AG nullification of duty threatens state government

Charlie Arlinghaus

November 4, 2015

As originally published in the New Hampshire Union Leader

The Attorney General’s refusal to defend state law, if allowed to stand, would rewrite state law and create an untenable secondary veto power in an appointed office. The “duty to defend” should itself be defended. The issues involved have little to do with one additional education funding lawsuit and everything to do with the balance of powers in state government.

Two weeks ago, the Attorney General Joe Foster’s office announced that it would refuse to defend the state law on education in the face of a challenge by the city of Dover. Dover is challenging the limits on the rate of increase in a town’s aid — limits that have existed since the law, co-sponsored by then- Sen. Joe Foster, was passed in 2008.

Foster told the press last week that his office “could not find a defense we felt was meritorious.” That this sentiment is the complete opposite of the opinion he had as a state senator is curious, but not the point of the current column.

The biggest problem for state government is not whether the defense of the law is good or mediocre. It matters not whether you supported extending the law or repealing it.  This is about the structure of state government and whether we want to grant the Attorney General a passive veto over laws.

Legal scholars refer to a state official’s obligation to defend state statute as the “duty to defend.” Some states vest a duty to defend, some imply, and others limit it. New Hampshire’s law is fairly clear.

The section of state law that describes the Attorney General’s “Powers and Duties as State’s Attorney” requires “The attorney general shall act as attorney for the state in all criminal and civil cases in the supreme court in which the state is interested.” The use of the word shall creates a duty.

On the supposition that everyone is entitled to a lawyer, the AG is designated as the State’s attorney. Just as criminals are entitled to a defense even if guilty, the duly passed laws of the state are entitled to a defense even if the lawyer so charged is not enamored of the law.

Attorneys general have very rarely refused to defend state law across the country even if states where the office is specifically empowered to do so. Because our law is so clear, a Yale Law Journal compilation of all such refusals finds no precedent whatsoever for this in New Hampshire.

It seems clear at this point that the Attorney General is acting beyond his brief, apparently in violation of state law. But what of it? Why should we be concerned?

First and foremost, the law must be defended. The State as an organization or institution is and must be subject to lawsuits. But it is entitled to a lawyer acting as the State’s attorney. Our rules and regulation — state statutes — create and fund an office that is assigned that task.

If the state official assigned that task refuses to undertake it — and that is precisely what has happened in this case — another lawyer should be found to take the job. For the time being, leave aside the question of whether or not an official should be allowed to refuse a job duty defined by law and still keep his or her job.

If the State’s attorney declines to represent the state — as required by statute — and no alternate provision is made, the state and its law is then denied a defense.

If the state’s attorney were allowed to refuse his duty to defend and no alternate provided, it would allow that official the opportunity to effectively negate state laws. His refusal, his judgment would be the equivalent of a veto of legislation without any ability to override that veto.

If he only refuses to do his duty in cases where he has constitutional concerns then we are allowing him to perform the function normally assigned to the Supreme Court despite being in the executive branch.

It has become commonplace for state attorneys general to seek to enlarge their power and set themselves apart from the rest of the executive branch but this trend should be resisted.

The current kerfuffle is not about one city’s quarrel with education funding. The question at stake is whether the Attorney General may nullify our “duty to defend” law and create for the office a shadow veto to make him half-governor and a shadow judicial review to make himself half-Supreme court.

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Margaret Thatcher and the New Canadian Prime Minister

Charlie Arlinghaus

October 21, 2015

As originally published in the New Hampshire Union Leader

Newly elected Canadian prime minister Justin Trudeau and the late, great Margaret Thatcher can teach timid modern politicians that polling, especially the way it’s reported, doesn’t matter and in fact only drives the skittish toward inaction. Polls are snapshots that can fall to a winning argument. Making and winning an argument matters and the good salesman triumphs over the illusory truth of an ephemeral poll.

Monday night, Justin Trudeau and the Liberal Party of Canada destroyed the election narrative written by pollsters months before and rode from third place into a supposedly-impossible majority government. His victory owes much to the admonitions of Margaret Thatcher and stands in stark contrast to the pathetic pseudo-wisdom peddled by American politicians and their media analysts.

Trudeau is no Thatcherite. It’s fair to say that almost anything Margaret wanted, Justin wants the opposite. He is from the left side of the centrist Liberal Party and the ideological heir to his father Pierre who presided over a massive expansion of the state as prime minister for almost sixteen years.

