John Locke Foundation
If the U.S. Supreme Court is ready to drop the topic of partisan gerrymandering, a legal brief filed this month on behalf of N.C. legislative leaders could help bolster their decision.
Yet a single footnote in the 75-page document offers a stark reminder: A favorable decision in Washington, D.C., wouldn’t settle the gerrymandering issue completely for North Carolina.
The nation’s highest court will address gerrymandering in North Carolina — again — next month. Supreme Court justices will hear oral arguments March 26 in Rucho v. Common Cause. It’s a case challenging North Carolina’s current congressional election map. Opponents contend the map is unconstitutional based on overly partisan gerrymandering.
It’s the second time this particular case has reached the high court. The legal brief filed Feb. 8 urges justices to ensure the case has no more return trips. The document also calls on the Supreme Court to wash its hands completely of any future complaints involving partisan gerrymandering.
A split three-judge trial court panel’s decision in Rucho “confirms the more fundamental reality that courts simply do not have any business making value-laden judgments about how much politics is too much in a process that will never be free of politics,” according to the brief. “This Court should declare partisan gerrymandering claims nonjusticiable once and for all and put an end to the effort to reassign the inherently political task of districting to the federal courts.”
A claim is “nonjusticiable” if it’s not possible for a court to settle the issue. The N.C. lawmakers’ brief turns to both constitutional history and court precedent to explain why partisan gerrymandering fits that bill.
Though the brief does not say so directly, the concept of “partisan gerrymandering” itself is redundant. Every instance of gerrymandering involves partisan purposes. American and N.C. history offer plenty of examples.
The brief traces the first case of gerrymandering in North Carolina to 1732, when “the governor was engaged in dividing precincts” in a way to benefit his political interests. That episode took place more than four decades before the American Revolution. The incident occurred 55 years before the deliberations that generated the U.S. Constitution.
Thus gerrymandering was “alive and well (though not yet known by that name) at the time of the framing.” Those who designed the Constitution and those who approved the document knew about the practice.
The Constitution’s framers could have fought the influence of gerrymandering by entrusting federal courts with oversight of electoral mapmaking. They rejected that option.
“For most of the history of the Republic, the notion that the answer to partisan gerrymandering would lie in the federal courts would have been quite remarkable,” according to N.C. legislators’ brief. “The framers, in their wisdom, delegated the sensitive task of federal oversight of state-enacted congressional districting legislation to Congress, not the federal courts.”
The U.S. Supreme Court opened the door to partisan gerrymandering complaints in 1986, in the Indiana case of Davis v. Bandemer. Though the court suggested gerrymandering could be too partisan to survive a constitutional challenge, a majority of justices couldn’t agree in that case on a standard that would help them decide how much partisanship was “too much.”
For more than 30 years, justices have struggled with the issue of finding a “judicially manageable standard” in partisan gerrymandering cases. Now, N.C. lawmakers’ brief argues, it’s time to shut the door.
“[T]he courts are simply being invited to invent a test for determining when political branches organized along partisan lines and deliberately assigned an inherently political task engage in ‘too much’ partisan activity,” the brief contends. “The Constitution provides no basis for a judicial answer to that question, and forging ahead nonetheless threatens to undermine the independence and integrity on which [federal] courts depend. …”
Gerrymandering foes spent years targeting Justice Anthony Kennedy. They believed he would provide a crucial fifth Supreme Court vote in favor of a standard for determining overly partisan gerrymandering.
Now that Brett Kavanaugh has succeeded Kennedy, some observers believe the court now has five votes to reject any such test. They believe five justices might be willing to rule that partisan gerrymandering is a political issue that courts should avoid completely.
Thus the Supreme Court’s ruling in Rucho could end federal partisan gerrymandering cases once and for all.
That wouldn’t settle the issue for North Carolina.
Footnote six at the bottom of page 33 in the N.C. lawmakers’ brief explains why. It reminds readers that the U.S. Constitution’s Elections Clause gives Congress oversight over state rules for congressional elections. That clause does not address state and local elections.
“[A] justification for federal intrusion into state and local elections, as opposed to congressional elections, did not even occur to the framers,” the footnote explains. “Instead, the framers left that authority with the States and did not sub silentio [without notice] transfer it to the federal courts.”
In other words, federal courts have nothing to say about partisan gerrymandering claims in state courts. A ruling from Washington, D.C., throwing out the Rucho case would not block an ongoing state court case challenging N.C. House and Senate election maps.
By the time those Republican-drawn maps reach the end of the state’s legal process, Democrats are likely to hold a 6-1 majority on North Carolina’s highest court. No one can say for certain how state Supreme Court justices would rule. It’s safe to assume they wouldn’t have much interest in helping the GOP preserve any partisan advantages.
Advocates of redistricting reform are drawing attention to this unsettled state of legal affairs. They are launching a concerted effort again this year to change the way North Carolina draws its election maps.
Without legislative action, it’s likely that partisans will continue to wage legal battles over gerrymandering. As footnote six suggests, the primary battlefield will shift from Washington, D.C., to Raleigh.
Mitch Kokai is senior political analyst for the John Locke Foundation.
Arguing that GOP-tilted districts had rendered elected lawmakers “usurpers” who “did not represent the people of North Carolina,” Wake County Superior Court Judge Bryan Collins has struck down two constitutional amendments approved by state voters last fall: one requiring a photo ID to vote and the other capping North Carolina’s income-tax rate at 7 percent.
I have advocated nonpartisan redistricting reform for more than 30 years. Since Republicans won legislative majorities in 2010, I have prodded them to reform redistricting, just as I prodded Democratic leaders to do it when they were in charge. But to Democrats gleeful about what Judge Collins has just done, I can only say that you are making a grave error.
North Carolinians support voter ID and the tax cap. They just added them to the state constitution. If this decision survives appeal, voters will view the state’s judiciary as the usurpers — and they’ll be right.
Legal disputes about redistricting have, unfortunately, been part of our political landscape for decades. One reason I favor redistricting reform, and am working with a wide-ranging coalition to get it passed this year, is that I believe this litigation to be a costly, convoluted, and divisive force in North Carolina politics.
However, I also understand that opinions differ about what fairness in redistricting means, and that state and federal judges have repeatedly altered the standards for legally permissible district maps. Although courts must inevitably settle some such disputes, it would be foolish and reckless to insist that legislative elections held in districts subsequently found to be noncompliant with statutory or constitutional provisions have no democratic legitimacy — that such legislatures do not “represent the people of North Carolina” and thus cannot legally enact legislation.
The implication of Collins’s theory is that every bill enacted by the General Assembly before the 2018 elections represents an invalid exercise of legislative power. Every tax dollar collected and appropriated by a budget bill, every pay raise for teachers and state employees, every change in civil and criminal law is suspect.
Collins was clearly aware of how ridiculous this would make him sound, so he tried to distinguish the legislative authority to propose amendments (requiring a three-fifths supermajority) from the authority to enact other bills. But the distinction doesn’t work here. Collins noted that two-thirds of all legislative districts had to be redrawn to satsify the court order — which, of course, means that the Republicans’ majorities, not just their supermajorities, were at issue. Indeed, under his theory it would make more sense to strike down enacted budgets and statutes than to strike down constitutional amendments, since only lawmakers ratify the former while the people themselves must ratify the latter.
“The prospect of invalidating 18 months of laws is the definition of chaos and confusion,” Senate leader Phil Berger said in response to the Collins ruling. Quite so. No matter how passionate they feel about blocking voter ID, raising taxes, or reforming redistricting, Democrats should not embrace this radical and irresponsible ruling.
Its radicalism and irresponsibility extend beyond redistricting disputes. Among the “findings of fact” in the Collins decision was that capping the income tax was a racist act — that it will “act as a tax cut only for the wealthy” and tend to “favor white households and disadvantage people of color, reinforcing the accumulation of wealth for white households and undermining the financing of public structures that have the potential to benefit non-wealthy people, including people of color and the poor.”
This claim by one of the plaintiffs, the NAACP, is both offensive and factually inaccurate. Before the General Assembly enacted tax reform in 2013, North Carolinians who earned more than $60,000 a year were subject to a state income tax rate of 7.75 percent on that income. The thresholds were $80,000 for a head of household and $100,000 for a married couple.
Do you consider all these North Carolinians “wealthy”? Do you think they were all white? That Judge Collins took this claim seriously as a justification for the NAACP’s standing to challenge the tax cap should tell you all you need to know.
Politically, the plaintiffs and the progressive interest groups who have financed and cheered them on have put Democrats in a perilous situation and handed Republicans a potent election issue. If a Democratic judiciary strikes down popular policies just approved by the voters themselves, most will see the Democrats as the party hostile to popular sovereignty here, not the Republicans.
The plaintiffs have also done the cause of redistricting reform a great disservice. By blocking partisan abuses and producing fairer, more compact, more voter-friendly districts, reformers seek to promote stability and cooperation, not chaos and confrontation.
Father of His Nation. Our first president. The New Cincinnatus. First in whiskey. President’s Day started out to celebrate the man behind those titles, George Washington, on his birthday, February 22.
