The road taken by Governor Dannel Malloy in providing specific businesses with disappearing tax breaks and other temporary business incentives is not the road less taken. Most recently, President Barack Obama provided Solyndra with millions in tax dollars because Mr. Obama wished to encourage the production of green energy. The problem was that the product made by Solyndra was underpriced – the sale price of Solyndra’s solar panels was less than the cost of production -- and it is only a slight exaggeration to say that company bigwigs, after successfully pressing the administration hard multiple times for tax subsidies, took the money and ran.
The Solyndra drama is still unfolding. Called to testify before a congressional committee, the top dogs at the bankrupt company took the fifth, and not because they feared they might in their testimony betray their company’s trade secrets. The captains of this industry were trying to avoid jail time.
The practice of enticing a company to produce a product by showering it with temporary tax reductions does not always lead ineluctably to jail house doors. Not all executives who accept tax dollars from presidents and governors are crooks and flimflam artists. Some are businessmen loathed to look a gift horse in the mouth.
Targeted tax credits, low interest loans and the like cannot be a magnet for all companies. If Mr. Malloy were to give a tax credit to every company in Connecticut, as well as companies considering moving into the state, his tax credits would be tax reductions; and tax reductions, most especially permanent tax reductions, would both attract businesses to the state and serve as a retaining wall for those businesses in Connecticut seeking a kinder and gentler entrepreneurial environment elsewhere.
Permanent tax reductions, however, are the bane of heroic politicians. Tax reductions produce red ink in the short run, the only run most politicians on the make are interested in. And, worst of all, the way to black, after a politician has cut taxes, requires painful spending cuts. Once cut, a tax is difficult to resurrect. Tax credits and other devises purporting to encourage business growth are more easily revoked. When the state of Connecticut decided during the administration of former Governor Lowell Weicker to institute an income tax two decades ago, it set its foot irrevocably on a spending path it has trodden ever since. Off in the hinterland, other companies, observing the drift of the state over many years, maintained a discreet distance. Within the state, companies that could move to greener pastures elsewhere did so, and prosperity has been frozen to the spot for twenty years.
Like Mr. Weicker, Mr. Malloy’s first act on becoming governor was to institute the largest tax increase in Connecticut’s history, more wounding than Mr. Weicker’s income tax because Mr. Malloy’s tax increases were added to Mr. Weicker’s, at the time the largest tax increase in Connecticut’s history. Mr. Malloy’s multiple tax increases considerably broadened the tax base.
Signing his jobs program recently in the company of Republicans leaders who previously had been ejected from the room while Mr. Malloy negotiated with unions, the governor boasted, "How often to you see this happening in Washington? Putting people back to work and making Connecticut more business-friendly aren't goals owned by any one party and they aren't owned by any one branch of government."
Goals are all fine and good, but there are some Republicans who continue to insist that Mr. Malloy’s policies will not move Connecticut toward a desirable and effective goal line. Much of the cost savings Mr. Malloy threatened to apply to unions in his Plan B budget never made it out of the gate. Some applied cost reductions were rescinded after union members were bludgeoned by the leaders of SEBAC to accept a slightly revised Plan A, and the cost savings option most welcomed by Republican leaders in Mr. Malloy’s jobs creation package is the formation of a study group to examine ways in which the state may save money – another one of those.
Mr. Malloy’s tax increases are real, permanent and deep, while much of his cost savings measures are theoretical, temporary and highly attenuated.
A business writer for a state-wide paper who cannot be accused of conservative rhetorical thuggery described Mr. Malloy’s jobs creation program this way: “On Wednesday night the state legislature committed a walloping $626 million on basically the kitchen sink of jobs programs. If it might work, it's in there: farm restoration, outright corporate greenmail, loans for dry cleaners, cash for manufacturers to train workers, a massive boost for tech investment, bribes for companies to hire unemployed people, airport development zones, expanded film tax credits and much, much more.”
The chief problem with top down, government inspired stimulus programs aimed at creating jobs for businesses is “that we can't create demand for their goods and services. And that, more than money, more than trained workers, more than slashing red tape, is what they need.”
Got that right.
