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Updated: 2 hours 17 min ago

Americans should be skeptical of single-payer promises 

Fri, 2019-06-14 01:09

Ten years ago, the passage of Obamacare vastly increased the federal government’s role in our health–care system. The health care overhaul was sold to the American people as a solution for skyrocketing costs and high uninsured rates. While some uninsured gained coverage, the law further complicated America’s complex system, which continues to fail so many of our citizens. Despite the glaring shortcomings in our current system, which is riddled with government intervention, many are calling for the next step: a single-payer system. American’s should be skeptical.  

Single-payer, Medicare For All, or a universal health–care system are some of the terms commonly used to describe the pie-in-the-sky system proposed as the new fix for American’s health–care problems. Although there are different proposals to thrust the government further into the health–care sector, the most popular plan championed by Sen. Bernie Sanders would grant full control to the government. Fellow Democratic presidential nominees, such as Sens. Elizabeth Warren, Kamala Harris, and Cory Booker, are co-sponsors of the legislation. Not everyone on the Left fully endorses this plan, however.  

Sanders’ plan would transition to a single-payer system. A recently released report by the Congressional Budget Office noted a single-payer system has four essential factors. It would rely on the government to operate major functions of the plan such as eligibility, benefits, and payments for services. All eligible enrollees would be required to pay into the system. Receipts and expenditures would be reflected in the government’s budget, and private insurance would be outlawed or play a minor role.  

Medicare For All as envisioned by Sanders would eliminate almost all private insurance and provide all Americans with coverage, including primary care, hospital visits, long-term care, vision, dental and prescription drugs in plan administered by the government.  

Indeed, most Americans would probably enjoy having such benefits. Polling by the Kaiser Family Foundation finds 71 percent of respondents favored a National Medicare For All plan after hearing it would guarantee health insurance for all. But Americans should be concerned the tremendous costs of such a plan.  

The most substantial effect on the economy would be the almost complete removal of the private sector in health care. Sanders’ program would shift more than half the country into a government plan by removing the market for private insurers. Support for the Medicare For All program fell to 37 percent in the KFF poll when respondents heard private insurance would be eliminated. Through competition and innovation, the American health–care system has produced some brilliant modernizations in medicine. Putting control in the hands of the government would likely stifle that innovative drive.  

So how would the government, assuming the responsibility for administering the plan, pay for such a large system? Under Sanders’ plan, patients would be subject to no out-of-pocket spending. Instead, taxes would rise, particularly on the wealthy, to pay for the program. KFF poll data shows support for the Medicare For All program falls to 37 percent when respondents are told most Americans would be required to pay more in taxes. Moderate estimates put the price tag at about $30 trillion over the first 10 years. The U.S. government is projected to run an $897 billion budget deficit in 2019, adding to our federal debt of $22 trillion. The federal government will have difficulty paying for its growing obligations to Social Security and entitlement programs, let alone the trillions needed to pay for the massive new program. 

Would everyone get the care they need in a single-payer system? Probably not. Reports from other single-payer countries paint sobering picture. For example, patients in the U.K. and Canada can experience significant wait times for certain medically necessary services. Support for Medicare For All in the KFF poll fell to 26 percent when respondents were told the system might lead to delays in people getting some medical tests and treatments. Research has shown that when patients are responsible for less of the bill, health care consumption increases, much of it unnecessary. In a country where upwards of 327 million people would be crammed into one health–care program, it’s not difficult to imagine the effects on wait times.  

Conservatives believe public policy is most effective when it’s administered as close to the intended population as possible. I believe the policy distance between patients and Washington D.C., is a critical problem in our health–care system. Health–care reform needs to focus on shifting the balance of power back to the patient, instead of toward the government. Moving to a single-payer system would be the final blow to patient choice in America’s health–care system, not to mention a blow to taxpayers’ already thinning wallets. 

Jordan Roberts is the health care policy analyst for the John Locke Foundation. 

Categories: Public Policy

What does freedom mean to you?

Thu, 2019-06-13 01:01

I have devoted most of my life to building, inhabiting, and sometimes leading organizations devoted to advancing the cause of freedom. But what I mean by that term may be quite different from what you mean.

Even if the context is limited only to political matters, most people would agree that “freedom” is an essential public value — and then proceed to disagree about what public policies are required to protect or expand it.

The roots of such disagreements run deep. In his seminal work Albion’s Seed, the historian David Hackett Fischer describes four waves of settlement, emanating from four different regions of the British Isles, that helped shape the history and politics of the North American colonies during the 17th and 18th centuries. Each of the four “folkways,” as Fischer put it, contained its own conception of freedom.

For the Puritans who settled New England from East Anglia and the Netherlands, the organizing principle was “ordered liberty.” You were free if you were part of a free, self-governing community. “Public liberty,” as the concept was also called, was “thought to be consistent with close restraints upon individuals,” Fischer explained.

For the Royalists who settled Virginia and neighboring colonies from their original homes in the south of England, the organizing principle was something closer to “hegemonic liberty,” in Fischer’s phrase. That is, while they emphasized individual freedom instead of the Puritans’ sense of collective liberty, Virginians didn’t think everyone was entitled to it. Rank had its privileges, in other words, and obviously those held in bondage were excluded entirely.

Quite different was the “reciprocal liberty” espoused by the Quakers and other religious dissenters who settled Pennsylvania and its environs. Their conception “embraced all humanity and was written in the Golden Rule.” While religious liberty was essential to this tradition, its protection of individual autonomy extended to other spheres of life, as well, including property rights and procedural rights for those accused of crimes.

Finally, large waves of settlement from Northern Ireland, Scotland, and Northern English during the 18th century brought the idea of “natural liberty” to the backcountry of early America. Rejecting the idea of tempering their personal freedom with the communal authority of the Puritans, the hierarchical authority of the Royalists, or the radical egalitarianism of the Quakers, the backcountry folk insisted that they simply wanted to be left alone. Indeed, as a group of Mecklenburg County leaders put it in 1768, their individual liberties came before their political obligations. “We shall ever be ready to support the government under which we find the most liberty,” they stated.

These were just the original British folkways that help shaped America’s political culture. Weave in the distinctive beliefs of America’s other origin cultures and you have an ideological tapestry of intricate complexity.

The late University of Oklahoma scholar Rufus Fears described freedom as existing at three levels. Individual freedom means the right to do you choose without the government telling you otherwise. Political freedom means the right to vote and participate in civic affairs. Finally, national freedom means the right of a people collectively not to be ruled by some other people.

Ideally, one would enjoy freedom at all levels. But for most of recorded history, most people have enjoyed just one or two of these freedoms, if any. For example, under the Roman empire quite a few people enjoyed individual freedom and some enjoyed the political freedom to elect local magistrates. But no one outside Rome itself experienced national freedom.

To my way of thinking, individual freedom is the end-goal. I value political freedom and national freedom precisely because I think they are most likely to protect individual freedom from encroachments, foreign or domestic. To be free is not necessarily to be happy. It certainly doesn’t make one free of social attachments, or capable of obtaining any particular goal. It simply means you can pursue whatever goal you wish without government telling you otherwise. And I think it’s worth fighting for.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

New craft beer law could be first of many needed alcohol reforms

Wed, 2019-06-12 01:46

Lawmakers have offered several proposals to repair the broken, outdated way the state governs alcohol through the N.C. Alcoholic Beverage Control system.

About a dozen bills, in fact, are moving through the General Assembly, and one, House Bill 363, the Craft Beer Distribution and Modernization Act, is now law.

H.B. 363 allows breweries that sell fewer than 100,00 barrels — up from 25,000 — to self-distribute and market their products without being required to use a wholesaler.

It’s past time North Carolina gets out of the liquor business, opens the market to competition, and encourages opportunities for entrepreneurs.

About a dozen additional proposals are being considered this session that would support a free and open market by increasing competition, expanding consumer choice, and encouraging entrepreneurs to start and grow businesses.

In the end, this isn’t really about alcohol. Rather, it’s about government’s role in encouraging North Carolina businesses to grow.

Alcohol bills lawmakers are considering this session would move the state’s system toward more competition, open up markets, expand consumer choice, and encourage entrepreneurs to start and grow businesses.

House Bill 91: The Joint Legislative Program Evaluation Division makes several recommendations for changes to the ABC laws, including requiring the merger of local boards when two or more are in the same county, allowing the option of ABC stores to open Sundays, and allowing spirits tastings at ABC stores. Consumers could buy one bottle rather than a case when placing a special order.

H.B. 536, ABC Omnibus Regulatory Reform, would allow tasting of spirits in ABC stores, flexibility with store hours and the option of Sunday sales. Consumers could buy products directly from distilleries and remove limits on the number of bottles a consumer could purchase (it’s currently a five-bottle per year limit). Breweries would be allowed to sell product-featured merchandise and conduct tastings at farmers markets.

Further reforms for distilleries are proposed in Senate Bill 290, which would allow, among other things, consumers to purchase a mixed beverage while visiting a distillery, allow distillers to sell to out-of-state customers, and allow distillers to provide tastings of their products in ABC stores.

H.B. 389 would allow public colleges and universities to sell alcohol during on-campus sporting events.

S.B. 290 and H.B. 389 are scheduled for votes Wednesday in the Senate Commerce and Insurance Committee.

