Dear L.A.W. Readers,
Bill and I have been away for awhile due to outside business obligations. We continue to research, read, network and monitor local events as always, but you may notice our written articles and comments have slowed in recent months.
We hope to post anew in the coming year as time permits. Check in when you can and we hope to have more to share at a later date.
Merry Christmas and Happy New Year to all.
Regards,
Bridget Dupont-Tingley,
Editor
Local Area Watch
Cure Michigan is the non-profit organization promoting the November ballot proposal to legalize the embryonic stem cell research. The group has started running television promising to mercilessly reveal the "lies" of those opposed to killing embryonic human beings to harvest their stem cells. Bridget, our editor, thought this would be a good time to remind everyone of the fraudulent origins of Cure Michigan that we had reported in July.
To borrow a phrase from Larry Kudlow, “King Dollar” must be a cornerstone of U.S. economic policy. That said, let’s keep in mind what the government should or should not be doing when it comes to the economy. Its first duty is to do no harm, which means staying out of our business even when it is folly. Failure is an option, as far as the government should be concerned, when it comes to our private dealings. But that does not mean it has no role to play in the economy. That role is fundamental albeit limited.
The government must establish the rule of law that makes the free market possible. That means enforcing contracts and prosecuting fraud. This can also include basic regulations that facilitate market efficiency like standard measures and transparency in financial transactions. There is also a place for public works such as highways and ports, but only if their private construction is impractical and their benefits significantly outweigh their costs. Finally, the government must ensure the integrity of the free market’s primary medium of exchange – i.e., our currency.
A “King Dollar” policy concerns this last role of the government. A strong dollar is a constant dollar. What does that mean? Just as a foot should always measure the same length and a pound the same weight, the dollar should always measure the same amount of wealth. In this way, when the dollar price of a product changes, we know that is because it costs more or less wealth to purchase it. We know that the dollar price is signaling a change in the supply and demand for a product. This is critical information the free market needs to respond rationally to the ceaseless dynamics of the economy. The government distorts or destroys this information when it changes the measure of the dollar through inflationary or deflationary policies. The economy is then racked with booms and busts as the market responds to perverted price signals (which our greed and fear will do every so often on their own without the government making it worse).
To best understand what the government should or should not do when comes to the measure of the dollar, we first need to define inflation (and by extension its counterpart, deflation). Inflation is frequently, and not very usefully, defined as a general increase in prices. However, there is an important difference between prices increasing because demand is greater than supply and because a dollar measures a smaller amount of wealth and so more dollars are now needed to buy the same goods. Think of it this way. One day you are six-foot tall. A little while later you are six-foot-six tall. If the government changed the measure of a foot from twelve inches to eleven inches, you are in fact no taller even though more feet are needed to measure your height. In other words the government inflated the foot. Your change in height is not real; it is an artifact of manipulating the measure of height. The same with prices that are higher because the government inflated the dollar. The change in prices is not real, but so what?
Two serious problems arise out of the dollar’s dual functions as a medium of exchange and a store of wealth. Regarding the dollar as a medium of exchange, the market will initially respond as though the change is real and react as though demand is outstripping supply. This causes people to make bad decisions about what to buy and sell, how to adjust costs, and where to invest. These decisions further distort the market and waste capital in fruitless endeavors. For example, if the price of corn rises because of inflation and a farmer takes this to be a consequence of increased demand, he diverts his capital to growing corn. But then he discovers that there is no new demand. Instead he has only added to the supply, driving the price of corn down while his costs have been driven up by inflation. He suffers a loss.
Regarding the dollar as a store of wealth, inflation is a thief. A hundred dollars saved is withdrawn as a hundred inflated dollars and cheats the saver. A thousand dollars lent is paid back with a thousand inflated dollars and cheats the lender. A million dollars invested is returned as a million inflated dollars and cheats the investor. While it is true that if the saver, lender, and investor are aware of inflation, they can demand interest that compensates them for their losses to inflation. But this is much easier said than done, because inflation is insidious, and it is matter of guesswork, even for the most sophisticated, what the effects inflation on the measure of the dollar will be. Plus we need to keep in mind that it is also unjust to those who must repay the saver, lender, and investor if the rate of interest is excessive because inflation isn’t as severe as anticipated (or even worse, turns into deflation). Neither the borrower nor the lender is entitled to a windfall from the government’s manipulation of the measure of the dollar.
This is why a “King Dollar” policy must be a cornerstone of our economic policy. The dollar’s integrity as a constant measure of wealth is matter of justice in the marketplace, which in turn allows us to put more confidence in our transaction, especially long-term ones. Furthermore, King Dollar does not pervert the market into pouring money into ratholes. A current example of this has been the loose money policy of the Federal Reserve during the first part of the Bush Administration which, combined with the Clinton Administration’s pressure on banks to make home loans to marginal borrowers, led us to this month’s financial panic. With the Bush Administration’s blessing, the Fed fixed interest rates at an artificially low rate to goose the economy. The taxpayer-backed home loan giants Fannie Mae and Freddie Mac exploited their access to this cheap money to make a market for subprime home loans. The banks, under pressure from the Clinton-era Community Reinvestment Act, to make more and more of these loans went through the door Fannie and Freddie opened for them (and kept open as congressional Democrats squelched any attempts to end this dangerous practice).
But at the end of the day, the piper must be paid. The dollar inflated by the Fed’s loose money policy weakened around the world. Commodity prices climbed, the economy stumbled, and the Fed went rapidly into reverse to jack up interest rates. At the same time the government-fueled boom in home-buying stalled, and the economy stumbled again. Foreclosures rose, the value of mortgage-backed securities fell, reducing the capital reserves of lenders, and so restricting the credit they could extend to businesses and consumers. The economy stumbled even further. The financial markets panicked, drove down the value of mortgage-backed securities to fire sale levels, and wrecked the weakest of the country’s large financial institutions. Now the taxpayers are called upon to cough up one trillion dollars (don’t forget the Fannie and Freddie bail-out on top of the $700 billion that Bush and congressional Democrats are demanding for the private sector) to bring sanity back to the markets. And where do you think that money will come from? Out of nowhere from the government’s power to print as much fiat currency as it wants. In other words, more inflation.