Saturday, October 29, 2011
The Occupy Everything Front: Tea Party vs. OWS
From the Daily Cardinal, a University of Wisconsin paper:
Hardy protestors in Providence Rhode Island preparing to confront an early winter storm look to George Washington for inspiration, the Associated Press reports:
And in New York, the epicenter of the Occupy Wall Street (OWS) movement, the Daily News reports:
A millionaire siting had been reported by the San Francisco Chronicle at the Occupy Oakland site:
While anecdotal comparisons have been made between the Tea Party movement and the anti-capitalist OWS, no reports on the Tea party movement have featured frequent fights, pimping opportunities, masturbation or millionaire anti-capitalist Palm D’Or recipient documentarians. Tea Party folk do not erect tents or stroke erections in public. It is always well to note points of difference when one makes comparisons.
“A neighboring hotel's staff alleged voiced concerns about having to recently escort hotel employees to and from bus stops late at night due to inappropriate behavior, such as public masturbation, from street protesters.In Manchester, New Hampshire, the Union Leader reports:
“In addition, officials agreed further occupation should not be allowed to continue without restrooms on site to avoid further public health violations.
"’You can't be affecting the safety and health of other people around you,’ Madison Fire Prevention Officer Jerry McMullen said. ‘With the public health violations and the complaints I've heard, I don't believe it meets the spirit of the ordinance to a street use permit.’"
“A city woman is accused of pimping a 16-year-old girl she met in Victory Park during the Occupy NH demonstrations.”
Hardy protestors in Providence Rhode Island preparing to confront an early winter storm look to George Washington for inspiration, the Associated Press reports:
"’Everyone's been calling it our Valley Forge moment,’ said Michael McCarthy, a former Navy medic in Providence. ‘Everybody thought that George Washington couldn't possibly survive in the Northeast.’"However, winters are neither kinder nor gentler than most police:
“But the dangers of staying outdoors in some of the country's harsher climes are already becoming apparent: In Denver, two protesters were hospitalized with hypothermia this week during a storm that brought several inches of snow.”
And in New York, the epicenter of the Occupy Wall Street (OWS) movement, the Daily News reports:
“Fights are erupting among Occupy Wall Street protesters, so much so that one corner of Zuccotti Park has emerged where protesters say they won't go for fear of their safety.”
A millionaire siting had been reported by the San Francisco Chronicle at the Occupy Oakland site:
“As Mayor Jean Quan finished fielding reporters’ questions Friday afternoon at City Hall about the clash between police and protesters earlier this week, she was suddenly drowned out by cheering coming from Frank Ogawa Plaza for Occupy Oakland’s newest celebrity guest: documentarian and political activist Michael Moore.”
While anecdotal comparisons have been made between the Tea Party movement and the anti-capitalist OWS, no reports on the Tea party movement have featured frequent fights, pimping opportunities, masturbation or millionaire anti-capitalist Palm D’Or recipient documentarians. Tea Party folk do not erect tents or stroke erections in public. It is always well to note points of difference when one makes comparisons.
The Occupy Everything Front: Tea Party vs. OWS
From the Daily Cardinal, a University of Wisconsin paper:
Hardy protestors in Providence Rhode Island preparing to confront an early winter storm look to George Washington for inspiration, the Associated Press reports:
And in New York, the epicenter of the Occupy Wall Street (OWS) movement, the Daily News reports:
A millionaire siting had been reported by the San Francisco Chronicle at the Occupy Oakland site:
While anecdotal comparisons have been made between the Tea Party movement and the anti-capitalist OWS, no reports on the Tea party movement thus far have featured frequent fights, pimping opportunities, masturbation or millionaire anti-capitalist Palm D’Or recipient documentarians. Tea Party folk do not erect tents or stroke erections. It is always well to note points of difference when one makes comparisons.
“A neighboring hotel's staff alleged voiced concerns about having to recently escort hotel employees to and from bus stops late at night due to inappropriate behavior, such as public masturbation, from street protesters.In Manchester, New Hampshire, the Union Leader reports:
“In addition, officials agreed further occupation should not be allowed to continue without restrooms on site to avoid further public health violations.
"’You can't be affecting the safety and health of other people around you,’ Madison Fire Prevention Officer Jerry McMullen said. ‘With the public health violations and the complaints I've heard, I don't believe it meets the spirit of the ordinance to a street use permit.’"
“A city woman is accused of pimping a 16-year-old girl she met in Victory Park during the Occupy NH demonstrations.”
Hardy protestors in Providence Rhode Island preparing to confront an early winter storm look to George Washington for inspiration, the Associated Press reports:
"’Everyone's been calling it our Valley Forge moment,’ said Michael McCarthy, a former Navy medic in Providence. ‘Everybody thought that George Washington couldn't possibly survive in the Northeast.’"However, winters are neither kinder nor gentler than most police:
“But the dangers of staying outdoors in some of the country's harsher climes are already becoming apparent: In Denver, two protesters were hospitalized with hypothermia this week during a storm that brought several inches of snow.”
