The Nutmeg State Dials For Dollars

As Connecticut descends further into the morass of debt (a tale told before by this blog), even after the past five years have seen the two largest tax increases in state history, our legislators are seeking even more inventive ways to squeeze cash from the ever diminishing pots of money left.  And it is diminishing.  Just recently, two of Connecticut's 15 billionaires left the state for the more tax-friendly environs of Florida and two more are considering making the move. These exits will have a materially significant impact on the state's finances.

Today's Wall St Journal reports that the Democratic president of the state Senate has proposed taxing the investment profits of Yale University's $25.6 billion endowment, the second largest in the country after Harvard (some have referred to Yale and Harvard as hedge funds that operate educational institutions as tax shelters).  Senator Martin M Looney stated:

"It is our hope that these rich schools can use their wealth to create job opportunities, rather than simply enrich themselves."

And, of course, what better way is there to create job opportunities that to give state government more money?

It's actually a pretty smart move by the money-hungry legislators.  Most corporations can more easily move their headquarters out of state, as General Electric is in the process of doing, but Yale is pretty much stuck in New Haven.  In the case of Yale, not only is its endowment not taxed, but the impoverished city of New Haven cannot levy property taxes on the university.

The Journal quotes a senior Yale official responding that the proposal is "plainly unconstitutional" and the university "would defend its constitutional right of non-taxation".  He also tried to defend the university by pointing out its pittance of an annual payment to New Haven of only $8.2 million from an institution that owns the bulk of the valuable property in the city.

But isn't this a moral, as well as legal question?  What about the children? And shouldn't Yale, a university at which many of its faculty have taken the lead in fighting income inequality do something affirmative to help the state?  After all, Yale is just one of 1,141 universities and colleges in the United States, yet its endowment is almost 7% of the total endowment of all of those institutions of higher learning and more than 70 times the average endowment.  Surely, they can spare a little?

Shouldn't Yale's administration listen to Yale's Institute for Social and Policy Studies which has campaigned so feverishly on the issue?

Shouldn't the administration listen to Thomas Pogge of Yale's Global Justice Program, who has said that inequality "undermines the social fabric"?

And to Robert Schiller, Yale Professor of Economics, who has argued that increased taxation should be used to attack inequality?

As well as to Yale University Press which has published numerous tomes on the scourge of inequality?

In addition to sharing the benefits of its endowment with the needy, it would be a noble gesture of all Yale faculty agreed that they would turn over any income in excess of the average household income in the state ($65,753) to go to a fund that would be shared among those making less than the average.

As a spur to action let us look at the concrete steps taken by Harvard and MIT to address this subject.

We await Yale's more considered response.

UPDATE:  Just after publishing this post, THC ran across William Russell Mead's take at his essential blog at The American Interest.  It's titled Blue Civil War Escalates, based on Mead's continuing series about the failure of the Blue Social Model:

Connecticut Democrats are going after Yale, for the same reason Henry VIII went after the monks and Willie Sutton went after the banks.

. . . desperate cities and states—caught between the unpayable pension promises created by decades of irresponsible governance, bloated workforces organized into unions that keep asking for more, poor residents wanting and needing more basic services, and rich residents threatening to flounce out of town unless they get more ‘amenities’—have no choice but to scrounge under the couch cushions for extra cash. And university endowments are a prime target.

Once Henry VIII discovered that you could squeeze gold coins from wealthy monastic foundations, he decided to squeeze harder. American politicians are no stupider than he was, and the need for revenue to feed Big Blue Machine is continuing to grow. The people who rule the Ivory Tower should start to take note.

Not A Root Cause: Really

A few hours after yesterday's post, President Barack Obama, in what appears to be a direct response to THC, remarked in at a Catholic-Evangelical Leadership Summit on Poverty that increased divisions in society are leading wealthier people to send their children to private schools (like the President whose children attend the elite private Sidwell Friends School while at the same time ending a program under which poor children in the District of Columbia received vouchers to attend private schools) and thus spurring disinvestment in public sector goods like education.

“Kids start going to private schools, kids start working out at private clubs instead of the public parks, an anti-government ideology then disinvests from those common goods and those things that draw us together.”

Let's look at some evidence.  The first two charts from the US Department of Education and the last from the OECD and all via Powerline.

