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*Opinions expressed here may or may not reflect the views of the Fernley Republican Women. Blog posts should not be considered an endorsement from the FRW.

Just the Facts, Ma’am: Income and Taxes in America

2/9/2021

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​“The rich get richer and the poor get poorer.”  A glib trope a liberal-statist law school classmate used as an obvious and key claim in advanced constitutional law in 1995.  My oral response objection was so loud and immediate the professor admonished me.
But official numbers at that time supported my objection.  And sound theory shows that, in a true market economy, it’s the right result when it happens.
We’ve all heard numerous similar tropes from Democrats, liberals, progressives, the politically correct and populists nearly every day.  These claims are so glib, well known and often generally accepted that the Dems, et al. usually don’t bother to back them with research, data and analysis.  And Republicans, conservatives and even many limited-government empiricists often don’t even bother to contest them.
More: The rich are paying lower taxes than they used to, especially since the Trump tax cuts.
And: The rich aren’t paying their fair share, so we need to increase their taxes so they do.
Etc.
Fortunately, the Internal Revenue Service publishes the actual numbers and facts with which we can determine the validity of these claims each year.  So, let’s explore the latest annual report, released last month and covering tax year 2018.
The poor get poorer?  The Tax Foundation’s (TF) digest of the IRS’s data states: “Tax year 2018 was the first under the Tax Cuts and Jobs Act (TCJA).  The number of returns filed and the amount of income reported grew in 2018 yet average tax rates fell across every income group and total income taxes paid decreased $65 billion.”
So, a tax cut preceded not just increased incomes for the poor and all income classes, but also income for all taxpayers as a group.  Score one for the key supply-side claim our tax rates are so high they damage the overall economy.
What about the really rich?  Per TF: “The share of reported income earned by the top 1 percent of taxpayers fell slightly, to 20.9 percent in 2018 from 21 percent in 2017.”  But remarkably, “Their share of federal income taxes rose by 1.6 percentage points to 40.1 percent.”
Moreover, “Since 2001, the share of federal income taxes paid by the top 1 percent increased from 33.2 percent to a new high of 40.1 percent in 2018.” … In 2001, the top 50 percent of all taxpayers paid 97.1 percent of all individual income taxes, while the bottom 50 percent paid the remaining 2.9 percent.”
That is, the long-term trend shows the income tax has become greatly more progressive.  And that trend continued with the Trump tax cuts.
But wait, there’s more!  “The top 1 percent paid a greater share of the individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent).”  And, “The top 1 percent of taxpayers paid a 25.4 percent average individual income tax rate, which is more than seven times higher than the taxpayers in the bottom 50 percent (3.4 percent).”
So much for the claim the super-rich don’t pay their share.
Moreover, high-income taxpayers paid the majority of federal income taxes, “In 2018, the bottom 50 percent of taxpayers (those with [Adjusted Gross Income] below $43,614) earned 11.6 percent of total AGI.  This group of taxpayers paid $45.1 billion in taxes, or roughly 3 percent of all federal individual income taxes in 2018.”
“In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $540,009 and above) …  earned 20.9 percent of all AGI and paid 40.1 percent of all federal income taxes.”
No one knows the exact ratios that are distributionally fair, but the trends and current rates support the following:
1) high overall tax rates and public spending are greatly responsible for our slow economic growth in the 21st century (as discussed at length in my previous columns and my Controller’s Annual Reports);
2)  the poor as a group are getting richer, not poorer;
3) the share of income taxes paid by the rich has increased greatly in the 21st century and continues to do so; and
4) the ratio of the rich incomes taken by federal income taxes is much higher than the puny fraction taken from the poor and middle-income folks.
Ron Knecht has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com. 
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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LGBTQ and All That: Conflicting Rights

