Freedom to Learn

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Documentaries have often been the unappreciated stepchildren of the movie industry. Usually earnest and hardworking, they nevertheless find little room at the cineplex next to the family of fictional feature films. Waiting for Superman is an exception. It created a sensation at the Sundance Film Festival last year, and an even greater sensation when it was picked up by the talking heads at FoxNews. Now it is being screened in large studio theaters side by side with blockbusters and indie films. And some of the viewings are even sold out.

The film's premise is the failure of what one speaker calls "our implicit promise to students: that the idea of public school could work." It suggests that the biggest problem in public schools is the stranglehold of the teachers' unions and a tenure system that makes it virtually impossible to fire mediocre teachers.

Failing schools create failing neighborhoods, and not the other way around. Without a doubt we have perpetuated several generations of failure.

The film follows the experiences of half a dozen students trying to get a better education than the one offered by their local public school. Most of them are minority kids attending schools in the inner city, in neighborhoods that are in shambles — rough places where education is not a priority for the majority of young people. But the filmmakers also visit Redwood City, California, a well-to-do town near San Francisco. There the percentage of students moving on to college is also dismally low because of "tracking," the practice of labeling people early in their school career as either "college track" or "vocational track."

Once a student starts down a lower track, it is virtually impossible to move up to the college track. This system was designed 50 years ago, when only 20% of students went to college anyway, and the rest got blue-collar jobs in the robust post-WWII economy. Today, by contrast, factory jobs are being mechanized out of existence or sent overseas, and everyone is thought to need a college education. But not everyone is being prepared for it.

The film's title comes from an interview with Geoffrey Canada, president of Harlem's Children's Zone, an organization that provides community support, tutoring, and even charter school education to families in a 100-city-block area of Harlem. He describes the despair he felt when his mother told him that Superman was not a real person. It meant, he said, that "no one was coming with enough power to save us." As a young child, he could see the problems that poverty, crime, and unemployment created in his neighborhood. He needed a superhero. As an adult, he realized that super power comes from superior education.

Over 2,000 schools are failing nationwide, causing many of them to be called "Dropout Factories" instead of high schools. Most are in poor urban neighborhoods, where many young adults end up either dead or in prison. But dropout rates are high throughout the country, not just in the South or in the inner cities. The administrator of one school admits in the film that its freshman class normally numbers 1,200 or so, but by sophomore year the number has dropped to 300–400, an astounding loss of 75%. The filmmakers ask a provocative question: do failing neighborhoods produce failing schools, or do failing schools produce failing neighborhoods?

Union bosses mandate uniform pay, uniform benefits, and a system of tenure that makes it virtually impossible to fire a bad teacher.

The real enemy, according to this film, is not the parents or the neighborhoods but the teachers' unions that control the supply and demand of teachers. Union bosses mandate uniform pay, uniform benefits, and a system of tenure that makes it virtually impossible to fire a bad teacher. In Manhattan, for example, teachers awaiting disciplinary hearings are sent to the infamous "Rubber Room," where they receive full pay for sitting all day, reading the newspaper, playing cards, or taking a nap. Some of them have been sitting there for as many as seven years, waiting for their hearings. Some become so bored that they quit and find a job doing something else, but most stick it out. After all, they get paid whether they work or not, so why work? Manhattan pays these teachers a shocking $100 million a year not to teach.

As Liberty contributor Gary Jason has pointed out in many articles, under union rules, good teachers and bad teachers are paid the same wage. In most states it is illegal to give merit pay for a job well done. So why should anyone try harder? Teachers have been heard saying, "I get paid whether you learn or not" as they play computer solitaire or read newspapers, and their students goof off. Try doing that in any other job or profession, and see how long you would last.

Like the federal government (and governments at every level) schools have also become bloated with administrators and bureaucrats. In Washington DC, school superintendent Michelle Rhee was hired specifically to cut costs and fix the ailing system. She fired several central bureaucrats, eliminated some principals and vice-principals, and even closed a few schools. With those savings she was able to bring back programs that had been cut, including music, art, physical education, libraries, and nursing service on every campus. When she offered teachers the potential of nearly doubling their salaries if they would give up tenure, many seemed interested. But worried by the looming loss of power, the union would not even let her proposal come to a vote. That's how frightened they are of competition.

They are also frightened of losing their control over Congress. Waiting for Superman claims that teachers' unions are the largest contributors to political campaigns, giving around $55 million per year to various politicians. About 90% of that money goes to Democratic candidates. This has successfully kept teachers' unions off the table when politicians discuss education policy. As Rhee comments sadly, "It's all about the adults."

Waiting for Superman suggests that charter schools provide the best hope for improving education. These schools are a kind of hybrid, using public school funding but run independently like private schools. Many charter schools have particular themes, focusing on specific areas of study such as science or performing arts. But many are dedicated simply to teaching students the basics and preparing them for college. Admittedly not all of these schools are effective, but the top charter schools are sending an impressive 90% of their students to college.

Some argue that the success of these charter schools is personality driven — that they rely on the unusual talents of a few charismatic teachers who would be just as successful if they were teaching in public schools. Challengers ask, can their success be replicated?

The answer seems to be yes. To cite an example: the KIPP (Knowledge is Power Program) Schools, highlighted in the documentary, were started by two very successful teachers, Dave Levin and Mike Feinberg. They have now nearly 100 schools nationwide, all producing successful, college-bound students. KIPP schools push their students to close the so-called "achievement gap." They rely on longer school days, shorter summer vacations, Saturday classes, and even inner city boarding schools. Other charter schools take an opposite approach: for a while my daughter attended a charter school designed for serious figure skaters, where classroom work took up very little of the day. The point is, charter schools give parents and children the opportunity to choose what is best for them.