Wait — first in whiskey? Yes. When Washington said farewell to the presidency in 1797, he hired a Scottish immigrant named James Anderson to manage his Mount Vernon estate. Anderson saw a gristmill, plenty of water, rye being used as a cover crop, and one wide-open business opportunity. Washington listened, and by the turn of the 19th century, Washington’s Mount Vernon distillery had quickly become the largest whiskey distillery in the nation.
A century later, neighboring North Carolina had become home to more legal distilleries than any other state in the nation. North Carolina was also the nation’s leader in wine production. State prohibition in 1908 killed those industries off well before federal Prohibition. Distilleries went underground, which as many Tar Heels know, led to bootlegging, fast cars, daredevil drivers to outrun revenuers, and then NASCAR.
Distilleries didn’t return in 1933, when Prohibition ended, or in 1937, when North Carolina enacted its Alcoholic Beverage Control system to control liquor. It wasn’t until 2005 that North Carolina saw its first legal distillery in almost a full century, and now only about five dozen dot the state. On the other hand, wineries slowly began returning about the same time as Prohibition’s end. Now there are 186 statewide.
Why has one industry returned so strongly while the other hasn’t? Why is North Carolina a regional leader in breweries, with more than 300 now? A big reason is that liquor is more heavily regulated here than other alcoholic beverages.
With North Carolina’s decision to control liquor, the state (ABC Commission) controls the distribution and local governments (ABC boards) control the retail sales in a limited number of government ABC stores. For beer and wine, however, a small group of private wholesalers handle the distribution while sales take place in taverns, bars, grocery stores, convenience stores, specialty shops, etc.
Controlling liquor doesn’t mean people won’t drink. Most people don’t limit themselves to one type of alcohol. Laws that make it harder to get liquor just make people more likely to opt for beer and wine. North Carolina is 13th out of 14 states (including D.C.) in the Southeast in per-capita liquor consumption. But we’re eighth in per-capita beer consumption and fourth in per-capita wine consumption.
According to the American Craft Distillers Council, 92 percent of small distilleries’ sales are in their home state. But here a distillery’s product can’t be sold in ABC stores until the ABC Commission places it on its approved list. That’s still just the start of their quest to reach consumers.
The distiller then has to contact the state’s 170 ABC boards to persuade them to carry their product in their particular stores. That’s a lot of sales calls and costly marketing efforts. Distilleries can’t offer tastings at the ABC stores. They can’t sell bottles at local fairs and farmers’ markets. They can’t ship directly to consumers.
The only way a consumer can get a bottle from an upstart distillery in North Carolina not listed by the ABC Commission is to visit the distillery itself. Even then, you can’t buy more than five bottles in a calendar year. Better be picky about your Christmas giving, I suppose.
Finding a local craft beer or wine is a lot easier, don’t you think?
Right now there’s a lot of chatter that we might see actual reform in North Carolina’s ABC system. That’s not only good news for freedom and for consumers in North Carolina, it’s also good news for our distilleries, their consumers, their future employees, and their communities.
If we let liquor compete here like beer and wine, North Carolina’s craft distillery industry is poised for growth. Like Mount Vernon in 1797, all the components for success are already in place.
Jon Sanders is director of regulatory studies at the John Locke Foundation.
March is madness for high school seniors. Each year, seniors mark March as the final month in the agonizing wait for college decisions. Early application timelines mean the admission process is blessedly over for some. But many still wait, even as stakes soar and odds seem to dwindle. UNC-Chapel Hill, for example, received nearly 45,000 first-year applications this year, the 14th consecutive year of record numbers. Is it harder and harder to get into college?
Hold for more jaw-dropping statistics: UCLA, the nation’s most popular university, just reported more than 135,000 freshman and transfer applications; NYU received more than 84,000 first-year applications. Duke, Dartmouth, Yale, Tufts, and Brown announced record applicant numbers. Admit rates at elite institutions are falling, even as perceptions grow that a college degree is a baseline prerequisite for future economic viability.
High schoolers hear the hype; such pressure pushes intensively, inexorably, into their school days and college dreams. Surveys of 100,000 students at high-achieving public, private, parochial, and charter high schools, conducted by the Stanford University-affiliated organization, Challenge Success, reveal college admissions is a perennial top stressor. To compete, kids labor to churn out awe-inspiring (and, they hope, admission-worthy) transcripts and resumes. They populate online message boards, anxiously posting test scores and GPAs, and asking others to “chance” their odds at top institutions.
Is their angst warranted? Is a spot at a prestige school the life-altering opportunity students believe it to be?
Not so, says Challenge Success, in a recent white paper emphasizing “fit” over rankings. The evidence is clear: There’s no significant relationship between school selectivity and quality of learning. School status isn’t linked closely with graduates’ well-being or later job satisfaction, either. Attending a selective school does confer “modest” financial advantages, says Challenge Success; such benefits are most evident for first-generation and underserved college students.
If college selectivity isn’t a strong predictor of success, what is? Engagement — how much students invest, right where they are. Engagement, according to Challenge Success’s review, leads to greater knowledge, competence, creativity, and curiosity. Effective engagement can include internships or mentoring, even projects and extra-curriculars. College major and ambition also matter, and so does time on task. Study, study, study in college, wherever you go, and you’ll do better. Don’t, and you probably won’t.
Some changes are coming. New college rankings will provide greater institutional accountability. US News & World Report’s 2019 rankings weight student factors (scores and class standing) less. Institutional outcomes (including retention and graduation data) matter more. Admit rates are out. Social mobility metrics are in. These measure how well institutions do at graduating low-income students. Now that would be an indicator of life-altering opportunity.
More college applicants? That’s a good thing, says Challenge Success co-founder Dr. Denise Pope, a senior lecturer at Stanford’s Graduate School of Education — but a “fear-based mentality” clouds the application process. Misperceptions abound. Students must be perfect and apply to a bunch of schools just to get in somewhere; only certain schools are worth attending. “All of those things are myths,” she says. “There’s actually a college spot for every person who wants to go to college.”
Really, there are only 100 to 200 schools that are considered highly selective, and “literally thousands of four-year institutions,” Pope notes. Students should look beyond rankings, which still are flawed, and focus instead on fit — how well institutional attributes and offerings align with their passions and proclivities.
“There are multiple fits for everyone,” Pope says, adding about the college decision process, “It’s not like finding a soulmate.”
Thank goodness for that. It’s timely reassurance for the weeks of waiting ahead.
Kristen Blair is a Chapel Hill-based education writer.
Although I write regularly about politics and public policy, my “day job,” so to speak, is to give money away. It’s not as easy as you might think.
Or, to be more precise, it may be easy to give money away — but it’s exceedingly difficult to give money away wisely. If donors are too prescriptive and heavy-handed with the recipients of their gifts, they may destroy what makes those recipients special and effectual.
On the other hand, simply giving money away year after year to the same individuals or organizations based on stated good intentions or friendly relations, without regard to the long-term consequences, can be not just wasteful but counterproductive. It can foster dependency, encourage indolence, and stifle innovation.
At the John William Pope Foundation, the grantmaker where I serve as president, we believe that thoughtful philanthropy plays an indispensable role in human progress. It ought to alleviate immediate needs and address immediate crises, to be sure. But philanthropy should also promote the virtues and practices that help human beings flourish, both individually and as part of communities.
The term “role” is an apt one. “All the world’s a stage, and all the men and women merely players,” Shakespeare’s character Jaques famously proclaims in As You Like it. “They have their exits and their entrances, and one man in his time plays many parts.” While this speech has a sardonic edge, the idea that societies are like dramas full of individuals portraying distinct characters long predates the Bard, and need not be such a downer.
In free societies, a core operating assumption is that different social institutions, organized in very different ways, can and should coexist. Governments differ from businesses, which differ in turn from charities, churches, clubs, and families. As individuals, we interact with various institutions over the course of time. As we do so, our roles change — alternating back and forth from worker to shopper to voter to volunteer to parent. Our tasks change. Our responsibilities change. Even our goals change, to some degree.
Civilization advances as we get better at playing our social roles. We practice. We write better scripts for ourselves. We get better direction. And, sometimes, we realize we’ve been miscast and seek out new roles better suited to our strengths. The process is messy. It’s challenging. It’s imperfect. And it’s essential.
One role that strategic philanthropy can play, in my view, is essentially to create new stages for our collective plot to unfold — new settings for seemingly disparate characters to meet, to innovate, and to work together to advance the common good. Theatrical analogies aside, this is the clear purpose of our foundation’s Joy W. Pope Memorial Grant program. Each year, we award two $100,000 grants, one in the arts and one in human services, to local projects that address community needs creatively and cooperatively.
Our arts grant this year is, quite literally, for a new stage. We are helping the University of Mount Olive redevelop a former drug store into a “black box” theatre and cultural center in downtown Mount Olive, North Carolina. It will house performances, concerts, classes, and other community events when it opens later this year.
Our human-services grant is also about learning and performing roles, but of a very different kind. Based in Forsyth County, ABC of North Carolina provides diagnostic, therapeutic, and educational services to people on the autism spectrum. Its new Joy W. Pope Life Skills Center will offer its patients the opportunity to visit branded “stores” — such as a grocery, a hair salon, a food stand, and a hotel room — so they can become acclimated to changing surroundings, practice social skills, and even gain experience for potential job opportunities.
