Kathy's son and mine went to the same school for 7th and 8th grades. We got to know each other fairly well and have kept in touch ever since. The fact that the Strib is dropping her column says volumes about the bias in the paper. Yes, Nick Coleman is going, too - finally - but he's got an entire chorus behind him so his leftist view of the world will be perpetuated.

Kathy's view, is another issue. Her columns provide much needed fresh air and common sense. They covered issues too much of the mainstream media is either afraid to write about or is incapable of comprehending. If you wish to make your sentiments known, please contact the paper's editor, Nancy Barnes at: nbarnes@startribune.com. While I doubt Ms. Barnes will even consider hiring a conservative replacement, letting her know why releasing Ms. Kersten is a horrible mistake has a slight chance of making an impact.

When papers and media present only one side of an issue or ignore an issue in its entirety, they are cheating themselves and their audience. A press that engages in such self-censorship is no longer free - it has voluntarily given up its freedom - without a fight.

Labels: free speech, Media, StarTribune

I think it's been a while since I feasted at the Coleman Cornucopia of Crapola. So hitting a hanging slider from Nicholas should be permitted.

He's having a cow over the purchase and registration of cars for the I-35W bridge reconstruction from Colorado.

Tuesday, I saw 15 trucks parked by the bridge site -- 12 Ford F-150 Supercab 4-by-4's with Triton V-8 engines, two Ford Explorers and one Ford Escape -- so new that many still have instruction tags hanging from their ignitions and control panels, and they have temporary state registration cards taped in their rear windows.

But those registrations are not from Minnesota, where Flatiron -- costing far more than local bidders, and taking longer to complete the project -- is scheduled to begin work next week. Flatiron's Fords are registered in Colorado; they were purchased in Littleton, a Denver suburb.

A Flatiron spokesperson did not respond to requests for comment, but permit me to sum up the situation here: Buying Colorado trucks for a high-profile project in Minnesota that still carries the emotional pangs of death and destruction? Dumb, Flatiron.

As Mark Perry points out, these are not Colorado "imports".

Ford F-150 pickup trucks are built in Kansas City, Norfolk, Detroit and Louisville, and would have therefore been "imported" from Missouri, Virginia, Michigan or Kentucky to Colorado, before being "imported" to Minnesota from Colorado.

As would be the trucks sold by John Wiese Ford in Sauk Centre, whose owner whines to Coleman about losing the sale. Perhaps Mr. Wiese could explain why, on a state contract, it would be acceptable to pay an additional 2.8% tax on the Minnesota-bought vehicles rather than those in Littleton, Colorado. That cost would have been projected into the contract Flatiron signed with the state and its taxpayers.

This is a company that was judged to have better public "outreach" than the local firms that lost out on the project, despite submitting lower bids. Would a Minnesota company buy a shiny new fleet for the project from, say, Colorado?

To save $39,200 on the expenses for this project? We may be dumb here, but we're not stupid. It would be an easy thing to fix -- just announce that contractors buying materials to fulfill a state contract get the goods tax-free if bought in Minnesota (which would push bids down; JOBZ has such a provision.) And Coleman also wanted to pick up the Hennepin county tax on this purchase, a cool $2100 towards building the Twins stadium (using his figure of $1.4 million for the trucks Flatiron wants to purchase, not the even million Coleman uses to keep his math simple. My students are quite capable of .0015*$1.4 million.)

What was actually lost to Minnesota was merely the $48,475 to the state coffers from the state sales tax, plus the profit margin that John Wiese or some other dealer would have made on the trucks, which if Flatiron is as skilled at buying as it is at bidding isn't more than $1000/truck. A far cry from $750,000, not likely a tenth of that.

Even with a generous fleet discount, we are talking a million dollars. While that may be a drop in the bucket on a $234 million project, a million bucks means $65,000 in lost sales taxes, which could have helped MnDOT add, who knows? Maybe a bridge inspector!

This is sheer demagoguery, of the same type as Don Boudreaux points out in Barbara Boxer's complaint that the war in Iraq makes fighting California's wildfires worse. Losing sales tax revenue makes lots of things more difficult to buy. You can say the same about resources consumed to fund the DREAM Act or bike trails. But of course you won't, because that's not your hobby horse.

Yes, but it's a MnDOT project. About the only surprising thing to me is these new trucks aren't on fire.

What the hell is it with Coleman and fire, anyway?

Labels: economics, Minnesota, StarTribune

There's been much ado about Rachel Paulose, the recently appoint US Attorney for the State of Minnesota. The Strib did their best to attack and defame her. Now, however, the Strib's only conservative columnist, Kathy Kersten, sets the record straight.

