WHERE'S THE OUTRAGE? (Pub Date TBD)

A few days ago Laurence Leamer, author of the new book "The Price of Justice: A True Story of Greed and Corruption" (Times Books, 448 pages), tweeted, "Why hasn't the West Virginia (press) asked why Don Blankenship has not been indicted for his role in the Upper Big Branch disaster?"

Leamer’s question is rhetorical and in the haiku of Twitter might be read simply as an attempt to shame journalists and prosecutors into action. But, Leamer knows West Virginia too well – its publishers, lawyers, judges, and people -- to expect so simple and righteous a reaction. He understands our political culture of accommodation and the tendency of an economically and culturally deprived people to slip into unknowing acquiescence. Thus Leamer’s tweet is a provocation, but one tinged with despair, because he grasps the human toll taken by our lassitude – the lives impoverished, stunted, and lost.

“The Price of Justice”, is a nearly up-to-the-present account of Hugh M. Caperton’s lawsuit against the former Massey Energy Company and its chairman, Don Blankenship, for using deceptive business practices to drive Caperton’s firm, Harman Mining Company, into bankruptcy presumably so that, rather than purchase the mine directly from Caperton, Massey could buy it out of bankruptcy for a fraction of its actual value.

Caperton v. Massey famously landed before the US Supreme Court over the question of whether West Virginia Supreme Court of Appeals Justice Brent Benjamin, whose election was bankrolled by Blankenship, should have recused himself when the court considered a lower court verdict that awarded Caperton $50 million in damages. The case became the inspiration for John Grisham’s novel , “The Appeal”, about a company that attempts to buy a state supreme court decision. But, Massey, unlike Grisham’s fictional company, succeeded when Benjamin cast the deciding vote in a 3-2 decision.

The judicial scandal didn’t end with Benjamin who was rebuked by the US Supreme Court and had to recuse himself from further involvement in the case. Also joining the rogues gallery was former Justice Elliot “Spike” Maynard whose impartiality was compromised when he was photographed vacationing on the French Riviera with Blankenship. Fellow justice Larry Starcher, had to recuse himself for prejudicial remarks he made about Blankenship. But most disturbing was Justice Robin Jean Davis who, as portrayed by Leamer, connived to throw the case Massey’s way.

During oral arguments Davis mischaracterized the lower court record. Following oral arguments she pre-empted any discussion of the case by the justices and proceeded directly to a vote. And, in rejecting the appeal, she and her allies did so “with prejudice”, meaning the case could not be retried or reheard. Finally, in finding for Massey, Davis’s majority did so on apparently specious legal grounds.

Why did they do it? Why have West Virginia politicians historically accommodated coal interests even when they run counter to the interests of citizens and, as Leamer shows was the case in Caperton, when they destroy lives?

Does Leamer fully prove these charges? No. But, he makes a compelling circumstantial case that warrants – nay, screams for – intensive scrutiny by reporters and politicians. This is why.

In attacking Harman Mining Company, Blankenship and Massey reneged on a contract to purchase coal at a specified price because it saw the possibility of driving Harman out of business and then acquire it for a song. That doing so would bankrupt Caperton, stiff creditors, and throw hundreds of workers out of jobs was unimportant.

Contractual obligations were similarly unimportant when Massey shorted Wheeling-Pittsburgh Steel on coal deliveries so the coal could be sold at higher prices elsewhere. Wheeling-Pitt sued and won a $220 million award, but the victory proved to be pyrrhic since the damage done to Wheeling-Pitt drove the company into bankruptcy, destroying hundreds of jobs and putting a nail in the coffin of a firm that once was the anchor of the upper Ohio Valley’s economy.

Then, of course, there were Massey’s thousands of violations of safety rules that produced the deaths of dozens of miners culminating in the tragedy at Upper Big Branch.

It’s important to remember that all of these tragedies resolve themselves in people. Leamer shares with us the anguish of the widows of dead Massey miners, the shattered life of a young man who became collateral damage in Blankenship’s drive to elect Brent Benjamin, and the Candide-esque tribulations of Hugh Caperton whose continuing search for justice and financial solvency is now in its fifteenth year. These tragedies are only partially offset by the inspiring perseverence of two attorneys, David Fawcett and Bruce Stanley, who strive to stop Blankenship. The suffering and efforts of all of these people are necessary because businessmen such as Blankenship are predators.

