Sunday, February 27, 2011

Zoning in Oriental

And now for some local news.

Last Tuesday evening, at the request of the Oriental Town Board of Commissioners, the town Planning Board recommended some changes to the Growth Management Ordinance, Article XV, Sections 230 - 237 (Amendments).

Some of their recommendations, if adopted, will fix things that need to be fixed.

Some won't. Accordingly, I oppose the present draft.

The proposed draft is on line at the Town of Oriental web site. The agenda packet can be found here. Click on "proposed amendments."

The impetus for amending the GMO was last year's application by developer Sylvan Friedman to change the zoning of a residential (R-3) parcel he owns on Midyette Street to MU. The public hearing (required by law) and action by the Town Board were delayed three times (twice at the request of the applicant). The application was opposed by neighbors during the public hearing. The neighbors submitted a formal petition opposing the measure, thus establishing a requirement for an affirmative vote by three fourths of the Board.

Because of the delays, the Board failed to act within the 65 days required by the GMO, thus effectively denying the Friedmans' request. Some Board members expressed the view that the failure to act should be deemed an approval.

The planning Board recommends extending the period to 95 days from first consideration of the request and changing the rule to stipulate that failure of the Board to act constitutes approval.

There are some who believe the applicant deserves a timely response from the Board. This misses the main point. It's about the public, not the applicant. As the GMO explains: "The Town Commissioners shall not regard the advantages or disadvantages to the individual requesting the change, but shall consider the impact of the proposed change on the public at large."

Other than requiring a public hearing before any amendment is adopted and requiring a three-fourths vote in event of a valid petition opposing an amendment, North Carolina General Statutes do not require the town to act in accordance with the opinions of the public voiced at the hearing. This is a political process - a legislative process, not a quasi-judicial proceding. That means it is not only proper but strongly advisable for Town Commissioners to seek the advice of residents before making a decision.

The public should expect Commissioners to take their views seriously. Accordingly, I believe any action deadline should be tied to the public hearing. For example, it makes sense to require that the Commissioners act within thirty-five days following the required public hearing. That way, the views of the public will be fresh in the minds of the commissioners.

Should the Commissioners be unable or disinclined to act within a deadline, the default position should be to maintain the status quo.

The public should not be penalized for inaction by a Town Board.

A One-Armed Economist

President Truman once complained about his economic advisers.

"They come in," he said, "and tell me 'on the one hand, this,' and 'on the other hand, that.'"

"What I need," he lamented, "are some one-armed economists."

Friday, February 25, 2011

Starving the Beast

So why did President Reagan and both Bushes follow a "borrow and spend" fiscal policy instead of making sure the national expenditures were paid for, as they could easily have done?

Because they didn't want to balance the budget. They wanted to follow the policy of "starving the beast."

Don't take my word for it - read the analysis by Bruce Bartlett, writing for Forbes.com.

Here is how economist Paul Krugman describes the scheme in the Pittsburg Post-Gazette.

Although the Republican Party has complained about deficit spending ever since the Great Depression, this was never previously a big deal with the GOP, with their predecessors the Whig Party, or with their original predecessors, the Federalist Party. In fact, President Washington, on advice of his Treasury Secretary Alexander Hamilton, began his administration with an enormous deficit.

This came about when the Federal Government under the new constitution purchased at face value revolutionary war bonds issued by the states. This represented an enormous windfall for speculators who had purchased the bonds from original investors at pennies on the dollar.

The rule: millions to subsidize financial speculators, but not one cent for ordinary people.

This continues to be the policy of the GOP.

What offended Republicans about the New Deal was not the deficit financing, but to whose benefit the money was spent.

Democrats, on the other hand, have from the time of the Anti-Federalists and especially from the Andrew Jackson administration, opposed deficit financing. The reasons:
1. Government borrowing drives up the cost of credit for ordinary people;
2. Paying off government debt takes money from the pockets of the poor and transfers it to the rich;
3. Driving up the cost of money increases the cost of American products and reduces exports;
4. Government borrowing from foreign lenders makes us vulnerable to foreign interests;
5. Etc.

Only in truly extraordinary circumstances do Democrats support extensive deficit financing: the Great Depression and World War II are the clearest examples.

Six years ago, Paul Krugman exposed the whole Starve the Beast bait and switch scam.

Now they have extended the scam from the Federal level to the State level by making it impossible for Washington to provide enough stimulus money to counteract the reduction in state expenditures resulting from state constitution requirements to balance the budget. Earlier, Krugman described the dilemma facing the states and the implications for the national economy in his article Fifty Herbert Hoovers. The article is worth reading again.

They Hired the Money, Didn't They?

Commenting in 1925 on a proposal to restructure European war debt, President Calvin Coolidge said, "they hired the money, didn't they?"

The same might be said of New Jersey and, indeed, of other states, who negotiated labor agreements without setting aside sufficient funds to meet their obligations.

The details set forth in today's New York Times article, "How Chris Christie Did His Homework," makes it clear that for seventeen years, New Jersey did not set aside enough funds to meet the pension obligations to which the state had agreed. In the case of health care obligations, they set aside no funds at all.

This is hardly the fault of the unions.