In Ms. Kersten's column today, she describes the REAL Rachel Paulose. Respected individuals from both political parties comment that Rachel is enormously qualified to perform the job as US Attorney, in spite of her: youth, minority status, and horrors, she's a Christian.

As one reads Ms. Kersten's column, the vast majority of individuals will realize that Ms. Paulose's appointment is warranted and that we are extremely lucky to have a person of her caliber in her position.

It is unfortunate that the media and the Democrat Party will only support minorities and strong women if they are Democrats. This same pattern occurred in the 2006 election - the Republican Congressional candidate for St. Paul's district was Obi Sium, a minority - he got minimal coverage. However, Keith Ellison, the minority Democrat candidate for the Minneapolis Congressional District got all kinds of favorable coverage.

Why?

Labels: StarTribune

[A reader, Dan Cohen, has sent the following letter to the StarTribune regarding its coverage of several items regarding the tax increase proposals in the Legislature this session, and the coverage of Bill Cooper's departure to sunny and income-tax-free Florida. I am posting it without further comment as interesting to my readers. He has edited what he sent to the STrib here for style:]

The Strib doesn't have a clue as to what to do about the mess they're in. Here's an outfit that hates and is hated by a substantial part of their customer base trying to shapeshift into something that will matter to people they've been holding in open contempt for decades. They've operated as a monopoly, an unregulated monopoly at that, since time immemorial. That mindset informs every word they publish.

Take for instance Kate Parry's column of last week. Ms Parry is billed as the Readers Representative, with the mission of "ensuring" that the voice of the reader is heard in the newsroom. That's pretty much the opposite of what her column is about. Most of what she does is ensure that the voice of the newsroom is heard by the reader. She would seem to be fairly representative of the Strib's attitude in its present predicament. Here's her principal argument for the Strib to continue to act the way it does:

I shudder to think of those decisions (i.e., matters of public policy-- my wording. D.C.) being made based on the unverified claims I see plastered onto some websites and blogs.

What Ms. Parry and her ilk don't realize is that many of us shudder to see decisions on matters of public policy being based on what we read in the Strib. That's why their circulation is tanking. Readers now get information from the net and the blogs and each other, because a significant portion of the readership does not trust the Strib to give them an honest shake on the news.

For years and years, the Strib has gotten away with demonstrating disdain and distaste and then some, for those who disagreed with them. Why not? Their readers had no place else to go. And the Strib also hasn't seem to much care that often the feeling was mutual. In fact, they seemed to wear it as a badge of honor that so many of the unschooled masses were infuriated by the Strib. It just confirmed the Strib's intellectual superiority.

Times have changed.

Now Ms. Parry says, trust us.

It won't happen.

Once trust is gone, it never returns.

There is no return trip ticket to those halcyon days when the Strib called the shots around here. Now it is the Strib itself that is on the defensive and it is the Strib's policies and attitudes that are being called into question. And it is the readers who have the upper hand at last, voting with their mouses against the arrogance and elitism that held the upper hand for so long.

The solution: for the Strib there is none. The Strib will continue to wither, and while it will never go completely away, it will simply be one player among many in a highly segmented market, where their niche will consist of a hard core of aging angry leftists.

Lots of other business have faced competitive challenges and survived and even thrived. One example is TCF, which was slowly withering away in the dying Savings and Loan industry. A new leader, Bill Cooper, was brought in, and he revived the business by converting TCF to a chartered bank. An obvious solution? Hardly. Cooper's chief competitor, Hal Greenwood of Midwest Federal, continued to dig himself and his company into an even deeper hole by plunging his business into risky investments in trailer parks -- the subprime loans of that era-- that eventually bankrupted Midwest.

Greenwood wound up in prison.

Cooper was a leader in the Minnesota Republican party.

Greenwood was a leader in the Minnesota Democratic party.

Cooper's contribution was recently recorded by a Strib columnist who slammed him for making a big pot of money for himself and leaving Minnesota for warmer climes when he retired.

Okay, it's no secret nobody loves the richest kid in town, and slamming Cooper was tailor made for the Minnesota constituency that hates the wealthy and that the paper loves to cultivate, whether the rich earned their money themselves or not. (One exception: the notorious public leech, Carl Pohlad, whose legendary talent for snaring government handouts has earned the Strib's admiration).

It was also tailor made to bring tears of joy to every single development staffer in every single state in the union other than Minnesota, who will clip and trot out the Strib's attack on Cooper and today's editorial calling for the highest state levied taxes in the nation on personal income and show them to every corporate executive whom we are competing for to expand or open new business and bring new jobs to Minnesota.

