Carolina Journal Weekly Report

December 09, 2002

In This Issue:
Feature 1 - NCSU Resort Plan Debated

Feature 2 - Right or Wrong?

Feature 3 - Antigun Scholar Resigns

Feature 1
NCSU Resort Plan Debated
Legislators can’t vote, but hear details anyway

Legislators last week listened to supporters and opponents of North Carolina State University’s proposed Centennial Campus hotel project. The Council of State, which consists of North Carolina’s statewide elected leaders serving in Raleigh, will vote on the project early next year.

State senators and representatives on the Joint Legislative Commission on Governmental Operations heard NCSU Chancellor Mary Anne Fox testify about the need for the hotel, conference center and golf course, which would cost an estimated $71 million to build.

“We believe it not only will enhance the education of our students,” Fox said, “but provide an economic boon…”
The project would be financed through the issuance of bonds, which would be repaid from the facilities’ revenues. The university plan says NCSU “would commit usage to meet required debt coverage,” which it says excludes tuition, state appropriations, restricted funds and special facilities funds.

But opponents of the project, including private hotel, resort, and golf course operators, doubt the profitability of the project and say that taxpayers could end up absorbing much of the costs. The 250-room conference center/hotel is expected to cost $235,000 per room, which private interests say is excessively lavish. Fox denied those claims.

“This is a project that will not require taxpayer dollars,” she said. “This is not a luxury hotel by any way.”

Those questioning the project don’t believe state officials are taking enough time to consider the problems with the plan.

“It is going from stage to stage to stage without getting the scrutiny it deserves,” said Gerry Hancock, a lawyer representing hotel and golf course owners in the state.

Hancock said the original plan for NCSU’s conference center called for private ownership, but had become such an expensive proposition by 2000 that construction with public funds was necessary. But the university’s plan says private interests would still be willing to own the project “if the university will make substantial use guarantees.”

Hancock also compared the extravagance of the NCSU project, which he said “will be the most expensive ever built in North Carolina,” to the privately-owned Grandover Resort in Greensboro, which was built for less money. He said in order for the NCSU hotel to meet its five-year projections to cover operating costs and debt payments, 73 percent of its clients would need to come from existing hospitality businesses in the state. He said it would take $60 million out of private hotels in its first 5 years, if successful.

Ahead of the Curve

• Despite the many resources North Carolina already uses to provide money for economic incentives, in 2001 the General Assembly gave permission for the Department of Transportation to use Highway Trust Fund money for economic development projects. The News & Record of Greensboro reported Dec. 5 that Honda Power Equipment Mfg. Inc. may expand its Swepsonville plant, which the newspaper said could create 409 jobs. If the company does, the Board of Transportation is expected to approve a $300,000 grant from the Trust Fund to widen N.C. 119 in Swepsonville, which would create a continuous left-turn lane for the plant.

• The N.C. Department of Commerce will likely provide $112,500 to “jump start” a project to provide housing for the elderly in East Flat Rock, the Hendersonville Times-News reported Dec. 4. The plan is to build apartments on the site of the former East Flat Rock school, which the newspaper said could “rejuvenate the community’s crumbling historic center.” The $2.7 million project will be built by Regency of Raleigh, which has similar facilities in Garner, Statesville, and Lynchburg, Va. Regency expects to also apply for $1.3 million in low-income housing credits and $587,000 in historic tax credits.The company will continue to own and operate the apartments after construction is finished. Hendersonville surveyor William Patterson called the Commerce grant “corporate welfare.” He also said, “Somebody is lining their pocket.”

Feature 2
Right or Wrong?
N.C. schools introduce character education

In an article titled Are We Living in a Moral Stone Age? philosopher Christina Hoff Sommers writes: “We often hear that today Johnny can’t read, can’t write, and has trouble finding France on a map. It is also true that Johnny is having difficulty distinguishing right from wrong. Along with illiteracy and innumeracy, we must add deep moral confusion to the list of American educational problems.”

Amid fanfare, a new curriculum item has arrived on the scene in North Carolina’s public schools. It’s called character education, and along with the Student Citizen Act of 2001, promotes target behaviors that successful character education students should exhibit. Traits identified in the character education handbook are courage, good judgment, integrity, kindness, perseverance, respect, responsibility, and self-discipline.

Can a handbook and curriculum plan transform the morally confused into the morally upright? The state of North Carolina is betting that the answer is yes. Local school boards were required to implement character instruction by the beginning of the 2002-'03 school year, unless they were granted a temporary exemption.

The new curriculum manual makes liberal reference to centers of study in ethics, morality, and values. Prominent among these are The Center for the Fourth and Fifth R’s (for respect and responsibility), the Josephson Institute of Ethics, the Center for the Advancement of Ethics and Character, and the John Templeton Foundation.

Thomas Lickona, author of Raising Better Children and Educating For Character: How Our Schools Can Teach Respect and Responsibility and a faculty member at the State College of New York at Cortland, is associated with the Center for the Fourth and Fifth R’s. Lickona wrote the definition of character education that opens the new manual. The definition emphasizes student behaviors that stem from embracing “universal values that we all share.”

