Friday, August 24, 2012

BLUTO AND THE TEA PARTY (To be published in "The Spirit of Jefferson", date TBD)


Gee, I loved “Animal House”. Do you remember when the Delts were facing expulsion from college and Bluto (John Belushi) rallied them with an impassioned speech?


D-DAY: War's over, man. Wormer dropped the big one.
BLUTO: Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!
OTTER: [whispering] Germans?
BOON: Forget it, he's rolling.

I suppose we can overlook a lot when somebody’s rolling. And that’s just what I did when I recently had breakfast with a Republican candidate for West Virginia’s house of delegates. During our conversation he mentioned that communism and fascism are really the same thing.

I let slide what I thought was an obvious inaccuracy because the comment was merely parenthetical and took place during a discussion of tax policy. But, in a strange coincidence, later that day a friend forwarded a 10-minute video titled “The American Form of Government”. The Tea Party-inspired video described various political ideologies including communism, socialism, fascism, and Nazism and, like my breakfast companion, went on to explain they are all the same thing.

The claim that these ideologies or systems of government are the same raises two issues. First, it’s patently wrong for reasons I’ll explain in a moment. Second, why have the definitions of ideologies that are in some respects little more than historical artifacts acquired such consequence, at least to people with Tea Party leanings?

To understand the difference between communism and socialism, which are on the political left, and fascism and Nazism on the political right, let’s turn to the late Jeane Kirkpatrick, former Georgetown University political science professor, a staunch anti-communist conservative, and President Ronald Reagan’s ambassador to the United Nations.

One of Kirkpatrick’s signature contributions to political science was her distinction between “totalitarian” governments on the one hand, which included the Soviet Union, Cuba, North Korea, China, and others; and “authoritarian” states on the other hand, which included Franco’s Spain, the Shah’s Iran, Marcos’s Philippines, and Pinochet’s Chile.

The difference she pointed out is that in totalitarian regimes governments are not only politically repressive, but they also collectivize the economy and own or control the means of production. Whereas authoritarian regimes, while they may be as politically repressive as their totalitarian counterparts, none-the-less allow the economy to remain largely in private hands.

For Kirkpatrick and other conservatives, that latter characteristic, the willingness of dictatorial regimes to tolerate free markets and private ownership, meant that, while we might regret their lack of political freedom, they still had shared interests with the United States and were, therefore, acceptable allies politically, economically and militarily.

Although Kirkpatrick’s belief that the United States should ally with authoritarian regimes was and is debatable, her distinction was a valid one. And to prove it, one needs look no farther than Nazi Germany. Decades before the Nazis came to power, privately held companies such as Daimler-Benz, Bayer, and BMW were well established. They continued to be privately held during the Nazi period and throughout World War II and are still with us today.

The same point could be made for all of the other authoritarian regimes mentioned above, which unlike Nazi Germany, the United States considered to be allies. And, truth be told, prior to the United States’ entry into World War II, even Nazi Germany was not universally reviled. Prominent Americans such as Henry Ford and Charles Lindbergh were favorably disposed toward Hitler and the Rockefellers' Standard Oil of New Jersey carried on a thriving business with the Nazi regime.

Also noteworthy is the fact that, while the United States has accommodated authoritarian dictators such as Marcos, Franco, and Pinochet; democratically elected leaders who nationalized or threatened to nationalize some industries, such as Iran’s Mosaddeqh, the Shah’s predecessor, or Salvador Allende who preceded Pinochet in Chile, fell victim to overthrows supported or even engineered by the United States.

In short, when the behavior of other countries brought into conflict two core American values – democratic government based on the consent of the governed and free enterprise – the United States willingly sacrificed the former in favor of the latter.

That’s why, while Tea Party sympathizers are fearful of incipient socialism, their counterparts on the left are just as fearful of creeping fascism. Given American tolerance of non-democratic regimes, it's entirely plausible to those on the left that there are economically powerful people who would willingly undermine basic political freedoms in order to achieve political dominance and commercial advantage.

