What’s a legal system for, anyway?

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Feb 232007
 

From Newsweek: China Above the Law:  A poorly functioning legal system is supposed to hurt economic growth.  But nobody told the Chinese.
This article explains how the Chinese compensate for the lack of a legal system and the “rule of law.”  Their method works, at least for now, at least as far as economic growth is concerned.   Not that we should really kill all the lawyers over here in the U.S. and do it the way China does, but this article helps us to think about why we even bother to have a legal system.  If we’re going to spend so much money on lawyers and judges, we ought to have an idea of what we’re getting for our money.  And if we aren’t, maybe some changes are needed.

How to supply the corruption that fuels the modern state

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Feb 132007
 

A WSJ article about the utility industry, one of a set of article in the Monday February 12 issue:
The Bottom Line

In the power business, the more electricity you sell, the more money you make.

Now state officials and electric utilities — backed by environmental groups — have begun to change that equation. Faced with growing demand for electricity and the environmental consequences of generating it, states and utilities are considering new regulatory regimes that remove the incentive for selling more power — and give utilities a financial stake in saving energy.

The ultimate goal is to eliminate the need for new power plants.

And just how would this be done? Count on the governing class to do anything, just anything, to avoid the use of market pricing mechanisms.

States are considering two major regulatory remedies. The first is “decoupling,” in which utilities receive a predetermined profit each year — thereby separating their earnings from the volume of electricity they deliver.

Here’s how it works. A utility and state regulators hammer out how much profit the company will be allowed to earn. At the end of the year, if the utility’s actual profit is lower than that amount, the company charges customers to make up the difference. If the actual profit is higher, customers get a rebate.

I like that phrase, “utility and state regulators hammer out.” In other words, they get together for some corrupt dealing and influence peddling. Well, that sort of corruption is the fuel that powers the modern state.

But under current rules in most states, utilities can’t earn a return on their efficiency spending — they can only recover the cost. A proposal being considered in California, Texas and several other states would change that.

Under such a system, “the people running the energy-efficiency departments in these utilities will become on a par with those running the transmission and distribution departments,” predicts Mr. Gallagher. “There will be more of a corporate focus on energy efficiency.”

In other words, there will be more emphasis on utilities figuring out how to make regulators happy than on energy production, or profit, or even energy efficiency.

Power trip

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Feb 092007
 

From chron.com and the AP

Snow called Pelosi’s office to make sure she knew the White House supported her use of a military plane.

He also distanced the White House from the GOP’s take on the matter. The Republican National Committee said Pelosi was on a “power trip.” Snow, asked whether the RNC is free to go after Pelosi on its own, said, “Well, apparently they did this time.”

A “power trip.” That would be a good name for Pelosi’s plane.

I for one have a big problem with this, no matter what Tony Snow says. Having her own plane helps free her from the need to make the skies safe for all travelers, not just those who are in positions of leadership. Maybe she’d have to be more responsible in dealing with terrorism if she didn’t have special protections that the rest of us lack.

I didn’t know that Hastert got special privileges, either, nor did I have a lot of sympathy for Newt’s complaints. But two wrongs don’t make a right. These people ought to live in the real world they are elected to represent instead spending their time jockeying for elite perks and privileges. It’s a corrupting influence on them.

Maybe if we had term limits to bring them down to earth once in a while, I’d have a different opinion about it.

I also have a big problem with special protections for judges and police. Those people, too, ought to be making the streets safe for everyone, not just for the privileged few.

Nancy and Newt don’t like flying 2nd class

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Feb 082007
 

From the Washington Times

An aide to Mrs. Pelosi, who asked not to be named, confirmed yesterday that discussions are ongoing with the administration. “It would be done for security reasons,” said the aide, adding that the speaker has used military aircraft for at least one trip back to San Francisco.
The aide asserted that the administration was using a Washington Times reporter, in effect, to negotiate with the speaker’s office by leaking information about Mrs. Pelosi’s request. Asked if the speaker was seeking increased access to military planes, the aide took the question, but did not call back.