But his path to power followed Thatcher’s advice that “first you win the argument then you win the vote.” Polls can be changed by winning the argument, selling your position to the electorate.

The Liberal Party long governed by being both a little bit left and little right. It occupied a wide, amorphous swath between the Conservative Party and the left-leaning New Democratic Party. In the last election they fell to third place and were thought to be squeezed out on both sides

Trudeau began the election campaign in third and two months ago was still 12 points behind the leading New Democrats, unlikely to be more than a spoiler.  But the other parties campaigned like Americans — believing the media spin that polls are all that matter and just trying to ride out the lead.

Trudeau campaigned. His message was upbeat and optimistic –“sunny days, my friends, sunny days.” He campaigned on ideas — not ideas I agree with, but ideas — while his opponents trimmed their sails.

The Conservatives in particular were stuck. Having run deficits for the last five years they had lost credibility on fiscal sanity. After a decade in power they were reduced to mocking Trudeau for his youth and his parentage — hardly a sign of strength in the battle of ideas.

Mocking your opponents and generally being grumpy old men wasn’t exactly Margaret Thatcher’s vision of  “winning the argument.”

Trudeau actually made the argument which made it easier to win it. On election night he declared “This is what a positive, hopeful vision and a platform and a team can make happen.” A vision and a platform, for my jaded fellow sufferers of modern politics, means talking about ideas and proposals rather than simply poking fun at the other guy.

What’s more, in Canada the Liberal Party is unquestionably the adult in the room on fiscal responsibility in a way that no American congressman seems capable of understanding.

When the Liberals were last in control, they were concerned about 40 years of deficits that had led to debt at a then-scary 67% of the economy — the current American public debt is 75% of GDP but we don’t seem to care.

The Liberals cut spending by an actual 10% with cuts coming in every budget area and balanced the budget in four years.

In our Congress, the deficit isn’t as bad as theirs had been but our nervous politicians maintain that balancing it in even ten years is nigh impossible.

Canadian debt declined from 67% of GDP to 37% today and allowed them to reduce the highest corporate tax rate from 29% down to 15% — ours is 40%.

I hope that Trudeau will spend a bit less than he promises and will balance the budget again in four years after the Conservatives let it go. Whatever happens, Americans can learn a lesson.

Trudeau was 12 points down two months out. A vision and platform — in contrast to opponents insisting he was too young at 43 — brought him twenty points higher than the favored New Democrats and ten points above the Conservatives.

Poll numbers are just random answers given on the day I made the mistake of answering my phone. Ideas have consequences. You can’t win the battle of ideas if you avoid the fight.

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A Tale of Two States: Economic Recovery in Massachusetts vs New Hampshire

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October 2015

Joshua Elliott-Traficante

Summary[i]: Despite historically leading the region out of recessions, the New Hampshire has become a laggard in comparison to Massachusetts. While Massachusetts recovered from the recession in terms of both employment and job numbers more than two years ago, only as of June 2015 has New Hampshire done the same. If New Hampshire had matched Massachusetts’s recovery speed, there would be 27,000 additional jobs in the state today. This piece looks at three work force metrics: the number of jobs in the state, the number employed residents, and the size of the labor force.

Jobs:[ii]

Proportionally, both New Hampshire and Massachusetts lost roughly the same amount of jobs in the last recession. Massachusetts hit bottom first in October 2009, with the total number of jobs in the state falling by just over 4 percent. New Hampshire reached its lowest point a few months later in January 2010 and lost just over 4.6% of its jobs. There the similarities end.

jobs1

 

After hitting bottom, Massachusetts experienced a job creation growth rate averaging 1.6% per year, over the last five and a half years, far outpacing New Hampshire’s .9% per year average. While a .7 percentage point difference in growth does not sound like much, compounded over five and half years yields the yawning gap seen in the chart above. With that higher growth rate, Massachusetts was able regain all of the jobs lost in the recession by September 2012. New Hampshire on the other hand needed an additional two and a half years to recover all of the jobs lost. The state did crest prerecession levels in both December 2014 and March 2015, only for it to fall back below in the following month. Only as of June 2015 have job numbers stated above prerecession levels for more than a single month. If New Hampshire experienced the same growth rate in job creation Massachusetts did, there would be an additional 27,000 jobs in the state today.

