Bluegrass Beacon — Kentucky to the ‘trade deficit’: You’re fired!

BluegrassBeaconLogoConsidering the Bluegrass State last year exported $30 billion worth of goods and services – more than 33 other states – Kentuckians should vigorously oppose anything remotely associated with a “war on trade.”

American Enterprise Institute scholar Mark Perry rated the share of Kentucky’s economy in 2015 linked to imports and exports fifth-highest in the nation, comprising 34 percent – or $66 billion – of the commonwealth’s $193 billion GDP.

Perhaps Kentucky Gov. Matt Bevin, who recently conducted a trade mission to Japan, could find a way to strike up a cordial conversation with his good friend President Donald Trump to put the commander-in-chief at ease about this whole “trade-deficit” matter.

Bevin could even share some wisdom from flyover country by passing on Indiana University Southeast economics professor D. Eric Schansberg’s reason for claiming the trade deficit remains “the most misunderstood concept in economics.”

Schansberg, Ph.D., says the discussion about international trade often focuses heavily on the downside – which tends to be more visible in terms of some individuals losing out in a global economy – while nearly completely missing out on its subtle but significantly important benefits for an entire state or nation.

“Trade is good for the aggregate if not always for the individual,” he says.

Schansberg, who’s also a Bluegrass Institute scholar, notes that “exports lead to imports” and warns that attempting to artificially narrow the so-called “trade deficit” could result in fewer dollars invested in America’s economy.

“Everybody talks about the difference in goods and services exported versus imports when what really matters is investment surplus,” Schansberg says.

Shallow-thinking protectionists rarely dig deep enough to reach this important component in making their own determinations about the success or failure of free-trade relationships.

Why, these shallow paddlers must wonder, would Bevin travel to Japan to tout the commonwealth as an attractive investment option instead of chastising that nation because last year it only spent $1.1 billion in direct purchases from Kentucky while we as a state imported $5.1 billion worth of Japanese products?

Consider the rest of this trading-partnership story.

Not only are imports critical to keeping Kentucky at – or near – the top in the automotive, aerospace and pharmaceutical industries, but Japanese-owned companies now operate more than 180 facilities in our commonwealth.

And while Kentucky is the fifth-largest importer of Japanese goods – Japan is the No. 1 international investor in the Bluegrass State, having created 44,400 full-time positions in those facilities.

“Investment surplus,” anyone?

An important teaching moment could occur if our governor explained to the president why Kentucky exporting nearly $30 billion while importing almost $40 billion is worthy of replicating rather than punishing, which would only bring us more harm, anyhow.

Schansberg notes the last time America had a trade surplus was not during an uptick but when the economy tanked during the late 1970s.

“It’s because investors were looking at our economy and they didn’t see it as a great investment,” he said.

All those current imports mean more choices and better prices for consumers and industry. It means foreign investors look at today’s Kentucky and America and they like – really like – what they see.

Frenchman Frédéric Bastiat, a 19th-century champion of free-market economics, proposed reversing “the principle of the balance of trade and calculate the national profit from foreign trade in terms of the excess of imports over exports.”

Bastiat called this “excess” the “real profit,” and challenged the contemporary protectionists of his day to produce evidence showing otherwise.

“Even if our imports are infinite and our exports nothing, I defy you to prove to me that we should be the poorer for it,” he said.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read his weekly Bluegrass Beacon column at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Institute — Charter-school bill: Will kids win?

BluegrassBeaconLogoThe Bevin administration and House Republican leadership – despite hard pushes for other platform priorities such as right-to-work and prevailing-wage repeal – may settle for a mediocre charter-school bill.

This is a testament to the stronghold the public-education complex has on our commonwealth and to its willingness to put money and control before students’ best interests.

Charter-school legislation has passed the state Senate for years, including Sen. Mike Wilson’s bill last year that sailed through with a 28-9 vote but ran aground before reaching the other end of the Capitol – a pattern we’ve seen for years.

Then came Election Night 2016 when the GOP took control of the Kentucky House of Representatives for the first time in nearly a century.

Voters handed Republicans supermajority status in the historic November election and seemed to say – as they had to then-candidate Matt Bevin during the previous year’s gubernatorial campaign: “Go to Frankfort, make the tough decisions and don’t worry about your re-election.”

