Tag Archives: government

The Fallacy of Taxes v Services

Field poll shows voters want lower taxes and services, just not any of the services they like

By Brian Leubitz

The Field polling organization occasionally asks voters how they feel about the balance of government services versus taxes. And in the most recent such poll, by a 54% to 35% margin, most California voters say they prefer lower taxes and fewer

government services to higher taxes and more government services. But if you are a Republican, you are going to want to stop reading there.

You see, voters aren’t really sure what they want. They say they want fewer services, but when it comes to choosing services that they would be willing to cut, well that’s a different story. When it comes to pretty much anything that costs a substantial part of our state budget, nobody wants to make any cuts.

However, when voters are asked whether state and local government spending in each of six specific program areas should be increased, reduced or left the same, there is much less support for spending reductions. Only small proportions of voter (between 8% and 15%) support less state and local government spending on the k-12 schools, mental health, road and highway building and repair, and law enforcement and police. In the case of k-12 schools and mental health, majorities favor increased government spending. In the case of road and highway building and repair, and law enforcement and police, pluralities support keeping spending at current levels. Voters are divided when asked about government spending on environmental protection and public assistance programs. (Field)

So, cut our taxes and reduce our services, except the services that we like, which are most of them. It’s a frustrating dynamic, to say the least, but it is a dynamic that the Republicans have been playing off for decades in California and beyond. It hasn’t been all that successful here, but it has worked very well elsewhere, and it is all they really have.

On another front, support for Prop 13 remains high. However, a big majority of voters would like to see the commercial property values reset on any property transaction, not just a complete sale. That change would be bigger than it sounds, as commercial property rarely changes hands completely. This would shift the balance that had been shifting heavily towards housing. But, who knows if it would ever happen, the Chamber of Commerce is still strong, and would bust out “job killer” in under 2.5 seconds.

Expansion of Wireless Network is Critical

This editorial in The Detroit News by Orjiakor N. Isiogu, chairman of the Michigan Public Service Commission, very nearly perfectly sums up our argument.

Like HDTV before it, 4G-LTE wireless holds incredible promise for consumers and device manufacturers alike. But today there is insufficient wireless capacity to support millions of 4G-LTE devices, and demand is rising ever faster. According to Cisco Systems, mobile traffic is expected to increase 26-fold by 2015. By 2015 the majority of Internet traffic will be via mobile devices – a reality unthinkable just two years ago.

That’s why LightSquared’s venture is significant. It would substantially increase America’s broadband wireless capacity while providing next-generation high-speed wireless data and voice to areas previously underserved. In addition, the company plans to market its nationwide network on a wholesale model, allowing any number of new competitors to enter the market. Many observers have hailed this proposal as a key part of President Obama’s plan to increase high-speed Internet adoption nationwide, while also increasing competition in a consolidating wireless industry, all at zero cost to taxpayers, thanks to a planned $25 billion investment by the company.

More competitors in the market will mean lower prices and better service for consumers, along with expanded wireless broadband options. Another key benefit will be the economic benefit associated with building out a national network, including the creation of an estimated 15,000 jobs per year. Public safety could be enhanced by this network as well.

Simply put, whether you’re somewhere in urban Michigan or rural California, an expanded wireless network means more competition, lower prices, and better service. And we’re doing it all at zero cost to taxpayers.

More Spectrum. Yeah. That’s the Answer!

For real – it is. And the truth is, that while all of this debate about the AT&T/T-Mobile merger is important, worthwhile and necessary, it’s also something of a red herring. Because at the end of the day the problem that the merger was initiated in part to address, the problem that will ultimately prevent new competition, stifle innovation and shut down the incredible potential to create jobs and grow the economy through broadband investment remains.

And that problem is SPECTRUM.

And if there’s something we know a little bit about, it’s the need for more spectrum.

Check out this very excellent article written by Jeff Kagen at E-Commerce Times, “Let’s Solve the Real Wireless Problem: Spectrum Shortage” http://www.technewsworld.com/s…

Bringing Broadband to Every Corner of CA

Few topics today are generating as much discussion as the seemingly insatiable demand for mobile data and how our country is going to keep pace with it. The United States has set a national goal to provide 98 percent of Americans with broadband access within the next five years. LightSquared is stepping up to help make this a reality. We are contributing $14 billion in private investment over the next eight years to build a nationwide wireless broadband network using 4G-LTE technology integrated with satellite coverage. This represents a $14 billion private sector-not government-investment in America’s infrastructure.

