In ObamaCare Part Two, I pointed out that we are still paying for a Supreme Court decision during WW II that exempted employer benefits from wage and price controls.  Seventy years later, we suffer the distortions and inequities in health care markets this decision caused.

However, that example of long-term effects from short-term stupidities pales in comparison to the great-great granddaddy of all legacy follies, one that also needlessly increases our medical costs today, and one that could easily be corrected by Congress.  This is the legacy that gives trial lawyers a free shot at the defendant’s pocketbook, no penalty for misses.

This is called the American Rule, in which each side in a lawsuit bears its own court costs, win or lose.  This contrasts to what’s called the English System, really “The Everywhere But America System,” where the loser pays the court costs of both sides.  Under the American Rule, frivolous law suits are common, and out-of-court settlements typical.  After all, it’s frequently cheaper to pay off the plaintiff rather than incur the expense of a trial, even one where winning is certain. This wouldn’t be the case under the English System.

As an example, years ago I was riding in a car that was slowly winding through an industrial area when a five or six year old boy ran out into the street and bounced off the REAR fender of the car. There was no way the driver of the car was at fault.  His insurance company settled out of court for about $750. It was cheaper than taking the frivolous charge of driver negligence into court where the case would have been easily won.

The American Rule came about in the aftermath of the American Revolutionary War, which officially concluded with The Treaty of Paris in 1783.  That agreement required British creditors to sue American debtors in American courts.  Seeing a chance to stick it to the Brits, state legislations passed The American Rule. Naturally, many British creditors viewed long distance law suits as suddenly too big a gamble to take.

Two hundred and thirty years later, we pay for that nonsense throughout our society, but especially in our medical bills. Perhaps it’s just a coincidence, but medical malpractice lawsuits really took off about the time Medicare was passed in 1966.  For every malpractice suit in 1960, there are 300 today.

The contingency fee system, where lawyers get about 30% of the settlement, plus juries that want to beat up insurance companies, means this is a great business for trial lawyers. Throw in a little “junk science”, and lawyers have gotten rich suing hospitals and doctors, amongst many others.

The despicable John Edwards (remember him?) was a trial lawyer who became a multi-multimillionaire in part by suing obstetricians for the “malpractice” of not performing C-sections in certain pregnancies, which if done would have allegedly prevented cerebral palsy.  The result has been a big increase in C-sections and NO decrease in cerebral palsy, probably because there is no connection. (http://healthewoman.org/2009/03/06/why-cesarean-section-has-not-reduced-the-incidence-of-cerebral-palsy/)

The bottom line is that medical malpractice is a big, risk free business for American lawyers. Malpractice awards run about $3.5 billion annually, all of which is passed through to patients and taxpayers via higher malpractice insurance fees paid by doctors and hospitals.  This is not much relative to overall medical spending of almost $3 trillion, but there is the hidden cost of defensive medicine, when physicians over prescribe treatments as a defense not against the patient’s illness, but a defensive against the doctor’s potential liability.

ObamaCare doesn’t lay a glove on this racket run by the trial lawyer one percenters.   In part, that’s because the American Association for Justice, formerly the Association of Trial Lawyers of America, has give 85% of their $42 million in political donations since 1989 to the Democratic Party.  From opensecrets.org, Center for Responsive Politics: “The association favors Democrats, who oppose most attempts to initiate tort reform.”

In fairness, neither major political party has done anything to put a stop to the lawyers’ gravy train, probably because so many of our elected officials in both parties are lawyers.  There have been some efforts at the state level, but all of the “loser pays” state laws have been complex and riddled with exemptions and procedural difficulties. In Texas, for example, the much ballyhooed law Governor Perry signed in 2011 doesn’t apply to people who represent themselves. Have to hire a lawyer. What a surprise.

Tort reform is an area where Federalism doesn’t work. A national law is needed, one that would standardize “loser pays” across the nation and also put a stop to “forum shopping” by lawyers, which is the practice of filling a lawsuit in the state with the most amenable courts.  Not only is this the right thing to do, it would save the nation many billions of dollars.