Legislators led by a new and energized majority leadership responded by passing seven bills in the session’s historic first week concluding with an equally momentous Saturday session despite threats from protesting union bosses in the halls of the Capitol to defeat them in the next election.

Then came the charter-school bills.

Rep. Phil Moffett’s House Bill 103 would have allowed mayors in Kentucky’s largest cities, the Council on Postsecondary Education as well as colleges and universities with accredited education colleges to serve as charter-school authorizers – a best practice working well in other states.

Then superintendents, teachers-union bosses and the public-education complex in general threatened to make this the last term in Frankfort for anyone supporting a strong charter-school bill.

Along came Rep. John “Bam” Carney’s House Bill 520, limiting authorizers to local school boards except for mayors in Metro Louisville and Lexington, albeit with an appeals process to the Kentucky Board of Education. That bill passed the Kentucky House and now sits in the Senate Education Committee.

So, education-complex threats may be strong enough to force Kentucky policymakers to settle for a bill, the mediocrity of which mirrors this state’s education system in which, as Moffett notes, only 51 percent of high-schoolers can read at grade level and just 38 percent are proficient in math.

The Bevin administration sees Carney’s bill as an opportunity to get the door opened for charter schools in one of only seven remaining states without charters.

But even Bevin conceded he “would have liked to have seen more than is in this bill” while insisting “we have to factor in what is possible.”

Another possibility, of course, is to wait until a stronger bill can be passed – not the first time we’ve mentioned in this column that route for serious consideration.

At the very least, facts should drive the debate that will take place in the coming days in Frankfort, including this one: charter-school creation is much-more robust in states with multiple authorizing agencies.

The National Alliance for Public Charter Schools reports there were 6,723 charter schools in the United States during 2015, of which 93 percent – or 6,241 – were in states with multiple authorizers. Only 482 – or 7 percent – exist in states that limit authorizers to local school boards.

For sure, the angst and debate regarding charter-school policy will test the political mettle of those sent to Frankfort by constituents assuming they would be in favor of strong reforms to our education system, which consumes 60 cents of every taxpayer dollar.

Will they stand up to the teachers unions’ uninformed and angry zealotry?

Will they fight for poor and at-risk children who stand to gain the most from great charter schools and who have no other voice but ours?

Will the best interests of thousands of young Kentuckians stuck in hundreds of mediocre and failing schools find a seat at the legislative table and a place in that debate?

Stay tuned.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read his weekly Bluegrass Beacon column at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: Embrace politically ecumenical policies

BluegrassBeaconLogoWhile the 2017 session of the Kentucky General Assembly has had its share of party-line votes, some policies designed to make government more transparent and accountable have garnered bipartisan support.

The decision by House Speaker Jeff Hoover and Senate President Robert Stivers to direct the Legislative Research Commission (LRC) to publish committee votes online within 24 hours is being hailed by policymakers across the political spectrum.

The decision resulted from a letter spearheaded by the United Kentucky Tea Party and signed by groups as diverse in their political views as Donald Trump and Chuck Schumer are concerning immigration policy – from Take Back Kentucky to the American Civil Liberties Union.

Apart from the most controversial bills, which usually result in the filing of floor amendments, most legislation’s heavy lifting occurs in committee hearings.

“Because the House and Senate committees have great influence on the consideration of bills by the full body, it is imperative that this critical process is similarly visible to the citizens of Kentucky,” the jointly signed letter.

Your humble correspondent enthusiastically signed as president of the Bluegrass Institute, which led the effort in 2005 to give citizens prompt access to votes on bills taken on the state House and Senate floors.

While that certainly was a giant step forward, making committee roll-call votes available in real time will, as Speaker Pro-Tem David Osborne, R-Prospect, observed, give constituents “access to every move we make on their behalf.”

House Minority Leader Rocky Adkins, D-Sandy Hook, also said his side of the aisle “concur and support the publication of legislative committee votes posted online.”

It should also change the practice of legislators passing on votes to avoid tough politically fraught decisions.

Committee-vote results for the remainder of this legislative session can be obtained by clicking:

  • “Legislation” at the top of the LRC website’s home page, then
  • “2017 Regular Session,” then
  • “In Senate” or “In House,” depending on which of the chamber’s committee voted on the bill.