2/2/2021

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​In my last column, I discussed the problem of transgendered boys and men competing in athletic competitions established for girls and women.  I explored the subject from the perspective of outstanding female athletes who have no chance of winning against previously male competitors who were nowhere near the top of the men’s standings in their events.
As one lady said, “It’s just not fair.”
That seems to be the overwhelming consensus on the subject among folks I know.  But while I think that’s the essence of the matter, the subject deserves a broader and deeper treatment.
One appropriate context is to consider transgender issues in the context of lesbian, gay, bisexual, transgender and queer issues – the LGBTQ complex so widely discussed but not addressed in necessary disaggregation and detail.
The first point is: transgender issues are characteristically different from the other four.  LGBQ matters involve folks’ preferences and actions regarding persons of the same or opposite gender.  Transgender issues deal with how some persons identify themselves and their desires to assume a gender other than the biological identity with which they were born.
Thus, LGBQ persons typically are generally happy with their own sexual or gender identity and they prefer the intimate company and practices of their own kind or of a mix of their own sex and the opposite sex.  This is generally contrary to conventional sexual mores and religious or ethical teaching.
Social pressure against LGBQ practices still today in many societies and historically in many others, including our own, often extended to legal prohibition or other sanction.  American social practice and law, as well as that in most other western societies, has been greatly liberalized in recent decades.  Now, LGBQ lifestyles are celebrated, not discouraged, as part of valuing human diversity.
So, we have LGBQ holidays, parades, nightclubs, bars, literature, etc.  Many more traditional people continue to resist this change, especially the supportive and celebratory aspects of it, but mainly tolerate it without objection.  The issue is the distinction between, first, accepting and, second, supporting and even celebrating minority choices.
Law in this area has generally focused on requiring tolerance, but not mandatory active acceptance or celebration of minority practices.  And make no mistake, the LGBQ community is decidedly a minority, varying from three to ten percent of the population, depending on age and other factors.  The sticking point arises when LGBQ people seek public support, celebration or accommodation, a burden on straights beyond mere passive acceptance and tolerance.
The apparent logic is: There’s little burden on folks who oppose or only passively tolerate LGBQ practices when those practices are confined to the minority’s private life and do not intrude on the lives of the majority.  And there’s significant benefit to the minority of allowing them to do their thing.  Hence, the social cost-benefit analysis favors toleration and passive acceptance.
But requiring participation, active accommodation or celebration reverses the C-B analysis so that the majority suffer more burden than the benefit then accruing to the minority.  This is because there are so many more people in the majority and the feelings of many of them are as strongly held as those of many LGBQ supporters.
Also, each side has strong claims it has basic rights at stake:  LGBQ persons to their practices, and straights to a world that doesn’t continuously assault majority mores and cause conflict. Transgender issues confront an even bigger deficit in terms of minority numbers and sensibilities versus majority numbers.  About 0.03 percent, or three in ten-thousand people have significant transgender tendencies.  So, the ratio is about 9997:3.
But transgender issues aren’t only characteristically different from LGBQ issues.  Some transgender desires, such as sharing locker and bathroom space or competing in athletic competitions, directly burden straights, as shown in considering transgender men in female athletics.
Even after full biological change to female, including surgery and hormones, persons born as men still have significant advantages in size, bone and muscle mass, strength, etc.  As one girl said, “That unfairness doesn’t go away because of what someone believes about their gender identity.”
LGBQ issues lend themselves to mutual accommodation.  In the transgender conflict of basic rights, there’s very little room to live and let live.
Ron Knecht, MS, JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contract him at RonKnecht@aol.com . 
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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Biden’s First-day Executive Order Embraces Sexism

