The California Redevelopment Dispute

The fate of California’s redevelopment agencies (RDA’s) is frequently discussed in the news these days. However, resolution is close—on November 10th, oral arguments will be heard by the State’s Supreme Court in the case California Redevelopment Agencies v. Matosantos.

The issue at hand in this important case is the constitutionality of Governor Jerry Brown’s proposed elimination of all 400 of the state’s redevelopment agencies. A critical facet of his budget proposal, Brown claims the move will save the state $1.7 billion this year. Characterizing the state’s redevelopment agencies as a “piggy bank” from which the state must now draw, he plans to redistribute the money back to counties, schools, cities and other special districts.

However, he’s also proposed that RDA’s can avoid elimination if certain steps are taken by their local jurisdictions, including an agreement that the RDA’s will pay $1.7 billion this fiscal year and $400 million in subsequent budget years in statutorily mandated revenues to school entities and other special districts.

Panicked redevelopment agencies are contending that the proposed cuts violate Proposition 22, passed by voters in November 2010, which prohibits the state from borrowing or taking funds used for transportation, redevelopment or local government projects.

Opponents to Governor Brown’s proposal feel that RDA’s are needed more now than ever as the state struggles to recover from the recession. The wholesale elimination of RDA’s, they maintain, eliminates important tools to spur job creation, increase tax revenues, and induce economic growth.

However, proponents of Governor Brown’s proposal, including State Controller John Chiang, claim that RDA’s are mismanaged and waste funds that would be better used to pay for schools and other critical services. Chiang, who recently reviewed 18 RDA’s statewide, cited numerous reporting flaws, questionable payment practices and inappropriate uses of affordable housing money.

This issue –like so many the justice system and voters encounter– begs the question: which decision will positively impact the most people? If political radical and philosopher Jeremy Bentham, an early advocate of utilitarianism, were to ponder the situation, would he lend support to Jerry Brown, attempting to balance a budget and mindfully funnel funds into what he believes are our most critical areas of need; or would he cast his vote with the RDA’s, who enable and encourage local government autonomy and revitalization?

There’s no denying that the ruling by California’s top court – whether in favor, or a rejection of Governor Brown’s controversial move – will impact taxpayers and jurisdictions across the state.

The court has promised a decision by January 15, 2012, which is when the first RDA payments would be due.

(John Hancock is the President of the California Channel.  This article was first posted in Fox & Hounds.)

It’s Time to Blow Up the FDA’s Drug Review Process

The Food and Drug Administration just held its first public meeting to set the course for the future regulation of prescription drugs and medical devices in this country.

Every five years, Congress must reauthorize the Prescription Drug User Fee Act (PDUFA), which governs many of the FDA’s regulatory efforts. Some lawmakers hope to use the debate over PDUFA to streamline the agency’s review process — and thus to get innovative, life-saving treatments to patients faster.

Legislators are right to do so. The FDA’s longstanding aversion to risk and penchant for regulatory overreach are keeping many revolutionary remedies from American patients.

PDUFA was implemented two decades ago to speed up the FDA’s sluggish review process. The law gives the agency the power to charge device manufacturers and others anywhere from $100,000 to $2 million to review their products. These fees fund nearly 25% of the FDA’s total budget.

Many patient advocates, members of Congress — and of course, drug- and device-industry reps — have chided the agency for its sloth despite all that additional funding.

Regulators have bristled at these accusations. At a conference in October, Janet Woodcock, a senior FDA official, suggested that Congress was in a “blowing up mood” and might go overboard with reform efforts. Other officials have tried to downplay concerns about the agency and stated that it could handle reforms internally.

But a little bit of regulatory “blowing up” is exactly what the FDA needs.

Consider the FDA’s device review process. The agency screens medical devices far more slowly than does its counterpart in the European Union.

European officials erect fewer hurdles for manufacturers to clear. For one thing, EU rules focus on safety, not efficacy. So doctors and patients — not bureaucrats — are empowered to decide whether a device is worthwhile.

The European system also does not require device manufacturers to get permission before marketing a device. The United States, in contrast, forces the medical-device industry into a government-run, “mother-may-I” system.

And the problem is getting worse. According to a 2011 study published by the California Healthcare Institute, the FDA’s reviews for higher-risk medical devices are now taking 75% longer than they did between 2003 and 2007.

According to a study coauthored by Josh Makower, a professor of Medicine at Stanford University, patients in America must wait two full years longer, on average, than those in Europe for medical devices to hit the market.

California patient advocate Marti Conger knows this reality all too well. In testimony before Congress earlier this year, Conger spoke of a severe and unusual spinal condition that surfaced in her body in 2006 — and the lack of treatments available to her in America.

The artificial disc she needed had not yet been approved by the FDA — but had been available since 2005 in Britain. Fearing for her health, Conger decided to empty her savings and travel to England for the disc replacement procedure.

And by slapping a new 2.3% tax on device makers, Obamacare is making the situation even worse. The device industry is preparing to cut jobs in the United States and grow outside the country. According to a study by the industry group AdvaMed, the device tax alone could cost the industry more than 10% of its jobs, slashing some 43,000 positions. Some 87.5% of device makers expect growth to be higher outside America in the coming years.

The FDA also serves Americans poorly with respect to prescription drugs. Although the FDA’s budget and headcount have increased dramatically, its productivity has deteriorated, according to a study completed by my colleague John R. Graham. During a twelve-month period in 2008-2009, thirteen new medicines were approved by both the FDA and the European Medicines Authority (EMA) — but the EMA’s approvals came 552 days faster, on average.

The FDA may believe that its review processes are working just fine. But the facts speak otherwise. Congress must seize the opportunity before it to streamline America’s system of medical regulation.