It’s temporarily clunky. However, the information will become much-more useful once committee votes are included on bills’ vote history, which will be added later.

Senate Bill 3, which passed with a 95-1 vote during the session’s first week, is proving not only to make taxpayer dollars more transparent but also to have great impact as taxpayers get a full view of 400 current and retired lawmakers’ pension benefits.

Such transparency has made it possible for reporters and media outlets statewide to report on politicians who reap a six-figure pension by gaming the legislative retirement system for a lifetime while also double-dipping via collecting a second fat check from other state benefit plans.

Space doesn’t permit me to give you the lowdown on several other retired politicians collecting more than $100,000 in taxpayer-funded pension benefits nor on the sexual harassers, felons, even murderers who receive a lifetime of public-retirement checks courtesy of we, the taxpayers.

But you can see it for yourself now.

Another policy that deserves the same type of overwhelming bipartisan support is Louisville Rep. Ken Fleming’s proposal to conduct an inventory of state government with the goal of cutting wasteful duplication and costs of services.

Fleming’s House Joint Resolution 35 directs the Finance and Administration Cabinet to determine what services currently are provided by each department or agency, the price tag of those services and “the feasibility of privatizing, consolidating, or otherwise changing those functions and services to achieve costs savings.”

Based on his experience as a small-business owner and former Louisville Metro Council member, Fleming told me he believes there’s a “silo mentality approach to government operations” which too often results in “a lack of truly understanding the cost of delivering services,” as well as duplication of delivery of services – some of which government should not even be doing.

“Government cannot be run as a business, but it sure can embrace a lot of business applications,” Fleming said.

That’s an idea both sides of the political aisle can – and should – embrace.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read his weekly Bluegrass Beacon column at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

 

Bluegrass Beacon: Fearmongering fails with free-market reforms

BluegrassBeaconLogoEditor’s note: Senate Bill 10, which moves forward with properly deregulating the telecommunications industry in Kentucky passed the Senate 35-1 and the House of Representatives 75-13 and awaits Gov. Matt Bevin’s signature.

The political left’s preferred pattern is to consign conservatism to the wilderness with obituaries of its much-ballyhooed demise abounding, signaling: it’s time to bury all hope of returning to the constitutional republic our founders intended.

When that doesn’t work – like when disruptors of the status quo took over the Kentucky House in November and began resurrecting ideas about returning this commonwealth to a free-market economy and the Constitution for which it stands – the preferred tactic of the left also resurrects: fearmongering.

The scaremongering was on full display throughout Betsy DeVos’ confirmation process as Education Secretary.

Senators and celebrities alike, many of whom attended – and send their own kids to – elite private schools, predicted gloom, despair and agony for public schools because DeVos wants to give all parents the same opportunity to choose a better education for primarily at-risk students that these hypocritical school-choice opponents’ rich kids enjoy.

I was reminded why I quit watching Comedy Central when I saw actress Ilana Glazer’s tweet: “It’s heinous, the school system was already so broken – this is murdering it.”

“Avengers” director Joss Whedon claimed DeVos and her supporters “declared war on our children.”

Liberal senators responded with similar vitriol. Washington Sen. Patty Murray, a Democrat, called the Michigan philanthropist’s nomination “a slap in the face.”

But America’s had charter schools for a quarter-century yet Chicken Little isn’t showing up on Public Education Street.

In fact, the best research shows that once students attend charter schools for at least three consecutive years, they usually begin to academically outperform their peers in regular public schools.

There have been no reported sightings of C.L. on other streets, either.

It wasn’t that long ago, for instance, that the rhetoric of fear could be heard clanging up and down Telecom Reform Street claiming regulatory improvements passed by the legislature in 2015 would leave vulnerable Kentuckians in rural regions without basic phone service.

“They won’t even be able to call 911,” Chicken Little clucked.

I put a call into C.L. on my new LG phone – at least where I could locate a signal – asking him to find me a single Kentuckian who lost basic phone service because of the 2015 reforms.

“Well, at the very least,” clucked C.L. Fearmonger, “they will harm, not help, Kentuckians.”

Tell that to entrepreneurs in Louisville now able to start home-based businesses or to students doing major projects online who now have access to larger and faster residential gigabit service. With increased investment, similar access will soon be coming to other parts of Kentucky.

Yet while Kentucky’s telecommunications reforms in 2015 were a good start, three years is a lifetime in technology.

