Paul Soglin: Waxing America

Why We Lost The Cold War

As a child growing up in the nineteen fifties there were plenty of reminders about the never-ending battle against Soviet Communism.

In and out of the classroom we knew of the value of our democracy, the freedoms we enjoyed as Americans.  We had open and free elections, though blacks could not vote in the South where the poll tax ensured the rule of whites. We could travel across our great country without having to show identification or answering to anyone as to our purpose, so long as there was no probable cause to stop us.

The differences were not limited to democratic values.

The virtues of capitalism were everywhere. In Poland, peasants stood in line for hours for a loaf of bread. In Moscow it took weeks, no months, to have a telephone installed. And the Soviet airline Aeroflot was a joke, United States Airlines Compete With Aeroflot - And Win :

At the height of the Cold War, Americans indulged in self congratulations when comparing our airline industry to the Soviet's Aeroflot. The rickety communist propelled travel provided images of a sweaty, husky commissar boarding an oversold but underfueled airplane, burdened with packages and a bottle of carry-on borscht.

As he worked his way into the seat, storing his chickens in the overhead compartment and his goats under the seat in front of him, he settled in next to an equally husky and sweaty peasant with a crying, soiled child -one  under each arm. If they were lucky, they would arrive at the scheduled destination city, and perhaps within twenty-four hours.

Onward

After the first of the year I was shopping at a big box store. The lines indicated it would take a half hour to check out. I asked the manager why there were so few clerks, "With the holidays over, no help to be had?" The response was frank and honest, "No, after the new year, we were instructed by regional to reduce our staffing to these levels."

My Facebook friends know that I spent over an hour on hold Monday with a life insurance company, a health insurance company, and a telephone company.

It was my fault trying to reach them on the first Monday after the holidays. Of course, I tried reaching them last week to no avail. There are only so many minutes one can waste on a cell phone.

Maybe the free-everything capitalists are right. We need competition. We need competition from the Communists. Then American corporations will start providing service.

Some of my friends probably think that the destruction of our Constitution under the second Bush reign with warrant-less search and seizures is a disaster. They probably think the telephone company turning over their phone records to the government without any legal authority is a travesty.

Screw the Bill of Rights.

The real travesty is the telephone company not answering the phone.

Praise Nordstroms. Praise the local Sundance 608 movie theater. Praise the Nitty Gritty. Praise the local Sentry.

 

 

 

WMC: Wisbusiness.com Covers Changes - consensus on state business climate

Mike Schramm was kind enough to remind me that the new WMC strategy is reported in wisbusiness.com by Brian E. Clark

WMC effort looks for consensus on state business climate

With Democrats soon to control the state Assembly, as well as the Senate and governor’s office, the state’s largest business lobby is shifting gears to deal with what it calls the “new political landscape."

Wisconsin Manufacturers & Commerce, which has often been at odds with Gov. Jim Doyle, is reaching out to diverse groups -- including labor -- to develop plans to stimulate the state’s slumping economy....

Wisconsin Manufacturers and Commerce: Moving Wisconsin Forward

This past week we discussed Wisconsin Manufacturers and Commerce's (WMC) new program, Moving Wisconsin Forward, which is described in their publication What Will It take?

While WMC refers to improving or growing the Wisconsin economy and improving the business climate, which are not the same, their new program is a significant departure from previous WMC government relations ventures.

In past legislative sessions, WMC attempted to unilaterally drive through the legislature new laws, or even constitutional provisions, such as TABOR. They took no prisoners.

The reality of Republican minorities in both houses of the legislature set in and now WMC speaks of "reaching out,'" "building coalitions,'" and "collaboration."

Regardless of the motive, the new approach is refreshing and welcome.

The real test for WMC is demonstrating that it comprehends that an improved Wisconsin economy is not synonymous with lower taxes and less environmental regulation.

Wisconsin needs investment in infrastructure and and investment in human capacity. That means more transportation systems, more energy, more workforce development, and more education.

Unlike the federal bailouts, which come with virtually no oversight or regulation, growing Wisconsin must be put in perspective.

Just as some knee-jerk liberals say, "no' to anything that is good for business development, WMC must realize that they cannot say "no" to oversight or regulation that demands green technology or that extends education and training into poor neighborhoods.