With customers and suppliers alike, Blankenship seized on any weakness to wring out maximum return. In doing so, adherence to the law and to human decency was seen not as a matter of principle, but as an option to be weighed on the scale of profit and loss leaving concerns about legality and ethics to those who are charged with enforcing such naïve concepts. Blankenship reminds us that, try as we might to make the cost of illegality and injustice greater than the gain, we can never anticipate all the means and rewards of malefaction.

That’s why the relative silence of journalists and politicians about Massey is deafening and why Leamer’s tweet and its implied question are so important.

Where’s the outrage?

"THE STATE OF MY STATE: THE BOOK" is on the way

This is the cover adorned with generous blurbs from WV Delegate Stephen Skinner, WV Poet Laureate Marc Harshman, and Ted Boettner, executive director of the WV Center on Budget & Policy. The book will be available in hard copy and online next month.

NO MORE LEECHES! (Pub Date May 18, 2013)

“Leeches! I must have more leeches!”

That’s the economist, Jared Bernstein, parodying British Chancellor of the Exchequer George Osborne, by portraying Osborne as a medieval physician practicing bloodletting to rid the British economy of “evil humors”. It’s a figurative, but sadly accurate characterization of Britain’s failed policy of budgetary austerity to which Osborne has grimly clung despite his nation’s five-year descent into double-dip recession and economic stagnation.

But, Bernstein might as easily have been parodying West Virginia Governor Earl Ray Tomblin and state legislators, Democratic and Republican, who as stewards of West Virginia’s economy continue to practice their own form of bloodletting -- corporate tax cuts and favors, which, because they primarily benefit out-of-state businesses and individuals, drain West Virginia’s economy of money and shift more of the tax burden onto West Virginia residents.

Tomblin and the others argue that their policies will increase investment in West Virginia by reducing costs. But years of business tax cuts and incentives have merely exported hundreds of millions of doallars out of state without any measurable benefit in jobs or investment. That’s because, looked at another way, the policy is really just a form of discounting, which is what merchants do when their products won’t sell. It’s a final act of desperation to which sellers resort when they don’t know how to improve their product or correct its weaknesses, which in West Virginia’s case include a poorly educated workforce, decrepit infrastructure, a dearth of suppliers and service providers, a poor quality of life, and a degraded environment.

An indication of our leaders’ desperation and their inability to think of ways to address West Virginia’s fundamental problems was a comment made by a state legislator who is generally progressive in outlook. When asked why he supports continuing ineffectual corporate tax cuts, he replied, “What else can we do?”

His reaction perfectly captures West Virginia’s problem. Although current policies are failing and many legislators know it, they can’t think of an alternative. So they repeat past errors, hoping for different results, but inevitably falling victim to the prophecy of Moms Mabely who said, “If you keep doing what you did, you’ll keep getting what you got”. In West Virginia’s case, that isn’t much.

So, here in broad strokes, is an alternative -- a series of policies for economic growth that, in contrast to the failed practice of discounting the state and exporting assets, would expand West Virginia’s economy by retaining more of the wealth the state generates and by attracting funds and investment from beyond West Virginia’s borders.

First, West Virginia can rebalance its mix of taxes to reflect national averages and shift much of the burden from West Virginia residents to out-of-sate entities. Doing so would save West Virginia residents between $250 million and $350 million a year in taxes without reducing government revenues. Most of the savings would be directly injected into the state’s economy.

Second, West Virginia should raise the minimum wage. One-third of jobs in West Viriginia pay poverty-level wages (at or below the federal poverty line for a family of four), the highest proportion in America. Last year a study by the Economic Policy Institute showed that raising the minimum wage from $7.25 an hour to $9.85 would increase wages by $300 million annuallym add $200 million a year to economic acitivity, and yield 800 new jobs over three years.