The commonwealth must follow the example of every other southern state by fully updating its telecom regulations.

Otherwise, we will continue losing out on very large investments by telecommunications companies less interested than ever in diverting resources toward maintaining old technology to satisfy rotary-dial regulations instead of building advanced, next-generation networks for all Kentuckians.

Other states, including neighboring Indiana and Tennessee, long ago eliminated onerous regulations like those that remain wrapped like anvils around the ankles of Kentucky’s progress.

This year’s legislative session can make history by removing the regulatory fetters and providing incentives to accelerate increased investment in Kentucky’s telecom infrastructure and making certain all Kentuckians – whatever their street – have access to the information superhighway.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read his weekly Bluegrass Beacon column at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: Set the table for a school-choice buffet

BluegrassBeaconLogoPresident Donald Trump’s administration is taking some cues from the productive Kentucky Legislature.

After a frenetic first week of the 2017 session of the Kentucky General Assembly during which seven bills were passed, the new Trump administration offered a proportional amount of accomplishment during its first five days in the White House.

Trump took 15 major actions in his first five days, including steps toward ending Obamacare and withdrawing the nation from the Trans-Pacific Partnership – a victory for Kentucky farmers, who grow more than 87,000 acres of tobacco annually.

I called for both actions in this column during the recent election season.

The Obama administration embedded its hatred of the tobacco companies into the 12-nation TPP deal, excluding these firms from protections available to all other industries against foreign governments taking property without compensation or seizing assets in the name of “public health.”

While the deal contained some attractive tax and tariff cuts, it’s unacceptable to single out a specific industry and its legal product based on ideology and the running amok of political correctness.

Still, it’s important for our nation’s security and for Kentucky farmers and manufacturers to maintain a strong, open trading relationship with willing countries.

As Frederic Bastiat, the great 19th century free-market French economist, believed: “If goods don’t cross borders, armies will.”

Democrats who lost the Kentucky House on the same night they turned over the keys to the White House complain about the feverish pace of it all.

Yet most of the legislation debated and passed in Frankfort during the first week in January – right-to-work, repeal of costly prevailing-wage mandates on public construction projects, making part-time politicians’ pensions transparent and pro-life bills – had been debated and passed by the state Senate for years.

School-choice legislation also fits that scenario.

It’s likely this session won’t end before Kentucky becomes the 44th state with a charter-school law and perhaps also the 18th state to turn tax-credit-friendly donations into scholarships allowing children from countless numbers of families access to a private education.

Louisville Rep. Phil Moffett’s charter-school legislation would offer Kentucky’s kids the opportunity to attend schools that will allow them, in many cases, to break the cycle of generations of poverty, illiteracy and failure.

Opponents continue to offer recycled claims about how empowering parents to choose the school that best fits their children’s educational needs somehow is a vast right-wing conspiracy to destroy public education.

But wait a sec’.

Charter schools are public schools.

Along with the reality that policies like Moffett’s bill haven’t caused an implosion of public education in those 43 other states is the expectation hardworking taxpayers have when they fork over their hard-earned dollars – $10.1 billion designated for K-12 schools in the commonwealth’s current biennial budget.

They want their money used for educating children, not propping up failing systems or sustaining jobs programs for adults.

While discussing his bill at a recent education forum in an inner-city church in West Louisville, Moffett told the largely minority crowd: it’s time to take a cue from its neighbor to the North.

Indiana is changing its approach – “to thinking about public education, not public-school systems,” the former GOP gubernatorial candidate said.

The shift has resulted in many more options for Hoosier State parents – from charter schools to vouchers to tax-credit scholarships and even individual tax credits for private-school enrollment and tax deductions for homeschooling families.

The Hoosier State has one of America’s biggest school-choice buffets and fastest-growing economies.

Kentucky will take major steps toward setting its table with the same kind of spread with similar results when it gets back in the kitchen on Feb. 7.

It can’t happen fast enough.

Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read his weekly Bluegrass Beacon column at www.bipps.org. He can be reached at jwaters@freedomkentucky.com and @bipps on Twitter.

Bluegrass Beacon: Statesmen embrace ‘loftier objectives’

BluegrassBeaconLogoDid you hear the one about the Texas great-grandmother, who, two days before her recent 92nd birthday, laced up her orthopedic shoes and then jumped out of an airplane?