There may be public investment that creates new jobs and builds factories, but it is not unreasonable to stop that programming if the jobs are located in suburbs with no public transit. There are solutions - build in the inner city or minimally require access to public transit.

Workers need training and education.  It costs more money to educate young men and women who are in households below the poverty line. In rural and urban areas WMC must support access to education, even if the cost is significant. The cost of not doing so is too expensive.

One of the biggest wastes of taxpayers dollars is the price of incarcerating so many of our state's residents. WMC must participate in discussions and solutions to end the rising crime in our state and that means more than conventional law enforcement. Real community policing is expensive.  Providing the childcare, transportation, job development, health care, and economic literacy training is costly. Again, not doing so is even more expensive.

We have highlighted some of the shortcomings of WMC's approach. We also recognize the value of WMC changing its strategy, its agenda, and broadening the discussion.

WMC, welcome to twenty-first century Wisconsin.

The Partnership for Wisconsin

The Partnership for Wisconsin is a collaborate effort of business, labor, professional, and academic leaders committed to a sound Wisconsin economy. The Partnership is a non-profit organization whose members share a common value, namely the importance of education for the growth, security and happiness of the individual, the family, and society.    The participants share a common belief that a highly educated and trained workforce is a critical element in making Wisconsin a better place to live, work and play.

The Partnership for Wisconsin acknowledges the benefits to the individual and society of an education.

A safe and healthy community is one that provides economic security and ensures economic opportunity for all of its members. Studies show that education is indispensable if individuals and their families are to fully realize the benefits of their labor.

Male college graduates earn well over $60,000 a year from the age of 35 to 60. High school graduates in the same age range earn under $40,000. The differential for women is similar. Women college graduates will earn over $40,000 a year while female high school graduates earn about $23,000 a year.

Society also benefits form the earning power of education.  Depending upon race and gender, the additional taxes paid by a college graduate compared to a high school graduate is between $200,000 and $400,000 in the course of a lifetime.

The benefits are not as stark, but still significant, if a high school drop out  were to finish school, or if a high school graduate were to have just one or two full years of higher education.

For example the public benefit of a high school education is $209,000. That amount represents the combination of greater taxes and reduced cost to the public of a high school graduate as opposed to a high school drop out.

From society’s perspective, it always pays to invest in education.

Add to this, the demands of Wisconsin business and industry for what one major employer who described his highest priority as a “need for an intelligent workforce.” Employers need workers who can contribute productively and intellectually.

The Partnership for Wisconsin recognizes that to provide for a sound education system there must be a fair and equitable system of taxation. In encouraging public support for education, the Partnership is committed to a Wisconsin taxation plan that not only adequately funds education, job training, and workforce development at all levels, but fairly distributes the cost among all of the parties who benefit.

The Partnership for Wisconsin recognizes that adequate investment in human capital and infrastructure are critical to stimulating private investment. For that reason, we are committed to encouraging a dialogue between the public and private sectors to set an agenda that acknowledges the many direct and indirect benefits that come from such strategies.

As its first commitment, the Partnership will focus on:

• Ensuring adequate financing of public education in all districts throughout the state of Wisconsin.
• UW System education. Financing adequate so that:
  • no in-state student has to pay more than % of their tuition
  • out of state tuition is not more than 100% of the cost of educating the student
  • Faculty salaries at the Madison campus are commensurate with other Big ten Schools
  • UW system Schools are (needs elaboration from academicians)…..
• A workforce development program through the VATC System  (more detail needed)….
• A tax structure that will most likely require an increase of existing taxes, the expansion of the tax base, and or the adoption of new taxes in order to adequately finance….(identification of educational and workforce development needs) 

The Partnership feels that our state must not only have an educated workforce but that we have an enlightened citizenry that understands the externalities and the consequences, or lack of consequences, from not giving full consideration to appropriate investment in human capacity as well as the learning environment.

For that reason the Partnership for Wisconsin is committed to supporting programs that are designed to provide economic opportunity to all Wisconsinites. A healthy state economy is predicated on strategy that encompasses all areas of the state, urban, rural, and suburban.