The welcome page for the Internet site of The Center for the Fourth and Fifth R’s says, “Character means living by these core values — understanding them, caring about them, and acting upon them.” Accordingly, a student who succeeds in the character education curriculum will presumably embody these traits.

Lickona’s book, Educating for Character, focuses on what schools can do as one component of the process, but the dedication page, which reads “to God,” indicates that character education, for Lickona, exists on a broader plain than just in the classroom. His work does not promote religion or a religion, but a deeper background clearly underlies the principles he advocates.

The Center for the Fourth and Fifth R’s addresses one difficult moral question by describing the behaviors that contribute to good character, as well as those that do not. In the essay The Neglected Heart: Ten Emotional Dangers of Premature Sexual Involvement, there is no moral haze surrounding uncommitted sex. The essay argues that the corruption of character and the debasement of sex are the consequences of premature, uncommitted sexual activity.

In short, it concludes that people of good character would not engage in this activity, which is inconsistent with the development of good character.

Capital Quotes

“If it’s such a prime piece of property, which it is, then why hasn’t anything been built there at this time?”

— Rev. Elmo Herman talking to the Fayetteville Observer about a piece of land his church wanted to acquire in Vandor alongside Interstate 95. The Cumberland Christian Center had an agreement to purchase 38 acres of land to build a new sanctuary and other facilities subject to rezoning. The Cumberland County Board of Commissioners rejected the rezoning petition, however, finding that the land was too valuable, as part of a potential large industrial site, to allow single tracts to be rezoned for other purposes.

“Are we asking enough to make a difference or are we spitting in the ocean?”

—Cary Mayor Glen Lang, as quoted by The News & Observer of Raleigh, talking about a proposal endorsed by the mayors of Raleigh, Durham, Chapel Hill, and Cary to increase a variety of taxes to raise $1.3 billion over the next 25 years for highways and transit. Among the taxes and fees the proposal recommends increasing are the gas tax in the Triangle area and automobile registration fees. Even with the tax increases, consultants noted that the area still has more than $6.5 billion in unfunded transportation needs over the 25-year period.

“Anyway, can we hang on to it? Is there anything else we can spend it on?”

— Lamont Wiggins, Rocky Mount councilman, as quoted by the Rocky Mount Telegram, asking whether any additional uses could be found for certain state Hurricane Floyd relief funds. The state money was designated for purchasing properties in the 100-year floodplain damaged by the storm. The city purchased and demolished more than 470 properties; 26 remain to be bought. With no other legal use for the money, the Rocky Mount City Council voted unanimously to return $13 million to the state.

Feature 3
Antigun Scholar Resigns
Emory finds 'evidence of falsification' against author

The saga of Michael Bellesiles appeared to come to an end in late October when the antigun scholar resigned from the faculty of Emory University.

Bellesiles gained national acclaim two years ago with the publication of his book Arming America: The Origins of the National Gun Culture (Alfred A. Knopf), in which he contended, using Colonial documents, early federal laws, and other historical accounts that private gun ownership in early America was uncommon. The “gun culture” pervasive in American today, Bellesiles argued, was not part of early America; the idea of a heavily armed colonial America was a “myth.”

The book created a sensation in gun-control circles. It was hailed by scholars and media alike, eventually receiving Columbia University’s Bancroft Prize for historical scholarship, the most prestigious award for American history books.

Despite the award and Bellesiles’ heavy use of footnotes throughout the book, Arming America drew a steady and mounting stream of historians who challenged it on many fronts. Among them:

• Bellesiles cites San Francisco probate records that were destroyed in the earthquake of 1906;

• He cited the wills of about 100 people in colonial Rhode Island who died without wills;

• He cited Vermont court records that no other scholar could prove existed;

• He misrepresented numerous original sources;

• He refused to share his research data with other historians when asked, as required by the ethical standards of the American Historical Association.

Chief among his critics was James Lindgren, professor of law at Northwestern University, and Clayton Cramer, author of two books on the history of gun laws in America. Scholarly critiques appeared in The William and Mary Quarterly and Reviews in American History. The Boston Globe also investigated some of Bellesiles’ sources and found that some did not match his claims about them and others did not exist. A previous Bancroft Prize winner, Dr. Roger Lane, who had favorably reviewed Arming America in the September 2001 issue of the Journal of American History and had served on the jury that awarded Bellesiles the prize, issued a press release in April 2002 saying the committee may revoke the prize (the committee has not).

Emory University then conducted an inquiry, which it completed in October, into charges that Bellesiles committed academic misconduct.

The investigative committee conducting the inquiry found “evidence of falsification” by Bellesiles, reason to question Bellesiles’ veracity on the San Francisco records, and that Bellesiles fell short on the standards of professional historical scholarship. In Bellesiles’ favor, however, the committee found “that despite serious failure of and carelessness in the gathering and presentation of archival records and the use of quantitative analysis, we cannot speak of intentional fabrication or falsification.” (Critics had noted that all of Bellesiles’ errors were in favor of his thesis.)