Whether deserved or not, that's the fear surrounding Charles and David Koch, the politically active brothers who heavily fund various right wing causes including the Tea Party.

But, regardless of whether anyone’s fears are well-founded, why is it that, despite a bright line theoretical distinction between totalitarianism and authoritarianism and extensive historical examples, folks aligned with the Tea Party movement are at such pains to blur or even deny the distinction?

For some, it may be a case of ignorance, but for others who know better or should know better, there is reason to suspect a propagandistic attempt to bundle up the sum total of Americans’ political fears and deposit them at their opponents’ end of the political spectrum while making their own extremism seem pure, incorruptible, and risk free.

If true, it’s a dangerous thing. After all, at the end of “Animal House” Bluto became a United States senator. One shudders to think.

Sean O’Leary can be reached at seanoleary@citlink.net or through his blog at www.the-state-of-my-state.com.

Thursday, August 23, 2012

THE DELUSION OF "UNLEASHING CAPITALISM" (Pub Date 9/8/12)


In 2007 then West Virginia University economics professor Russell Sobel published “Unleashing Capitalism: Why prosperity stops at the West Virginia border and how to fix it”.

Professor Sobel’s book was a hit. Copies were mailed to every state legislator. Sobel was invited by then Governor Manchin to address his cabinet as well as a joint session of the senate and house finance committees. The state Republican Party chairman described “Unleashing Capitalism” as “our party platform”.

The book’s policy prescriptions are simple.
• Lower taxes and regulations including lowering or eliminating the business franchise tax and personal tax on inventory, machinery, and equipment.
• Reform West Virginia’s courts to reduce the number of suits against businesses and the size of awards.
• Limit the growth of state government.

Some of these recommendations are being implemented. The Manchin administration initiated across-the-board business tax cuts that are continuing under Governor Earl Ray Tomblin. And, while there has been no significant progress in the area of tort reform, an effort to limit the size of state government is underway.

Governor Tomblin’s administration is grappling with an anticipated $400 million shortfall in next year’s budget and the only solutions floated thus far involve cutting state services. No political leader of either party has suggested that some of the impending deficit be addressed by deferring or reversing reductions in business taxes which, when fully implemented, will cost the state over $200 million annually.

That’s because Unleashing Capitalism’s thesis that cutting taxes and reducing the size of government will spur economic growth has become an unquestioned article of faith. Some legislators even carry copies of the book with them the way sixties radicals carried Mao’s Little Red Book.

The problem is, in almost every major respect, Unleashing Capitalism’s analysis is wrong and the effects of its policy prescriptions are not those claimed by professor Sobel.

Sobel’s argument is that the more “free” an economy is, the more prosperous it will be. In his parlance, “free” means minimal taxation, minimal regulation, and a minimal role for government in society.

The evidence for this claim is a body of research conducted by the Fraser Institute that periodically scores state and national economies for degrees of economic freedom and then ranks them by per capita gross domestic product.

Report after report shows that as economic freedom increases, so does GDP. The reports also show that West Virginia, the poorest or next-to-poorest state, has “the least-free market economy in America”.

But, when the Fraser Institute’s criteria for measuring “degrees of freedom” are examined, what emerges is a flawed methodology that conflates causes with effects and employs criteria that have more to do with ideological preferences than they do with “freedom”.

A prime example is the report’s first major criterion -- “the size of government”, the smaller being the better. Size of government is measured by the percent of GDP taken up by government expenditures, transfers of income and subsidies, and Social Security payments.

The problem is that the share of the economy comprised by these items is more likely to be the result of private sector performance than its cause – a fact demonstrated by the 2008 financial collapse. Government expenditures for unemployment compensation, Social Security, and other programs grew in response to the private sector slowdown, which is what they were supposed to do. By performing this useful function, these programs helped prevent the slowdown from descending into full-on crisis as occurred in the Great Depression. But, according to the Fraser Institute, they simply made our economy “less free”.