 

Employment:

In terms of employment, which measures the number of state residents that have jobs (regardless of where the job is located), New Hampshire made out slightly better than Massachusetts did in the recession, experiencing less severe losses on a percentage basis.

Employment1

Despite losing more proportionally, Massachusetts recovered faster, averaging growth of 1.4% per year, and returned to its pre-recession employment level in June 2013. New Hampshire however, only averaged .66% growth per year. That lower growth rate meant New Hampshire only returned to its pre-recession level of employment in February 2015, nearly two years after Massachusetts. The fact that the number of employed returned to prerecession levels before the number of jobs after Massachusetts did, indicates more people are commuting to other states for work than they did before the recession.

Labor Force:

With the mediocrity of the recovery, many analysts have used changes in the size of the labor force as a better measure of the general labor situation because the traditional unemployment rate fails to account for those who have given up looking for work. Although mild by national standards, both New Hampshire and Massachusetts saw declines in their respective labor forces as first the recession and then the mediocre recovery wore on. After hitting their lowest points in Spring 2011, both states saw minor albeit steady improvements.

jobs1

Massachusetts returned to its prerecession high in March 2012 and saw accelerating growth beginning in late 2013 that continues to the present. New Hampshire’s Labor Force largely held steady and only recovered fully in May 2015. In recent months however, New Hampshire has experienced sustained growth, though not nearly as dramatic as south of the border. Some of this slow recovery in Labor Force growth is connecting to the ageing of the state, but the recent growth spurt in the last few months shows that this is not the dominant factor.

More Commuters?

With those upticks in Labor Force and Employment growth rates, it would seem as though New Hampshire is finally experiencing real economic growth. Unfortunately that does not seem to be the case. That growth in the Labor Force over the last 11 months represents more than 7,000 additional New Hampshire residents actively searching for work, with the number Employed growing by roughly 10,500. That means both those new entrants into the Labor Force and people who are currently unemployed are finding work. However, there is only a muted corresponding increase in the Jobs numbers, which only increased by 3,600 over the same eleven months. What accounts for these ‘missing jobs?’ Even when taking into account the self-employed and agricultural workers[iii] the difference between Job creation and Employment growth means upwards of half of the newly employed are finding work in another state, likely Massachusetts.

Conclusion:

While it is tempting to judge a state’s economic health based on the unemployment rate alone, doing so can be misleading. New Hampshire has an incredibly low unemployment rate, but it only just recovered all of the jobs lost in the recession.  In contrast, Massachusetts has seen strong job growth, propelling it back to precession levels two and a half years before New Hampshire. Had New Hampshire simply replicated this growth rate, there would be more than 27,000 additional jobs in the state. Despite the recent improvements over the last nine months in both Labor Force and Employment numbers, the lack of a corresponding increase in Job numbers indicates more people are commuting out of state for work. Given Massachusetts’s growth it is likely that most of those new commuters found work there.

If Massachusetts, a state that lost a congressional seat in 2010 because its population was not growing fast enough, and that has notoriously difficult regulations and high taxes can both increase their labor force and add jobs, New Hampshire can certainly do better.

Click here to download a pdf version of this paper

 

 

[i] All data used in this piece was taken from the Bureau of Labor Statistics Establishment Survey (Jobs) and Household Survey (Employment and Labor Force) for New Hampshire and Massachusetts.

[ii] Jobs vs Employment: ‘Jobs’ counts the number of paid positions based on where they are located. Employment’ counts the number of people employed based on where they live. The employment figure for New Hampshire counts every state resident that has a job, regardless of where the job is located, while the jobs figure for New Hampshire counts the number of jobs based here, regardless of who fills it. For example, someone who lives in New Hampshire, but works in Massachusetts, would show up in the New Hampshire employment number, but their job would be counted in the Massachusetts job number. The Labor Force measures all of the people either employed or looking for work.

[iii] Both the self-employed and those who work on farms are not counted in the Jobs survey, but are counted in the Employment survey. It is possible that all of those ‘missing’ jobs in the last eleven months are people who started their own businesses or found agricultural work in the state. However, there is no evidence of a very quiet boom in either farming or self-employment, so this does not seem to be the case.