The most thorough proposal I’ve come across is a study by Marie Gryphon, an attorney, published by the Manhattan Institute for Policy Research, December of 2008.  Google “Gryphon loser pays.”  She notes our litigation costs as a percent of gross domestic product are twice those of Germany and over three times the cost in France or the United Kingdom.

How much longer must we put up with the tort system one percenters?

In last week’s column I listed some negatives that make the state of New Mexico an unattractive place to do business.  When local groups get together and try to come up with ways to get the Grant County economy revved up, they have to think within that framework.  It’s not like they are arranging deck chairs on the Titanic, but damn close.

This doesn’t mean we should do nothing.  There are things we can do to help our local economy in spite of  being in New Mexico, but first we have to take a hard look at the realities of Grant County/Silver City. The Chairman of the Grant County Commissioners, Brett Kasten, has done that, and he doesn’t like what he sees.

The last two or three times I’ve heard Brett speak, he has mentioned that the school population in Grant County has dropped 50% in the last 30 years, while the overall population has remained around 30,000.  Brett is distressed by this, and he thinks we need to do something to become more family friendly, especially look for ways to attract jobs and improve our “quality of life.”

I look at the numbers differently.  Thirty years ago, Silver City was a high desert mining community, now it is a high desert retirement community. The families being attracted are those with no children in the nest.  Income statistics support this conclusion: In 1996, over half the income in Grant County was from paychecks; in 2010, over half was from retirement checks.

What this means is that the Gila Regional Medical Center (GRMC) is a more important asset for the future of Grant County than the mines run by Freeport-McMoRan.  The copper mining era, short of discovering a rich new vein, is over as an engine of growth. Attempts to integrate the mining of copper with fabrication of copper products, as some have urged, are not going to be successful in New Mexico. (See last week’s list of New Mexico negatives.)  It is what it is, folks, and no amount of wishful thinking will change it.

If Silver City has become a retirement community,  maybe we should concentrate on making it a BETTER retirement community, not necessarily a place to start just any business, but a business that caters to retired citizens, e.g. lawn and yard services, home maintenance, home medical care, pet sitting, and so on.  Some of the locals in these businesses could use a little competition!

What are the things that attracted my wife and me to retire here? In order of importance:

Climate
Low Taxes
Fabulous hiking
Small community with a WalMart.
WNMU

The GRMC was a very pleasant surprise.  If I were to make a list today, the GRMC would place third.  Nowhere on the list is “a vibrant downtown,”  “a cinema multiplex,” “paved golf cart paths,” or “college swimming teams and college baseball teams.”  In fact, efforts to supply all these things threaten to turn number two above, low taxes, into a negative: high taxes.

While our three county commissioners are promoting a tax to raise $10 million, over half of which will they will then turn over to WNMU, over which Grant County taxpayers have no control, the GRMC is undergoing a financial and management crisis.   The GRMC is a county responsibility,  a WNMU swimming pool is not.

Grant County Commissioners: Where are your priorities, gentlemen?

In the seven years I’ve been in  Silver City, I’ve witnessed a great deal of public huffing and puffing about “economic development.”  It seems like there is always an announcement in the paper about a meeting of VIPs that somehow involves bringing economic development to Silver City.

I can’t keep up with them all, e.g. The Grant County Economic Development Coalition for Progress, The Southwest New Mexico Economic Development Partnership, The Gila Economic Development Alliance, Silver City Main Street,  Silver City – Grant County Prospectors,  The Chamber of Commerce – regular, The Chamber of Commerce – Green, WNMU’s Small Business Development Center, and so on. I’ve probably left out a few.

A couple years ago, Grant County even hired an economic development coordinator, I guess less to coordinate any actual economic development than to coordinate the various groups who were head scratching about economic development. That position is no more, assumed by the head of the Grant County Planning Department, Anthony Gutierrez.