For his part, Bellesiles adamantly denied the charges. “I have never fabricated evidence of any kind nor knowingly evaded my responsibilities as a scholar,” he wrote in a response to the inquiry.

On The Cutting Edge

The Shadow Economy

• Within most economies, there are large portions that work outside the law called shadow economies. Participants in the shadow economy neither pay taxes nor obey regulations. A recent study finds that taxes and burdensome regulations push people into the shadow economy.

The authors use data from 21 countries in the Organization of Economic Cooperation and Development and 22 countries that are adopting capitalism. The sizes of the shadow economies are substantial.

Over 2001 to 2002, the average size of an OECD shadow economy was 16.7 percent of “official” gross domestic product. Over the same time frame, the average transition country shadow economy is 38 percent of “official” GDP.

Using other economic data, the article finds that taxes and regulations push portions of the economy away from the law. A one-point increase in regulation (on a five-point scale) results in the shadow economy increasing by 10 percent.

A one percent increase in the marginal personal income tax triggers an increase of 1.4 percent in the shadow economy. Higher corporation taxes have a similar effect.

This is especially prevalent in the OECD countries. Greece, Belgium, Italy, and Sweden all have tax burdens larger than 70 percent of GDP and have shadow economies larger than 20 percent of their official GDP. In contrast, the United States and Switzerland have low tax burdens and low shadow economies (8.8 percent and 7.5 percent, respectively).

The author argues that shadow economies have a vicious cycle. As people enter the shadow economy, tax revenues fall, leading the government to raise taxes. This pushes more people into the shadow economy, starting the process over.

Researched by Friedrich Schneider, “The Size and Development of the Shadow Economies of 22 Transition and 21 OECD Countries,” IZA Discussion Paper No. 514, June 2002, Institute for the Study of Labor.

Job Turnover

• A new Labor Department survey shows that the U.S. labor market, described in recent months by many economists and policymakers as stagnant, has instead been a churning cauldron of change, with millions of people each month getting hired and fired.

Given that, it seems that the more than 8 million jobless in September were not necessarily the same 8 million unemployed in August or October.

The Department's Bureau of Labor Statistics recently released the August results of its new Job Openings and Labor Turnover Survey, which painted a dynamic picture. According to the survey, about 3.7 percent of those at work at the end of August were hired that month. At the same time, 4.1 percent of those at work on the last day of July left their jobs during August.

Of those who left, three-fifths quit and only one-third were discharged or laid off for more than a week, with the remaining fraction departing because of retirement, disability, death or transfer to another location.

The figures may even understate the amount of change, according to an analysis by two Federal Reserve economists of other BLS data. The Fed economists, Bruce C. Fallick and Charles A. Fleischman, found that labor-market turnover was so great over a seven-year period ending in 2001 that, on average, 6.7 percent of all workers employed one month were not employed by the same employer the following month. The survey also offers one figure that does not appear in the regular monthly statistics: the number of job openings. In August there were 3.49 million job openings for which employers were actively seeking workers.

Reported in the Washington Post, 11-6-2002.


• Corruption stifles freedom and economic growth. However, there are two types of corruption: top-down and bottom-up. Bottom-up refers to low-level officials collecting bribes and sharing them with superiors, while top-down refers to corrupt superior officials buying the silence of subordinates by sharing their loot. Recent research analyzes the two types of corruption, using the notoriously corrupt Commonwealth of Independent States as a model.

Firms report paying 5.7 percent of all revenues as bribes in the CIS, as opposed to 3.3 percent in the Balkans, Baltic republics, and Central Europe. Economic growth in these other states is more than 2 percent higher on average than growth in the CIS.

After further analyzing the CIS, the researchers found that if corruption is inevitable, then top-down corruption is superior to bottom-up. The amount of bribes paid per investment project is smaller with top-down corruption.
Firms have better information about the exact quantity and method of payment under a top-down corruption, meaning that firms have better information about the true costs of a project.

The economy is larger under centralized corruption. Centralized corruption is more easily controlled and restricted, leading to smaller bribes.

Reported in Economic Inquiry, Vol. 40, No. 4, October 2002.

Coming Up

• On Jan. 27, the John Locke Foundation will welcome renowned author and reporter Bill Gertz to speak at a special luncheon. The national security and defense writer has just released his new book, Breakdown: How America’s Intelligence Failures Led to September 11.

Gertz is an internationally recognized newspaper reporter who has specialized in writing major stories on a wide variety of defense, intelligence, and international security issues.

A veteran defense writer who specializes in coming up with inside stories, often based on classified documents, he is widely viewed as one of the best reporters in his field. His sources within government are extensive. Gertz has broken a number of stories with international implications. As former CIA Director R. James Woolsey put it, “When I was DCI [Director of Central Intelligence] Bill used to drive me crazy because I couldn’t figure out where the leaks were coming from. Now that I’ve been outside for two years, I read him religiously to find out what’s going on.”

For more information or to pre-register visit the new John Locke Foundation Website at or contact Kory Swanson or Thomas Croom at (919) 828-3876 or [email protected].

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