A “King Dollar” policy will not prevent our follies as private buyers and sellers in the free market. Because of our human – and so fallen – nature, greed, fear, and ignorance will from time to time puff up markets with euphoria and bring them crashing down with panic until the end of times. But those who lose from such folly will mostly be limited to those who made bad decisions about what to buy and sell. The harm will be contained, and the steady, the prudent, and the wise will carry on with little disruption. However, a “King Dollar” policy would have prevented today’s crisis in the financial markets. The Fed would have focused on keeping the dollar, as a measure of wealth, constant instead of manipulating that measure to fix interest rates. It would have also stymied the artificial demand for new homes resulting from the forced creation of new dollars for home loans by the Community Reinvestment Act (magnified by the recklessness of Fannie and Freddie unconstrained by the discipline of market because they were backed by the taxpayers – implicitly perhaps, but everyone correctly assumed it).
There remains the important question of how the government maintains King Dollar. Gold bugs will say we need to fix the dollar to gold. Others say to a basket of commodities. The problem with these proposals is that they amount to price-fixing, which puts the measure of the dollar at the mercy of changes in supply and demand. The gold bugs usually overlook the severe inflation and deflation that the U.S. economy suffered while on the gold standard as the supply and demand for the yellow metal fluctuated. The national banking system that preceded the creation of the Federal Reserve in 1913 did a lot to ameliorate the problem with the gold standard by allowing the market’s demand for credit guide the creation of new dollars. The Fed was a nationalization of this system, which has caused us nothing but woes in the 1920-1921 depression, the Great Depression, the Great Inflation of the 1970’s, and now the current financial panic. Nevertheless, a president does have the clout to keep the Fed from engaging in policies that working against King Dollar. Even if we don’t have the best way to maintain King Dollar right now, we can get pretty close with the existing machinery of government.
Drill for oil and natural gas in ANWR. Drill out on the continental shelves, even off Santa Barbara where the lefty locals would rather have Big Bad Oil carting the stuff off instead of it naturally leaking out through the earthquake-cracked seafloor and stinking up the place. Drill in the Great Lakes. Drill in Nancy Pelosi's front yard. Drill for these fuels wherever it is reasonable to do so and private investors are willing to put up the cash to get it done. In short, end the arbitrary restraints the Beltway crowd has imposed upon the development of domestic sources of oil and natural gas – at least by letting the off-shore drilling moratorium die a long overdue death come October 1st.
Why? First, to increase supply and reduce the price of energy, which effects the price of everything else. Second, to starve rogue regimes and the jihadist states of as much oil revenue as possible (although, only indirectly, because most of the oil we import is from Canada and Mexico). That makes “Drill, baby, drill!” a program for both economic growth and national security. It is also a program for sound energy and environmental policies. Yes, there is the received wisdom, with the requisite fretting and hand-wringing, of those who declare that the continued large-scale exploitation of domestic fossil fuel reserves will only retard the development of alternative energies. If so, good.
Wind, solar, and biomass are boondoggles, sustainable only by massive taxpayer subsidies, that can never provide a significant portion of the country’s energy needs. That’s because wind and solar are intermittent generators of energy that must be plugged into a national electrical grid to be of any real use. However, that energy cannot be sporadically dumped into the grid, because the supply and demand for electricity must be kept in constant balance or you get brown-outs and black-outs. While wind and solar can be backed up with quick-start fossil-fueled generators to fill in when the wind isn’t blowing or the sun isn’t shining, there is a limit to the engineering practicality of this, let alone the cost, both financial and environmental. Usually overlooked by the alternative energy crowd are the great expanses of wilderness spoiled by wind farms and solar collection facilities.
As for biomass, it is a fuel that can be burned in a controlled manner to maintain a level output of energy, but it is inefficient as an energy source. For example, a gallon of ethanol delivers only 85% the energy a gallon of gasoline does. The inefficiency is even greater for the generation of electricity. Much worse, however, biomass leaves a huge footprint on the planet compared to fossil fuels. Coal, oil, and natural gas simply require far less of the environment for their extraction and refinement into usable fuels than biomass, which would require conversion of all our farmland (and then some) to its production – and we still have to eat. Even the greenest green who hasn’t lost his marbles can understand the environmental disaster of replacing fossil fuels with biomass.
But this is not to say all alternatives to fossil fuels are impractical and environmentally unsound. Nuclear power can realistically replace fossil fuels for the generation of electricity. Indeed, about twenty-five hundred plants, each costing about the same as one of T. Boone Picken’s wind farms, could entirely eliminate our use of coal, oil, and natural gas to produce electricity. Despite all of the NIMBY and environmentalist fear-monger, nuclear power is very safe and clean – and it can truly reduce our reliance on fossil fuels. So let’s add nuclear power to the “Drill, baby, drill!” program to really gut the cost of energy and put the hurt on the petro-tyrants who wish us nothing but ill.
The non-profit corporation, Michigan Citizens for Stem Cell Research and Cures, puts itself out as an organization dedicated to the education of Michiganders on the pros and cons of various types of stem cell research. On its website, MCSCRC makes this public statement about itself:
Michigan Citizens for Stem Cell Research & Cures (MCSCRC) was created with the long-term goal of educating citizens about stem cell research. We will present the facts necessary so each individual can form her/his own opinion about stem cell research. As a 501(c)(3) nonprofit charitable organization MCSCRC does not and cannot express support for any piece of legislation or political petition related to stem cell research. [Our emphasis.]
MCSCRC’s status as a 501(c)(3) organization under the tax code is no small thing. That means the donations people make to it are tax deductible. If it becomes involved in political campaigns, it loses that status –- and donors lose their tax deductions. So MCSCRC must keep its nose clean in this regard. Indeed, its corporate by-laws prohibit the organization from engaging in propaganda and political campaigns. Thus, the good folks at MCSCRC present themselves as earnest people sincerely trying to provide all the information Michigan voters need to make decisions on pending legislation and ballot initiatives concerning stem cell research.