With all the reforms being considered, there’s no suggestion of loosening enforcement of ABC laws, but there is an effort to strengthen enforcement of alcoholic beverage laws. The Alcohol Law Enforcement Division would move under the SBI to a separate division under the Department of Public Safety, and its duties and jurisdiction would be clarified, under H.B 99.

An ABC Regulation and Reform proposal, S.B. 11, would strengthen the commission’s oversight of bars by increasing fines for violations, increasing the minimum age for bar managers from 18 to 21, and change definitions of “private club” and “private bar.” It has passed the Senate and is on Thursday’s House calendar.

As the craft beer and craft distillery business continues to grow, lawmakers should encourage their growth by removing barriers and encouraging further investments. As consumers expect business to respond to their needs, lawmakers should encourage competition and open markets.

In the end, it’s not really about alcohol. It’s about government’s role in allowing the N.C. economy to grow.

Becki Gray is senior vice president of the John Locke Foundation.

Categories: Public Policy

Boosting responsibility by turning off the spigot

Tue, 2019-06-11 04:02

It’s a hard lesson for some parents to learn: Foot the bill every time your adult child runs into financial trouble, and that child is more likely to continue running into trouble.

Cut off the flow of parental cash instead, and your child is more likely to learn responsibility for his own debts and obligations.

A recent report from the Cato Institute applies a similar principle to the federal and state governments.

Scholars at the nation’s pre-eminent libertarian think tank might shudder at the comparison. They might not like to think of Washington as a parent enabling fiscally irresponsible state “children.” Nonetheless, the analogy seems well suited to a report calling for “Restoring Responsible Government by Cutting Federal Aid to the States.”

Federal aid spending is expected to reach $750 billion this year, up from $697 billion in 2018. Washington funnels that money to state and local governments through at least 1,386 programs, according to the Cato report. The money influences such key policy areas as education, housing, and transportation. Along with the cash, the feds attach “top-down regulations.”

“The federal government has a giant budget deficit of over $1 trillion now a year,” said report author Chris Edwards during a recent edition of the John Locke Foundation’s “HeadLocke” podcast. “We have to cut federal spending somehow. I think the best way to cut federal spending is to cut out the federal activities that are properly the responsibilities of state and local governments.”

Cutting that spending would lead to the “double advantage” of reducing the federal deficit while ensuring more responsible government, said Edwards, Cato’s director of tax policy studies.

Take, for example, local transportation programs. “Americans across the country are taxed,” Edwards said. “The money goes to Washington. Then the Washington bureaucracies spill back out money that funds your local city bus system. This makes no sense to me. It seems to me that we ought to fund local activities … locally. You get much more responsible and efficient government that way.”

Take away the federal subsidy, and it’s less likely that local officials will adopt programs their own constituents are unable or unwilling to pay for themselves.

Edwards looks back at least 100 years for the source of harmful federal meddling in state and local government issues. The problem became much worse under President Lyndon Johnson’s tenure in the 1960s. “The federal government entered hundreds of new areas, passed hundreds of programs to intrude in state and city activities like urban redevelopment. That’s when the K-12 education subsidies started. That’s when the Medicaid subsidies started.”

“Very quickly after these programs went in place, analysts began noticing how horribly inefficient it was to try to fund local activities from Washington,” Edwards added. “There’s the pork-barrel problem. The politicians in Washington just fight over the amounts of money sent to their districts. There’s no focus on efficiency or responsibility in these programs.”

State and local governments, like the spendthrift child, deserve part of the blame. While some have resisted federal involvement in their policy areas, “the lure of federal money essentially bought off state and local officials,” Edwards said. “This made sort of an end run around our Constitution.” The 10th Amendment and other constitutional provisions were meant to keep the feds out of state activities.

The Cato report has implications for a current N.C. policy debate. As the state wrestles with Medicaid expansion, Edwards explains why the discussion ought to address problems linked to federal aid. “States have this incentive to endlessly expand their Medicaid programs,” he said. “If they spend $2 more on Medicaid, they draw an extra dollar from Washington.”

“Money from Washington seems to be ‘free,’ so state politicians spend it recklessly,” Edwards added.

It’s unlikely the federal government cut could the Medicaid cord abruptly. Edwards says reform could start instead with the feds converting existing funding into block grants. “Give the states fixed chunks of money,” he said. “That would allow the federal government to control the costs. It would provide strong incentives for the states to deliver services more efficiently.”

As for many of the other federal aid programs, Edwards recommends a cleaner break. “Hundreds of them are small programs that I’m sure most of your listeners have never even heard of,” Edwards told the “HeadLocke” audience. “They really only benefit the political class. They don’t benefit most citizens. So I think hundreds of these programs we could eliminate — abolish quickly, overnight — and no one would even notice.”

A parent can continue covering his child’s bills indefinitely, as long as the money is available. A federal government carrying a multitrillion-dollar debt does not enjoy the same luxury.

In either case, Edwards’ message of increased responsibility and accountability is worth hearing.

Mitch Kokai is senior political analyst for the John Locke Foundation.

Categories: Public Policy

Boost health access by lowering cost

Mon, 2019-06-10 01:01

Although policymakers sometimes portray increasing access and reducing cost as separate objectives for health care reform, the two are closely related. When North Carolinians lack immediate access to primary care or mental health services, they bear the cost either of waiting for an appointment or of traveling long distances to get the care they need.

According to the state’s Department of Health and Human Services, 82 of North Carolina’s 100 counties rate poorly in access in primary care. Most are exactly where you’d expect them to be, in our state’s most rural eastern and western areas.

Thinking about a lack of health care access as an additional cost helps clarify what might otherwise be muddy issues. For example, advocates of Medicaid expansion, Medicare for All, and other expansive approaches to government finance of health care tend to conflate price and cost.

It certainly matters who pays the bills — patients, taxpayers, or some combination thereof. But shifting the price from (relatively) shallow pockets to (apparently) deep pockets doesn’t necessarily change the cost. Indeed, in some cases it may increase the true expense of delivering the service by making patients less cost-conscious or by imposing regulatory burdens that exclude some providers from the market, thus reducing competition.

In large swaths of North Carolina, access to medical care is a big problem. Let’s tackle it, in ways that don’t shift costs but actually reduce them.

One idea is to make it easier for advanced-practice nurses to set up shop in rural areas. For example, North Carolina is one of only 12 states requiring that nurse practitioners, certified nurse midwives, clinical nurse specialists, and certified registered nurse anesthetists agree to be “supervised” by a physician. I put that term in quotes because, in reality, the supervision is minimal — sometimes the docs and the nurses are separated by hundreds of miles and rarely see each other — but the latter must pay the former for the privilege.

A bill making its way through the General Assembly this year, the SAVE Act (which stands for Safe, Accessible, Value-directed and Excellent care), would address this and other unwarranted obstacles to providing affordable primary care in rural areas.

Another solution in some circumstances will be to expand the use of technology. While ill-suited for some services and patients, telemedicine is already used routinely and effectively to diagnose conditions, prescribe or supervise treatment, and provide counseling services. It could do more to expand access under the right regulatory framework.

To be more specific, North Carolina should not let its licensing laws block rural residents from accessing out-of-state specialists as long as those physicians are in good standing with their home states’ medical boards.

On the other hand, state lawmakers shouldn’t try to “help” the field expand by dictating to health plans how they must pay for telemedicine services. “If insurers are forced to pay for virtual services at the same rate as in-person services,” explains John Locke Foundation health-policy analyst Jordan Roberts, “there is no incentive for the utilization of technology that has the potential for cost savings and a more patient-centered form of care.”

No matter what policymakers do, there will still be local differences across North Carolina in access to medical services. People choose where to live based on a host of considerations. Some prioritize urban amenities. Others place a higher value on housing prices, family roots, rural lifestyles, and wide-open spaces. Given economies of scale, some health-care institutions and options are only going to be available in metropolitan areas.

But the gaps don’t have to be as wide as they are now. Better access to primary care, in particular, will help keep rural North Carolinians healthier while saving time and money. That will, in turn, strengthen rural communities. We don’t need to break the bank or vastly expand government to accomplish the goal. We simply have to reduce regulatory barriers so that health providers and patients can make mutually beneficial arrangements. We have to target cost, not just price.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Budget standoff highlights policy differences 

Fri, 2019-06-07 01:01

A version of this editorial appeared in the June 2019 print edition of Carolina Journal. To sign up for a free subscription, visit here.

A week ago, the state Senate passed its version of a $23.9 billion General Fund budget for the next fiscal year. The Senate and House still must resolve their differences in a conference report, pass it, and send it to Gov. Roy Cooper. 

Who probably  will veto  it. 

None of this is surprising. The Democrat Cooper vetoed the last two budgets he got from the Republican-led General Assembly. But the 2017-18 legislature had enough Republicans to override the vetoes. 

Last November’s election results flipped the odds to Cooper’s favor. Republicans lost their veto-proof  supermajorities in both the House and Senate. And yet each chamber passed its budget along party lines. Since Cooper has rejected the GOP’s priorities, the simplest way he could enact his vision is by refusing to let any new fiscal plan take effect without concessions from lawmakers. 

