Friday, March 05, 2010

Mrs. S writes 

For the past few months, I�ve been looking for a job. It�s a long, arduous process, and sometimes I wonder what it would take for someone to hire me. They would have to pay me a salary, Social Security, unemployment insurance and perhaps health coverage and retirement benefits.

Where do they get this money? Because I can make them more profitable, or at least support them in their efforts to become more profitable. And if I can�t do that, no employer would hire me unless they wanted to lose money.

I�m not alone. About 6.3 million Americans have been unemployed for more than six months, up from 2.7 million a year ago. There�s talk of another jobs stimulus bill. But if government creates jobs for me, it needs to pay those things. Where does it get the money to do this?
That's the start of her column today, which may have gotten more notice than the news report on last night's Economic Outlook. Good for her. I don't think it's just because she's married to an economist that she thinks her job prospects depend on potential employers making a profit.

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Friday, February 19, 2010

Bait and kick down the road 

The Pew Center for the States reports a $1 trillion shortfall for state and local government employees' retirement benefits. (h/t: Arnold Kling.) One source of that shortfall here locally has been the presence of health benefit guarantees for retired teachers and administrators. The state of Minnesota gave permission to school districts with such unfunded liabilities to mark up property taxes to pay the benefits, and our local school district did so. Now, they want to divert that money to pay teachers current salaries.
School board members are expected to consider the budget recommendation Thursday. The 2010-2011 budget does not have to be approved until June 30, but staff needs to know how the board wants to deal with the expected shortfall before completing the budget.

Administrators considered layoffs, savings in health insurance and the elimination of a work day before settling on the use of the reserve and tax dollars, Superintendent Steve Jordahl said.

�We have said from the very beginning we would not cut staff. That is not an option for us. We said we wanted to protect, in this economy, our staff members,� Jordahl said.
Mr. Jordahl is a young man, and perhaps he has not had experience with down budgets before. But how much of his budget comes from payroll? What his statement means is "we are declaring more than 75% of our budget off-limits to cuts." Rather than cut one dollar from anyone's pay, or cut one job, the district chooses to kick its unfunded retirement benefits problem down the road ... after having raised taxes explicitly to solve the problem.

Add to this the loss of $250,000 for failing to settle contracts by a state-mandated deadline -- which combined with the Superintendent's statement means the teachers have no incentive to settle -- and you have another governmental unit treating the incomes of their constituents like a cookie jar.

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Friday, February 12, 2010

Media alert 

I will be on Jay Caldwell's show on WJON around 10:15 this morning, to talk about the economy, locally and (sometimes) nationally.

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Tuesday, February 09, 2010

Don't look at my garbage, man 

Writing about the now-overexposed Green Police Super Bowl ad, Prof. John Palmer of Western Ontario observes:
The ad hit pretty close to home. In our community, we are now required to use clear garbage bags so the garbage collectors can examine our garbage to make sure we are recycling instead of just dumping recyclables into the garbage. (But let me add that I have not heard of a single instance where a curbside garbage collector has actually looked at a garbage bag and rejected it because it contained recyclables. There's a pretty serious principal-agent problem here since the garbage collectors are competitive profit-oriented private businesses who have an incentive to keep us happy and collect whatever we put out.)
Why would governments not understand this incentive incompatibility? John notes that his local government has already given up the ability to inspect "personal garbage" (let your mind wander, I can wait. ... OK) and (this is the best part) people have cut so much back on putting out garbage that the contractor is losing money.

Here in St. Cloud, we pay $2/bag at local grocery stores for bags picked up by the city. The price of the bags has not changed since introducing the bags about 15 years ago. They are opaque. They're stamped City of St. Cloud and are stamped with an instruction not to place more than 25 pounds in the bag. Want those bags lighter? I think John has a plan for us.

(The city sells clear yard waste bags for $1/bag. Those ARE inspected.)

I should note that I posted that I liked the ad on Twitter, and I got many comments about its creepiness. I just thought it was funny.

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Friday, February 05, 2010

Mrs. S writes "created or saved too ambiguous" 

She writes about a place I call "Obama Road".
According to Stephen Gaetz, director of public services for St. Cloud, it is hard to answer questions about Pinecone jobs without an operational definition of �job,� especially as it concerns the seasonal nature of the construction industry.

Gaetz reported 162 workers worked �from a few hours to several weeks� for a total of 4,528 hours. That comes out to about 28 hours per worker. One can say this is good, but it�s not even close to 162 full-time jobs � 40 hours a week year-round.

Construction jobs are certainly not like all other jobs, but the administration simply uses the vague word �jobs,� blending them with other kinds of work. Overall, it�s a mistake to use an undefined term like �jobs� as a metric to measure the stimulus. It�s too ambiguous.

...without a workable definition of �job,� it is hard to unravel the question of �created� or �retained.�

I also wrote to Kristen Morrell from the Minnesota Department of Employment and Economic Development. She wrote that the money �was used to augment existing programs that help people who are unemployed and looking for work.�

She cited a public works program for water projects called the Public Facilities Authority that used $107 million and �created or retained 178 construction jobs.� For how long did those jobs last? Projects take six months to two years, she answered. Not all of the 178 workers work that long.
I'm proud of Barbara's efforts to get actual data to look at, and I for one thank Mr. Gaetz for straight answers.

To answer at least one critic in the comments on her article -- it would be a straightforward, honest answer for the Administration to say "we used $1.6 million to spread 4,528 hours of paid work over 162 people." When you say "we saved or created 162 jobs", (or 80, if I'm reading the report from right -- that's a problem) you imply that is a permanent job, not a drive-by job for a day or a week. That's the ambiguity.

There is also the question of whether the project provides some value to the area. Part of the problem I thought about for this road is that it largely lies in one community (St. Cloud) but serves another (Sartell.) If you just grant money to St. Cloud they might want to use it somewhere else of greater benefit to their own population. St. Cloud is a destination for Sartell much more than the reverse flow, I am assuming. So it may be that a higher level of government (county, state or national) solves a coordination issue. That's not the stated goal of the money, though -- the metric we get is only "jobs saved or created."

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Wednesday, January 27, 2010

What are ya in for, kid? 

And I, I walked over to the, to the bench there, and there is, Group W's where they put you if you may not be moral enough to join the army after committing your special crime, and there was all kinds of mean nasty ugly looking people on the bench there. Mother rapers. Father stabbers. Father rapers! Father rapers sitting right there on the bench next to me! And they was mean and nasty and ugly and horrible crime-type guys sitting on the bench next to me. And the meanest, ugliest, nastiest one, the meanest father raper of them all, was coming over to me and he was mean 'n' ugly 'n' nasty 'n' horrible and all kind of things and he sat down next to me and said, "Kid, whad'ya get?" I said, "I didn't get nothing, I had to pay $50 and pick up the garbage." He said, "What were you arrested for, kid?" And I said, "Littering." And they all moved away from me on the bench there, and the hairy eyeball and all kinds of mean nasty things, till I said, "And creating a nuisance." And they all came back, shook my hand, and we had a great time on the bench, talkin about crime, mother stabbing, father raping, all kinds of groovy things that we was talking about on the bench.
We come to find out that the city of St. Cloud is going to charge the fellow who put up the stupid posters. What is his crime?

A Waite Park man who posted anti-Muslim cartoons in several St. Cloud locations has been cited with violating a city ordinance that prohibits posting materials on fixtures.

Each of the two civil charges carry a maximum fine of $250.
This ordinance has kept St. Cloud safe from garage sale announcements and lost dog notices for many years now. Along with more than a few bits of graphic art including pictures of Abu Ghraib. (This one was on a junction box near North Junior High where I often take cigars for a walk.)

The thirst for justice has not been slaked:
Many speakers questioned local authorities' response to the incident, and asked why the man who has admitted to posting the cartoons doesn't face criminal charges. Others criticized city leaders for not doing enough to combat long-standing discrimination against Muslims and people of color.

Lam told city leaders she's been to plenty of "kumbaya meetings" about discrimination. This time, Lam wanted to know what will happen next.

"I've been here for four years, and I'm scared of this city," Lam said. "What are you going to do to show that you are going to protect all citizens of St. Cloud?"
In times of trouble, I often turn to Arlo Guthrie:
And everything was fine, we was smoking cigarettes and all kinds of things, until the Sergeant came over, had some paper in his hand, held it up and said.

