Bacon's Rebellion

  • The GERM That Is Destroying Public Education

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    Peter Galuszka

    By Peter Galuszka

    Sarah Wyscoki seemed to be doing well as a fledgling fifth grade teacher in the District of Columbia public system. Last spring her appraisal praised her “sound teaching” along with her ability to motivate students and keep things positive, according to The Washington Post.

    She was fired two months later. Why? The D.C. school system had adopted an Obama-instigated program that puts a much higher emphasis on students’ test scores and their “value added” computer consensus as a way to retain or get rid of teachers. Because of the shift in appraisal methods, Wyoscki went from being a highly regarded teacher to one with a stigma of being fired for poor performance.

    Her predicament shows just how efforts to “reform” public school education are so wanting. Barack Obama shares plenty of blame with his “Race to the Top” program. So does George W. Bush with his “No Child Left Behind” program.

    Both are known among educators as part of the “Global Education Reform Movement” (or “GERM,”) that is pushing tougher testing and productivity as yardsticks for academic success. But according to The New York Review of Books, the approach teaches children to learn the test and for teachers to teach it. Obama has said that teaching the test is not the way to go, but his program directly c contradicts that motive.

    I’ve been fascinated by some of the bloggers on this blog, notably Jim Bacon, who suddenly have taken up the mantle for some type of GERM. Jim, who apparently has very little real life experience in K-12 public education either as a student or parent, writes predictably that education must be made “efficient” and “cost-effective.” I was always puzzled by Bacon’s sudden interest in public school education because it dovetailed with a national offense on the topic by conservatives.

    There may be a few little problems with that idea. Writer Diane Ravitch in the Review notes:

    “The GERM model seeks to emulate the free market, by treating parents as consumers and students as products, with teachers as compliant workers who are expected to follow scripts. Advocates of GERM often are hostile to teachers’ unions, which are considered obstacles to the managerial ethos necessary to control the daily life of a school. Unions make it hard, if not impossible, to carry out cost savings, such as removing the highest-paid teachers, and replacing them with low-wage, entry-level teachers.”

    I wish I could have said it so well. Ravitch is spot on. The problem with the bean-counting efficiency types get hold of social programs, they start treating them as if they were General Electric making a jet engine blade to the best and cheapest tolerance. Fact is, kids aren’t widgets. The same ethos translates into health care, but that’s something else. Another problem with the GERM system is that it always punishes teachers and never the administrators who make much more in salary and decide the issues with the biggest impact, such as budgets.

    In her article, Ravitch reviews a book about Finland’s highly successful public school program. Most Finnish teachers and principals belong to one union. The teachers are motivated by a love of teaching, not fear of some arbitrary test and “value-added” methodology that mysteriously massages the results.

    I haven’t read the book about Finnish school, but I have been to Finland a bunch of times. It was our major source of resupply when I ran a news bureau in Moscow during the Cold War. I always found the Finns smart, efficient and friendly. I may still have an account at Stockman’s, downtown Helsinki’s largest department store.

  • ¡Viva la Revolución!

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    Peter Galuszka

    Estimado Jefe!

    Usted nunca debe salir de la ciudad, señor! Ahora que usted está ausente, la revolución comienza! Amados lectores de ya no ver los artículos que glorifican a los ricos y privilegiados. Vamos a ayudar a la tierra y los pobres y redistribuir los fondos de cobertura. ¡Viva la Revolución!

     

  • One Day, a World of Peace… of Justice… and No Stoplights

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    James A. Bacon

    One last post before I head off to the sunny south…. Here’s a computer simulation of what a major intersection would look like in a world of self-driving automobiles. Dude, can you imagine life without stoplights? It may be pure fantasy, but I like the fantasy. — JAB

  • Cooch Loses a Case, but Hockey-Stick Man Not Off the Hook

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    James A. Bacon

    Michael Mann: victim or fraud?

    The Supreme Court of Virginia has ruled against Attorney General Ken Cuccinelli’s bid, on the grounds of investigating fraud, to obtain the email files of former UVa climatologist Michael Mann. The court stated that the university and other state agencies cannot be considered “persons” under the Virginia’s Fraud Against Taxpayers Act.

    “From the beginning, we have said that we were simply trying to review documents that are unquestionably state property to determine whether or not fraud had been committed,” said Cuccinelli in a prepared statement.  “Today, the court effectively held that state agencies do not have to provide state-owned property to state investigators looking into potential fraud involving government funds.”