Striking a disinterested posture vis-à-vis any particular proposed law is a good way for MCSCRC to gain the public’s trust as an objective voice on the issues underlying that law. Of course, that trust is abused if, in fact, MCSCRC is not disinterested in the passage of a law –- let's say, the Cure Michigan ballot initiative to end restrictions on harvesting stem cells from embryonic human beings -– and wants to surreptitiously persuade voters to support it. And that, unfortunately, is the case with MCSCRC. Its pose as an honest broker in the embryonic stem cell debate is a fraud.
Cure Michigan, the sponsor of the initiative that will now likely appear on ballot this November, is entirely funded by Stem Cell Research B.Q.C. In turn, Stem Cell Research is a non-profit corporation controlled by MCSCRC. Under Stem Cell Research’s by-laws MCSCRC appoints its board of directors and upon its dissolution (probably after the November election) all of its assets go to MCSCRC. Furthermore, Marcia Baum, the executive director of MCSCRC, is also the spokesman for Stem Cell Research and Cure Michigan. Therefore, the person operating the allegedly disinterested educational group is also actively advocating the passage of a law that the educational group cannot lawfully express support for.
So despite the propaganda to the contrary, Cure Michigan is not a grassroots effort. It is the creature of Stem Cell Research, which in turn is the creature of MCSCRC. So little wonder that MCSCRC’s “education” of voters on stem cell research just happens to support the claims of the Cure Michigan ballot initiative. That is why MCSCRC is a fraud. Its mission to publicly provide disinterested and objective information on stem cell research is anything but that. With this sort of falsity in the very bones of MCSCRC/Stem Cell Research/Cure Michigan, let’s not be shocked if falsehood substitutes for fact in the campaign for the Cure Michigan ballot initiative (or that Big Sister is one of its leaders).
A reader e-mailed us that the headline of our previous article, "Big Sister's Slice-and-Dice-the-Babies-for-Science Proposal Nearly on Ballot", was deceptive. The reason? The appearance of Big Sister a.k.a. G.R. Mayor George Heartwell at a conference last fall promoting the ballot proposal doesn't make it HIS proposal. Perhaps, but Big Sister did more than appear at an event hosted by the Michigan Citizens for Stem Cell Research and Cures. MCSCRC is the force behind the November ballot proposal to legalize the destruction of embryonic human beings by researchers, and Big Sister sits on the organization's Board of Directors. So, it is his proposal.
P.S. Nick DeLeeuw reports that Big Sister's proposal has gotten enough petition signatures to put on this November's statewide ballot. Now we'll see in a few months' time whether obfuscations, lies, and utilitarianism hold greater sway with the voters than commonsense, truth, and respect for human dignity.
OK, OK. I'll admit the headline is a little loaded, but it got your attention, right?
Our thanks to Nick DeLeeuw of RightMichigan.com for staying on top of the Michigan Citizens for Stem Cell Research and Cures (MCSCRC) ballot initiative that would allow researchers to vivisect, mutilate, and kill embryonic human beings to harvest their stem cells. Nick covers all the solid facts that people have no excuse for not knowing on such a fundamental issue -- excepting, of course, the so-called progressives like MCSCRC who never let a fact get in the way of their plans to run/ruin our lives -- so we invite you to check out his article on the moral, scientific, and policy arguments against the MCSCRC initiative.
Nick's update on this initiative ties in with the story we broke last fall about Big Sister a.k.a. Grand Rapids Mayor George Heartwell stumping for the MCSCRC cause. We took note of Heartwell's speech before the group, because he had made a show during his re-election campaign of staying silent on abortion and the other life issues. He had claimed his silence was a consequence of the irrelevance of these issues to the office of mayor, when in fact it was a crass political calculation to keep his pro-abortion position under wraps to suppress the turn-out for his pro-life challenger in the mayoral primary race. However, once that strategy worked to win the election, Heartwell used the prestige and influence of his "irrelevant" mayoral office to support the MCSCRC initiative.
But then Heartwell is the most advanced sort of progressive. Not only does he not let the facts get in the way of his political agenda, he doesn't let integrity get in the way either.
I know the folks over at Media Mouse, River City's progressive local media critic, are earnest in their endeavors (which is one reason why we provide a link to their website). But the trouble with the leftist take on society is that your Big Idea about how the world is supposed to work trumps the facts instead of letting the facts inform your ideas about what really drives things. If this penchant for rationalism doesn't lead to an out-and-out detachment from reality, it can manifest a certain cluelessness.
For example, this recent Media Mouse notice that Obama has rejected public financing for his presidential campaign:
Last week, Democratic Party presidential candidate Barack Obama announced that he will not be participating in the public financing system for his campaign. Instead, Obama will be able to raise an unlimited amount of money. However, much of the discussion on his decision has missed larger issues--why does it cost so much money to run for president and why do media corporations profit so much from elections?
The larger issue is the very thing that Obama ditched, the public financing system for presidential campaigns. Why is it that the bedrock freedom of political speech is confounded, constrained, and controlled by campaign financing restrictions that leave many a candidate no choice but to run for office on the public dole under the dictates of federal election commissars? Why is it that the so-called progressives who decry entrenched power and extoll the voice of the people are enamored with the bureaucratic bean-counting of the size and frequency of campaign contributions that favors incumbents and the super-rich at the expense of dark horses and ordinary citizens in political races? That is the fundamental issue.