If the same logic were applied to the question of how we should overcome illness, we would conclude that, because sick people use more medications than those who are well, the medications must be the cause of their illness and they should stop taking them.

By conflating cause and effect Sobel’s claim that “free economies” are more prosperous becomes a meaningless self-fulfilling prophecy. Further evidence is provided by another report.

Every year, The Tax Foundation, a conservative, free market-oriented organization, ranks the tax environments for business in the various states. Unlike the Fraser Institute, the Tax Foundation report focuses exclusively on something that lawmakers control – tax rates.

This year West Virginia’s tax environment ranks twenty-third in the nation. We can add to that ranking the fact that in the last six years West Virginia has offered additional targeted tax incentives ensuring a virtual tax-free environment to almost any employer prepared to bring a couple of hundred jobs.

Yet, how many companies have come? Very few and, in those six years, the actual number of employers in West Virginia has actually declined.

Why?

Because, contrary to what Sobel implies in “Unleashing Capitalism”, cutting business taxes doesn’t make much of a difference. The one or two percent savings in operating costs the tax cuts represent are too small to change employer behavior and in any case are dwarfed by the real financial incentive West Virginia offers employers – wages that are almost 20% below the national average.

That’s why, if discounting could bring prosperity to West Virginia, we’d have it already.

Cutting business taxes is politically easy and “Unleashing Capitalism” gives doing so a veneer of respectability. But, the facts reveal it to be nothing more than an economically and intellectually bankrupt way of avoiding the hard work that’s necessary to attract business to West Virginia – educating our work force, building modern infrastructure, and cleaning up our environment.

Monday, August 13, 2012

WEST VIRGINIA'S MISSING UPPER CLASS (Pub date August 25, 2012)

The phrase, “upper class”, is provocative. Among conservatives it’s heard as an alarming call to class warfare. Among liberals, particularly those sympathetic to the “Occupy” movement, “upper class” is shorthand for the oligarchical 1% that they believe controls America’s wealth and institutions.

The substitute phrase, “rich people” or simply, “the rich”, is almost as provocative, which is why Republicans in congress have banned it and replaced it with the pleasantly scented, “job creators”, a euphemism of startling inaccuracy that reminds us that the point of euphemism is to mask unpleasantness even at the price of distortion.

But, whether you call them “the upper class”, “rich people”, or “job creators”, there is one abiding fact -- West Virginia doesn’t have many of them. This isn’t an ideological point. It’s a statistical one.

Consider that if you were to equalize the population of Connecticut, the nation’s wealthiest state, with that of West Virginia, the poorest or next-to-poorest state, Connecticut’s richest 1% of households would have as much income as West Virginia’s richest 22%. If you don’t bother equalizing the populations and simply take them as they are, just the top 2% of Connecticut households, about 27,000 families, have an aggregate income equal to that of all of West Virginia’s 750,000 families.

The implications of this inequality are profound economically, socially, and culturally. And they should be politically, but strangely are not.

The presence of the wealthy and very wealthy creates demand for products, services, cultural and educational opportunities, entertainment, and even environmental conditions that have a beneficial halo effect for those who live in their proximity. Restaurants, theaters, schools, galleries, and retail stores contribute to vibrant and diverse communities. Even though most of us cannot afford to take advantage of these opportunities as often as the wealthy, we can afford to do so sometimes and wouldn’t be able to at all if it weren’t for the regular patronage of the well endowed.

The presence of wealthy people also tends to produce a cleaner, healthier environment and those in their proximity enjoy the benefits as well, which is among the reasons that the wealthy and those around them have noticeably longer life spans.

This isn’t to say that all good things derive from rich people or that their presence has only good effects. But, we need look no farther than West Virginia to see the kind of society that their near absence creates.

In contrast to the diverse and vibrant places in which the wealthy reside, West Virginia is economically, culturally, and socially bland and depressed.