In many cases, pension and health care agreements were negotiated in lieu of salary increases. In other words, the state said "you provide work for us now in return for future compensation" and signed on the dotted line.

They hired the money.

Did the state negotiate in good faith? If so, the failure to set aside sufficient funds reveals sustained incompetence. If not, what do we call it? A confidence game?

Thursday, February 24, 2011

If You Lived Here, You'd be Home by now

Years ago, when we lived in the big city, downtown developers tried to lure home buyers with signs for commuters that said, "If You Lived Here, You'd Already Be Home."

I think of that every time some pundit talks about how urgent it is to reduce the deficit. The last President to successfully reduce the deficit was Bill Clinton.

In fact, according to CBO projections, if G.W. Bush had continued the Clinton policies, we would have not only reduced the deficit, we would have paid off our national debt by now.

The last previous presidents who reduced the deficit were Jimmy Carter and Lyndon Johnson.

Ronald Reagan tripled the national debt during his tenure. By the end of George Herbert Walker Bush's administration, the debt was four times as great as at the beginning of Reagan's term. At the end of Bush I's term, the debt equaled 66% of the Gross Domestic Product. By the end of Clinton's term, it was down to 56% of GDP.

How would you like for the country to have zero debt right now? We'd have much better fiscal options, wouldn't we?

Instead, by the end of George W. Bush's term, our debt had risen to 83% of GDP, and we were in the midst of the greatest recession since the Great Depression. In fact, had it not been for the safety nets put in place after the Great Depression, we could easily have had an even greater depression.

But let's get one thing straight - the national debt didn't cause unemployment. Nor did it cause the great recession - mishandling of private debt and financial misfeasance did that. And so far, the national debt hasn't caused any inflation.

Now is absolutely the wrong time to balance the federal budget, thus reducing aggregate demand and stifling what little recovery we have going.

Once we get back to near full employment, though, we need to pay down the public debt and drastically reduce private debt. We won't be able to do that without getting back to making things instead of just making deals.

To get there, we need to reward the thing makers and take away special rewards for financial manipulators.

Tuesday, February 15, 2011

Why Rush to Reduce Deficits?

A good article in Slate Magazine calls for politicians to do a better job of explaining why deficit reduction is so important.

The author, John Dickerson, repeatedly points out that the public is more interested in jobs. He says neither party has explained how reducing the deficit will get them jobs.

There's a really good reason for that.

It won't.

In fact, reducing the deficit, which is a good idea in the long run, will kill jobs in the short run.

If so, John Boehner said today, "so be it."

Let them eat cake.

A Well Regulated Militia - the Regulations

In case you wondered what a "well-regulated militia" looked like, here is the governing law and regulation, passed by the Congress May 2, 1792 and amended in 1795.

The Militia Act of 1792 required all white males of the age of 18 to the age of 45 years to serve in their respective state militias. Detailed regulations passed May 8, 1792 stipulated the organizational and rank structure and spelled out what equipment was to be provided by each member of the militia at his own expense.

It makes interesting reading.

Those of you anxious to exercise your Second Amendment rights - this is what it was about.

Monday, February 14, 2011

Robotics and Economics

Ninety years ago, the Czech journalist and author Karel Capek introduced the word "Robot" to the world in his play, "R.U.R. (Rossum's Universal Robots)." Isaac Asimov expanded the concept in his I, Robot books.

A staple of science fiction of the forties and fifties was the question of how society might cope with the circumstance created if robots with a wide range of capabilities were to replace humans in routine or even challenging jobs (as did HAL in "2001, Space Odyssey").

We are now there. We get our money from robots (ATM's), we send robots in to fight fires where no human could survive, we use robots to do surgery, dispatch software robots to search the internet, and even use robots to fight our wars.

This is just the beginning.

This Wednesday, IBM will pit its artificial intelligence system named Watson against two of the world's best Jeopardy players. Experts expect that Watson will win the contest. If so, it would be a demonstration of the amazing progress in artificial intelligence. To succeed, Watson will have to deal with puns, homonyms, and contextual ambiguities. (Update as of Tuesday morning: The first round of Jeopardy ended with Watson in a tie for the lead. Stay tuned.)

A different but also successful approach to use of computers to assist human intelligence is known as Intelligence Augmentation (IA). Google searches are a successful implementation of IA.

Economists have always held that increased automation creates as many new jobs as it destroys. That may no longer be the case (if ever it was). For the past few recessions, we seem to have had a "jobless recovery."

The usual suspect for loss of jobs is offshore outsourcing. It may be that another factor is increasing use of computers to perform tasks formerly done by humans. An additional influence is that high speed broad band internet makes it possible to transmit any information that can be digitized to offshore sites for processing. This is already done for widely diverse fields including accounting, law and radiology. Combining offshore outsourcing, robotics and high speed internet could be creating a perfect storm of economic restructuring.

The volume of such outsourcing is said to be small compared to the economy as a whole, but it probably already influences salaries by establishing marginal salaries above which companies will seek offshore solutions, thus keeping labor rates down.

Possible consequences include the fact that twenty-six percent of recent college graduates not going on to postgraduate education are unemployed. For that matter, many of those pursuing graduate degrees may be doing so because they couldn't find a job.