Posts filed under 'News'
Part of the public pension system’s purpose is to attract and retain a high quality workforce. So, I read with interest the announcement that Lincoln-Sudbury High’s principal is retiring because:
“It’s one of these things where you hit a certain point in the Massachusetts retirement system where you have a certain amount of years of service and are at a certain age,” he said. “You hit the point where your pension is at a max.”
Take a read of some of Bob Costrell’s work on the Massachusetts public pension system for educators to get an idea of the perverse incentives in place.
October 29th, 2008
Reading the affadavit submitted by Special Agent Corr in the Diane Wilkerson case, I can glean at first glance two lessons - apart from the obvious one that taking bribes to grease the wheels for a liquor license probably doesn’t make for sound public policy.
1) I hate to beat the drum on transparency, but, if Senator Wilkerson’s description of its deliberative process as “smoke and mirrors” is anywhere near accurate, the Boston Licensing Board is in more dire need of transparency than any government organization I’m aware of.
2) When government boards and agencies are the gatekeepers of economic activity, corruption inevitably ensues. It did when Jack Abramoff was lobbying for clients with casino interests and it seems to have here.
As my colleague Steve Poftak pointed out to me, the math is pretty glaring. If the cost of purchasing a transferable liquor license on the open market is currently running between $250,000 and $300,000, but the cost of buying a non-transferable license directly from the city runs only about $2,000 per month for the term of the license, prospective buyers not only have a distinct incentive to finagle a non-transferable license out of the city, they can pay an enormous amount of money to potentially corrupt politicians in order to obtain the license and still strike a bargain. As currently structured, Boston’s process for licensing the sale of alcohol at restaurants and bars invites corruption and has for years. Should we really be surprised when it finally manifests itself.
October 28th, 2008
The Diane Wilkerson story is breaking all over right now. I urge you to read the whole affidavit.
Her culpability must be proven in a court of law, of course. But I assume her story is wrapping up.
I think its a more interesting read for the supporting actors, which the FBI brings on-stage, then never really resolves their involvement. There are phone calls, promises, withheld raises, etc. galore. It lays bare the raw power that certain politicians (and not just Senator Wilkerson) can wield and the ends for which they will wield them. I am not alleging any criminal behavior, just the naked exercise of power for no discernible public good.
I hate to sound naive. But this affidavit raises many questions. I’m hopeful that we get some answers from the press in the coming days.
October 28th, 2008
Over the past couple of weeks a lot of folks that I respect from the newspaper business have come into Pioneer world HQ (yes, with the plush cloakroom) to speak to us on camera. Each has offered a scenario on where the newspaper business is going.
Well, it seems that for certain newspapers, the trend line rivals that of Wall Street. See the following numbers from Editor & Publisher regarding the circulation of some of the top daily papers (”for the six-month period ending September 2008 based on a Monday through Friday average” with the percentage comparing “this period to the same period a year ago”):
USA TODAY — 2,293,310 — 0.01%
WALL STREET JOURNAL — 2,011,999 — 0.01%
NEW YORK TIMES — 1,000,665 — (-3.58%)
WASHINGTON POST — 622,714 — (-1.94%)
BOSTON GLOBE — 323,983 — (-10.18%)
The Globe’s 10-plus percent loss is staggering. Only a handful of papers has sustained similar losses. Enter Jack Connors? With the coming loss of auto advertisement revenue, one wonders if the more apt question is not, Exit Globe?
I have come to two general positions on the collapse in circulation, whether at the Globe or elsewhere.
(1) Like many other papers, the Globe seems to have lost belief in its own product — which should be must-have, timely and investigative news stories, reported without favor, and a certain style. When was the last time you thought of the Globe as having an edge, a style, a reason for reading it besides the fact that people will refer to it? On State House matters, the State House News Service is better. On the economy the WSJ and Bloomberg are the winners (I often skip the Globe biz section now that its stars are gone).
(2) “Timely” news requires a different, web-based model, and the Globe has never taken its web presence as anything but an extension of the printed paper — a large mistake whether in formatting or marketing.
October 27th, 2008
Good question on a Monday morning. Greg Mankiw, one of my favorite blog reads, asks it in the following way:
On a regular basis, I am offered opportunities to make some extra money. It could be giving a talk, writing an article, editing a journal, and so on. What incentive is there to put forward that extra work effort?
To a large extent, the beneficiaries of that extra effort are my kids. My lifestyle is, as a first approximation, invariant to my income. But if I make an extra few dollars today, I will leave more to my kids when I move on.
So he asks himself, what difference would it make if McCain or if Obama wins? What would their respective tax plans mean for him?
The answer depends on four tax rates. First, I pay the combined income and payroll tax on the dollar earned. Second, I pay the corporate tax rate while the money is invested in a firm. Third, I pay the dividend and capital gains rate as I receive that return. And fourth, I pay the estate tax when I leave what has accumulated to my kids.
After some quick modeling, he determines that given his life expectancy, under the McCain plan “a dollar earned today yields my kids $4.81″ versus $1.85 under the Obama plan.
He notes in closing that
If you are one of those people out there trying to induce me to do some work for you, there is a good chance I will turn you down. And the likelihood will go up after President Obama puts his tax plan in place. I expect to spend more time playing with my kids.
Bad news for Pioneer: We would love to have Prof. Mankiw come and speak!
October 27th, 2008
There is still money in the budget for the Commonwealth Corps, for, ahem, a start on universal pre-K, and many of the Governor’s other pet projects. He slashes deep into health and human services budget, but keeps alive expansions–I repeat, expansion–in other pet programs. Then, today, he announced the short-sighted action to cut 37 percent of the budget for the state council that, in accordance with the 2006 health care reform act, is meant to improve the quality and contain cost of health care in Massachusetts. The staff is gone.