When people describe West Virginia as being unusually homogeneous they’re usually making reference to our lack of racial diversity. But, they could just as easily be talking about the age distribution of our population, which is concentrated in early old age, educational attainment, which is concentrated at the high school level and below, cultural and artistic opportunities, of which we have the fewest in the nation, and our environment, which is among the nation’s most toxic.

The result is a comparatively barren place that is first and foremost an industrial zone in which the presence of people is tolerated, but only so long as they don’t complain about toxins in their environment or interfere with corporate interests. It’s not surprising that wealthy people almost invariably choose to live elsewhere.

West Virginia’s lack of wealthy residents also has political implications. One of the great political battles currently raging in Washington and between West Virginia’s congressional candidates is whether the Bush-era tax cuts for those making more than $250,000 a year should be extended.

Republicans including Senatorial candidate, John Raese, Congressman David McKinley of West Virginia’s first district and Shelley Moore Capito of the second, say they should. Democratic Senator Jay Rockefeller and Congressman Nick Joe Rahall of the third district say they shouldn’t. Meanwhile, Senator Joe Manchin wanders in his usual fog of political calculation.

What’s fascinating is that West Virginia’s lack of wealthy residents makes the outcome of the debate almost irrelevant to the state. With only a little more than 1% of West Virginia families making more than $250,000 a year, not many will be affected by the tax cut, nor will West Virginia’s economy. We are far more likely to feel the effects of the drawbacks if the reduction is extended. The federal deficit will increase as will pressure to cut federal entitlement programs upon which West Virginia is more dependent than other places.

On the other hand, in Connecticut, where more than 10% of families make more than $250,000, the benefit of the tax cut for the wealthy will be much greater. For every dollar the average West Virginia family saves as a result of the tax cut extension, the average Connecticut family will save $10. And for every dollar that the tax cut pumps into West Virginia’s economy, Connecticut’s economy will receive $22.

This means that the already doubtful and factually unsupportable claim that reducing taxes on the wealthy fuels job and income growth for working Americans is being replaced by the even more laughable claim that cutting taxes on rich people in Connecticut will generate jobs and income in West Virginia.

A few years ago Thomas Frank wrote a book, “What’s the matter with Kansas?”, in which he wondered why Kansans, who are famously conservative, consistently vote for candidates whose economic policies put Kansas at a disadvantage. The same question should be asked of West Virginia’s Republicans in congress.

Sunday, August 12, 2012

UPCOMING PLAY PERFORMANCES

(Picture: Connie Culbertson, Jenna Panza, and Pogo, in the Gemini Theatre production of CLAUDIE HUKILL)

Upcoming performance dates for a few of my plays:
-- CLAUDIE HUKILL reading, September 3, 3-6pm, by Venus Theater at the Kennedy Center's "Page to Stage" festival in Washington.
-- THE BOY IN THE BOX. Special performance by my dad, Hal O'Leary, at Towngate Theater September 14, time TBD.
-- WALT WHITMAN'S SECRET. Premieres at Full Circle in Shepherdstown, WV September 28.
-- CLAUDIE HUKILL runs at Venus Theater, Laurel, MD from November 28 through December 23

Thursday, August 2, 2012

THE ECONOMIC AND MORAL CASE FOR EXPANDING MEDICAID IN WEST VIRGINIA (Pub Date August 11, 2012)


So significant was the recent dedication of the new Macy’s Distribution Center in Martinsburg that it drew the presence of Governor Earl Ray Tomblin, Congresswoman Shelley Moore Capito, and Senator Joe Manchin. They gushed about the importance of Macy’s $150 million investment to build the center, the thousands of jobs it will create, and the tens of millions of dollars it will pump into West Virginia’s economy.

Now, imagine for a moment what it would be like if instead of just one new Macy’s Distribution Center, West Virginia got ten of them. That’s right, a distribution center for every region in the state – one for the Eastern Panhandle, one for the Northern Panhandle, two or three in the southern coalfields where the need for jobs is acute, a couple more in the central highlands and the Ohio River valley, and at least two for Kanawha County because it’s, well, Kanawha County.