    Frankly, I’m a little bit relieved. Although I sympathized with Cuccinelli’s aim of exposing Mann, the global warming zealot who concocted the famous hockey stick graph purporting to show an unprecedented spike in global temperatures, I was uncomfortable with the means. Cuccinelli tried to use an anti-fraud statute to probe the flaws in Mann’s work. That set a dangerous precedent for politicizing scientific research in Virginia universities. I certainly wouldn’t like it if a liberal AG was probing a conservative scholar. Hopefully, the court ruling will eliminate any future temptation to meddle in this way.

    The proper way to expose Mann is through the Virginia Freedom of Information Act, which the American Tradition Institute (ATI) is doing. Alas, the University of Virginia, which reportedly turned over the emails of global warming skeptic Patrick Michaels to Greenpeace without a peep of protest, has steadfastly resisted doing the same in Mann’s case.

    Here is an ATI update on that matter. After a year of legal wrangling, UVa has turned over 1,700 emails but withheld 12,000 others that allegedly contain “proprietary” information. We’re not talking about technology with commercial potential here. ATI is seeking to understand how Mann devised his hockey stick graph — information that, according to ATI, he has so far refused to make public. So much for the ideal of subjecting one’s scientific work to peer review.

    As far as I can see, UVa’s logic is as bogus as Cuccinelli’s. Either the administration is worried that the emails might embarrass Mann and thus the university, or it is caving into faculty pressure to protect “academic freedom,” which apparently is something granted only to liberal scholars, not conservative ones.

    Mann was a central figure in the so-called “Climate-gate” email scandal. The emails revealed how Mann and others had acted to squelch the views of scientists skeptical of the more alarmist view on global warming. Access to Mann’s UVa emails could shed more light on the extent to which he might have fudged his hockey-stick result or otherwise corrupted the scientific process. This is a proper matter for citizens and scholars to look into, using FOIA. Let’s hope it doesn’t take a Virginia Supreme Court ruling to get UVa to turn the emails over.

    — JAB

  • Adios, Amigos

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    James A. Bacon


    Tomorrow, mis amigos, I’m off to the Club Med in sunny Punta Cana, Dominican Republic. I don’t plan to do any blogging, but I will check in periodically to make sure that Peter G. hasn’t launched a Bolshevik putsch in my absence! I’m looking for a total R&R experience — lots of reading, a little writing (non-blog), some pilates and treadmill work and perhaps some  wind surfing.

    Rest assured that rum will be swilled in copious quantities, food consumed — hmmm, huevos rancheros son ricos — and dice games played. (The Bacons and friends are farkle fanatics.) One of the things I love about Club Med, aside from the unlimited booze, is the cosmopolitan crowd. Lots of French and Spanish spoken there. I speak mangled French and managed to pick up a couple hundred words of Spanish from Rosetta Stone over the past month. I can hardly wait to make a fool of myself. (My son has vowed to disown me if I try communicating en espanol. Just try it, muchacho!)

    Oh, yeah, one more thing about Club Med: Las mujeras frances no se llevan las camesitas on the beach. That’s probably not grammatical but you catch my drift!

    — JAB

  • Showdown Looming over PLA

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    James A. Bacon

    The McDonnell administration has warned the Metropolitan Washington Airports Authority (MWAA) board that a recent decision to favor Project Labor Agreements (PLAs) in Phase 2 of the Rail-to-Dulles construction project could jeopardize $150 million in state funding for the project.

    Governor Bob McDonnell intends to sign legislation that prohibits state financing for construction projects that discriminate on the basis of labor-union affiliation, wrote Transportation Secretary Sean Connaughton in a letter co-signed by Sharon S. Bulova, chairman of the Fairfax County Board of Supervisors, and Scott K. York, chairman of the Loudoun County board. Fairfax, Loudoun and the state, along with MWAA comprise the four funding partners behind the estimated $2.8 billion construction project.

    “The MWAA Board’s decision to use a 10 percent incentive to encourage the use of a PLA for Phase II of the Dulles Corridor Metrorail Project is being viewed as a potential violation of the pending law,” the letter states. “It would be a tragic loss and a detriment to the project if the Commonwealth withheld its $150 million contribution, as well as its ability to cooperate with MWAA, in construction of Phase II.”