Phyllis Guthrie, who earned a doctorate degree at age 78 before climbing a mountain in the Alps at age 82, isn’t ready to settle for making the afternoon Bridge game at the Waterview Senior Living Center in Granbury, Texas, the highlight of each of her remaining days.

So she jumped.

“If George Bush can do it, then so can I,” she told Fort Worth Star-Telegram reporter Sarah Bahari, referencing the former president’s sky dive to celebrate his 90th birthday.

The world needs more Phyllis Guthries with long bucket lists and fewer people content to live vicariously through others’ feats.

We also need more statesman and fewer unremarkable politicians at all levels of government.

Too many politicians seek office for the thrill of the ride and the notoriety and power it brings.

What we consider “good politicians” often are those who simply have figured out how to manipulate the levers of power primarily for personal gain and without any real intention of accomplishment.

“The statesman’s allegiance is to loftier objectives,” Lawrence W. Reed, president of the Foundation for Economic education, wrote in an essay outlining the characteristics of true statesmanship versus the mediocre politics we see too much of today.

Many of the eligible voters who stay home on Election Day have made it clear: they would engage if office seekers at least aspired to act in a more statesman-like, less-partisan manner.

It would also reconfigure Washington and Frankfort in ways that would make both of those cities – and the policies emanating from them – look and function much differently.

What if, for example, we had more men and women who already had accomplished much in their own lives and were willing to sacrificially take time away from those endeavors to serve the general welfare, instead of folks seeking to hold on to power for what they can get out of it or because it’s the only kind of work they know?

How different is a statesman like the ancient Cincinnatus, who would have contentedly remained anonymous in the annals of history, enjoying life on the outskirts of Rome in the fifth century with his wife Racilia on their three-acre farm.

However, when the Roman Senate called, he answered, dropping his plow to become the nation’s all-powerful military leader in order to deliver the city of Rome itself from vicious tribal armies at its gates.

Cincinnatus could have reveled in power and riches for the rest of his life with absolutely no worries of being term-limited. Instead, he relinquished power and returned to his farm after a mere 15 days.

America had its own Cincinnatus in George Washington.

Washington like his historical counterpart attained near-mythical status, not just due to the fact that he led the fledgling Continental Army to against-all-odds victory over the British Redcoats or even because he served as the nation’s first president.

He was admired and respected by his fellow Americans because of his genuine statesmanship demonstrated by not just a willingness but an eagerness to relinquish power.

Washington rejected Connecticut Gov. Jonathan Trumbull Jr.’s attempts to convince him to run for a third term as commander-in-chief, writing to the governor that he wanted to avoid being “charged … with concealed ambition.”

Great-grandma Guthrie said she jumped out of that plane because she wants her family and friends to have a way to remember her.

“I want to leave a legacy,” she said.

While there are many qualities of statesmanship, none results in a richer contribution to momentous legacies than men and women who leave lives of individual accomplishments, genuinely sacrifice for the good of others and seek only enough power – holding on to it only long enough – to complete their assignments.

Jim Waters is president of the Bluegrass Institute; Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Bluegrass Beacon – Teachers and their pensions: Doing the math

BluegrassBeaconLogoLots of retired teachers bared their angry fists at me following my recent column about the soon-to-retire public school administrator who will, if he fulfills life expectancy, collect pension checks for longer than he worked, enjoy annual cost-of-living increases and amass a KTRS-funded $5.6 million fortune by retiring at 49 years of age after working 27 years.

“Please be accurate rather than (highlight) one exceptional pensioner!” one retired emailer scolded.

However, it behooves all of my retired-teacher friends to remember: the same shrinking KTRS kitty that’s billions upside down yet which they depend upon for their own pensions is the very same plan struggling to fork over the money for that administrator’s lavish benefits.

Yet while highly paid superintendents and principals have both hands in Kentucky’s pension pot, some basic mathematics reveals that many retired teachers overdo it with claims of humble pensions.