“Self-reliance, self-confidence, and integrity are the keys to success,” John Pope once remarked. His insight applies to all of us, no matter what circumstances we inherit, what capabilities we exhibit, and what roles we inhabit. To flourish, we need the social equivalent of rehearsal space. Philanthropy can supply it.
The top page-one headline trumpeted the news: “Report: Armed police officer needed at every N.C. school.”
And the Raleigh News & Observer wasn’t alone. “School safety panel calls for resource officers in every NC school,” according to WRAL.com.
But what struck two of the state capital’s leading mainstream media outlets as especially newsworthy ended up conspicuously absent from another source. The official Feb. 7 news release about final recommendations from Gov. Roy Cooper’s school safety committee said nothing about adding resource officers to every N.C. public school.
Not once in the 800-word release did Cooper’s press office mention the recommendation that “North Carolina needs to be proactive and provide money to have an armed police officer at every school in the state,” as the N&O reported in its opening paragraph.
“All the schools should have a police officer in them to protect the kids from harm,” Gaston County Sheriff Alan Cloninger told the newspaper. Cloninger co-chaired Cooper’s committee.
The governor’s release did not convey the sheriff’s sentiment. Nor did Cooper’s press operation mention that “among the recommendations was funding for school resource officers at every school statewide — or at least at every middle school and high school, with three or four elementary schools sharing the services of one officer,” as WRAL reported.
Instead of highlighting that news, a bullet point on the second page of the governor’s release referenced without additional comment a recommendation of “More School Resource Officers (SROs) in schools.”
Why the disparity in emphasis between the news reports and the official account from the governor’s office? The N&O story offers a possible clue.
“The recommendation to increase the number of school resource officers could draw questions from groups who argue that there should be less police and not more in schools,” reporter Keung Hui suggests.
Among the groups actively protesting police in schools: left-of-center political activists who spend much of their time criticizing the Republican-led General Assembly. Hui quotes one of them. “‘Research has not shown that having a school resource officer in every school prevents shootings or makes schools safer,’ said Peggy Nicholson, director of the Youth Justice Project of the Southern Coalition for Social Justice. ‘But research does show it sends more kids into the court system, especially black and brown children.’”
The N&O turns to Nicholson again after citing an October poll that found 84 percent of North Carolinians believe “hiring more school resource officers will be very effective or somewhat effective in stopping school shootings.”
Don’t count the social justice activist among the 84 percent. ““It’s critical that all children feel safe at school, but if you talk with parents and students there are some who don’t feel safe if there’s an officer in school every day,” Nicholson told the Raleigh paper.
While objecting to armed officers in every school, Nicholson mentioned support for the report’s recommendations dealing with officer training and increased funding for mental health services.
Her comments aligned more closely with the priorities emphasized in the opening line of the governor’s news release. “To strengthen school safety and help prevent school shootings, North Carolina schools needs to ramp up training for law enforcement and educators, improve physical security at schools, gather better information about potential threats, and invest in more mental health support for schools.”
It’s worth noting that Cooper’s press team was not alone in downplaying the resource officer recommendation. Carolina Journal’s reporting opened with a focus on mental health programs and “including students in conversations about school safety.”
CJ reported the “recommendation for full funding for an SRO to be assigned to every school in the state.” But that fact appeared in a bullet point more than halfway through the article.
Legislators would need to invest significant taxpayer money to meet the goal of a resource officer in every school. It would require roughly doubling the 1,200 officers patrolling school hallways today.
Some recent academic research questions the benefits. The Brookings Institution highlighted last fall a report that showed no relationship between increased funding for middle school resource officers and a decrease in reported school crimes.
Yet the research findings might be “irrelevant,” according to John Locke Foundation K-12 education expert Terry Stoops. “As long as parents believe that metal detectors, cameras, and school resource officers improve school safety, districts and states will pour money into them.”
Stoops highlights another key point. “As proponents of school resource officers point out, it is nearly impossible to know if the presence of resource officers discouraged or deterred potential acts of school crime and violence (because they are not reported).”
One can expect continuing debate over school safety in North Carolina. If lawmakers pay more attention to their news feeds than Cooper’s press releases, the future of school resource officers will play a leading role in that debate.
Mitch Kokai is senior political analyst for the John Locke Foundation.
Is it the job of government to make you happy? While it may seem like a straightforward question, there are some important subtleties packed into those few words.
On the face of it, “no” feels like the obvious answer. Our country’s Declaration of Independence states that governments are instituted to secure our rights to “life, liberty, and the pursuit of happiness.” The first section of our own state constitution uses the same language, while adding that North Carolinians are also entitled to protection of their right “to enjoyment of the fruits of their own labor.”
Under our form of government, you are not entitled to be happy. Nor are you entitled to enjoy the rights of someone else’s labor. You are free to yearn, to strive, to pursue. You may reach your goals, and feel happy about that. Or you may not fully reach your goals, yet derive satisfaction from the attempt and from what you gain along the way.
Governments are obligated, then, only to protect your right to pursue happiness. Simply being unhappy is not a justification for governments using coercion to transfer the fruits of other people’s labors to you.
On the other hand, the tasks governments are constitutionally authorized to do for us — ensure public safety, administer courts, and finance public goods that cannot otherwise be delivered by voluntary means — are obviously related to our happiness. We pay taxes, comply with the law, and otherwise give up some of our personal liberty in order to receive valuable public services. If we don’t get them, or their value is far less than the cost, that understandably makes us unhappy. As government failures increase, that unhappiness turns to anger.
Whether in Washington or in Raleigh, policymakers typically judge public policies according to objective criteria such as the pace of economic growth, changes in personal incomes, levels of educational attainment, or health outcomes. Increasingly, however, some analysts are using measures of public happiness or satisfaction to evaluate what government does (or fails to do).
The technical name for what they are measuring is “subjective wellbeing.” People differ in their preferences, circumstances, and definitions of a life well lived. The best way to gauge how happy or satisfied they feel is to ask them, not to make guesses based on facts external to their personal experience.
When it comes to the optimal size and scope of government, progressives and conservatives clearly disagree. In the North Carolina context, for example, progressives think our state expenditures and taxes are too low to finance necessary public services. Conservatives think North Carolina is closer to getting it right, and that making state government bigger than it is now would cost more than the additional services would be worth.
I’m a conservative, and I often cite studies about economic growth to support my case. But is that really the goal? One might argue that instead of measuring North Carolina’s gross domestic product, we ought to be measuring North Carolina’s gross domestic happiness!
A few researchers have done that kind of analysis. For example, a study by Baylor University political scientist Patrick Flavin, just published in the journal Social Science Research, compared levels of state spending to levels of subjective wellbeing. He found no relationship between overall state spending and residents’ self-reported happiness. He found the same thing for major categories of state spending such as education and public assistance.
However, Flavin did find the states that spent more on true “public goods” — including highways, public safety, libraries, and parks — tended to have higher levels of subjective wellbeing. With true public goods, it is either impossible or prohibitively costly to exclude nonpayers from benefitting from them, and consumption by one person doesn’t significantly reduce the ability of another to consume it.
Taken together with other studies showing a link between economic freedom and subjective wellbeing, I read this evidence as generally consistent with a fiscally conservative approach to public policy. Perhaps you disagree. I’m happy to talk more about it.
The Program Evaluation Division has a compiled and released a comprehensive report that looks at how North Carolina regulates and controls liquor sales and offers ways and legislative options toward changing and modernizing the process.
The thoughtful 59-page report, “Changing how North Carolina Controls Liquor Sales has Operational, Regulatory, and Financial Ramifications,” plus appendices, provides an excellent starting point for lawmakers who want to reform the system, as well for those intent on maintaining the status quo.
But lawmakers should not, uh, read too much into it.
Carol Shaw, the PED’s principal program evaluator, on Feb. 11 presented the report to lawmakers, and she patiently answered their questions, which came at least a couple hours after her initial comments.
The presentation and subsequent questions — most of which were relevant — was sort of a legislative precursor for the coming main event, when lawmakers will debate and decide what to do, if anything, about the antiquated way North Carolina regulates and sells liquor.
As bills are introduced, the PED report will become the basis for much of the debate, and in some cases lawmakers’ respective points will become mantra and even rallying cries.
It’s easy to predict what some of those will be.
Liquor consumption in North Carolina, and how it correlates with liquor density — ABC stores — will be a common theme, but mostly for those resisting free-market models.
As one lawmaker said Feb. 11, North Carolina, in the Southeast, has the lowest rate of consumption — third-lowest nationwide — it’s bringing in the most revenue per wine gallon sold —455,829,000 for fiscal 2016-17 — and it has the lowest density.
The N.C. Alcoholic Beverage Control Commission and its 170 boards run 433 stores, which, in fiscal 2016-17, sold, the report says, 79 million bottles of liquor.
“At $36.79 per wine gallon, North Carolina collected four times as much revenue per gallon as Louisiana, which collected the lowest revenue per gallon among southeastern states,” the PED says
“Among Southeastern states, North Carolina collects the most public revenue per gallon of liquor sold, has the lowest liquor outlet density, and has the second lowest adult per capita liquor consumption,” the report says.