(I read in the paper recently that Gutierrez, when asked to report on economic development, said that would be easy, because there wasn’t any. There’s a guy to vote for!)

Naturally, when you don’t have any economic development, EVERYTHING is pushed as economic development.  Refurbish the Silco Theater? ECONOMIC DEVELOPMENT!  Build a Twin Sisters Reservoir? ECONOMIC DEVELOPMENT!

So it isn’t surprising that one of the reasons for increasing the GRT is to help bring economic development to Grant County, specifically for the Convention Center and a multiplex theater, more generally to build a “quality of life” infrastructure necessary to attract the type of people economic development requires, i.e. professionals and entrepreneurs, who have lots of other places to choose from. The problem with all of this is in the last two words of where we live, Grant County, New Mexico.  Repeat slowly: New Mexico.

Nobody in their right mind would move a business into New Mexico, unless maybe it was a sole proprietorship or family enterprise.  Why is that, you say?  Let’s look at some of the things that a potential business newcomer would review. We don’t have to mine the data too deeply, which wouldn’t change the conclusion.  We‘ll just take a quick look, which is all a potential business would do before deciding to look elsewhere, e.g. Texas, Arizona or Oklahoma.

– NM tied at 36th with KY in a recent CNBC 2013 ranking of states in which to do business. (TX #1, AZ #22, OK #4, CO #8) CNBC ranked NM 46 in education, 47 in business friendliness.
– 50th state, Economic Freedom of North America, the Fraser Institute, 2012
– #1 “Death Spiral” state by Forbes, 11/25/12. A ranking of private workers vs. welfare recipients and government workers.
– #45 in legal climate, Institute for Legal Reform, 2012.
– #50 in Kids Count 2013 report, Annie E. Casey Foundation, NM Voices for Children.
– #50 high school graduation rate, Diplomas Count. 10-year to 2010, ahead of only D of C..
– NM = D- grade in K-12 Achievement, Education Research Center, 2012. Above D of C, Louisiana, Mississippi.
– Bottom 10 states in rating of four year colleges, US Chamber of Commerce, 2012.
– Surrounded by right-to-work states: TX, AZ, OK, UT (but not CO.)
– Renewable energy of 20% by 2020 = electric rates higher than states without renewable standards.
– Largest private employer, Intel, can’t meet goal of new hires being at least 60% from NM.
– NM only state west of Mississippi as “top outbound” in 2012, United Van Lines.
– NM one of only seven states with complex, business unfriendly “gross receipts tax.”

Take a look at that list, and you’re sure tempted to move your business to NM, right?  It also means “economic development” efforts that don’t take into consideration the state’s problems are largely a waste of time.  Even making Highway180 to Deming a four-lane won’t help much, maybe a little more tourism. For sure, golf cart paths, baseball diamonds, and swimming pools won’t do anything, but maybe an empty cinema multiplex will draw tourists fresh from a visit to the empty Spaceport.

“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.  – THOMAS SOWELL

At the forum Thursday at WNMU on raising the GRT, Nick Seibel said the following about the ballot’s lack of spending specificity, “We elected these people, so we can hold them accountable by being able to replace them.”

Really? Let’s think about it. How do you hold accountable someone who’s no longer in office, e.g. former Governor Richardson and his Spaceport?  What about the proportionality problem? By this I mean the “punishment“ of losing office rarely compensates for the damage done.  If we boot out the commissioners responsible for a multimillion dollar cinema multiplex boondoggle, we’re holding the bag while they’re going on their merry way.  That’ll show ’em!

Then we come to WNMU President Joe Shepard, not an elected office holder.

In truth, there is nothing we can do to any of them to hold them truly accountable. This got me to thinking about a surety bond, or performance bond, that the county could require of the commissioners voting to build the multiplex. This works sort of like a life insurance policy. If the multiplex “dies”, the surety company pays the face amount of the policy, e.g. $100,000, to the county and then cashes in the collateral the commissioner(s) placed with the surety company.