Teachers have been heard saying, "I get paid whether you learn or not" as they play computer solitaire or read newspapers.

Why should this matter to people who have no children, or to those whose children have already graduated from college? The answer seems obvious. Students are our workforce for the future. As Bill Gates states in the film, "We can't sustain a system of continued growth without an educated work force." If people can't get jobs, they'll be living on welfare. This matters to all of us.

Although teachers unions are portrayed as the villains in Waiting for Superman, teachers themselves are portrayed as heroes. They are the Supermen and Superwomen for whom too many students are waiting. The film ends with this paean: "A great teacher is like a great athlete or a great musician. Teaching is a work of art."

Unfortunately, for too many students great teaching is out of reach. Schools need flexibility, accountability, and competition in order to improve. I'm not sure that this documentary provides all the answers or that it sees all the causes of the problems. Certainly a difficult home environment contributes to the failure of many students. But I like the director's notion that failing schools create failing neighborhoods, and not the other way around. Without a doubt we have perpetuated several generations of failure.

Moreover, the film's assessment of the stagnating effect of unions and the tenure system is sound. Motivate teachers with the risk of failure, the incentive of merit pay, and the freedom to innovate, and let's see how quickly the best teachers rise to the top. Other teachers will soon follow, as they see that greater effort will garner greater pay. As this documentary makes abundantly clear, it's time to end the stifling system of tenure and unions in public education. Those who teach well have nothing to fear. Those who can't teach effectively should go find another profession.


Editor's Note: Review of "Waiting for Superman," directed by Davis Guggenheim. Paramount/Vantage, 2010, 102 minutes.



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Barbarians at the Gate

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Four things struck me particularly about this Wednesday's news from London, regarding the attack on Tory party headquarters by students, faculty, and unionists protesting the government's planned increase in college fees.

1. News reports emphasized, above everything else, the factoid that "only a minority" of the protestors who blockaded the building actually managed to do physical harm. The emphasis, in other words, was on the lack of responsibility of people who participate in a mob but don't personally do its dirty work. According to CNN, the protest was "largely peaceful." So was the storming of the Bastille, from a statistical point of view; most of the revolutionaries probably just milled around. The violence in London, says the AP, "appeared to be carried out by a small group as hundreds of others stood and watched." Enough said.

2. University education is not what it used to be. According to the Associated Press, the leader of a group of protesting faculty members opined that "the actions of a minority, out of 50,000 people, is regrettable." It is also regrettable that teachers can't make subjects and verbs agree.

3. Instead of viewing college fees as investments in their own future income, the protesting students viewed them as attempts to turn colleges into resorts of "the rich" (i.e., themselves, a few years down the road). Students also pictured the use of fees to cover Britain's immense education deficit as a case of "the previous generation passing on its debts to the next." The president of the National Union of Students said that his group "will not tolerate" that. These students demand, instead, that their own debts be passed on to the next generation. It should be noted that the costs of education would be reduced to a minimum if colleges would simply refuse to accept students who couldn't pass a rudimentary test in logic.

4. What is to keep such dramas of entitlement from happening in America, at that dreadful moment when we have to start paying our debts?




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The Fed's Easy Money

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The Federal Reserve has heeded calls for more “quantitative easing.” It will create still more high-powered (bank-reserve) money by buying more government bonds. That is a bad policy.

Perhaps untypically, the current recession is not of a sort that more easy money would remedy. A liquidity shortage is not the problem, and worries about actual deflation are curiously short-sighted. Already the banking system could multiply the stock of ordinary bank-account money on the basis of the stock of reserve money already greatly expanded by the Federal Reserve. That could and would happen if bankers and borrowers had confidence in business and regulatory conditions.

Two words used above need explaining. “Recession” means more here than just the downward phase of the business cycle. Even after the economy has hit bottom and has begun recovering, it is still in recession as long as subpar business conditions drag on. This is the popular use of the word. The word “untypically” draws a contrast between the current recession and most earlier ones. Those apparently did trace to a slowdown or reversal of money-supply growth.

Actually, too loose a Federal Reserve policy seems to have figured in the background of the current recession, along with artificial pro-home-ownership policies that contributed to a speculative housing bubble. The latter was a real factor — “real” in a sense contrasting with “monetary” and more fully explained below.

Now, notoriously, businesses and consumers are hanging onto money and near-moneys (cash and equivalents) instead of spending them at a rate that would restore prosperity. The velocity of money — the income to money-supply ratio — has fallen, whatever one plausibly counts as money. This demand to hold money has strengthened only passively, however. Individuals and companies, by and large, are not deliberately restraining their expenditures to build up cash balances they consider inadequate. Instead, they are postponing expenditures for lack of attractive opportunities. Meanwhile, they are left holding cash and equivalents by default.

These sources of uncertainty are real, not just monetary. Real factors explain why some countries are economically advanced and others economically backward.

But why this postponement? Worry about how long a recession will drag on is an old story.  Now, moreover, uncertainty prevails about how government policies will raise business costs and erode job and profit prospects. Health care, financial regulation, cap and trade, various “green” pressures and subsidies, taxes, deficits and debt, widespread economic ignorance, and a perceived hostility toward big business are causes for concern. One hears about this crippling uncertainty from all sides (as from business executives interviewed by Charles Gasparino).