Cooper could have chosen to sit down with legislative leaders and make deals. But he hasn’t. And the plans passed by the Senate and House show such negotiations aren’t likely. 

The governor is treating the budget fight as the unofficial launch of his 2020 re-election campaign. Legislative leaders are plenty happy to contrast their vision of the role of government with his. As a result, we have a budget stalemate which could last for months. Neither side seems inclined to compromise, as each offers a different set of priorities for governance. 

If a new budget isn’t in place by July 1, the current tax and spending programs will stay in place until a fresh budget becomes law. With plenty of money flowing into the state treasury to cover spending obligations, state government will stay open. 

The likely standoff might last a long time. 

While we take issue with some of the legislature’s choices, lawmakers clearly have a better idea than the governor does of managing state finances and public policy. 

The fight is worth it. 

For instance, Cooper insists on expanding Medicaid coverage under the Affordable Care Act. Doing so in the budget appears easier than moving a separate bill. Set aside the problems with expanding Medicaid coverage primarily to people who are single, childless males, as Obamacare expansion would do. And the evidence that Medicaid patients often get worse care than uninsured people who rely on clinics and emergency departments for their treatments. 

Cooper’s budget doesn’t pay for Medicaid expansion. 

John Locke Foundation Health Policy Analyst Jordan Roberts has noted that Cooper’s budget has expansion costing an extra $6.3 billion over two years. Federal taxpayers (including North Carolinians) will pick up 90% of that spending. Since Uncle Sam already has run up more than $23 trillion in public debt, the money really will come from today’s young workers. 

Even so, N.C. taxpayers would remain on the hook for $631 million over two years. Cooper’s budget proposal covers $78.2 million — a mere 12% of the cost. The rest would require spending cuts or higher taxes. 

Cooper also would leave less than $80 million of his $24.5 billion General Fund plan unspent. (The House and Senate leave unappropriated $619 million and $743 million, respectively, allowing more flexibility in case of emergencies or other unanticipated problems). 

And the governor wouldn’t cut taxes. The General Assembly’s plans raise the standard deduction or “zero tax bracket” — the amount of money you can earn without paying income taxes. The increase is a tax cut  for  every working North Carolinian. There’s also a solid business tax cut in the legislative proposal, a reduction in the franchise tax, which businesses must pay whether they’re wildly profitable or barely able to make payroll. 

Legislative leaders have been eager to call the governor’s approach a return to failed policies of the past, and they’re not far wrong. The General Assembly’s agenda — cutting and simplifying taxes, streamlining regulations, expanding school choice, and boosting infrastructure repair and upgrades — has  made North Carolina a better place to live, learn, work, raise a family, and operate a business. 

The governor’s plans would reverse many policies which spurred that progress. 

There’s some room to compromise, but only if Medicaid expansion is off the table. If Cooper won’t relent, then each side seems happy to stand by its goals and let North Carolina voters decide next year. 

If so, here’s hoping they choose wisely.

Categories: Public Policy

Average teacher pay number comes under attack

Thu, 2019-06-06 04:02

Some advocates of higher pay for N.C. public school teachers don’t like the number $53,975. Specifically, they don’t like that number reported as the average salary for a teacher in the Tar Heel State.

Their attempts to explain away that average fall short of the mark. But the criticism reminds us about the limited usefulness of the statewide average as a guide to good public policy.

First, let’s address the source of the average number itself. Critics at an advocacy group called the Public School Forum of North Carolina label the $53,975 figure as having been “reported by” the N.C. Department of Public Instruction. In a statement quoted at WRAL.com, the forum contends that the DPI figure “includes calculations that inflate the state ‘average,’ which results in a misrepresentation of what teachers actually earn in most districts.”

Any such special calculations do not appear to bother the nation’s largest teachers union. The National Education Association used the same $53,975 figure in its annual report on teacher pay issued March 12. NEA cited a one-year increase in the average from $51,231 to $53,975. That 5.3% hike moved North Carolina up from No. 34 to No. 29 in an annual ranking of the states. (Factor cost of living into the equation, and that ranking would climb to No. 20, according to computations by my John Locke Foundation colleague Terry Stoops.)

The NEA’s endorsement of the $53,975 average proved problematic for some participants in the highly publicized May 1 teacher union march in Raleigh. Multiple marchers held signs disputing the figure.

One sign proclaimed, “If you believe the average N.C. teacher makes 54K, you will believe anything!” This observer’s response: “If you don’t believe the average N.C. teacher makes 54K, then you don’t believe the union that helped organize the rally at which you are holding this sign.”

DPI also responded to the criticism. The state government official who has calculated North Carolina’s average teacher salary since 2002 explained to WRAL.com that the process has remained consistent from year to year.

In other words, neither the Republican-led General Assembly (in power since 2011) nor the Republican superintendent of public instruction (in office since 2017) has taken any steps to skew the average teacher pay number as calculated for the better part of two decades.

Though there’s no evidence of nefarious tinkering with the data, let’s look more closely at the Public School Forum’s complaints.

Among the primary concerns is the use of an average local salary supplement figure. That average “obscures the substantial differences in local salary supplements from one district to another, resulting in large disparities in average teacher pay depending on location,” according to the forum. For example, the average in Dare County, the state’s highest-paying system, reaches $59,223. The lowest-paying system, Swain County, offers an average of $47,554.

It’s unclear why the statewide average salary calculation should take no account of the average salary supplement. That supplement number is just as critical as the average level of teaching experience. It’s just as important as the average amount of pay tied to special certifications or extra school duties.

What appears to irk the Public School Forum is “inequities” in local salary supplements. Local governments and school districts “that have the wealth to do so” offer “significant” supplemental pay. Meanwhile, the average teacher in more than 80 percent of North Carolina’s school districts falls below the “reported” $53,975 average.

This disparity “leaves so many teachers scratching their heads,” according to the forum’s Keith Poston. “In reality, in most school districts teachers earn less than the average.”

Two aspects of the supplement-related criticism are worthy of comment. First, focusing on school districts rather than teachers could prove misleading. North Carolina has 115 school districts in its 100 counties.

The two largest districts serve 160,000 (Wake) and 147,000 (Charlotte-Mecklenburg) students. The third-largest district (Guilford) is less than half as large. The state’s smallest district serves fewer than 600 students. The largest system is more than 260 times as large as the smallest.

It should surprise no one that higher salaries in Wake and Charlotte-Mecklenburg have a major impact on statewide averages. The average teacher is likely to work in one of the districts with the most students. Only if our school districts had roughly equal student populations could we expect roughly half of the districts to reach the statewide average salary.

Second, different local salary supplements are not necessarily based solely on “inequities.” Elected local school boards set supplement levels based on funding made available by elected county commissioners. While the size of the local tax base certainly affects those decisions, local politics and varying local government priorities also play prominent roles. It’s inaccurate to assert that all school systems would offer the same local supplements if not for different economic circumstances.

Perhaps the key takeaway from this discussion is the limited usefulness of one single number for average N.C. teacher pay. Politicians from both parties have latched onto the figure. They have suggested that a higher average is necessarily better — especially in comparison with other states.

But the statewide average has its drawbacks. Most importantly, it focuses attention squarely on an education input rather than an outcome. That includes the most important outcome: student achievement.

Regardless of the merits of the Public School Forum’s arguments, its complaint gives us another reason to question the importance of average teacher pay.

Mitch Kokai is senior political analyst for the John Locke Foundation.

Categories: Public Policy

Don’t play favorites with business taxes

Wed, 2019-06-05 01:01

Although it may not appear so, the leaders of both major political parties in North Carolina favor lowering the tax burden of large businesses. Their real dispute is about the scope and magnitude of the tax relief.

Democratic Gov. Roy Cooper has consistently opposed recent state budgets, crafted by the Republican-controlled legislature, that reduced the corporate tax rate from 6.9 percent in 2013 to 2.5 percent today. This year, Cooper seems likely to veto whatever budget emerges from the General Assembly, in part because it will contain a cut in franchise taxes (which tax the value rather than the net income of a business).

The administration’s spokesman, Ford Porter, put it this way after the Senate passed its budget plan: “Governor Cooper will continue pushing for a budget that represents middle class families instead of special interests and corporate shareholders.”

But Cooper has also requested and enthusiastically supported big tax incentives for companies that moved to or expanded their operations in North Carolina, including multi-million-dollar packages for Lending Tree, Honeywell, equipment manufacturer Greenheck Group, biopharmaceutical firm Cellectis, and Charlotte tech company AvidXChange, among others.

More generally, Cooper and other Democratic leaders have sought to restore, protect, and expand tax breaks for politically favored industries such as solar energy and film production.

It’s not necessarily a contradiction to favor large but narrowly tailored tax relief over across-the-board reductions. It does require making certain assumptions — and they ought to be clearly spelled out so that North Carolinians can decide for themselves whether the assumptions are reasonable.

One such assumption is that when it comes to reducing state tax burdens, some but not all companies are “worth it.” They are more important to the state’s economic vitality, one might say, either because of their sheer size or their expected future growth in sales, investment, and jobs.

Another assumption is that some companies are more responsive to taxes than others. If ACME Manufacturing is going to do business and employ people in North Carolina at roughly the same level, regardless of how much tax it pays, the state might be better off collecting the revenue generated by the higher rate and spending it on public services, or so the argument goes. On the other hand, if Ach-Mee Manufacturing won’t come to or stay in the state unless it gets a tax break, North Carolina ought to give it to them.