I contacted a surety company and talked to a knowledgeable young man about doing this, and I learned that there is no company, anywhere, that writes performance bonds on politicians. Gee. How sad.  The sympathetic young man, Josh, suggested that I look into something called an irrevocable letter of credit, ILC, issued by a local bank that would pledge payment to the county from the customer’s account, in this case a county commissioner’s account, in the event of the multiplex not meeting expectations.

I then talked to a local bank president.  Yes, an ILC in such a case is possible, but normally the bank requires a cash escrow, not a second mortgage or promissory note, etc.,  BUT, it is certainly conceivable an ILC could be issued using such collateral.  I figure, where there’s a will, there’s a way.

Then, I thought, why ask just the county commissioners to step up to the plate?  There are a number of Silver City’s leading citizens who would like to see a cinema multiplex built here, and I’m sure all of them would join the three county commissioners in pledging a portion of their personal assets, say $100,000 each, to at least partially indemnify Grant County taxpayers in the event the multiplex bombs.

Following is a list of  people identified in local news coverage, mostly The Grant County Beat, as supporting raising the GRT to build a multiplex. If I have left anyone out, I sincerely apologize, and if I’ve wrongly accused –oops!–cited you as a multiplex supporter, I will publicly apologize, buy you a cup of expresso at Polly’s Javalina and donate $5 to The Puppy Dog Ranch.

Joe Shepard, James Marshall, Alex Brown, Alex Ocheltree, Tony Trujillo, Jason Quimby, Nick Seibel, Skip Thacker, Trent Petty, Mary Stoecker, Kim Clark, Edward Encinas, and of course our three Gant County Commissioners: Brett, Gabe and Ron.

Since I am personally acquainted with almost all of these people, I know they are an honorable bunch who will rush to take out ILCs in the tragic event the GRT tax increase is approved by the voters.  At $100,000 each, that will go a long way to protecting Grant County’s taxpayers.

Furthermore, it will be a noble effort that will garner much favorable publicity for Silver City. I can see one of my favorite Libertarians, John Stossel, leading the TV crews down Bullard, interviewing proud citizens and proclaiming how this could be the start of a national trend that could CHANGE THE FUTURE OF AMERICA!

I’m so proud of the folks who will be doing this that the more I think about it, the more choked up I’m getting.  The page is getting blurry, so I’d better quit now. Besides, it’s my turn on Signal Peak to watch for Crop Circle Aliens.

NO! to Q of L Tax Increase, Part 4 by Peter Burrows 7/27/13 elburropete@gmail.com

The voters of Grant County will soon receive a ballot in the mail asking us to approve a .25% increase in the Gross Receipts Tax.  This will support a $10 million bond sale, the proceeds from which will be spent on five projects in Grant County, projects that some people think will improve our quality of life and economic welfare, thereby leading to happier families, lower crime rates, longer lives, and so on.

The most moronic of the proposals is to spend $3 million building a movie multiplex, which someone will then manage.  A recent editorial in the GC Beat by Lynda Aiman-Smith gives chapter and verse on a similar project in Deming.  Why such a disaster should be visited on the residents of Grant County is a mystery to me.

A more fundamental reason to vote against the proposal is that half the proceeds will be used to support Western New Mexico University projects, specifically a new swimming pool complex and a refurbished baseball field.  Aside from the widely held opinion that college athletic programs are a waste of money, especially at small colleges, the university is not Western Grant County University.

WNMU is a state supported institution, which means the entire state of New Mexico.  If the state refuses to pay for something University President Joe Shepard wants, it is not the obligation of Grant County taxpayers to fill the void.  A baseball field?  Say it ain’t so, Joe.

In fact, if the spending was to be for new libraries and laboratories at the university, we should still vote no.  If we’re going to spend our tax dollars on new libraries and laboratories — or new pools and baseball fields — it should be for Silver High School, or Cobre, or Cliff, or Aldo Leopold.