1/26/2021

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​When Sandra Bucha entered high school in 1968, she wanted to be a competitive swimmer.  But there were no girls’ teams in her state.
In 1972, with help from the American Civil Liberties Union (ACLU), she and her father filed a federal lawsuit against the Illinois High School Association on behalf of girls who wanted to compete in school sports.  They lost, in part because the judge noted that males have physical advantages over females, and thus schools had valid reasons for separate athletic competitions.
That same year, Congress passed Title IX, a law prohibiting sex discrimination by schools receiving federal money, which is almost all of them.  Now colleges and schools that field athletic teams have significant numbers of girls/women’s teams and athletes.
Although I wish female athletics had been achieved without federal legislation and well before 1972, I’ve always thought providing equal opportunity is a great thing for everybody.  And I’ve been proud of America for it.
Alanna Smith, a sophomore at Danbury High School in Connecticut, is a natural athlete.  She’s the daughter of Lee Smith, a Hall of Fame major league pitcher, and her mom was a high-school long-distance runner.  One uncle played professional baseball, another professional football, her grandfather was a high-school basketball and football standout, and her twin brother is a three-sport athlete.
“Sports is a huge part of who I am,” she says.  “Training to compete and be my physical and mental best at the starting block is who I am, too.  Running with my mom when I was younger taught me how to prepare, train and focus.”
She won state 100-meter championships in sixth, seventh and eighth grades.  She’s proud to have set records and achieved personal goals.  But as a high-school freshman, she had to compete against two males who identify as female in the state meet.
“No matter how many hours I trained – or how hard I worked on endurance, speed and strength – I had no chance to beat the physical strength of a biological male who previously ran in the men’s division.”
“I felt defeated before stepping onto the track. … It’s not that second or third place isn’t good enough for me if I’ve done my best; it’s just not fair.”
The two boys have been running girls off the track since 2017, setting 17 individual state meet records with times girls have little hope of ever breaking.  Their sheer size and strength has resulted in more than 85 missed opportunities for Connecticut girls even to qualify for the next level of competition, even though neither transgender competitor was a top sprinter as a boy.
“It’s simply not fair for anyone born as a boy to compete against girls,” says Alanna.  “That unfairness doesn’t go away because of what someone believes about their gender identity.”
So, Alanna and two other female Connecticut high-school athletes filed a federal lawsuit with the help of Alliance Defending Freedom to keep boys out of girls’ competitions.  Bucha, now a lawyer, and 300 other current and former female athletes are pursuing similar action at the college level.
To illustrate the unfairness, the Connecticut suit notes the fastest female sprinter in the world, America’s great Allyson Felix, has more gold medals than Usain Bolt.  However, Felix’s lifetime best in the 400-meter run is 49.26 seconds.  And about 300 American high-school boys beat that time each year.
Says Bucha about the effect of allowing biological boys in girls’ competitions: “It isn’t merely the trophies and scholarships and opportunities at stake.  It isn’t even all the benefits sports have so long provided to young women – in self-esteem and health and camaraderie with friends.  It isn’t merely that girls who participate in sports tend to earn better grades, that so many Fortune 500 executives were athletes, or that sports force teen girls out of their own heads where they might stew to their own detriment.  It’s the profound injustice of it.”
On his first day in office, Joe Biden signed an executive order purporting to require that schools receiving federal funding must allow boys self-identifying as girls onto girls’ sports teams – reversing a Donald Trump policy.  Elections have consequences.
And the ACLU supports Biden’s awful policy.
Ron Knecht, MS, JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com. 
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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About the Climate Change Crisis, Emergency or Whatever

1/19/2021

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​A key thing about measurements and forecasts of rapid human-caused (“anthropogenic”) climate change is that a sustained temperature change in any system is a result of a sustained imbalance in the energy flowing into and out of the system.
If the energy inflows to and outflows from earth’s climate are equal, the average temperature around the globe is roughly constant from one year to the next.  If inflows exceed outflows, there’s warming.  If outflows are greater than inflows, there’s cooling.
Energy flows into earth’s climate system from the sun’s radiation at a rate estimated at 340 watts per square meter per year at the top of the atmosphere.  However, only 240 watts reaches the earth’s surface.  The rest is reflected back into space.  Energy flows out of the earth’s climate system mainly by way of infrared (heat) radiation escaping into space, also estimated at 240 watts.
The vast majority of our climate energy inflows, estimated at 99.97 percent, come from the sun.  The greatest rates of insolation (the amount of solar radiation per square meter per time period) occur near the equator, while the least take place near the poles.  The rates vary in the intermediate areas, depending on how perpendicular to the sun’s rays the ground is (which varies over the earth’s surface because earth is roughly spherical).
Total insolation of the planet cannot be directly measured.  Instead, it must be estimated from many measurements, including the total heat the sun is generating, the heat capacities of parts of the earth and atmospheres, etc.  So, the 240 watts inflow figure is merely an estimate subject to measurement error.  The actual figure could be 235, 245 or some intermediate value.
Similarly, the energy outflow cannot be directly measured.  It must be estimated from the reflective effects of cloud cover, atmosphere, land and water surfaces, etc.  And the actual annual average outflow per square meter of earth’s surface may range between 235 and 245 watts.
Because the in- and out-flow measurements are subject to error, so is the difference between them.  Hence, it’s very difficult to know whether we’re experiencing warming or cooling as a planet.  As a surrogate for direct measurement, we can use the deep ocean temperature and related data to determine whether the earth’s overall temperature is rising or falling.
The idea is that deep ocean temperatures measure the overall ocean heat content much closer than surface measures do.  To measure deep ocean temperatures, salinity, currents, and bio-optical properties, a system of 4000 drifting “Argo floats” have been deployed around the world since the early 2000s.  Their readings are transmitted to research facilities via satellite.
Using these data and many others, the average annual energy in/out flows for the earth are estimated by scientists at about one watt, another figure that is just an estimate subject to error, reflecting the uncertainty in data used to estimate it.
The bottom line, according to Dr. Roy W. Spencer, Principal Research Scientist at the University of Alabama-Huntsville, is: our oceans have warmed very slowly the last two decades, by an average rate of 0.04 degrees centigrade per decade.
The one-watt net inflows estimate is much less than the 235- to 245-watt insolation flows.  Hence, the energy imbalance causing recent slight warming is much less than the uncertainty in our knowledge of natural energy flows.
“As a result,” he states, “climate change could be mostly ‘natural’, and we would not know it.”
Because, he points out: “Climate models must be adjusted to not produce any ‘natural’ climate change, which the modelers simply believe does not exist.  Despite their belief, there is abundant evidence of past natural climate change events, the causes of which are largely unknown.”
Spencer concludes, and I agree: “These facts show that the hypothesis that humans have caused most, or all recent warming involves a large measure of faith. … This is the basis of their faith: That only humans can cause climate change.”
But the climate warmed and cooled naturally in the past: for example, the Medieval Warm Period (about 1000 years ago) and the Roman Warm Period (about 2000 years ago) were as warm as today, without anthropomorphic causes.
I’ll discuss related points in future columns.
Ron Knecht, MS, JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com .
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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RIP, Sheldon Adelson; Prayers for Dr. Miriam Adelson