The larger issue certainly is not: "Why does it cost so much money to run for president?" It doesn't. Americans spend a pittance on the publication of campaign speech compared to the advertising dollars that we pour into pushing mundane products like laundry detergent, fast-food burgers, and the latest amazing gadget for only $19.95 plus shipping and handling. For presidential candidates to spend what amounts to at most only a few bucks per voter every four years to get their messages out to the public is hardly a scandal. Indeed, stack that up to what pornographers spend to ply their putrid wares (which so-called progressives are so quick to defend under the free speech banner), and one wonders about the bad wiring in the heads of those who link arms with the flesh peddlars while sanctimoniously denouncing the few dollars spent on getting political speech on the air, on the internet, and in print.
Nor is the larger issue: "Why do media corporations profit so much from elections?" Is this really a head-scratcher for our progressive friends? The answer is obvious. The [shudder] "media corporations" own soapboxes that candidates want to rent to get their message out to the readers, viewers, and listeners of those companies. Meanwhile, all the other businesses and organizations that still need to advertise in the ordinary course of business don't go away. So demand goes up while the supply of space and minutes available for advertising remains about the same. Hence, the price for advertising laundry detergent and campaign slogans goes up. Nothing sinister. Economics 101.
If the leftists think the solution is to force the evil media corporations to hold their prices, just who do you think is going to get the limited supply of advertising available? Those customers of the media corporations placing ads day in and day out, or the fellow that comes along once every four years to get ink or air for a couple of months ahead of the election? Now if those leftist wheels are really turning, no doubt the solution to this is to force media corporations to ration ads to candidates -- and steamroll over the freedom of the press in the process.
All of which is to demonstrate that if our progressive friends put the facts first rather than their pet ideas, they might not wring their hands over things that are a problem only because they do not fit into the tidy world of their Big Idea.
Yes, I know, we shouldn't expect much in the way of intelligent discourse from grandstanding politicians on Capitol Hill and windbag pundits on cable news. But is it really too much to ask that their bloviations have at least some connection to reality, however tenuous that may be?
What is sticking in my craw is the utter stupidity of blaming speculators for the high price of oil. These blowhards are railing against traders of oil futures because their alleged speculations are bidding up the price of crude. First of all, let's get straight what a future is. It isn't a barrel of crude oil, a bushel of wheat, a head of cattle, or anything else tangible. It is a contract to buy or sell a commodity at a set price at a certain date in the future. So if oil-futures traders are pushing up the price of anything, they are pushing up the price of the contractual right to buy or sell oil, not oil itself.
Second, the oil futures market, like all futures markets, is a zero-sum game. That means for every oil futures contract sold, one has to be bought. There is nothing mysterious about this. It is as obvious as it sounds. Once a contract exists, it can be traded again and again until it expires. So that contract to buy oil at a set price has its own price that will go up and down. Thus, an oil futures contract acquires a market dynamic of its own that can closely track or wildly deviate from the actual price of oil depending upon the objectve, insight, mood, or, often, folly of traders. Whatever the case, this trading remains a zero-sum game, so that for every trader making a bet that the price will go up, there is another betting that it won't. In other words, these "evil" speculators are collectively placing as much money on one direction as the other -- and even then, it is on the direction of the oil futures contract, not oil itself.
Third, is everyone making trades in a futures market a speculator? No! Futures markets are an efficient way to trade risk for certainty. For example, a farmer wants to lock in the price he will sell his wheat for at harvest. A baker wants to lock in the price he will pay at that time to buy wheat. They both want to eliminate the uncertainty of their revenues and costs in the future. With a futures market the farmer and the baker do not need to find each other to make this transaction. The futures traders will do that for them. More importantly, they will do that when there is an imbalance between buyers and sellers of commodities. In that case, they will speculate. But their speculation comes with the risk the farmer and the baker traded away for certainty. That risk means, if they are wrong, they will either have to buy or sell the commodity contracted for at a loss or, as is usual, settle the difference in cash.
Finally, all of the above is the reason why an oil futures contract is called a "derivative". It exists only because there is a market for the real thing, crude oil. Thus, the futures market is parasitical to the actual market for oil. It can not and does not drive that market. The actual market is driven by the fundamental law of supply and demand (except for the periodic self-correcting euphoria and panic to which all markets are subject), and so the price of a futures contract for oil merely bounces up and down around the actual price for oil. For the futures market to drive the actual market would be a defiance of the law of supply and demand, a law which not even the most vociferous demogoguery from Capitol Hill and cable news can repeal.
The indefatigable Nick DeLeeuw of RightMichigan.com has done an excellent job on reporting this bit of corruption called Reform Michigan Government Now. Check out his most recent series of articles on this murky group's attempt to dilute the vote and influence of ordinary Michiganders by consolidating the state's political power into the hands of fewer entrenched incumbents:
DECIDING PARTISAN CONTROL OF LANSING TEN YEARS AT A TIME BY THE FLIP OF A COIN!
DECREASED REPRESENTATION AND STRONGER CENTRALIZED LANSING GOVERNMENT
YOU ONLY RUN A STEALTH CAMPAIGN IF YOU HAVE SOMETHING BIG AND UGLY TO HIDE
Good work, Nick!
Usually my interest isn't piqued by headlines touting the most recent study of how our bigoted self-indulgent couch-potato middle-class society called America oppresses the poor, disadvantaged, and disenfranchised. This is not because there are not injustices and inquities in the land, some blame for which does result from a blindness brought on by our increasingly vulgar self-absorption. It is because such studies are usually nothing more than propaganda pieces -- mindlessly reported by the mainstream media as legitimate news -- to justify shoveling taxpayer funds to the group who "discovered" the problem in order to solve it.
But that's not always the case. Sometimes the grievance industry is onto a problem that does merit our attention. For example, the Grand Rapids Press reported on yesterday's front page: "Justice denied to poor, study says". To wit, the National Legal Aid & Defender Association examined the public defender system in ten Michigan counties with the endorsement of the state legislature. Their findings are available at the Michigan Bar Association's website, and they are not good. Excessive plea-bargaining, lack of preparation, shoddy to non-existent representation, conflicts of interests are rife among lawyers taking public defender cases on the taxpayer dime. We know from the Jack Crofoot incident (here and here) that it is not just another grievance-mongering fairy tale that rotten public defenders risk putting the innocent behind bars.