As noted in our recent policy brief, there is no strategy to the Governor’s cuts. As the administration advances universal pre-K even as it cuts other pre-K programs, as it lards up the education budget with a Secretary while cutting METCO, assistance for MCAS, and other programs, we can without any lingering doubt assert that there is no strategy to the cuts.
We need a Governor who can prioritize.
October 22nd, 2008
What if you spent $1.6 million building something and nobody uses it? The Allston U-Turn Ramp on the turnpike attracted 9,527 users in August. That’s about 13 cars a hour.
October 22nd, 2008
It’s been a while. I apologize to my many fans (and by many I mean you, Petrillo; I know you’ve been desperately waiting for my next post) out there who have missed me since I last posted well over a month ago. Things around Pioneer’s office have been a little crazy. We’ve released 4 pieces of research in just the last three weeks alone (reports and policy briefs on regionalizing local services, declining school enrollment in Massachusetts, voc-tech education, and the budget cuts the Governor should have offered instead of the ones he did), put up online a GIC estimator for Revere so that the city’s employees and retirees can calculate how much they might save if it were to purchase health insurance through the state, and on top of all that we’re gearing up to celebrate Pioneer’s 20th anniversary with a star-studded gala November 13th. Let’s just say we’ve been a little busy.
Nevertheless, the fact that the Boston Redevelopment Authority’s budget is not available to a sitting city councilor, never mind the public at large, has me wired up. In the past, I’ve defended the BRA as a necessary, though sometimes blunt, tool with which to cut through the development process in the city. But keeping its books closed to outsiders only lends credence to opponents who see the agency as unfriendly to the city’s residents and neighborhoods and completely unaccountable for its actions. The BRA needs to open its books up for public inspection. No ands, ifs or buts.
Coincidentally, or maybe not (I don’t know, the Globe editorial staff might be that good), today’s paper also has an op-ed on the flimsiness of the state’s public records law. Too many Massachusetts’ politicians and public managers don’t seem to get it. Even as they moan about Question 1, they display little evidence they comprehend one of the primary motivations that drive such ballot measure - simple distrust. Toothless public records laws and a lack of transparency - and a necessarily corresponding lack of accountability, for how can there be accountability without transparency - only engender more distrust.
October 22nd, 2008
A colleague told me the other day that I needed a Facebook page. I don’t know much about social networking, but I know its the hot technology of the moment.
So, I’m amused to see that the City of Boston is funding its own version of a social networking site, using public money. Its launching a non-profit (packed with a board of the great and the good) with $1 million of BRA funds and claims that its version of the site integrates (and doesn’t compete) with other social networking sites. Which begs the question of what the $1 million is being used for. Potential Mayoral candidate Michael Flaherty asks some of the same questions today.
One does not need to look far to see how the City fares when competing with the private sector on the latest technology. Remember the Boston Wireless Task Force? Launched with great fanfare back in 2006 (packed with a board of the great and the good) with a mission of bringing free wi-fi to the city. It has succeeded in reaching a bit more than 2% of that goal in the intervening period. The website of the non-profit leading the initiative has its last press update from March 2007, so I’m guessing not a lot is going on.
October 22nd, 2008
Bill Shipman — chairman of CarriageOaks Partners LLC in Manchester-by-the-Sea and co-chairman of the Cato Institute Project on Social Security Choice — advanced an intriguing idea on how to “support housing prices and facilitate the market for toxic securities that ultimately are tied to housing” in a recent Investor’s Business Daily: Suspend the capital gains tax on toxic assets.
No tax on short- or long-term capital gains or other income realized upon sale of the asset through 2013 for any individual or institution that purchases either the distressed real estate or securities collateralized by the real estate. This idea will produce winners and no or few losers.
When the seller would keep all of the proceeds from the sale of a house, because none are taxed, the future value of the house is greater than if it were taxed. The present value, therefore, is also greater.
Stated differently, housing prices rise when taxes are reduced. An individual who has been thinking of investing in distressed real estate may now find the timing right. If he assumes that housing in his market would rebound within five years, he now has an incentive, at the margin, to buy.
Institutions may provide a limited-purpose collective pool, such as a mutual fund, to buy distressed real estate, and then distribute the sales proceeds tax-free within five years. This structure would allow individuals who are not real estate professionals, but who nonetheless find the present housing market now more attractive because of the tax treatment, to easily participate and profit in its rebound. Private capital would enter the market, buy distressed property, and aid in re-establishing the market for housing.
Homeowners who are able to service their mortgage, but who are considering dropping the keys off at the bank, will rethink because their negative equity will shrink. Homeowners who are unable to meet their mortgage responsibilities would also benefit in those cases where the equity flips from negative to positive.
The securities collateralized by the real estate will increase in value as well, for two reasons. The first is that the collateral is now greater, therefore the risk is less. The second is that the gain on the sale of the securities is not subject to tax, therefore increasing the after-tax return to capital. Purchasing these securities from banks, an objective of the legislation just passed, would improve their balance sheets.
Shipman notes two objections he has heard:
The first is that investors would reap a windfall due to the tax treatment. This objection is a confirmation that the idea has merit because no windfall can accrue unless private capital invests.
The second objection is that it would cost the government money in the form of the lost income and capital gains tax. This is a red herring because the private sector isn’t investing, and without investing there can be no gain to tax. From the government’s point of view, not investing, or investing with no tax, yields the same zero revenue.
Elegant solution. Thoughts?
October 20th, 2008
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