(Sally C. Pipes is president, CEO and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book, The Truth About Obamacare, was published in 2010.)

Arrivaderci, Berlusconi … and the Pronto’er, the Better

A powerful man who has dominated his region in terms of sports, politics, and business clings to power in light of a scandal involving sex with underage youths, cover-ups, and accusations of protecting one’s friends and abuse of power.

No, I’m not talking about Joe Paterno.

I’m talking about Silvio Berlusconi.

If you haven’t been paying attention to Italian politics—and quite frankly, none of us should have to—Berlusconi is the prime minister of Italy and he runs that country with the blunt force and voracious sexual appetite of a Roman emperor.

Berlusconi came to power initially in the entertainment field, where he cobbled together Italy’s first major commercial TV network, at a time when the government controlled everything from the price of pasta to what you saw on the boob tube. (And in Italy, you see so many boobs on the tube that it’s actually an accurate name.)

Berlusconi parlayed his TV money and success into sports, buying the equivalent of the New York Yankees of Italian soccer. In so doing, he discovered what tons of colorless, flavorless business leaders have since learned—that if you buy a major sports team, you suddenly become tall, handsome, charismatic, and fascinating to the media, the public, and especially, young women.

Berlusconi was already charming and fascinating—the guy is Italian, after all—but he took his TV and soccer fame and parlayed it into a new political party, Forza Italia, which is a little like naming a new American political party “Let’s go Dallas Cowboys.” He rode Forza Italia all the way to the top, commandeering the villas of others, throwing parties with allegedly underage prostitutes (in attendance only as guests, Silvio claims), and generally running Italy as if it were his private fiefdom.

Which, in time, it became. Berlusconi was Italy, and Italy was Berlusconi. Anyone who had any kind of power—in the government, in business, in the courts—owed that power to his relationship with Berlusconi. This was no naked emperor. Berlusconi was about as powerful an individual as ever ruled any country at any time. What was the point of indicting him if one of the judges he appointed would drop the charges? What was the point of investigating shady business dealings if everybody in Italy knew the shortest way to end your career was to dig under rocks?

Unfortunately, for Italy and for the rest of the world, there came a point for Berlusconi where his quasi-criminal activity, let alone his fondness for young—and I mean really young—ladies of the night could no longer be ignored by the rest of the world. That time is right now, when Italy is days or perhaps just hours away from being denied the ability to borrow money from the international banking community.

Most of the world’s attention has been devoted to Greece, whose leaders apparently decided that it wasn’t enough to have young, half-naked European and American women lounging on their beaches and drinking Ouzo. No—Greece had to go and borrow gazillions of euros from banks, especially German and French ones, and then spend the money on…well, no one knows what they spent the money on. But it’s gone.

Which is why Greece is broke, and the theoretically sober-minded, worldly-wise German and French bankers are left holding the empty bag. But just to the north of Greece lies another ticking financial time bomb in Berlusconi’s Italy. Silvio has finally been abandoned by his chief political ally and playmate, Umberto Bossi, leader of the Northern League, which means that Berlusconi has nothing to fall back on except billions of dollars of personal wealth, incredible power throughout the entire country, and the short memories of his countrymen who would probably forgive him all manner of financial chicanery if only Inter Milan won another soccer title in the Premier League or wherever they play.

The reason I bring all this up is because yesterday morning, the stock market report on KNX began with a reference to the Italian debt crisis and what Berlusconi was going to do next—resign, reorganize, or just order another plate of risotto.

There is no reason on earth why the stability of the American financial system should be threatened by the actions of a comic opera buffoon running a delightful country 6,000 miles from here.

Unfortunately, that’s how things are these days. The world may or may not be flat, but it sure has gotten small. They used to talk about the butterfly effect—a butterfly flapping its wings in Beijing would cause tremblings in the wind patterns that would affect everyone and everything in the world. Since Italy is the home of grand opera, perhaps we should call this the Madame Butterfly effect. What happens in Rome doesn’t stay in Rome. It affects everything, including how things go on the New York Stock Exchange, and therefore your stock portfolio.

About thirty years ago, Rolling Stone economics columnist (bet you didn’t know they had one) William Greider wrote a fascinating book about the federal reserve system, Secrets of the Temple. In that outstanding book, he quoted a U.S. senator back in 1980 as being amazed that a farmer at a town hall meeting would raise a question about M1, a definition of the money supply created by the Federal Reserve. “How would a farmer know something like that?” the Senator asked in amazement.

Well, today, we should know about M-1 and whatever the Fed is doing, or not doing, to prop up our sagging economy. But we really shouldn’t have to know anything about what goes on in Italy or Greece or any of these other countries where the appetite for borrowing makes their economies look like a college freshman who just got his or her first credit card. Unfortunately, the economic recovery we’re all wishing into existence really does rise and fall with news of what people like Silvio Berlusconi eat for breakfast.

If we’re lucky, he’ll do the right thing and step down, as he recentlys said he would. If not, then the world’s economic condition will move from comic opera to tragedy. And that’s something none of us can afford.

(Michael Levin is a New York Times bestselling author and runs, America’s leading provider of ghostwritten business books.)

Redistricting Role Reversal: CA’s Black Leaders and the Voting Rights Act

On an abnormally chilly morning this past summer, a group of black leaders gathered in front of the California African-American Museum in Los Angeles to oppose what they called an “effort to turn back the clock” and “declare the premature death of black political power.” The purported death sentence was issued one day before, with the release of prospective statewide redistricting maps, which consolidated African-American voters in Los Angeles County into one congressional district. Racial gerrymandering has been a common method of disenfranchising black Americans since the days of Reconstruction. But this time, the law that protesters were opposing was one identified with racial progress: the Voting Rights Act of 1965.