Third, at a federal level, West Virginia representatives should defend Social Security benefits. West Virginia gets a greater share of household incomes from Social Security than any other state. In fact, Social Security provides more income to West Virginians than the entire coal industry. So, cuts to Social Security benefits, such as those resulting from increasing the eligibility age, will harm West Virginia more than any other state. That's why our representatives must defend Social Security resolutely.

Fourth, on federal taxes, two of our congresspeople, David McKinley of the first district and Shelley Moore Capito of the second, as well as Senator Joe Manchin, stood quietly by while the federal payroll tax cut expired last year. Their acquiesence along with that of their colleagues cost West Virginia taxpayers $500 million a year in income. State leaders and citizens should insist that our federal representatives support restoration of the payroll tax deductions and the implementation of other progressive tax policies as part of upcoming budget negotiations.

Finally, West Virginia should take advantage of every opportunity to attract more money to the state’s economy. The recent decision to expand Medicaid under Obamacare will inject $500 million a year into West Virginia’s economy. We need to seek out every such opportunity.

Collectively these measures would expand West Virginia’s economy by billions of dollars annually. That translates into greater incentives for working, more jobs, and increased sales for West Virginia businesses, which is a far more powerful incentive to expand and hire than fractional reductions to tax rates, especially since, by retaining more of its resources, the state would also be able to address issues of education and infrastructure, which are the other great inhibitors of business growth.

Some will argue that these measures would discourage business expansion by raising business costs. They are wrong and future columns will explain why. In the meantime, the choice is stark. We can invigorate the economy by retaining and investing more of the wealth that’s created by West Virginia resources and labor or we can apply more leeches.

HOW TO KILL AN ECONOMY (Pub Date 5/4/2013)

Sometimes a statistic seems obviously wrong and even absurd. It’s duly put on some back shelf of the mind where, if we had a choice, it would be forgotten. But, memories are not chosen and it’s a good thing because sometimes we begin to notice events occurring that the statistic predicted. And earlier events, which had previously baffled us, all of a sudden become understandable.

Such is the story with West Virginia’s “Rate of Absentee Land Ownership”. Chances are you’ve never heard of this obscure statistic, which quantifies the share of West Virginia land that is owned by out-of-state individuals and businesses. The last major study of property records done in 1981 showed that 60% of West Virginia was owned by out-of-state entities. Another 15% was owned by state and federal government, which left just 25% for residents of the state. There is little to suggest that the situation has changed significantly in the thirty-two years since.

The statistic’s obscurity owes partly to antiquated government record keeping, which makes research difficult, but also because, as we will see in a moment, it's implications are politically inconvenient for for state policymakers.

An equally obscure statistic is the share of jobs in West Virginia that pay wages that fall below $22,314 per year, the federal poverty line for a family of four. By that standard, one-third of West Virginia jobs pay poverty wages – the highest rate in the nation in which the overall average is 21%.

When you put these two neglected statistics together you suddenly realize that, in an economy that offers two ways to make money – wages and return on capital – West Virginia residents don’t have much of either. This goes a long way toward explaining why West Virginia is by many measures the most impoverished state in the nation. What it doesn’t explain is why political leaders in the state pursue tax policies that magnify rather than mitigate these weaknesses.

Part of the reason that wages in West Virginia are so low is that the bulk of West Virginia commerce is done by companies that are based in other states. That's where the executive-level jobs are, where the profits from the business these companies do in West Virginia end up, and where most of the gains from property ownership gravitate. In short, that giant sucking sound you hear is wealth, created by West Virginia resources and developed by West Virginia labor, being furiously drained from the state.

Mostly, it's money lost to West Virginia residents and to the state’s economy. Demand for goods and services is reduced thereby restraining economic growth and limiting the resources available to a state government that struggles to address chronic problems of inadequate services and infrastructure. The strange thing is that these effects could be mitigated and even reversed with some rather simple changes to state tax policy.

State and local governments are primarily funded by four types of taxes: sales, individual income, corporate income, and property. West Virginia also generates substantial government revenue from severance and gambling taxes. But, not all of these taxes are the same in terms of who pays them. Personal income taxes are paid almost exclusively by West Virginia residents. Sales taxes are also paid mostly by residents of the state. But, for the reasons cited above, corporate income taxes, property taxes, severance taxes, and gambling taxes are largely paid by out-of-state entities.