1/12/2021

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​A truly Distinguished Nevadan, great American and all-around Mensch, Sheldon Adelson, died Tuesday.  This self-made fabulously wealthy entrepreneur, businessman, philanthropist, and political and communications force of nature was also a great human being who will be hugely missed.
In this hour, we send condolences and prayers to his wife, Dr. Miriam Adelson, and family and friends.
Many people know some aspects of his remarkable life, but only some.  Born into a one-room Boston tenement in 1933 to a Lithuanian-Ukrainian cab driver and knitting-shop owner daughter of a Welsh coal miner, Sheldon became the third-richest person in America in 2007.  Following some ups and downs, he left a fortune of $33.5-billion, plus a vast legacy of gifts to many good causes.
At 12, he began his career by borrowing $200 from his uncle to buy a license to sell newspapers on street corners.  He went on to create nearly 50 other businesses in his life.  He attended college but dropped out and attended trade school, hoping unsuccessfully to become a court reporter, before joining the army.  By his thirties, via entrepreneurial ventures, he had twice built and lost million-dollar fortunes.  Later, he lost $25-billion and recovered that.
In the 1970s and 1980s, he also adopted and cared for the three children of his first wife.
He didn’t invent trade shows, but he and partners bought the fledgling COMDEX computer industry shows in the late 1970s.  Sheldon’s vision and creativity built it into one of the largest trade shows in the world in the next two decades – and remade the resort and casino industry into its modern form.
Previously, the casino business overwhelmingly concentrated on the gaming floor, with cheap accommodations and food.  Besides pioneering trade shows to diversify the business and upgrade the eats and accommodations to world-class levels, he also recognized the tourist business could be much more than merely gaming.
Honeymooning in Venice in 1991 with his second wife Miriam, he envisioned the mega-resort hotel and casino.  He added exotic shopping, entertainment and recreation to lavish rooms and food to set off the Las Vegas explosion that made him and many others very wealthy.  The first such property, the magnificent Venetian, opened in 1999.
Soon, he realized the model of bringing tens of millions of visitors annually to Las Vegas was insufficient, and he led the industry to the People’s Republic of China, opening the 1,000,000 square-foot Sands Macao in 2004.  It multiplied his fortune by a factor of fourteen, and he built many more from there.  Today, Macau’s industry dwarfs Las Vegas’s.
In 2010, he opened the $5.5-billion Marina Bay Sands in Singapore, the sixth-most expensive building in the world.  It has the greatest amenities of any such building and was featured extensively in the 2018 mega-film Crazy Rich Asians.
But here’s what’s important about all this.  In 2008, the Nevada Policy Research Institute gave him its Chairman’s Award for efforts to advance free market principles in Nevada.  Before 1996, he was a Democrat, but since then has been a free markets and Republican stalwart.
In 2010, as a Regent, I nominated him and Miriam for the Distinguished Nevadan award from our system of higher education.  Why?
In bestowing the award, I emphasized that the money he had made in business and investment only reflected the even bigger value he bestowed upon customers, his 100,000-plus employees and legions of investors, as well as Las Vegas and Nevada.  When people talk abut giving back, they miss the fact that fearless entrepreneurs like Sheldon become wealthy by the great value they deliver to others via their creativity, investment, vision and guts.
In 2014, he was named to CNBC’s list of 200 people who transformed business in the previous 25 years: “top leaders, icons and rebels, a definitive list of people who have had the greatest influence, sparked the biggest changes and caused the most disruption in business.”
There’s so much more to tell.  He has been a major force in philanthropy, newspaper publishing, diplomacy and politics in America, Israel and the world.
But his humanity showed perhaps brightest when the Coronavirus pandemic hit.  He’s kept the ten-of-thousands of Southern Nevadans he employs on payroll and covered by health insurance.
Ron Knecht, MS. JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com .
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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Response to Jim Schnieder’s Way to Welcome 2021

