Archive for the ‘Business & Economy’ Category

The (non-existent) Fates Again

Friday, November 12th, 2010

The same (non-existent) fates which interrupted Wednesday’s post have struck again.

OK, it wasn’t really the fates. One problem with one-man-band web sites like this is that we all have personal obligations outweighing our professional duties from time to time.

Yesterday was one of those times.

To be candid (candor always having been one of the goals here), the fact that yesterday was a day (and perhaps one of the last of the year) in which sitting in front of the computer seemed almost a sacrilege played a role.

Because the topic of the planned post is delicate and complicated, more than usual care is required. So one more postponement. It will be here Monday, honest to Betsy (or to whomever one wishes to be honest).

For now, just a couple of updates on previously mentioned matters.

Earlier this week, Windsor Superior Court Judge Katherine Hayes ruled on the case mentioned twice before here (most recently this one) on whether Hartford police had to release records concerning the incident last May in which they pepper-sprayed and handcuffed a man in his own house.

It was what might be called a split decision. The judge ordered the town to turn over the records about what happened after police decided not to charge the man, Wayne Burwell, but not the records about what happened earlier (the pepper-spraying, the hand-cuffing).

There is insufficient legal expertise here to justify commenting on whether the judge ruled according to law. But no expertise is needed to wonder whether Vermont law, or its application or both are consistent with transparent government.

Another recent post (Vermont’s Fine Whine, October 15) noted that the state’s economy was in remarkably good shape, especially considering its rural make-up, and the fact that in today’s economy. “the advantages go to concentration and consolidation.”

Two new and possibly disturbing pieces of evidence to support that conclusion – the possible impending demise of the small-town post office and the small-town drug store.

According to a story  in this week’s Chronicle in Orleans County (not available on its web site), a bill in Congress would allow the Postal Service to shut down small post offices that don’t pay their way.

No closures appear imminent, but according to the article, 30 small-town post offices in Vermont have not replaced postmasters or postmistresses who have retired, died, or quit. The post offices are not vacant, but are being run by an “officer in charge” without the postmaster title.

That’s not proof the Postal Service plans to shut down those facilities. But it is what it would do if shutting them down was the plan.

Meanwhile, the state’s independent pharmacists are circulating petitions urging support of two bills in Congress that would counter the practice by some insurance companies, big pharmacy chains, and pharmacy benefit managers to convince customers to buy their drugs only from the big chains or from on-line services.

The local druggists admit that there is a powerful incentive for consumers to forsake them and buy from the big guys – it’s cheaper. Sometimes a lot cheaper. Sometimes so much cheaper than the local druggists wonder whether some of the prices are so low that the chains are losing money on the drugs just to attract the customers and put the independent pharmacies out of business.

That’s entirely unproven, but it wouldn’t be unprecedented in the history of American business.

The price – and sometimes home delivery – make it quite sensible for people to buy their drugs from the chains and the on-line services. But sometimes a slew of reasonable individual decisions can have a social cost. A small town drug store is often also a coffee bar or café, a social center, a reason for people to come into town where they might visit other stores. Some of these stores could probably hang on without the pharmacy; others won’t, and where a town has neither a drug store nor a post office, how long will it remain a town at all, other than legally?

In a fast-moving world, trying to stay alive in the slow lane isn’t easy.

Unintended Consequences

Friday, October 22nd, 2010

This will be a somewhat abbreviated post because the News Guy moderated a debate among Northeast Kingdom legislative candidates last evening and there is only so much one fellow can do in one day.

Oh, all right. Full disclosure. In addition to this public duty, the News Guy herewith admits another factor. As revealed in an earlier post (the one about Centennial Field and the Lake Monsters Take Us Out To the Ball Game? July 3, 2009)  among the News Guy’s private passions is that exotic past-time known as baseball, to which he devoted the latter part of the evening.

So for today, just a correction or two, a little mopping up, and then a tale, a true story that may or not be cautionary.

Wednesday’s post reported news of an “inter-active map showing poverty rates by state and county in 2009 when the poverty reached its highest levels in 51 No big surprises.”

Obviously that should have been the poverty rate which reached its highest levels in 51 years, period, end of sentence.

A few paragraphs later, the post listed the poverty rates for Vermont’s counties, but left out two of them. Thanks to the reader who pointed out the omission, and for those who read the post early, scroll down. All 14 counties are in there now.

And to the reader who asked what the under-five-year-old poverty rate is by county, stay tuned. The search is on.