So, take a look at the NLADA study. Of course, these guys are a special interest group who believe that the solution lies in giving their members more power and money to liberate the poor and disadvantage from our oppression. However, the problem they report is real, and their identification of the routine ethical misconduct of many doing public defender work is a serious problem that is the responsibility of the legal profession and state oversight agencies to clean up -- not taxpayers forking over more dough. Check it out.
Reform Michigan Government Now, a cryptic group with unknown sources of financing (here and here), is collecting voter signatures to put a series of constitutional amendments on the November ballot. These amendments would reduce the number of state officeholders and cut their pay. To succeed, Reform Michigan must get 371,000 signatures on its petition by July 7th. That would appear to be a hurdle the group cannot clear, and so these proposed amendments are likely a dead letter. That's just as well.
There are two reasons Michiganders should oppose the Reform Michigan amendments. First, it is always a dubious proposition to amend the constitution for partisan advantage. There is a reason why Michigan Democrats are high on this effort. One proposed amendment cuts the number of state supreme court justices from seven to five, and the amendment is drafted in a way so that the two justices who would be tossed from the bench are Republicans. Similarly it cuts the state court of appeals from 28 to 21 judges, although without a clear-cut partisan advantage resulting (but then the court of appeals is not nearly as political as the supreme court in any case).
Another amendment reduces the number of state representatives from 110 to 82 and state senators from 38 to 28. These reductions would drive the creation of new legislative districts that favor the Democrats, by allowing the packing of Republican voters into a few solid "red" districts while spreading out Democratic voters across many districts in which they constitute a majority, but not overwhelmingly so. In this way, fewer districts help Democrats to hold a majority in the house and senate.
These are the ways in which the Reform Michigan amendments re-tool the state constitution to gain control of the supreme court, the senate, and the house for the Democrats at the expense of the Republicans. (And yes, it would be just as noxious if it were the other way around.) Of course, it is properly the prerogative of the voters to determine which party is in control and not behind-the-scenes operators pushing allegedly good-government constitutional amendments with convenient side effects for their cause.
And that brings us to the second reason for opposing the Reform Michigan amendments. They work against good government. Representative government should be, after all, representative. As it stands, 110 state representatives and 38 state senators are not a large number of legislators for 10 million Michiganders. The proposed amendment reducing the size of the state house would concentrate lawmaking into fewer hands necessarily less representative and more remote from their constituents. The greater the number of constituents a legislator represents, the less influence any one constituent or small group of them has with him. Thus, the legislator is even more captive to powerful constituents and special interests. While this problem can be mitigated by giving a legislator a bigger staff, it does put a bureaucratic barrier between him and the ordinary constituent.
Better that we have double the number of legislators in the house and senate than any fewer. Smaller districts are more representative of the diverse communities that make up our state. Plus we can make them part-time lawmakers, because the same amount of legislative work could be spread across more people. Also, as part-timers, our legislators receiving only part-time pay literally could not afford to isolate themselves from the real world the rest of us live in. Just the opposite happens with the Reform Michigan amendments. Even though they modestly cut the pay of officeholders, the smaller number of legislators would remain full-timers drawing a sufficiently high salary to make Lansing their source of financial well-being rather than the communities they come from.
It is a misguided notion that we need "professional" legislators in Lansing -- i.e., we need men and women drawing good salaries and benefits from the taxpayers to work full-time on making new laws. Consider that full-time lawmaking means full-time law-changing. That is not good government. The law should be limited in what it rules, and what it does and how it does should not be in doubt. That is not achieved with a continuous flow of new legislation. It is a chaos to which "professional" legislators attach themselves by our mandate that they become full-time lawmakers rather than as our occasional citizen-emissaries to Lansing to represent our communities on only the most pressing public issues.
The Reform Michigan constitutional amendments not only stink of hack partisanship but would restructure our state government to concentrate it into fewer hands more beholden to special interests than to ordinary Michiganders.
Last month Gary Olson, an official advisor to the Michigan State Senate on fiscal matters, advised the appropriations committee that the state’s new tax incentive program for filmmaking companies will cost over $127 million in tax credits this year in exchange for only $10 million in income and sales taxes that 22 film projects presently committed to the state will generate.
Under this hand-out pushed by Governor Jennifer Granholm and star-struck state legislators earlier this year, filmmakers get a 40-cent credit from Michigan taxpayers for every dollar they spend in the state to make movies, television programs, and even computer games. This credit is applied against the amount a filmmaking company owes under the Michigan Business Tax. But that’s not all. That 40 cents is not just a tax credit, but a refundable tax credit. That means if the credit exceeds the amount of the state’s MBT bill to the company, the taxpayers then cut the film company a check for balance of the credit.
That’s right! We are paying the film industry to shoot movies in Michigan. For example, if a filmmaking company spends $10 million in the state for a movie project, it gets a $4 million refundable tax credit. If the company’s MBT bill is $2 million, then the remaining $2 million of the credit is directly paid to the company straight out of the state’s tax coffers. In exchange for all this, according to Olson, the project will put back into the coffers about $790,000 in state income and sales taxes. To add insult to injury, the film company won’t even pay those taxes. The local employees and vendors of the company will.
Meanwhile Guv Jen is telling Michiganders to suck it up, because there will be no limit on this taxpayer giveaway to the film industry. The governor along with the legislators who backed this boondoggle insist that we have to subsidize the film industry if we want it to take root in the Great Lakes State. Of course, they say we must also understand this will be a long process that will not produce a robust film industry here overnight. In other words, the current crop of politicians who are now paying for their fantasies of hobnobbing with the stars with our tax dollars will be long out of office when this idiotic waste of money does nothing better than drawing into our state a gaggle of weak businesses that can’t survive without a taxpayer handout.