“The Voting Rights Act is being used to disadvantage black people in Los Angeles,” explained Jackie Dupont-Walker, the influential leader of the Ward Economic Development Corp., in the Los Angeles Sentinel, one of L.A.’s leading African-American community newspapers. Dupont-Walker wasn’t alone in making the explosive claim. The City of Angels’ most prominent black leaders have taken a united stand against the landmark civil rights legislation. Representative Karen Bass, the first black woman in the United States to serve as speaker of a state legislature, added, “We should not accept the Voting Rights Act.” An African-American member of the state’s redistricting commission lamented at a July hearing: “The Voting Rights Act is now . . . an instrument to be used against the African-American population.”

It’s a dramatic role reversal. Long considered one of the most important pieces of legislation in U.S. history, the Voting Rights Act now finds itself under attack from the same minority groups that once championed its adoption. California’s Citizens Redistricting Commission, which spent the early part of the year redrawing the state’s political maps, ultimately bowed to African-Americans’ demands that it maintain three safe congressional seats in South L.A. The commission’s compromise sets the stage for a showdown in court and at the ballot box. California’s supreme court last week unanimously rejected two challenges to the commission’s new congressional and state senate maps, which the Republican plaintiffs vow to appeal. Opponents of the commission’s work, who also include several Democratic incumbents whose seats are no longer so safe, have until November 15 to collect 504,000 signatures for a referendum that would ensure the new district maps aren’t in effect for the 2012 election cycle.

Over the last few years, California passed two redistricting-reform initiatives—Proposition 11 in 2008 and Proposition 20 in 2010. The effect of both was to strip the legislature of its redistricting authority and vest it in the independent citizens’ commission. The initiatives outlined strict line-drawing criteria, including compliance with the federal Voting Rights Act. Douglas Johnson, a redistricting expert with the Rose Institute of State and Local Government at Claremont McKenna College, says that the Voting Rights Act is one of the most difficult laws to understand. The initiatives’ authors, in an effort to avoid any confusion, added a provision that required the commission to hire special legal counsel, a responsibility eventually bestowed on George Brown and Dan Kolkey of Gibson, Dunn & Crutcher.

Throughout the mapmaking process, Brown and Kolkey advised the commission that in order to comply with Section 2 of the Voting Rights Act, the commission must draw every possible “majority-minority” district in any area with a history of racially polarized voting. Brown made it easy for the citizen commissioners; he gave them a simple numerical bright line of 50 percent. In essence, if census figures show half a district’s worth of historically underrepresented minorities, the commission must draw a corresponding district. Brown based his standard on a 2009 U.S. Supreme Court decision, Bartlett v. Strickland, which set a 50 percent standard for legal standing in redistricting challenges. But with demographic changes in Los Angeles County, that benchmark spelled trouble for the region’s three black members of Congress: Karen Bass, Maxine Waters, and Laura Richardson. Since the 2001 reapportionment, L.A.’s black population declined from 9.5 percent to 8.3 percent—enough for one, maybe two, but certainly notthree majority-black districts.

Black political leaders weren’t about to surrender that third congressional seat without a fight. “We ain’t going nowhere,” vowed L.A. County Supervisor Mark Ridley-Thomas in July. “Our descendants fought, bled, and died to have a right to participate in the political process and we are not going to start sitting down now.” Redistricting commissioner Andre Parvenu proposed an alternative plan to split black voters across three districts. Just one problem: the “30-30-30” plan was a clear violation of the Voting Rights Act. “I don’t think that on its face there is a legal basis for saying just draw three districts with 30 percent African-American voting strength in the same areas that they’re in now,” Brown told the commission in May. “I don’t understand the legal argument for doing that.” Other redistricting experts echoed Brown’s view. Chandra Sharma, a redistricting consultant with Meridian Pacific, testified that a 30 percent split would “apply a different [VRA] standard to Latino populations versus African-American populations.” He added in a recent interview: “The redistricting commission, in drawing congressional districts in South Central Los Angeles, chose to violate both their own mandate and the Federal Voting Rights Act in order to protect a set of incumbent legislators.”

This inconsistent application of the Voting Rights Act motivated some redistricting commissioners to rethink their interpretation of the law altogether. Commissioner Connie Galambos-Malloy said at a tear-filled July 24 hearing, “The Voting Rights Act is not just about Section 2, and it is not just about Section 5. It’s about the big picture. It’s about not just these districts, but when we zoom out and we look at the region, and when we look at the state, and ultimately when we look at the country; what impact is the redistricting process having on minorities?” Two commissioners weren’t ready to adopt such an expansive reinterpretation of the Act and opposed the congressional maps on VRA grounds. Ultimately, the commission carved out a brand-new district in which Waters may safely run.

Redistricting commissioner Michael Ward, a Republican from Anaheim and the most vocal critic of the commission’s work, came out swinging. “I believe that the Citizens Redistricting Commission broke the law. Nowhere is this more apparent than with the commission’s failure to follow the Voting Rights Act,” he said at a press conference following the commission’s final vote on August 15.

To be fair, not everyone is convinced that the commission’s Los Angeles County congressional lines violate the Voting Rights Act. Johnson, the lead technician for Arizona’s 2001 redistricting process, has handled multiple Voting Rights Act challenges. He points out that the law never establishes a numerical standard. “There’s no magic number in the Voting Rights Act about what’s an effective district,” he said. “It’s ironic that the commission knowingly violated their own rules and in the process happened to follow the Voting Rights Act.” Despite his contrarian view, Johnson believes the commission might be susceptible to a legal challenge based on other racial gerrymandering violations.