Finally, and most importantly, advocates of targeted tax relief assume that they or some other state officials are capable of reliably distinguishing the worthy corporate recipients from the unworthy ones — that is, they can know with confidence which companies are economically vital and most sensitive to tax burdens.

When Gov. Cooper insists, for example, that North Carolina shouldn’t cut state corporate or franchise taxes across the board but that our state should devote more tax incentives to film and TV production, he is suggesting that media companies are more valuable to the state’s economy than other kinds of firms, are more likely to do business elsewhere if they don’t get their way, or both.

There are surely North Carolinians who find these assumptions plausible. I don’t. I think economies are far too complex a set of systems to be measured, forecast, and planned at that level of detail. I don’t think it wise to put state officials in the position of choosing among “worthy” businesses or industries, which I suspect will inevitably lead to political favoritism and perhaps even rank corruption in the long run.

Of course, even if it were technically feasible and politically sustainable, I still think it would be grossly unfair to tax companies differently based on size, location, average wages, or industry. Uniform taxation advances both fairness and efficiency. If a billionaire came to your county and offered to live there in exchange for exempting her mansion from property taxes, on the grounds that she’d boost the local economy by spending lots of money, wouldn’t you want your county commissioners to say no?

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Hospital mergers: Profits over patients

Tue, 2019-06-04 04:00

“Economies of scale, lower administrative costs, and more coordinated care will lower overall costs and improve the quality of health care.”

This is a line we typically hear when large hospital systems merge or acquire smaller practices. To many, this may seem reasonable. For example, think about a large retail store such as Walmart. When these types of businesses get to a certain level of growth, they can use that size to create more efficiencies and lower the costs for the products they offer. Wouldn’t this be the same for hospitals? Not so much.

The two main factors that should be considered when evaluating how hospital mergers affect a health-care market for patients are prices and quality.

Health-care prices are widely recognized as one of the main cost drivers when it comes to overall health-care spending. Whether patients realize it, Americans are usually paying exponentially more for the same services, compared to patients in other countries. Hospital market concentration is one of the main culprits causing this occurrence.

Numerous studies have shown evidence that when hospitals consolidate, patients pay higher prices for procedures. Naturally, when there are few hospital competitors in a given area, the incumbent hospitals have enhanced market power to dictate costs and access. For example, one study found that prices are 12% higher in markets where there is a monopoly hospital, compared to those where there are four or more competitors. Another analysis examined 25 metropolitan areas where concentration was the highest and found that between 2010-13, the price of an average hospital stay increased anywhere from 11% to 54% percent.

A significant catalyst in the hospital consolidation phenomenon is the Affordable Care Act, or Obamacare. But how are hospital mergers and Obamacare related? A report from the Robert Woods Johnson Foundation in 2012 wisely foretold, “The Patient Protection and Affordable Care Act promotes Accountable Care Organizations (ACOs) and the bundling of payments across providers for an episode of care (“bundled payments”). Both of these features of the ACA encourage consolidation between hospitals and physician practices, which in fact has recently accelerated.”

President Obama signed his landmark health-care legislation in 2010, and it has been a boon for many hospitals since. Data from the American Hospital Association shows that following the passage of Obamacare, hospital margins have been at their highest level since at least 1995. As you can see below the yearly number of mergers and acquisitions since 2010, after Obamacare became law, have increased steadily.

Source: https://www.kaufmanhall.com/sites/default/files/legacy_files/2017-in-Review_The-Year-that-Shook-Healthcare.pdf

Another aspect of hospital consolidation that patients may not be as keenly aware of is the extent to which non-hospital providers, such as primary care practices or specialists, may become part of the equation. When large hospital systems expand, there is potential for more profits when they acquire smaller practices and incorporate them into their systems. Often the same procedure will be much more expensive in a hospital compared to a smaller practice. Outpatient procedures and imagining services are a prime example. So the natural result is that when hospitals acquire smaller practices — you guessed it — prices rise.

The second factor that deserves consideration in discussions of hospital consolidations is the questions of health-care quality. Patients want to go to the best possible hospital for procedures, such as something small such as a broken arm, or something potentially life-threatening, such as heart surgery. But the reality is the largest, most expensive looking hospital may not be the best in terms of producing the highest quality health outcomes. Indeed, Martin Gaynor and Robert Town, two health-care economists who focus on health-care competition, drew one conclusion from a review of the literature on hospital markets: Competition among hospitals leads to better health outcomes. While some of the most expensive hospitals may have a good track record for healthy outcomes, competition ensures that market participants are responsive to patients needs in ways not to lose them to their competitors.

This is not to say that hospitals are bad. Far from it. This is to say that in most cases, when hospitals merge and create large hospital systems, patients are made worse off. A healthy dose of competition in health-care markets would serve patients well because in the presence of competitors, patients and insurers are offered competitive rates. Hospitals have more of an incentive to offer the highest quality services for fear they may lose patients to a nearby competitor. These processes would foster a more functional health care market. However, as the data shows, when there are market distortions like the ACA and other state level polices such as Certificate of Need laws or Medicaid expansion, hospitals respond to the incentives by growing, which leads to higher prices for patients.

The topic of hospital mergers is important for a number of reasons. It was recently reported there have been proposals floated for massive hospital mergers in North Carolina and across the region. But more importantly, health-care policies are on the minds of Americans. Polls constantly find health care is one of the most important issues for voters. presumably because they have seen premiums and out-of-pocket costs grow substantially over the past decade.

To better protect patients from exorbitant health care costs and promote a more functional health care market, more light needs to be shed on the potential effects of hospital mergers and acquisitions.

Categories: Public Policy

Population trends may surprise you

Mon, 2019-06-03 01:01

In 1940, some 3.6 million people lived in North Carolina, ranking the state 11th in the nation in population and first in the Southeast. Across the South as a whole, only Texas (6.4 million) was more populous.

If present trends continue, by 2040 North Carolina will have a population of about 12.7 million, ranking us seventh in the nation but only fourth in the South, after Texas (40 million), Florida (28.9 million), and, just barely, Georgia (12.8 million). By that time, more people will live in North Carolina than in Illinois or Ohio.

Surprised? Let’s see if I can surprise you again. Even as North Carolina reaches that milestone, our population-growth rate will be declining significantly. According to the projections (from the University of Virginia’s Demographics Research Group), North Carolina’s population will have risen 10.8 percent from 2010 to 2020, 10.5 percent from 2020 to 2030, and 8.4 percent from 2030 to 2040.

These increases will still outpace the average national rate, which is also projected to decline. But keep in mind that North Carolina’s growth rates have historically been far higher — 12.7 percent in the 1980s, 21.4 percent in the 1990s, and 18.5 percent in the 2000s. Indeed, if the 2020-2040 projections prove accurate, North Carolina will grow at our slowest rate since the tumultuous 1860s (7.9 percent).

Part of the explanation is that Americans as a whole are less likely than their predecessors to move across state lines. This is another trend that many may find surprising, especially if they live in rapidly growing communities full of new arrivals. The other, larger story is simply that fertility rates are declining and immigrants from other countries are not expected to make up the difference.

Although the growth rate may decline on a percentage basis, our state is still poised to add lots of new residents — more than two million more North Carolinians by 2040. Our economies, communities, and politics will change accordingly. Some of these effects are (sort of) predictable. Others may well present us with still more surprises.

We assume based on recent experience, for example, that these new North Carolinians will live disproportionately in our largest cities. They probably will live disproportionately in metropolitan areas, but I wouldn’t be too sure where in that rather broad swath of North Carolina they will end up working and raising their families. Relative costs, technological change, and consumer preferences fluctuate. Perhaps our largest cities will get much denser. But perhaps young natives and newcomers will prefer new centers of employment, residence, and commerce on the fringes of today’s urban cores.

In the past, policymakers also assumed that population growth meant lots more children in schools and colleges, requiring massive capital expenditures to keep up with the demand for classroom space. Yet North Carolina’s school-aged population isn’t growing as rapidly as policymakers expected just a few years ago, and a higher share of those young people get their educational services in new ways — in home schools or in flexible arrangements that combine school buildings, satellite campuses, libraries, their homes, and other homes.

Even as North Carolina grows more populous, it will grow older. A lot more North Carolinians will be retired. Again, don’t make hasty assumptions. We’ll have more retirees and they’ll live longer, many into the 80s and 90s, but that doesn’t necessarily suggest our governments, households, and provider networks will collapse under the strain of caring for infirm parents and grandparents.

Tomorrow’s retirees will be far healthier than yesterday’s retirees were, on average, and as the American Enterprise Institute’s Andrew Biggs pointed out in recent congressional testimony, they’ll be better prepared financially than any previous generation of American retirees has been.

Back in 1940, the second-largest city in North Carolina wasn’t Raleigh. It was Winston-Salem. Durham, Greensboro, and Asheville were also more populous than the capital city at that time. Some statistician probably predicted that Raleigh would surge, but I’m sure it came as a surprise to many North Carolinians, anyway. Rinse, repeat.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Alcohol reform may be coming to N.C., and it’s about time 

Fri, 2019-05-31 04:00

The N.C. Alcoholic Beverage Control system — created in 1937 in the wake of the repeal of Prohibition — for the past 80-plus years has remained mostly static. 