Given the aforementioned evaporation of wealth from West Virginia due to out-of-state ownership, you might think the state would be inclined to rely less heavily on taxes that mostly impact residents and more heavily on those that impact out-of-state players. You would be wrong.

Nationally state and local governments generate an average of 38% of their funding from property and corporate income taxes – taxes which in West Virginia are largely paid by out-of-state entities. But, in West Virginia only 25% of state and local government funding is derived from those sources. Meanwhile, personal income and sales taxes, which are primarily paid by residents are taxed more heavily in West Virginia than in the rest of the nation. Even West Virginia’s severance tax on coal is lower than those of other major coal-producing states, Wyoming and Kentucky.

So, what would happen if West Virginia were to adjust its severance tax to match Wyoming and Kentucky and alter other taxes to reflect the proportions that prevail nationally? In short, far more of the tax burden would be born by out-of-state entities and far less by West Virginia residents.

West Virginia residents would save between $250 million and $350 million every year on taxes without any change in the total amount collected by state and local government. To put that figure in perspective, it would be the largest single tax cut for West Virginia residents in the state’s history. It would put an additional $400 to $600 a year in the pocket of the average West Virginia family and significantly expand the state’s economy in the form of additional demand for products and services from West Virginia businesses.

Instead, even as the state cuts education and services in the face of budget shortfalls, it continues to implement masochistic tax cuts that largely relieve out-of-state businesses and indivduals while shifting more of the tax burden to West Virginians thereby draining wealth from the state. It's truly a lesson in how to kill an economy.

THE SECOND ARROW (Pub Date 4/20/2013)

From “The Accidental Buddhist”. “The Buddha once asked a student, ‘If a person is struck by an arrow, is it painful?’ The student replied, ‘It is.’ The Buddha then asked, ‘If the person is struck by a second arrow, is that even more painful?’ The student replied again, ‘It is.’ The Buddha then explained, ‘In life, we cannot always control the first arrow. However, the second arrow is our reaction to the first. The second arrow is optional.’”

The terrorist attacks on 9/11 were a first arrow. Mass shootings at Columbine, Aurora, and Sandy Hook were first arrows. Coal mine disasters at Upper Big Branch and Sago were first arrows. And disasters such as Superstorm Sandy and Hurricane Katrina were first arrows as well. Now we can add the Boston Marathon bombings to this list of events whose impact is so deeply felt that they invite reaction and, with it, the possibility of a damaging second arrow.

Terrorist acts, unlike accidents and natural disasters, are undertaken with the specific goal of inciting a second arrow. By themselves terrorist attacks do comparatively little damage. As of this writing, the Boston bombings have killed three and wounded 175 -- a human and spiritual tragedy, but a statistical non-event on a day when gunfire and accidents killed and wounded a hundred times that many. Even the 3,000 Americans killed in the 9/11 attacks increased that day’s death toll in America by only 25% and in that year by a factor so small that it amounts to a statistical rounding error.

The damage terrorist attacks do is spiritual, but social damage, if there is any, is inflicted by us when we react. Sometimes our reactions are prudent and in rough proportion to the risk presented. That was the case with Timothy McVeigh’s bombing of the Murrah federal office building in Oklahoma City in 1995 and with the Centennial Olympic Park bombing in Atlanta in 1996. Sometimes we underreact as was the case with the Upper Big Branch mine disaster in the wake of which Governor Earl Ray Tomblin and the legislature dissipated public anger by enacting ballyhooed but almost hollow mine safety bill.

But, more often, if the event has caught the public’s imagination, we overreact and in some cases we oppotrunistically exploit the event. The 9/11 attacks provided a convenient excuse to launch a preconceived war with Iraq that resulted in more than a million deaths and little beneficial effect apart from a reshuffling of that country’s sectarian deck. Meanwhile, here in America we witness the aftereffects every time we walk into an airport or discover new ways in which civil rights have been circumscribed in the name of national security.