And in New York, the epicenter of the Occupy Wall Street (OWS) movement, the Daily News reports:
“Fights are erupting among Occupy Wall Street protesters, so much so that one corner of Zuccotti Park has emerged where protesters say they won't go for fear of their safety.”
A millionaire siting had been reported by the San Francisco Chronicle at the Occupy Oakland site:
“As Mayor Jean Quan finished fielding reporters’ questions Friday afternoon at City Hall about the clash between police and protesters earlier this week, she was suddenly drowned out by cheering coming from Frank Ogawa Plaza for Occupy Oakland’s newest celebrity guest: documentarian and political activist Michael Moore.”
While anecdotal comparisons have been made between the Tea Party movement and the anti-capitalist OWS, no reports on the Tea party movement thus far have featured frequent fights, pimping opportunities, masturbation or millionaire anti-capitalist Palm D’Or recipient documentarians. Tea Party folk do not erect tents or stroke erections. It is always well to note points of difference when one makes comparisons.
Wednesday, October 26, 2011
Another Pig, Another Poke
Duane Billington, a retired engineering technician and civic activist from Naples, “fought for 18 months against Jackson Laboratory's plan to expand in Florida,” according to a story in the Hartford Courant.”
Ultimately Mr. Billington was successful. Jackson Laboratory pulled up their negotiating stakes in Florida.
Governor Dannel Malloy’s chief of staff, Roy Occhiogrosso, read about the failed attempt to pitch the deal to Florida in a newspaper, evidentially shared the information with his boss, and a contingent from Connecticut was sent to Bar Harbor Maine to negotiate a deal with Jackson Laboratory administrators. The Courant story does not mention the names of members of the Connecticut contingent sent to negotiate with Jackson. The deal apparently was consummated and a letter of intent was signed between the parties.
When two members of the General Assembly, Senator Len Suzio and Senate Republican leader Leonard Fasano, asked to see the memorandum of understanding between the state and Jackson, they were sternly rebuffed. Malloy officials asserted the documents contained trade secrets that could not be disclosed to members of the General Assembly who would be asked to provide funding for the deal. The same claim was made in Florida, an overreach that some say soured the state on the deal.
Suzio has scoffed at the transparent dodge.
“I've got a business guy here who fell off his chair laughing,'' Suzio said of a colleague's reaction about trade secrets. “Why would there be any confidential information in a letter of intent? We're not asking for the disclosure of secret formulas. It's laughable.''
Many of Suzio’s questions were bridges too far; Mr. Malloy’s aggressive administration very early acquired the habit of pushing things through with minor participation on the part of the people’s representatives. Republicans in the General Assembly were simply pushed out of the way during budget negotiations.
It is becoming increasingly apparent that the Malloy administration has to some extent been trying to sell the Democratic dominated General Assembly a pig in a poke. The Malloy-Jackson deal, according to the Courant story, “is scheduled to come to a vote Wednesday in the House of Representatives and the Senate. Malloy is calling for the state to borrow $291 million to construct a new building on 17 acres of state-owned land at the University of Connecticut Health Center campus in Farmington and provide $99 million in research money for Jackson. The nonprofit institute is pledging to create 300 jobs within 10 years and 600 jobs within 20 years, making it slightly larger than the Florida plan in jobs and state subsidies.”
Mr. Billington certainly is not shy of reporters.
"They couldn't find a home here in Collier County or Sarasota because they don't have a product to deliver,'' Mr. Billington told a reporter. “Their business is to produce genetically altered mice for other scientists to study and use in experiments. This thing they're going into is a totally new deal for them. They have no expertise. It's an exercise in venture capitalism. It could work, and it might not.''
Jackson Laboratory has had success in genetically altering mice sold to prospective buyers in other research facilities. The Connecticut operation would break new and untested ground for Jackson, which now is seeking to move into an entirely different field, that of genomic medicine, the study of genes and genetic interactions that, according to a 26-page brochure that was distributed to Connecticut legislators, are "essential to creating new medicines and treatments for some of humankind's worst diseases and conditions.''
Mr. Billington told the Courant reporter, “We're glad to be rid of them. I feel bad for the state of Connecticut if you all have politicians who are swallowing the Jackson line hook, line and sinker.”