In Shaw v. Reno (1993), the Supreme Court ruled that states couldn’t draw lines based predominantly on race. “A reapportionment plan that includes in one district individuals who belong to the same race, but who are otherwise widely separated by geographical and political boundaries, and who may have little in common with one another but the color of their skin, bears an uncomfortable resemblance to political apartheid,” Justice Sandra Day O’Connor wrote for the Court. Johnson argues that “time and time again,” California’s commission did just that—draw lines around ethnic communities, most obviously with the Latino communities of South El Monte.

Perhaps most significantly, the African-American community in Los Angeles could be setting a new precedent for how the Voting Rights Act is applied nationwide. “The Voting Rights Act is a monumental piece of legislation that has helped elect minorities all throughout the country,” said Sharma. “If you set a new L.A. County precedent and apply it to other states, the consequences could be disastrous.” Alas, Californians likely won’t know just what the consequences will be unless the U.S. Supreme Court weighs in. Get ready for an ugly fight.

(John Hrabe is a writer and contributes regularly to the Orange County Register and This article was first published in City Journal.)

Major GOP donors and lawmakers push new rhetoric and policy on immigration reform

Kicking the can down the road to address immigration reform in the United States will not cut it much longer, as businesses, Latino voters and others become more restive on the issue. Immigration is typically a political landmine for lawmakers, and understandably so, given intersecting public policy elements. But too much is at stake to wait on decisive action and Republicans, in particular, have the most to lose by not advocating some common-sense, functional approaches – especially going into the 2012 election cycle.

It’s no wonder the Lincoln Club, a longstanding, conservative, pro-business, Orange County, California-based Political Action Committee, on Thursday revealed a three-pronged immigration reform proposal meant to guide GOP policy-making nationally and reach out to crucial Latino voters.

This is the first official immigration policy prescription in the Lincoln Club’s almost-50 year history, according to Lincoln Club president Bob Loewen. The policy has been ten months in the making, but its approval by the Lincoln Club’s Board of Directors this week, is well timed given new polling on Latino voter sentiment.

(Read Full Article)

(Brian Calle is an Opinion Columnist and Blogger for the Orange County Register. His blog is called Uncommon Ground.)

Californians Should Get Another Vote on High Speed Rail

Imagine you found the house of your dreams. The price is $450,000. You sign papers only to later learn the sellers made a mistake. The price for the house is actually $1 million. Fortunately, under California real estate law, you can back out of the deal. But if you were a California voter buying a train instead of a house, you might be out of luck.

In November 2008 California voters narrowly approved—by a vote of 52.7% to 47.3%— Proposition 1A. The measure authorizes nearly $20 billion in state spending to establish high-speed train service linking Southern California counties, the Sacramento/San Joaquin Valley and the San Francisco Bay Area.

At the time, the entire project was expected to cost about $45 billion. Proponents claimed funds from other public and private sources would cover the project’s remaining costs.

Tom McClintock, Jon Coupal and I co-authored the opposition ballot argument. We called the measure a “boondoggle” that “could cost $90 billion—the most expensive railroad in history.” We warned that no one really knew how much the project would ultimately cost.

After years of waste and mismanagement, California’s High Speed Rail Authority (CHSRA) has finally admitted what critics like us warned all along: “Building the entire system will take longer and cost more than previously estimated.”

In fact, the price tag for this risky transit gamble is now nearly $100 billion—more than twice the original estimate. The new number is greater than California’s entire annual state budget. To fund the entire project today, every Californian, including men, women and children, would need to write a check for more than $2500.

Without those checks, existing funding will only be enough to cover the first phase of the project connecting Fresno and Bakersfield. Should additional funding materialize, Merced and San Jose will be the next stops.

Despite the uncertainty, the folks at CHSRA claim California voters still want to buy this train. At a recent press conference, CHSRA chair and former Democrat Assemblyman Tom Umberg said, “There are some things that do change—development changes, cost changes. But the will of the California voter, I believe, remains the same today…”

Mr. Umberg might believe California voters are still on board, but I’m not so sure. Much has changed since 2008. California’s unemployment rate has risen from single to double digits, the state’s budget has become much, much tighter, and our credit rating has been downgraded to the worst of any state in the nation.

Further, the deadly collision of two high speed trains in China earlier this year has prompted new worries about the safety of high speed rail and led to the recall of 54 trains, reduced speed limits and a moratorium on new projects in that country.

Finally, renewed concerns about our nation’s debt and overall government spending make the outlook for federal funding far less certain. Congressman Kevin McCarthy has introduced a measure that would freeze federal funding and require a thorough audit of the project. The measure, introduced last month, is being co-sponsored by nine other California congressmen.

Perhaps California voters support high speed rail regardless of the cost. If so, high speed rail proponents shouldn’t fear a new vote on their new plan. If not, it would be a breach of contract—or as liberal columnist Tom Elias puts it—“a bait and switch”—to move forward with a costly plan that is little like the one Californians voted for three years ago.

As even Mr. Umberg admits, there are other options for improving California’s crumbling transportation infrastructure. One hundred billion dollars—or even a smaller portion of that number—could do much to improve the roads, freeways, ports and airports Californians use every day. The taxpayers who will foot the bill should make this call.

To that end, Senator Doug LaMalfa plans to introduce legislation putting the project back on the ballot. California taxpayers should support his effort and urge Governor Jerry Brown, the Legislature and the CHSRA board to do the same.

(George Runner represents more than nine million Californians as a member of the State Board of Equalization. For more information, visit This article was first published in Fox & Hounds.)