Back in 1995, Newt Gingrich was skinned alive when he complained about the seat he was assigned on a Clinton plane.   Here is CNN’s spin on it:

Gingrich and Dole had complained earlier about their lack of discussions with Clinton during the 25 hours of flying time. But Gingrich went a step further Wednesday by saying the incident contributed to the government shutdown.

“This is petty,” said Gingrich, indicating his displeasure at the way the two were treated. “You’ve been on the plane for 25 hours and nobody has talked to you and they ask you to get off the plane by the back ramp. … You just wonder, where is their sense of manners? Where is their sense of courtesy?”

I wonder if Nancy will fare as well as Newt did.

AP “computer analysis”

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Feb 052007
 

LANSING, Mich. — After 15 years of tax cuts, including drops in property and income tax rates, Michigan families have seen their state tax bills decrease by as much as a fourth, according to an Associated Press computer analysis.

The above is from an AP article that seems to have appeared in a lot of newspapers today. I first saw it in today’s Kalamazoo Gazette. It’s the lead article on page 1. Here is a link to the Chicago Tribune version.

The information as to how this “analysis” was performed is pretty scanty. The best I could find was this from something called Michigan Wire.

It’s curious that the AP is now doing analyses like these instead of reporting on other people doing such analyses. Usually the AP is able to achieve a high level of partisanship just by the way it reports on other peoples’ agendas. Apparently that wasn’t enough this time. And it’s suspicious that such an analysis comes out just before the Governor’s State of the State address. Producing a study to serve a political timetable is hardly the way to get objective results.
There are so many things wrong with this, and so many unanswered questions.

Hiding behind the fig leaf “computer analysis” is one of the oldest dodges in the book. There is apparently no web site where one can go to check the data, the assumptions, and the calculations. Just because a computer was used doesn’t mean this piece of work wasn’t ideologically biased.

The article purports to tell how families’ tax bills have dropped over the past 15 years. But in a sidebar that lists tax changes since 1991, there is a list of tax increases (3 of them) followed by a long list of tax cuts. But the latter list includes a cut to the Single Business tax! So how did they calculate the effect of that one in reducing the typical family tax bill?

The article states that “the biggest savings have come through the lower property-tax bills that homeowners have paid since Proposal A passed in 1994.” But I thought the revenues were supposed to be off-set by sales tax receipts. Has that not happened? Are we now spending less per pupil in inflation-adjusted dollars? If so, that would be the story to report on. (Not that it would necessarily be a bad thing, or a good thing. But either way, it would be worth knowing about.)

And if they did somehow make that calculation, where is the information about the indirect effects of changes in the tax rates on economic activity, e.g. on attracting businesses to come to Michigan or leave the state?
And what about the non-school property taxes that are being collected locally? How come those weren’t included in the analysis. Has the reduction in school property taxes made it easier for local governments to raise property taxes for other purposes, as some people predicted would happen? That should have been part of the story, too.

But most of all, I want to know what part of the state GDP is being taken in taxes. Is the government’s percentage of the state’s economy growing or decreasing? Not a word was said about that.

Tom Clay, fo the nonpartisan Citizens Research Council, says policymakers will need to address that question if Michigan is to deal with falling revenues caused in part by lower tax rates.

Note those words, “in part.” But which part? 10 percent? 90 percent? What is the other part that’s not caused by lower tax rates. And what will happen to that other part if tax rates are increased?

I think what’s needed is for some news agency that is a real news agency to do some reporting on this. Find out how the AP really did this study. Find out what motivated it and who the players are behind the scenes. Find out who decided that now was the time for such a study to come out. Find out what the critics have to say about it. Because whatever this story is, it is not a matter of the AP reporting the news. It is a matter of the AP inventing news. And for that kind of work, it should be held to account.