Although Osama Bin Laden may have lost the war, he won the battle of 9/11 by successfully provoking a reaction that cost America and the world untold numbers of lives, billions of dollars, and, perhaps most dearly, the moral stature America once had in the world as well as much of the good will Americans of different political persuasions once felt toward one another. Such was the devastating power of that second arrow.

So, what will we make of the Boston bombings? How, if at all, will we or should we react beyond finding and prosecuting those responsible?

At present there is too little information to know and, besides, we haven’t finished dealing with our previous mind-concentrating event, the mass shooting at Sandy Hook. As of this writing, a bill that would expand background checks for gun purchases awaits a vote in the senate. Some say the bill, although inadequate, is a step in the right direction and refects what we’ve learned as a result of Sandy Hook and similar catastrophes. Others say the bill does nothing to enhance safety, needlessly burdens gun owners, and represents a shameless exploitation of Sandy Hook to achieve part of a larger agenda.

Since we only learn from experience, events such as Sandy Hook warrant public debate. Still, it’s difficult to determine when the discussion passes from the realm of legitimate debate and into the realm of exploitation. But, there are warning signs. One is when people willfully mislead, which is what happened in the run up to the invasion of Iraq. But, another warning sign is more subtle.

During the 1988 presidential campaign, Democratic candidate Michael Dukakis was confronted with the question of whether he would support the death penalty for a criminal who raped and murdered his wife. In one of many self-inflicted wounds, Dukakis, a death penalty opponent, responded to the horrific scenario in such a detached and bureaucratic manner that he seemed alien. After the debate New York Governor Mario Cuomo, another death penalty opponent, reflected on how he would have answered the question. Cuomo wrote, “I tremble at the thought of how I might react to a killer who took the life of someone in my own family. I know that I might not be able to suppress my anger or put down a desire for revenge, but I also know this society should strive for something better than what it feels at its weakest moments.”

When we discover who set the Boston bombs and the reasons why, we like Mario Cuomo, should give full vent to expressions of anger, but also let reason guide our actions lest we again fall victim to our worst angels and the second arrow.

HOW THE NRA WOULD SEND HUNDREDS OF ARMED, VIOLENT FELONS INTO OUR SCHOOLS

What are there, perhaps two or three mass shootings in schools every year? To address the problem the NRA has proposed training and arming willing teachers and staff members so that would-be school attackers would face armed resistance.

If we assume just one armed teacher or staff member per school in the US, that would translate into about 125,000 people carrying guns. While it's possible their presence might deter attackers, it's also possible that the cure could be worse than the disease.

125,000 is a lot of people and, however well we screen and train them, a few bad apples are likely to slip through. For instance, we subject police officers far more scrutiny and training than the NRA suggests would be necessary for school personnel for whom they prescribe 40-65 hours of instruction. Yet, despite their more extensive training, every year about four-tenths of one percent of police officers commit violent felonies.

That's a tiny fraction, only about one in every 250 officers. Nonetheless, if the rate of violent felonies for police officers turns out to be true of school personnel and you apply it to the number of people the NRA suggests equipping with firearms, you come up with about 500 armed, violent felons per year.

One could quibble that, because they're educators, teachers and school staff members may not be as likely to fall into violent crime as police officers whose profession puts them in closer proximity to violence and, therefore, perhaps greater temptation to indulge in it. But, even if the rate for teachers and school staff members is only half that of police officers, that's still 250 violent felons that we would send into our schools with guns every year . . . and that assumes that there would be only one gun-carrying person per school. In fact, the NRA would like to see far more.

So, on the one hand we have a current rate of two to three mass shootings in schools every year and, on the other hand, we have the prospect of sending hundreds of armed, violent felons into our schools. Which one do you think puts our children at greater risk?

RETURN TO THE HERMIT KINGDOM (pub date 4/6/2013)

Early in the last century West Virginia was a dark and isolated region dominated by coalmines and company towns that were brutish and barren. They were places where adults and children alike labored in danger and poverty. These conditions and the mine wars they spawned provoked voyeuristic interest among astonished newspaper readers in New York, Philadelphia, and Washington. So extreme was the situation that when the union organizer, Mother Jones, made her famous declaration, “When I get to the other side, I shall tell God Almighty about West Virginia!”, no one had to ask what she could say that would shock God. They already knew.