1/5/2021

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Jim Schnieder of Sparks writes occasional opinion columns in the Reno Gazette Journal.  I called him to discuss his recent opus, which offered three ways for Nevada to welcome 2021.  After a pleasant, constructive conversation, here’s my rebuttal.
Schnieder’s first recommendation is that we, “[f]ormulate and apply the least harmful taxes.”  My interest in this subject began in 1989 when I took the public finance and taxation courses in Stanford’s economics department while in graduate school.  For over 30 years, I’ve kept up with empirical academic literature on this subject, used it in my public service and written about it.
His concern is that state and local governments need money – more money now due to the Corona virus and related lockdowns – for education, law enforcement, public health agencies and municipal transportation.  He adds, “There needs to be a mindset that when needed, equitably apportioned taxes are good.”
His proposal raises two separate points.  First, are new taxes needed and appropriate now?  Second, if they were, what are the least harmful taxes?
There’s no doubt the virus and especially the lockdowns have increased public spending needs relative to what they were a year ago.  However, there are offsetting factors, and my conclusion is now is exactly the time not to increase taxes.
Schnieder is candid that he has not weighed the damage the virus and lockdowns have caused to Nevada families and businesses, plus the further damage tax increases would add, against the good new public revenues could do.  The damage so far has been by far the worst hit to our families and businesses since the Great Depression of the 1930s.
Following the Great Recession of 2008-09, even Brian Sandoval running for governor in 2010 agreed the hit they suffered then made the case against new taxes at that time.  Things are much worse now, and even if one thought our overall tax levels are not high enough – a view with which I greatly disagree – now would not be the time.
Here’s the key point.  As discussed at length in the four Controller’s Annual Reports I authored for 2015-18, “The size, scope and reach of American government – including spending, taxing borrowing, statutory mandates, regulation, monetary and credit-allocation policy, and other intervention – long ago exceeded levels that promote the public interest in maximum economic growth and fairness.”
I added, “These excesses at federal, state and local levels have increasingly slowed growth and diminished fairness and will continue to do so unless they are reined in.”
In assessing the optimal level of public spending, I relied not only on my long familiarity with the subject but also a confirming review of the literature by some scholars at the University of Nevada, Reno.  The optimal total tax burden on our economy is 17 percent to 26 percent, but the actual level has now passed 40 percent and continues to rise.
Instead of increasing taxes and borrowing for more public spending, we should be realizing economies in total spending like those regularly achieved by the private sector, and thereby bringing down public spending and borrowing relative to our economy.
In the 21st Century, Nevada’s real state spending on health and human services has skyrocketed (aided greatly by federal grants) and that for K-12 has also risen hugely.  All other state spending and the real per-person incomes of families and businesses have fallen significantly.
Also, the crushing burden of lockdowns has fallen heaviest on low-income folks.  Which brings up his concern for the least fortunate among us, where he advocates progressive taxes as a solution.
First, his view seems to overlook that government has long made huge income transfers to the poor, in addition to subsidizing their health care, schooling, diets, etc.  And it has already greatly increased these benefits in response to the virus and lockdowns.  People still cry out in need, but the fact is America has always responded generously and even more so in 2020.
Real fairness consists in lowering the overall tax and other public sector burdens to let productive folks keep the fruits of their labor, investment, creativity and productivity – and thereby grow the economy for the benefit of all.
Government growth exacerbates the problem; it’s not the solution.
Ron Knecht, MS, JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com. 
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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My Big Picture View of Policy, Economy & Politics

12/29/2020

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​I hope you enjoy and share this.  Constructive criticsm always welcome. -- RK