"Kids, this-piece-of-paper's-got-47-words-37-sentences-58-words-we-wanna-know-details-of-the-crime-time-of-the-crime-and-any-other-kind-of-thing-
officer's-name-and-any-other-kind-of-thing-you-gotta-say", and talked for forty-five minutes and nobody understood a word that he said, but we had fun filling out the forms and playing with the pencils on the bench there, and I filled out the massacre with the four part harmony, and wrote it down there, just like it was, and everything was fine and I put down the pencil, and I turned over the piece of paper, and there, there on the other side, in the middle of the other side, away from everything else on the other side, in parentheses, capital letters, quotated, read the following words:

Were the scribbler at the open house last night -- hosted by the Council on American-Islamic Relations, a group with an excellent track record on free speech -- he might have gotten that form.

The city is trying to have it both ways. It recognizes that the poster, hateful and disgusting as it is, is nevertheless free speech protected by the First Amendment. The city attorney says criminal charges "wouldn't hold up in court." So rather than that, he uses a selectively-enforced ordinance against that person, and names the person in public. Will his picture next appear on those electronic billboards alongside the child molesters? How big a target does the city wish to paint on this person?

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Monday, January 25, 2010

"Neither conservatives nor liberals as a whole are racist" 

Thus speaks Eric Austin, writing about a post by Leo Pusateri. And of course this is true. Leo's post tries to take the concept of welfare dependency (I hear strains of Daniel Moynihan in Leo's hypothesis) and say that those who support broader social spending encouraging dependency are holding back minority families and children. Even if so, that cannot be attributed necessarily to a racial impetus. (This essay by Larry Dewitt seems to help fill in the history for those unaware.)

I appreciate Eric's distinction between what one says and what one is when it comes to race. I also think Leo's point is clear -- that despite one's noble intentions, the effect of one's policy prescriptions can be to harm those you wish to help. But Leo seemed to bend that further than the point is meant to go.


Thursday, January 21, 2010

Minnesota job loss 3% for 2009 

Data released this morning by DEED indicates we've lost 80,800 jobs in Minnesota in 2009. Job loss was 4,100 for December, along with a downward revision in November to a -1,500 from a +3,000.
�December�s results are consistent with the ebb and flow of a recovering economy. We expected the pace of recovery would be slow, although generally the Minnesota economy is on the mend and should continue to improve in the coming months,� DEED Commissioner Dan McElroy said.

...In the state Metropolitan Statistical Areas, over-the-year job losses occurred in the Duluth-Superior MSA (down 3.4 percent), St. Cloud MSA (down 3.1 percent), Minneapolis-St. Paul MSA (down 2.7 percent) and Rochester MSA (down 0.5 percent).
The decline in St. Cloud for the 12 months to Novmeber 2009 was 3.6%, so the rate of decline is slowing, but at a job loss of 3,100 it is still the largest yearly decline in St. Cloud since we started tracking the data in 1988.

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Tuesday, January 19, 2010

Media alert 

St. Cloud, MN, January 2010: - Three prominent local economists will speak at the St. Cloud Public Library on Wednesday, Jan. 20, 7:00 � 8:30 p.m., about �St. Cloud�s Economy: Past, Present and Future.� The meeting is open to the public and will take place in the library�s Bremer Community Room.

The presenters are King Banaian, Ph.D., professor and chairman of the Department of Economics at St. Cloud State University; Louis Johnston, Ph.D., associate professor of economics at the College of St. Benedict and St. John�s University; and Rich MacDonald, Ph.D., assistant director of the Center for Economic Education at St. Cloud State University.

Their presentation will describe the economy of the St. Cloud area, including a brief history, a description of the economy�s performance in 2009, and thoughts on how the economy is likely to fare in the future.

For more information about programming at Great River Regional Library, visit the library�s Events page at, or contact the library at 320-650-2500.

I draw "present" out of that list of three. Johnston, an excellent economic historian as well as macroeconomist, does "past" and MacDonald will do "future". It's not the biggest of rooms, so if you want a seat come early.

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Thursday, December 31, 2009

New QBR is up 

Here's the short summary of our latest report:
Despite continued weakness in the regional labor market, St. Cloud-area firms are finally beginning to expect an improved future economic outlook. While it is still too early to declare that the local recession has ended, this improved outlook does suggest that 2010 will be a year of recovery and expansion for area firms.

The area economy appears to be following the path of national economic activity. A large majority of economists agree that the national economy emerged from recession at some point in the second half of 2009. While national labor market conditions remain weak, U.S. production, income and sales data indicate a national recovery has begun. While the lags on the availability of data on local income, sales and output are long, the results of this quarter�s St. Cloud Area Business Outlook Survey provide some evidence that area firms will begin to enjoy this recovery by the middle of 2010. For example, the outlook for future business activity is the highest it has been in the fall survey since fall 2006.

Local labor market conditions remain weak. St. Cloud employment declined by 3.4 percent over the year ending October 2009 as only the leisure and hospitality
sector experienced employment growth over this period. The St. Cloud Index of Leading Economic Indicators continued to slide, though at a slower rate. The latest reading of the Probability of Recession Index predicts that it is 73 percent likely the local economy will be in recession in February to April 2010.

Thirty-four percent of surveyed firms report an increase in economic activity over the past three months, while 25 percent report a decrease. This is a large improvement over the survey from one year ago...
Full report available from here.

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Tuesday, December 01, 2009

Media reminder 

I will be hosting the KNSI Morning Show the rest of this week. Please listen in. It is not the format of the old Final Word or the new King Banaian Show: early morning radio in markets like St. Cloud have many ads for local firms, news and sports and weather every 30 minutes, etc. But we sneak a little fun in from time to time, and even a quick point about current events. I hope you'll tune in.

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Monday, November 23, 2009

Deepening production vs ramping up production 

I think Arnold Kling is onto something here:
If everyone scans the headlines and sees "Great Depression," that could very well cause a drop in consumption. And if everyone scans the headlines and sees "recovery," they might spend more.

We could also observe herd behavior among producers. I have been talking a lot about Garett Jones' remark that today's work force produces organizational capital rather than widgets. It is time to elaborate on this notion.
After a long comparison of information-based businesses versus manufacturing, he concludes:
Thus, my experience fits very well with the notion that workers are needed in order to build organizational capital. In today's economy, the organizational capital often is embodied in a computer system of some kind. Those systems depreciate very rapidly, because of technological innovation and the evolution of business demands.

Other forms of organizational capital are embodied in human capital. For example, an airline needs to have an effective program for training its employees and for ensuring the quality of their work. If your flight attendants are surly, some of your customers will switch to a different airline next time.

The macroeconomic significance of all this is that the choice of when to invest in organizational capital is discretionary. If you read a bunch of headlines that say "economic downturn," you can cut back your labor force to just the number of people needed to keep today's business operating. If you read a bunch of headlines that say "recovery," you may become inclined to invest in projects that make your business more complex or more competitive.
The Quarterly Business Report we do at SCSU for central Minnesota includes a survey of local business leaders. We don't take a temperature of business confidence directly, but we can track their assessment of the national economy along with their own plans to expand payroll, wages to be paid and prices to be received, etc. I have long wanted to see if these data could be used somehow in a confidence index. There is some evidence that business confidence is a turning point indicator (McNabb and Taylor [2002], Holmes and Silverstone [2007] ). There's also at least anecdotal evidence that reporting on economic news influences that confidence. (This is why President Obama probably shouldn't say "double dip recession" in public.) Indeed, Google Trends still averages ten times more for recession than economic recovery.

Herd behavior is probably more prevalent in smaller cities like ours than in larger ones. And even in a city as dependent on goods production as St. Cloud, more than 65% of all GDP comes out of the service sector.

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I don't understand newspapers 

According to the City Pages, the proper way to interview Congresswoman Bachmann is:
Q: Gov. Tim Pawlenty said on MSNBC that moderates need to fall in line with the conservative base of the Republican Party. Do you agree?
A: I think that he's accurate that ...
And they chastise as "pitching softballs" a newspaper that already declared "we've had enough" of Bachmann.

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Wednesday, November 18, 2009


Let Freedom Ring is five. Here's a comparison. When the internet first started its biggest use to me was for fantasy baseball. I've played with dozens of other enthusiasts since 1992, and a few of them have stuck as friends afterwards. I can count those on one hand. I stopped playing for one year in 2008, but went back to the one league where I knew and liked a couple of guys last year. My team was terrible, but it was nice to see them again.

I started blogging a little more than seven years ago. In that time I have befriended countless people, many of whom are now family friends. Few friendships have as high a place in my life as these, particularly those with NARN and with St. Cloud blogger Gary. Our homes are less than two miles apart yet it took the world wide web for us to meet.

Were it not for my blogging I wouldn't be in NARN, and were it not for LFR Gary and I would not have met; my life would be poorer without those friendships. It's one of many gifts this place gives you.