The Cain – Kopechne Ticket

Like trout rising to a cheese ball, the liberal media and feminazi coven have gone on their search and destroy mission against the latest conservative front-runner Herman Cain. So far it has been a lot of search and very little destroy, as polls show Cain gaining support in the wake of the media lynch mob.

Anita Hill must have been busy still examining coke cans for signs of stray follicles, as the media has had to rely on mainly anonymous allegations of vague, nonspecific charges of “sexual harassment” by mostly hidden accusers. That is thoroughly predictable and frankly unremarkable.

What I find remarkable about the brouhaha so far has been the failure of the GOP to hit out of the ballpark this fat, slow pitch the media delivered squarely over the plate. Republicans are once again living up to their reputation as the stupid party.

In a perfect world I would have been in charge of the GOP response, if I do say so myself and I just did. Here’s what would have happened, irrespective and totally separate from whatever response the Cain campaign made.

The nano-second after the allegations were made by the Democrat Party’s sock puppet website Politico, I would have found friendly reporters to locate Bill Clinton and ask him for his reaction to the charges. They would have asked the only President to be disbarred if he would advise Cain to tell the truth under oath if he were ever questioned by a grand jury about the matter, or to burn any dresses belonging to the accusers that Cain might have.

I would suggest to Andrew Breitbart that he dispatch a video crew to locate the Secretary of State, and ask if she saw signs of a vast left wing conspiracy at work against Mr. Cain.  One question might be if Mrs. Clinton saw any quantifiable difference between the very specific allegations of rape and physical abuse brought against her husband by several publicly identified women and the charges of “harassment” brought against Cain by largely anonymous sources.

We would of course have had journalists at the inevitable press conference held by Gloria “It’s always all about me” Allred.  Ms. Allred would have been reminded of the words she spoke about Bill Clinton after Kathleen Willey accused him of groping her in the Oval Office. Clinton, she said,  “is not guilty of sexual harassment. He is accused of having made a gross, dumb and reckless pass at a supporter during a low point in his life. . . . In other words, he took ‘no’ for an answer.”  We would ask Gloria to compare and contrast the incidents and point out their differences.

Then onto the hundreds of prominent feminists and Democrats who in 1998 and 1999 insisted that even if all the charges against Bill Clinton were true (which it would appear was the case), and even if he committed perjury before a grand jury (which was most definitely the case), “it was all about sex”, and had no bearing on his ability to be President.  Just for fun we might visit the offices of and ask if they thought it was time to move on from the silly allegations against Cain as after all, it’s all about sex.

The piece de resistance (for UCLA grads that means the “best part” or “highlight”) of the response would be a visit to Hyannis Port.  Assuming we could find a Kennedy sober enough to answer, we’d ask the dissolute descendants of Camelot to expound on the difference between conduct that makes a woman feel uncomfortable and conduct that abandons her to drown in the backseat of a car.  Just for grins we might print up some “Cain – Kopechne 2012” bumper stickers and leave them at the front desk of the National Press Club in Washington, D.C and at the Kennedy School of Mis-Government at Harvard..

This is not rocket science folks. It’s called, or used to be called, hard nosed politics. If any – let alone all – of the above had happened in the last ten days I guarantee you that the media, Democrats and women-of-the-fevered-brow would have lost interest in the Cain matter. That none of it has happened shows that the GOP still is playing by Marquis of Queensbury rules while our opponents continue their efforts to gut our best and brightest.

Newt Gingrich, showing again why he would be a formidable nominee, is the only GOP candidate who has hit back at the press on this matter.  The rest of the field has run for the high grass, the exception being Michelle Bachmann who tried to score political points with the media by criticizing Cain’s response to the allegations. Shame on her for giving aid and comfort to the enemy.

We are in a deadly serious, perhaps existential contest for the future of our country.  The full apparatus of the left knows this. It is not coincidence that they have tried to destroy first Palin, then Bachmann, then Perry and now Cain. Enough!  It is time to bloody some noses and put the left on notice that we shall fight for every inch of political turf. It’s time to remind the American people that nobody drowned at the National Restaurant Association.

(William E. Saracino is a member of California Political Review’s editorial board.)

Legal Reform = Job Creation

We all agree that the number one priority in this state and nation should be job creation. However, it seems like some people are more focused on spending money than saving money, at the expense of job creation.

A new study published by the U.S. Chamber Institute for Legal Reform called Creating Conditions for Economic Growth: The Role of the Legal Environment sheds some light on how the high cost of tort systems in the United States is raising the cost of doing business and hurting job creation. This study is based on a data set of state liability costs never before made available to public policy researchers, which provides an excellent basis for a reliable state-by-state comparison of costs.

I have often cited the Pacific Research Institute’s U.S. Tort Liability Study, which stated that just one tort reform in California would create 141,000 jobs. This study, looking at updated data, concludes the same thing: improvements in states with the costliest legal environments could increase employment between 1% and 2.8%. In California, that could mean more than a quarter million jobs.

Will this latest study simply be placed on a bookshelf with all the other studies and rankings or will someone (in the Legislature or Governor’s office) clue in and get it? We need to make legal reform part of California’s jobs package and thoroughly examine our regulations so we can get California back on track.

It is pretty clear that if we want people to invest or expand businesses in our state, we need to make the business climate more inviting. Right now, it is fair to say (and many CEOs agree) California’s business climate is among the worst in the nation. Legal and regulatory reform will create a positive business climate where investors will come and build.

Are you listening California? Legal reform = Jobs. Don’t just take my word for it – there are plenty of materials you can read to back it up.

(Tom Scott is the Executive Director for California Citizens Against Lawsuit Abuse.  This article was first featured in Fox & Hounds.)