The stupidity of these politicians is costly to us. (By calling them stupid, I am being charitable. I assuming that they are benighted and not bedeviled in what they have done.) They throw away our tax dollars on film companies that will not do business anywhere unless they get generous subsidies -- because they cannot make money otherwise -- and pay for this foolishness by ratcheting up the tax burden on other companies that can and do business in this state without any subsidies -- until that burden either ruins them, restricts their growth, or drives them out of state. Thus, Michigan becomes an economic wasteland.
Let’s be clear. Lower taxes (as opposed to subsidies) are good for all of us, if they are non-discriminatory. However, they will wreck an economy (especially as subsidies) if politicians pick and choose which businesses get their favor. Call this Gresham’s Law applied to business. Taxpayer subsidies draw in weak businesses and drive out strong ones. Renaissance zones, bio-tech and ethanol subsidies, the farm preservation program, and the other targeted business tax breaks and subsidies all contribute to the same rotten result -- as this new filmmaker tax credit will -- of impoverishing us.
It’s long past time to say no more. Cut taxes for all of us, not just those who catch the fancy of our elected officials.
Last month we reported the story of John Gregory, a Forest Hills school district principal who refused to resign his office after pleading guilty to drunk driving. Why should he? No one in authority is demanding it of him. Besides, ‘fessing up to his criminal irresponsibility made it a “teachable moment” for his students. Exactly what that moment taught I’m not sure, but when too many kids drunk behind the wheel kill and get killed, keeping his office certainly doesn’t send the message that drunken driving should be taken too seriously.
Gregory, it seems, has an acolyte of his school of “Never Say Quit!” James Idziak, a Comstock Park school district teacher, was charged with a pair of felonies after leading the cops on a drunken car chase northwest of town last month. The prosecutor further charged him with misdemeanor child endangerment from partying with his high school students prior to the chase. The teachers union, the Michigan Education Association, is standing by their man and providing him with a lawyer to defend his tenure because he refuses to quit teaching.
Again, why should he? Even though the Comstock Park school board, in stark contrast to the Forest Hills board, fired Idziak for his reckless conduct, that is no guarantee he will lose his job because of it. The union will fight for him. In fact, even a conviction on one of the felonies or the child endangerment charge is no assurance that he will lose his teaching certificate. The union will fight for him again. The only certain means of Idziak losing his job is to quit. But he learned from Gregory’s teachable moment that a public servant is the last person who needs to hold himself accountable for his wrongdoing.
Last week Jack Crofoot contacted us with good news.
As you will recall, Mr. Crofoot was facing a trial on criminal charges pressed by the grocery chain Spartan Stores. On the advice of Warner Norcross attorney Alex DeYonker, Spartan was trying to intimidate Mr. Crofoot into silence about his mistreatment by the company after one its security guards had falsely twisted a honest mistake into a shoplifting beef against him. (Mr. Crofoot, who is legally blind, exited a Spartan grocery store with an unchecked item in his shopping cart. The security guard accosted him when he was going back into the store to correct his mistake.)
Grand Rapids Assistant City Attorney Margaret Bloemers gleefully piled on to prosecute Mr. Crofoot, even after Spartan's security manager contacted her to drop the charges. You see, the company's surveillance video proved Mr. Crofoot's innocence, and the security manager knew that. This put Spartan Stores in a pickle: They had falsely accused Mr. Crofoot of a crime, about which he had been making public complaints. DeYonker tried to bully Mr. Crofoot into silence by hanging the possibility of future prosecution over his head if he didn't shut up, but Mr. Crofoot refused to be cowed. So Spartan pressed on with charges, with Bloemers happily carrying their water in court.
This shouldn't have been a tremendous problem for Mr. Crofoot to overcome, because of the evidence of the Spartan surveillance video. However, Spartan refused to release to the court the portion of the video that exonerated Mr. Crofoot, and Mr. Crofoot's public defender did not want to be bothered with defending his client. (After all, that would mean working for his fee paid by the taxpayers, and who are they to expect anything like that?) So, by the time Mr. Crofoot's trial was scheduled for the end of April, things looked bleak.
Fortunately, the American Council for the Blind stepped and sent an attorney to Mr. Crofoot to represent him. All of the sudden, Bloemers folded and the City Attorney's Office signed an agreement dismissing all charges. As for Spartan Stores, all Mr. Crofoot could say is that he signed an agreement to no longer publicly discuss the matter. Therefore, we do not know what, if any, settlement has been reached between Spartan and him. For what it's worth, I will say that a "gag order", like the one Mr. Crofoot spoke of, would indicate his lawyer got him a favorable settlement from Spartan.
So despite the mendacity of Spartan Stores, the thuggery of Warner Norcross, and the supine submission of the City Attorney's Office to the players in town, justice did prevail. Mr. Crofoot is officially no longer a bad man. We wish him well.
Whatever happened to the "morals clause" in service and employment contracts? How is it that a high school principal can get sloshed, climb behind the wheel of car, get arrested for drunken driving, then convicted for the same, and still keep his job? Indeed, how is it that the man is perversely lauded for providing his students with a "teachable moment"?
What Jon Gregory, principal of Forest Hills Northern High School, taught his students this week is that a bad act may have consequences, but one of those consequences doesn't have to be taking personal responsibility for it. The police may arrest you, the media may report what you did, and the judge may fine you or lock you up, but you certainly don't have to resign from your public office. Others may have the power to make you account for what you did, but you don't have to make yourself pay for your malfeasance.
This is the substance of Gregory's "teachable moment" after he was arrested last November for drunken driving and pled guilty to it on Tuesday in Rockford District Court. He has been hailed for his honesty in revealing his arrest to the Forest Hills school board last year and his impending trial to Northern's staff and students last Friday. Well, I'm not sure how much virtue there is in being honest about a matter that is public knowledge. I do know, however, that the integrity of making yourself personally accountable for your misdeeds is virtuous. I do know that such integrity probably demands that you resign your office for violating an important public trust -- i.e., setting an example of character for our children -- because it is simply not enough to roll the dice on whether anyone else will hold you accountable.