    A tragic loss — that’s putting it lightly. The $150 million contribution was critical to a fragile Memorandum of Agreement (MOA) worked out late last year under the auspices of U.S. Transportation Secretary Ray LaHood to bring Phase II costs under control and reduce the burden on Dulles Toll Road users, who would pay for any cost overruns through higher tolls. The prospect of sky-high tolls created a brush fire of opposition in Fairfax and Loudoun counties, home to many toll road users. If the state yanked its $150 million, the MOA would fall apart, and so could the entire financing for Phase 2.

    The letter signatories stressed that they have no objection to voluntary PLAs. “In fact, such agreements are being used in Phase I of the Silver Line as well as other transportation projects in Northern Virginia such as the I 495 Express Lanes.”

    The legislation that McDonnell plans to sign would create a level playing field between union and non-union companies bidding for the Phase II contract. MWAA policy would tilt the playing field heavily in favor of companies committed to PLA agreements with labor unions, discouraging open-shop companies from participating in the bidding. MWAA critics contend that shrinking the pool of competitive bids could result push the cost of the project hundreds of millions of dollars higher.

    — JAB

  • An Awesomely Awesome Project for Richmond’s Haxall Canal

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    James A. Bacon

    One day it'll all look like this.

    Huge news for re-development of downtown Richmond’s Haxall Canal: A deal to convert five historic industrial buildings into retail and residential space is “about to materialize,” reports the Times-Dispatch.

    Slowly but surely for the past 20 years, developers have been renovating the old industrial shells along the Haxall and Kanawha canals, building a vibrant urban district where people can live, work and play. The Canal Walk, a pedestrian path that parallels the 19th-century canals and locks, offers striking visuals, takes interesting twists and turns, meanders under shaded tunnels, and provides pedestrian links to the central business district. It will be an extraordinary asset when it has been developed end-to-end.

    While both ends of the canal complex have been developing nicely, the hole in the doughnut has been the sprawling Reynolds Metals complex. Pedestrians strolling along the canal must walk past several hundred yards of hulking, empty buildings. Renovation of these buildings will create activity along the full length of the canal. It may not be the equal of San Antonio’s breath-taking River Walk, but it will be an urban jewel. It has the potential to become a truly special, memorable place, even better than the old C&O Canal in Washington, D.C.’s Georgetown district.

    “This is the linchpin project we have been waiting for the last 15 years,” said Jack Berry, executive director of Venture Richmond. The first phase of construction will convert historic five historic buildings into 175 apartments and 8,000 square feet of retail space. A later phase calls for tearing down two buildings constructed in the 1970s to make way for more apartments, retail and office space. A high-rise building is planned at 10th and Byrd Streets.

    Combine the canal-walk renovation with the vision for transforming Richmond’s riverfront, with its islands and rapids, into a regional recreational asset, and downtown Richmond will be one of the most awesomely awesome places to live live and work on the East Coast. It has been a long, long time coming. But very few cities will have anything to match it.

    — JAB

  • Cooch Still Backs McDonnell on Dulles-Rail PLA

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    James A. Bacon

    Dulles rail construction near Tysons Corner. Photo credit: Washington Examiner.

    Holy moly, I’m getting whiplash. Last week, word came out of the Attorney General’s office that the Comstock bill, written to ensure that union and non-union companies received equal treatment in state-funded contracts, would not block the Metropolitan Washington Airports Authority (MWAA) from favoring a Project Labor Agreement (PLA) in Phase 2 of the Rail-to-Dulles heavy rail project.

    Apparently, the AG’s opinion came through back channels and went public when Sen. Dick Black, R-Loudoun, shared the news with Loudoun County lawmakers. “It is the Attorney General’s firm opinion that those bills have no impact whatsoever on mandatory union provisions being imposed by MWAA,” he wrote. (See the Washington Examiner story here.)

    But Cuccinelli called Black yesterday to tell him that the AG’s office had been wrong when it had advised him last week. “We have NOT issued an opinion on this yet, AND we have NEVER changed our position on [the Dulles funding bill]. That is just not correct,” Cuccinelli’s spokesman Brian Gottstein said in an email to the Examiner.

    That should please the McDonnell administration, which has warned it might withhold $150 million in state funds appropriated for Rail-to-Dulles unless MWAA reverses its stance on the labor contract. In its most recent meeting, the MWAA board dropped its position that a PLA had to be mandatory and substituted instead a provision that would give preferential scoring to bids with PLAs.