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The Great Myths About the NH Primary

Charlie Arlinghaus

August 19, 2015

As originally published in the New Hampshire Union Leader

Much of what you know about the New Hampshire primary is wrong or misleading. Six months before the election seems like a good time to sort out some fact and fiction.

Many Granite Staters like to think that New Hampshire has some inherent right to the primary because we pay more attention, are more involved, and take our job more seriously. The story of the noble activist fighting a grass roots battle is best explored in Dayton Duncan’s wonderful portrait Grass Roots: A Year in the Life of the New Hampshire Primary — sadly out-of-print but available used.

Duncan is now famous for PBS documentaries on subjects like Lewis and Clark but was a sought after Democratic political operative in the 70s and 80s. His portrait, however, is sympathetic to all the citizen activists he follows and, as with the best historians, the reader has no clue to the author’s partisan sympathies.

The motivations of volunteer activists, their joys and their heartbreaks are painted boldly in a story that could be about any election in any state but happens to be about the New Hampshire primary. It is compelling storytelling.

But some of the mythology surrounding the primary is exaggerated. Most activists enjoy the joke in which an old Yankee, when asked about a candidate, says “don’t know, only met him three times.” In New Hampshire, some will boast, we meet and evaluate them all. It simply isn’t true. The vast majority of people never see a candidate in person.

In 2008, in both primaries a total of 519,000 people voted. The activists who attend town halls or bother to leave the house at night to sit through a town hall type event probably amount to only 25-30,000 voters — a scant 5 or 6% of the total. Those people generally see multiple candidates.

Remember how surprised people were that Hillary Clinton beat Barack Obama here? Obama had enormous crowds and Clinton less so. Among the most excited and most active political watchers, Barack Obama generated a lot of excitement. But maybe 90% of the 284,000 who voted in the Democratic primary never went to see anyone. They probably read the newspaper — newspaper subscribers are among the most likely voters — listened to the radio or watched television and then voted.

So when a reporter interviews an attendee at a political event, he’s interviewing a jaundiced member of an over-involved minority. That person’s views are unlikely to be representative of the fabled man-on-the-street.

Most voters will decide very late in the process simply because they, like voters in every other state, are paying attention to the important things in their life and politics is well down on their list.

On the Republican side, we are often told that New Hampshire is a very conservative state. That’s never been particularly true and it certainly isn’t today. The GOP electorate here is quite squishy. In the 2012 exit polls, a total of 47% of Republican primary voters chose to describe themselves as moderate or liberal as opposed to somewhat conservative or very conservative.

That was not the result as some claim of liberals, with no Democratic primary to participate in, crossing over to cause mischief. In fact, in 2008, when the Democratic primary attracted 50,000 more voters than the GOP, the moderate-liberal percentage in the GOP primary was still 45%.

It is also interesting to note that the great moderate hope Jon Huntsman was not their first choice in 2012. It was Ron Paul’s best demographic though he was still second to Romney among moderates.

One remarkable consistency in the primary is the number of candidates. Each of the last six GOP primaries without an incumbent has had 5 or 6 candidates with at least 1% of the vote. on the Democratic side, the same has been true of six of the last seven primaries without an incumbent.

Finally, the winner of these multi-candidate fields since 1988 have finished well under 50% of the vote with the exception of John McCain’s 49% in 2000. Six times the winner had between 36 and 39% but this year’s GOP winner is likely to be closer to Pat Buchanan’s low mark of 27% in a field with six significant candidates.

For some hyper-involved activists, the primary will take on the romantic qualities found in Duncan’s Grass Roots and the experience will stay with them for a long time. For most of us though, we won’t go see anyone in person and won’t pay too much attention until the few weeks. It’s easier that way.

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No One is Winning or Losing Despite What You Read

Charlie Arlinghaus

August 12, 2015

As originally published in the New Hampshire Union Leader

Right now you should pay less attention to presidential election. Paradoxically though, you should also paying more attention. The real problem is the media covering the election acts as if they’ve never covered an election before and have no familiarity with elections in general.

No one is winning and no one is losing yet. The large number of candidates in the race make some in media eager to start eliminating candidates and to indulge in breathless discussions about momentum. History suggests media discussed polling momentum is silly and meaningless.