The deployment and management of the LightSquared network will, in turn, create new jobs. We expect to generate more than 15,000 direct and indirect jobs in each of the next five years. And that’s just the beginning of what the LightSquared network will help bring to California and across the country.

LightSquared will offer network capacity on a wholesale-only basis. This is a dramatic departure from the current vertically integrated model in the wireless industry, and it will open the broadband market to new players such as retailers, cable companies, and device manufacturers, to name a few. This means that end users – consumers like you – will enjoy the benefits of innovation, increased competition, and choice.

Last, but not least, the LightSquared integrated 4G-LTE-satellite network will provide much-needed access to consumers, businesses, healthcare facilities, tribal communities, and public safety agencies throughout rural America. Across the country, we will serve critical public sector needs such as emergency preparedness and seamless communications in times of crisis.

One of the reasons we are so committed to bringing wireless connectivity to the underserved rural United States was seen in action this past spring. As storms and a tornado ripped through the south, websites were posting potentially lifesaving real-time information. But because broadband Internet access and adoption in Alabama is below the national average, many residents missed out on the advance warning. This is unacceptable. The United States should be the global leader in delivering wireless broadband to all of its citizens, regardless of whether they live in rural Alabama or downtown Los Angeles.

What Happens in a Bad Economy?

Politicians like to talk in abstractions.

Come to think of it, they like to argue and obfuscate in abstractions, as well. They campaign in abstractions and make abstract pledges until those abstractions turn into something tangible, like a subprime lending crisis or a downgrade from a particular private rating agency.

We spend so much time wading through abstractions that we cannot get to the meat of the issues that face us today. Enough of that.

What really happens in a bad economy? And what is the public’s role during these tough times?

Americans feeling the pinch have less disposable income–their paychecks go in increasing amounts to paying the bills and saving to make ends meet.

This means there is less overall consumer spending. Sure, certain industries do better–oil & gas, for instance–because they are pseudo-required for transportation to and from work or school.

Less consumer spending means lower demand for durable goods (automobiles, clothes, household appliances, etc.). This lower demand results in lower prices for these goods (or even a forced lower supply).

Lower prices & lower supply means businesses bring in less money and potentially less profit. This means big-time layoffs and a plethora of pink sheets.

Fewer workers and fewer wage jobs further decreases consumer spending, even though prices have lowered. This drives that vicious circle even farther, resulting in even greater job loss.

All of this illustrates what we can call the “paradox of thrift:”

“By attempting to increase its rate of saving, society may create conditions under which the amount it can actually save is reduced. This phenomenon is called the paradox of thrift….[T]hrift, which has always been held in high esteem in our economy, now becomes something of a social vice.”

Pundits are fond of saying that “if a family operated its finances like the federal government, they would go bankrupt!” This is true, from the whole to the individual unit in society. But the revered Adam Smith wrote, “What is prudence in the conduct of every private family can scarce be folly in that of a great Kingdom.” The implication that spending in the federal government is wrong or evil is false; it’s a “fallacy of composition.”

What does that mean? “If a population saves more money…then total revenues for companies will decline. This decrease in economic growth means fewer salary increases and perhaps downsizing. Eventually the population’s total savings will have remained the same or even declined because of lower incomes and a weaker economy.”

So what is the role of the public–through their government–in these tough economic times?

Government spending bridges the gap–while the overall propensity of families across the nation may be to save, public investment slows the contraction of the economy due to that subsequent lower demand we talked about earlier. Government spending helps individual families do what is economically prudent according to their own circumstances, without unnecessarily dragging down the national economy.

In other words, when you and your family are focused on spending, you can’t help grow the economy through your usual spending and investment. That’s where public investment is pivotal–and has historically brought us through rough patches.



Of course, this argument presupposes that in good economic times, government–as a matter of course–spends less; this did not happen from 2001-2008. Unnecessary government spending on programs with no long-term benefit to the American public–the Bush-era tax cuts and spending on two major wars–drive up both deficits and explode the national debt. That is what has driven the current debt/deficit reality.

(And for those worried about raising taxes on families in tough times–I certainly am–let’s simply let the Bush tax cuts expire already. They cost the country a whopping $1.8 trillion, contributed to the housing bubble and did not achieve growth. They did the exact opposite of what a responsible government does when the economy is strong; instead of running a surplus and paying down the debt, they ran up needless deficits and exploded the national debt.)

(Cross-posted from The Journeying Progressive.)

On “La Dolce Vita”, Or, The Real Life Of A State Worker

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