"Here it is, Mr/Ms. Boss. Move to Minnesota, build a business, hire thousands of people, pay them decent salaries, generate dividends for your investors, and after working a lifetime to do it, when you decide to retire to , God forbid, a warmer climate, the local press, instead of congratulating you on your contribution to the civic welfare, will kick you in the butt, and tell you not to let the door do further damage to your backside on the way out. And while you're here, they'll also tax you to the max. Personally and with a great sense of moral entitlement."

This is the sort of stuff the Strib publishes every day in whatever little corner of the paper they can find that lends itself to that message, and believe me, it is a the business equivalent of a deadly roadside bomb in the hands of competing states.

Corporate executives are not given to calls to holy orders. They are, it is true, highly desirous of taking care of themselves bigtime. But the glory, the wonder, the blessing, of capitalism is that in order for them to receive the maximum benefit for themselves, unless they are of the Nachio variety, they also have to benefit others as well. That's what Cooper did. That's what the Strib denigrates. And that's the message that will find its way to every executive considering a move to Minnesota.

But then, it's all simply part of the same sad scenario: the desperate gasps of a wounded beast. And this is just the beginning.

Labels: StarTribune, taxes

Relaxing with a cup of tea or coffee and reading a paper used to be a pleasant pastime. That idyllic scene disappeared many years ago. Why? The unbelievable bias apparent in so many papers forced me and millions of others to the Internet for a balance of news. Frankly, I prefer the paper and coffee.
Today, after buyouts and requests for changes, another example of the incredible short-sightedness of the paper media displayed itself. The Mpls. Star Tribune (Strib) has a gifted writer in James Lileks. Witty, sharp, clever, etc. , he has his own website and had a regular column and written a few books. So what does the Strib do? They switch him to a local beat.

I called the Strib circulation department (612.673.4343) to voice my concern about the sheer stupidity of this move and reached a real person! I told her I'd be cancelling our subscription except that we'd cancelled it about three years ago. She begged me to contact the reader's rep page and give the same message.

Hello Strib owners: If you want any chance of getting your paper regaining respect, provide some balance. Then again, maybe you need to sell it for a tax loss just as the most recent, previous owner did.

KING ADDS: Of course it's ridiculous. Mitch links to the analysis of Tim Worstall, which I suspect is right. It's a way to say goodbye without saying goodbye (though I doubt the severance package for columnists is that lush.) Hugh and James had a discussion a week ago (wraps around these two hours) on how to fix the newspaper and James' biggest point was "go local on page one." So why not put your best writer on the local beat? Because that's not what he does best. What they need is more input like this.

Labels: Media, StarTribune

A story of despair...

I was in the Cities this weekend and as fate would have it a StarTribune was in front of my hotel room door Sunday morning. I could have returned it for $.88, I was told, but decided to keep it. A Sunday morning with a good sports section during baseball season, and a hearty cup of coffee, is a pleasure even if the rest of the paper is crap.

Alas, my eyes insist on busyness at all times -- this will be their ruin, I know -- so eventually I got around to the editorial page, whereupon I found this.

Politicians often find it convenient to assert that taxes are paid by two kinds of entities -- businesses and people. Economists -- and this page -- don't buy it. We maintain that all taxes are paid by people.

Search the internet for "corporations are people too" and you get a lot of leftist bilge. But the editorial is correct -- all taxes are paid by people, since entrepreneurs are people too.

Tax a business' property, payroll or purchases, and to the best of its ability, that business is bound to pass the bill along to its customers and employees, in a way that bears little relationship to ability to pay.

So it only took the third sentence to go awry. Businesses don't pass along all their taxes. Some they do, but only by willingness to pay. In a free market, when you shift a tax onto me, I can say no. I don't because I value the good more than the money I give up including the tax (what Stossel referred to last night as the "weird double-thank-you", where each party to a transaction thank the other for completing it. That still happens with a tax, just less often, proof that some social welfare is lost when you tax goods and services -- there are fewer double thank-yous.)

Of late, some Minnesota politicians -- including Gov. Tim Pawlenty -- have been giving this argument an odd twist. They argue, in effect, that the one state tax that is clearly based on ability to pay -- the personal income tax -- is really a tax on business. For that reason, they say, the Legislature should not raise taxes on the state's highest earners, even though these taxpayers now pay state and local taxes at a lower effective rate than other Minnesotans. Those fortunate few are job producers, the argument goes, and making such businesses pay an equitable share of taxes would drive this flock of golden geese away.

"In effect" are weasel words. They know we don't really argue this, as they admit:

Their contention is grounded in this much reality: Small businesses, particularly sole proprietorships and partnerships, are typically organized in a way that allows their profits to be taxed only after they have been passed through to their owners, as income.