My Big Picture View of Policy, Economy & Politics
By Ron Knecht – 29December2020
Recently, I spoke to the Carson City Men’s luncheon group about my big picture view of public policy, economics and politics.  Herewith, some things I told them.
Let’s start with the duty (beyond integrity, etc.) of elected officials and high-level bureaucrats – something most of them get wrong.  Their duty is to represent the people and the broad public interest to the agencies of government.  That is, to control the agencies and whole of government to serve the people’s interests and the broad public interest.
Not, as most politicians and bureaucrats do, to represent and advocate for government and its agencies to the people, often at the expense of the broad public interest.
For example, too many school board members and superintendents are consumed with telling the people endlessly the district needs more tax revenues and special-interest legislation.  That benefits mainly teacher and administrator unions, whose political captives they’ve become.  Instead, they should spend their time and energy seeking to incorporate cost-reducing technologies and business-model innovations to serve the interests of students and the people.
Also, some local planning departments serve as advocates for new infrastructure, business subsidies or proposed developments.  Thus, they become agents for crony capitalists seeking money, special privileges, or both from local governments.
While we need to rein in regulatory over-reach and tax and fee burdens on business, the people and public interest are not served by using special favors to offset government excess.  These departments need to be more focused on the public interest and objective analysis.
All this begs the question: What is the public interest?  That question has been central to my work as a state economist, controller, legislator, regent and college teacher.  Even as a writer.
From all my experience, I conclude there are two main elements to the public interest: economic growth and fairness among parties.
Increasing economic growth means we maximize the size of the pie.  That allows us to take better care of folks who, through no fault of their own, cannot adequately care for themselves.  It means we have greater overall wealth and incomes via both more effective private markets and improved public services.  Better education, diets, health care and human flourishing in general.
Our measures of economic provision – primarily gross domestic product – are, of course, imperfect, albeit improving.  Until someone devises a better measure for aggregate human wellbeing, maximizing economic growth seems self-evidently a key public interest.
Fairness comes in many forms, including civil and criminal laws and regulations to minimize conflicts and establish equity among individuals.  To keep one person’s free actions or choices from harming others.
In economic matters, I submit the institutions, principals and policies that promote growth also are the essence of fairness.  Foremost among these is that our primarily market economy and political system allows people to keep most of the fruits of their labor, creativity, investment, and productivity.
Market systems are fair because they reward people for the value they deliver to others, whether by labor, creativity or investment.  Mandating equal outcomes for everyone is simply not fair.
It’s certainly true public services and goods play a role with private inputs in creating the value firms and people deliver.  However, this does not mean, as Barack Obama claimed, that “You didn’t build that.”  Overwhelmingly, the value delivered to people by a mixed economy comes from the private sector.
Essentially, contributions of the public sector justify its role in spending, taxation, fees, borrowing, law and regulation.  However, extensive empirical research has shown that the optimal levels of public spending and other intervention are far lower than actual levels have been for over half a century.  In short, we would have higher degrees of aggregate human wellbeing and fairness with a smaller public sector at all levels.
The sum of human experience has shown the following items are central to economic growth and fairness: the rule of law (not “living constitution” judges or the administrative state); constitutionally limited government; and separation of powers between national, regional and local governments.
Also, separation of functional powers (legislative, executive and judicial) at each level; individual sovereignty and personal liberty; individual rights, not group rights and identity politics; strong property rights; and high levels of economic freedom.
Ron Knecht, MS, JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com.
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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Christmas Memories Through the Years