But this may soon change, as lawmakers have offered several proposals to repair the broken, outdated system

But what’s interesting this session, despite the many past attempts to reform the system, is that the proposed changes by lawmakers are simple and workable. 

Long-needed reforms to modernize, build efficiencies, enhance consumer choice, and streamline a cumbersome system are long overdue. But even if substantive reform this session is unrealistic, smaller provisions have been well-received and, in turn, would have a significant impact on loosening the current rigid ABC system to encourage and to grow a burgeoning industry. 

Each state regulates the production, sale, and distribution of alcohol, and North Carolina is just one of 17 states with a “control model.” North Carolina, however, is the only state in which local government boards control liquor sales, operating through 170 separate boards appointed and controlled by county or municipal officials. This unique model has evolved over the years into a cumbersome, inefficient system that is rife with mismanagement, wastes taxpayer money, limits consumer choice, and chokes out competition.   

It’s past time North Carolina gets out of the liquor business, opens the market to competition, and encourages opportunities for entrepreneurs. 

Comprehensive reform, as suggested in House Bill 971, would eliminate local ABC boards, and treat the distribution, sale, and permitting of spirituous liquor the same as it does beer and wine. H.B. 971 would maintain the current wholesale distribution system, amend excise taxes — redirecting proceeds to local governments — authorize the sale of the state’s warehouse, ABC stores and current inventory, and dedicate funds for public safety concerns.  

The bill would limit the authority of the ABC Commission to administer laws governing spirits, as well as enforcing those laws through state Alcohol Law Enforcement.  

North Carolina would add liquor sales and distribution to the current three-tier system, which is now working for beer and wine. Spirits, in limited and controlled amounts, could be available wherever beer and wine are now sold. 

Replacing local revenue from liquor sales is — and has been in previous discussions — a large hurdle toward reform.  

So, then, how would the state collect and distribute taxes under a reformed system? The current excise tax would go from 30% of the sales price to a flat $28 per gallon. Of the taxes collected, 25% would go to local governments. Taxes from beer and wine could be used for any purpose, but taxes from spirits would be applied specifically to: Treatment of alcoholism (4%); research and education (15%); enforcing the pertinent laws (11%); and the rest for any public purpose. Each year, the Department of Health and Human Services would get $2 million for alcoholism treatment and education, and the ABC Commission would get $8.5 million for operating and administrative costs. Wholesalers would pay excise taxes. 

Getting out of the liquor business means liquidating assets. By Jan 1, 2020, the ABC would sell the state warehouse — and any liquor in its possession — by public sale through a wholesaler. Proceeds would flow into the General Fund. By Jan. 1, 2020, all 170 of the local boards would liquidate their assets, with wholesalers bidding on liquor held by the boards. Funds from the sale would go to counties or municipalities for public-school capital expenses. 

The reform proposal gets the state out of the liquor business and builds on the current structure for beer and wine. It builds efficiencies in an outdated system, gives consumers more choice, and streamlines access for business.  

Meanwhile, about a dozen additional proposals are being considered this session that would support a free and open market by increasing competition, expanding consumer choice, and encouraging entrepreneurs to start and grow businesses. On Thursday, for instance, Gov. Roy Cooper signed House Bill 363, which allows brewers to distribute more of their own beer.

In the end, this isn’t really about alcohol. Rather, it’s about government’s role in growing North Carolina’s economy.

 Becki Gray is senior vice president at the John Locke Foundation.

Categories: Public Policy

Partisan squabble could overshadow clear need for disaster recovery reform

Thu, 2019-05-30 04:02

Expect continuing partisan shots as Republican legislators and Democratic Gov. Roy Cooper’s administration haggle over state government’s response to Hurricane Matthew.

But one hopes that the bickering does not overshadow one clear fact: Bureaucratic inertia and perverse incentives plague portions of the federal government’s disaster recovery system. A brief statement last week from Cooper’s Office of Recovery and Resiliency demonstrated that point.

“These things come so quickly and are so disastrous,” said Rep. Craig Horn, R-Union, of Hurricane Matthew. “It takes us so long to help folks that are in immediate need. It’s a crying shame.”

By the time Horn uttered those words May 20, he and other members of a legislative oversight group had spent about an hour dissecting the state’s response to the 2016 hurricane.

They focused particularly on a report from the General Assembly’s Program Evaluation Division. That report cited “administrative missteps” and a “lack of expertise.” It labeled $3.7 million in state hurricane recovery spending “unnecessary.” Based on the findings, program evaluators recommended a series of changes at the state Department of Public Safety and its relatively new recovery office.

Lawmakers took no votes. But Horn’s comments spoke for many of his colleagues. “It’s just very frustrating,” he said. “If you’re in a home that’s devastated, you’ve lost everything. And it seems like everybody’s spinning their wheels, and nothing’s happening. And you’re stuck.”

Laura Hogshead has served as chief operating officer at the Office of Recovery and Resiliency since January. She spelled out the Cooper administration’s response to the legislative report.

Of course Hogshead’s comments placed the facts in the most favorable light for Cooper’s hurricane response team. Legislators have legitimate reasons to question Cooper staffers’ effectiveness.

But only the most hardened partisan would fail to see that some of her statements raise serious questions about the federal government’s role in disaster recovery.

First, Hogshead reminded lawmakers about the basic structure of the federal Community Development Block Grant program for disaster recovery, or CDBG-DR. The feds granted North Carolina $236.5 million under that program. (The federal government chipped in a total of $914 million for housing and infrastructure assistance linked to Hurricane Matthew.)

“CDBG-DR is designed to meet the unmet need,” Hogshead explained. After other public and private “funding streams” have been tapped in a recovery, “CDBG-DR is designed to be last.”

That’s why Hogshead disputes criticism that the state waited 515 days after the hurricane’s landfall to award a contract for administering the grant. “The first 311 days, the state had no ability to pull on those funds,” she said. The state Commerce Department spent months jumping through federal hoops. After roughly 10 months, the agency finally acquired the federal certification it needed to qualify for a grant.

Because North Carolina had not been granted similar funding since Hurricane Isabel in 2003, “there was no institutional knowledge left in the state to spend those funds,” Hogshead said. That’s a problem when it comes to a complex program like CDBG-DR, she said.

“It is subject to 80 cross-cutting federal regulations and 50 [U.S. Department of Housing and Urban Development] guidance documents,” Hogshead explained. “It is not codified in statute. … CDBG-DR changes slightly with each disaster.”

Hogshead has worked with the program since Hurricane Katrina slammed Louisiana in 2005. “The Appropriations Committee appropriates the funding,” she said. “HUD puts out a federal register notice. The rules change just a little bit. Every disaster changes the flavor of the funding. So you have to wait for that federal register notice to tell you how to spend that funding.”

So what about the legislative report’s finding that North Carolina is a “slow spender” of federal grants? State government had spent just $2.6 million, or 1%, of its grant by December 2018, more than two years after the storm.

That same “slow spender” designation covers 65 percent of all state grantees, Hogshead responded. “It is virtually impossible to stand up a staff and spend these funds within the first year of receiving them,” she said. As an aside, she noted that spending has now climbed to 4% of the total grant.

The legislature would be wise to push Hogshead and her colleagues. It would be nice to learn what it will take for North Carolina to join the 35 percent of grantees who avoid the dubious “slow spender” label. But even with improvement at the state government level, the scenario Hogshead describes remains troubling.

A permanent, cabinet-level state agency had to work for months to become eligible for a federal grant? The grant program changes from disaster to disaster, subject to dozens of regulations and dozens more pieces of federal guidance? No one knows how the grant program will work without understanding the federal budget process first?

This is not a recipe for efficient, effective government response to a natural disaster.

Just as troubling was Hogshead’s reply to the charge of $3.7 million in “unnecessary” spending. “That money was not misspent,” she explained.

It paid for intake centers that helped hurricane survivors. “That is where we crossed an invisible line we didn’t know was there,” Hogshead said. “Because we didn’t have any experience with CDBG-DR since 2003, we didn’t realize we had crossed a line.”

Only when HUD staffers arrived on the scene did the state learn that the feds would not pay for intake centers. If the state had decided to delay a short-term emergency service, officials might have been able to shift the cost to Washington, D.C.

Talk about a perverse incentive to do nothing until the feds say OK.

Lawmakers and the Cooper administration are likely to haggle in the coming months over lessons learned from Hurricane Matthew. They will debate the proper staffing levels for Hogshead’s office. They might squabble over funding for future hurricane preparations. They’ll play the blame game.

But this observer hopes Hogshead’s comments prompt a larger discussion. The federal government’s rules and timelines seem poorly suited for the demands of a state dealing with a hurricane’s immediate aftermath.

That’s a topic worthy of bipartisan reform.

Mitch Kokai is senior political analyst for the John Locke Foundation.

Categories: Public Policy

Good citizenship requires skepticism

Wed, 2019-05-29 01:01

In an act of integrity that also proved to be politically shrewd, future President John Adams served as defense counsel for British redcoats involved in the Boston Massacre of 1770.