Shaw says the PED — the legislature’s government watchdog arm — uses a universally accepted standard to measure consumption, done by dividing the total amount of liquor sold — in wine gallons — by the number of people 21 and older.
But alcohol consumption is generally down, so N.C. lawmakers would do well to consider other factors when debating the fate of the ABC system.
New data show that U.S. alcohol volumes dropped 0.8 percent last year, slightly steeper than the 0.7 percent decline in 2017, the Wall Street Journal reported last month.
The fall in alcohol volumes, the newspaper reports, reflects “a growing trend toward mindful drinking or complete abstinence, particularly among the millennial cohort,” says IWSR’s U.S. head Brandy Rand. IWSR’s specializes in analyzing and dispersing data associated with the spirits industry.
And the state numbers reflect only the consumption of liquor, not beer and wine, which are generally less expensive and not so tightly regulated, especially in North Carolina. In fact, the brewery boom here didn’t begin until lawmakers removed the handcuffs and made it easier for brewers to brew and sell their beer.
The PED’s consumption numbers also fail to account for liquor sold in border states such as Virginia and South Carolina. It’s also important to consider the prevalence and pervasiveness of marijuana and pills, which people intent on getting a buzz may find cheaper than liquor and thus eschew the bottle.
And there’s this.
Revenue across the spirits sector, the N.Y. Times reports, was up 5.1 percent to a record $27.5 billion in 2018, with sales of the most expensive liquors growing the fastest. People may indeed be drinking less overall. But they are drinking better, willing to spend more for literally top-shelf products.
The PED did an outstanding job, and its report is replete with important and useful information for lawmakers.
But, conversely, lawmakers should be careful how they use it.
Among many in the Democratic Party, attacking the rich is back in style.
Some popular Democrats contend that large concentrations of wealth are, at best, unseemly and, at worst, absolutely immoral. From newly elected Congresswoman Alexandria Ocasio-Cortez to possible presidential candidates, including Senators Elizabeth Warren and Bernie Sanders and New York Mayor Bill de Blasio, proposals to punish the rich through exorbitantly high marginal tax rates of 70 percent or 80 percent are commonplace. Most recently, Mayor de Blasio argued that while there is plenty of money in New York City, it is in the hands of the wrong people. The clear implication was that those who have accumulated large sums of wealth should not be allowed to keep it and that some form of coercive wealth transfer would be in order, presumably to move that money to de Blasio’s chosen “right hands.”
In an editorial, the Wall Street Journal pushed back on de Blasio’s remarks. In doing so, it pointed to the fact that some of wealthiest citizens of New York City – libertarian billionaire David Koch, Home Depot Founder Ken Langone, financier Richard Gilder, and investor Stanley Druckenmiller – have given many hundreds of millions of dollars to philanthropic efforts to improve the lives of everyone living in de Blasio’s kingdom.
The problem with the Wall Street Journal’s approach is that it misses a fundamental point and in doing so makes the wrong argument. The moral case for wealth cannot rest on how the wealthy use their money.
For socialist-leaning Democrats like Ocasio-Cortez, de Blasio, Bernie Sanders, and others, high levels of income or wealth and large disparities in wealth distribution cannot be justified at all. From their egalitarian perspective, such disparities are, in and of themselves, immoral. From the Wall Street Journal’s perspective, the morality of having large sums of wealth seems to rest on how it is used. The money is in the “right hands” if those who have it give a significant portion of it away for the “greater good.” In other words, if these folks were not so generous with what they’ve earned, well, maybe de Blasio would be right.
From a moral perspective, both the democratic socialists and the Wall Street Journal are wrong. It is not about how much one has, relative to others, or how the money is disposed of, but how it is obtained that determines the morality of wealth and income. If a person uses moral means to obtain his or her wealth (regardless of how much wealth that is) it is moral, i.e., in the “right hands.” But if the means by which the wealth is obtained are immoral, then so is possession of that wealth, regardless of how it is used.
So, the logical question is, if we are not going to use the level of wealth or its use as our standard of morality, but, instead, the means by which the wealth is obtained, then what determines the morality of means? If we are going to proclaim that any level of wealth that is obtained properly is moral, then we have to know what the definition of “proper” is.
In a free society, income and wealth that is obtained through voluntary means, that is, without the use of force or fraud, is moral. If a person obtains his or her wealth through non-coercive methods, then no matter how much is earned or how it is used, the income is justified; it is ethical. On the other hand, if the wealth is obtained through force, threats of force, or fraud, i.e., through non-voluntary means, then it is immoral.
For example, if a person produces a product or service that is highly valued by others in society and they become wealthy by voluntarily exchanging that product for money that others surrender freely to obtain it, then the wealth generated by that production is morally obtained and justified. This is true regardless of how much it is or how it is used after the fact.
On the other hand, if a mob boss amasses a fortune by extorting local businesses and threatening violence against potential competitors, then all of the wealth obtained by these methods is immoral. And the fact that the mobster gave some large sums of money to build a hospital or playground doesn’t make that wealth any more moral or even imply that it is in the “right hands.” The right hands for that money would be the hands of the people who had it extorted or stolen from them, even if they wouldn’t have done any of those “good” things with it.
This framework also has policy implications. Wealth that is obtained by businesses or individuals through the coercive methods of the state, even if it was done using legal political processes, should also be viewed as morally suspect. In a free society, a businessperson that becomes wealthy by getting special subsidies from government or by using eminent domain to take property from owners unwilling to sell it or through regulations that keep potential competition out of the market are doing so through the use of immoral means. This is the wealth that we should view as being in the wrong hands. Governments should end existing opportunities for obtaining wealth through immoral methods, illegal or legal, and avoid opening up new opportunities for coercively transferring wealth in the future.
Dr. Roy Cordato is senior economist and resident scholar at the John Locke Foundation.
I was born in Charlotte. But I grew up in rural Mecklenburg County. There used to be such a place — and, indeed, quite a few such places still exist in our increasingly urbanized state.
My family lived on 40 acres, mostly forest with a freight-rail track running through it. When the train came by, the engineer waved. We waved back, even after we had piled rocks and coins on the track to see what would happen. We planted beans and shucked corn and picked blackberries. We fished the pond on the other side of the cow pasture. For part of my childhood, we had a box on a rural route, not a street address.
I now live in suburban Wake County — sort of. My neighborhood is bordered on all sides by farms and stables. It’s not unheard of for me to look out my front window and see folks riding by on their horses. Our German shepherd snarls and barks at the riders, as if to shout “How dare you? Don’t you know you’re in the suburbs?”
North Carolinians been talking for years about the rural-urban divide, and we ought to be. But we don’t really live in rigidly separated rural places and urban places. And the largest share of North Carolinians live in places they and others would call suburban.
I spend much of my time doing political analysis, where oversimplification is commonplace. When politicians and reporters say that “urban areas vote Democratic” and “rural areas vote Republicans” and “the real battleground is the suburbs,” they are saying things that are true, in a sense, while not saying all that is true about those things.
For example, in 2016 Donald Trump won North Carolina with about 2.4 million votes. Hillary Clinton got about 2.2 million votes. She won almost all counties classified as “urban” while Trump won most counties classified as “rural.” But what does it mean to “win” a county? Based on how exit-poll respondents described their own neighborhoods, as opposed to how others describe their counties, about 620,000 urban North Carolinas voted for Trump. Nearly half a million rural North Carolinians voted for Clinton.
And, by the way, Trump won a somewhat-larger share of the suburban vote than he won of the rural vote. Did you know that? Pesky details — they’re always spoiling things.
The Institute for Emerging Issues, based at North Carolina State University, is all about “spoiling things,” to the extent those things are preconceived notions and faulty definitions that divert or obstruct us from addressing our state’s biggest challenges.
The institute has developed a project called ReConnect NC, anchored by a series of six Emerging Issues Forums on the overall topic of strengthening the ties that bind us all together. The second such event, held Feb. 11 in Raleigh, focused on bridging rural, urban, and suburban North Carolina. How are they different? What do they have in common?
Indeed, a major theme of the day was that these labels can both inform and misinform. As my personal story illustrates, but other speakers explained with reams of data, our lived experiences often differ in ways that don’t align well with county lines or other jurisdictional boundaries. For example many North Carolinians commute daily from rural or suburban to urban, from one city to another, from one suburb to another, or some other way. Traffic in freight, information, and ideas also tie seemingly disparate people and places together in powerful, and sometimes even improbable, networks.
The institute’s Raleigh forum made the usual news, with legislative leaders talking about emerging needs in rural broadband and school construction while Gov. Roy Cooper pitched an expanded Teaching Fellows program and other educational initiatives. But what was transformational, I think, was the overarching theme of rejecting rigid categories and simple explanations of complex problems.
What comes next? The next forum is Oct. 15 in Charlotte. I’ll be sure to stop at the Hood homestead on my way to put a penny on the railroad track.
Mention the phrase “these go to 11,” and you’re likely to elicit chuckles from fans of a classic 1984 movie.
That famous punchline also comes to mind as this fan considers debate over state-funded public school construction in North Carolina. Yes, I’m linking one of North Carolina’s most pressing policy discussions to “This Is Spinal Tap.”