This is the second time the Malloy administration has asked the Democratic dominated General Assembly to swallow an unpalatable deal. Asked to vote on a budget the details of which had not been finalized in negotiations between Malloy administration officials and SEBAC, a union coalition authorized to negotiate contracts, Democratic leaders in the General Assembly persuaded their caucus to vote in favor of an unfinished budget. The leaders of the Democratic caucus, President of the Senate Don Williams and Speaker of the House Chris Donovan, apparently like the taste of hooks and lines and sinkers.
Mr. Donovan, SEBAC’s best friend in the legislature, is running for the U .S. Congress in Connecticut’s 5th District.
Since the Malloy administration enjoys an insuperable majority in the General Assembly, it does not need Republican votes to pass measures the details of which have not been adequately ventilated in public. Calls on the part of Republicans to put off the vote Wednesday until the pig in the poke – minus the trade secrets, which always may be redacted in publically disclosed documents – has been put on public view and debated fully by the General Assembly will no doubt be ignored by the Malloy administration. And the deal will go down on Wednesday, possibly with the concurrence of some Republicans in the General Assembly who have acquired a taste for hooks, lines and sinkers.
All the “buts” will not arrive until much later.
Mike Hyde, Jackson’s Vice President and fund raiser, no longer concerns himself with Mr. Billington's criticisms. "I'm delighted to be in Connecticut,” he has said. “It's a great state. I really don't have any hard feelings about what happened in Florida. This is here. This is now.”
Florida rejected Jackson’s best offer because the state is flat on its back and broke, unlike Connecticut. For now, at least, the state is flush in quickly disappearing funds owing mostly to the largest tax increase in its history imposed upon it by its “shared sacrifice” governor. This is here. This is now.
And the future? Let the future eat cake.
Ultimately Mr. Billington was successful. Jackson Laboratory pulled up their negotiating stakes in Florida.
Governor Dannel Malloy’s chief of staff, Roy Occhiogrosso, read about the failed attempt to pitch the deal to Florida in a newspaper, evidentially shared the information with his boss, and a contingent from Connecticut was sent to Bar Harbor Maine to negotiate a deal with Jackson Laboratory administrators. The Courant story does not mention the names of members of the Connecticut contingent sent to negotiate with Jackson. The deal apparently was consummated and a letter of intent was signed between the parties.
When two members of the General Assembly, Senator Len Suzio and Senate Republican leader Leonard Fasano, asked to see the memorandum of understanding between the state and Jackson, they were sternly rebuffed. Malloy officials asserted the documents contained trade secrets that could not be disclosed to members of the General Assembly who would be asked to provide funding for the deal. The same claim was made in Florida, an overreach that some say soured the state on the deal.
Suzio has scoffed at the transparent dodge.
“I've got a business guy here who fell off his chair laughing,'' Suzio said of a colleague's reaction about trade secrets. “Why would there be any confidential information in a letter of intent? We're not asking for the disclosure of secret formulas. It's laughable.''
Many of Suzio’s questions were bridges too far; Mr. Malloy’s aggressive administration very early acquired the habit of pushing things through with minor participation on the part of the people’s representatives. Republicans in the General Assembly were simply pushed out of the way during budget negotiations.
It is becoming increasingly apparent that the Malloy administration has to some extent been trying to sell the Democratic dominated General Assembly a pig in a poke. The Malloy-Jackson deal, according to the Courant story, “is scheduled to come to a vote Wednesday in the House of Representatives and the Senate. Malloy is calling for the state to borrow $291 million to construct a new building on 17 acres of state-owned land at the University of Connecticut Health Center campus in Farmington and provide $99 million in research money for Jackson. The nonprofit institute is pledging to create 300 jobs within 10 years and 600 jobs within 20 years, making it slightly larger than the Florida plan in jobs and state subsidies.”
Mr. Billington certainly is not shy of reporters.
"They couldn't find a home here in Collier County or Sarasota because they don't have a product to deliver,'' Mr. Billington told a reporter. “Their business is to produce genetically altered mice for other scientists to study and use in experiments. This thing they're going into is a totally new deal for them. They have no expertise. It's an exercise in venture capitalism. It could work, and it might not.''
Jackson Laboratory has had success in genetically altering mice sold to prospective buyers in other research facilities. The Connecticut operation would break new and untested ground for Jackson, which now is seeking to move into an entirely different field, that of genomic medicine, the study of genes and genetic interactions that, according to a 26-page brochure that was distributed to Connecticut legislators, are "essential to creating new medicines and treatments for some of humankind's worst diseases and conditions.''