The Partnership, from time to time, may support the work of others or engage in its own research and policy development in areas related to education, workforce development, or which support the individual’s ability to further their education and training.  This may also include the examination of collaborations with employers, both for profit and non-profit, that are in need of an ever expanding educated workforce.

The Partnership recognizes that many factors enter into the decisions of investors to locate businesses in a community. Reputable studies show that public safety, efficient transportation systems – both public and private, a sound environment, cultural and recreational opportunities, along with fair taxation and a friendly attitude towards economic development are all critical elements that affect decision making.  For that reason the Partnership for Wisconsin, will convene workshops and forums throughout the state to discuss how to improve the economic climate.

Particular attention will be paid to how the international economic environment impacts Wisconsin business and the need to create sustainable industries that can compete in an economy that will afford greater opportunity to businesses that are ‘green.’

Dr. Martin Luther King Jr., noted for his leadership in the civil rights movement could have found an alternative career as a leader in the quality movement when he said “All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.”  The Partnership for Wisconsin joins in Dr King’s sentiment and is committed to urging both business and labor to collaborate to the greatest degree possible in providing fair and decent wages and benefits, working conditions and hours, and at the same time appreciating the contribution to improvement that every employee can make.

While the Partnership will not become involved in disputes between employers and organized labor, it will urge that resolution of differences be made with an eye to the long term consequences as well as the short terms needs of both parties.

Wisconsin has a long tradition of utilizing the research capabilities of its universities for the advancement in health, science, nutrition, safety, technology, culture, societal organization, and a greater understanding of the human condition. For that reason the Partnership for Wisconsin is committed to supporting research and academic freedom in all of our institutions of higher learning.

 

author's note: This is a draft written six months ago and now available on another web site. Over the past year I met with many Wisconsin business leaders. They were unhappy with Wisconsin Manufacturers and Commerce (WMC). They felt that WMC should be ignored and that a new organization established in our state. Based on what they were saying and my discussions with labor and academic leaders, I drafted a plan for the Partnership for Wisconsin.

 

I will post next week its origin  and why it relates to our state's economy.

Inappropriate: "School Districts Were Told of Investment Risks"

Five Wisconsin school districts, (Risky Wisconsin School District Investments - We Need To Know More ) are suing the Royal Bank of Canada (RBC) and the financial advisers that led them into a series of investments, some with borrowed money, that resulted in losses amounting to $200 million.

The Milwaukee Journal Sentinel reports,  School districts were told of investments’ risks, firm says that in their defense the investment advisers state:

We made full disclosure of the merits and the risks associated with these transactions, and we were never guarantors in any fashion of the performance of those investments

The article goes on to note that

...(the)suit alleges the firms misled five Wisconsin school districts — Kenosha, Kimberly, Waukesha, West Allis-West Milwaukee and Whitefish Bay — in their $200 million investment into complex financial products called collateralized debt obligations, or CDOs...

..The lawsuit accuses Stifel of misleading district officials about the nature of the investments, which they claim they thought were the equivalent of highly rated corporate bonds. Instead, they say they were sold RBC’s “toxic debt.”

From where I sit, which is fourteen years as a mayor, six years as an investment adviser representative, seven years of teaching graduate courses that include public finance and the investment of public monies, and as a board member for two foundations with combined investments of over $100 million, there is no logical or reasonable defense for the RBC and its cohorts.

Even if the school districts had come to the RBC and its associates threatening to burn down the schools unless the advisers arranged the purchase of CDOs, the sale should never have been made.

Any investment adviser, no matter how open the disclosure, no matter how frank the discussion, should have known that they were not dealing with people who understood the transactions by virtue of the inherent risk involved.

Simply put, the investment did not meet the test of appropriateness for the client.

It is unconscionable for any investment adviser to arrange this transaction under the circumstances described for any unit of government.

The Price of Gasoline A Year Ago; A Barrel of Oil Drops to One Year Low

Today, oil reached its lowest price in a year, trading below $80 a barrel in London for futures delivery, though the current price is still $83. I filled up the tank and payed $3.35 per gallon in Madison.  A year ago, the average price for regular was $2.86.

Here are some sample prices by state for a year ago and today.