The bottom line is that the students of Forest Hills Northern have learned this from Gregory: Have no shame for your bad acts. It is enough to be honest and declare mistakes were made, but let's not drag integrity into this mess. If outside forces make you pay, sobeit. But you don't have to make yourself pay. Why should you? If what you did wasn't too heinous, possibly no one will make you pay much for what you did. So why make certain you will pay through your own actions?
We do not ask too much of a high school principal to have the shame to resign for drunken driving, especially when that dangerous behavior is one far too many high school students indulge in. If Gregory hasn't either the decency or the commonsense to know that by holding onto to his office, he is clearly communicating to his charges that drunken driving really isn't that serious of a thing, then the Forest Hills school board should supply that decency and commonsense. Unfortunately, while none of this is too much to ask, it is too much to expect these days of public servants.
Now that it looks like a re-do of the Michigan Democratic presidential primary is in the dustbin, it's time to sort through this mess.
There's been a lot of huffing and puffing over how the national Republican and (especially) Democratic parties "disenfranchised" Michigan presidential primary voters. Of course, the state, not national, party organizations have themselves to blame. The national organizations laid down the rules on scheduling primaries. They permitted only a few states to hold primaries or caucuses ahead of "Super Tuesday" on February 5th. They clearly warned the state organizations that holding an early primary would result in some or even all of the selected delegates not being seated at this summer's presidential conventions.
Nevertheless, Michigan Republicans and Democrats blundered forward with an early primary in plain violation of the national party rules -- and now are paying the price for it. Because the Republican presidential nominee is a settled matter, no one on that side of the aisle cares anymore. However, the Democrats still have a tight race for the nomination, and so Michigan delegates now might matter if they are seated. Thus, the sound and fury during the past few weeks about the Democratic national party "disenfranchising" Michigan voters if either the national party doesn't seat the delegates chosen in the renegade primary or the voters don't get another primary to chose again.
The first big piece of clutter to clear out of the way is that voters have NO constitutional right to choose a political party's nominee for public office. Political parties can pick their nominees any way they want, whether it's a primary, a caucus, a convention, or a smoke-filled room. Whether or not it is savvy, reasonable, or fair for a political party to use one method instead of another is not the point. The First Amendment freedom of association is. So, the Republican and Democratic national parties can dictate any rules they deem fit for determining who their presidential nominees will be. If they want to exercise control over the primary calendar (which, in light of how the Democratic contest is playing out, trying to prevent a front-loaded calendar seems not to have been such a bad idea), they can do so.
And if they want to penalize state parties that violate that schedule, they can do so. It should be clear to everyone by now that this is a hard fact of life. The courts have repeatedly refused to get into this mess, because they know they have no jurisdiction over the matter. So why all the hullabaloo directed at the national parties? Why aren't we thoroughly ticked off with the Michigan Republicans and Democrats who took our tax dollars to hold presidential primaries to chose delegates who would not be seated at the summer conventions? They are the ones who took $10 million from taxpayer wallets to hold a meaningless event -- indeed, an event they knew was meaningless at the time.
In fact, why do the taxpayers even pay for political party contests in the first place? How is it that we are obliged to subsidize the nomination process of the Republican and Democratic parties over which, by their First Amendment rights, we have no control? Primaries might well be a good way for parties to select their nominees, but let them and not the taxpayers pay for it. Meanwhile, keep in mind those state pols who blew your money on a pointless presidential primary the next time he or she is trolling for your vote.
Yesterday the Grand Rapids City Politburo -- I mean, Commission -- met and discussed the potholes that are reducing our streets to rubble and our cars to wrecks. There was the usual griping that city apparatchiks haven't confiscated enough of the bourgeoise's wealth to pay for capitalistic excesses like pothole repairs. So, Second Ward Commissar David LaGrand proposed a corvee! Yes, a corvee, labor exacted in lieu of taxes to build or repair highways.
I kid you not, folks. WOOD TV-8 News reported that LaGrand recommended giving local residents a shovel and a bucket of tar to repair our potholed streets. Nothing like a bit of old school workers' paradise to fix a problem that the government is too incompetent to remedy. Heck, if the Soviets managed to bring in the harvest by hustling people out of their offices and factories into the countryside to do what the state collectives couldn't get done, why not give it a try in River City?
No doubt LaGrand would object that he was calling for volunteers. Well, I'll go along with that so long as payment of city taxes is also voluntary.
Kevin Kabat rose through the ranks of that venerable West Michigan institution, Old Kent Bank & Trust, and played a key role in suppressing a shareholder revolt when the big bank from Cincinnati, Fifth Third Bancorp, gobbled it up in April 2001. Two years later, after Fifth Third reduced Old Kent to its Michigan subsidiary and then ousted its discredited mole, David Wagner, from the top spot there, Kabat took the reins of Fifth Third-Michigan. Then last April, Kabat was rewarded for keeping the Fifth Third-Old Kent merger skeleton in the closet with promotion to chief executive officer of the entire bank. So he packed his bags and moved to Cincinnati.
Now we learn from the Securities & Exchange Commission that after less than a year running the show at Fifth Third Bancorp, the board of directors paid him $10 million in 2007. That includes a base salary of $866,534, perks and benefits totaling $140,400 such as $28,682 in country club dues, a $3,000,0000 performance bonus, and $6,000,000 in Fifth Third stock and options. So Kabat bagged $10 million while his shareholders got what in 2007? Well, Fifth Third's stock (ticker symbol: FITB) plummeted from a high of $43.32 a share in 2007 to $22.13 a share this morning. That wiped out about $10 or $12 billion in shareholder value since Kabat took over.
Well, maybe Kabat deserved his big payday, because in a tough market, he had managed Fifth Third better than its competitors. Sounds good. However, there's the inconvenient fact that Fifth Third's performance ranking has been at or near the bottom of the top fifty largest banks in the U.S. The big bank from Cincinnati continues to sink after the Federal Reserve put the kibosh on ex-CEO George Schaefer's running-on-water strategy designed to outpace the discovery of irregularities in Fifth Third's acquisitions of competitors, especially Old Kent.