According to Daviess County Public Schools’ published certified salary schedules for the past three years:

  • Rank 1 teachers with at least 21 years of experience earned gross salaries of $62,364, $62,988 and $64,248, respectively, during the three most recent years – presumably their three highest annual salaries – for a total of $189,600 and an average of $63,200.
  • Daviess County teachers who spend 33 years in the classroom and retire in their mid-fifties with those three highest years of salary will, according to the KTRS website’s own “Benefit Estimator,” receive a total service credit – a complicated part of the pension formula used to determine retirees’ benefits – of 84 percent. (The total service credit is established through multiplying the first 30 years by a 2.5 percent per-year service credit and the final three years by an enhanced annual 3-percent credit and combining those totals.)
  • The average salary of $63,200 multiplied by the 84 percent service credit results in a $53,088 gross annual – or $4,424 monthly – pension check.

Sounds reasonable so far, right?

Let the unreasonableness begin:

  • According to KRS 161.155, 33-year employees are allowed 10 sick days a year and can count up to 300 unused ones toward their annual salaries used to determine their retirements.
  • State law requires that 30 percent of the total amount of the average daily salary of these 300 days be incorporated to decide a retiring teacher’s final annual salary. KRS 161.623 dictates this be done by dividing the teacher’s salary in the final year he or she worked “by one hundred eighty-five (185) days.”
  • The final year’s salary in Daviess County of $64,248 divided by 185 days reveals per-day pay of $347.29. Teachers who accumulate half – or 150 – of those days at the end of their career boost their pensions by $15,628, giving them annual retirement payments of $68,409, or $5,701 monthly.
  • None of this even includes the annual cost-of-living increases (COLAs) and rich, but nearly free, health-care benefits KTRS recipients receive.
  • “But we don’t get Social Security,” I can hear even now as fists shake faster and angrier. True. I will have some thoughts in a future column on how to remedy that policy in favor of KTRS and the taxpayers.

This brief mathematical study shows that Daviess County teachers who save even half of their sick days will receive more in gross pension benefits during their first year of retirement than in the final year they worked.

If they fulfill their life expectancy, they will amass more than $2.1 million in taxpayer-backed retirement bucks – plus tens of thousands of additional dollars in the form of health-insurance benefits and COLAs for a lifetime. (Those benefits are not even included in the above numbers.)

The burden of a system allowing teachers – or any public worker, for that matter – to retire in their mid-fifties and collect hefty public-pension, health care and cost-of-living checks is funded by taxpayers struggling to make ends meet in their own homes, and who, if they even have a retirement plan, are largely funding it themselves.

Plus, they’re certainly working more than 185 days a year.

Who should be angry here?

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Bluegrass Beacon: One politician’s minimum-wage hike is a young worker’s poison

BluegrassBeaconLogoThe Pardachirus marmoratus, also known as “Red Sea Moses sole,” is a small fish secreting a poisonous milky substance allowing it to swim with sharks in biblical waters.

The poisonous paradaxin irritates predator fish and, in some cases, even temporarily paralyzes their jaws, keeping them from making Red Sea Moses a bite-sized appetizer.

While some well-meaning, bleeding-heart marine biologist out there would suggest, if it were possible, removing those fins that allow Moses to spill paradaxin into the water (it’s poison after all!), I doubt it would just be PETA radicals protesting that removing the one defensive mechanism allowing sharks and soles to swim together is cruel and unusual punishment – despite the good intentions involved.

So, where’s the objection to minimum-wage laws that not only force employers to pay more but also prohibit workers from accepting jobs they deem worth their effort if the pay falls below some arbitrary level determined by politicians, most of whom never met payrolls or bottom lines?

Not all who support hiking Lexington’s minimum wage by a whopping 39 percent to $10.10 within three years are like the community dividers who shouted judgmental slogans about what Jesus would do to anyone who disagreed with them at recent public hearings.

Yet while council members who push government-mandated wage hikes may not intentionally be dividers, their policies can make them destroyers in the same way Moses sole would become Catch of the Day if he lost the ability to secrete paradaxin.

Proponents claim their proposal to raise the minimum wage from the current $7.25 to $10.10 per hour is meant to collectively raise the boats of those on lower rungs of the economic ladder in the face of big, bad employer sharks.

Why don’t proponents of helping the economically disadvantaged instead permit the poison to return by removing wage mandates and letting workers lacking the skills and experience to produce $7.25 per hour – much less $10.10 – regain their competitive edge in the employment seas?