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They assume they know you 

While I was reading Eric's post, I came upon a title on that same site "Fear and Loathing in White Cloud." 'White Cloud' is a smear that people put on my fair city, and has been one I've heard pretty much since I moved here in 1984. At that time I was probably in the darkest 10% of the population here (unlike all you European descendants, my father's family is actually from the Caucasus.) Not to claim any minority status, but to say that I am aware of the whiteness of the place, particularly after moving here from Los Angeles.

Calling the place White Cloud has become in the last decade more than a joke about Stearns County residents, in-breeding, etc. It has become a cudgel taken up by race baiters, and the article linked contains the old saw about our town police picking up "too many minorities." What one should note about those studies is that they never correct for people of color who come from other countries (who might not have a firm grasp of the rules of American roads) or that minority groups might have a younger population, and younger people get stopped by police more than those over 50. The people who did the study said simply they didn't have the Census data.

The writer dredges up the swastika story, which we've covered here at length. The only person found to have drawn a swastika turned out not to be from this area, assuredly not Sherburne County, and is not white. That young man probably did not draw the others. We don't know who did, but the writer of this article assumes he does.

So instead this writer relies on a document of the Sherburne County GOP and a police report that someone burns a cross in Seberger Park on Halloween night. From this we get
Even though the 6th District is among the least diverse in the country and Sherburne County is the whitest county in that district, the GOP still uses the fear of forced integration and public access for everyone as a reason to fear Democrats. To them, patriotic principles are at odds with protecting the weak. Many of us were taught that America is a �melting pot,� but here in Sherburne County you�re either one of us or one of them.

...There is a stain on this part of the state. It�s ugly and real and always right under the surface of any political conversation. It�s played a big part in every election and yet it�s never come up in a debate or candidate interview.

Maybe it�s time it did.
Now for some reason we have to first assume that the only reason anyone burns a cross is because of racism. The fact that it's Halloween, or even Guy Fawkes Day, has nothing to do to change that inference in this writers world. (BTW, did you ever wonder where Jack O' Lanterns came from? I did too, now I know.) The SherCo list is a bit more problematic, but it was written in 2007 by someone unknown, and it took me some time to find it on their page (it's at the very bottom of their main page, in small font.) And let me again point out that very little of Sherburne County is in east St. Cloud.

The writer of this, a director of the 6th Congressional District DFL and a max-dollar contributor to 2008 Congressional candidate Bob Olson, has thus concluded that if you vote for the GOP you are a racist, no matter what you do. And it's a dirty secret in Minnesota, even though he uses a common slur for a city in central Minnesota, as well as the derogatory term "tea bagger". This dismissive arrogance of those with whom you disagree is even more galling given he does not live in St. Cloud.

But this won't matter to them, and no doubt my post will show up as fodder for more of their childish behavior. Remember this moment though: It's clear that the DFL in this district believes that its opponents are evil and probably racists. So when you put out your lawn signs, what's on them really doesn't matter. If you don't vote for their gal, they assume an awful lot about you.

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Friday, November 13, 2009

A thought on Clark 

A quick thought on our own Sen. Clark, who apparently has gotten herself engaged in a (relatively small) fracas over some comment she made to a left-wing blog. If you live in St. Cloud you often see her, sometimes with her husband, visiting with constituents. "Isn't she nice?" many will say to me. Yes, in fact, mostly she's nice to me to my face. (Gary has had a different experience; I have not.) But there does seem to be two Mrs. Clarks -- the one constituents and her own family see in St. Cloud, and the one her DFL family in St. Paul sees. I'm sitting in one of those places right now where she enjoys a bit of a rock star status sweeping through the coffee shop. But ask those people what she does in St. Paul and all you get is "she represents us." It's a vague answer.

I really don't think the St. Cloud observers know the St. Paul Clark, and I'm not sure they'd like what they saw if someone showed her to them. Some will certainly, the strong partisans and the bombthrowers and the tax consumers. But her ability to reach independent voters, particularly in the business community I know, would be damaged if she was seen as being as strident as her Daily Beast or Kos blog shows her to be. As of yet in St. Cloud, tax consumers are not the majority.

If the Bachmann campaign wanted to play hardball with Clark, it should show St. Cloud the St. Paul version. The Americorps comment is what football players call "bulletin board material."

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Thursday, October 22, 2009

It takes some doing to make me miss Northwest 

But Delta, congratulations! You've done it.
Delta Air Lines announced today that it is ending air service between St. Cloud and Minneapolis at the end of the year.

The company cited weak customer demand that has seen flights between the Twin Cities and St. Cloud at about 33 percent capacity during the past year.

Travelers who have Delta flights booked after Dec. 31 will get alternative transportation options or refunds, the company said in a news release. Delta will contact customers who provided full contact information with their reservation to arrange alternative transportation, the company said in the news release.
So investments made by the area to improve and expand this airport will now have to bring someone else to use this airport. C'mon Sun Country! I've always wanted to be a fan, and I even follow you on Twitter.

In a related story, Rep. Jim Oberstar promises stimulus dollars to extend the Lake Wobegon bike trail to Eagan. /sarc

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Wednesday, October 07, 2009

Media alerts 

I will be on WJON at 10:40 or so Central discussing the local economy.

Comments about the real estate market in the local paper here. (My real estate friends will be mad at me again.)

I am sitting in for Don Lyons tomorrow, 6-8am on KNSI.

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Monday, September 21, 2009

What motivates a newspaper? 

The local paper seemed to go on the offensive yesterday over complaints that their coverage of recent events has been a little meager and one-sided. Managing editor John Bodette argues that the paper focuses on local coverage. True, but the one case of local coverage he does give in the article is of the local tea party and town hall of Michele Bachmann. In that case, as I noted last week, they used one article to cover both events. They were not organized together and had little to do with each other except that Bachmann spoke at both (and, I guess I did too, though I said very little at either one.) The editorial page gave more space yesterday to a screed about the tea party than its reporter provided coverage.

All the other items were national items, which Bodette reports as having seen some coverage inside the paper. It's not as if national items never appear on page one, but if I ran a St. Cloud newspaper I would take the same attitude Bodette does: Local news is what will sell papers.

Then editorial page editor Randy Krebs decides to reveal something about his editing. The crux of his argument:
The teacher asked our class what the purpose of television was and the overwhelming response was �entertainment.� His tart reply: �Wrong! What you see as �entertainment� is merely something to show between the commercials there to get your money.�...

I will grant you that �objective news reporting� is a subjective term. That�s human nature. I also fully acknowledge that the business realities facing newsgathering entities can impact those efforts, especially these days. And by no means am I comparing broadcast to print media. (They are apples and oranges, but that�s another column � or a book.)

But to be blunt, the bulk of the complaints aren�t that sophisticated. They simply don�t seem to grasp that what they are watching or listening to is more about entertainment. In the words of my old teacher, �it�s there to keep you tuned in until the next commercial.�
So when you watch Fox News or MSNBC, they are giving you entertainment, not facts, and it's because of the almighty dollar. But what motivates the newspaper if not profit? This is after all a newspaper of the Gannett chain, one that prefers smaller papers where they dominate the advertising market. As ad revenues dropped the newspaper got smaller, and as it got smaller so did the amount of news provided.

Local sells, Bodette tells us, and TV and radio (and I'd assume blogs like this one) are motivated by something base like "getting eyeballs to commercials" while the newspapers are not. Yet the newspaper operates as a business; it hires and fires workers, including reporters, based on profit. It can and does shade its news (see here for more) but it will respond to incentives just like anyone else. Would the editors agree we should apply the same skepticism to print as we do to broadcast?

Profit is often not the only motive. Particularly when it comes to managers working for a distant ownership, other goals come in to play. One of those may be acceptance within your profession. Providing enough profit keeps the paychecks coming, but when given an opportunity you may choose to do things that keep you invited to the nice parties at the next journalism convention.

Krebs instructs us:
As the person at Times Media whose job hinges largely on people understanding �it�s the Opinion Page,� I simply ask you to be a little a more discerning, and perhaps honest.
Now remember, this is the newspaper that has said in its very same editorial page that "we've had enough" of Bachmann who "consistently invokes extremism."
This board has never been a supporter of Bachmann, but it was willing to treat her tactics and outlandish statements as errors in judgment and/or a need to get noticed. Sadly, we�ve had enough.

Two straight years of her consistently spewing misleading snippets about important issues yet never stepping beyond those statements to find realistic solutions make it clear she is all about extremism and cares nothing about crafting viable public policy.
I'd love to give you the whole column, but it appears to have gone down the memory hole in the Times' parlous web. No money in that, either, dontcha know!