Adams was a prominent advocate of the Patriot cause. His cousin Sam was one of its top leaders. Still, John Adams insisted that the soldiers deserved legal representation. He also recognized that if they didn’t get a fair trial, whatever “justice” got meted out by a Boston mob would harm rather than help the Patriots’ case for self-government.

During the trial, Adams offered a defense not only of the presumption of innocence and the right to counsel but also for seeking truth wherever it may be found. “Facts are stubborn things,” he said, “and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”

Modern politicians sometimes quote this passage solemnly before making a political point. But do they really practice what Adams preached? Or, if I may be so bold, do you?

Politics is a team sport. It always has been. As another American Founder, James Madison, famously explained, the origins of political faction are “sown in the nature of man.” Humans can approach the same question with wide varieties of information, perceptions, and objectives. “As long as the reason of man continues fallible, and he is at liberty to exercise it,” Madison observed, “different opinions will be formed.” These differences, in turn, have “divided mankind into parties, inflamed them with mutual animosity, and rendered them much more disposed to vex and oppress each other than to cooperate for their common good.”

Neither Adams or Madison thought it possible to wish political factions away. Nor do I. As regular readers surely know by now, I have strong opinions on political questions. I want government at all levels to be smaller, less costly, and less intrusive. I think competition is superior to monopoly in both the private and public sectors. I don’t think government should try to engineer “social justice,” whatever that means, because it requires inflicting injustice on specific individuals.

Regardless of whether you agree with me on these and other political propositions, however, it ought to be possible for us to come to some level of agreement on basic facts. We may well continue to disagree about what these facts mean, of course. But at least we’d be talking about the same thing. We’d truly be arguing rather than just bickering with each other.

This is, alas, much harder to do than to describe. When trying to answer a question of fact, we tend to follow the lead of sources, of “experts,” whose political views we share. When someone from the “other team” offers a factual proposition, we frequently discount it. Indeed, we don’t just tend to discount their factual claims about political issues. As the authors of a new study in the academic journal Cognition discovered, there’s a strong tendency to let politics influence judgments on matters far afield from public policy.

The researchers called this effect “epistemic spillover,” which they detected in a creative set of online experiments that blended political questions with a geometric-puzzle test. They found “participants falsely concluded that politically like-minded others were better at categorizing shapes and thus chose to hear from them.”

Cognitive biases are tricky things. Be honest: when you hear about the kind of behavior I just described, do examples from the “other team” come more quickly to mind? If you are Trump critic, do you see MAGA hats on those subjects? If you are a Republican, are social-justice warriors making the mistake?

The truth is that we are all prone to the same errors. We face the same temptations. I believe being a good citizen requires that we lean against our biases — that we do our own homework and be skeptical (though not cynical) when listening to political leaders. If you agree, perhaps that gives us a good place to start.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Federal funding harms state policy

Tue, 2019-05-28 01:01

When North Carolina governors and lawmakers talk about “the state budget,” they rarely tell you the whole truth.

It’s not that they are trying to deceive you. They are simply speaking a kind of political shorthand that, unfortunately, fails to convey the full breadth and cost of state government.

Our state budget contains several discrete funds with their own design, function, and revenue sources. Last year, they totaled $54.5 billion in expenditures. Some $23.9 billion of that, or 44 percent, consisted of the General Fund. It receives the proceeds of state income taxes, sales taxes, and other levies, while housing state expenditures on education, human services, public safety, and general government.

The General Fund is what politicians typically refer to as “the state budget.” It’s obviously of great importance and interest. But the General Fund encompasses less than half of the state budget. Federal appropriations (28 percent), highway funds (7 percent), and programs funded by other taxes and fees (21 percent) account for the rest.

For the sake of both accuracy and accountability, policymakers and those who report or comment on their actions should be more comprehensive in their presentation of fiscal data. North Carolinians can’t make informed decisions at election time, or engage effectively with public officials in-between elections, if they aren’t getting the full story.

In particular, by focusing so much on the General Fund, our current discourse about the state budget obscures the large role that federal dollars play in state government. During the immediate aftermath of the Great Recession, for example, General Fund appropriations fell. But state government simultaneously received significant increases in federal funding, largely offsetting the overall fiscal effect (although not necessarily the effect on specific agencies or programs).

The consequences of federal funding go far beyond the immediate fiscal effects, however. What Congress appropriates, Congress must first expropriate. If you are a North Carolina taxpayer, you are also a federal taxpayer. While the net flow of funds may be positive to our state at a given point in time — especially if direct expenditures on federal installations such as military bases are included in the calculation — North Carolinians are no less on the hook than all other Americans for the massive borrowing binge both parties have been on in Washington.

In other words, there’s really no such thing as “free” federal money for states. It’s costly, in more ways than just the obvious.

Chris Edwards lists some of them in a new research paper for the Cato Institute. One dynamic is called the “flypaper effect.” When Congress creates a new grant-in-aid program for states, its offer of federal money entices state legislatures to spend additional dollars of their own on the same things, often in the same way.

If you think politicians and bureaucrats in Washington always know best, and that there is just one best way to solve public problems, then this flypaper effect shouldn’t worry you. If not, it should.

Another, related problem is the extra cost states incur for handling complex federal grants. Here in North Carolina, a new report by the General Assembly’s Program Evaluation Division took the administration of Gov. Roy Cooper to task for squandering lots of time and millions of dollars in ineffectual efforts to deliver federal aid to victims of Hurricane Matthew, which ravaged a significant swath of the state in 2016. For one of the programs in question, North Carolina had spent only 1 percent of allocated federal funds through the end of 2018.

Cooper officials defended themselves in part by challenging some of the division’s definitions and interpretations of existing law. As you can see, even seen in the best possible light, the episode illustrates how involving multiple levels of government can prove cumbersome and confusing.

The Cato Institute paper concludes, and I agree, that federal aid ought to be a much-smaller share of state budgets. “Americans want more responsive and effective government,” Edwards writes, which requires “devolving power to the states and reviving competitive federalism.”

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Electoral College has little to do with race, slavery  

Fri, 2019-05-24 04:00

Given the result of the 2016 presidential election, it’s not surprising Democrats are talking a lot about the Electoral College as the 2020 campaign gets under way. A number of their candidates want it abolished. Race has become a central feature of the debate. Prominent scholars on the left assert the Electoral College was established to safeguard and propagate the institution of slavery, and that alone makes it an abomination. I’m going to chime in. 

Slavery was quite clearly on the minds of delegates to the Constitutional Convention in 1787. Virginian James Madison stated publicly in mid-July that the South’s black population was a liability in a direct national vote for the office of president. But the final agreement on the Electoral College came six weeks after the notorious compromise granting states seats to the House of Representatives based on their population calculated with slaves counting as three-fifths of a white person. The focus of delegates in their discussion of what would become the Enumeration Clause in Article I was Congress; the branch they believed would be most powerful. Only in the last days of the convention and after having considered many different plans for presidential selection, did the framers settle on the Electoral College. As a form of indirect election that mixed popular democracy with federalism, its appeal was broad.  

Setting the motives of delegates aside, the Electoral College forced the South to “play fair.” A simple popular vote would have provided all states with greater incentives to cheat, by falsifying census data and manipulating voting rights, rules, and reported outcomes. Given how easy this would have been at the time, they would surely have done so. The Electoral College has given us a number of elections tainted by accusations of chicanery — 1824, 1876, 1960, and 2000. Before the Civil War, the contests of 1824, 1840, and 1844 were so close in the national popular vote that many Americans would have questioned the result. In 1860 Abraham Lincoln won a precarious popular vote plurality, but a decisive Electoral College majority. Under direct election, Democrats and southerners may well have used legal and political tools to prevent his ascension to the presidency.  

The Electoral College was also not “rigged” to produce outcomes conducive to slavery.  The three-fifths compromise ensured white adult males in slaveholding states exercised disproportionate influence. But it did not give them an electoral majority. The 1790 census shows, for example, northern non-slaveholding states — I’m excluding Delaware, Maryland, and Kentucky that did not join the Confederacy but contained sizeable slave populations — could single-handedly determine the fate of the presidency if they voted as a block. This was true even in 1824 after the small slave states of Alabama, Louisiana, and Mississippi — advantaged by the two electors every state receives regardless of population — had joined the Union. That year, John Quincy Adams of Massachusetts captured the White House.   

The reason only two presidents came from “free” states before 1836 was not the Electoral College, but the North’s incapacity to stick together and unwillingness to offer candidates committed to fighting slavery. With the possible exception of 1812, it wasn’t until 1856 that we have a truly sectional result. The two geographic blocks generally had the same profile — a couple of very large states and a few smaller ones. But the North always had the edge, in both electoral votes and white male population. After 1840, the North grew more rapidly, became more unified, and its candidates won many more presidential elections.   

In the same vein, a central attribute of the Electoral College is the winner-take-all or “unit” rule — in which the candidate who gets a plurality of a state’s popular vote wins the entirety of its electors. That’s why we say the really influential states in presidential elections are “battlegrounds,” where the outcome will be close, today places like Florida and Ohio. Each citizen’s vote for the winner there is worth more in the Electoral College than a vote cast for the winner in California or Texas; that is, by someone who lives in a solidly blue or red state.   