These sources of uncertainty are real, not just monetary. Real factors explain why some countries are economically advanced and others economically backward. These real factors determining production and growth include more than just material ones such as labor supplies and skills, natural resources, and technology. They also include entrepreneurial alertness, competitiveness, mobility of labor and other resources among employments and places, taxes and regulations, and various other institutions and policies that promote or impair intersectoral and intertemporal economic coordination. Real factors determine the “natural rate of unemployment,” the frictional unemployment that persists even during prosperity.

Now, a sound old tenet of monetarism — the monetarism of Warburton, Friedman and Schwartz, Brunner and Meltzer, and others — is that monetary policy cannot remedy real impediments to prosperity and growth (except perhaps only temporarily and unsatisfactorily, as noted below). Far from celebrating any wondrous potentials of monetary policy, monetarism warns about the damage that bad policy can cause and often has caused. It warns against destructive stop-and-go oscillation between fighting unemployment and (belatedly) fighting inflation. Monetary policy should concentrate steadily on what it can do, on preserving the value of money.

Admittedly, a sufficiently expansive monetary policy could offset a fallen velocity of money, even of the present fear-based passive sort. People’s willingness to accept and just hold money is not unlimited. The Federal Reserve could make the economy so awash with money that people would spend it even though they worried about real conditions and because they feared inflation. Banks would activate their ample idle reserves, so creating more money.

The equivalent of Milton Friedman’s metaphor of helicopters dropping bale upon bale of freshly printed money could reinforce the great potential for money creation and spending expansion that already exists. But how unsatisfactorily! More monetary expansion would threaten severe price inflation, causing distortions and discoordinations of its own. At worst the dollar would collapse as foreign central banks unloaded their great holdings of US bonds.

Finding the proper dosage and timing of aggressive monetary expansion would be a hopeless challenge. Already it is hard to see how the Federal Reserve might find an “exit strategy” from its swollen balance sheet.

In summary, easy money (like fiscal “stimulus,” by the way) is no cure for “real” defects of economic structure and policy. Bewailing the lack of jobs, though amply justified, is no diagnosis and no remedy. Lack of a politically easy way to undo bad policies is no excuse for making things worse.




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Doing Time

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“Convict.” Verb: to prove or find a person guilty. Noun: a person serving a prison sentence.

“Conviction”: an unshakable belief in something without need for proof or evidence.

The title of the film Conviction is perfectly ambiguous, focusing on both the guilty verdict of the defendant in a murder case and on the unshakable belief of his sister that he is innocent. The movie is based on the true story of Betty Anne Waters, who spent 18 years earning a GED, a BA, and finally a law degree in order to get her brother released from prison, and who now serves as an attorney for the Innocence Project. Along the way she lost her marriage and fulltime custody of her children; her brother Kenny lost his relationship with his daughter, who was a toddler when he was arrested. As presented in the film, the case involveddirty politics, suborned witnesses, and the rush to remove criminal types from the community, even if they are not actually guilty. And it demonstrated the indefatigable love of a sister and a brother.

The film opens with a walk through the bloody murder scene, reminding the audience that a brutal crime has been committed, and a victim is dead. It's appropriate to remember the victim in any crime story. But convicting the wrong man is also a crime of violence, a crime often overlooked in the rush to convince voters that the district attorney's office is doing its job to keep criminals off the streets.

Police and prosecutors involved in the case do everything they can to stonewall the new investigation and prevent the truth from coming out.

After the murder, Kenny (Sam Rockwell) is immediately brought in for questioning, because he has a record as a barroom brawler and petty thief. Kenny takes the arrest with the wisecracking aplomb of a man who is constantly hauled downtown every time a crime has been committed. Betty Anne (Hilary Swank) arrives at the jail with the same longsuffering resignation of a sister who has done it all before. He is released, and all is forgotten — until two years later, when he is arrested for the murder and eventually convicted, with a sentence of life without parole.

The film uses flashbacks to show the kind of life Kenny and Betty Anne had as children. Their mother has nine children by seven men, and is often absent. As they grow up, they are in and out of foster homes and in and out of trouble, mostly trespassing and vandalism. Kenny in particular is seen as a wisecracking hothead, the kind of guy who has a biting sense of humor and makes everyone laugh, even when they're exasperated. Because of their difficult background, the two siblings are unusually close.

When Kenny is convicted, Betty Anne vows to get him out by earning a law degree. She doesn't even have a high school diploma, and she is often at the bottom of her class. Her husband leaves her, and eventually so do her sons, who choose to move in with their father because their mother is so focused on her brother. In many respects, when Kenny goes to prison, so do Betty Anne, her family, and Kenny's daughter.

During her legal studies, Betty Anne comes across a brand new line of evidence: DNA testing. She contacts Barry Scheck, founder of the Innocence Project, and the search is on to gain access to evidence that has been locked away for 18 years and possibly destroyed. As the movie tells it, far from serving the cause of justice, police officers and prosecutors involved in the case do everything they can to stonewall the new investigation and prevent the truth from coming out. Barry Scheck (Peter Gallagher) drily explains, "People don't like to admit when they've made a mistake."

One must recognize that this film is a dramatization, not an analytical report; one must allow for dramatic license in its telling of this particular story and its representation of the characters. Betty Anne Waters has said about the film, "The movie is so true to life. Not every scene happened, but every emotion happened." But the family of Katharina Brow, the woman Kenny Waters was accused of killing, have hired Gloria Allred to represent them in a suit for not presenting Brow in a better light.