12/22/2020

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​The Perfect Wife and Awesome Daughter urged me to write a Christmas memories column.  Most of mine are unexceptional, but maybe these items can bring some cheer to end an otherwise dreary year.
In my first Christmas memory, I was seven years old.  I got a felt cowboy hat, two-holster gun belt and twin cap pistols.  Cowboys were the big thing then for little boys, and I was in Hopalong Cassidy/Wild Bill Elliot/Lone Ranger heaven.
One of my uncles who had a churlish streak – most of them did – spent the evening challenging me to quick-draw contests and winning all of them.  I was pretty frustrated, but learned the lesson that The Establishment always wins, even if it has to cheat.  He was, after all, merely raising his index-finger and saying “bang” while I had to get my pistol out of my holster, aim and fire. 
A seven-year-old boy today who brought his cap-guns to school would be suspended or expelled and would get his parents in trouble.  Social change isn’t always progress.
A few years later, my brother and I got matching Schwinn 26-inch bikes with baskets.  This was also heaven, because we were now mobile, a fact that changed our lives greatly for the better.  It was a marvelous act of generosity by our parents who could not really afford such extravagances.  Thanks, Mom and Dad, for blessing us this way, as well as many others.
And I’m sorry that a few years later we painted those beautiful metallic red bikes a hideous dark dull green.  However, we both learned our first lessons about things mechanical.
Later, my parents splurged again, getting me the top-of-the-line transistor radio I desperately wanted.  It was the size of a small pack of cigarettes and made a boy of twelve feel cool to have in his front pocket.  It was high quality and ushered me into the modern era of communications and rock-and-roll before disappearing into the mists of time.
A year and a half ago, my brother brought out its original box with the radio, accoutrements and instructions all packed neatly as new, but now quite weathered by time.  It no longer works, but is a treasured memento.  Thank you, Tom.
Kids get Christmas gifts.  In high school, college and young adulthood, people cultivate and remember experiences as gifts.  And emphasis moves from receiving to giving.
In college, I took my first plane ride with a girlfriend and went skiing for the first time.  Later, another girlfriend got an annual gift from me of a poinsettia in Atlanta.  She said Christmas couldn’t begin at their home until my poinsettia arrived.
I had an MG-B in my twenties and took my little sister and brother skiing a few Christmases.  Lisa sat in front.  Brent was stuffed into the back compartment above the batteries; sorry.
Also in those days, as I drove three hours from Urbana to Belleville for Christmas, I would think about what I had achieved that year and how much better it had been than previous years.  And where I was going in life.  I was becoming an adult.
My other sister lived a few miles out of town and had a horse she let me ride a few Christmas mornings through the farms, woods and hills.  In two inches of snow and alone with my thoughts and dreams, those were some of the best hours of my life.  Thank you, sister Kathy.
In San Francisco in my thirties and forties, I made Christmas dinner for eight and then took everyone to the center box for the SF Ballet’s Nutcracker.  One year, the Ballet shifted the start time from eight o’clock to seven.  We got there at intermission.  My regrets to the Agnews and Kathy and her parents, especially because I had told everyone how great the first half would be.
In those days, we also spent some holidays travelling.  And skiing in the Sierra, especially because the traffic on the slopes was very light Christmas morning.
Since moving to Nevada, our Christmas kick-off has been family and friends watching It’s A Wonderful Life, one of my favorite films.  Tonight’s joy for Kathy, Karyn and me.
Merry Christmas to you.
Ron Knecht, MS, JD & PE(CA) has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com.
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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A Day That Will Live in Infamy: The Rest of the Story

12/8/2020

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​In my last column, I said I’d complete my series on higher education this week.  But with Monday being December 7, the 79th anniversary of the “day that will live in infamy” – Japan’s attack on Pearl Harbor – and this column being written Tuesday for publication Wednesday and Thursday, I’m postponing that piece to next week.
The horrible Pearl Harbor attack was followed by many heroic actions.  I want to recall two of them.  As legendary radio and newspaper columnist Paul Harvey said: The rest of the story.
Bob Feller was an Iowa farm boy who, by legend, could throw a baseball through a brick wall.  At 17, “Rapid Robert” broke into professional baseball in 1936 with the Cleveland Indians, becoming an instant star.  In his first start, he struck out the first three batters and 15 batters total.  That strikeout record for a first start still stands today.  Three weeks later he tied the then major league record with 17 strikeouts in a game.
His amazing first year made him “the best-known young person in America, with the possible exception of Shirley Temple,” said one sportswriter.  By 1939, he was the best pitcher in baseball and fans, especially children seeking autographs, swooned.  On opening day 1940, he pitched his first of four no-hitters, the only such opening-day feat ever.
In 1941, Life magazine wrote, “he is unquestionably the idol of several generations of Americans, ranging in age from 7 to 70.”  The best hitters of the 1940s and 1950s anointed him the best hurler of his era.  Ted Williams: “the fastest and best pitcher I ever saw.”  Stan Musial: “probably the greatest pitcher of our era.”
On December 8, 1941, Feller drove to Chicago after visiting his terminally ill father in Des Moines.  On his car radio, as he drove there to sign a new contract with the Indians, he heard about the Japanese attack.  Two days later, he volunteered for the Navy, becoming the first professional athlete to enlist, according to Wikipedia.  America loved him.
“I told them I wanted to … get into combat; wanted to do something besides standing around handing out balls and bats,” he said.  On the USS Alabama, he saw extensive action in the Atlantic and Pacific theaters, mustering out in 1945 as a Chief Petty Officer.
He completed one of the greatest pitching careers ever in 1956.  During his career, he did much barnstorming with Negro League players to show how good they were.  He also advocated for major league players’ rights against management.
Ted Williams was born in San Diego in 1918, two months before Feller.  After being a minor league phenom, he made his major league debut in 1939 with the best rookie hitting season up to that time.  As with Feller, things only got better from there.
In 1941, he batted .406, the highest since 1924, and the last time anyone topped .400.  Many people consider his 1941 season the best ever – even better than Babe Ruth’s top years in 1921 and 1927.  Some people even say “The Splendid Splinter’s” career hitting was better than the Babe’s, which “The Kid” denied.
But Williams became as unpopular as Feller was beloved.  The rookie was told in 1939, “Wait ‘til you see Jimmy Foxx (his team’s star) hit.”  Teddy Ballgame’s answer: “Wait ‘til Jimmy Foxx sees me hit.”  He also fought continuously with the press and fans.  In 1942, Williams was drafted, but managed to duck going into service.  Despite a Triple Crown year, this went down very badly with fans and press.
But in 1943-45, he became a crackerjack Marine Corps Naval Aviator and returned to baseball in 1946 as good as ever.  His redemption with fans grew when he returned to the Marines in 1952 for the Korean conflict, where he flew 39 combat missions and earned medals.  Leaving and returning to baseball, he was feted a hero.
At ages 39 and 40, he won two more batting crowns.  In 1960, in his last at bat, he homered.
At his Hall of Fame induction, he spoke for recognition of Negro League stars, and they soon also were inducted.
Two great WWII heroes.  And that’s the rest of the story.
Ron Knecht, MS, JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college economics teacher & legislator. Contact him at RonKnecht@aol.com.
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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Self-inflicted Problems of Higher Education: Part 4