Education expenditures up about 300% in constant dollars over the past 50 years.

Enrollment is up only about 35%.

Per pupil expenditures for selected countries.  U.S. does well comparatively.



As mentioned yesterday, these same types of charts were used in the healthcare debate to argue that the United States was spending too much.

THC has seen this same argument about more spending made for decades regardless of the evidence.  It's getting a little tiring.

William Voegeli's 2010 book, Never Enough, had as its thesis that there is no limiting principle in today's liberalism.  Its only constant is that whatever is being spent on a social program is Never Enough, a war cry reflecting the bizarre mindset of the Washington political world where increases in spending are denounced as "cuts" and "slashing budgets"; for more see The Fiscal Uncliff.

Isn't it time for some people to become reality-based?

Second Thoughts From The New York Times On Cuba

(Carlos Slim Yacht)
(Cuban refugee yacht)

Attentive THC readers may remember his December 2014 post, Top 5 Reasons We Ended The Cuba Embargo.

The first four were:

- Retro look of Havana appeals to hipsters.

- Travel to U.S. mostly by boat which is more environmentally-friendly than air travel.

- Fairness Doctrine implemented on more progressive basis grounded in concept that anything not approved by Government is unfair.

- Fertile ground for new Cash for Clunkers program.

The fifth was:

- Income inequality solved by maximum monthly wage of $20.

It's this last one which is now giving the New York Times second thoughts about the wisdom of ending the embargo as you can see in its recent article bemoaning the advent of capitalism on the island:

Inequality Becomes More Visible in Cuba as the Economy Shifts

This is causing the Times, which has advocated strongly for reducing income inequality in both its editorial and news sections, anguish.  It is better for everyone to remain poor together according to the Times.  Well, almost everyone.  In Cuba, the ruling elite is exempt from many of the restrictions imposed on the rest of the population because, well, just because.  In the U.S. the Times pushes the issue though it would exempt the members of its Editorial Board, the family owners of the paper (the Sulzbergers) and its largest non-family shareowner (currently 17%) the well-connected Mexican billionaire Carlos Slim who controls 80% of the landlines and 70% of cell phone service in his native country (see this NPR piece on his monopolistic practices; no mention of his large ownership interest in the Times; does anyone doubt that if Slim were a major shareholder in Fox that NPR would have mentioned it at least in passing?).
 

All of which brings to mind Margaret Thatcher's response on income inequality from 1990: "They'd rather have the poor poorer".

Ending Income Inequality & Climate Change

You ask and THC answers!  We handle the Big Questions here at Things Have Changed.

According to recent research by Experts:

. . . assortative mating has a role to play in household income inequality. Empirically, it has been found that the proportion of couples who share the same level of schooling has been growing over the past few decades. This has been accompanied by a rise in household income inequality.

Assortative mating is when people of similar economic and/or educational background marry each other and the rate at which this is occurring in our society is increasing.  In conjunction with the rise of children living in single-parent households over the past 40 years it is the major contributor to inequality.

At the same time other Experts have determine that divorce is a major contributor to the warming of the planet and the destruction of the Earth's resources.  According to a study reported by the Washington Post individuals post-divorce use between 42% and 61% more water and electricity than when they lived together and according to the UN State of the World Population Report (2009) "a divorce may cause more carbon dioxide emissions than an additional birth".

In addition we know that health outcomes are better for married couples as well as for children not raised in single family homes and controlling our country's rocketing health costs is extremely important, particularly now that the government is paying for more of such care.

Given this data the solution seems obvious.  The President needs to propose and Congress should enact a law declaring that urgent need to reduce income inequality and end the risk of dangerous global warming requires national action.  In order to meet these needs the President and the relevant executive branch actions would be authorized to take certain actions:

• At 18 every citizen will be assigned a mate for purposes of marriage.  The process used will be developed by the same folks responsible for developing the algorithm under the President's recent Electoral Reform Proposal.  The algorithm will be designed to maximize marriages across economic and educational levels taking into account race, ethnicity, sex and gender.

• Divorce laws be will nationalized and grounds for divorce will be strictly limited in order to minimize its environmental impact.

• In those limited circumstances where divorce is permitted, the divorced parties will be given three choices:

           (i)   Assignment to live in a group home until such time as they are married again
          (ii)  Accept a new marriage partner as assigned to them by the algorithm
         (iii) Individuals may remain single and not live in a group home if they purchase the proper       regulatory determined amount of certified Carbon Offset Credits.