Rob Reiner’s fake documentary — “If you will, rockumentary” — chronicles the exploits of a quartet of English knuckleheads who embody every cliché of a heavy metal rock band.
Lead guitarist Nigel Tufnel, portrayed by Christopher Guest, exudes an amusing cluelessness throughout the proceedings. In one scene, Tufnel explains how he turns up the volume of his performance — figuratively and literally.
His specially designed amplifier has knobs that turn from a low of zero to a maximum of 11. Tufnel compares the amp to others that max out at 10. “It’s one louder, isn’t it?”
An interviewer asks, “Why don’t you just make 10 louder, and make 10 be the top number, and make that a little louder?” Tufnel ponders the question for a couple of seconds before responding: “These go to 11.”
So committed to the notion that 11 must be louder than 10, the guitarist fails to comprehend an alternative that might accomplish the same goal.
No one is arguing that top N.C. government leaders would struggle in a war of wits with Nigel Tufnel. But it’s possible that some might be so committed to one particular policy option that they fail to contemplate an alternative.
In the debate over state funding of local school construction, the most highly visible option is a proposed statewide school bond referendum. Democratic Gov. Roy Cooper has endorsed the idea. He launched a statewide tour last summer touting a $1.9 billion bond package.
Speaker Tim Moore, R-Cleveland, and other leading N.C. House Republicans also have signaled support for a statewide bond. They organized a January forum on the topic in Harnett County. Local leaders trumpeted potential benefits for addressing their school systems’ building needs.
Meanwhile, leading state senators have put forward a different proposal. Rather than take on new debt with a bond package, senators would tweak the State Capital and Infrastructure Fund created in 2017.
Outlining the plan for reporters, Senate Majority Leader Harry Brown, R-Onslow, argued that his chamber’s pay-as-you-go alternative would devote more money to schools ($2.03 billion versus $1.9 billion), start construction projects two years earlier than a bond package would allow, and save North Carolina $1.2 billion in interest payments over the next 30 years.
The Associated Press asked Brown whether the Senate plan reflects that chamber’s stronger aversion to taking on new state debt. “I think that’s fair to say,” he responded. “But also you can see with the other plan — with a bond plan — you’re talking about over $1 billion in interest payments. With this plan, you don’t have any of that. So it just allows you to spend more money on where you want it to be spent.”
Plenty of questions remain about both plans. Can North Carolina afford to take on new debt linked to a bond? How would a change in the SCIF formula affect funding for other government construction priorities?
What kinds of projects would be funded under either proposal? Would they be concentrated in areas with the highest rates of student growth? Dispersed in ways that tilt more toward urban or rural interests?
How have changes in enrollment patterns affected the need for new district school buildings? Does it make sense to give state government a larger role in traditionally local school building decisions? Should the fast-growing public charter school sector share in any state construction funds?
Those questions need answers before policymakers proceed with any plan. If they reach agreement that the state should take some action, then they’ll have to choose among a bond, a pay-as-you-go plan, or some combination of the two.
The bond proposal has been circulating longer. Plus it’s more familiar to taxpayers and voters. When counties decide they need to build or upgrade school buildings, they often turn to local bond referendums.
But that shouldn’t stop policymakers from considering alternatives. When senators propose more money for school construction, available more quickly, and at lower overall costs, it won’t be a great idea to respond: “But we support a bond.”
Unless, of course, bond advocates want to come across in the same way as the Spinal Tap guitarist who cranks his amplifier up to 11.
Mitch Kokai is senior political analyst for the John Locke Foundation.
If the most important factor determining the welfare of workers is the growth rate of the economy, that has policy implications that free-market conservatives, among others, will welcome.
Real, long-term economic growth is about investment, about both the amount invested and how skillfully it is invested in capital assets that make labor more productive. Assembling financial capital to start or expand a business is one example. Building physical capital such as plants, stores, equipment, information networks, and highways would be another. Direct investment in the productivity of workers themselves, in their knowledge and skills, is yet another example of capital formation, and obviously a critically important one.
Here in North Carolina, we’ve spent the past decade debating how best to boost economic growth. Are we more likely to boost it by spending more tax dollars on new infrastructure and education programs, or would it be more growth-enhancing to reduce taxes and thus promote investment in the private sector?
It’s been a robust debate, at the very least. But was it all an irrelevant distraction?
In recent years, some politicians and activists have come to question the fundamental assumption that economic growth and worker welfare are joined at the hip. They point to evidence that even as the productivity of the economy has gone up, worker wages haven’t. They observe that the share of national income that goes to workers has declined. Faster growth just means more money in the pockets of CEOs, business owners, and investors, while everyone else gets left behind.
This is, inescapably, an argument about the validity and interpretation of statistics. Those who challenge the link between overall growth and worker well-being have passed around charts showing a widening disparity between productivity gains and workers’ share of national income since the 1970s. These charts are based on official government data. But they do not convey reality.
For one thing, they focus on gross income, not net income. When businesses use capital assets to produce goods and services for sale, those assets aren’t unaffected. Over time, they get used up. That’s called depreciation, and any accounting that fails to subtract depreciation is not conveying true net income.
For another thing, “official” statistics are not necessarily valid ones. Over the past few decades, the federal government has changed the way it measures and allocates an important category of income: self-employment. If you both own a business and work for it, some of the income you receive is payment for labor and some of it is return on your capital investment. It’s hard to figure out what the allocation should be. Unfortunately, federal statisticians haven’t been consistent about it. Over time, they’ve decided to treat self-employment income more as return to capital than as return to labor.
When former Heritage Foundation analyst James Sherk adjusted for these two factors alone — depreciation and inconsistent allocation of self-employment income — he found that the share of national income going to workers has been “remarkably stable” since the end of World War II, at around 69 percent. Only briefly did the share move significantly above 70 percent, during the tech bubble of the late 1990s.
In other words, the measured income of workers — which overlooks some of the ways that workers are compensated, by the way — remains closely tied to the overall growth rate of the economy. Making workers’ labor more productive, through capital investment of various kinds, remains the best way to improve their well-being. We don’t need new regulations, or stronger unions, or more income-redistribution programs to do the job.
I continue to believe, based on valid theories of economic growth and sound empirical evidence, that the best way for North Carolina to do its share of the job is to stay its current conservative course. Maintain our pro-investment tax and regulatory policies while increasing the productivity of the public dollars we put into our education, transportation, and public-safety programs.
As our work becomes more valuable, we are paid more for it. Still true. Still matters.
It’s time to wake up, North Carolina. Enough is truly enough.
In truth, it’s well past time lawmakers take substantive steps toward rewriting or eliminating much of the arcane laws governing alcohol, painfully documented in N.C. General Statute 18b.
It runs nearly 150 pages and almost 70,000 words. So, let’s open that cracked and weathered book.
This column will have, to put things mildly, its detractors, some of whom have valid concerns and make salient points.
But continuing to follow laws created just after cutting the lights on the great mistake that was Prohibition is not only nonsensical but also grinds against our inherent spirit of progress and innovation so proudly touted by the people who govern us.
North Carolina is a great place to work, live, do business. To worship, to study, and to raise a family. For myriad reasons, chief among them an indelible spirit to create and to prosper.
Unless, in the minds of some, that spirit of innovation and invention is touched by alcohol, especially distilled spirits. A mere mention of making the state’s broken alcohol control system more friendly to producers and consumers alike leads some lawmakers to scowl and others to turn and all but scurry for shelter.
They have their reasons. Politics play no small role, of course. North Carolina has 168 local alcohol-control boards, and county commissioners and town leaders will resist relinquishing their power to appoint members, and they will throw a collective fit over the possibility of losing money generated by liquor sales, to which they’ve become so accustomed to collecting and distributing.
Then there’s the primal aspect of control, an old and frayed belief a state monopoly over spirits effectively inhibits over-consumption and dangerous consequences.
And, to be fair, some small distillers have learned to use the state-controlled system to their advantage and have prospered, in part at least, because of it. They’ll resist change, too.
Yet not all lawmakers are running from the issue. Rather, they, like me, have — despite the many obstacles they’ll be sure to face — too have said, Enough is truly enough.
Look around, they’ll say. Virginia recently reformed its laws to better help local distillers, as well as tourists. Kentucky, as Carolina Journal reported this week, has, through legislation, become a hotspot for tourists thirsty for bourbon.
“Kentucky bourbon now pours $8.6 billion each year into the state’s economy, generates more than 20,100 good-paying jobs with an annual payroll topping $1 billion, provides $235 million in local and state tax revenue, and is in the middle of a $2.3 billion building boom,” a news release from the Kentucky Distillers Association.
In 2005, North Carolina had one distillery. Now it has almost 60. This, despite the archaic rules.
For the past 10 years or so the John Locke Foundation has worked to reform the state’s 80-year-old rules. And it will continue to do so.
My friend and colleague Jon Sanders offers a clear and consistent take on the issue, and his research is vital in guiding lawmakers — and North Carolina consumers — through a morass of state alcohol rules, codes, and statutes.
An argument over the evils of alcohol, though sometimes valid, shouldn’t serve as one point of debate on what is a complex issue transcending the idea of whether people should buy liquor — whether to drink it or to collect it.