So how about, when you do a report on Bachmann and you bury the tea party story after the jump and append it to the end of the town hall story, "you be a little more discerning, and perhaps honest" yourself.

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Thursday, September 10, 2009

Three "country economists" 

For those interested in the background of three of us who think about the local economy and macro generally in the St. Cloud area, Britt Johnsen of the St. Cloud Times has a feature on Rich MacDonald, Louis Johnston and me today. It made my morning Panera visit a bit more challenging.

One thing that you may notice: none of us went to college to be economists. I bounced through two pre-professional programs plus philosophy before landing on economics (I took the GMAT, LSAT and GRE in a six-week stretch.) The other thing I notice is we all went to liberal arts schools and had the traditional education of taking courses in areas you didn't know you were interested in. I wandered into economics as someone interested in pre-law (it's great for that) and got talked out of law by "Professor Kingsfield".

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The National Education Service 

Gerald Prante notices the comparison President Obama made last night in comparing the competitive advantage of public option health insurance to that of public universities.
Public colleges and universities not only rely on billions of dollars in government subsidies (which he says the public option would not receive), public colleges and universities do indeed crowd out private colleges, largely because of these subsidies. For a California resident, UC-Berkeley (probably the best public university in the nation) is indeed a lower-priced substitute for Harvard University. To say otherwise would show ignorance of basic economics.
But of course not every state has a Berkeley (and, I'd argue, there are other universities that are good substitutes for an Ivy, such as Virginia, Michigan, or North Carolina.) Those students go to Tier 3 or Tier 4 schools. They get less-good higher education. So will we equalize health care across the states? Will every state get a Mayo Clinic, with equal access?

And how will innovation occur? In higher education, even with the ubiquity of state universities, costs are enough that private concerns are competing and dwindling enrollments for public institutions at a time when we have fewer students graduating high school. There are demands for more. And so how do public schools respond?
The Education Department is making plans to create free, online courses for the nation's 1,200 community colleges � which teach nearly half of undergrads � to make it easier for students to learn basic skills for jobs. The courses would be offered as part of a "national skills college" managed by the department.
One of my lectures in public finance (when I taught it years ago) was that we could separate the public role in allocation to public provision of goods and services and financing of those goods and services. Trash collection can be public financed through taxes yet a private hauler hired to provide the service. Private prisons and defense armaments were other examples I used in class. But I have wondered aloud whether financing eventually leads to provision? Is the box where you have private provision, public financed goods stable, or is there a tendency to have those goods drift into the public-public box (in some 2x2 grid)?

I don't think I have to worry that Blue Cross is going to operate its own hospitals some day. Firms find their specialization and stay on it until technology changes and their comparative advantage with it. But government can vertically integrate anywhere it wants -- it can be both in the insurance and the hospital administration businesses.

I particularly concern myself over non-profit hospitals like the St. Cloud Hospital. Their mission derives from the social concerns of the Catholic church. If you perceive the government will fill that need, does the hospital have a mission? Will it withdraw? This is what I think of when I hear Dennis Prager say "the bigger the government becomes, the smaller the individual citizen becomes."

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Friday, August 28, 2009

Tomorrow's a Fair Day 

Tomorrow I have first an opportunity to hear some conservative views on the health care debate. See yesterday's note for more, but the short of it is: 9-11am at the St. Cloud Public Library on St. Germain. I will be moderating a panel that will include medical professionals and state Rep. Steve Gottwalt. Our discussion will be more general intended to show alternatives to the plans being discussed at town halls. We are not replicating a town hall; I am using a moderated format for audience participation that I think will promote a good discussion.

Then I'll hop in the SUV and head to the State Fair, as NARN begins in a few minutes with its NARN on a Stick broadcast schedule. Normal Final Word tomorrow, 3-5 pm. guests to include state Rep. Laura Brod. I have a potential surprise guest too that you won't want to miss. Be sure to turn your radio to AM 1280 all day as we start with the David Strom Show at 9am and then six hours of NARN.

I'll be pulling extra NARN on a Stick duties on Monday and Friday next week, 5-7, so if you plan to come to the Fair, please look for us on Dan Patch, about fifty yards inside the Snelling gate. Alternatively, if you're already in the Fairgrounds, come up Dan Patch, walk past the DFL booth and turn right. We'll be there.

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Twinkle, Northstar, price too high 

Last April I noted the nice service provided by the Albuquerque-Santa Fe Rail Runner, which cost me $8 for a round-trip. At that time I said
I'm not a transportation specialist, but I'm willing to speculate that the demand for urban rail is elastic, so higher prices decrease quantity demanded greatly. If so, would the fares being discussed for Northstar be too high?
We'll see shortly, because when they start running the train in November, you'll be paying $7 each way just to get to Big Lake, a much shorter distance than Albuquerque-Santa Fe. Weekends will have a discounted fare. There will now be as well another as-of-yet-undetermined charge for a bus link between St. Cloud and Big Lake.

According to a former public official $7 represents about 20% of the cost of running Northstar based on some assumptions about ridership. Wouldn't you want to price this to maximize total revenue? If so, do we really think $7 a ride does that? (For non-economists, here's a tutorial on the relationship between elasticity, pricing, and total revenue.)

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Thursday, August 27, 2009

Health Care Forum this Saturday 

I will moderate a Health Care forum this Saturday, 9-11am at the St. Cloud Public Library on St. Germain. Link will provide directions. Speakers will include two doctors, someone from the St. Cloud Hospital, and Rep. Steve Gottwalt of St. Cloud. This forum is sponsored by the Central Minnesota Conservative Caucus.

The forum is the first of several "think-talk fora" that CMCC hopes to hold. I have been involved in thinking about the think tank, and given the timely nature of the discussion we're hopeful that others will join us. There will be a moderated opportunity for audience participation. The Library has a coffee shop on the premises. Admission is free.

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What comes out of the churn? 

I got a call last night, and spoke this morning, with a reporter from the New York Times discussing St. Cloud, the economy here and the impact of the New Flyer layoffs (discussed on this blog last week.) St. Cloud seems to have become a magnet for stories about jobs and the stimulus. Describing this city's economy is part of my job, and I remind readers who are curious to look at what we write at the St. Cloud Quarterly Business Report.

Central Minnesota has long been a place that had a higher-than-average share of manufacturing jobs. It's hard to really say why; it's on Interstate 94 and has good rail traffic, so the transportation is here to support it, but there are many, many places like that. The area bucked this long-run trend of declining manufacturing employment, but how much longer remains to be seen. Recessions tend to take declining firms and industries out of business much more, and you get rotation towards other industries as you come out of the recession.

So the question we ask up here, the one I keep asking to local audiences, is "if we're going to stay strong in manufacturing, what's our advantage? And if we're not, what do we rotate towards?" Those who answer positively point to lower labor cost when factoring in relatively high productivity. Take Federal Reserve economist Toby Madden, for one.

Overall, Madden said he's very bullish on the manufacturing sector's prospects for recovery -- if you gauge recovery on the basis of productivity, which he said is an important economic measure.

"If you take a look at what really matters, which is people's consumption of goods and services and leisure time, productivity is the key," he said. "It's hard to measure and it's not reported as vibrantly as job numbers are, which are easy to obtain, yet maybe not as important as the overall increase in productivity and output of goods and services."

Madden said many manufacturing jobs simply will not come back, as companies do more with fewer people.
That won't be New Flyer's (or Arctic Cat's) story, since their plants are relatively new and most of the productivity gains are already in place. If those places grow business, they'll probably add new labor. But many longer-established places in town maybe will have that opportunity before them. That will mean we converge towards the lower manufacturing shares in employment in Central Minnesota, even if we still have a comparative advantage.

The ones who think the comparative advantage is gone? You can call it creative destruction or the churn, but predicting the outcome of this dynamic process is hard. Nobody has a good idea for what comes next. Everyone pumps health and the local hospital. That will serve much of the population to the north and west of us who used to go to the hospitals in Minneapolis, St. Paul and Rochester. But what's happening to their demographics? Central Minnesota might have population growth, but the western part of the state has falling population. Will servicing that population with health, education, retail, leisure and hospitality really work here? We have no I.T. sector to speak of, even though it appears we have some great infrastructure here. Finance? Why would those firms move here? These are the questions I have wrestled with, and will more this weekend as I start writing the next QBR (due out at the end of September.)

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Wednesday, August 19, 2009

These jobs weren't created or saved 

The St. Cloud Times has a breaking news item:
New Flyer, the company hailed as a St. Cloud success story, will lay off about 320 workers.