Dr. Shepard previously worked at a university in Florida, a relatively rich state. New Mexico is a relatively poor state, and Grant County is a relatively poor New Mexico county.  We would be even poorer if it weren’t for WNMU, one of Grant County’s most important assets.   However, to the extent WNMU starts to be a burden on Grant County taxpayers, to that extent it is less an asset and more a liability.

Let’s don’t go down that road. There is no end.

On a larger scale, the Rio Grande Foundation has done research showing that New Mexico, with 65 higher education campuses spread over 16 colleges, is over-schooled and spending way too much on higher education relative to richer states, e.g. Arizona.  How long is this going to go on?  Might this mean budget cuts, curricula elimination, and perhaps the elimination of all athletics are someday inevitable for WNMU?

Nationally, the Wall Street Journal had an article last Thursday about second tier colleges having a hard time filling their freshman classes.  This is due in part to the demographic fact that the number of high school graduates is in a long-term decline from its peak 3.4 million in 2010-2011.  Add to that the soaring costs of tuition, a trillion dollars of student debt, jobless college grads, and people are finally beginning to ask a fundamental question: Is a college education worth what it costs?

Note, the question is not if a college education is worthwhile, but is it worth as much as it costs?  If the primary purpose of college is to prepare for a career, the answer may be a resounding no, especially relative to a shorter, cheaper, technical education.  Maybe that’s where WNMU can find a niche.

The Internet promises to be an integral part of the future of higher education, a future that will provide a better education at a lower cost. WNMU already offers eight online degrees. Living on campus, going to college football games (or swim meets), is yesterday’s college, not tomorrow’s, especially not for WNMU, which I think faces a very uncertain future.

NO! to the tax incease.

NO! To Quality of Life Tax Increase, Part Three by Peter Burrows elburropete@gmail.com

There are tried and true arguments politicians always use to justify higher taxes.  There must be a  manual somewhere, Tax Increases for Dummies (that’s you and me), because we see the same list over and over. Very predictable, and being used right now, right here in Grant County to push a tax increase.

1) The tax isn’t very much. In our case, only .25% or only $1 extra sales tax for $400 of purchases.   This argument is used to take our eyes off the ball, to avoid the real question, which is: What will the extra tax money be used for? If it’s only $1 out of $1,000,000 but it’s being wasted, the tax is TOO MUCH.

2) Even after the tax increase, taxes will still be below what other dumm—oops! taxpayers elsewhere pay. In our case, what taxpayers in Ruidoso and Santa Fe pay. Well, frankly, most of us don‘t give a damn what they pay in Ruidoso or Santa Fe. Maybe their taxes are too high, and, more importantly, their taxes may be lower than ours on an ability to pay comparison, meaning they have higher incomes (which they do.)

3) We need to spend more money on our children because they have no place to play nothing to do are bored and getting into trouble and it’s all our fault for not providing them with something to do or some place to go like a new youth center or baseball league or swimming pool or bungee tower or blah blah blah blah.

When they pull out the “for the children” argument, you know they’re getting desperate. Lots of voters unquestioningly vote for anything if its “for the children”, even if it’s only a tiny portion of the overall spending plans, or only remotely connected to children. The Spaceport, for instance, was going to motivate New Mexico kids to take up math, engineering, physics, etc., and I wish I was making that up. People, God bless ‘em, by and large really do want to do something for children, and politicians shamelessly take advantage of that decent impulse.

Some of us curmudgeons, however, might suggest that if kids are getting into trouble during the summer, maybe we should add six weeks to the school year. Of course, we do such a great job of educating kids in New Mexico, other states would see that as really piling on, and besides, our underpaid teachers (aren’t they all?) would want more money, and the greenies might object because running school buses an extra six weeks will add more greenhouse gases to the atmosphere, bringing closer the day when Global Warming (always capitalize the name of a religion) will kill us all.

It was just a thought.  Geez.

Another thought: Why not eliminate the minimum wage law for kids under 18? So typical of politicians: 1) raise the minimum wage. 2) This means more kids can’t get summer jobs. 3) Raise taxes to provide something for kids to do in the summer.  Sigh.