How many could this be? It's certainly many. Of the 2.4 million tax returns filed in Minnesota in 2000 (last year I could find online), 343,249 of them listed business income on their individual returns and thus would be eligible to pay the higher rate the DFL proposes. About 47,000 of them had business income over $100,000 that year, 9,000 more than a quarter million. By comparison, there were less than 30,000 100% Minnesota corporations in 2001. So it's not an insignificant amount.

But small businesses come in all sizes and profit margins. The vast majority of their owners report incomes well below the thresholds for the new top bracket being considered by House and Senate DFLers. What's more, to thrive, these business owners need the services that tax money buys: education, transportation, public safety and more.

"You can't do it without us!" When I arrived back home after the weekend and picked up my mail I got a copy of Frank Chodorov's "The Peddler as Hero." That peddler, the old middle class, had died by the time Chodorov wrote this in 1962:

The middle class, of the earlier period, was identified by something besides economic status; one thinks of them as a people motivated by certain values, among which integrity was uppermost. The middle-class man was meticulous in fulfilling his contractual obligations, even though these were supported only by his pledged word; there were few papers that changed hands, fewer laws covering contracts, and the only enforcement agency was public opinion. In the circumstances, personal integrity in the middle-class community was taken for granted; anyone who did not live up to his obligations was well advertised and lost his credit standing. Bankruptcy carried with it a stigma that no law could obliterate and therefore was seldom resorted to.

The life of the old middle-class man was, by present standards, rather prosaic, even humdrum, being enlivened only by plans for expanding his business. If he had dreams, these were concerned with getting ahead by means of serving his community better, of widening the scope of his enterprise. But, his personal life was quite orderly and quite free of eroticisms; rarely was it disturbed by divorce or scandal. His sense of self-reliance imposed on him a code of conduct that precluded psychopathic adventures and gave him stability. Orderliness in his personal life was necessary to his main purpose, which was to produce more goods or render more services for the market; that burned up all the surplus energy he had at his disposal.

It never occurred to this middle-class man that society owed him a living, or that he might apply to the government for help in the solution of his problems. The farmer is a particular class in point; the present day agriculturist, who must be included in our present day middle class in terms of income, holds it quite proper to demand of government, that is, the rest of society, a regularized subsidy, even a subsidy for not producing; the farmer of the early part of the century would hardly have thought of that.

The merchant or manufacturer located in the area served by the Tennessee Valley Authority has no hesitation in accepting electricity at rates that are subsidized by the rest of the country, and even demands more of that handout, without any hurt to his self-esteem. The pride of the peddler, the entrepreneur, has left the industrialist who now grovels before legislatures and bureaucrats in search of government contracts, while the independence that characterized the early banker has been replaced by a haughty obsequiousness of the modern financier in his dealings with government.

Indeed, it has become a "right" to demand a special privilege from the authorities � as, for instance, the urgency of professional athletic organizations for publicly financed stadia in which to display their wares; and the man who secures such a privilege does not feel humiliated by its acceptance, but rather holds his head as high as did the earlier entrepreneur who made his way on his own steam.

Perhaps the StarTribune editorialist is correct: We have raised a generation of middle class entrepreneurs that are willing to game the system, seek favors from government to line their pockets. If so, they have only themselves to blame. You now must share your wealth with the other guys in the bargain, and the other side has a monopoly on using the police to enforce their will. But there are certainly some that do not. Why are they to be punished by the force of taxation? The editorialist continues,

The argument that those who have profited most handsomely in the environment those services helped create deserve to pay a lower effective tax rate than other Minnesotans, including most other business owners, doesn't wash. Neither does the presence of business owners among the state's top earners, a group that includes ballplayers, CEOs and top professionals of all kinds, warrant a lighter tax burden for the lot.

No, you must all pay to Leviathan. Bow before your master.

What Pawlenty and other Republicans are invoking is trickle-down economics, a theory that has remarkable staying power in this country given how poorly it has aligned with experience.

And yet count the countries of Eastern Europe that have adopted a flat tax! These countries are run in many places by ex-communists. And it really fooled this guy:

Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits� In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.

This is not Reagan, but John F. Kennedy, 45 years ago.

The editorialist continues,

According to trickle-down notions, states with high taxes and progressive tax structures should be flagging economically. The evidence is otherwise. The state with the highest per capita taxes, Connecticut, had the highest per capita after-tax income in 2006; conversely, low-tax states such as Alabama and West Virginia also rank at the bottom in after-tax personal income.