Mr. Billington told the Courant reporter, “We're glad to be rid of them. I feel bad for the state of Connecticut if you all have politicians who are swallowing the Jackson line hook, line and sinker.”
This is the second time the Malloy administration has asked the Democratic dominated General Assembly to swallow an unpalatable deal. Asked to vote on a budget the details of which had not been finalized in negotiations between Malloy administration officials and SEBAC, a union coalition authorized to negotiate contracts, Democratic leaders in the General Assembly persuaded their caucus to vote in favor of an unfinished budget. The leaders of the Democratic caucus, President of the Senate Don Williams and Speaker of the House Chris Donovan, apparently like the taste of hooks and lines and sinkers.
Mr. Donovan, SEBAC’s best friend in the legislature, is running for the U .S. Congress in Connecticut’s 5th District.
Since the Malloy administration enjoys an insuperable majority in the General Assembly, it does not need Republican votes to pass measures the details of which have not been adequately ventilated in public. Calls on the part of Republicans to put off the vote Wednesday until the pig in the poke – minus the trade secrets, which always may be redacted in publically disclosed documents – has been put on public view and debated fully by the General Assembly will no doubt be ignored by the Malloy administration. And the deal will go down on Wednesday, possibly with the concurrence of some Republicans in the General Assembly who have acquired a taste for hooks, lines and sinkers.
All the “buts” will not arrive until much later.
Mike Hyde, Jackson’s Vice President and fund raiser, no longer concerns himself with Mr. Billington's criticisms. "I'm delighted to be in Connecticut,” he has said. “It's a great state. I really don't have any hard feelings about what happened in Florida. This is here. This is now.”
Florida rejected Jackson’s best offer because the state is flat on its back and broke, unlike Connecticut. For now, at least, the state is flush in quickly disappearing funds owing mostly to the largest tax increase in its history imposed upon it by its “shared sacrifice” governor. This is here. This is now.
And the future? Let the future eat cake.
Monday, October 24, 2011
Connecticut’s Social Gospel
What might be called Connecticut’s social gospel is prospering under the hand of progressive Governor Dannel Malloy. Should anyone doubt that Mr. Malloy is a born again progressive, he has only to pay heed to remarks the governor made at a progressive panel discussion in Washington D.C., the epicenter of modern Democratic progressivism.
When president CEO of the Center for American Progress John Podesta, former White House chief of staff to President Bill Clinton, asked Mr. Malloy to display his progressive credentials, the governor unscrolled a partial list that included:
• The passage of Connecticut’s new earned income tax credit program
• The decriminalization of marijuana use in small portions, “the third most robust of its kind in the country,” according to CTNewsJunkie
• The passage of a law providing in-state public college tuition rates to undocumented Connecticut students
• A new law outlawing discrimination against transgendered individuals
• The implementation within the Department of Correction of a new risk reduction credit program that some think will reduce prisoner recidivism
• An executive order that provides a path for state child care workers and personal care attendants to unionize
• And, not mentioned by Mr. Malloy at the progressive conference, a pledge to sign a bill abolishing Connecticut’s death penalty
A bill abolishing the death penalty was presented during the administration of Mr. Malloy’s predecessor, Jodi Rell, who vetoed the bill. That attempt arrived on the heels of Michael Ross’ murder spree. The bill Mr. Malloy has pledged to sign will be presented following a particularly horrific crime in Cheshire.
Mr. Malloy’s crowning achievement was the passage of Connecticut’s paid sick day law.
“This year,” CTNewsJunkie reported, “Connecticut became the first state in the nation to pass a law mandating some employers provide paid time off for workers when they are ill.”
A pleased Mr. Malloy told the gathering of progressives, “So it was, I think, a pretty progressive agenda,” the passage of which was made easier by a General Assembly dominated by like-minded progressive Democrats.
The progressive social gospel in Connecticut is eclectic and politically pragmatic, its doxology wedded to no firm principles. This makes the gospel infinitely elastic. The same governor who on Monday raises taxes both on businesses and individuals can on Tuesday appear before a union group and assure them that at heart he is Samuel Gompers, which is reasonable enough. But then to reappear on Wednesday before yet another business group to sooth and stroke them with his plan to create jobs is a bit of a stretch for most chamber of commerce types who may have graduated from Capitalist University. The disjunctions do not seem to trouble Mr. Malloy, and indeed, once economic prosperity is coupled with crony capitalism the disjunctions disappear altogether. If job production is dependent on governors who pick and choose economic winners and losers, capitalists are reduced to beggars at the throne, and those who cozy up to power win the spoils. The invisible hand of commerce rewards entrepreneurs according to merit, which is determined by consumers who vote for products with their dollars. The visible hand of crony capitalism rewards political benefactors, the prizes being given out by politicians most of whom have never met a payroll or employed a worker who was not on the public dole.
