation of monopolistic enterprises?
I’ve been amused by the notion that Republicans have a lock on millionaires. Within the Democratic Party, we are invited to think, there are no millionaires: no Dick Blumenthals or Rosa DeLauros, both of whom are millionaire Democrats coasting along in seemingly impregnable Democratic districts.
According to the myth peddled by Democrats, businesses in the United States prop up Republicans with generous campaign contributions – but rarely Democrats. Nothing could be further from the truth. The late Senator Ted Kennedy could depend on regular infusions of campaign cash from captains of industries in the United States: Ditto former Senator Chris Dodd, showered for years by financial groups that he was supposed to be regulating as chairman of the banking committee. Mr. Dodd has now cashed in on his many years of experience in the U.S. Senate by becoming a lobbyist for Tinsletown. Mr. Dodd’s Hollywood adventure began only a few weeks after he had shaken the dust of the U.S. Congress from his feet, about a month after he had told his supporters on the left that he would never, ever become a lobbyist.
Money continues to be the Mother’s Milk of politics, and mouths are everywhere. So long as crony capitalists feel that they can be assisted in cornering markets by politicians, they will continue to buy politicians. In the last Republican-Democratic campaign in the 1st District, the incumbent Democrat, John Larson raised $2.7 million, much of it from financial interests; his Republican competitor, Ann Brickley, managed to get along with a slender $250,000.
If one may be so bold as to measure the wealth of a politician by the contributions he receives, we should conclude that Mr. Larson was the millionaire, while poor Mrs. Brickley was in financial campaign rags. Mr. Larson was in this race – and indeed, in all his races – the Mr. Bumble of the Democratic workhouse, while Mrs. Brickley was Oliver Twist, begging for more workhouse gruel. It’s wonderful – to me anyway – how desperately people who have been writing about politics in the state most of their adult lives cling to these myths, the work, for the most part, of ideological ad-men and Orwellian spin-masters.
In late September, as FBI agents were carting boxes of information from Solyndra -- the environmentally friendly, technologically advanced, politically correct, and now bankrupt company into which the Obama administration had poured its heart, soul and taxpayer money – administration officials, including the president, were avoiding comment. We may wonder why. The media, so far, has focused its attention on the vast sum of money “invested” in the now bankrupted solar panel producer. That focus is not misplaced. But we ought not to forget several other important points.
The e-mails now pouring out of the scandal suggest that the whole business was an improperly vetted photo opportunity for the president and vice president. Any kid selling lemonade from a lemonade stand might have told any one of the financiers in the Obama administration now busing themselves with ending a seemingly intractable recession that when a product’s cost of production exceeds the amount of money one expects to receive through sales, the company is incurring a risk of bankruptcy. In an S-1 filing a year ago, Solyndra reported its average sales price was over $3.20 a watt, about 65% more than leading crystalline-silicon PV manufacturers. Its cost of manufacturing was an astounding $6 a watt. These figures are irreconcilable.
Solyndra was not one of those companies in the United States deemed too big to fail, and so it failed – which means, a bankruptcy judge will be assessing the company’s assets and selling them off, parceling out a portion of redeemed value to the company’s investors. In Solyndra’s case, about a half billion dollars of tax money was frontloaded into the collapse. The Solyndra loan was part of a $38.6 billion program to aid green energy that the Washington Post says has created exactly 3,545 jobs, about $10,888,575 in loans per job – all vanished. Perhaps, with the FBI on the case, someone will go to jail. In the case of Fannie Mae and Freddie Mac, the tax money was both frontloaded and backloaded; the company is now bigger than ever, and no one went to jail.
The government financing of select companies it chooses as prospective winners in a competitive market place is wrong for multiple reasons. Government intervention in decisions generally made by consumers distorts demand signals and creates moral hazards for investors. Government is notoriously inept at choosing winners; increases in the price of stamps have not prevented the U.S. Post Office from painful consolidations. But the most objectionable feature of Crony capitalism is this: It funnels profits to private investors and shifts debts to taxpayers.
Somehow, something in my bones tells me that millionaire Democrats in safe districts like Mr. Larson, or private business- punishing former attorneys general like Senator Dick Blumenthal or tax the millionaire proponents, who continually deny that our country and state are beset with a spending rather than a revenue problem, do not pass their days worrying about such things. But the people of Connecticut should – because we are living in a time in which our problems will kick in our front doors if we ignore them. They are coming to sleep with us in our beds; they will be sitting in a chair next to us at our work sites. They will be sitting in the passenger seats of our cars.
We no longer have the comfort of ignoring them.
The chief difference between Republicans and Democrats in the coming campaign will be this: Republicans are interested in increasing prosperity through a series of painful but necessary reforms. They want small, efficient and responsive federal, state and municipal governments and an expanding economy. Democrats want to expand the range of influence the government has over our lives. One party would shrink the private sphere and expand the public sphere; the other would do the opposite. We must never forget that in democracies and republics the citizenry gets the kind of government it votes for. Having crossed the bar to the 21st century, we should wonder and worry whether the challenge thrown down by Ben Franklin at the founding of the republic will be properly answered. When asked by a woman what kind of government the founders at the close of the Constitutional Convention of 1787 had given to the country, Franklin said, “A republic madam – if you can keep it.”