    Critics have said that requiring or favoring companies with PLAs would reduce interest by open-shop companies from participating in bidding for the job, estimated to cost $2.8 billion. Fewer bidders increases the odds that the winning bid will come in higher than the estimate.

    — JAB

  • Clown Show Update: Now Dems Are in Center Ring

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    James A. Bacon

    by James A. Bacon

    First, it was the Republicans’ turn to alienate voters by pushing abortion-related legislation far more radical than a majority of the Virginia electorate was prepared to accept. Now it’s the Democrats’ turn to piss off the public by blocking passage of a state budget. If there was ever a year in which “clown show” was an accurate depiction of the General Assembly, this was it.

    In a straight party-line vote, Democrats deprived Republicans of the 21 votes they need to pass a budget. Lieutenant Governor Bill Bolling, who was allowed to cast tie-breaking votes on measures to organize the Senate and pass other legislation, is not permitted to vote on the budget. Now, with no budget bill to work from, there is no way for the Senate to engage in a budget reconciliation process with the House of Delegates, which not only passed a budget but did so with an overwhelming majority. (Eleven Ds joined the Rs in a 29 to 21 vote.)

    Senate Dems are furious about their shabby treatment by Senate Republicans. “Anyone who can count knows that we deserve respect and consideration for the 20 votes we have in the Senate — and we are asking for that — no  more, and no less,” said Sen. Phillip P. Picket, D-Russell, in a statement that pretty well sums up the sentiments animating the Democrats.

    Let’s be candid: The Dems were treated shabbily. The Republicans stiffed the Dems on Senate committees and subcommittees. But that’s politics. That’s the way the game is played. Waaaah. It’s time to be big boys and girls and concede that you were outmaneuvered instead of subjecting the electorate to a temper tantrum.

    Last time there was a 20-20 split in the Senate, the Dems, who held the Lieutenant Governor’s position back then, were fully prepared to organize the Senate in exactly the same manner that the Republicans did this year. The reason they did not is not that they were overwhelmed by a sense of justice and fair play but that then-Senator Virgil Goode threatened to bolt the party. To turn around and accuse the Republicans of abusing their power is the height of hypocrisy.

    But the Dems don’t stop there. They say they “deserve” equal treatment because they won 20 seats. And how did they win 20 seats? By gerrymandering the heck out of the Senate districts. When it came to actual votes in state Senate races, 57% were cast for Republican candidates and 41% for the Democrats. If the Dems expect the public to feel cheated, they’re kidding themselves.

    Here’s the truly remarkable thing:  Sen. Donald McEachin, D-Henrico, has dropped his lawsuit challenging Bolling’s right to cast tie-breaking votes in Senate and seeking a temporary injunction preventing him from voting on organization of the Senate. “I think it’s an unnecessary distraction both for the caucus and the AG’s office,” said McEachin when withdrawing the suit. Yeah, that and the fact he didn’t have a legal leg to stand on.

    The Senate Dems are throwing a hissy fit, pure and simple. If they stick with it, they will lose the considerable public sympathy they gained from opposing Republican over-reach on Culture War issues.

    Third party, anyone?

  • That Danged News Media!

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    Peter Galuszka

    By Peter Galuszka

    After a deluge of negative national publicity in recent weeks over a number of socially conservative and highly controversial bills that he originally endorsed, Virginia Gov. Robert F. McDonnell has complained on a WTOP radio interview that he’s disappointed with the news media.

    “All we ever ask from the media is to be fair, cover what’s actually going on,” McDonnell told listeners.

    Oddly, the news media has been covering exactly what has been going on. Virginia has suddenly become the tip of a spear in a hard right-wing agenda. The General Assembly has been flooded with bills to force women to have a transvaginal ultrasound exams before they get an abortion, to repeal laws restricting monthly handgun sales, to deny poor women abortion money in special cases, to force police to check the citizenship of anyone they arrest, among other legislation.

    McDonnell whines that the media should be looking at 100 other bills, such as adjusting the state pension system, boosting education and easing traffic congestion.

    He must want the good old days a while back when he was being touted as a modern and responsible new type of Republican governor who can cut budgets while attracting jobs.

    Too bad for the governor. It may not be his fault in the most recent elections that a number of socially conservative Republicans gained enough legislature seats to push laws that had been held in check for years. Just after those elections. But he backed these people. He basked in media attention that his enlightened leadership was somehow responsible for their victories.