Another reader had a good point on that post, and this time it was not just any reader but Doug Hoffer, the Democratic candidate for Auditor. Read Hoffer’s full comment (just go down to the bottom of Wednesday’s post and click on “3 comments,”) but his main point was that it isn’t good enough for Vermont’s poverty rate to be lower than in most other states; ten percent in poverty still too high and we’re all too willing to accept that state of affairs.

An interesting comment which deserves a full treatment soon.

Later in that same post was the report of a poll showing that “45 supported the idea, 36 percent opposed it, and 19 percent were undecided.”

No doubt you all figured this out for yourselves, but just for the record, that’s 45 percent.

The October 11 post, Ethical Quandary, reported that Lt. Gov. Brian Dubie was once a member and chairman of the school board in Essex. It was Essex Junction. Apologies to both municipalities and to Dubie.

OK, now to the tale, in which the names shall be changed to protect the innocent. So let’s call them Mr. and Mrs. Jones. They live in Charlotte, in the same house they had built more than 40 years ago. It isn’t a big house. Fifteen hundred square feet, Mr. Jones said.

The Joneses are not young. He’s 81. She’s 75. They’re not rich either. Last year, they said – and emailed tax records to back it up – their taxable income was $44,000. Because they own their home free and clear, they no longer have to make mortgage payments. They just have to pay their utility bills, buy food and fuel, whatever clothing they might need, and some incidentals.

Oh, and of course property taxes on their house. This year, their property tax bill is $11,252.

No, that’s not a typographical error. The Jones pay more than $11,000 – one quarter of their taxable income – for property tax.

Wait a minute. Doesn’t Vermont’s property tax system include an “income sensitivity” provision that protects middle-income homeowners from sky-high property taxes?

Yes, but earlier this year the Legislature passed a bill (H 783) effectively abolishing income sensitivity  when “the equalized value of a housesite (is) in excess of $500,000.”

That covers the Jones’s 1,500-square-foot house that they had built in 1967 for $22,000. It is now assessed at $1.4 million

No, neither of those was a typo, either.

The Joneses have made some improvements to their house over the years. But that’s not why its assessment shot up. It was, said Mrs. Jones, the much larger houses built all around them over the last several years that raised the assessed value of all the homes in the neighborhood.

The Legislature acted after some news stories in the Burlington Free Press and the Valley News (for some reason unavailable on its web site) that some residents of opulent homes were paying modest property tax bills based on their incomes.

The Legislature acted out of a combination of opportunism and controlled panic. The lawmakers were scrounging for all the revenue they could find. And they worried about being attacked for coddling the “wealthy,” even if these supposedly wealthy people earned average incomes.

It was not an unreasonable decision. Like the others so targeted, the Joneses will not suffer economically. They can sell their home, probably not for $1.4 million in the Recession, but for several hundred thousand dollars, which will allow them to live out their lives in comfort.

But they don’t want to move.

“This is our home,” Mrs. Jones said. “It’s where we raised our three boys. At my husbands age, moving will be hard on him.”

Surely this is not what the Legislature intended. But nobody has repealed the law of unintended consequences. And legislating on the basis of a few “horror stories” is a good way to activate that law.

Numbers and Words

Wednesday, October 20th, 2010

Innumeracy: A front page story in Monday’s Free Press noted that the Vermont Student Assistance Corporation (VSAC) “is pushing to hold on to Vermonter’s loan accounts, arguing that Vermont default rate (4.7 percent) is well below half the national rate (7 percent)…”

Forget the lack of either the word ‘the’ before, or an ‘apostrophe s’ after, ‘Vermont,’ and just concentrate on 4.7 being “well below half” of seven.

Let’s see. “Below half” would be less than twice as much. So multiply the lower number by two. Seven times two is 14. Put down the four and carry the one. Four times two is 8. Add the one and you get nine. Twice 4.7 would seem to be 9.4, which at least to the untutored eye is more than seven, making 4.7 definitely above half of seven.

“Well” above?

That’s a judgment call.

Illiteracy (economic version): In a column in Sunday’s Free Press, Betsy  Bishop, president of the Vermont Chamber of Commerce, declared, “government does not create jobs.”

A widely held and bipartisan sentiment. Sen. Susan Bartlett posted the same words on her web site during her primary campaign for governor. But it’s economic illiteracy.

Cops, firefighters and teachers are employed, almost all of them by one government or another. While employed, they provide a service, which creates wealth, which produces more jobs.

There is a name for the system described above. It’s called a market economy, sometimes known as capitalism. Among Adam Smith’s great insights in Wealth of Nations (1776) was that it made no difference how wealth was created or who created it. By any means, from any source, it enriched society and created jobs.

