The Locker Room

January 10, 2011

Progress-Duke merger a model for the progressive economic agenda

Posted by Dr. Roy Cordato at 2:51 PM

The progressivist vision of how an economy should look and operate is represented almost perfectly by the merger of Duke Power and Progress Energy. This merger creates a giant government protected monopoly that will, in conjunction with government bureaucrats, control the production, sale, and distribution of electric power for most of North and South Carolina. This has always been the economic vision of the progressive movement going back to the early 20th Century.  It is the model that originally gave us the FCC, which created cartels in the radio ad TV industries; the CAB, which cartelized the airline industry; and the ICC, which brought about the cartelization of the trucking industry, among other monopoly creating government agencies.

In the progressive economy all production activities would be dominated by a few very large industries that work hand in glove with the regulatory apparatus of the state. A few very large companies are easier and less costly to regulate and pacify than many smaller companies acting in a competitive environment. The Duke/Progress merger advances this agenda. While these companies are, on paper, private, they have their market completely protected from competition by government regulation.  All prices are set with prior approval of the state and, in exchange for this, profits are guaranteed at certain levels. In addition, the state makes decisions about how and what sources are used to produce the product in question. In this instance the product is electricity. In other words, all the important decisions are made by government while maintaining the veneer of private enterprise.

By the way, this is also the model for transforming the health insurance industry under Obama Care.

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New report pegs North Carolina taxpayer burden at $43.4 billion

Posted by Mitch Kokai at 2:25 PM

Each man, woman, and child in the Tar Heel State is on the hook for more than $16,000 of unfunded state government obligations, according to a new report from the Chicago-based Institute for Truth in Accounting.

Joseph Coletti offers his reaction here and in the video clip below.

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Give it Back

Posted by Becki Gray at 1:14 PM

Overhead receipts are a pile of money that universities get when they receive a federal research grant. It’s money given on top of the actual grant amount that is intended to defray the administrative and institutional costs in conducting the actual research.  The problem for taxpayers, however, is that these are costs that the General Assembly has already covered.  So what we have here is the universities double dipping and raking in cash that could be used to pay other needs that the state faces in a tough state budget. My colleague, Jon Sanders offered a good explanation of overhead receipts here.   

Every year each university campus has to report by December 1 how much they have gotten in overhead receipts, how much of the money they’ve spent and how much they have left over.  Those figures are then reported to the Board of Governor’s at their February board meeting. The Board of Governor’s then has to report the amount of overhead receipts and the use of those funds to the Joint Legislative Committee Education Oversight Committee by March 1.

  Just how much are these overhead receipts worth?  The latest figures I have are from 2007-08 when the UNC system got $174 M in overhead receipts. Perhaps that money would be better applied to pay  for core functions, high priority responsibilities of state government.

To get through the current and upcoming budget shortfall, all of state government is going to have to exhibit restraint and look everywhere for savings.  The universities could set a great example of fiscal discipline at their upcoming February board meeting and return the overhead receipts, which were never really theirs anyway, to the General Fund.


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Barone assesses the Obama administration's new deal maker

Posted by Mitch Kokai at 10:54 AM

Michael Barone's latest column posted at Human Events discusses the impact of William Daley's appointment as White House chief of staff:

It's not hard to understand Obama's reasons for choosing Daley. Businesses are sitting on $1 trillion in cash and refusing to make job-creating investments. They are spooked by the Obama Democrats' vast expansion of the size and scope of government and the prospects of ever more intrusive and expensive regulations being churned out by various federal agencies every day.

Obama hopes that the fact that Daley has held high-level jobs in the private sector will assure them that their fears are unfounded.

But when you take a look at Daley's resume, what you see are positions not in job-creating departments but at the intersection between private firms and governments. He headed a union-owned bank. He was on the board of Fannie Mae. He was a high honcho at the telecom SBC.

Most recently, he has headed Chicago affairs for JPMorgan Chase, whose CEO, Jamie Dimon, is the most politically shrewd of the big finance chief executives. ...

On the other hand, Barone says Daley could prove useful in helping Obama reach out to new House Speaker John Boehner.

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How well does remediation work?

Posted by George Leef at 10:45 AM

In today's Pope Center piece, Jenna Ashley Robinson takes a look at that issue and concludes that the answer appear to be "Not very well."

Even with the low standards that prevail in many colleges and the pressure on faculty members to keep as many students as possible moving toward degree completion, the percentage of students who have to take remedial courses who eventually graduate is only around 17 percent. That isn't stopping some of the lower-tier UNC institutions from spending more money on remedial programs, however.

In my own experience, weak students usually have two problems. They have serious educational deficits from years of educational neglect and also serious attitudinal problems. A remedial English or math course might help enough for a focused and motivated student to get up to academic speed if the ground to be made up isn't too great, but many of the remedial students simply don't have the disposition and habits of mind necessary to do so.