A person who has been wrongly accused and convicted faces a double dilemma: the agony of knowing he did not commit the crime, and the knowledge that he will probably never earn parole.

The film emphasizes a number of problems that actually exist in the criminal justice system, especially as it is applied to poor people. Too often, police and prosecutors justify a swift arrest and conviction with the "unshakable belief" that "if he isn't guilty of this, he's guilty of something." In the film, Kenny can't afford the $25,000 to hire a private attorney, so he uses a public defender, whose case load is too heavy to give any real attention to his clients. The prosecutor takes one look at Kenny's juvenile record and believes it is in the public's best interest to get him behind bars. This is not untypical of the system. In addition, like many small-time criminals accused of hefty violent crimes, the Kenny whom we see in the film is at the mercy of police officers and prosecuting attorneys who have the power to coerce testimonies from petty thugs and frightened acquaintances willing to lie to protect their own freedom. Juliette Lewis gives an astounding performance as the pathetic, broken-toothed former girlfriend who testifies against Kenny after investigators threaten her with losing custody of her child.

A person who has been wrongly accused and convicted faces a double dilemma: the agony of knowing he did not commit the crime, and the knowledge that he will probably never earn parole. A person who is truly guilty can serve the minimum time, go before the parole board, express contrition and regret for the crime, and get out. A person who is not guilty must either lie and pretend to be sorry for the crime, or maintain his innocence and never get out, because parole boards never grant parole to convicts who do not acknowledge their remorse. Catch-22. If the inmate does decide to lie, that confession can be used against him if he ever earns the chance for a retrial. Consequently, convicts who have been wrongly accused of murder almost never get out.

The emergence of groups such as the Innocence Project, however, is changing the system. Kenny Waters was convicted because he had the same type of blood as the perpetrator, Type O. But O is the most common of blood types. It was easy to convict defendants on the strength of matching blood types, but DNA evidence is much more precise and individualized. Since DNA testing became admissible as evidence, 254 prisoners have been exonerated and released from prison. I personally know three people who spent two decades of their lives or more in prison for crimes they did not commit. If it weren't for the Innocence Project, they would still be behind bars.

But in many ways, they are still imprisoned. They have each lost 20 years of technology, job training, and social experience. Their children have grown up without them. Many such people have earned large financial settlements from the state, but no one can give back the time they lost. People like Betty Anne Waters and Barry Scheck are true heroes who understand the meaning of the word conviction.


Editor's Note: Review of "Conviction," directed by Tony Goldwyn. Fox Searchlight, 2010, 106 minutes.



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The Limits of Victory

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American voters rebuked the president’s impatient leaps toward statism by ending his party’s control over the House of Representatives. This is important: Obama’s ability to force ill-conceived bills into law is gone.

Yet voters showed restraint, even in their rebuke. Some of the candidates who had been the most strident critics of the president did not win their elections.

Much attention was paid to the race for the U.S. Senate seat in Delaware, a seat left open when Joe Biden became vice president. Biden had tried to stage-manage events so that his son could take over in a few years. Roughly stated, the scheme was to arrange the election of an ancient and amiable Republican “moderate,” who would keep the senate seat warm for Biden fils. Local voters, sensing and resenting the scheme, booted the seat-warmer and chose one Christine O’Donnell in the GOP primary. If nothing else, she and her supporters should be applauded for foiling Biden’s dynastic ambitions.

Statist media types insisted that Ms. O’Donnell was a “face of the Tea Party” movement for the 2010 elections, but this was an exaggeration. Although she did have the support of one large Tea Party group, Rush Limbaugh, and (relatively late in the process) Sarah Palin, O’Donnell never seemed comfortable making the case for limited government. In fact, she never seemed comfortable at all. She stumbled into several statements that made her sound like an inexperienced religious fundamentalist.

O’Donnell is a particular sort, fairly common on the coasts and in college towns. She’s a contrarian who lives by the feud with “liberals” and establishment elites. Rather than ignoring their barbs, she engages statists on their ground — bickering over trivia rather than making affirmative arguments. Example: during a critical televised debate, O’Donnell artlessly (though correctly) made the point that the phrase “separation of church and state” does not appear in the constitution. Her opponent, an effective rhetorical mechanic, was able to make her precision sound like small-mindedness. He won the election easily.

When the unions figure out that their precious pension systems are underfunded (nay, bankrupt), they’re going to march up and down the Strip with Harry’s head on a pike.

Much attention was also paid to the race for the U.S. Senate seat held by shady cretin Harry Reid. Sharron Angle, another “face of the Tea Party” and a former state legislator from Reno, mounted a credible challenge to the sitting Senate majority leader. In front of smaller groups (including FreedomFest last July), Angle made an effective case for limited government. But, like O’Donnell, she wasn’t very smooth in front of cameras.

More importantly, Reid counted on his sleazy Big Labor masters in the Las Vegas area to mobilize the minions. On election night, a talking head on one of the cable television channels boasted that Labor “really flexed its muscles” for Reid. Asked which unions, particularly, got out the vote, he said, “SEIU, AFSCME, and, uh, the AFL-CIO.” In other words, two government-employee unions and an umbrella organization that includes . . . government-employee unions.

Reid’s retention of his seat (and his party’s retention of a narrow majority in the Senate) was a triumph of sullen government clerks. When these people figure out that their precious pension systems are underfunded (nay, bankrupt), they’re going to march up and down the Strip with Harry’s head on a pike.