How the wealth of the “1%” provides the standard of living for the “99%”

The protesters in the Occupy Wall Street Movement and its numerous clones elsewhere in the country and around the world chant that one percent of the population owns all the wealth and lives at the expense of the remaining ninety-nine percent. The obvious solution that they imply is for the ninety-nine percent to seize the wealth of the one percent and use it for their benefit rather than allowing it to continue to be used for the benefit of the one percent, who are allegedly undeserving greedy capitalist exploiters. In other words, the implicit program of the protesters is that of socialism and the redistribution of wealth.

Putting aside the hyperbole in the movement’s claim, it is true that a relatively small minority of people does own the far greater part of the wealth of the country. The figures “one percent” and “ninety-nine” percent, however exaggerated, serve to place that fact in the strongest possible light.

What the protesters do not realize is that the wealth of the one percent provides the standard of living of the ninety-nine percent.

The protesters have no awareness of this, because they see the world through an intellectual lens that is inappropriate to life under capitalism and its market economy. They see a world, still present in some places, and present everywhere a few centuries ago, of self-sufficient farm families, each producing for its own consumption and having no essential connection to markets.

In such a world, if one sees a farmer’s field, or his barn, or plow, or draft animals, and asks who do these means of production serve, the answer is the farmer and his family, and no one else. In such a world, apart from the receipt of occasional charity from the owners, those who are not owners of means of production cannot benefit from means of production unless and until they themselves somehow become owners of means of production. They cannot benefit from other people’s means of production except by inheriting them or by seizing them.

In the world of the protesters, means of production have the same essential status as consumers’ goods, which as a rule are of benefit only to their owners. It is because of this that those who share the mentality of the protesters typically depict capitalists as fat men, whose plates are heaped high with food, while the masses of wage earners must live near starvation. According to this mentality, the redistribution of wealth is a matter merely of taking from the overflowing plates of the capitalists and giving to the starving workers.

Contrary to such beliefs, in the modern world in which we actually live, the wealth of the capitalists is simply not in the form of consumers’ goods to any great extent. Not only is it overwhelmingly in the form of means of production but those means of production are employed in the production of goods and services that are sold in the market. Totally unlike the conditions of self-sufficient farm families, the physical beneficiaries of the capitalists’ means of production are all the members of the general consuming public who buy the capitalists’ products.

For example, without owning so much as a single share of stock in General Motors or Exxon Mobil, everyone in a capitalist economy who buys the products of these firms benefits from their means of production: the buyer of a GM automobile benefits from the GM factory that produced that automobile; the buyer of Exxon’s gasoline benefits from its oil wells, pipelines, and tanker trucks. Furthermore, everyone benefits from their means of production who buys the products of the customers of GM or Exxon, insofar as their means of production indirectly contribute to the products of their customers. For example, the patrons of grocery stores whose goods are delivered in trucks made by GM or fueled by diesel oil produced in Exxon’s refineries are beneficiaries of the existence of GM’s truck factories and Exxon’s refineries. Even everyone who buys the products of the competitors of GM and Exxon, or of the customers of those competitors, benefits from the existence of GM’s and Exxon’s means of production. This is because GM’s and Exxon’s means of production result in a more abundant and thus lower-priced supply of the kind of goods the competitors sell.

In other words, all of us, one hundred percent of us, benefit from the wealth of the hated capitalists. We benefit without ourselves being capitalists, or being capitalists to any great extent. The protesters are literally kept alive on the foundation of the wealth of the capitalists they hate. As just indicated, the oil fields and pipelines of the hated Exxon corporation provide the fuel that powers the tractors and trucks that are essential to the production and delivery of the food the protesters eat. The protesters and all other haters of capitalists hate the foundations of their own existence.

The benefit of the capitalists’ means of production to non-owners of means of production extends not only to the buyers of the products of those means of production but also to the sellers of the labor that is employed to work with those means of production. The wealth of the capitalists, in other words, is the source both of the supply of products that non-owners of the means of production buy and of the demand for the labor that non-owners of the means of production sell. It follows that the larger the number and greater the wealth of the capitalists, the greater is both the supply of products and the demand for labor, and thus the lower are prices and the higher are wages, i.e., the higher is the standard of living of everyone. Nothing is more to the self-interest of the average person than to live in a society that is filled with multi-billionaire capitalists and their corporations, all busy using their vast wealth to produce the products he buys and to compete for the labor he sells.

Nevertheless, the world the protesters yearn for is a world from which the billionaire capitalists and their corporations have been banished, replaced by small, poor producers, who would not be significantly richer than they themselves are, which is to say, impoverished. They expect that in a world of such producers, producers who lack the capital required to produce very much of anything, let alone carry on the mass production of the technologically advanced products of modern capitalism, they will somehow be economically better off than they are now. Obviously, the protesters could not be more deluded.

In addition to not realizing that the wealth of the so-called one percent is the foundation of the standard of living of the so-called ninety-nine percent, what the protesters also do not realize is that the “greed” of those who seek to become part of the one percent, or to enlarge their position within it, is what serves progressively to improve the standard of living of the ninety-nine percent.

Of course, this does not apply to wealth which has been acquired by such means as obtaining government subsidies or preventing competition through protective tariffs and other forms of government intervention. These are methods which are made possible to the extent that the government is permitted to depart from a policy of strict laissez-faire and thereby arbitrarily reward or punish firms.

Apart from such aberrations, the way that business fortunes are accumulated is by means of the high profits generated by the introduction of new and improved products and more efficient, lower-cost methods of production, followed by the heavy saving and reinvestment of those high profits.