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Senate leader names Judiciary II Committee leaders

Posted by Mitch Kokai at 10:23 AM

From Sen. Phil Berger's office:

Berger Announces Chairs for Judiciary II

Raleigh, N.C. – Senate Republican Leader Phil Berger (R-Rockingham) announced today new leadership for the Senate Judiciary II Committee for the 2011-2012 session of the General Assembly. Senators Austin Allran (R-Catawba), E.S. “Buck” Newton (R-Wilson), and Warren Daniel (R-Burke) will serve as co-chairmen of the committee. The Senate Judiciary II Committee has traditionally overseen the state’s criminal justice system and laws.

Sen. Berger said, “Senators Allran, Newton, and Daniel have the right combination of real world experience and perspective to bring fresh leadership to this committee.”

“Overseeing and reforming the criminal justice system is an important responsibility of the General Assembly. We will bring a keen awareness of the law as well as careful judgment and vigilance toward improving the system,” said Sen. Allran.

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Good news on public-sector unions

Posted by Mitch Kokai at 06:49 AM

Regular Locker Room readers have seen plenty of evidence of the negative impact of public-sector unions.

The latest TIME magazine delivers some good news on that front:

Formerly friendly Wisconsin has a new governor, Republican Scott Walker, who is promising to use "every legal means" to weaken the bargaining power of state workers — including decertification of the public employees' union. Ohio's new governor, Republican John Kasich, wants to end the rule that requires nonunion contractors to pay union wages, and he's targeting the right of public employees to strike. Indiana legislators talk of making their state — once a bastion of unionized manufacturing — a Midwestern right-to-work redoubt.

Even in places where Democrats cling to power, unions are under the gun. New York's incoming governor, Andrew Cuomo — son of the labor darling Mario Cuomo — intends to freeze the salaries of the state's 190,000 government workers and has promised to cinch the budget belt tighter when public union contracts are renegotiated this year. In California, new governor Jerry Brown — who gave public employees the right to unionize when he was governor in the 1970s — returns to his old post talking darkly about the unsustainable drain that union pensions and health benefits are on the state's budget.

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ObamaCare gets TIME’s scrutiny

Posted by Mitch Kokai at 06:48 AM

Less than a year old, President Obama’s signature legislative achievement heads under TIME magazine’s microscope this week:
While wholesale repeal is virtually impossible, there is no guarantee that the shaky coalition Obama glued together to get the landmark bill passed last year will hold. In the midterm-election campaigns, Democrats found themselves under fire for backing a new expansion of federal entitlements. Some of those who expect to face tough contests in 2012 may decide to hedge their bets on subsequent votes to defend or dismantle the law. One House Democrat, Dan Boren of Oklahoma, has already said he is "inclined to support the repeal." Physicians' groups, hospitals, insurers and drugmakers, which reluctantly got behind the measure last year, will stick with the law only if its implementation appears to be stable and predictable. Major legislative revisions, which are not impossible, may cause their support to evaporate. It is almost certain that the law will be changed before the 112th Congress adjourns next year.

For another perspective on ObamaCare’s future, check out Daren Bakst’s recent Shaftesbury Society presentation on the topic.

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Taking on tenure?

Posted by Mitch Kokai at 06:47 AM

Red ink in state budget ledgers across the country has prompted many lawmakers to take on the sacred cow of university professors’ tenure, according to the latest Bloomberg Businessweek.

By taking the cash, [a retiring University of South Florida professor] joined hundreds of professors at public universities across the U.S. who have been coaxed into retirement with offers of as much as two years' pay.

Faced with 2012 deficits estimated at a total of $140 billion, according to the Center on Budget and Policy Priorities, states are looking to their university systems for savings, even if it means circumventing the once-sacrosanct tenure system. "Most states have horrific budget problems, and they haven't dealt with the kinds of cuts in higher education that are going to be necessary," says Roger Meiners, who teaches economics at the University of Texas at Arlington and has written a book about tenure. "These buyouts will become more common." …

The buyouts also make business sense: Pay for tenured professors averages $117,000 a year at the top 200 U.S. public universities, according to the American Association of University Professors. Annual contracts for replacement instructors cost an average $52,500, the group said in an April report.

One suspects George Leef would lose no sleep over efforts to thin the ranks of university faculties full of higher-paid tenured professors.

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Businessweek on BoA

Posted by Mitch Kokai at 06:46 AM

The latest Bloomberg Businessweek recaps Bank of America CEO Brian Moynihan’s first year on the job. As the magazine notes, Moynihan “has struggled to stanch loan losses and forestall a surge of litigation at the biggest U.S. lender while trend to mend relations with customers, regulators, and investors.”

As regular Carolina Journal Radio listeners might remember, you can learn more about the impact of the financial crisis on BofA and the rest of the Charlotte banking community by reading Rick Rothacker’s recent book Banktown.

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New Carolina Journal Online features

Posted by Mitch Kokai at 06:37 AM

Don Carrington's latest Carolina Journal Online exclusive describes the state Department of Environment and Natural Resources' plan to seize from private owners waterfront property in Onslow County that once served as a beach for African-Americans. 

John Hood's Daily Journal examines the North Carolina implications of a new essay exploring why Africa is poor.

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