When political parties did this sort of thing during the real progressive era, progressives and muckrakers in the media made it a point to inveigh against both the crony capitalists and governors and presidents who fed them from the public trough. The whole point of progressivism Teddy Roosevelt style was to bust up monopolies created by an alliance between powerful businessmen and politicians. Even Mr. Roosevelt, the scourge of monopolists, agreed to waive the Sherman Antitrust Act during the panic of 1907 so that U.S. Steel, owned by acquisition maestro J. Pierpont Morgan, could acquire Tennessee Coal & Iron (TC&I) to avert a Wall Street collapse of companies too big to fail.
That was then. Modern day Pierpont Morgans are made in Washington – and in the states by progressive governors who lavish upon them tax money in amounts that would bring a blush to the cheek of Mr. Morgan.
When president CEO of the Center for American Progress John Podesta, former White House chief of staff to President Bill Clinton, asked Mr. Malloy to display his progressive credentials, the governor unscrolled a partial list that included:
• The passage of Connecticut’s new earned income tax credit program
• The decriminalization of marijuana use in small portions, “the third most robust of its kind in the country,” according to CTNewsJunkie
• The passage of a law providing in-state public college tuition rates to undocumented Connecticut students
• A new law outlawing discrimination against transgendered individuals
• The implementation within the Department of Correction of a new risk reduction credit program that some think will reduce prisoner recidivism
• An executive order that provides a path for state child care workers and personal care attendants to unionize
• And, not mentioned by Mr. Malloy at the progressive conference, a pledge to sign a bill abolishing Connecticut’s death penalty
A bill abolishing the death penalty was presented during the administration of Mr. Malloy’s predecessor, Jodi Rell, who vetoed the bill. That attempt arrived on the heels of Michael Ross’ murder spree. The bill Mr. Malloy has pledged to sign will be presented following a particularly horrific crime in Cheshire.
Mr. Malloy’s crowning achievement was the passage of Connecticut’s paid sick day law.
“This year,” CTNewsJunkie reported, “Connecticut became the first state in the nation to pass a law mandating some employers provide paid time off for workers when they are ill.”
A pleased Mr. Malloy told the gathering of progressives, “So it was, I think, a pretty progressive agenda,” the passage of which was made easier by a General Assembly dominated by like-minded progressive Democrats.
The progressive social gospel in Connecticut is eclectic and politically pragmatic, its doxology wedded to no firm principles. This makes the gospel infinitely elastic. The same governor who on Monday raises taxes both on businesses and individuals can on Tuesday appear before a union group and assure them that at heart he is Samuel Gompers, which is reasonable enough. But then to reappear on Wednesday before yet another business group to sooth and stroke them with his plan to create jobs is a bit of a stretch for most chamber of commerce types who may have graduated from Capitalist University. The disjunctions do not seem to trouble Mr. Malloy, and indeed, once economic prosperity is coupled with crony capitalism the disjunctions disappear altogether. If job production is dependent on governors who pick and choose economic winners and losers, capitalists are reduced to beggars at the throne, and those who cozy up to power win the spoils. The invisible hand of commerce rewards entrepreneurs according to merit, which is determined by consumers who vote for products with their dollars. The visible hand of crony capitalism rewards political benefactors, the prizes being given out by politicians most of whom have never met a payroll or employed a worker who was not on the public dole.
When political parties did this sort of thing during the real progressive era, progressives and muckrakers in the media made it a point to inveigh against both the crony capitalists and governors and presidents who fed them from the public trough. The whole point of progressivism Teddy Roosevelt style was to bust up monopolies created by an alliance between powerful businessmen and politicians. Even Mr. Roosevelt, the scourge of monopolists, agreed to waive the Sherman Antitrust Act during the panic of 1907 so that U.S. Steel, owned by acquisition maestro J. Pierpont Morgan, could acquire Tennessee Coal & Iron (TC&I) to avert a Wall Street collapse of companies too big to fail.
That was then. Modern day Pierpont Morgans are made in Washington – and in the states by progressive governors who lavish upon them tax money in amounts that would bring a blush to the cheek of Mr. Morgan.