That’s why it was jarring when then Republican Senate candidate and coal fortune heir, John Raese, told radio host, Laura Ingraham, that he wished for a return of capitalism like it was at that time – “capitalism the way it should be”, he called it.

John Raese isn’t alone in his benighted yearning for an imaginary past. Whether because of ideology, ignorance, or opportunism many West Virginia legislators would take the state in directions opposite those of the rest of America and back into social, cultural, and economic isolation. Doing so risks making West Virginia once again an unfortunate outlier in an America that increasingly values the wellbeing of people and communities. On multiple issues – taxation, guns, healthcare, the environment, equal rights, education, and matters of personal safety – West Virginia is diverging from the national consensus to a degree that sometimes amounts to a retreat from modernity.

Four decades after the passage of the Clean Water and Clean Air acts, hundreds of thousands of lives have been saved and the prevalence and severity of diseases have been reduced with little measurable cost to jobs and economic growth. Consequently America is embracing further measures to lessen the presence of toxins such as mercury and selenium in the environment. But, in West Virginia legislators generally oppose these measures and are actually moving to allow more selenium in the water supply.

Nationally higher education is recognized as being imperative for economic prosperity. Measures are advancing to rein in tuitions, reduce student debt, and promote access to college for middle and lower income students. But, in West Virginia, the state with the lowest average level of educational attainment in the country, we are cutting state support for higher education and raising tuitions and fees at state colleges.

In healthcare, more states, including many with conservative governors, are embracing Obamacare and expanding Medicaid to assure universal access to medical insurance. They look forward to their economies and hospitals benefitting from generous federal subsidies. But, in West Virginia, a state whose poorest citizens and whose economy would benefit more than those of nearly any other, we dither apparently contemplating whether we’d rather become an example of social backwardness.

In the area of taxation America has emphatically embraced the need for businesses and the wealthy to pay their fair share. But in West Virginia, despite ongoing economic stagnation, we cling to the illusion that cutting taxes on businesses and liberally handing out incentives are useful policies. We believe doing so should even take precedence over investing in education despite the fact that an increasing share of the tax burden is being shifted to citizens.

On the subject of guns, at a time when majorities of Americans support policies such as universal background checks for gun purchases and assault weapon bans and when the gun industry and the NRA find themselves in defensive postures, political momentum in West Virginia is going in the other direction. Legislators are aggressively promoting the proliferation of guns despite the fact that rates of violent crime are increasing in West Virginia even as they drop precipitously in the rest of America.

As more states recognize the inhumanity, not to mention the appalling error rate, of the death penalty and are choosing to ban the practice, in West Virginia we are contemplating reinstating capital punishment at considerable cost to the state, without any evidence that doing so would deter crime, and with virtual certainty that innocent people would be executed – a likelihood evidenced by over a hundred and forty people who were sentenced to die only to be exonerated later.

At a time when majorities of Americans support same sex marriage, a bill in West Virginia’s House of Delegates that would have merely prohibited discrimination against gay, lesbian, and transgendered people in housing and employment had to be withdrawn because of insufficient support.

Even on an issue as simple as making the failure to wear seatbelts a primary offense, passage of a bill in the House almost didn’t happen because some legislators, ignoring statistics showing the seat belt use reduces traffic accident deaths and injuries by at least half and reduces everyone’s insurance rates, called wearing seatbelts a matter of personal freedom and in one bizarre case argued that whether one dies in a traffic accident is the will of God.

If these positions, for which there is currently considerable support, carry the day, West Virginia risks becoming more isolated from the rest of America than we have been in a century -- separated by a culture, environment, and quality of life so rare and unpleasant that outsiders will have little desire to move families and businesses to place they will correctly perceive as prejudiced, polluted, and impoverished.

Sean O’Leary can be reached at seanholeary@gmail.com. A version of this column with links to the sources can be found at Sean O’Leary’s blog, www.the-state-of-my-state.com.