On a more Cosmic plane, intellectuals and other superior people will quote Supreme Court justice Oliver Wendell Holmes who said, “I like to pay taxes. With them I buy civilization.”  This is one of those pithy little sayings that’s supposed to shut down all argument, when it really needs to be qualified.

It certainly does not justify taxes being spent on stupid or corrupt things. For instance, no one can defend the city manager in Bell, CA, paying himself a salary of over $700,000 a year, plus, his pension funding was $600,000 a year. Where was that money coming from, the Tooth Fairy? Gee, he must have been really civilized.

At the other end of the spectrum, libertarians have a cute little phrase of their own, almost as fatuous as the Justice Holmes quote, which is “Taxation is theft.”  That, too, needs to be qualified. Taxes have to be levied to pay for essential services, services which indeed buy civilization, such as police protection and courts of law. That’s hardly theft.

One of my favorite quotes cuts through the sophistry and verbiage and says it best: “Collecting more taxes than is absolutely necessary is legalized robbery.” — Calvin Coolidge

NO! To Q of L Bonds, Part Two Peter Burrows elburropete@gmail.com silvercityburro.com

Grant County voters will soon be voting via a special mail-in election on whether to authorize $10 million in new bonds, the proceeds to be used, supposedly, for five “quality of life” projects.  For legal reasons, what will formally be voted on is an “Imposition of a County Capital Outlay Gross Receipts Tax of 0.25%.”

The ballots will be mailed by the end of July and must be postmarked by August 19 to be counted.  My understanding is that the mailings will not include any details of the spending on the five projects publicly proposed by Grant County Chairman Brett Kasten, County Manager Jon Saari and WNMU President, Joe Sheppard.

Let’s take a look at these five projects that may or may not be funded by the blank check the County Commissioners want us to sign.  The one that has the most merit is to remodel the interior of the county owned Conference Center, the old WalMart building where Ace hardware is.

As you’ve probably noticed, the exterior of the Conference Center has just been extensively renovated.  It looks pretty good, but as Joe Sheppard said, doing just the exterior is like “putting lipstick on a pig.”  Sheppard would like to tie-in the Conference Center with university events, but the interior has to be redone in order to accommodate large gatherings and formal presentations.

I have no idea if it makes economic sense to do this, but at least it should generate some revenues. I would point out to Dr. Sheppard that the “lipstick” was given to us by the Economic Development Administration who, due to sequestration, couldn’t follow through with the $2 million budgeted to do the interior.  Now we are being asked to finish the job with our own, taxpayer purchased  “lipstick.”

What’s the rush?  Has the Economic Development Administration removed all possibility of ever completing the funding?

Also, has the County ever tried to sell the Center to a professional real estate management company, somebody with expertise who would put their own money in the game?  I would ask the bankers for advice on this, especially Wells Fargo. I’d also see if there are any regional REITs that might be interested, e.g. put in a call to Trans Continental Realty in Dallas. Can’t hurt.

(As an aside, if this had been privately funded, the inside would have been done FIRST.)

Another proposal, probably the most trivial, is to spend money improving the golf course, specifically to put in paved cart paths.  This isn’t what I’d call lipstick on a pig, more like lipstick on a platypus.  The course is just fine the way it is. It’s a good course, not a great course. If people must have a great golf course or a private country club, Silver City is not for them.

Besides, the golf course was a big beneficiary of the Silver City $5 million quality of life funding approved two years ago in which $450,000 was earmarked for a new clubhouse, yet to be built.  The first step was to clean up the parking area around the old clubhouse by removing all the little Quonset huts that are garages for privately owned golf carts.

These were all moved across Fairway Drive to the parking lot by the baseball fields and reinstalled on new cement pads.  This was absolutely the best thing that could be done to make the golf course more attractive. It also points out that any improvement to the course, especially cart paths, will primarily benefit the owners of these golf-cart Quonset huts.