The company announced in its second-quarter report that it will cut staff by 270 in its facilities across the company, which includes St. Cloud, Crookston and Winnipeg, Canada. About 50 salaried workers will be cut, too, most of those in Winnipeg.
New Flyer was, unfortunately, the site of Sheriff-Vice President Joe Biden's local stop on the stimulus tour. The money that was supposed to flow from state budgets to New Flyer to buy new buses isn't getting there, as deliveries are being delayed by buyers not getting funding. There are approximately 1000 jobs in Minnesota and 1200 in Winnipeg. So this cuts about a seventh of their workforce. MPR explained three weeks ago that the cancellation of a bus order from the Chicago Transit Authority, which claims the cancellation was due to not being able to use federal stimulus dollars (I have read conflicting reports on this, one saying they could not use them for buses, the other saying CTA got less than half of the funds requested, and made the decision themselves to delay the order -- the latter is what MPR reported.) Canadian press says the layoffs are "indefinite" and that there will be a two-week shutdown at the end of the year for all plants.

At minimum, this is a timing problem: you can't make all the buses at once, but if people put off taking delivery you either have to build, pay workers and suppliers and hold inventory, or you have to lay off and wait for the orders to re-emerge. The second seems to be the way they've gone, but for how long will they wait?

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Monday, August 10, 2009

Clark doesn't heart Reagan 

Eric Black writes a bio of state senator Tarryl Clark. He makes a big deal about her claim that she was once a Republican.

A MinnPost reader stumbled on the fact that Clark was a former Repub and asked me to check it out. Sure enough, she grew up in a Republican family and voted Repub as a young adult, including for Ronald Reagan in 1980 and 1984 (ouch, don�t tell Walter Mondale).

Of that 1984 vote for Reagan, Clark says: �If I could take that back, I would. He [Reagan] was kind of the nail in the coffin� of her Republican sympathies.

During the Reagan years, she says, she saw her ancestral party abandoning the needs of families and failing to walk the walk on fiscal responsibility. She�s been a Dem ever since and served as deputy chair of the DFL. (An aside, because I happen to recall it, Rep. Bachmann was a Democrat as a young adult, campaigning for Jimmy Carter. The Reagan years turned Bachmann into a conservative Republican and Clark into a liberal Democrat.)

I don't know about Bachmann, but I can tell you I made the opposite journey. Voted for Carter in 1976, for John Anderson in 1980. I cannot even say that, when I voted for Reagan in 1984 that I did so with great enthusiasm; it was much later that I realized the breadth of his intelligence. But I was attracted to Friedman and Margaret Thatcher earlier, and given the disastrous fiscal policies proposed by Mondale the vote for Reagan that time was not hard.

But I don't get how Clark claims the Republicans "abandoned the needs of families" and "failed to walk the walk of fiscal responsibility." The balanced-budget high-spending Republicans of the east coast are not those of her previous homes in Illinois and Virginia. Did not Reagan's foreign policy precipitate the fall of the Berlin Wall, saving us $100 billion in defense spending? The ones who squandered the peace dividend came after the fall of the USSR.

Did the budget balance that came at the end of the Clinton years come thanks to Clinton, or thanks to the 18 year run of good economic performance that came after the 1981-82 recession (with a small pause in 1990?) Didn't all that income help families? It took me a long time and perhaps some time with Robert Bartley's The Seven Fat Years to understand what Reagan had wrought. Clark failed to learn the lesson.

Clark is undoubtedly aware of the difficulties of running as a pro-choice DFLer who voted for many tax increases and a healthy stealth pay increase through per diems (you'll note I've never removed this from the blog sidebar.) First Ringer highlights the uphill fight Clark faces; even if Bachmann is a lightning rod for liberals, her district has a pretty substantial base of people who will vote for her, and gets an IP candidate that last time tanked Tink. If in a DFL highwater year with Obama at the top of the ticket Bachmann can get 49% even after sticking her foot and calf in her mouth on national TV (to the extent MSNBC can be called that), it's hard to see how Clark finds a plurality.

And the side benefit is, SD 15's state senate seat is now up for grabs unless Clark reverses field or should lose the endorsement to Dr. Maureen Reed. The latter is the longest of long shots; the only way Clark doesn't get the DFL endorsement is if she decides her party has dressed her up just to carry her up to the volcano, and declines to be tossed in.

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Thursday, August 06, 2009

The Lawyers Professional Responsibilty Board is filled with partisan hacks ... oh, wait 

KSTP reports that the fellow whose quote is to your right about me being a partisan hack (from this 2006 post) has run afoul of ethics charges.
A lawyers' standards board has filed a petition accusing former St. Cloud Mayor John Ellenbecker of unprofessional conduct.

The Office of Lawyers Professional Responsibility alleges Ellenbecker didn't return an audiotape to a client. It also accuses him of failing to pay a private investigator even after ordered to do so by a court.

The petition also says Ellenbecker hasn't cooperated with the office, which is an agency of the Minnesota Supreme Court that handles complaints against lawyers.

Ellenbecker didn't return a call Thursday seeking comment.

Ellenbecker uncooperative? Incroyable! I'm sure there's a good explanation for this.

The Board is in fact appointed by the Minnesota Supreme Court and has 23 members.

UPDATE: Larry Schumacher gets a call from Ellenbecker, who says it's a "misunderstanding" that he made worse through "procrastination". �I screwed up, but I didn�t do anything intentionally in terms of trying to avoid anybody,� he said Thursday. The story is generating a great deal of commentary on the Times' chat, where the former mayor is a frequent poster.

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Wednesday, July 29, 2009

No signs of recovery up here 

The Ninth District economy contracted since the last report. Decreases in activity occurred in the retail spending, tourism, services, residential construction, agriculture, mining and manufacturing sectors. The commercial construction sector was stable at low levels, while the energy and residential real estate sectors saw moderate increases. Labor markets slackened since the last report, and wage increases were moderate. While a number of prices were lower than a year ago, prices have generally remained stable since the last report.
From the new Federal Reserve Beige Book released this PM. Further details on jobs and wages:
Labor markets slackened since the last report. The University of Minnesota recently announced plans to reduce the school's workforce by 1,200 positions over the next year, mostly through attrition, but 370 employees are expected to be laid off. Also in Minnesota, a trucking company with 200 employees recently announced it will close by the end of August, a Minnesota-based regional airline plans to furlough up to 110 pilots and a health insurance company will lay off 100 workers. ... A temporary staffing agency survey of Minneapolis-St. Paul businesses showed that 13 percent of respondents expect to hire workers during the third quarter, while 19 percent expect to reduce staff. A Minnesota staffing services company noted that the pace of business in early July was much slower than usual. However, another placement company noted an increase in demand for experienced information technology workers.

Wage increases were moderate. According to respondents to a recent St. Cloud (Minn.) Area Business Outlook Survey, 24 percent expect to increase employee compensation over the next six months, down from 35 percent in last year's survey. A Minnesota bank branch cut pay by 5 percent for all salaried staff.
That's of course the survey I co-author; a copy can be found here. I keep being asked about where the bottom here is. If this a U-shaped recession, the bottom is like finding the bottom of your cereal bowl: you know you're near the bottom, but seldom know you're past it until you're several months out. And the shift in what we build here (read: manufacturing) compounds it, as Rich and I will discuss in the next Business Central. Ernie Goss says this is so for the state as a whole.

I find myself thinking a bit about Bryan Caplan's suggestions for what this wave of creative destruction means for St. Cloud and most of outstate Minnesota. There's a good amount of vacant commercial and office property here (as well as Minneapolis/St. Paul.) What's going to occupy that space? St. Cloud was long the home of Fingerhut which distributed mail-order products. That space is still here, and internet sales could be fulfilled from here. I wonder why we don't see more internet businesses use that space. Caplan also suggests that the retail that would grow would be "services and products with short shelf-lives and/or high weight to value ratios." I.e., the stuff the internet doesn't deliver well. What would those be? Who in St. Cloud would deliver those products?

I'm more sure what we are rotating away from (manufacturing) than what we're rotating towards. Can there be destruction without creation? Not if the price system works. So it will be something. But what? As Caplan says, if I knew, I would be doing it rather than writing this blog, or teaching.

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Thursday, July 16, 2009

Minnesota jobs: no green shoots there, either 

Jobs are down in Minnesota still:
Minnesota employers cut 16,700 jobs in June, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED).

The agency said the state�s unemployment rate in June rose to a seasonally adjusted 8.4 percent, up from 8.1 percent in May. The U.S. unemployment rate in June reached 9.5 percent.

The sectors that added jobs in June were trade, transportation and utilities, which gained 800 jobs, and financial activities, which added 600 positions.