For example, the $6 billion fortune of the late Steve Jobs was built on a foundation of Mr. Jobs having made it possible for Apple Computer to introduce such new and improved products as the iPod, the iPhone, and the iPad, and then heavily saving and reinvesting the share of the profits that came to him.

Two closely related points need to be stressed. First, the fortunes that are accumulated in this way generally serve in the larger-scale production of the very sort of products that provided the profits out of which their accumulation took place. Thus, for example, Jobs’ billions serve largely in the production of Apple’s products. Similarly, old Henry Ford’s great personal fortune, earned on the foundation of introducing major improvements in the efficiency of automobile production, which brought down the price of a new automobile from about $10,000 at the beginning of the 20th Century to $300 in the mid 1920s, was used to make possible the production of millions of Ford automobiles.

Second, the high rates of profit earned on new and improved products and methods of production are temporary. As soon as the production of the new product or use of the new method of production becomes the norm in an industry, it no longer provides any exceptional profitability. Indeed, further improvements again and again render earlier improvements downright unprofitable. For example, the first generation of the iPhone, which was highly profitable just a few years ago, is or soon will be unprofitable, because further advances have rendered it obsolete.

As a result, the accumulation of great business fortunes generally requires the introduction of a series of improvements in products or methods of production. This is what is required to maintain a high rate of profit in the face of competition. For example, Intel’s ability to maintain its high rate of profit over the years has depended on its ability to introduce one substantial improvement in its computer chips after another. The net effect has been that computer users have gotten the benefit of improvement after improvement not only at no rise but a drastic decline in the prices of computer chips. Insofar as high profits rest on low costs of production, competition drives prices down to correspond to the lower level of costs, which necessitates the achievement of still further cost reductions to maintain high profits.

The same outcome, of course, applies not only to Intel and microprocessors but also to the rest of the computer industry, where gigabytes of memory and terabytes of hard drive data storage now sell at prices below the prices of megabytes of memory and hard drive data storage just a couple of decades ago. Indeed, if one knows how to look, the principle of ever more and better products for less and less applies throughout the economic system. It is present in the production of food, clothing, and shelter as well as in the high tech industries, and in virtually all industries in between.

It is present in these industries even though the government’s inflation of the money supply has caused the prices of their products to rise sharply over the years. Despite this, when calculated in terms of the amount of labor the average person must expend in order to earn the wages needed to enable him to buy these products, their prices have sharply fallen.

This can be seen in the fact that today, the average worker works 40 hours per week, while a worker of a century or so ago worked 60 hours a week. For the 40 hours he works, the average worker of today receives the goods and services comprising the average standard of living of 2011, which includes such things as an automobile, refrigerator, air conditioner, central heating, more and better living space, more and better food and clothing, modern medicine and dentistry, motion pictures, a computer, cell phone, television set, washer/dryer, microwave oven, and so on. The average worker of 1911 either did not have these things at all or had much less of them and of poorer quality.

If we describe the goods and services received by the average worker of today for his 40 hours of labor as being 10 times as great as those received by the average worker of 1911 for his 60 hours of labor, then it follows that expressed in terms of the amount of labor that needs to be performed today in order to be able to buy goods and services equivalent to the standard of living of 1911, prices have fallen to two-thirds of one-tenth of their level in 1911, i.e., to one-fifteenth of their level in 1911, which is to say, by 93 1/3 percent.

Capitalism—laissez-faire capitalism—is the ideal economic system. It is the embodiment of individual freedom and the pursuit of material self-interest. Its result is the progressive rise in the material well-being of all, manifested in lengthening life spans and ever improving standards of living.

The economic stagnation and decline, the problems of mass unemployment and growing poverty experienced in the United States in recent years, are the result of violations of individual freedom and the pursuit of material self-interest. The government has enmeshed the economic system in a growing web of paralyzing rules and regulations that prohibit the production of goods and services that people want, while compelling the production of goods and services they don’t want, and making the production of virtually everything more and more expensive than it needs to be. For example, prohibitions on the production of atomic power, oil, coal, and natural gas, make the cost of energy higher and in the face of less energy available for use in production, require the performance of more human labor to produce any given quantity of goods. This results in fewer goods being available to remunerate the performance of any given quantity of labor.

Uncontrolled government spending and its accompanying budget deficits and borrowing, along with the income, estate, and capital gains taxes, all levied on funds that otherwise would have been heavily saved and invested, drain capital from the economic system. They thus serve to prevent the increase in both the supply of goods and the demand for labor that more capital in the hands of business would have made possible. They have now gone far enough to have begun actually to reduce the supply of capital in the economic system in comparison with the past.

Capital accumulation is also impaired and can ultimately be turned into capital decumulation, through the effects of additional government regulation in raising the costs of production and thus reducing its efficiency. This applies to practically all of the regulations imposed by the Environmental Protection Agency, the Occupational Safety and Health Administration, the Consumer Product Safety Commission, the National Labor Relations Board, the Food and Drug Administration, and the various other government agencies. The effect of their regulations is that for any given amount of labor performed in the economic system, there is less product than would otherwise be produced.

Now anything that serves to reduce the ability to produce in general, serves also to reduce the ability to produce capital goods in particular. Because of such government interference, any given amount of labor and capital goods devoted to the production of capital goods results in a smaller output of capital goods, just as any given quantity of labor and capital goods devoted to the production of consumers’ goods results in a smaller output of consumers’ goods. At a minimum, the reduced supply of capital goods produced serves to reduce the rate of economic progress. A reduction in the supply of capital goods produced great enough to prevent the addition of any increment to the previously existing supply of capital goods, and thus to put an end to capital accumulation, brings economic progress to a complete halt. A still greater reduction, one that renders the supply of capital goods produced less than the supply being used up in production, constitutes capital decumulation and thus a decline in the economic system’s ability to produce. As indicated, the United States already appears to be at this point.