    Yet once these fledglings got into power, they went so crazy with a multi-front socially conservative offensive that the national media could not help but notice. Nor was the humor (if any) of the situation lost on scriptwriters at “The Daily Show” and “Saturday Night Live.”

    McDonnell wants to be ready for prime time. His WTOP complaints show that he isn’t.

  • It’s the Tax Rate, Stupid

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    James A. Bacon

    A fascinating new study by the Tax Foundation and KPMG digs deeper than the usual analysis that ranks states by business tax burden. This report, “Local Matters: A Comparative Analysis on State Tax Costs on Business,” recognizes that tax rates vary depending upon the type of business. Thus, while Virginia ranks 11th best among all the states for its taxes on mature firms, it ranks a humble 38th for taxes on new firms.

    And that, my friends, goes a long way to explaining the conundrum I have frequently posed: Why does Virginia, especially outside of Northern Virginia, have so few fast-growth small and midsized companies? It’s the tax rate, stupid.

    Here’s a breakdown if how Virginia ranks by sub-classifications:

    Mature corporate headquarters — 9th
    Mature R&D facility — 28th
    Mature retail store — 7th
    Mature call center — 15th
    Mature distribution center — 10th
    Mature capital-intensive manufacturing — 28th
    Mature labor-intensive manufacturing — 8th

    New corporate headquarters — 28th
    New R&D facility — 39th
    New retail store — 19th
    New call center — 25th
    New distribution center — 28th
    New capital-intensive manufacturing — 49th
    New labor-intensive manufacturing — 44th

    You get what you tax lightly and drive away what you tax punitively. We want more start-ups, more fast-growth enterprises, more R&D and more advanced manufacturing. And what do we tax the heaviest? Those very same categories of business. Does it look to you like Virginia’s tax code serves the future… or interests of the corporate status quo?

    Bacon’s Rebellion — asking the questions no one else asks.

    — JAB

  • Second Thoughts on Charlottesville Bypass

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    James A. Bacon

    U.S. 29 north of Charlottesville

    The battle over the Charlottesville Bypass still isn’t over. The Virginia Department of Transportation (VDOT) must review its Environmental Impact Statement (EIS), last supplemented in May 2003, to see if it needs to be updated. Now the Charlottesville-Albemarle Metropolitan Planning Organization (MPO) has submitted a letter listing 11 topics that VDOT could consider in that review.

    The letter, written by Stephen Williams, executive director of the Thomas Jefferson Planning District Commission of which the MPO is a part, raises numerous issues that surfaced in public hearings last year during the debate over the McDonnell administration’s plans to resurrect the project. Among the key points.

    • “At a minimum, we request that a No-Build alternative and an Alternative that includes proposals from the join VDOT/Albemarle County Places29 Transportation plan, should be studied,” writes Williams. The Places29 plan, which would reduce congestion on U.S. 29 without the need for a Bypass, did not exist when the 2003 EIS was written.
    • VDOT needs to conduct an entirely new traffic impact analysis. Development patterns have changed over the past 9 years, three interchanges on the proposed Bypass have been stripped out of the design, and a link-up with the Meadow Creek Parkway has been abandoned.

    Among other items, VDOT needs to consider the impact of the Bypass upon three schools that the highway would skirt — many citizens are concerned about the effect on diesel pollution on the health of school children — and the department needs to update its noise analysis and impact on the reservoir, wetlands, stormwater and the water distribution system.

    The MPO letter is not some last-ditch effort by die-hard opponents to derail the project. This is the same MPO that reversed its previous opposition last summer, allowing the McDonnell administration to resurrect the project. Indeed, Albemarle Supervisor Rodney Thomas, who also is chairman of the MPO, has gone public with the idea of extending the Bypass on the grounds that it doesn’t begin to bypass all the congestion. Thomas was a key figure locally in getting the Bypass approved. Further, ignoring the suggestions of the regional transportation planning entity might not set well with the Federal Highway Administration, which has ultimate authority over projects within the federal highway system.

    To my mind, an updated traffic analysis is mandatory. Over and above the points raised in the letter, traffic-light sequencing has so dramatically reduced congestion on U.S. 29 that it calls into question the need for a Bypass in the first place. Anyone accustomed to traffic conditions in Richmond, Hampton Roads or, god forbid, Northern Virginia, would wonder what all the fuss was about.