Jobs losses occurred in June in construction (down 3,900), manufacturing (down 3,700), professional and business services (down 3,500), leisure and hospitality (down 3,000), logging and mining (down 1,000), government (down 800), other services (down 800), information (down 700), and education and health care (down 700).

Fishing around the data, I note St. Cloud is down 2,300 private sector jobs in the last 12 months. About all of that is from goods production, meaning construction and manufacturing. Health and education are actually up 700 over that same time. Retail trade (which is fairly large here) is flat.

State government employment? Up 1.9% in the last twelve months in Minnesota to over 100,000 workers. Overall government employment in St. Cloud is up 401 jobs. Hold that thought, the next time you hear about unallotment.

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Monday, July 06, 2009

Shovel ready vs environmentally friendly 

We can have our recovery just as soon as the enviros tell us it's OK.
The $6.6 million 28th Avenue corridor project would increase future traffic flow in the southwest corner of Waite Park by connecting Minnesota Highway 23 and a realigned Stearns County Road 137, Waite Park City Engineer Terry Wotzka said.

�It�s a project of regional significance,� he said. �We�re ready to go on it.�

But Federal Highway Administration officials have not cleared the project to receive nearly $2.8 million in federal stimulus funding because of concerns about its potential environmental impact.

...Waite Park officials almost lost the stimulus funding last month, when a Minnesota Department of Transportation deadline to clear the necessary bureaucratic hurdles passed.

But some political arm-twisting convinced state transportation officials to give Waite Park more time. Now, they have until July 25 to satisfy federal officials that the project is worth the environmental impact of putting the extension through about 3.5 acres of wetlands, said Doug Hecox, spokesman for the Federal Highway Administration.

Environmental reviews are rigorous because they have to be,� he said. �Whether it receives (stimulus) money or not, we only have one shot to make sure we do it right.�
Highlight added. Why does it have to be? What is it about 3.5 acres of wetlands that is worth however many jobs this project was supposed to "create or save"? We had Sheriff Joe Biden up here a few months ago. Can't he move a little red tape for us? He's supposed to be on the job.

This is a perfectly good example of how the regulatory state supported by the Democrats ties itself in knots. And how, when faced by a revolt from its base supporters in the Greenocracy, the more mundane things like jobs and cars fall aside.

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Monday, June 29, 2009

New Quarterly Business Report out 

The news story on our new Quarterly Business Report is out. Not a pretty picture: Because the St. Cloud economy went into recession much later than the national economy, and because there's not yet anything to indicate a bottom in the national economy, we think the St. Cloud economy stays in recession until at least winter. I'm only a bit more optimistic than my co-author Rich MacDonald on this forecast, but for me to be right we need to see some real signs of turnaround soon. Anecdotal stories aren't encouraging based on what I've heard around town the last week. Any place someone can pinch spending, they are still doing. Whatever stories you hear about consumer confidence, they aren't evident to business owners in spending patterns yet.

Note to media: If you want an interview on this one, send me an email rather than trying to call my phones. I'll have trouble with those up in Canada. I'm going to try out Skype for the first time.

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Thursday, June 25, 2009

Unallotment powers 

The DFL continues to make claims about the unallotment process that Governor Tim Pawlenty is using to balance the budget that the Legislature chose not to. Leading this charge has been DFL state Senator Tarryl Clark of St. Cloud. From her latest newsletter:
It has been just over one month since the Governor announced he was ending negotiations and would go it alone on budget cuts. We thought it was unwise then and it remains so now to do budgeting behind closed doors. Unallotment is meant to be a scalpel, not an ax and it is meant to be used at the end of the two-year budget cycle, not the beginning. It is for unanticipated budget shortfalls, not ones created by vetoes and a refusal to negotiate.
This is wrong on at least two levels. First, the DFL legislature had in fact created the budget in private, asking next to no help from either the governor or the Republican caucus. It did so on May 8, and then did so on the last night of the legislature, passing a bill barely by midnight. It is rather rich for Clark to argue that the governor will go it alone when they did not take his wishes into account (something Rep. Gene Pelowski understood.) Gary Gross is correct in saying that Clark and her colleagues assumed they could get Pawlenty into special session, where the pressure would bear down on him as much as them. She is upset that the Governor side-stepped that box.

Second, Clark has misrepresented the nature of the unallotment process. Luckily, a review of the process was done only last October. The House Research document on unallotment speaks to the issue of timing:
The statutory duty to reduce allotments is mandatory to the extent needed to make up a projected deficit not solved by use of the budget reserve account. However, the statute does not specify a timetable. The authors presume unallotment would have to occur in time to make up the projected deficit within the biennium. Arguably, the Commissioner of Finance must unallot immediately once the conditions that require unallotment have been determined to exist, and the commissioner has approval of the governor and has consulted the LAC. However, in the past, it has been a common practice of commissioners of finance and governors to wait until the legislature had time to rewrite the budget before unallotting. The requirement to obtain the governor�s approval and to consult with the LAC may imply that the commissioner has some discretion in the timing of unallotment. (pp. 4-5)
The governor notified the legislature of his intention to use the power if he did not receive a plan from them. They chose not to act on that power except to run forward a last-minute bill that had already been vetoed once (and had that veto sustained.)

The Minnesota Supreme Court also spoke on the unallotment process in Rukavina v Pawlenty (684 N.W. 2nd 525 [2004]), finding it constitutional for the Legislature to have ceded that power.
Although appropriation of money is the responsibility of the legislature under Minn. Const. Art. XI � 1, it is an annual possibility that the revenue streams that fund those appropriations may be insufficient to actually realize each appropriation. For that purpose, the legislature, by statute authorized the executive branch to avoid, or reduce, a budget shortfall in any given biennium. Minn. Stat. � 16A.152 does not represent a legislative delegation of the legislature's ultimate authority to appropriate money, but merely enables the executive to deal with an anticipated budget shortfall before it occurs.

Although purely legislative power cannot be delegated, the legislature may authorize others to do things (insofar as the doing involves powers that are not exclusively legislative) that it might properly, but cannot conveniently or advantageously, do itself. (cite omitted). It does not follow that, because a power may be wielded by the legislature directly or because it entails an exercise of discretion and judgment, it is exclusively legislative. (cite omitted). Pure legislative power, which can never be delegated, is the authority to make a complete law--complete as to the time it shall take effect and as to whom it shall apply--and to determine the expediency of its enactment. We conclude that Minn. Stat. � 16A.152, does not reflect an unconstitutional delegation of legislative power, but only enables the executive to protect the state from financial crisis in a manner designated by the legislature.
Indeed, to the extent possible Governor Pawlenty has delayed most unallotments to not take place until July 1, 2010, to both hope for more revenue from an improved economy and to allow the Legislature time to make changes in cooperation with the Executive. The door isn't closed: The governor offers the chance to find a better solution, and makes plain the consequences of not compromising.

Clark notes that Pawlenty has used unallotment three times, and in one of those cases the legislature had sought an opinion from the Supreme Court. It therefore had full knowledge of the law. If it did not want to permit the executive the power to "protect the state from financial crisis" through the current law, it only needed to pass a law amending the process. Certainly if the executive is expanding power unduly, the DFL could find a few GOP representatives to vote to defend their prerogative.

I encourage you to read Gary's post for more on what's wrong with Senator Clark's e-letter. But the point here is to make it plain that the DFL continues to mischaracterize Pawlenty's use of powers the Legislature delegates to him. They knew the issues, they did not address them by legislative initiative, and they continue to be hypocritical over who didn't bargain in good faith with whom.

UPDATE: Gary has a second post. Key point I would highlight:
It isn�t accurate to say that the DFL didn�t submit a balanced budget. It�s accurate, though, to say that the first balanced budget they submitted to Gov. Pawlenty passed the Senate with minutes left in the session. It�s equally accurate to say that the Tax Bill that passed was a hodgepodge bill, filled with a litany of tax increases and spending shifts.
And let's not forget that this was trotted out at 10:30pm for passage before midnight in an uncivil manner. Senator Clark should also answer for that clusterfarg.

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Tuesday, May 26, 2009

Beware the do-gooders 

In four short paragraphs, we get a veritable cornucopia of crap.
We tend to believe that the United States is the best place to live. And of all of these United States, Minnesota is the best of the best. Collectively, we want opportunity and education, quality health care and transportation systems, as well as readily available police and fire protection.

So why can�t we agree on how to pay for these things that we all use? Our Legislature last week presented the state with a two-year budget that is balanced and fair. It taxes those who can afford it the most and includes cuts to spending where possible. Our governor says he will veto this bill and cut spending according to his own whim.