We are under a moral obligation to those who came before us and to those who will succeed us – to keep it.
Saturday, August 27, 2011
The UConn Health Center Tar Patch
The University of Connecticut Health Center (UCHC) has for many years been Connecticut’s problem prodigal child.
The Democratic dominated General Assembly approved Governor Dannel Malloy’s then unbalanced budget the first week of May. And although it took two and a half months to finalize a budget that some still consider out of balance, the Malloy administration was never-the-less able to find nearly $1 billion to invest in a UCHC building program, not the first time the state has thrown money into the black hole in Farmington.
This year’s tax and spending budget allowed the administration to reap an artificial surplus of about $1 billion. Call it a make work for unions slush fund or a political hedge fund, the extra billion may be used much in the way that Tammany Hall of blessed memory used “walking around money” to purchase affection and votes.
Agents of the Malloy administration dickered for months with SEBAC, a coalition of unions authorized to negotiate contracts with the state, in an attempt to realize temporary savings. A goodly portion of the savings will be temporary, because the two year wage freeze imposed on unions will give rise at its terminus to wage increases of three percent for the next three years, after which the governor will find himself in much the same union contract negotiation tar patch from which he has just now extricated himself, particularly if he feels the need to cut spending further as the state and country lopes in the direction of a double dip recession.
Mr. Malloy’s final budget plan let out the back door a series of pestilential problems that soon will be begging admittance at the front door.
All the indicators suggest that Connecticut’s debt will grow. The nation may be in even worse shape. The national government is spending nearly twice as much in excess of its revenue: Projected expenditure in 2011 is 3.77 trillion, while revenue is 2.15 trillion. The interest paid on national debt to creditors, mostly China, is enough to fund that nation’s entire military budget.
Here in Connecticut, debt cannot be diminished through tax increases paid out in expenditures and not applied to liquidating the state’s permanent debt. The nearly $1 billion artificial surplus built into the budget has given the Malloy administration the opportunity to engage in a much heralded jobs program. Much of the tax overcharge – that is what a surplus is – will be used to justify boondoggles like the UConn Health Center and the costly and destructive $573 million, $952 per inch busway make-work project from New Britain to Hartford.
The state also is laying itself open to bribery by Big Business. The money supplied by the Malloy administration to UBS and other Connecticut industries too large to be permitted to migrate to other states represents dollars taken from Main Street to support Wall Street. We may wait in vain for Republicans to characterize these giveaways as welfare for Big Business and Wall Street. One might ordinarily expect progressive Democrats to raise a howl about all this, but Governor Jodi Rell has left the building, and Mr. Malloy is considerably more progressive than “Snow White,” a name applied derisively to the governor’s presumed ineffective predecessor.
The UCHC has been given money to burn: $338 million in previously authorized bonds, $254 million in new bonding and $69 million from the health center. And even now, the bonfire crackles. Several months ago, the center was awarded what should have been a contract worth almost $1 billion. On a memorandum of understanding, rather than a solid contract, the center was selected to perform health services for the state’s prison system. Had the job been put out to bid, the medical work might have been done at a lesser cost. But the Malloy administration, as well as union facilitators in the General Assembly, is averse to privatization.
The latest scandal involves a union featherbedding arrangement facilitated by Karen Duffy Wallace, director of labor relations at the UConn Health Center, who sent to personnel at York an e-mail specifying that more cost effective per-diem nurses "should not exceed 2 shift[s] per week averaged over a 3 month period. This is so they do not replace a permanent bargaining unit employee and is something the Union traditionally wants. We get questioned periodically by 1199 when we are using per diems too much as it takes away from permanent bargaining unit members." Ms. Wallace’s salary, according to the Transparency.CT.Gov web site, was listed at $149,044 for the 2009-10 fiscal year, perhaps too much for someone who so readily falls into lockstep with union officials.
Republican leaders in the General Assembly – and, astoundingly, state Senator Edith Prague, considered friendly to union interests – have called for a congressional investigation.
The state Senate, with Mr. Malloy’s declared approval, earlier had passed a bill that would have cut costs considerably by excluding acquired overtime in pension calculations. Alas, “labor's trusted friend and lackey, Speaker Chris Donovan, refused to take up the bill in the House,” accordingto a Hartford Courant editorial, after which Mr. Malloy’s support of the bill collapsed. The new administration-labor agreement, Mr. Malloy now says, has supplanted the proposed legislative fix because pensions under the new agreement will be based on the last five years of earnings rather than, as before, on the top three years. That leaves, the paper noted, “45,000 employees whose pensions are calculated under the old system.”
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