    One final point: If the McDonnell administration is absolutely determined to spend more money on U.S. 29, perhaps on the ground that the citizens of Charlottesville-Albemarle should get their “fair share” of state construction dollars, then it needs to consider the alternative plan, Places29, that did not exist when the last EIS was conducted a decade ago.

    — JAB

  • IG of the Day: Virginia Poverty

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    James A. Bacon

    IG credit: Weldon Cooper Center for Public Service. (Click graph for more legible image.)

    Over the past 30 years, Virginia has consistently logged a lower incidence of poverty than the United States as a whole, as seen in this graphic published by the Weldon Cooper Center for Public Service.

    But broad measures of poverty don’t tell the whole story. In “Poverty and the Social Safety Net: Who Are Virginia’s Poor?” Dustin A. Cable and Rebecca M. Tippett provide a more detailed statistical portrait of poverty in the Old Dominion.

    The authors distinguish between different levels of poverty. Deep poverty (incomes half or less than the poverty rate) comprise 5.1% of the state population; 10.8% of Virginians can be classified as poor (under the poverty line), and 17.2% can be classified as “in or near poverty” (under 150% of the poverty line).

    Cable and Tippett also note that Americans move in and out of poverty, depending upon circumstances: 51% of Americans experienced at least one year of poverty, while 30% have experienced deep poverty.

    (Click on graphic for more legible image.)

    In Virginia, poverty is concentrated in inner cities jurisdictions like Norfolk, Richmond and Portsmouth and rural regions such as Eastern Shore, the Southwest and Southside.

    Poverty is highest among children and lowest among working-age adults, with elderly adults in between. Blacks have the highest poverty rate (20%), followed by Hispanics (12.4%), whites (8.1%) and Asians (7.3%).

    What this study doesn’t tell us is why Virginia has a lower rate of poverty than other states, and why poverty is distributed among ages, ethnicities and geographic groups the way it is. Presumably, there is a relationship between poverty and unemployment. Virginia’s unemployment rate is consistently lower than the national average. Is that a reflection of a stronger economy with greater job creation, or is it possible that tighter-fisted social safety net funding encourages poor Virginians to get out and look for jobs? Another question: To what extent are Virginians trapped in a culture of poverty and dependency, and to what extent are they victim of circumstances such as layoffs? Those are the questions we really need to be asking.

    Cable and Tippett did dig deeper in a companion piece, “The Role of the Social Safety Net in Virginia,” in which they show how Social Security, Medicare and means-tested wealth transfers play a significant role in lowering the poverty rate. But they don’t address the questions that I ask.

    — JAB

  • Enjoy 2.4% Economic Growth While You Can. It Won’t Last.

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    James A. Bacon

    by James A. Bacon

    Cackling with joy now that the Gross Domestic Product is projected to grow 2.4% this year, lovers of the leviathan state see the faster pace of recovery as a vindication of the Obama administration’s activist economic policies. In truth, the current burst of growth reflects the most stimulative fiscal policy since World War II combined with one of the most stimulative monetary policies ever.

    The question that leaps immediately to mind is, “How long can it last?” The answer: “Not long.”

    The chart below shows the yield on 10-year Treasuries adjusted for inflation — the “real” interest rate.

    The rate was low — dangerously low — during the Bush years, and it is widely acknowledged that Federal Reserve Board policy under Chairman Alan Greenspan contributed to the real estate asset bubble and ensuing crash. But the low interest rates of the Bush/Greenspan era were nothing compared to the super-low rates engineered by Ben Bernanke. Real interest rates on Treasuries are now in negative territory. You can’t get any more stimulative than that.

    Meanwhile, the Obama administration continues to rack up budget deficits, which, as a percentage of the economy, have no peace-time parallel in modern U.S. history. Keynesian stimulus during Obama’s years in office totals $5 trillion so far.

    Both fiscal and monetary policies are unsustainable. The Obama administration sees deficits declining to less than $600 billion yearly later in the decade — a fiscal contraction of $700 billion in a $15 trillion-a-year economy. Republicans would like to cut even more aggressively. Failure to deliver on those deficit cuts would bring a brief reprieve in fiscal stimulus, but bigger deficits would propel Uncle Sam even more rapidly toward the Boomergeddon scenario I have written about.