The real face of the Tea Party, an election-eve winner who will likely make life difficult for Reid and others, is Kentucky’s senator-elect Rand Paul. The son of Texas Rep. Ron Paul (and, like his father, a medical doctor), the new Gentleman from Kentucky has already been battle tested. During his campaign, he stuck to his critique of the “public accommodations” language in the Civil Rights Act. This was a courageous and coherent criticism of a troubling section of black-letter law. Paul made it and won. He should do a lot to keep the statists of both major parties honest.

But the key to keeping the statists in check will be the House of Representatives, not the Senate. And the new speaker of the house will be Ohio Rep. John Boehner. Not known as a small-government idealist, the new speaker did make some heartening comments in the hours after the GOP reclaimed the House. He restated his opinion that Obamacare is a “monstrosity” that he would like to overturn.

The manner in which he tries to do this will be important. The whole law needs to be revoked and rescinded. Parliamentary compromises and budgetary tricks aimed at trimming the edges will not be enough to save the country from the mischief that this perverse “reform” is already causing.

Lastly, it’s worth noting the president’s press conference on the day after the midterm elections. Living up to his burgeoning reputation for being thin-skinned and petulant, he hemmed and hawed on the matter of his role in his party’s congressional losses: “Some election nights are more fun than others. . . . We lost track of the ways we connected with the folks who got us here in the first place. . . . I've got to do a better job, like everybody else in Washington.”

In moments of adversity, Obama’s rhetorical skills vanish. He sounds and looks like a man who’s been graded on a curve his whole life.

Sixteen years earlier, in similar circumstances, Bill Clinton called a press conference and took responsibility more directly and emphatically for his party’s losses. After that press conference, he changed the course of his presidency, proceeding pragmatically through a reelection and second term. But Barack Obama is no Bill Clinton.




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Escaping the Income Tax

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Voters in my home state, Washington, have rejected a state income tax. The vote at press time is 65% no.

This is a watershed vote.

Washington is one of only seven states with no personal income tax. The others are Alaska, Florida, Nevada, South Dakota, Texas, and Wyoming. In addition, New Hampshire and Tennessee tax only interest and dividends.

The Tax Foundation ranks states by their tax burden as a percentage of gross state income. Not by accident, eight of these nine are the lowest-tax states in the union, ranking 43rd to 50thon this list.

Washington is the outlier. It ranks 35th.

The eight lowest-tax states are all “red” states. In the presidential election of 2000, all eight voted Republican. Washington voted Democrat, as it has in all presidential elections since 1988.

If it were up to the state’s politically active Democrats, Washington would have had an income tax long ago. But an income tax requires a public vote. And Washington voted 68% no in 1970, 77% no in 1973, and 67% no in 1975.

There was a message in those numbers, and politicians heard it. For most of 25 years, an income tax has been seen as impossible.

The people of the state continued mostly to vote Democrat, many of them out of a fondness for the redistributive state, but also for other reasons. Washington is one of the least religious states. In 1970 it voted for abortion, and in 2008 it voted for assisted suicide. It was not the first state to offer gay civil unions, but in 2009 it was the first state to do so by vote of the people. It was an early medical-marijuana state, following California’s historic vote in 1996 by its own in 1998. In 2010 a group called Sensible Washington circulated petitions for a ballot initiative to repeal the marijuana laws entirely, and though they had no money, they collected more than 200,000 signatures. It wasn’t quite enough — they are trying again — but that it happened at all shows there is a libertarian streak in this “blue” state.

A liberal group quietly worked for several years on a tax proposal that could be put to Washington voters. In January 2010, income tax proponents sensed it was time to act.

An income tax has long been an electric fence of Washington politics (we have no “third rails” here), and few Democrats running statewide have dared to touch it. One who did was King County (Seattle) Executive Ron Sims, who ran for governor in 2004 supporting an income tax. He lost the Democratic nomination to Attorney General Christine Gregoire, who took no such stand, and was elected. (Sims is now Obama’s deputy secretary of HUD.) Under the previous governor, Gary Locke (now Obama’s secretary of commerce), tax “reform” got no further than a study. In 2002, a majority of the tax-study commission recommended a flat-rate income tax levied on virtually all income. The income tax was envisioned as revenue-neutral to the state, its collections offset by large cuts in the property tax and the sales tax. The study was talked about, but Democrats did not dare act on it.

A liberal group quietly worked for several years on a tax proposal that could be put to Washington voters. In January 2010 the group was encouraged by Oregon Measure 66 to create a new high-earners’ bracket in Oregon’s personal income tax: 11% on individual income above $125,000. Facing a large deficit in their state budget, Oregon voters passed it.

In the 2009–2011 biennium, Washington’s budget had fallen one-fourth short. For the following period, another big deficit was forecast. Income tax proponents sensed it was time to act.

The chairman of the 2002 tax study had been Seattle attorney William H. Gates, Sr. He is the father of Microsoft founder Bill Gates, the richest man in the state. In 2010 the senior Gates, age 84, became the public face of the measure to create an income tax in Washington.

In its final form the measure was called Initiative 1098. It was very different from the tax recommended in the 2002 study. It was not a flat tax. It was steeply progressive, with three rates: 0%, 5%, and 9%, the high rate being one of the highest among the states. The proposed rate was zero on individual income below $200,000 and 9% on income above $500,000. This was a “high-earners tax.”

Initiative 1098 also proposed two tax cuts: an exemption for very small businesses from the state tax on business revenue and a 20% cut in the state tax on property. Together, these cuts offset 22 cents of every dollar the new income tax was expected to collect.