The argument, rather, is about getting government out of people’s way. It’s about giving entrepreneurs the freedom to honor tradition, to work on perfecting their crafts, to identify markets and to prosper from them. To give consumers more freedom to choose where to buy, and giving them more choice regarding what to buy.
Again, the debate among lawmakers over reforming the N.C. Alcoholic Beverage Control Commission is and will be composed of many points. Whether government should continue playing a role in deciding if consenting adults should even consume alcohol shouldn’t be among them. These arguments are virtual red herrings, which crowd out more moderate voices and eventually derail pragmatic discussion.
It’s not wrong to voice religious objections, or to refer to experience as a reason to oppose the sale and consumption of distilled spirits. But, and I’ll say it again, this isn’t a debate about alcohol.
It’s about North Carolina, which, in regard to the way it stubbornly maintains a stranglehold on liquor, is quickly losing touch with its neighbors, who apparently better see the value in promoting tourism and in helping ensure their small businesses are given the means to prosper and to grow.
Yes, let’s focus on programs and ways to help people who have problems with alcohol. Let’s educate people about the dangers of binge drinking. And, of course, let’s protect our children from the dangers of underage drinking.
Thing is, Prohibition — which created far more problems than it solved — ended in North Carolina some 80 years ago. We must stop trying to bring it back, and we should cut loose a system of control that’s steeped in politics and, by its very nature, tainted by hypocrisy.
The governor’s behind it, and state Department of Health and Human Services Secretary Mandy Cohen is for it. Some freshmen legislators have made it a priority, some leaders in the N.C. House think it’s a good idea, and 32 states have implemented a version of it.
But does Medicaid expansion take us in the wrong direction?
We begin the 2019 legislative session with winds of transformational reforms at our backs. They’ve given us surplus revenue, more transparency, more opportunities, and a stronger economy. Do we really want more government control over health care?
Medicaid is federal- and state-run health coverage designed for vulnerable and high-risk, low-income aging and disabled adults, pregnant women, and children. Twenty percent of North Carolinians are covered under Medicaid. State taxpayers foot about a third of the total costs of $3.6 billion. Medicaid is 16 percent and the fastest growing part of the general fund budget. A provision in Obamacare authorized states to expand Medicaid coverage to low-income, able-bodied childless adults with an income of $16,753, or for a family of four to $34,638. Thirty-two states have expanded Medicaid, but North Carolina isn’t among them.
The federal government has promised to pay 90 percent of the costs for Medicaid expansion through 2020. But that doesn’t apply to administrative costs, and future funding isn’t guaranteed. The federal government is already $22 trillion in debt. In states that expanded Medicaid, the number of enrollees has been larger than anticipated, and costs have been higher. Lower reimbursement rates have meant fewer doctors willing to take on Medicaid patients, limiting access and compromising outcomes for those receiving care through Medicaid. The General Assembly’s nonpartisan Fiscal Research staff estimates initial Medicaid expansion will cost about $300 million.
As a federal entitlement program, Medicaid obligations are paid first; before the first teacher or police officer. As those obligations increase, Medicaid costs will crowd out other general fund obligations.
The state’s Medicaid program has undergone significant reforms since 2011, cleaning up waste, making management changes that provide better budget predictability, and changing the model from fee for service to managed care. Before 2013, Medicaid cost overruns totaled almost $2 billion.
The General Assembly successfully reformed and restructured the program beginning in 2013, which allowed, among other things, a stable and predictable budget. From 2014 through 2018, $436 million was set aside in reserve accounts. This enabled the General Assembly to fund other parts of state government, such as five consecutive pay increases for teachers. The hope is a newly implemented managed care model will provide better care with better outcomes for Medicaid patients and lower costs for taxpayers. Money for implementation to the managed care model will be taken from the reserve accounts. The final costs and the results won’t be known for several years.
It has taken six years to bring meaningful reforms to N.C. Medicaid program. Lawmakers shouldn’t be anxious to turn it over to the folks who created so many of the problems. Despite significant improvements, Medicaid remains vulnerable, but many state lawmakers and Cooper are advocating adding 500,000 new people to the rolls. Eighty two percent of those in the proposed expansion population are able-bodied, working age, childless adults — a far cry from the vulnerable high-risk population for which Medicaid was designed in the Social Security Amendments of 1965.
The better solution for those in the “insurance gap” would be a job in which they could receive health insurance through their employer or individually through an insurance market that offered a variety of policies at affordable costs that best met individual needs. North Carolina would be better to spend that $300 million — likely more — estimated for Medicaid expansion on workforce training programs, apprenticeships, and expanding skill development opportunities. Lawmakers would be wise to reform the insurance market to encourage competition and allow individuals to choose options that best meet their needs, rather than an insurance exchange ACA regulations offer.
A lot of people have made a lot of money under the current system. Pharmaceutical and insurance companies, big hospital conglomerates, and others will have to make concessions, but the future of health care rests in decisions made in 2019.
We are at a crossroads. The current health care system is unsustainable. Costs continue to escalate, access continues to be limited, and outcomes are deteriorating. It appears we have two choices: More government control, or more patient- and market-driven solutions. Medicaid expansion sets us on the path to more government control. First, it’s 500,000 more on the rolls. Next, it will be a statewide universal health care system for all, as was proposed in 2017 and carried a cost estimate of $101 billion — in the first year alone. If we choose to go that way, we need to be prepared to accept — and pay for — the health care government is willing to give us.
Friar Laurence has the best of intentions. But in William Shakespeare’s Romeo and Juliet, the friar’s well-intended interventions do not yield happy results.
Laurence’s initial good intention is to end the destructive conflict between two warring families. That’s why he agrees to marry Romeo and Juliet, though their romance is both sudden and perilous. Later, the friar recognizes their true love and gives Juliet a potion so she can fake her death and slip away to be reunited with Romeo. Neither scheme works. The unintended consequence of Laurence’s intervention is the death of star-crossed lovers.
When government actors translate their own good intentions into policy interventions, the consequences may not be so tragic. But all too often, they produce unintended and adverse consequence for many affected parties.
A famous example was the initial roll-out of child-safety caps for pharmaceuticals. The intention was to reduce incidence of accidental poisonings. And the new caps did so in many cases. But the intervention to frustrate the efforts of children to gain access to pills also frustrated the efforts of adults, especially seniors and those with disabilities, to open the containers. Some ended up leaving the caps off their medications altogether, which actually made it easier for kids to gain access and poison themselves.
For others, the regulation produced what scholar Kip Viscusi termed a “lulling effect.” Bringing home bottles with so-called childproof caps, these adults weren’t as careful in where they stored their meds. Their children noticed, got curious, and learned to manipulate the caps.
Other safety rules have produced a similar effect, a form of what is called “moral hazard.” In response to regulations requiring safety features on automobiles, for example, some motorists felt so reassured that they drove more recklessly.
Pointing out the unintended consequences of state action is not to argue against all efforts to combat harms through regulations or expenditures, of course. As a limited-government conservative, I recognize there are situations in which consumers have no practical way of discerning what risks they may bring on themselves — by purchasing food from a restaurant, for instance. Can we watch it being prepared? Can we be reasonably certain that the stomach ache we got was the result what we ate for dinner, what we ate for lunch, or something else entirely?
The gap between intentions and consequences is nothing more than a reflection of our human nature. We are risk-calculators. But we are not computers. Instead of performing flawless calculations based on carefully curated data, we rely on traditions, rules of thumb, social cues, and time-saving assumptions.
These decision rules actually serve as well most of the time. When they don’t, the intervention of others can certainly help us make better choices. Depending on the context, however, such an intervention can also distract us, remove a self-protective incentive, or provoke a self-destructive backlash (human beings are social creatures, yes, but that doesn’t mean we automatically welcome being told what to do or treated as children).
Consider what happened when 11 states responded to the Great Recession by restricting employer access to the credit reports of prospective employees. Many of those who had lost jobs got behind on their mortgage payments or other debts. State lawmakers argued that to allow employers to request credit reports constituted “kicking people when they were down.”
As a team of three economists found in a recent study of the policy, however, the real-world effects deviated significantly from the stated intention. Forbidden from using the data to distinguish between applicants and thus reduce the risk of a problematic hire, some employers simply cut back on new hires, particularly in communities with a disproportionate number of economically fragile residents with subprime mortgages. Indeed, delinquency rates for subprime loans rose in states where credit-check bans were enforced.
While Left and Right may differ on when government should intervene, we may at least agree that nudging is better than shoving, and that regulations that enhance information are likely superior to those that suppress it.
Longtime fans of pro basketball remember the “Jordan rules.” The term described a strategy designed to limit the game’s most powerful player.
Now N.C. legislators have an opportunity to enact their own “Jordan rules.” In this case, the goal would be to harness the state’s most powerful legislators.
Basketball’s Jordan rules took their name from Michael Jordan, the Wilmington star who earned national player of the year honors at UNC-Chapel Hill before turning pro. Jordan then led the Chicago Bulls to six National Basketball Association championships in the 1990s.
As Jordan began to dominate the pro game, opponents searched for ways to contain him. The rival Detroit Pistons devised a physically tough style that took on the name the “Jordan rules.” That term even ended up as the title of a book about the Bulls’ 1990-91 championship season.