Now that we've solved that what's next?

Solving Income Inequality

Apparently Income Inequality (TM) has become quite an ISSUE for some folks.  THC never heard much about it until a couple of years ago (though he recently reported on the highly educated efforts of Harvard and MIT to address this pressing issue in a post of April 1, 2014), but in the interests of keeping our devoted readership informed we wanted to let you know that Michael Totten, intrepid foreign correspondent and keeper of the Dispatches blog, has, in his recent travels, stumbled upon a solution that has, until now, eluded the sheltered and provincial people of America.

At City Journal, Totten reports on his recent visit to Cuba, part of an ongoing series the rest of which can be found at Dispatches.  According to Totten, it turns out that Cuba has successfully solved income inequality by imposing a maximum monthly wage of approximately $20 a month!!  Seems like a solution that is simple, cutting through the Gordian Knot of complexity which some reactionaries throw up to avoid addressing the ISSUE.
(Havana from City Journal)
In its empathetic approach towards the issue the Cuban government has taken creative steps to ensure that inequality does not arise again particularly as the regime has selectively opened small parts of its economy to  foreign companies.  Totten reports on the experience of Melia International, the Spanish company hired to manage Havana's tourist hotels.  Before signing its contract Melia insisted it wanted to pay its Cuban workers a "decent wage" in the range of $8-10 an hour.  The government agreed, but to spare its citizens from any resulting inequity it insisted that Melia pay the wage directly to the government which in turn pays each worker 67 cents a day.  We can only applaud such dedication and the satisfaction it must provide to the people of Cuba!
(Havana from Dispatches)
Totten does claim in passing that:

Cuba isn’t a developing country; it’s a once-developed country destroyed by its own government.

But that is surely an uncharitable remark and a small price to pay for eliminating inequality!*


* Certain government officials do make substantially more than the maximum wage but we all recognize that those in the Revolutionary Vanguard need adequate resources to allow them a single-minded focus on the welfare of The People. (Havana from Dispatches)

Harvard Goes Egalitarian

THC was alerted to this breaking story by the Liberty & Law Blog on Harvard's actions to address this pressing issue:

In a move designed to foster diversity and to create a university that “thinks like America,” Dr. Drew Gilpin Faust, the President of Harvard University announced yesterday that the school will embrace egalitarian admissions. The school will no longer give priority to students with good grades, high SAT scores, and impressive extra-curricular activities. Such policies have, Dr. Faust acknowledged, created an “elitist” and “inegalitarian” atmosphere at the college. “It is unacceptable in 2014 to be favoring the intelligent over the unlearned, and the energetic over the slothful,” she proclaimed. Starting next year Harvard’s incoming class will have SAT scores ranging from six to sixteen hundred to produce, for the first time, a truly diverse freshman class. The class’ scores will resemble the distribution of scores across the United States. This mission will extend beyond admissions: “Harvard is now dedicated to fighting ‘thinkism” in all its guises".

The word is that Harvard is considering yet another daring step to address inequality.  According to US News & World Report, America's 1,141 universities and colleges have a total endowment of approximately $370 billion.  However, 10 universities (0.9%) have more than 35% of all endowments with Harvard alone accounting for more than 8% of the total!  Harvard's endowment is so large that it is almost 100 times the size of the average college endowment.  Sources are reporting that Harvard is planning to disband its endowment and distribute all of it to community colleges and trade schools across the United States with one Harvard insider reporting remarking "We simply must address this outrageous inequality - it's, it's unfair! ".  What a magnanimous gesture this would be!
(Harvard endowment)
Not to be outdone, Harvard's rival in Cambridge, MA, the Massachusetts Institute of Technology (MIT) is launching an initiative under the leadership of Professor Jonathan Gruber, one of the policy experts behind the creation of the Affordable Care Act.  Gruber, who has been adamant in denouncing "winners of the genetic lottery", has decided to "walk the talk" and recently announced he is voluntarily giving up his tenured position at MIT and that the University has agreed to annually rotate in a new professor selected at random from the Boston phone book.  MIT and Gruber are urging other tenured professors to follow his noble example.       (former tenured Prof Gruber)


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