Neither of the two cuts benefited the poor, a group often invoked by supporters of “tax reform.” The cuts were for the middle class. They were there so proponents could say that under Initiative 1098, “the wealthy pay more and the rest of us pay less.”

It was not a flat tax. It was steeply progressive, with the "high-earner" rate being one of the highest among the states.

And what better face to put on it than Bill Gates — even though it was not the famous Gates, but his dad. Gates plunked down $600,000 to pay for signature gathering and ads. (Late in the campaign, his billionaire son announced that he agreed with his father, but contributed nothing.)

I-1098 had a handful of other $100,000-plus contributors: Nick Hanauer, a venture capitalist who had made his grubstake by investing in Amazon.com; Ann Wyckoff, an heiress to the Kenworth and Peterbilt truck fortune; and Bill Clapp, an heir to the Weyerhaeuser fortune. But most of the money raised to sell the state income tax was contributed by public-employee unions. The Service Employees International Union, the largest contributor, put in $2.2 million. In total, the amount raised was nearly $1 for each of the 6.5 million residents of Washington.

Opponents knew they had to match that, and they did. They got some money from corporations, but the biggest checks were from CEOs. These included $425,000 from Steve Ballmer of Microsoft, and $50,000 to $100,000 from former Microsofties Paul Allen, Nathan Myhrvold, and Charles Simonyi, who now have their own companies. Amazon’s Jeff Bezos, who is known as a libertarian, put in $100,000. There were others. CEO contributions were not easy to get, particularly at first. Most CEOs were not people who wanted public attention on an issue like this. But they also did not want a "high-earners" income tax.

Some donated after reading an Aug. 14 editorial in the Wall Street Journal, which said: “Washington would move overnight from one of the nine states with no income tax to having the eighth highest rate in the country. Mr. Gates, a wealthy lawyer whose son is among the richest men on the planet, is pitching the proposal as a chance for 97% of the voters to pay the state's bills by socking it to the richest 3%. What he doesn't say is that Washington's lack of an income tax is among its main comparative advantages in luring those top 3%, along with their businesses and jobs, into the state.”

The pro-tax campaign was not going to talk radically. It needed to wrap “soak the rich” in a warm, progressive blanket.

The Journal was not alone. All the big newspapers in the state opposed Initiative 1098, and for some of the same reasons. The Seattle Times claimed in an editorial headline that the income tax would “Calitaxicate” Washington, a play on an old environmentalist slogan, “Don’t Californicate Washington.”

In presenting its case to the public, the proponents had to make a radical tax sound non-radical. Their supporters could do the dirty work. The Stranger, an alternative Seattle paper famous for its sex columnist, Dan Savage, ran a cover story called, “Tax the Filthy Rich!” But the I-1098 campaign was not going to talk that way. It needed to wrap “soak the rich” in a warm, progressive blanket. And for that, it had the rich man who wanted to be soaked: old Mr. Gates.

He was front and center in the first big TV ad: “Hello. I’m Bill Gates senior. And I love our state. That’s why I helped write Initiative 1098. Middle-class families are struggling. 1098 will cut state property taxes by 20%. And eliminate the B&O tax for small businesses. It will dedicate two billion dollars a year to improve education and health care. And only the wealthiest 1.2% will pay more. Support Initiative 1098. It’s good for Washington.”

Opponents hooted at this. Gates had made Initiative 1098 sound like a tax cut, which it was not. He had been too chicken to use the electric words, “income tax.”

The classic was his next ad, with Gates in blue shirt and khaki pants. He opens: “Some people say Initiative 1098 is about soaking the rich. But it’s really about doing something for the next generation.”

The camera pulls back, and you see Gates sitting above a plastic pool of water, in bare feet. Kids are next to the pool, throwing softballs at a target. Gates says: “You see, state cutbacks have put our kids at risk, and we can’t just sit here and do nothing about it. 1098 will dedicate two billion dollars a year for education and health care, and only the wealthiest 1.2% will pay more.”

A softball hits the target, thwap, and the old man drops into the pool of water. The kids cheer. Gates makes an underwater face through the pool’s plastic wall. He surfaces, streaming with water, and says: “Vote yes on 1098. It’s good for Washington.”

It’s a cute ad with a hard message: soak the rich.

The other side’s ads were also carefully constructed.

Their money had come from CEOs who cared about how a high-earners tax would become a corporate income tax for companies such as privately held Bartell Drug, an “S” corporation that flowed its earnings directly to its shareholders; about how the tax would handicap out-of-state recruitment for technology employers such as Microsoft and Dendreon, a Seattle biotech company; and about how it would simply enable more state spending, making Washington like California.

A softball hits the target, thwap, and the old man drops into the pool of water.

In the fight in Oregon, Nike founder and CEO Phil Knight had bought a fold-over-page-one ad in the Portland Oregonian to make an economic case against Measure 66. It was a fine pitch, but it hadn’t resulted in a sale. The Washington No-on-1098 campaign was not going to make CEO-type arguments.

The No people did not have rich guys in their advertisements. In their signature ad, they offered a middle-aged white woman, overweight, plainly but nicely dressed, in a modest suburban kitchen, pouring herself a cup of coffee from a $79.95 Cuisinart coffeemaker. No Italian espresso machine. She looks straight at the viewers and says: “Times are tough these days. And sure, Initiative 1098 might sound good, but supporters don’t even tell us what it really is: an INCOME TAX. And the problem is that after two years, Olympia can extend the income tax to everyone, including people like me. Look what’s happened with the sales tax. It keeps going up and up. I just don’t trust Olympia. So I’m voting no on 1098.”