Unlike the Pistons, state legislators wouldn’t need to slap, push, poke, punch, or trip anyone to enact their own Jordan rules. Instead they could listen to another Tar Heel named Jordan. That’s Jonathan Jordan. He left the N.C. House of Representatives at the end of the year after losing his re-election bid. Jordan, a Republican, had represented Watauga and Ashe counties for four terms in Raleigh.
In a profile piece that ran in the Ashe Post and Times shortly before he left office, Jordan pointed to one particular low point from his legislative career.
“Something Jordan said still bothers him to look back on is a bill that infamously became known as the motorcycle abortion bill of 2013,” the newspaper reported. “‘I was co-chairing the judiciary committee, and we had a bill on our committee about motorcycle safety, regarding helmet safety,’ Jordan said. ‘Well, at some point during that session, the speaker [of the House] and one of our very senior members who was running the bill came to us about the abortion-rights bill — a controversial issue.’”
A legislator who “runs” a bill is overseeing its progress. He shepherds the bill through committees and works to ensure it has enough votes to clear his legislative chamber.
“‘They got to my co-chair about putting that [abortion] bill into our committee that day,’” the newspaper account continues. “‘Well, that’s pretty quick notice for a bill,’ Jordan said. ‘The worst part was that they needed a bill to put it in, because we were past the bill-filing deadline, so they wanted to add it in with the motorcycle safety bill — I think they just put it in there with it.’”
Then Jordan explained why the incident “still bothers him.”
“‘It became known as the motorcycle abortion bill. I saw some of the best political cartoons about that,’ Jordan said. ‘That was a mistake; we didn’t know enough at that time, but we should have said to the speaker, “No sir, we’re not doing that.”’”
While a single bill targeting rules for abortion and motorcycle helmets proved unusual, it has not been uncommon for legislative leaders in both parties to make other questionable combinations over the years.
The situation arises when powerful lawmakers want quick action on a bill. It’s most likely to happen when an issue surfaces relatively late in a legislative session. Especially when the issue crops up after the General Assembly’s self-imposed bill-filing deadline.
The deadline applies to rank-and-file legislators. For the most powerful, the rules prove less restrictive. They hold the power to gut an existing bill and replace its contents with their own ideas.
These unusual two-headed bills still need to win votes from a majority of both the House and Senate to become law. In most cases, they need to survive scrutiny from the governor’s office as well.
But the process evades legislative transparency.
Unless you’re a lobbyist or activist paying close attention to legislative business, it’s difficult to track a bill. Is it in the state House? The Senate? A committee? Which committee? What if multiple bills target the same topic?
The situation doesn’t get any easier when a bill that interests you is advertised as dealing with a completely different issue. Want to find the latest bill addressing bicycle safety? Look for the one that says it’s about designating a new state chipmunk. (Yes, I’m joking. But that’s the type of sleuthing an observer might face during a legislative session’s closing days.)
There’s no reason to preserve the status quo. Members of the House and Senate can take steps to block their leaders from creating another “motorcycle abortion bill” in the future. They could craft official legislative rules that end the so-called “gut-and-amend” tactic. It generates confusion and criticism.
Without formal action, rank-and-file legislators still could say, “No, sir. We’re not doing that.” If they take that course, the N.C. General Assembly would have its own Jordan rules.
Mitch Kokai is senior political analyst for the John Locke Foundation.
I am a fiscal conservative. I recognize that government at all levels has important tasks to do, tasks that make us all better off if done at a reasonable cost. I think the list of such defensible tasks is necessarily short, however, for both constitutional and practical reasons, and that American government as a whole has expanded far beyond its proper scope.
Therefore, my fellow conservatives and I consider it to be a high priority for policymakers to reduce the size of government. We typically measure progress toward our goal by looking at government expenditure as a share of the overall economy.
Is it realistic to expect that proportion to fall over time? Some say no, including some conservatives who would welcome smaller government but simply don’t think it is politically possible in today’s world.
There are reasons for skepticism, to be sure. Once a spending program develops a political constituency — made up of those who either receive direct payouts or who derive income from delivering government services to others — it can be exceedingly difficult to reduce or eliminate funding in the future. Those beneficiaries are a discrete group with strong incentives to know what they are getting and to protect their stream of income.
The taxpayers who foot the bill may be more numerous, but in a legislative context that’s not necessarily a plus. While the total cost of the program may be large, the cost per taxpayer isn’t. Lacking personal financial incentives to work against the expenditure, or to join an interest group to do so, taxpayers get out-lobbied. It’s a problem of “concentrated benefits and dispersed costs,” as scholars of public-choice economics put it.
This kind of collective-action problem in government finance is challenging, to say the least. But it should not lead to undue pessimism if you are fiscally conservative. In the real world, government doesn’t always get bigger. In recent years, in a number of places, it has actually shrunk.
One of them is our own state of North Carolina. I recently compared the state’s General Fund operating budgets to gross domestic product for every year since 1997. After bouncing around within a fairly narrow band, the proportion surged right before the onset of the Great Recession in 2008-09, then snapped back. From 2010 to 2017, it went down by 9 percent and is now at its lowest level in at least two decades. According to a broader measure that includes local as well as state spending, the relative size of government has declined in most states since 2010, but North Carolina’s decline has exceeded the national and regional averages.
Because we are talking about a fraction, both the numerator and the denominator are explanatory factors. Fiscal discipline as practiced by the Republican-led General Assembly has certainly played a role. So has growth in the denominator, North Carolina’s economy.
Setting aside partisan differences, which are quite real in state and local fiscal policy at least, constitutional limits and other institutional safeguards can deliver victories for taxpayers against powerful spending lobbies. For example, states and localities are more fiscally responsible than Washington because most of the former have balanced-budget requirements and limitations on the issuance of government debt, while some offer additional tools to executives such as item-reduction vetoes to disrupt “logrolling” deals that expand budgets.
Pessimists who think government can’t be shrunk must also confront evidence to the contrary from recent international experience. For a recent Regulation magazine article, Southern Methodist University professor Ryan Murphy examined government spending in 24 industrialized countries from 1980 to 2015. “The idea that government spending cannot ever be reduced is not supported by the analysis,” Murphy wrote, as the results differed substantially by country and spending category.
With regard to the size of government, as with any other political dispute, no victory is permanent. Perhaps North Carolina’s future leaders will try to go on a spending spree. I will do my part to stop them, comforted by the knowledge that they aren’t destined to prevail.
I made a presentation recently to a community GOP club, a group of kind people who were smart, engaged, and curious. Much like many of the other groups I speak to and with.
Most recently, I spoke about the N.C. Alcoholic Beverage Control Commission and how it keeps a stranglehold on the production, sale, distribution, and enforcement aspects of all spirits coming in and out of North Carolina.
It’s not so easy to explain, as the laws, rules, and codes date to Prohibition. It’s much like peeling the layers of a rotting onion.
Generally speaking, I’m always struck by how little people really know about the history and machinations of the N.C. ABC system. But how would they? And it’s just the way things are, right?
I grew up in Pennsylvania, where, outside visiting a bar, the only place to buy beer was from a distributor. By the case. No six-packs, no singles. Things have changed some, but the Keystone State, when it comes to all sorts of alcohol, isn’t a place one might call consumer-friendly.
It was just the way things were. Or, in many respects, are.
If they choose to buy spirits, people who move to North Carolina from the North or Midwest soon become familiar with the state’s ABC system. They get used to it and may even become friendly with the clerks and managers.
But none of this absolves the system from a blind commitment to its Prohibition-era, heavy-handed rules. There are better, more market- and consumer-friendly ways to sell liquor, which dozens of other states have shown through privatization and even centralized governance, as opposed to 168 independent boards.
Someone recently asked me why North Carolina keeps an interminable death-grip on an archaic system that’s more about control than commerce, more about dumping money into state and local coffers than into the hands of entrepreneurs and innovators.
It’s difficult to provide a clear answer, but a couple of factors are at play here.
Primarily, it’s about control. The N.C. ABC system has been in place since 1938 — some five years after federal repeal of Prohibition — and only incremental changes have since been made. That state’s local control boards and the nonsensical system in which they operate are inherently political and absolutely entrenched. These boards, which respectively operate the state’s ABC stores, transfer millions of dollars each year to county and municipal governments throughout the state.
Overall, the N.C. ABC boasts in its annual report, fiscal 2018 marked the third consecutive record-setting year for “ten-digit sales.” The billion dollars in revenue, the report says, resulted in a all-time high transfer of money to the General Assembly, which funded state departments and agencies, as well as UNC System universities such as UNC-Pembroke and Western Carolina University.
Does anyone else see a disconnect here?
The state, as evidenced by the ABC system, believes it’s a better steward of people’s money than private businesses and local entrepreneurs, who, should the state go private, would replace that “lost” revenue through property taxes, jobs, and ancillary investments.
The biggest obstacle I see in reforming this antiquated system is — and this may sound harsh — the absence of an informed public, who, generally speaking, have just a superficial knowledge of how the system works and exactly who profits from it.