There would be endless ribbon-cuttings, gallons of champagne, and . . .

Wait! Stop it, you say. This is silly. It’s a fantasy. Why are we even having this conversation?

Well, actually something like this can happen, but only if the governor allows it.

Amid all of the political posturing about whether West Virginia should opt into an expansion of Medicaid under Obamacare – a step that would help 120,000 West Virginians buy health insurance; as many people as the combined populations of Charleston, Huntington, and Wheeling -- one point is often lost. The annual cost to the state, which would start at $27.3 million annually and eventually rise to $80 million, would be accompanied by an injection into the state’s economy of roughly $500 million annually in federal dollars.

This funding would not add to the national deficit because it would be paid for with dollars raised by the “individual mandate” and by a reduction in the need for federally subsidized care for the indigent. And, while some of the funds would go to out-of-state companies in the form of insurance premiums, the law stipulates that at least 80% must be spent on actual medical services – services that in the majority of cases would be provided by West Virginia doctors, hospitals, and other healthcare providers.

How big would the economic impact be?

Take the Macy’s Distribution Center and put it together with two of the state’s other great causes, the Century Aluminum plant in Ravenswood and the Gestamp auto parts plant in South Charleston, and multiply by about five.

In fact, it’s likely that the incremental economic activity spurred by the $500 million dollars would spin off more than enough new tax revenue to pay for the state’s share of the cost. And, even if there were no offset, the added cost to the state represents less than three-quarters of one percent of the annual state budget.

If the governor can’t stomach even that, there are other places to find money. Topping the list should be a revocation of planned cuts to state business taxes. West Virginia is in the middle of a multi-year plan to cut business taxes by more than $200 million annually, many times West Virginia’s price tag for Medicaid expansion.

The savings from these tax breaks go largely to out-of-state companies and shareholders who either keep the money or invest it elsewhere. As a result, between 2001 and 2011, while West Virginia’s gross domestic product grew by 55%, the number of jobs grew by only 3%, thoroughly refuting the notion that business tax cuts are a job-creator.

The bottom line is that the economic benefit to West Virginia of Medicaid expansion is great, the cost is small or nonexistent, and we haven’t yet discussed the moral dimension of the issue.

The 120,000 West Virginians who would gain coverage under expansion are poor, mostly with incomes between 35% and 100% of the federal poverty line. The majority work and, as a recent study shows, without coverage, many will suffer unnecessary illness and die prematurely. In part that’s because many can’t afford to see doctors when they should. Consequently, conditions go undiagnosed and untreated until they become serious at which point treatment is both more expensive and less effective.

That’s one reason why, after Mississippi, West Virginia has the shortest median life expectancy in the nation – a full six years less than wealthier places.

It’s interesting to be writing about the plight of our uninsured in the immediate aftermath of the mass shooting in Colorado. About a third of the 58 who were wounded in that attack lack health insurance. But, hospitals there are waiving fees and a charity established by Colorado’s governor is collecting $5 million to help with medical bills.

In all, the uninsured Coloradans will get an average of $100,000 of free care per person. Meanwhile, in West Virginia we’re anguishing over whether we can afford what amounts to $225 a year for each newly insured person.

It’s true that the uninsured victims of the Colorado shooting aren’t entirely analogous to our uninsured. Theirs are famous; ours are anonymous. Theirs are younger; ours are older. Their tragedy took place in an instant while ours occurs in slow motion.

But, are theirs more deserving – that much more deserving?

In both cases, the result is the same. Unless a community acts, people will suffer and die. So, I look at the care being lavished on the Coloradans in their time of need and wonder, won’t we do just a tiny fraction as much for our own?

Sean O’Leary can be reached at seanoleary@citlink.net or through his blog at www.the-state-of-my-state.com.
 
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