This no tax policy favors the rich at the expense of the rest of the state.

Gov. Tim Pawlenty spends much of his time with the top 2.5 percent (by income) of the population of Minnesota. Is this why his tax policy favors them? Is it because his experience is different from the majority of Minnesotans?
Where do we start with this?
"We tend to believe"? �Why hedge this? �Are you suggesting that this might be a wrong belief?
  1. "Collectively"? �What is there about the belief in opportunity and freedom, the ability to develop your human capital (education), and quality health care, that is a collective belief? �These are things I believe in as a person, as an individual. �
  2. And yes, I know you didn't write "freedom". �I meant to ask, why not? �
  3. Is it the "collectively" meant that the writer had concluded already that the only way to provide for those things he's listed we want is to use the state to buy them.
  4. "Our Legislature last week presented the state with a two-year budget that is balanced and fair." �Well no they didn't unless you are referring to the two-hour budget on Monday night which didn't technically pass by midnight and which Times' executive editor John Bodette said "doesn't work" as a budget. �(I agree with Gary on the rest of John's column.)
  5. "It taxes those who can afford it the most" always means "it taxes those I've decided can afford it the most." �It means "we won, so we get to take your money." �(Seems I've heard this before. �Why yes, yes I did.) �By the way, 77% of Americans disagree with needing more taxes.
The rest of this column describes this leftist's visit with the local group GRIP, a long time point of discussion on this blog (here and here). �But in this article he keeps coming back to this "business leaders" and "2.5% (by income)" point like all business leaders are somehow rich. Did he ever talk to a business leader? �And who are they? �Try reading the Survey of Business Owners from the US Census and you would learn:
  • 15% of them are seniors;
  • half of them don't have a college degree;
  • almost a fifth of them are veterans; and
  • most of them don't make much money (check out this graph).
But that group is not the favored group right now. �We read for the remaining 500 or so words of the article about an "ecumenical" group that seems to have no place for 20 million or so business owners. �Isabel Paterson once noted:
Most of the harm in the world is done by good people, and not by accident, lapse, or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends.

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Friday, April 17, 2009

She didn't get the memo 

In her e-news letter to constituents, Senator Tarryl Clark (DFL-St. Cloud) reports on the difference between the Senate's plan to balance the state budget and that of Governor Tim Pawlenty.
Using a combination of cuts, federal recovery funds and new revenues it brings the state budget into balance for not only the next two years, but also the two years beyond that. This is something our Governor does not plan to do. Instead he pushes much of our present problems into the next two years. Seemingly he is hoping, and that�s all it is, is a hope, that things will get much better, much sooner than most economists believe. If his hope is misplaced Minnesota will be in even worse financial straits.

I don't think the Obama administration is buying that with their forecast of GDP. CBO, who has panned some of the President's numbers, nevertheless expects real GDP to grow 4% in 2011, 4.1 in 2012. Indeed, the disingenuous part of Sen. Clark's statement is that there are no forecasters saying growth will be weak in 2011, when the next biennium budget begins. �(See the WSJ survey last week, or Blue Chip yesterday.)� Why is Sen. Clark so pessimistic about Minnesota? �Why does she not share the optimism of her party's leader?

I will be dissecting other parts of this letter next week.

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Monday, April 06, 2009

Trying to have it both ways 

Local state senator Tarryl Clark was chastised by the St. Cloud Times last week for a bill that would take the teeth out of Gov. Pawlenty's Q-Comp program by forbidding the state from withdrawing funds from non-compliant school districts. Clark complains today that she's misunderstood. Yet her defense says three things that are collectively inconsistent:
  1. Q-Comp is failing to improve student achievement. I could be persuaded this is true, but wouldn't you then look to end it?
  2. The school district signed up in good faith believing it would work, though it never put in the pay for performance provisions that are at the heart of Q-Comp.
  3. Clark does not want to impose any penalty on the St. Cloud school district while she decides whether it works or not. This while there's a state budget deficit greater than $6 billion.
As noted last week, St. Cloud schools were told many times the money was in jeopardy, but did not solve them. It doesn't work according to Clark, but you should still give your money. So when she says "We owe it to our students, teachers and taxpayers..." I think she's only worried about the debt to one group.

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Monday, March 30, 2009

Thinking about media and bias 

Saturday's Final Word featured Society for Professional Journalists and St. Cloud Times reporter Dave Aeikens, the podcast of which is now available (link when it's live.) Following on our discussion of the press restrictions of the Minnesota Legislature, Dave provided us with examples where online and "legacy" journalists (hey, if it works for toxic assets, why not?) are working together to blur the lines between who is a journalist and who is not. In fact, he was adamant that the line could not be drawn.

In the second half we turned to the idea of media bias; I am one who does not think there is groupthink in the media (Janet might disagree with me here, but read through to be sure), but that writers tend to reflect individual preferences and are reinforced in doing so when they think their audience will favor. Some of the economic research that convinces me of this is a paper by Mullainathan and Shleifer (2005 AER, ungated copy here, hereinafter MS.) It was their example of the two stories on the unemployment rate that I read to Dave. I think there's slanting of stories, which as MS point out can be a rational response to a biased readership. The market for the StarTribune contains the congressional district of Keith Ellison, so you write stories Ellison supporters would like. That's not bias, that's responding to incentives.

With that in mind, consider this opinion piece written by Randy Krebs in the Sunday St. Cloud paper. He illustrates his belief that he has intolerant readers by reporting on phone calls he receives after the paper reports on "Rep. Steve Gottwalt�s bill requiring people to remove headgear for their driver�s license photo." A few sentences later he writes, "A couple of different readers called separately to express support for Gottwalt�s initial idea." Mr. Krebs takes the rest of the column to call these two callers intolerant. Wouldn't a reader think that by extension Krebs thinks Gottwalt is, too?

Except that the paper reported weeks ago (in an article co-authored by Dave Aeikens, just to tie this together) that after meeting with Muslim groups, who felt the law was discriminatory against their religious practices, Gottwalt revised the bill to strike a better balance. This point appears nowhere in the Krebs opinion unless you ask why Krebs called it "Gottwalt's initial idea." It seems to me Krebs was aware of that change, but because it was inconvenient to his story he made his way quickly around that point to get back to attacking the droogs who dared ring his phone.

So is that bias? I don't think so; even if it is, Mr. Krebs is certainly entitled in an opinion piece to express it. I suspect though it's a bit more like slanting; there is nothing false about what Krebs has written, but he's in need of props to tell his story of religious intolerance and found these callers handy. It would muddy his story to remind people of Gottwalt's revision, so that doesn't make it into the op-ed.

Dave argues in the podcast that without newspapers bloggers have nothing to say. But newspapers in fact present us with something to do: to demonstrate slanting, and yes, re-slant for our readers. Since it appears more liberals self-select into careers in journalism (see for example here and here for evidence, for starters), those who want a different slant are served by both Fox and by center-right bloggers.

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Friday, March 27, 2009

New Quarterly Business Report is out 

The news story in the Times is here. There's very little good news in it, alas. The continued decline of our local leading indicators series (above) gives a 99.3 reading for February, continuing a decline that began in earnest a year ago, making an end to the local recession before the end of summer quite unlikely. Our probability of recession index for February showed a 94% chance of recession 4-6 months ahead (again, for the June-August period.)

For Scholars readers, you may find a copy of the report here.

As supporting evidence, you may wish to see Minneapolis Fed President Gary Stern's address to the Minnesota Economics Club yesterday:
Once under way, the pace of the expansion is likely to be subdued for a time. There is historical precedent for this, since the recovery of the early 1990s was initially quite modest, as was the recovery earlier this decade. More importantly, in view of the state of the credit markets, it seems a fair bet that it will take time for momentum to build. But with the passage of time�as we get into the middle of 2010 and beyond�I would expect to see a resumption of healthy growth.
I still see the possibility of a trough of the business cycle in late 2009, but if the recession and recovery is U-shaped, that trough may be barely perceptible this year.

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Friday, March 13, 2009

Everyone's meritorious 

If you want to know why St. Cloud has been tossed out of the Q-Comp program that Governor Pawlenty touted to increase teacher performance through, inter alia, pay for performance, you need only read these two paragraphs:
About 96 percent of the district�s 750-800 teachers participate in Q-Comp. A teacher in the program receives about $2,000 and teachers who accept leadership roles in the program earn a stipend.

...The decision is also significant for the district because of dollars tied to two staff development days agreed to in the district�s contract with teachers.