The rent for these, and there are 54 of them, is $100 per year. In addition, to operate a cart on the course costs $556 per year. This totals $656 before any green fees are paid.  Since these folks own their carts, they incur the additional expenses of depreciation, maintenance and fuel.  Any course improvements, especially cart paths, will be much appreciated by this tiny, well-to-do minority.

Don’t be surprised if these people support the bond. I don’t blame them. If I had the money, I’d buy a storage unit and cart, and tool around the course in style.  If I really wanted voters to approve this tax increase though, I’d drop funding for anything associated with the golf course. Enough is enough.

Next week Part Three, More dumb ideas

The voters of Grant County will soon be voting on a $10 million “quality of life” bond our three County commissioners unanimously recommended.  It will be paid for by increasing the gross receipts tax, New Mexico’s convoluted sales tax, by one-quarter of one percent in the county.  Supporters will tell us that this is only $1 out of every $400 in retail purchases. No biggie, right?  Wrong.  Two reasons:

(1) If the money is used in a corrupt or stupid manner, any amount is too much. For example, if the “quality of life” being enhanced is that of ex-county commissioners, starting with the current three, in the form of life-time annual pensions of $100,000 each, this is clearly corrupt.  If the money will be used to build a monorail to the Cliff Dwellings, this is clearly stupid.

(2) By trivializing the tax increment, proponents would have us ignore that this is additive to the taxes we already pay.  For example, one-quarter of one percent used to justify one hundred proposals adds up to 25%.  It illustrates the old saw that you can’t throw a frog into boiling water, because he’ll reflexively jump out. However, put him in the pot and slowly raise the temperature, and he’s cooked.

“Cooked” is what Grant County taxpayers will be if we continue to approve “quality of life” spending. We have to ask,  just whose “quality of life” is being enhanced, the general publics’ or special interests’ ?

A couple of years ago, Silver City had its own $7 million quality of life bond issue.  Mayor James Marshall defended the spending by noting that there is a certain level of public infrastructure that most residents think municipalities should provide, in addition to essential services such as police and fire departments.

This includes things like public tennis courts, a municipal golf course,  a public swimming pool, attractive parks and maybe even public transportation, e.g. a city bus service.  None of these by themselves makes much difference, none can be individually defended as an essential service,  but together they constitute important quality of life factors that make Silver City a nice place to live, frosting on the cake, so to speak.

When the city council requested public input on what to spend the money on, a large group of citizens showed up wielding tennis rackets.  The refurbishing of six tennis courts made the list.  Numerous people also supported building a new clubhouse at the golf course, the primary reason being that a golf course is an absolute must to attract many retirees.  That, too, made the list.

There may be a couple hundred families living in Silver City that wouldn’t be here if these amenities didn’t exist. They pay thousands in property taxes and spend millions at local retail stores, and without them Silver City would be hurting. A case can be made that some, SOME, quality of life spending is a good investment for the city, especially for things the city has historically supported.

However, there are a couple of problems with this approach, the first being that it‘s difficult to quantify cost vs. benefit when it comes to quality of life spending.   Second, and far more important, the list of new proposals never ends.  Somebody will always have a good idea to spend public money on, something that will enhance somebody’s quality of life.

One lady recently said it would really be nice if there were facilities for year-around basket ball and year-around volley ball, to keep the kids busy.  Yes, it would be nice.  It would be nice if Grant County built a Curling rink, say two sheets of ice up in Pinos Altos, give the kids something to do in the winter, attract retirees from Wisconsin and Minnesota. And on and on and on.

The problem is we are a small, relatively poor community that just cannot afford to be all things to all people. WE CANNOT AFFORD TO BE ALL THINGS TO ALL PEOPLE. Somebody has to draw the line, and it doesn’t look like our elected officials will do it.

Next week: Part Two: How The Money Would Be Spent

Obamacare and the 1%, Part Two 6/30/13

The absurdly named Affordable Care Act (ACA), a.k.a. Obamacare, does nothing to make medical care more affordable, just the opposite.  The shame is, and shame is an apt word, there are a number of things the Federal government could have done to improve medical care in America, including make it more affordable, and such things would have required only a few paragraphs, not thousands of pages.