State   2007     2008

AL      2.66      3.45

CA     3.02       3.51

NJ     2.61       3.09

TX     2.64       3.20

                                      

Do not hold your breath waiting for pump prices or home heating costs to drop to 2007 levels unless that becomes the silver lining in a depression, not recession, that rivals 1929.                                                                       

Economic Disaster That A Fool Could Forecast

Like most states, we are caught up in the cruel torture of national policies that are driven by greed, imperialism, and stupidity. Readrers of Waxing America will recall that in the spring of 2007 I forecasted a stock market crash and repeated it last January, Another War; Another Recession. Whatdidyah Expect?

Last  spring I used my limited abilities in forecasting the economy and predicted a stock market crash... For the second time in my lifetime a stupid, foolish war built on lies not only wrecked havoc with another country but it is destroying the American economy.

It does not take a rocket scientist to get it right... Go on take 10% of your income and set it on fire, throw it down the toilet, or just rip it up. And just for good measure, borrow a lot of money and rip it up too.

It is so simple. You cannot destroy your resources and your assets. Imagine the homes and schools that might have been built. Billions of dollars - now that is stimulation for the economy.

I am not a genius in these matters; it is that I am not driven by blind ideology in arriving at conclusions about the ecomony. A few years experience in the public and private sectors, an understanding of history and a willingness to distance myself from bad public planning, or lack of planning, no matter how politically popular the proposal, do help.

As the fall elections approach, candidates for the Wisconsin legislature and Congress from both political parties will warm your frontal lobes with cuddly promises of 'no tax increases,' cutting fat from the budget, and reducing spending.

If you are attracted to those soft sweet sounds, complete the job and instead of voting, just get a lobotomy.

If you want a candidate who will  provide a lump of coal to warm you in your decrepit retirement, and a dull knife so you can remove your spouse's appendix by candlelight in your toothless waning years, I suggest looking for the following promises:

• A pledge to the business community to provide an educated, trained workforce, not lower taxes.
• A pledge to increase spending on education from kindergarten through the University of Wisconsin and Voc-Tech Systems.
• A commitment to spend money on infrastructure that places a priority on the environment, health, and safety.
• A commitment to regulate where appropriate and needed.
• That infratstructure will be funded through borrowing as should any reasonable capital budget item.
• The operating budget, unlike the capital budget, will be funded by general purpose revenues, and only general purpose revenues. No borrowing here.
• It will be necessary to increase taxes. The increase will be progressive and will fall on wealthier taxpayers.
• A commitment to regulate where required for health and safety.
• A declaration that international trade which exports great jobs and imports poisonous pet food and baby formula is not working.
• There will be no reductions of state revenue payments to local units of government. These reductions only end up with increase in the property tax which has the impact of shifting taxes from the wealthy to the middle class.
• On the national level there will be increases in the income tax- progressive increases.
• If we fight a war, there will be honest talk. It is impossible to have guns and butter. If we fight a war there must be sacrifices at home as well as on the battlefield.
• If the candidate tells you they are highly regarded by Wisconsin Manufacturers and Commerce (WMC), tell that candidate to move to Alaska.

 

 

It does not take a rocket scientist to get it right... Go on take 10% of your income and set it on fire, throw it down the toilet, or just rip it up. And just for good measure, borrow a lot of money and rip it up too.

It is so simple. You cannot destroy your resources and your assets. Imagine the homes and schools that might have been built. Billions of dollars - now that is stimulation for the economy.

Stung WMC To "Reposition"

From Sunday's Wisconsin State Journal:

WMC to consider toning down its political ads

Stung by criticism over its political activities, the state's largest business lobby is rethinking the tenor of its election-season advertising and how it sells itself to the public...

...The board plans to discuss the tone and tenor of WMC-sponsored ads leading into the fall legislative races at its meeting this month, several directors said.

In the article, Wisconsin Manufacturers and Commerce (WMC) spokespersons deny internal strife and refuse to acknowledge that there is a movement to reform the organization from some members. We know better.

We do not expect WMC to embrace a progressive political platform or to become pro-labor. We do expect WMC to eventually join the family of Wisconsinites who are working to fix health care systems, provide fair taxation and to support educational and employment training programs.