Our society, to be sure, has decided that most economic activity – and therefore most wealth-creation and job-creation – should take place in the private sector. For all sorts of reason, that’s a very wise decision. But it does not mean that government does not create both wealth and jobs. In fact, five days a week for most of the year, in almost every town in America, schools (the vast majority of them public, meaning government-run) create human capital, perhaps the single greatest source of wealth, and therefore of jobs.

Numbers, good and bad: Via Huffington Post and an organization called Mint.com, comes this inter-active map showing poverty rates by state and county in 2009, when the poverty reached its highest levels in 51 years. No big surprises. Vermont’s poverty rate (10.4 percent) is lower than the national average (14.3 percent), but not as low as the rates in several other states, including neighboring Massachusetts and New Hampshire. The states with the lowest rates were Wyoming, Hawaii, New Jersey, and Minnesota. Mississippi, Alabama, and the District of Columbia had the highest rates.

Vermonters between the ages of five and 17 had almost the same poverty rate (10.6 percent) as the entire population, but the rate for children under five was a surprisingly high 16.2 percent. Even that was lower than in most other states. In Mississippi, more than 30 percent of children under five were poor.

Unlike most states in the deep South, Texas, New Mexico, Arizona, and both Dakotas, no county in Vermont had a poverty rate of anywhere close to 30 percent. Still, there were obvious – and perhaps not surprising – differences among the state’s 14 counties. The lowest rate was Grand Isle County’s 8.4 percent; the highest Essex County’s 14.8 percent.

The rates in the rest of the state were as follows: Addison 10.4; Bennington 12.2;  Caledonia 11.8; Chittenden 9.6; Franklin 9,9; Lamoille 10.1; Orange 10.9; Orleans 14.3; Rutland 11.6; Washington 9.7; Windham 9.8; Windsor 9.3.

Numbers and Words: The following is clarification, not criticism. Vermont Public Radio has been trickling out reports from the statewide poll that it commissioned from Mason-Dixon Polling and Research. The results are interesting, and probably accurate, but the latest accounts could be misleading if not understood in context.

For instance, the poll showed that 44 percent of the respondents think the Vermont Yankee nuclear power plant should be shut down when its license expires in 2012, while 39 percent want it to get the 20-year renewal it seeks and 17 percent are undecided.

Asked whether they support or oppose a plan to consolidate the state’s 278 school districts into 45 “to save administrative costs, which could result in the closing of some smaller schools,” 45 percent supported the idea, 36 percent opposed it, and 19 percent were undecided. On health care, a 56 percent majority supported either a universal government-run program like Medicare or a “public option” alternative like Catamount Health Care.

As mentioned in Monday’s post, Mason-Dixon is a respected firm, the sample of 625 was big enough, so there is no reason to doubt that these results are accurate.

But there is some reason to doubt that they accurately represent popular opinion on those issues by the people of Vermont.

That’s because, as also noted Monday (just scroll down) the average age of those 625 people is substantially higher than the average age of Vermont’s voting age population. A full 60 percent of the respondents are over 50. Almost 60 percent of voting-age Vermonters are under 50.

The pollsters didn’t goof (although “to save administrative costs,” though accurate, might invite a positive reply on the school question). They were first and foremost trying to figure out who’s likely to win next month’s elections, so they “screened” for likely voters. Older folks vote more. The sample, then, quite likely represents those Vermonters who are going to vote on November 2.

But no matter who wins the elections, the results on those three questions are likely to be used during next year’s legislative session as though they reflect where Vermonters stand on those issues. Perhaps they do not.

OK, there’s a certain amount of conjecture here, because the poll did not break out the voter preferences by age groupings. But there’s something close to a consensus among politicians that younger voters are:

–More likely to oppose Vermont Yankee;

–Less likely to be for school consolidation because they are more likely to have kids in school. Rare is the parent who wants his/her child to have a longer bus ride to school. If nothing else, it means getting up earlier in the morning.

–Perhaps (though this one is murkier) not as keen on government-run health care.

Still in the realm of conjecture, but restrained conjecture, here’s a suggestion that a poll of all registered voters – not just those likely to vote this year – would find a small majority against Yankee’s relicensing, with perhaps 30 percent in favor and almost 20 percent undecided.

Politically, that’s a big difference because the undecideds don’t matter; they’re not going to vote against a legislator either way over the issue. But a lawmaker who might hesitate before displeasing 39 percent of the electorate, while earning the thanks of only five percentage points more, is less likely to pause before pleasing a majority and annoying only a third of the people.

As is often true in life, in polling, when it comes to numbers, nothing is more important than the words.