Those few paragraphs, however, would have tread on the interests of at least three “one percenters” who benefit from the current medical system: doctors, unions, and lawyers.  Obamacare and the 1%, Part One, scratched the surface on the AMA’s monopoly of doctor education and accreditation.  The AMA supported the ACA. The ACA does nothing to expand the number of doctors or other care providers.

Unions also supported the ACA because employer provided health care is a tax free benefit for workers, and negotiating health care benefits is one of the most important thing unions do for their members.  The ACA does nothing to change this tax loophole, which is fundamentally unfair to the self-employed and to workers whose employers don’t offer health insurance.

Many years ago I worked for a company that provided terrific benefits including Cadillac health insurance for employees and their families.  The company sent each employee an annual summary of what all the company benefits cost, health insurance being the largest, cafeteria subsidies the smallest.  I figured the company buying my health insurance saved me over $500 a year. What a deal, right? Not quite.

It’s a well known fact that people spend their own money a helluva lot more carefully than other peoples’ money, and that includes buying health insurance. If the company had paid me what they spent on my family’s health insurance,  I would have bought a high deductible policy that didn’t offer some of the benefits my employer offered, e.g. pregnancy coverage, and I would have saved money, after tax. More importantly, I would have incurred lower medical bills because of the deductible, money out of my own pocket I watch very carefully!

The company, Wausau Insurance, didn’t offer that option and I wouldn’t have taken it anyway. They had a great health insurance plan and saw it as a both a recruiting tool and a way to keep employees happy, so happy that they wouldn’t do foolish things like leave for another job that didn’t offer such a deal.  That brings up another problem with employer provided health insurance, lack of portability.  If you leave the company or get fired, say goodbye to your health insurance, a huge problem for the fired or laid-off older worker.

It happened to me.  “Gosh Mr. Burrows, your blood pressure has gone up in the last twenty years. YOU’RE UNINSURABLE.”  (True story.)

How did employer provided health insurance become such a way of life in America? People don’t get their auto insurance, or their home insurance, through their employer — or for that matter, their groceries, electricity, clothes, etc. Why health insurance? Because of a very stupid decision by the Supreme Court during WW II, when it declared health benefits did not fall under the wage and price controls of the time, which was a separate stupidity.

Thus, for over 60 years we’ve lived with this dual tax treatment, which is both unfair and encourages over consumption of medical services. After all, somebody else is paying for it, right?  Numerous critics have recommended the tax code be changed to make heath insurance either taxable or tax deductible; one or the other, but not both as it is today.

Perhaps the best known critic is Harvard economist Martin Feldstein, who wrote in the Wall Street Journal a few years ago, “Like virtually every economist I know, I believe the right approach to limiting health spending is by reforming the tax rules.” (WSJ 8/18/09)

In a separate article, Feldstein noted that employer-provided health insurance received a “federal tax subsidy of more that $220 billion” per year.  Feldstein would tax health benefits and use that $220 billion to help pay for a voucher system to purchase a fully portable policy with a deductible of 15% of family income.  The deductible is a key part of the plan: It would get people to pay attention to their medical costs, plus it would inherently incorporate ability to pay, e.g. if you make $100,000 per year, your insurance starts after $15,000 of medical bills; if you make only $30,000, you pay only $4,500 before the insurance kicks in.

It was, and is, a great idea.  It would be much simpler and cheaper than Obamacre. Interested readers can Google, Feldstein  healthcare  for details. As far as I know, his plan was never considered.  Do you wonder why?

In the WSJ article above, Feldstein wrote, “The unions are particularly vehement in their opposition to any reduction in the tax subsidy for health insurance, since they regard their ability to negotiate comprehensive health insurance for their members as a major part of their raison d’etre.”

Which political party do the unions give over 90% of their support to?  Hint: It’s not the Libertarian Party.