The message is that the people pushing the tax are tricksters. They hide the words “income tax.” They hide the fact that in two years the state legislature can pile the tax on the middle class by a simple majority vote. When the woman says, “I just don’t trust Olympia,” the viewer thinks, “Yeah, and I don’t trust the weasels behind this tax.”

It was an effective ad. Before the two sides’ ads began, Initiative 1098 had support in the low 40s, with opposition lower than that. As both types of ads unrolled, the percentage opposed grew but the percentage supporting did not. Sometime between mid-September and early October the two lines crossed. By mid-October, the proponents pulled the Gates ads and were using other ones, but nothing worked for them. It was clear that Initiative 1098 was going to lose.

And it did. It was not a narrow loss. It was a big loss. It was a very big deal for Washington, which remains the only “blue” state with no personal income tax.




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A Nice Surprise

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Unnoticed by the mainstream media in the flurry of election coverage was a quiet victory in Arizona. There voters approved Proposition 107, which bans racial quotas and other preferences by state government, Arizona thus becomes the fifth state to do so (after California, Michigan, Nebraska, and Washington).

And the vote wasn’t even close — Prop. 107 got nearly 60% of the vote.

I would have hoped that by now every state would have outlawed reverse discrimination (more appropriately characterized as “revenge quotas”). But I try to savor victories as they come.




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Google's Tax Dodge

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Curiously, most of the money that computer and internet-related companies give to political causes goes to Democratic candidates. For example, of the $12.9 million the high-tech industry contributed to candidates in this election cycle, over two-thirds ($8.4 million) went to Democrats.

A particularly strange case is that of Marissa Mayer, a top executive at Google. She held a fundraiser at her mansion to help Democratic politicians. Guests paid over $30,000 each to attend. Obama was the star performer, and had nothing but praise for Google. Amazingly, he showed none of his usual business bashing. The intense love shown on both sides was deeply touching. Who would have thought that these captains of industry would support so staunchly a man committed to raising taxes on the rich?

Mayer was not unique in her support for our neo-socialist president — 75% of all donations by Google employees went to the Democrats.

Yet even as the Google crew partied with Obama, news surfaced showing that Google had used tricky strategies to pass most of its foreign profits through Ireland and the Netherlands to Bermuda. These strategies — with cute names like “Double Irish” and “Dutch Sandwich” — saved Google over $3 billion in taxes, lowering its effective overseas tax rate to a measly 2.4%.

So it is that even as key elements of Google’s management attempted to help elect the party devoted to raising taxes, especially on the hated rich, the corporation itself dodged taxes artfully. Pretty slick for a company that has the boastful motto, “Do no evil.” It should be, “Pay no taxes.” And while they’re at it, maybe the Google high-fliers should google-search the word “hypocrisy”...




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A Libertarian Election

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In emails sent on election day to prospective Democratic voters, President Obama said, “Today, the country will make a choice about the direction we take in the years ahead. " We’ll see now whether he respects that choice. I predict he won’t. Yet the Republicans have won an enormous victory.

Of the 435 seats in Congress, two-thirds are safe preserves for Democrats or Republicans. During this election, the Republicans put two-thirds of the rest of them in play. And of those seats, they won about two-thirds. If America operated with a European parliamentary system, Obama would not be president today. He lost the confidence of the majority of parliamentary districts.

Libertarians should be happy, though perhaps not ecstatic, about the Republican victory.

Why?

Because the Republicans are, on the national level, the only effective barrier to the enormous expansion of government personified by Barack Obama, Harry Reid, and Nancy Pelosi.

Stereotypes? Yes. Amusing targets of ridicule? Right again. Yet until now, these ridiculous figures have been potent encroachers on the freedom of every American.

Despite the gross imperfections of the Republican Party, we have to recognize that it is a party that could not exist without essential libertarian ideas. Just as Obama’s most potent ideas come from European socialism, so the Republicans’ most potent ideas come from American concepts of individual liberty. I refer to default notions of limited government, private property, freedom from unnecessary taxation, ownership of self-protective devices (guns), and unabridged freedom of speech and association. Without these ideas, a libertarian society is impossible. Never mind the rest of it: at this moment, the Republicans are friends of these ideas; the Democrats are not — although even Obama was constrained, in his post-election press conference on Wednesday afternoon, to pay tribute to free enterprise and entrepreneurship as the source of American prosperity.

If America operated with a European parliamentary system, Obama would not be president today.

“Across the country,” says David Harsanyi of the Denver Post, “the electorate laid down a resounding angry vote against activist government. And, mind you, no one had to wrestle with any ambiguity about the objectives of the Republicans. Democrats helpfully hammered home all the finer points of libertarianism, and Republicans typically embraced them. Exit polls showed that this election was a rejection of the progressive agenda of ‘stimulus,’ of Obamacare, of cap and trade. Exit polls show that there was great anger with government — not government that didn't work, or government that didn't do enough, but government that didn't know its place.”

Yet the election wasn’t just about ideas; it was about what can be done with ideas in the electoral marketplace. With this in mind, let’s try to put the events of Nov. 2 into some kind of libertarian perspective.