The problem of capital decumulation has been greatly compounded as the result of massive credit expansion induced by the Federal Reserve System and its policy of easy money and artificially low interest rates. This policy led first to a great stock market bubble and then a vast housing bubble, as large quantities of newly created money poured into the stock market and later the housing market. Between these two bubbles, trillions of dollars of capital were lost. In both instances, vast overconsumption occurred as people raced to buy such things as new automobiles, major appliances, vacations, and all kinds of luxury goods that they would not have believed they could afford in the absence of the effects of credit expansion, often incurring substantial debt in the process.

In the one case, it was the artificial rise in stock prices that misled people into believing that they could afford these things. In the other, it was the artificial rise in home prices that produced this result. The seeming wealth vanished with the fall in stock prices and then again, later, with the fall in housing prices. In the housing bubble, moreover, millions of homes were constructed for people who could not afford to pay for them. All of this represented a huge loss of capital and thus of the ability of business to produce and to employ labor. It is this loss of capital that is responsible for our present problem of mass unemployment.

Despite this loss of capital, unemployment could be eliminated. But given the loss of capital, what would be required to accomplish this is a fall in wage rates. This fall, however, is made virtually illegal as the result of the existence of minimum-wage laws and pro-union legislation. These laws prevent employers from offering the lower wage rates at which the unemployed would be reemployed.

Thus, however ironic it may be, it turns out that virtually all of the problems the Occupy Wall Street protesters complain about are the result of the enactment of policies that they support and in which they fervently believe. It is their mentality, the Marxism that permeates it, and the government policies that are the result, that are responsible for what they complain about. The protesters are, in effect, in the position of being unwitting flagellants. They are beating themselves left and right and as balm for their wounds they demand more whips and chains. They do not see this, because they have not learned to make the connection that in violating the freedom of businessmen and capitalists and seizing and consuming their wealth, i.e., using weapons of pain and suffering against this small hated group, they are destroying the basis of their own well being.

However much the protesters might deserve to suffer as the result of the injury caused by the enactment of their very own ideas, it would be far better, if they woke up to the modern world and came to understand the actual nature of capitalism, and then directed their ire at the targets that deserve it. In that case, they might make some real contribution to economic well being, including their own.

(George Reisman, Ph.D. is Pepperdine University Professor Emeritus of Economics, a Senior Fellow at the Goldwater Institute, and the author of Capitalism: A Treatise on Economics (Ottawa, Illinois: Jameson Books, 1996). His website is and his blog is

Fake Teacher Evaluation Racket Busted in Los Angeles

Parents sue the LA school board and teachers union, forcing them to obey a law that they have ignored for 40 years.

There is nothing new about unions bullying weak-kneed school districts, but this may be the mother of all abuses– for forty years, school districts and unions have collaborated to break the law in California. According to the Stull Act (Section 44660 of the state’s education code), part of a teacher’s evaluation is required to include a student achievement component, but this has not happened anywhere in the state. Last week, after consulting with EdVoice, a reform advocacy group in Sacramento, parents of some students in Los Angeles Unified School District sued the school district and the teachers union for what amounts to a dereliction of duty. While the lawsuit is aimed at LA, it will have state-wide ramifications.

Originally enacted in 1971, the Stull Act, named after State Senator John Stull, was amended in 1999 to include,

“The governing board of each school district shall evaluate and assess certificated employee performance as it reasonably relates to:

The progress of pupils toward the standards established pursuant to subdivision (a) and, if applicable, the state adopted academic content standards as measured by state adopted criterion referenced assessments….”

In other words, a part of a teacher’s evaluation is supposed to be contingent on how well his students do on state mandated tests. This is hardly a radical notion, as half the states in the rest of the country now evaluate teachers in part by student performance on these tests.

But in California, what are laughingly referred to as “teacher evaluations” are anything but.  A “Stull” is typically a very rare and brief visit from a principal who helps plan the lesson they will observe and lets the teacher know exactly when the observation will be. And all the while, the teacher is prepping his kids to be at their absolute best when the principal steps into the classroom for the evaluation. Invariably everything goes swimmingly. So consistently good are the results of these Potemkin Village-style “evaluations” that over 99 percent of teachers get a satisfactory rating.

Teachers unions think that linking student performance to a teacher’s evaluation is a grave injustice and have always fiercely opposed it.

In reality, holding a teacher accountable for student learning is about as unjust as holding a chef responsible for the food he cooks.

Still, the teachers unions’ position is understandable because their unions have never demonstrated any real concern for students.

But what about the folks who sit at the other end of the bargaining table? What is the excuse for the school boards? Are they all that easily cowed by union bullies? Or are they part of a club that has forgotten their mission? Are they corrupt? Can they be ignorant of the law? Some or all of the above?

In any event, with judicial lights shining brightly, the jig is up…sort of. What the education code does not stipulate is how much weight to give the student performance component. Therein lies the rub. Without doubt, the teachers unions will negotiate to minimize it to near zero, with little or no consequence for the bottom performing teachers (to the unions, there is no such thing as a bad teacher, and they’ve rigged the system so that getting rid of a stinker is about as prevalent as the occurrence of Halley’s Comet).

If the intent of this lawsuit is seriously embraced, it could have a major impact in California, where a third of all students drop out before completing high school and a great majority of those who do graduate and go on to college need remediation.

Will school boards finally man up and take action to reverse a forty year shame?

Or will they cower and cave, yet again, to union demands and turn their backs on the children of California?

(Larry Sand is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues. This story was first posted on Red County and can be found here.)