Sunday, October 23, 2011
Jackson Laboratory, The Done Deal
Jackson Laboratory has found some important friends in high places in Connecticut. Among them are Governor Dannel Malloy and, almost certainly, the Democratic caucus in the General Assembly, which has tended thus far to march to the music of Mr. Malloy’s drum on all issues of importance. Here and there, critics of the deal privately arranged between the governor and Jackson have surfaced.
“Republicans,” one commentator wrote, “are right to question the deal and get as much information as possible. But by the experts’ accounts, this is a good risk for Connecticut. And as in so many other ways, Connecticut should not be like Florida.”
Jackson was considering a move to Florida, but the deal in that state was never consummated. It has become part of the narrative of Connecticut Democrats supporting the deal that the governor of Florida failed to engage in the negotiations and so the state lost out on a promising deal that a wide awake Connecticut governor thereafter snatched from Florida’s jaws.
Connecticut 1, Florida 0.
Mr. Malloy, an activist governor, has vowed to remake Connecticut. Previous governors have been content in improving the general business climate in the state so that all businesses large and small, relying upon a set of governmental laws and regulations that did not favor one business over another, could plot their futures and compete together on what former Attorney General Richard Blumenthal use to call “a level playing field.” In bygone days of yore, if a regulation or a law did not apply equally to the local barber shop and a large employer such as Pratt & Whitney, that law or regulation would die in utero, because in the glory days of the republic laws and regulations were general and equitable. In the modern period, brimful with lobbyists and crony capitalists, governors see fit to determine the economic future of states by remaking business environments -- while in the process rewarding their friends and punishing their enemies.
Oh, happy day.
The “deal” to which the commentator above referred is, of course, the “private arrangement” worked out between Mr. Malloy and Jackson Laboratory to move the Jackson’s research operations to the UConn Health Center (UCHC) in Farmington.
Prior to the deal, Mr. Malloy had awarded the health center nearly a billion dollars, presumably to improve its failing operations. The installation of Jackson at the reconfigured UCHC will cost Connecticut taxpayers an additional $291 million -- initially. UCHC, a failing enterprise before Mr. Malloy and the Democratic dominated General Assembly decided to douse it with money, has been a tax sponge for decades. Jackson Laboratories is a successful non-profit business, which means that, unlike other overtaxed businesses in Connecticut, the research laboratory will not be returning tax dollars to the state. As a general rule, non-profits are tax revenue losing operations because, among other reasons, they do not produce a taxable product. The tax revenue value of Jackson rests in its magnetic quality: It is supposed by eternally optimistic Democrats that a research complex involving Jackson and Connecticut’s educational institutions will in time attract to the state tax revenue producing businesses.
Unlike Jackson, Pfizer of New London, a large pharmaceutical company that also engages in research, is a tax revenue producer. Interestingly, Pfizer was given tax credits and loans by the state when it opened operations, but recently the company had moved jobs out of state after the deal between the company and the state had been fulfilled and tax reductions had disappeared.
As a former communications director for state Democrats, the commentator above may, at least emotionally and ideological, still have a dog in the fight, but he generously acknowledges that “Republicans are right to question the deal and get as much information as possible.”
And there is the rub.
Some Republicans, much to the annoyance of Mr. Malloy and Roy Occhiogrosso, the governor’s chief cook and bottle washer, are asking for information that has not been forthcoming. They want to see the agreement arranged between Mr. Malloy and Jackson before they vote to commit tax money to what may or may not be a promising project. Their request has sent the deal makers into a crouch position that revolves around trade secrets. The General Assembly, which will be asked to pony-up the tax money that will keep the UCHC afloat for the near future, appears to have swallowed this lame excuse; even top military secrets that the U.S. government is loath to share with Wikileaks are provided on demand to the relevant overview committees in the U.S. Congress, possibly because national congressmen still take seriously their constitutional obligation to represent the will of the people to both presidents and lobby infested businesses. On such occasions, damaging information, made available to the committees, is redacted before the committee reports to congress and the people.
In a recent hearing that will determine the fate of millions of tax dollars, state legislators were told they had less than two hours to question representatives from Jackson. The people’s representatives were limited to one question apiece, and when Senator Leonard Fasano, the second-ranking Senate Republican, said he wanted to see the written agreement signed between the governor and Jackson, he was told to go fish.