The data before 1824 are meager but, with the possible exception of 1836, antebellum popular vote outcomes were appreciably closer in northern states. Because the North was divided, the Electoral College’s unit rule inflated the chances of a candidate backed by majority sentiment in its states at the expense of the favorite of a more unified South.  

The Electoral College is not the evil institution many claim it to be. I don’t think there’s any doubt it was elitist — electors could act independent of the popular vote in the early years —and retains counter-majoritarian characteristics as we saw in 2016. It has little to nothing, however, to do with race and slavery. 

Andy Taylor is a professor of political science at the School of International and Public Affairs at N.C. State University. He does not speak for the university. 

 

  

  

 

 

Categories: Public Policy

What’s important to know about screens and reading 

Thu, 2019-05-23 04:00

In a world accustomed to skimming and scanning, what promotes deep reading? Paper or screen? Does the medium matter? As schools integrate digital resources and tools broadly into curricula and teaching, such questions need good answers. Fortunately, evidence is accumulating, with big impacts for learning. 

New research, published in the Journal of Research in Reading, affirms the medium does matter — but what to do about it isn’t always clear. Findingsfrom a meta-analysis conducted by education researcher Virginia Clinton of 33 rigorous studies, show performance is better with paper. Differences between paper and screen are small but consistent. “There is legitimate concern that reading on paper may be better in terms of performance and efficiency,” Clinton writes.     

Genre matters, too. Clinton found no difference for lighter, narrative texts. But comprehension of dense, expository texts suffered on screens. Screen readers were also overconfident, thinking they understood more than they did.     

Should we dump devices? Push paper? No, but it’s smart to be strategic about screens and reading.  A guiding directive: Know yourself and how you like to read.   

I interviewed Clinton for additional perspective. The primacy of paper, she says, is a “pretty resounding finding” throughout research. What’s behind it? Personal preference is a “huge factor;” most people prefer paper. In one study with participants who preferred screens, “any detriment of screens went away,” Clinton says. “So, if you like a screen, you read just as well from a screen as from paper.”   

Contextual cues play a part. “A screen is a cue that what you’re doing is more casual and light,” Clinton says. “There’s some research that indicates [readers] see the paper as a cue that means you’re supposed to focus,” she adds. “That could explain both the over-confidence piece as well as the … comprehension benefit.” 

This research is highly relevant for schools, especially as use of open educational resources —which are mostly digital — grows. In 2015 the U.S. Department of Education launched the #GoOpen initiative, encouraging states to transition to free, openly-licensed educational materials; 20 states, including North Carolina, signed on.   

It’s worth noting that reading preference can often be accommodated with OER. Clinton, who studies OER in higher education, says of textbooks vetted through networks like the Open Textbook Library, “One of the criteria is that [they’re] downloadable and printable.  An open textbook does not mean it has to be electronic. You can print them out or you can order a bound copy.” 

For students, Clinton advises, “Reflect on your preferences. If you really prefer reading from paper, then it may be worth the cost to you to print it out and read it that way. That may be enough of a bump in your comprehension and your awareness of your reading to be worth [it].”  

More research is coming. Screens offer interactive capabilities that studies utilizing static content aren’t assessing. Clinton plans to study interactivity next, looking at what the medium can do. 

More fundamentally, experts say we’re honing pervasive digital-era reading habits — to process a barrage of information — that war with deep reading. We need to do better at winnowing wheat from chaff, identifying when to focus, when to skim.   

Honoring paper preferences when possible and practical makes sense. But there’s more to do. The way forward, writes neuroscientist Maryanne Wolf in The Guardian, is to “identify and redress” what’s being lost, cultivating a “’bi-literate’ reading brain capable of the deepest forms of thought in either digital or traditional mediums.”   

Wolf calls it a “new literacy for the digital age.” It’s hard but important work.   

Kristen Blair is a Chapel Hill-based education writer.

Categories: Public Policy

Let’s make politics less important

Wed, 2019-05-22 01:01

It might sound odd to hear this from someone who’s been writing a syndicated column on politics for more than 30 years, but politics has become vastly more important in our lives than it should be.

Virtually every decision we make in our ostensibly free society is now subject to review, refinement, and reversal by some government agency. We can’t buy or consume what we want, hire whom we want on mutually agreeable terms, inhabit and dispense with our property as we want, or make critical decisions about our families’ education, health care, and financial planning without the intrusion of governmental “helpers.”

I’m not an anarchist. Modern civilization and human progress have proven to be impossible with governmental structures. When administered effectively and constitutionally, governments promote law and order, adjudicate disputes, and ensure the provision of certain public goods that for technical reasons can’t be delivered by purely voluntary means.

That’s not to say human beings can’t live without government. For most of the history of the species, humans lived in small hunter-gatherer bands, consisting largely of relatives, that came together only occasionally to swap, socialize, and find mates. In some places, these social bonds developed into tribal confederations and, later, into chiefdoms. But not until a few thousand years ago did true states appear in an anthropological sense — social institutions that established a “monopoly of the legitimate use of physical force within a given territory,” as Max Weber famously put it.

The invention of the state and the invention of cities were interrelated events. The word political comes from the Greek polis, for city-state. Civilization both creates and requires politics in the sense we use the term today.

Humanity can live without government, as I said — but not long or well. Hunter-gatherers may have had more free time than we do, but they starved, shivered, and died violent deaths at far higher rates, too. Tribes and chiefdoms weren’t much more conducive to human flourishing. Even early civilizations, built around cities and states, increased the total population and scope of human communities without necessarily raising the standard of living for the average person very much for very long.

What ultimately did the trick was the marriage of industrial capitalism and increasing levels of republican self-government during the 18th and 19th centuries, beginning in Northwestern Europe and North America and then spreading elsewhere. The public sector played a critical role in this gigantic and unprecedented leap forward in human wellbeing. But it did so precisely because its power was constrained by law and custom.

In the American context, at least, modern conservatives should be understood as conserving a set of truly revolutionary ideas and practices. One such idea is that government is both necessary and dangerous. As James Madison put it in a post-presidency speech in Virginia, “the essence of government is power; and power, lodged as it must be in human hands, will ever be liable to abuse.”

By “power” here, Madison and other Founders meant coercive power — the capacity of government to force people at the point of a gun to comply with its commands. Whether republican or tyrannical, all governments possess such power. Again, it’s necessary. But it ought to be used sparingly, only for tasks that can’t be accomplished through market transactions, charitable activity, or simple persuasion.

That’s the case that my colleagues and I at the John Locke Foundation, and at other like-minded organizations in North Carolina and beyond, seek to make every day in our programs, articles, interviews, and public appearances. Our work is usually devoted to specific applications. We advocate liberating North Carolinians to make choices for themselves about how best to educate their children, improve their health, pursue economic opportunity, and build the families and communities in which they live their lives.

Whether the stakes in a particular dispute we discuss seem big or small to you, keep mind that the broader principle couldn’t be more momentous: everything need not be political. Minimize government. Maximize freedom.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

A tale of two op-eds and the 2020 Senate race

Tue, 2019-05-21 04:02

As a regular consumer and producer of opinion columns, it’s possible that this observer tends to inflate their importance in the world of N.C. politics.

But two op-eds clearly have played significant roles in the opening stages of the fight for Republicans’ 2020 U.S. Senate nomination. Whether those op-eds have any long-term impact remains to be seen.

Incumbent Sen. Thom Tillis faces his first re-election contest next year. Heading into that race, a Feb. 25 column in the Washington Post focused national attention on Tillis, and not necessarily for reasons he would have liked.

The senator devoted much of his op-ed to pledging support for President Trump’s agenda of securing the southern border. Tillis also took shots at congressional Democrats. He accused them of obstructing Trump’s plans for dealing with the border and immigration.

But it was the Republican senator’s bottom-line conclusion that attracted notice. “I would vote in favor of the resolution disapproving of the president’s national-emergency declaration, if and when it comes before the Senate,” he wrote.

How could Tillis support the president on border security, yet oppose the national-emergency declaration designed to help implement Trump’s policies? The senator pointed to the proper separation of powers between Congress and the federal government’s executive branch.

He cited his concerns “as a conservative” about a precedent “future left-wing presidents will exploit.” Those future presidents could follow Trump’s lead to “advance radical policies that will erode economic and individual freedoms,” Tillis wrote.

Nothing about the preceding paragraph would appear out of place in the writing, floor debates, or stump speeches of a standard-issue, right-of-center Republican lawmaker. But the practical impact of Tillis’ principled stand was direct opposition to Trump. The president’s supporters cared little about the senator’s purported principles or the proper balance between Capitol Hill and the White House.

By the time the Senate voted on the emergency declaration, 17 days after the op-ed’s publication, Tillis had changed his mind. From the Senate floor, he explained that conversations with Trump administration officials and fellow senators had addressed his concerns. He voted with the president.

But the damage was done. Trump supporters didn’t rally to his defense. They didn’t praise his decision to set his reservations aside and stick with the team.

Those who might have credited Tillis for standing by his principles no longer had a reason to do so. And most observers considered the episode to offer evidence of a “full flip-flop,” quoting a Raleigh News & Observer headline.