People just don’t know that each boards operates as an independent fiefdom, that distillers winning their approval sometimes have to circumvent and quell old feuds and prejudices. That getting into ABC means local products are relegated to “N.C. Products” shelves, oftentimes near the back of stores. That ABC rules make it increasingly more difficult for small distillers to prosper and grow.
That all spirits are sent to Raleigh and shipped from there, regardless of whether there’s an ABC store just blocks from the producers. That distillers can sell just five bottles per customer, per year, that they can’t make visitors mixed drinks, and that customers at ABC stores can’t possibly sample a product for which, considering taxes, the state has priced at $40 or more. Distillers can’t ship products directly to buyers. The list goes on; brewers and vintners, though on a separate legislative plane, are hampered by the ABC, too.
Many N.C. distillers are proponents of the state ABC, and each has her or his own reasons. Thing is, though, they have a better understanding of system intricacies than do most customers, and they make concessions and take advantage based on that knowledge. Many ABC store workers and managers are great people, who know their inventory and make extraordinary efforts to satisfy customers. But that doesn’t apply to all, and these ABC workers have no real incentive to do better. Why would they? It’s not their business.
North Carolina is one of 17 remaining alcohol control states in the country, and it’s also one of the most restrictive.
Consumer choice is, at best, limited, and some products just aren’t available in North Carolina, regardless of how much someone is willing to pay for them. I’ve seen some alleged whiskey aficionados respond to that with a shrug, then say they know a store in South Carolina, or that a store manager in Virginia, also a control state, can order a single bottle should they just ask for one.
The N.C. ABC system has serious issues requiring immediate and aggressive legislative action. Trying to explain why lawmakers won’t move to make sensible reforms is, well, getting kinda old.
Alexandria Ocasio-Cortez deserves a big “Thank you.” In calling for top marginal tax rates of 70 percent, the freshman U.S. representative from New York is attracting attention to often-neglected issues linked to federal tax policy.
To be clear, this column is not endorsing Ocasio-Cortez’s proposal. A near doubling of the current top tax rate would be unwise.
Still, Ocasio-Cortez’s high profile — especially among younger voters — means that at least some AOC fans might be willing to devote time to learning facts about tax rates. Those who look into the topic might be surprised at what they learn.
Permitted since the adoption of the U.S. Constitution’s 16th Amendment, the modern federal income tax started in 1913 with a rate of 7 percent. Its top marginal rate reached as high as 94 percent during World War II. The top rate stood at 91 percent as recently as 1963. It didn’t dip below Ocasio-Cortez’s 70 percent standard until 1981.
Ronald Reagan entered the White House that same year and began a concerted campaign to lower tax rates across the board, including the top marginal rate. (Reagan’s jump from the Democratic Party to the Republicans had stemmed, in large part, from his own experience with high marginal tax rates. At the peak of his movie-star career, the Gipper had experienced firsthand the disincentives linked to sky-high rates. If he could keep less than a dime of each dollar he earned beyond a certain income threshold, why bother working on another movie?)
By the time Reagan left office, the top marginal rate stood at a postwar low of 28 percent. Rates have climbed since that time. The top rate has fluctuated between 35 percent and roughly 40 percent for the last quarter century.
Ocasio-Cortez and her supporters point to the pre-Reagan historical record. They see that the American economy thrived at times when tax rates topped out at 70 percent or higher. They are correct.
But as economist Milton Ezrati noted this month in New York’s City Journal, those higher rates accompanied a much different federal tax code. Deductions and exemptions “drastically reduced” the amount of income subject to the higher rates. Tax cuts enacted since the Reagan era have closed most of those “loopholes.”
“Taxpayers could write off all state and local taxes, with no limit — including sales taxes, licensing fees, property taxes, and income taxes,” Ezrati reminds us of the era of 70 percent top marginal rates. “They could also write off all interest expenses without limit — on their mortgages (no matter how many), all credit-card debt, auto loans, or home-improvement loans. Imagine the benefits to a plutocrat, buying a third home or a fifth Bentley.”
That’s not all. “The code included dividend exclusions and generous provisions for capital-gains preferences,” Ezrati adds. “Taxpayers back then could shelter unlimited amounts in IRAs. Social Security payouts were tax-free, no matter how high a person’s income. Individuals could write down their taxable income through averaging provisions and transfer as much income as they liked to their children, who paid at lower rates. There was no limit to rental-loss deduction. Business losses counted against all income.”
The end result: Few people paid 70 percent rates on any income. Ezrati cites a Tax Foundation estimate that the top 1 percent of taxpayers in the 1950s ended up paying an average effective tax rate of 17 percent. That was despite a top rate that hit 92 percent.
“If our highest earners today were offered the 2019 code or the old one, they might well go for the old rules, even at a 92 percent top rate,” Ezrati concludes.
The old rules might benefit those high earners, but it’s hard to argue that the increased complexity in the tax code would benefit the economy as a whole. Tax reformers argue fairly consistently for “neutrality and simplicity.” That means eliminating special credits and deductions that complicate the tax code and skew taxpayers’ economic decisions.
One suspects that Ocasio-Cortez has no interest in restoring the old special breaks and deals that helped high earners avoid much of the tax burden a 70 percent rate would imply. Instead she is likely to support higher rates alongside the current number — or even fewer — credits and deductions.
If that’s true, one can expect high earners to follow one of several courses in the face of a new sky-high tax bracket. First, they might emulate the moviemaking Reagan and simply curtail their income-generating activity. If they can’t keep more than 30 cents of every dollar they earn, they’ll have less incentive to earn that additional dollar. That means less economic activity overall and a hit to American economic growth.
Second, they might steer more of their earnings toward tax accountants and lawyers who will help them game the system. These are the very taxpayers who will be able to afford that type of specialized tax expertise. Money spent for tax-saving purposes won’t go into savings and investment that boost economic growth.
Third, high earners will hire lobbyists to help them win targeted tax relief from Congress. The higher the top marginal tax rate, the larger the incentive for prospective payers to seek a deal from Washington bureaucrats and elected officials. New breaks would undo many of the reforms that helped improve the American tax code over the past four decades.
It’s doubtful that Ocasio-Cortez has spent much time considering these potential consequences. One hopes at least some of her followers will dedicate more attention to these critical details.
Mitch Kokai is senior political analyst for the John Locke Foundation.
I have written a syndicated column on politics and public policy for North Carolina newspapers since 1986. Have I influenced how readers think about the issues I discuss? I certainly hope so, at least to some extent.
But there are plenty of smart people, scholars of public opinion and political behavior, who question whether editorials, columns, and op-eds matter. Some argue that political attitudes are so deeply felt, so bound up with partisan affiliation and personal experience, that they rarely change in response to what people read. This is especially true, the argument goes, for the political insiders who wield a disproportionate influence on policy outcomes.
Other skeptics argue something like the reverse: that what may look like fixed ideological attitudes are nothing more than fleeting symbols of group affinity, blind allegiance to a charismatic leader, or how poll questions are worded. To the extent opinion writing changes minds, it rarely sticks. It doesn’t transform thoughts or actions in the long run, they contend.
As with most questions of human behavior, the evidence here is mixed. Partisan preference (as distinct from party membership) is a powerful force that limits how much people are willing to stray from their team’s consensus. Lots of people do “follow the crowd” when it comes to political attitudes, conforming their views on issues beyond their personal experience to those of their leaders or groups.
But there is also good evidence for the proposition that ideas matter — that powerful messages conveyed in compelling ways can change the course of political debates, movements, and elections. For example, the bitter conflicts of the 20th century between rival totalitarian ideologies are difficult to explain without recourse to ideas. Millions of people were willing to fight and die for causes that originated in the written word of persuasive madmen such as Marx, Lenin, Mussolini, and Hitler.
It works for benign ideas, too, and for philosophical conflicts with less at stake. A fascinating study published last year in the Quarterly Journal of Political Science used online surveys to gauge the political views of respondents before and after they read op-eds published in The New York Times, The Wall Street Journal, USA Today, and Newsweek. In samples of both general readers and political “elites,” those who read an op-ed became more favorably disposed to its thesis than those who did not, although the effect was weaker for political insiders (as might be expected).
Using reasonable estimates of the number of readers exposed to these op-eds in the “real world,” rather than within the confines of the study, the authors calculated the cost-per-mind-changed ranged from 50 cents to three dollars — which compares favorably with other means of political communication such as buying ads or staging events.
Even if the skeptics are right to cast doubt on the persuasion effect, opinion pieces can serve other rhetorical goals. If the writer is a trusted political or intellectual leader, readers may shift their views based on the byline rather than the content. A strongly argued op-ed may also convince political actors who disagree with the writer that they might lose the debate, pushing them towards compromise.
I have loved newspapers ever since I started reading them in the 1970s. I believe in their continued relevance as a critical source of news, analysis, and commentary, whether readers encounter them in print or online. I have considered it a privilege to write a regular column for North Carolina papers, and to contribute occasionally to national ones. And I consider it an opportunity not just to express myself but to inform, challenge, provoke, and, yes, persuade readers to see things as I do.
It’s a two-way street, of course. While my core philosophy has remained the same for more than three decades, my views have shifted on some issues in response to writing, responding to critics, and reading editorial content from other writers.
Today, I had a more limited goal: to persuade you to keep reading editorial pages and opinion sections. Did I succeed?