"Everybody understands the term 'trade secrets' - meaning they are pieces of information that you don't want your competitors to know about,” said gubernatorial mouthpiece Occhiogrosso. “The law says we can't release the document. What he asked for, he can't get by law.''
At least not before the shameless, representation averse, rubberstamping General Assembly votes in favor of the funding.
“Republicans,” one commentator wrote, “are right to question the deal and get as much information as possible. But by the experts’ accounts, this is a good risk for Connecticut. And as in so many other ways, Connecticut should not be like Florida.”
Jackson was considering a move to Florida, but the deal in that state was never consummated. It has become part of the narrative of Connecticut Democrats supporting the deal that the governor of Florida failed to engage in the negotiations and so the state lost out on a promising deal that a wide awake Connecticut governor thereafter snatched from Florida’s jaws.
Connecticut 1, Florida 0.
Mr. Malloy, an activist governor, has vowed to remake Connecticut. Previous governors have been content in improving the general business climate in the state so that all businesses large and small, relying upon a set of governmental laws and regulations that did not favor one business over another, could plot their futures and compete together on what former Attorney General Richard Blumenthal use to call “a level playing field.” In bygone days of yore, if a regulation or a law did not apply equally to the local barber shop and a large employer such as Pratt & Whitney, that law or regulation would die in utero, because in the glory days of the republic laws and regulations were general and equitable. In the modern period, brimful with lobbyists and crony capitalists, governors see fit to determine the economic future of states by remaking business environments -- while in the process rewarding their friends and punishing their enemies.
Oh, happy day.
The “deal” to which the commentator above referred is, of course, the “private arrangement” worked out between Mr. Malloy and Jackson Laboratory to move the Jackson’s research operations to the UConn Health Center (UCHC) in Farmington.
Prior to the deal, Mr. Malloy had awarded the health center nearly a billion dollars, presumably to improve its failing operations. The installation of Jackson at the reconfigured UCHC will cost Connecticut taxpayers an additional $291 million -- initially. UCHC, a failing enterprise before Mr. Malloy and the Democratic dominated General Assembly decided to douse it with money, has been a tax sponge for decades. Jackson Laboratories is a successful non-profit business, which means that, unlike other overtaxed businesses in Connecticut, the research laboratory will not be returning tax dollars to the state. As a general rule, non-profits are tax revenue losing operations because, among other reasons, they do not produce a taxable product. The tax revenue value of Jackson rests in its magnetic quality: It is supposed by eternally optimistic Democrats that a research complex involving Jackson and Connecticut’s educational institutions will in time attract to the state tax revenue producing businesses.
Unlike Jackson, Pfizer of New London, a large pharmaceutical company that also engages in research, is a tax revenue producer. Interestingly, Pfizer was given tax credits and loans by the state when it opened operations, but recently the company had moved jobs out of state after the deal between the company and the state had been fulfilled and tax reductions had disappeared.
As a former communications director for state Democrats, the commentator above may, at least emotionally and ideological, still have a dog in the fight, but he generously acknowledges that “Republicans are right to question the deal and get as much information as possible.”
And there is the rub.
Some Republicans, much to the annoyance of Mr. Malloy and Roy Occhiogrosso, the governor’s chief cook and bottle washer, are asking for information that has not been forthcoming. They want to see the agreement arranged between Mr. Malloy and Jackson before they vote to commit tax money to what may or may not be a promising project. Their request has sent the deal makers into a crouch position that revolves around trade secrets. The General Assembly, which will be asked to pony-up the tax money that will keep the UCHC afloat for the near future, appears to have swallowed this lame excuse; even top military secrets that the U.S. government is loath to share with Wikileaks are provided on demand to the relevant overview committees in the U.S. Congress, possibly because national congressmen still take seriously their constitutional obligation to represent the will of the people to both presidents and lobby infested businesses. On such occasions, damaging information, made available to the committees, is redacted before the committee reports to congress and the people.
In a recent hearing that will determine the fate of millions of tax dollars, state legislators were told they had less than two hours to question representatives from Jackson. The people’s representatives were limited to one question apiece, and when Senator Leonard Fasano, the second-ranking Senate Republican, said he wanted to see the written agreement signed between the governor and Jackson, he was told to go fish.
"Everybody understands the term 'trade secrets' - meaning they are pieces of information that you don't want your competitors to know about,” said gubernatorial mouthpiece Occhiogrosso. “The law says we can't release the document. What he asked for, he can't get by law.''
At least not before the shameless, representation averse, rubberstamping General Assembly votes in favor of the funding.
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.
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