Doing so would allow 16-to-24-year-old employees, who comprise the majority of Kentucky’s minimum-wage workforce, to release the kind of poison that keeps technical experts and veteran laborers from throwing them to sharks named “Unemployment Jaws” and “Lack of Opportunity.”

It’s the only competitive advantage many young people have, and which would – like the Red Sea Moses sole – allow them to survive in the current marketplace’s choppy waters.

Give a porcupine his quills or a deer her speed and you help animals that otherwise would be completely defenseless successfully compete for their lives.

Loyola University economics professor Walter Block notes there also are “weak economic actors,” including the young, disabled, minorities and untrained.

“But like the weak animals in biology, they have a compensating advantage: the ability to work for lower wages,” Block writes. “When the government takes this ability away from them by forcing up pay scales, it is as if the porcupine were shorn of its quills.”

Just like price increases result in consumers purchasing fewer goods, employers forgo the “purchase” of unskilled labor – especially when the cost of that labor rises.

University of Kentucky economics professor Ken Troske predicts the council’s planned minimum-wage increase will cost Lexington 2,000 jobs.

University of Michigan economist Mark Perry writes that Seattle, which in 2014 passed a $15 minimum-wage mandate, lost 700 restaurant jobs between January and September while “restaurant employment in the rest of Washington state is booming this year” with the addition of 5,800 such positions during the same time period.

Block surmises the result of government-forced wage increases “is unemployment, which creates desperate loneliness, isolation, and dependency.”

No wonder a former colleague of mine concluded: “the minimum-wage law is one of the cruelest in the land.”

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Bluegrass Beacon: Warmer economic climates heat up competition for jobs

BluegrassBeaconLogoFlorida Gov. Rick Scott’s recent stop in Kentucky to try and convince businesses to move south to the Sunshine State was met with predictable derision from the political establishment.

Louisville Mayor Greg Fischer used Scott’s visit to remind people of the Florida governor’s baggage from his past tenure as CEO of the Columbia HCA hospital chain, which purchased Humana’s “Galen” hospitals in the early 1990s.

Scott in 1995 moved the company’s headquarters and its 1,000 jobs from Louisville to Nashville, citing Kentucky’s high taxes. He was forced to resign in 1997 in the midst of a $1.7 billion settlement related to Medicaid fraud.

“And now, this guy is coming to Kentucky and saying, ‘Trust me?’” Fischer said. “I don’t think so.”

But Scott isn’t preaching “trust me.”

He’s in competitive mode, promoting the Sunshine State’s warm business climate – including lower taxes, less regulation and the freedom to say “no” to paying union dues without losing your job.

“You don’t have to worry about your taxes going up because the credit rating is not one of the worst in the country,” Scott said, rightly noting that’s “what’s happened in Kentucky.”

Scott’s not the only one who’s touting Florida.

Friendlier tax codes make it a little easier for us to do business there,” said Chris Yeazel, owner of 1st Choice Aerospace, which has decided to expand in Scott’s state rather than at its Hebron location.

The decision by the company, which repairs interior items on commercial aircraft, means 40 new jobs and a $7 million investment will go to the Sunshine State instead of Kentucky.

It’s fair game for Scott’s critics to question his integrity. Credibility matters.

However, Scott isn’t the only governor to come and contrast his state’s attractiveness with Kentucky’s slower economic growth.

Then-Texas Gov. Rick Perry came to Murray last year and said he didn’t “worry about” Kentucky.

“I can promise you: I get up every morning and I’m nervous about what (Gov.) Bobby Jindal’s doing in Louisiana, and I know for a fact that Rick Scott’s over there in Florida looking at his tax code, his regulatory code; he’s trying to pass major tort reform in Florida today. It makes me nervous,” Perry said. “You think (Tennessee) Gov. Bill Haslam’s not sitting down there, kind of looking up here going ‘which of these businesses am I going to come get this time’ because he’s a right-to-work state, he doesn’t have a personal income tax.”

Neither is 1st Choice Aerospace the first company to invest in another state while citing uncompetitive policies.

Chegg, Inc., a California-based textbook rental company, announced earlier this year it was closing its Shepherdsville-based fulfillment center.

Rob Chestnut, Chegg’s general counsel, told Louisville Business First: “Kentucky’s business climate has had us very unhappy for quite some time.”

The story’s headline read: “Where will Chegg Inc. move its inventory? Anywhere but Kentucky.”