One person who clearly followed the proceedings with interest was retired Raleigh business executive Garland Tucker. Speaking May 8 with nationally syndicated radio host Sean Hannity, Tucker referred to Tillis and “the famous Washington Post op-ed.” “When he got a lot of pressure from conservatives back home, he flip-flopped on that issue,” Tucker said to Hannity’s audience. “I think on immigration he’s been very, very weak.”

Tucker featured that “famous” op-ed in his first television ad challenging Tillis’ re-election bid. Vying against the incumbent in a Republican primary, Tucker pledged to distinguish himself from the sitting senator both on immigration and government spending.

The challenger also promises support for Trump. He compares the president’s economic policies to those of conservative heroes Ronald Reagan and Margaret Thatcher. “When I’m elected senator of North Carolina, I’m going to support him 100 percent on what he’s doing with the economy, for sure,” Tucker told Hannity.

Those words haven’t protected Tucker against a charge from Tillis’ camp that the challenger is actually an “anti-Trump activist” who is “assembling an anti-Trump team.”

What’s the basis for Tillis’ accusation? Tucker’s own words.

He wrote an op-ed for the News & Observer in September 2016, shortly before Trump’s presidential election victory. Tucker labeled Trump a “flawed candidate.” The op-ed critiqued Trump’s character and temperament. It questioned his consistency on policy issues. Tucker pledged with reluctance to support Trump over Democratic rival Hillary Clinton.

Responding this month to criticism of that nearly three-year-old column, Tucker told the N&O that he “wouldn’t retract anything” in it. He labeled Trump’s performance in office “one of the most pleasant surprises I’ve ever seen.” Tucker says he’s now pleased that Trump was elected, and “I shudder to think there’s any chance he might not get re-elected.”

Regardless of Tucker’s explanation, Tillis supporters might continue to mine that 2016 op-ed for damaging material. They will hope to plant seeds of doubt about Tucker’s devotion to Trump and his policies.

Much will happen between now and the March 2020 Republican primary. Both Tillis and Tucker will have plenty of ways to share their opinions with GOP voters. One can only guess whether either of these two potentially damaging op-ed columns will sway voters as they head to the polls.

But it seems clear that Tillis’ and Tucker’s writing has helped set the stage for the campaign that lies ahead.

Mitch Kokai is senior political analyst for the John Locke Foundation.

Categories: Public Policy

More freedom means more businesses

Mon, 2019-05-20 01:01

We all want North Carolina to be an attractive place to live, work, create jobs, rear families, and build communities. When we move from ends to means, the level of disagreement moves from low to high.

Generally speaking, progressives think that the best way to accomplish these goals is to expand government — to tax more, regulate more, and spend more on government services. Conservatives generally think the best way to make North Carolina a more attractive place to live and work is to restrain government so that it delivers basic services more cost-effectively, allowing households to keep more of their own money and freedom to use as they wish.

The dispute is often framed solely in the context of interstate mobility. Certainly we want people, businesses, and jobs to flow in rather than out. But let’s be more specific. Our growth over time depends heavily on our rate of entrepreneurship, the rate at which people — natives or newcomers — create and expand new businesses in our state.

There are many different ways to assess the rate of business formation. The U.S. Bureau of Labor Statistics counts jobs and business establishments across the country. Over the past three years, new enterprises represented about 3.11 percent of establishments in North Carolina. That’s modestly higher than the national average but lower than that of regional rivals such as Florida.

A set of entrepreneurship indicators compiled by the Ewing Marion Kauffman Foundation helps fill in the picture a bit more. While a higher proportion of Floridians (.42 percent) than North Carolinians (.28 percent) started a business last year, for example, that doesn’t tell the whole story. A higher share of those Florida entrepreneurs started their businesses “by necessity,” in other words because they lost a previous job. Entrepreneurship by choice was higher in our state. North Carolina startups were also slightly more likely than Florida startups to survive into a second year.

However our state might fare in an elaborate apples-to-apples comparison, there’s little doubt that North Carolina be better off if more people were willing and able to take a chance on new business ventures in our state. You often hear the claim that small businesses are more important than large businesses when it comes to creating new jobs, or bringing to market new products and services that satisfy consumer demands. This isn’t quite right. A disproportionate amount of new economic value, including employment, comes from new businesses, regardless of size, although of course most new businesses start out small.

So, how can policymakers foster a stronger culture of entrepreneurship in our state? Both ideological coalitions offer predictable sets of answers. Progressives insist that government ought to spend more on public services even if it means higher taxes and that the new regulations they favor would confer more benefits than costs on North Carolinians, including those inclined to start and grow new businesses. Conservatives disagree.

It’s a complex matter, naturally, but on balance the empirical evidence supports the conservative side of the disagreement. Most studies find that startups are more frequent, and more likely to succeed, in states where taxes and regulations are low, all other things being held equal. Higher government spending doesn’t boost entrepreneurship in most studies.

A different way to test the proposition is to ask entrepreneurs themselves. That was the approach taken by three economists who published a recent study in the Journal of Regulatory Economics. They zeroed in on entrepreneurs in Kansas City, which straddles two states (Missouri and Kansas) that exhibit differences in fiscal and regulatory policy. The vast majority of respondents said they would be less likely to start a new enterprise in a place that increased occupational licensing, corporate taxes, or the time required to register a business.

A few, 16 percent, indicated otherwise. Some business folks don’t see bigger government as a barrier. Some reside in North Carolina. You may have heard from them, and their opinions are valid. But they are also atypical. Policymakers, take note.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

To understand appeal of charter schools, start by talking with parents

Fri, 2019-05-17 04:00

In 2011, Thom Tillis, Phil Berger, and the Republican leadership in the N.C. General Assembly removed the 100-school school cap included in the 1996 law that authorized the creation of charter schools, which are tuition-free public schools that have more freedom than district-run public schools. Removing the cap, along with providing opportunities for enrollment expansion at existing charters, has led to unprecedented growth in the number of children attending the state’s charter schools.

At the end of the 2010-11 school year, the state had 99 charter schools that enrolled around 41,200 children, and thousands of children remained on waitlists, hoping to be among the lucky few selected in an enrollment lottery. The waitlists remain, unfortunately, even though more than 109,200 children currently attend one of North Carolina’s 184 public charter schools. As long as parental demand for charter schools seats remains strong, the state must remain committed to granting charters to high-quality and innovative applicants.

Not all agree.

For years, district schools and left-leaning advocacy groups have led the opposition to this expansion. Districts still serve around 80 percent of all North Carolina children, so rumors of their demise are exaggerated. Unlike charter enrollment, however, district enrollment is stagnating or declining, even in areas enjoying population growth. The loss of students to charter schools not only means a loss in revenue for the districts but a weakening of an institution that has been instrumental in reinforcing their expansive vision for government. Yet, in the face of unprecedented competition, districts appear unwilling to compete with public and private alternatives.

Presumably, district school advocates would rather bellyache about charters than offer a compelling reason why parents should select the district schools that they support. Wake County Commissioner Greg Ford recently tweeted that Wake County taxpayers “will fork over $42,312,228.60 to #charter schools, who cherrypick their students and have absolutely no local (and very little state) accountability.” While factors such as enrollment lotteries and the presence of multiple sources of accountability undermine much of his critique, I was struck by his failure to articulate why parents should opt for the Wake County Schools. After all, $42,312,228.60 is following children to charter schools for a reason.  Perhaps better understanding those reasons and creating a strategy to address them would keep more children (and dollars) in the district.

PTA parents have used similar appeals to object to the opening of new charter schools in Wake County. Leslie Fielding-Russell, PTA president of Jones Dairy Elementary in Wake Forest, told the News & Observer, “There is plenty of choice. We don’t need anymore. We want to keep the funds in our Wake County Public Schools.” Fielding-Russell is one of a number of parents who live in northern Wake County and protest the opening of two new charter schools in the area, North Raleigh Charter Academy and Wake Preparatory Academy. Again, there seems to be little regard for why parents are deciding to enroll their children in charter schools.  And its parents, not Fielding-Russell, who should decide how much choice is enough.

Attempts to understand parental decision-making vary by district. Each year, the Wake County Schools conducts a districtwide family survey through Panorama Education LLC, a for-profit analytics company in Boston. The surveys provide insight into families’ perceptions of topics like family support, engagement, and school climate, which are used by districts to improve instructional and support services. But it’s unclear if these survey results or others are used to determine the factors may be driving parents to leave the district.

Even without surveys, there are some clear sources of dissatisfaction in Wake County. For example, some parents object to the use of the Mathematics Vision Project curriculum adopted in 2017. Moreover, families may soon face another round of disruptive student assignment changes. Perhaps unchecked teacher radicalism will emerge as a source of discontent. Aside from circumstances unique to Wake County, research tells us that parents choose charter schools for a variety of reasons: safety, proximity, specialized programs, and school size. These factors are communicated to parents through a variety of channels, including the internet, social media, and their social networks. Insight into parental decision-making is out there for those willing to look.

It is easy to complain about the proliferation of charters or the money that districts “lose” because of them. It’s much more difficult to try to understand the needs of families and make systematic changes to accommodate them. To understand the rise of charter schools in North Carolina simply requires one to be attentive to the voices of ordinary parents who have made the choice to send their extraordinary children to charter schools.

Terry Stoops in vice president of Research for the John Locke Foundation.

Categories: Public Policy

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