This is of course the post hoc (or perhaps in this case post non hoc) fallacy. There's ample evidence to the contrary, if you wanted to look. In short, any paper that shows no effect of state tax rates on growth also shows no effect of state spending on growth, meaning all those "investments" the DFL wants to make have a zero return. Those things that made high-tax Connecticut grow also made Christine Whitman's New Jersey grow after she passed 30% tax cuts. The same can be said for southern states. This helps explain the last paragraph of the editorial:

But Minnesota doesn't have to look to other states for a model. It need only look to its history. Decades of higher-than-average taxes and spending on public services helped Minnesota become the most prosperous state in the Midwest in the 1990s. Only since big tax cuts began to squeeze those services in this decade has state income growth lagged behind the national average. That trend needs to be altered, and pinching public services in order to perpetuate sweetheart tax treatment of the wealthy won't do it.

There is no sweetheart tax treatment. Nominally, we've built in a good deal of progressivity; the "sweetheart tax treatment" is the ability of Minnesota businesses to shift taxes onto labor and consumers. I keep coming back to the same point -- raising the taxes to compensate for shifting only leads to more shifting. The only way to control shifting is to control prices and wages. That's been tried before, and the Soviet Union now lies in the dustbin of history.

The reason Minnesota is lagging behind the nation now is a shift in demographics and in comparative advantage. Minnesota used to have 16% of its workforce in manufacturing; now it has less than 13%. This is a national trend, but it hits Minnesota (and most of the upper Midwest) harder than it hits the rest of the nation, and St. Cloud harder than most of Minnesota. This is about 50,000 jobs lost in that region. What area is growing? Health care. You can say this about any state in the old Rust Belt. It has nothing to do with tax cuts or Ventura or Pawlenty or our own history. Welcome to the country that is getting older, particularly if we keep trying to keep immigrants out of it.

Those older people will remember the simpler time, and may be the people who are remembered by Chodorov,

And so it has come to pass, during the second half of the 20th century, that the ethic of the peddler class has been replaced by the ethic of mendicancy. I am inclined to the thought that the change indicates a deterioration of the American character; but, then, I am loyal to my youth, as is every older man, and may be prejudiced.

It may well be that social security is an advance over self-reliance, that the individual prospers better under the ministrations of the bureaucrat, that juvenile delinquency is a social rather than individual malady, that individual proficiency is a social curse, that freedom is indeed the right to feed at the public trough. The young people, those who were born or got their rearing during the New Deal era, do not question that concept of freedom, and the professors of economics, psychology, jurisprudence, sociology and anthropology write learned books in support of it. Therefore, it must be so.

Any attempt to revive the old concept of freedom � that it is merely the absence of restraint � would be a fatuous undertaking; it would be like trying to "turn back the clock."

Yet, one cannot help speculating on the future. When the present generation, well inured to the Welfare State, shall have grown old, will it not also write books on the "good old days," even as this book speaks lovingly of the ethic of the peddler class? And what new ethic � every generation has its own � will these books decry? Maybe it will be the ethic of the totalitarian state. Who knows?

I'll link again to Chodorov and to the StarTribune and ask, has that ethic already come to pass?

Labels: economics, Minnesota, StarTribune, taxes

Minneapolis Star-Tribune editorial: Pawlenty took office in 2003 determined to starve the state beast.

Minnesota general fund spending increase, 2006-07 biennium: 11.9%. (5.6% in 2004-05 when the budget deficit was over $4 billion.)

Fastest growing expenditures:

• Medical Assistance Basic Care for Families and Children: 22.7% 2008-09 over 2006-07.
• Medical Assistance Basic Care for Elderly and Disabled: 27%
• MinnesotaCare: 49%
• Medical Assistance Long Term Care Waivers: 19.5%

That's some kind of starving there, boy. I hate to think what would happen to my waistline if I went on that diet.

Labels: Minneapolis, Minnesota, StarTribune

No, not the show. Despite Kouba's rants, he and I still both watch faithfully. No, I meant 24 no more at the StarTribune, taking voluntary buyouts. Heard this from a friend in the parking lot yesterday, but also confirmed by Drew Emmer.

Those accepting the buyouts include: Judy Arginteanu, Bill Arthur, Steve Aschburner, Mike Carroll, Bob Franklin, Gretchen Gramenz, Doug Halliday, Jeremy Iggers, Jocelina Joiner, Tom Jones, Jim Landberg, Bob Lutsey, Ron Meador, Richard Parker, Darlene Prois, John Reinan, Pam Schmid, Al Sicherman, David Silk, Derek Simmons, Tom Simon, Dane Smith, Brad Stokman and Margaret Zack.

Dane Smith will be missed. Al Sicherman not so much.

Labels: Minneapolis, StarTribune