Some recent data also casts serious doubt on Kentucky’s competitiveness.

A new Truth in Accounting report indicates that our commonwealth has the nation’s fourth-highest taxpayer burden.

Frankfort owes $53 billion in bills, has $13 billion in assets, which leaves $40 billion in debt and results in a $32,600 burden for each taxpayer – up from $23,800 in 2009.

Compare that with Florida’s taxpayer burden of $1,100 or neighboring Indiana’s $700 load.

Each Tennessee taxpayer would actually receive a $1,300 surplus if the Volunteer State’s $2.4 billion surplus were divided among them.

Such economic strength is attractive to companies looking to expand.

They don’t want to arrive in a state only to be forced to bail out a public-pension system through higher taxes.

Will Fischer and his fellow politicians urge Kentucky’s business owners: “Don’t leave; trust us to fix these problems”?

How many will respond: “I don’t think so”?

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Bluegrass Beacon: Virus of secrecy infects KentuckyWired program

BluegrassBeaconLogoEditor’s note: Since this column was originally released on Sept. 17, the commonwealth finally – finally – posted the KentuckyWired contract. However, the points made here about this big-government boondoggle remain very timely and relevant.

If Gov. Steve Beshear’s administration wants taxpayers to trust it to build KentuckyWired – a $350 million, 3,000-mile high-speed Internet network – then bureaucrats in charge of the project should at least be technologically capable of scanning and posting a copy of the commonwealth’s contract with Macquarie Capital, its Australian partner.

Could it be the administration doesn’t want taxpayers to know the details because Macquarie has a poor track record when it comes to government-owned high-speed Internet projects in other states?

Instead of just releasing the documents, a Finance Cabinet official responded to a simple request to see the contract by claiming his office was having technical difficulties posting the documents online but claimed they would be available in another week or so.

It’s supposedly been months since a deal was reached, yet we still haven’t seen the contract.

With a project this big and with all Kentucky taxpayers on the hook, an open-records request should not even be required. The details should have been revealed even before it was signed.

Perhaps the claim about “technical difficulties” is just a smokescreen for politicians in Frankfort, including legislators – who slipped a $30 million KentuckyWired-expenditure into the 2014 budget and who would rather not have us privy to its details.

If KentuckyWired is as good as Beshear’s public-relations machine claims and even the gubernatorial candidates naively believe, wouldn’t they want taxpayers to know as much as possible – as soon as possible – about its greatness?

“Here in Kentucky, you’re about to be given a gift,” Brian Mefford, CEO of Connected Nation Exchange, piped up with all of the sunshiny-ness he could muster during a recent broadband conference. “And the only think you had to do to get that gift is to be a taxpayer.”

He’s right: this project surely will be a gift that keeps on taking … from taxpayers.

There are other question marks about the project, including how Frankfort’s genius bureaucrats and politicians concluded they could build an entire statewide network for $350 million when it cost $500 million to construct a gigabit network in one city – Chattanooga, Tennessee.

Also, realizing that there usually are cost overruns even on projects that government knows how to build reasonably well – such as roads, bridges and schools – what’s the contingency plan for such excesses related to the KentuckyWired initiative?

What happens if the project runs out of money before completion? Will taxpayers be forced to ante up and make up the difference?

Considering that, conservatively, 85 percent of Kentuckians already have access to high-speed Internet service, where will KentuckyWired find its customer base?

Will state government quit doing business with private companies who currently serve city colleges and universities? What would such an approach do to the rates of private Internet providers?

What if the network can’t get enough subscribers to properly fund it?

Will all Kentuckians be forced to pay higher utility fees, like Macquarie Capital tried to tack on to utility bills of Utah residents – even those who already had their own service or simply didn’t want to subscribe to the 11-city government network?

Who will build this Internet highway? Originally, rural Kentucky contractors were promised that this would be a true public-private partnership – with them involved in constructing the fiber-optic lines for the network.

We now hear rumblings that a Canadian company is going to be brought in to build out the network instead of employing those who live, work and contract in – and know – rural Kentucky.

Making taxpayers wait to see the details until after Frankfort already committed to funding this deal is like forcing a home owner or car buyer to make the deal before finding out the terms of the loan.

It would be like saying “we’re giving you a gift,” only to find out later it was a genuine dud.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.