Last year those days were paid for with Q-Comp money. Now the district will have to find money in next school year�s budget to pay for the days.
As the StarTribune pointed out last month, it ain't merit pay if 99% of teachers get it. And it ain't merit pay if you're using the money to pay for a staff development day for everyone. H/T for the STrib link to Kevin McNellis at Growth and Justice, who says Pawlenty "must mandate the use of quantified measures of teacher merit" to make this program go. The suspension of St. Cloud from the program is actually a good first step, since it was the inability of the district and the local union to agree on revising the teacher contract to include merit pay that was why Q-Comp was in trouble here. (The school superintendent up here,who has taken up blogging, acknowledges this.) Maybe the district and the teachers union can now come to an agreement on providing for real merit pay where not everybody is above average.

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Friday, March 06, 2009

Mrs. Scholar writes 

This month it's about one of my favorite examples fair trade coffee.
The coffee market is volatile, and when the price goes up, the farmers are often the last to get paid more for their crop.

Reflecting on our conversation while enjoying the aroma of freshly brewed coffee, I wondered what would happen to the farmers if people quit drinking their lattes?

Fair trade coffee raises prices, which encourages people to stay in coffee production. But is this the best use of their labor?

Coffee prices rise and fall by large amounts, alternatively enriching and impoverishing these farmers. Would they be better off with fewer farms and farmers, but with more labor to produce other goods that generate value?

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Tuesday, March 03, 2009

Not the kind of record we wanted 

The local area unemployment rate in St. Cloud reached 9.4% in January. January is always high due to post-holiday layoffs of seasonal employees, but this is clearly a record. Retail dropped 554 jobs in January, but that's barely 20% of the 2631 jobs lost in the area overall. Even areas normally not moving down in January, like health care, saw losses.

The size of the declines are worse in the Cities (that data is seasonally adjusted, unlike the St. Cloud data -- I do the SA myself.) Health sector there is at least holding some gains, but construction looks worse.

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Wednesday, February 18, 2009

Slightly better than burying dollar bills in bottles 

The stimulus bill will not result in much spending here in the St. Cloud area, at least not in transportation. Larry Schumacher reports:
A Waite Park road extension on the city�s southwest side is the only St. Cloud-area transportation project to receive funding thus far from a federal stimulus bill signed into law Tuesday.

Waite Park will receive $2.7 million from the stimulus bill to advance construction on a 28th Avenue extension between Minnesota Highway 23 and Stearns County Road 137, City Engineer Terry Wotzka said.

The project met the stimulus bill�s criteria of being �shovel-ready� and a job creator that would not have otherwise happened this year, Wotzka said.

...[APO Transportation Planner Kirby Becker] said the other two requests didn�t make the cut: $4 million to advance the West Metro Corridor realignment of Stearns County Road 134 and widening of Stearns County Road 4, and $3.5 million to extend the Beaver Islands Trail along the Mississippi River from St. Cloud�s Civic Center to Hester Park.

Duluth will receive $6.6 million for projects in the stimulus bill and Rochester will receive $8.5 million, he said.
Hard to believe we couldn't get the money for a bike trail in Oberstar's America. But I would have thought, given the Obama Administration's commitment to transparency, that we would understand why a road that goes to a park is chosen above a road widening that helps traffic flow between St. Cloud and growing Sartell.

The project begins in June, maybe.
Highlights of the project will include a four-lane, undivided roadway extension with a trail alongside and a new trail on County Road 137 near Quarry Park, plus a signal change at Highway 23 and the realignment of part of County Road 137 near the new intersection, he said.

Though the road project is 100 percent federally funded, Waite Park officials must still come up with up to $3.5 million in local funding to pay for a new sewer and water line installation, Wotzka said.

�This is a future growth corridor for the city,� he said. �The new sewer and water lines will facilitate that.�

City officials are still negotiating some right-of-way land acquisition that could delay the project, he said.
That's the last sentence of the story, and it says that maybe this project isn't shovel-ready. And it's a road to no businesses, only a residential area and a county park that could be "a future growth corridor." If it wasn't going to be otherwise funded, does anyone ask why? Could it be, perhaps, that it wasn't worth the money?

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Tuesday, February 17, 2009

From where comes hope? 

I was reflecting on a new Economist article on the middle class today and thought to relate this to an article in the local paper on St. Cloud residents from India and their reaction to Slumdog Millionaire. One of the people interviewed in the Economist article is Surjit Bhalla, who is doing research in New Delhi on the emerging middle class there and has written a review, The American in Slumdog.
I have been somewhat surprised at all the hoopla surrounding this India-based film, in India. Too much poverty � what, know you not, there are middle class and rich Indians also? Why do people always revel in showing India in a bad light � by showing the exploitation within, by emphasizing its dark poverty? ...

The portrayal of poverty is no grounds for divorce from reality. If this had been the accepted wisdom, the world would have been denied de Sica�s The Bicycle Thief and our own Satyajit Ray�s Apu Trilogy. We should be embarrassed for even bringing up the idea of protesting the film, let alone discussing it in a juvenile fashion on TV. The bet is not on Slumdog to win because it glorifies the tragedy of poverty. No, Slumdog will win because it tells a quintessentially American story. And the appeal is enhanced by the Indian setting, and a Bollywood (may not love it but can�t leave it because it is so enjoyable) treatment.
I've not seen Ray's films, but The Bicycle Thief is a very dark movie of postwar Rome that hardly portrays Italy in a great light. The movie isn't about Italy. (I won't give the plot away, but you don't know the point of the movie until the climactic scene. If you haven't seen it, please do. If you must spoil it, you can get most of the point in Roger Ebert's review.)

Likewise, the slums of India are not the point of this movie, as Bhalla tells it:

My first article in journalism was written in the winter of 1980. It was entitled �In Defense of Attenborough�. Many Indians then were up in arms � how dare an Englishman, and not an Indian, make a film about the Father of the Nation? And why not, I argued � perhaps he will have a more detached perspective. Ditto in the case of Danny Boyle � he has made a better film on Indian slums, and universal hope, than most Indians could. The reason no Bollywood filmmaker could have made as good a film on �poverty� is because, well, Bollywood is not that interested in doing so. Befitting the upward mobility and aspirations in our society (shades of being American?), Bollywood is much more interested in luxury and fantasy and Sydney Harbour and the Swiss Alps than even a stylized version of the �real� India. One does not have to be poor, or live in a poor society, to make a film about hope despite poverty. One just has to be human � thankfully, none of the jingoistic and mis-guided critics have denied Boyle his abundant humanity.

The movie tells an American story, or is it Indian? Rags to riches, and the worth of an education. Both American and Indian children need to know the names of the Three Musketeers. Fighting the odds and coming out ahead. Being optimistic about pulling through rather than being burdened by the pessimism of reality. Aspiring to be middle class, dreaming of a better life. And often, making dreams happen. Only in Hollywood-Bollywood movies or only in America and India?

There was a time, not so long ago, when the Americans believed in themselves, and their power to change their destiny. Always, the most positive person in the room was the American � the most pessimistic the German. A bit like Boyle�s and Ray�s treatment of poverty � one sees hope and emergence, the other sees despair and unrelenting loss.

One of the Indians interviewed in the St. Cloud paper, a colleague of mine, says "As soon as they showed the slum in the movie, I said we should have known that the West has made this movie � that�s what a Westerner would show of India." No, what a Westerner shows of India is quintessentially American. It is a place that still has a relatively low Gini coefficient (much lower than China's) which nevertheless will see increasing inequality as their IT-led expansion, fueled by easy connectivity to the world, increases their middle class dramatically. There are, as the Economist article points out, two middle classes in the developing world. One can be middle class anywhere in the world; some of these 'global middle class' make up the faculty quoted in the article. A second group, a 'developing middle class', can be so in their country but not in the West. The protagonist in Slumdog has that dream, and has that education. He learns because he lives in a country where that modest dream can be made -- he can be a millionaire in his own land, even if he would seem poor in another's. By one Indian think tank's projections, half of the urban dwellers in India will be middle class by 2016. Their populations are swelling now, and for now they move into low-rent housing, where they dream. Bhalla concludes that the movie about rooting for the underdog � a clich� but never a truer one. Look at the villains in the movie � they are not an example of thinly disguised racial profiling, but you and me. Heck, even the hero of the movie is a Muslim.

The movie succeeds because everything portrayed is plausible � not likely, but possible. It is a movie about the celebration of hope, about the reach being further than the grasp. How can you get more American than that � or more Indian?
(BTW, I have been wracking my brain trying to think of an Armenian movie to fit this theme, but haven't come up with one. Perhaps cinema in Armenia is just too small. Comment please if you think of one.)

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