And do not doubt that Kabat won a jackpot from the directors. Even Jeffrey Immelt, chairman and CEO of General Electric did not make as much as Kabat. GE's directors paid him only $9.1 million for running a company with a shareholder value thirty times the size of Fifth Third. If Kabat had been paid accordingly, he would not have even earned half of his base salary. It appears that our local boy is still collecting from grateful Fifth Third's directors for keeping shareholders in the dark about the crooked deals surrounding the Fifth Third-Old Kent merger, such as Toxic Towers.
Jack Crofoot is a bad man. So bad he needs to be locked up in the joint. At least that's what Spartan Stores, their attorneys at Warner Norcross, the Grand Rapids City Attorney's office, and apparently even Mr. Crofoot's public defender want you to think. What did this bad man do?
Mr. Crofoot was a regular patron of Spartan's Family Fare grocery store near the intersection of 44th Street and Breton. One day he missed a couple of items in his grocery cart when he checked out. Before leaving the store, he noticed one of them, a bottle of bleach, and then went back and paid for it. Then immediately after exiting the store, he noticed the other item, a bottle of rum he purchased for a family member. (Mr. Crofoot doesn't drink.) As he headed back into the store to pay for that, the store's security guard detained him and refused to let him do so.
Mr. Crofoot missed the bleach and the rum at the check-out because they were out of sight in his cart, and you see, folks, he is legally blind. However, the Spartan rent-a-cop scoffed at his blindness and demanded that he sign documents confessing to theft. Mr. Crofoot refused, and the rent-a-cop called in the Grand Rapids police. As it happens, the rent-a-cop was also a cadet with the GRPD, so he had an incentive to make it appear to his colleague in blue that he was making a good bust and not a screw-up. As it also happens, this conflict of interest is the very reason why the City of Grand Rapids prohibits its police officers from moonlighting as security guards within the city limits. (More on that below.)
So the Spartan rent-a-cop persuaded his brother officer to cite Mr. Crofoot for shoplifting. Understandably, Mr. Crofoot was unhappy about this and had the gall to complain. In fact, his complaint did get the attention of Spartan's manager for security who then reviewed the store's surveillance video of the incident. He concluded that Mr. Crofoot had told the truth and committed no theft. So the security manager contacted the Grand Rapids City Attorney's office to drop the charges. However, Assistant City Attorney Margaret Bloemers refused.
She was miffed that Mr. Crofoot had made a public complaint about the Spartan rent-a-cop's conflict of interest, which forced the GRPD to enforce the moonlighting regulations that its cadet had been violating. So, Ms. Bloemers, who serves as the GRPD's legal adviser, decided to make an example out of Mr. Crofoot and show us slack-jawed yokels that we had better not get uppity when the cops make a mistake. She pressed on with his prosecution in the city's district court.
Meanwhile, Spartan's security manager had been overridden by the grocery store chain's hired gun, Alex DeYonker of the law firm Warner Norcross & Judd. Mr. Crofoot's public complaints about Spartan tarring his name with an unjust prosecution raised the prospect that he might have a meritorious lawsuit against the grocery store. Thus, Mr. DeYonker decided to deter that prospect by bullying Mr. Crofoot into submission. So instead of giving the man a simple apology and gesture of goodwill as the security manager had originally offered, Spartan's jackal -- ahem, Mr. DeYonker -- decided is was best to hold a suspension of the prosecution (rather than an outright dismissal of it) over Mr. Crofoot's head until he knuckled under to Spartan's settlement terms.
Mr. Crofoot didn't agree, because he wanted his name cleared. So Spartan, Warner Norcross, and the City Attorney's office proceeded with his prosecution. Living on a fixed income, Mr. Crofoot needed a public defender and the district court assigned one to him. Unfortunately for him, his lawyer was one of those operators who collects his fee from the public defender's office and then does as little as he can get away with in exchange for it. In fact, he told Mr. Crofoot that he would not enter a plea of "not guilty" on his behalf because it wasn't worth the trouble. He claimed that he had already met with the judge who was determined to convict him. Unsurprisingly, Mr. Crofoot made a big stink about this: He wanted his lawyer to defend him! Finally, his lawyer relented and agree to enter a "not guilty" plea, but he would not do any work toward his defense -- for example, subpoenaing the store's video surveillance tape or the security manager and the store clerks to appear as witnesses. Mr. Crofoot's lawyer explained that such case preparation would take too much trouble.
Of course, we can all marvel at the absurdity of this. However, Mr. Crofoot faces the prospect of doing time, because everyone who should be putting things right by Mr. Crofoot has instead chosen to serve crass, rotten, venial interests that profit by his conviction, as unjust as that may be:
[1] The Spartan security guard vilified Mr. Crofoot to make himself look good to his superiors at the GRPD;
[2] Spartan and Warner Norcross have chosen to run a customer through a ruinious process to crush any prospect of a lawsuit for falsely detaining and defaming him as a thief;
[3] The City Attorney's office has put petty bureaucratic solidarity ahead of justice to smack down a citizen who rightly complained of a police officer's conflict of interest in the matter; and
[4] His public defender is peeved that his client should be so unruly as to demand that he actually defend him and so make him work for his fee.
Mr. Crofoot's real crime, folks, is that he had the temerity to complain when wronged. He had the nerve to hold people accountable to the rules they claim to abide by. He had the unmitigated gall to demand that his name be cleared by those tarring it. Instead of fixing the problem, the Spartan security guard, Spartan Stores, Warner Norcross, the City Attorney's office, and his public defender chose to vindicate themselves at his expense -- which may end up including a jail sentence. Their craven cowardice in refusing to admit a wrong to falsely justify themselves -- especially those who hold a public trust, like Assistant City Attorney Bloemers and Mr. Crofoot's public defender -- is despicable.
Such is the rule of petty bullies in River City and the supine go-along-to-get-along culture of our public officials, watchdogs, and local media that lets them get away with it.
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