12/1/2020

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​In parts 1-3 of this series of columns, I noted the long-term rapidly rising costs of tuition and fees at U.S. public colleges and universities: 225 percent increases in real terms from 1984 to 2014, versus 25 percent in median family income, which measures folks’ ability to pay.
These hikes caused huge increases in student debt.  As federal student aid rises, colleges raise their charges to absorb the new money available.  Student debt now totals $1.67-trillion, a large part of our total public and private national debt, which long ago passed sustainable levels.
The money goes to administrative bloat, emphasis on research over teaching, and excessive compensation all across campus.  National numbers of university administrators rose by 2012 to almost one per faculty member.  And they are paid better than folks in comparable positions outside academe.
For faculty, research tends to crowd out excellence in teaching.  And university professors’ pay is as bloated as for administrators.  Compensation bloat is not a problem in our community colleges, nor among graduate teaching, grading and research assistants and adjunct faculty.  They are part-time and poorly paid.  As a Nevada Regent, I observed all these phenomena here.
The key problem of higher education is the same as for K-12 public education and all the public sector: The enterprises are run for benefit of the employees, not for benefit of students, other clientele, taxpayers and families paying the bills, nor for the public interest.
Twelve years ago, in a major article for the Chronicle of Higher Education, I pointed out that higher education – and all education, health care and the whole public sector – exhibit “cost disease”.  That’s the problem of showing few gains in productivity over long periods of time and little business model innovation because they do not really embrace opportunities made possible by technological progress and operational innovation – as competitive businesses do.
In the article, I attributed the problem to the public sector’s cost-plus budgeting approach.  Twelve years later, I realize it’s due more to the predatory special-interest providers, bureaucrats and politicians who run things by taking an ever-larger share of our economy, contrary to the public interest.
So, what is higher ed’s future in view of these problems?
In my article, I pointed out that technological progress and business innovation leads to “bypass” by new entrants of incumbents in regulated and public-sector enterprises that don’t embrace such changes.  This had already happened in communications, energy utilities and transportation.
“Education at all levels could experience the same upheaval in coming decades.  We have already seen signs with the rise of for-profit colleges and in certification alternatives to traditional undergraduate degrees,” I wrote.
Nevada regents, administrators, faculty and students had already begun discussing these issues.  However, administrators assured us adoption of new instructional paradigms, including distance learning and other digital methods, would lead to cost increases, not decreases.
This is an example showing it’s the people more than the budgetary system that’s the problem.  Instead of using the changes to cut costs and reduce outmoded offerings and methods, they continued to increase those in their budget requests and treat innovation merely as an optional add-on.
The UNLV president assured me that, despite predictions of experts, bypass would not dent the current system, and the status quo would continue.  In the twelve years since then, the wolf was already at the door before the Covid pandemic arose.  Some private colleges had already closed, and nearly all institutions were scrambling to fight off challenges from bypass entrepreneurs and to incorporate new technology such as distance learning and competency certificates.
The pandemic, the unduly harsh responses of mostly Democrat governors, and the economic swoon they have caused have led our institutions to clumsily embrace digital distance learning and other changes to a huge extent that now almost fully displaces in-person instruction.  This has sped up the needed progress hugely.
But unless our public institutions do these things right and add value that bypass institutions such as for-profit colleges and certificate-oriented schools cannot, many will not survive.  The pandemic, shutdowns and economic collapse will require administrators, faculty and politicians to promptly and effectively change or public institutions will die.
Final installment next time: specific changes to make.
Ron Knecht, MS, JD and PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com.
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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