    Likewise, Fed policy is not sustainable. Bernanke thinks he can keep interest rates super-low for three years, but that’s only assuming inflation remains tame. If inflation heats up — it’s brushing against 3% right now — bond holders will revolt and demand higher yields to compensate for the eroding value of the dollar, accelerating the nation’s inevitable borrowing crisis. If inflation remains restrained, it will be for one reason only: Pallid economic growth keeps wages and commodity prices depressed.

    The fact that one of the most stimulative economic policies in the history of the U.S. is yielding a growth rate around a measly 2.4% should be frightening. We’re using up all of our ammo. If the growth rate slows, we’ve got nothing left. We cannot increase fiscal stimulus to $2 trillion a year with collapsing the confidence of the capital markets. And when nominal interest rates are scraping zero, it’s hard to drive them any lower without igniting inflation.

    Current policy may succeed in preserving the illusion of recovery long enough to re-elect Obama in November. But there will be economic hell to pay for the next president, whether it’s Obama or one of the tin men campaigning for the Republican nomination, when the inevitable slowdown comes.

    It’s no wonder that businesses are hanging on to cash and bullet-proofing their balance sheets. Individual households should be doing the same, and so should Virginia’s state government.

  • General, Politician and Entrepreneur

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    James A. Bacon

    G.W. was more than just a guy with wooden teeth who wore a wig, more than a general and president. He was a successful entrepreneur.

    by James A. Bacon

    President’s Day is more than a week past, not that anyone paid much attention to it anyway (except for Peter G., who penned this piece comparing the myth-making surrounding the founding fathers to the propaganda of Josef Stalin). It’s the day we commemorate the contributions of America’s two greatest presidents, George Washington and Abraham Lincoln. Of the two, Washington has faltered the most in the popular imagination. Nobody believes the chopping-down-the-cherry-tree tale anymore, and even fewer even appreciate the moral of that fable, “I cannot tell a lie.” “Hey, dude, didn’t you ever hear of situational ethics?” Indeed, for many, Washington was a Founding Hypocrite who espoused liberty for whites while depriving blacks of their freedom. At least Lincoln is revered in modern memory for abolishing the Peculiar Institution.

    But Washington is worth remembering, and not just for his role as the nation’s first president or the general who led the 13 colonies to independence. He was one of Virginia’s, and arguably the nation’s, most successful entrepreneurs and businessmen.

    G.W.’s gristmill

    This brief essay in Real Clear Markets praises Washington for his entrepreneurial acumen. Washington transformed Mount Vernon from a failing tobacco plantation inso a diversified agroindustrial empire that cultivated wheat, milled it, branded it and sold it throughout the colonies, in England and even in Portugal. His enterprises included a fishery, a gristmill, meat processing, textile and weaving manufactory, brickmaking… (my favorite)…. a distillery. He owned a cargo-carrying schooner and he invested in land development schemes from the Dismal Swamp to the Ohio River basin.

    And, yes, George Washington did own slaves. He did not create the institution, he inherited it. But unlike those morally self-righteous voices who criticize the founding fathers for falling short of 21st century ideals without appreciating from where those ideals originated, he wrestled with the inconsistency between his ideals and his material self interest. Tell me how many people today embrace principles that undercut their source of wealth and power to the benefit of someone else? How many left-wing trust fund babies give away the ill-gotten lucre accumulated by their robber-baron ancestors? Not many.

    Acutely aware of the contradiction between ideals and practice, Washington worked tirelessly in the last few years of his life not merely to free his slaves upon his death but to create the conditions to ensure their well being — providing for their education and the support of children and the elderly — when they became free. When we see how Martin Luther King’s soaring rhetoric — judging a man by the content of his character rather than the color of his skin — has degenerated today into squalid identity politics, race hustling and envy-driven wealth-transfer schemes, Washington stands all the taller in my esteem.

Now Available

Book cover of 'Dust Mites: A Second American Revolution' by James A. Bacon, featuring astronauts planting a flag with a blue and white emblem on a lunar landscape, with Earth visible in the background.
For sale on Amazon.com

The year: 2075. The American colonies on the Moon are getting restless under Washington’s tyrannical rule….

This second edition of “Dust Mites” has a snazzy new cover, includes helpful lunar maps, and is 5,000 words tighter than the original. The sequel, “Trogs,” is scheduled for publication this summer.

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Bacon’s Rebellion is Virginia’s leading politically non-aligned portal for news, opinions and analysis about state, regional and local public policy. Read more about us here.

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