Many people, such as Neil King, Jr., writing for the Wall Street Journal on Nov. 1, wonder about the volatility of American elections, about the electorate’s movement between, for instance, the 2008 and the 2010 elections. How, King wonders, can the country “solve its long-term problems . . . when voters seem so uncertain which party should lead the charge.” I agree with King’s list of specific problems — deficits, Social Security, healthcare costs: yes, those are real issues. But I disagree with his analysis of the situation.

Even Obama was constrained, in his post-election press conference on Wednesday afternoon, to pay tribute to free enterprise and entrepreneurship as the source of American prosperity.

For one thing, “voters” are not quite “so uncertain.” In American politics, huge results can follow from the shift of only 4.6% of the voters, which was the difference between the returns for the Democratic presidential nominee in 2004 and the returns for the same party’s nominee in 2008. As I’ve often pointed out in Liberty, the two big American parties live by getting as many marginal votes as they can, wherever they can get them. If one party falls beneath its normal margin, it will try to find a group of issues that will allow it to annex some new group of voters, or bring some new inspiration to the formerly faithful. That’s why the Republicans (or the Democrats) can stand for one thing in certain years, and nearly the opposite in others, and why individual candidates within each party can stand for both at the same time.

This year, the Republicans put new life into their dormant libertarian principles, and they won decisively. It is not inconceivable that the Democrats will create some simulacrum to those principles, for use in the next election. But the important thing is to reduce the power of politics to “solve” our problems.

When government is perceived as the source of solutions, the problems ordinarily get worse — because, as many voters saw this year, the fundamental problem isn’t the deficit or healthcare or old-fashioned entitlements programs. The fundamental problem is the reach of government. The libertarian idea — originally, the American idea — is to conserve the power of the individual to decide what his indebtedness shall be, what his investments shall be, and what steps he should take to provide for himself in sickness and old age. The problems that King enumerates would not be political if the friends of government hadn’t “led the chargeto extend government’s power and purview.

The two big American parties live by getting as many marginal votes as they can, wherever they can get them.

That’s why the victory of the Republicans is important and interesting, even exciting. In 2010, the Republicans responded to the repudiation of Bush in 2008 by seeking voters everywhere outside the Democratic base. They largely abandoned their appeals to “social issues,” which hadn’t been getting them any crucial amounts of votes, and they appealed instead to the people’s resentment of the Obama regime as arrogant, spendthrift, anti-property, and anti-individual — in short, fanatically expansive and power-seeking. They saw the Democratic regime as the American phalanx of the European nanny state, now in retreat even in Europe.

After World War II, the two big American parties studied the complex art of gerrymandering. In most states, they perfected it. They learned how to ensure that whoever had a seat in Congress would be able to keep it. To maintain their hold on “minority” (i.e., especially, African-American) voters, the Democrats created “urban” districts in which voters would never have a real choice of parties. But often the Republicans cooperated with the Democrats in the great effort to preserve legislators’ individual seats. In this year, however, some of the most gerrymandered districts in the union changed hands: look at the map of Illinois congressional district 17, and notice what happened there, and you’ll see what I mean. The appeal of an essentially libertarian platform inundated many of the carefully fenced-off legislative fiefdoms, and swept their lords away.

Walter Shapiro of AOL’s “Politics Daily” describes the current situation clearly: “At a time when the percentage of voters who call themselves liberal (about 20 percent) has remained constant, the number of self-identified conservatives among voters has risen from 32 percent (2006) to 34 percent (2008) to a whopping 41 percent (2010). In fact, conservatives outnumbered moderates (39 percent) among 2010 voters. Since such ideological markers normally move at a glacial pace, the dramatic increase in conservatives may be the most lasting legacy of the 2010 election.”

The fundamental problem isn’t the deficit or healthcare or old-fashioned entitlements programs. The fundamental problem is the reach of government.

Consider now that conservative “social issues” were not a factor in the current contest, hence did not increase voters’ self-identification as “conservatives.” The new “conservatives” were attracted to that label largely by the libertarian idea of limited government.

In this way, the Republicans found their voters. On the scale in which elections are won and lost in America, they found them in enormous numbers. And this discovery will have enormous effects — if people who believe in the American ideal of individual liberty continue to demonstrate that they will settle for nothing less.




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The Lonely Lunch Bucket

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Usually when one side in politics loses big, its defenders will deny that the people rejected their ideas.

Republicans said so in 2008 and partisans of the Democrats began saying so even before the election of 2010.

Here is Michael Lind, writing in Salon (November 2). He notes that the Democrats have joined other center-left parties in Germany, Italy, France, and Britain in electoral banishment.

The reason, he argues, is that all these parties “abandoned their traditional working-class constituents in order to woo bankers and professionals.” Instead of pushing for more social benefits and a higher minimum wage, they have embraced the market and refocused their progressivism on “non-economic causes like renewable energy, mass transit, the new urbanism, gay marriage, identity politics and promotion of amnesty for illegal immigrants.”

The Democrats have hardly given up on social benefits — see Obama’s health-insurance law — but they did go for renewable energy, gay marriage, etc., as Lind says. They do have pals on Wall Street — and more of them perhaps than they traditionally had (though even FDR had his Bernard Baruch). But imagine if the Democrats had defined themselves exclusively as a pro-union, lunch-bucket Hubert-Humphrey-and-Walter-Mondale party. They would have been even deeper in the woods than they already are.

The gist of Lind’s argument is that the Democrats are losing because they don’t have the courage and wisdom to agree with Michael Lind. That argument allows Lind to make the further claim that the people do agree with him. And some do. I know them — and they are feeling politically very lonely.




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