 

Investing Public Funds - Regulation and Education Is Needed

Yesterday I commented on the the significant losses incurred by several Wisconsin school districts when they took public money, some from the taxpayers and some borrowed, and lost over $150 million in high risk financial ventures, Risky Wisconsin School District Investments.

I am sure that most of the school board members and the respective staffs of the districts involved are bright people and probably do not deserve the agony they are presently experiencing in return for their efforts at public service.

They screwed up and the damage is extensive, which points to the need for a combination of regulation and education to make sure this does not happen again.

First , every elected official in the state needs some sort of training in these matters. School boards, city council members, village presidents and county supervisors need a short course on the risks of managing public investments. The training can come from a number of sources. Professional associations, the State Treasurer, the State of Wisconsin Investment Board, and the various associations of public officials can take on this responsibility. Some are already doing it, but obviously it is not going far enough.

Secondly, we need stiff regulation and punishment for brokerage houses and investment firms that sell these kinds of risky investment vehicles to government bodies. While it is impossible to outlaw and identify every type of investment that creates this risk, certainly a well crafted statute can describe the consequences, require disclosures, and provide penalties.

There is too much at stake and this happens too often for it to be ignored any longer.

Clerealy the elected and appointed school officals must take responsibility but this os one of those situations where blame does not rectify the problem and bring the funds back to the scool distrcits.  It is the taxpayers, the students and the employess who need the protection, especailly when the public officals are not up to the task.

The Government Finance Officers Association (GFOA) has many valuable Recommended Practices  that cover this subject. Here are two:

• Use of Derivatives by State and Local Governments for Cash Operating andReserve Portfolios (1994 and 2002)  ...   The Government Finance Officers Association (GFOA) urges state and local government finance officers to exercise extreme caution in the use of derivatives and to consider their use only when they have developed a sufficient understanding of the products and the expertise to manage them...

 

•  Market Risk (Volatility) Ratings (1995)  State and local governments have long relied on credit ratings as an independent analytical source to gauge the credit risk of an investment option. However, credit risk analysis alone is not sufficient to safeguard against the assumption of other risk components, including market, interest rate, and liquidity risks...
  GFOA encourages state and local governments to augment information they receive from brokers, dealers, or advisors with independent research when conducting due diligence of potential investments. Information sources include historical trading ranges, trend and volume data, brokerage firm research, cash flow and present value analysis, andcredit ratings and research.
  

   

   

A Viable Wisconsin Republican Party in November?

John Torinus and I will not agree on all tax policies or tort reform but we do have a common interest in developing capacity - education and job training as well as improving infrastructure.

Torinus, a recovering journalist and one of the more sensible members of the board of directors of Wisconsin Manufacturers and Commerce (WMC) spends time writing columns and opinion pieces for Wisconsin newspapers when he is not running Serigraph Inc.

Yesterday Boots and Sabers, in anticipation of the Jim Sensenbrenner primary win, pulled out an old commentary by Torinus that appeared in the West Bend Daily News:

Sensenbrenner is a charter member of the Republican right that has worked to purge the party of moderates, which his wing of the party dubbed RINOS -Republicans in Name Only. That purifying approach to party politics has resulted in a fall to the minority status at the state level in Wisconsin and the loss of congress.

Most polls point to more losses by right-wingers in the fall elections...The elimination of the moderates...has moved the GOP from big tent party to a pup tent...

Torinius is correct. There are dark skies over the Republican tent and a strong national wind along with a full press Democratic Assembly campaign is likely to cost the GOP control of the Wisconsin lower house in November.

For the past six years Governor Jim Doyle attempted to engage state Republican leaders in a dialogue that will lead to growing Wisconsin business in a manner that recognized fair wages and benefits. Given current political trends the discussion will take place with moderate and temperate business leaders of both parties, but will continue to reduce the role of Republican Party leadership, especially in the legislature.

While the Democrat in me enjoys the prospect of fewer and fewer Republicans in the legislature, I know that to fashion a legislative program that will succeed, there must be genuine and real bipartisan support.

Unfortunately, the prospects of that happening are reduced as the Republican Party in Wisconsin plays its RINO games.