No one’s campaign is on life support and no one is inevitable. You should feel free to listen to and evaluate multiple candidates. For example, Fox would have had you believe that you should ignore all but ten candidates. They relegated all the other — the losers in the so-called Fox primary — to a junior varsity debate. The losers were allowed to talk at 5:00 (2 in the afternoon on the west coast) but prohibited an audience. Yet the candidate who most improved his or her position as a result of the events was Carly Fiorina, one of the candidates we were told to ignore.

Better advice: don’t give up on anyone yet. Four years ago the candidates seen to have momentum changed on a regular basis. At this point, Newt Gingrich’s campaign was essentially shuttered. But he would have two surges in which he took the lead in the national polls — one right before Iowa and one in the middle of the primary voting.

Around this time four years ago, Michele Bachmann experienced a big surge only to fall away quickly. Rick Perry jumped in the race and skyrocketed to a healthy polling lead — he had a 12 point advantage over the next highest of eight major candidates before seeing his support collapse over the next six weeks.

Then came Herman Cain. His catchy 999 plan took center stage and pushed him to a narrow lead in national polls. He too saw his support collapse in about six weeks.

Newt Gingrich then came back from the dead. His campaign surged to a 13 point lead in national polls just three weeks before the Iowa caucus would allow actual humans to vote and steal the media’s thunder. Then he too collapsed.

Rick Santorum had a moment in the sun. He took advantage of the Gingrich collapse and won the Iowa Caucus. He would remain a contender for the duration of the primaries, winning elections in eleven states despite having been dismissed by the media as a nuisance candidate six months earlier.

Gingrich was dead again. He came in third in Iowa and a distant fifth in New Hampshire. But Gingrich deaths tend to be short lived. He came back again and won the third primary, in South Carolina, and regaining the lead in national polling.

All this goes to show that none of the discussions about momentum amount to a hill of beans. Almost everyone still has a chance to have a day in the sun. New Hampshire is supposedly paying more attention than any other state but even here only 11% of the voters claim to have picked a candidate and half of them will change their mind.

Polling means little most years. It means even less when there are 17 candidates this year instead of eight in 2012. One or two debates will do little to destroy any individual campaign. What they might do is introduce a candidate to voters who decide to learn more. It may put a candidate or two on a voter’s dance card so to speak.

Most of the working political press has little interest in telling you anything informative about a candidate. Since George Bush declared in 1980 that he had “big mo,” writers and reporters have been focused on momentum and process.

What remains remarkable is that voters are willing to listen but then to ignore the stories about who is up and who is down, who can or can’t win. Rick Santorum couldn’t win Iowa but he did. Newt Gingrich’s two campaign deaths were apparently exaggerated. The campaign eulogies written about John McCain in 2007 didn’t keep him from winning the nomination. The Phil Gramm juggernaut in 1996 didn’t earn him any delegates.

The behavior of actual voting humans tends to confound political reporters and I suspect we all enjoy that.

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The Impatience of The Political Class Ruins Elections

Charlie Arlinghaus

August 5, 2015

As originally published in the New Hampshire Union Leader

The political chattering classes would prefer primaries and debates to be run for their own entertainment and are generally annoyed at the patience and caution with which the vast majority of voters approach the process. No one votes for six months yet but they are already tired of the candidates, bored by substance, and itching for juvenile name calling to begin. Their annoyance with the first debate earlier this week highlights why you should be annoyed with them.

Every four years a host of candidates spend numerous months exploring a presidential campaign and begin introducing themselves first to a very few insiders, operatives, and reporters. They then branch out to the few actual voters interested very early in the process and graduate to the electorate at large.

The marathon-like length of the process provides a premium to candidates interested in discipline and showing patience. Unfortunately, it also means boredom can set in for the operatives who pay much too much attention compared to normal people and also the reporters and other information providers we rely on to help us learn enough to make an informed decision.

The debate season is a very early stage in the primary process but it comes after reporters and the chattering classes have sent as much as three years listening to and talking about specific candidates. To that very tiny group that has been paying attention for far too long boredom long ago set in. But normal humans are just now starting to kick the tires and get to know bits and pieces of information in the hope of making a final decision sometime next year.

The unusual size of the Republican field this year has frustrated much of the insider class. There are 17 candidates who might be referred to as serious — former governors, senators, etc.

Normally, a reporter can be expected to have to sift through five or six candidates in a given party. With so many they are at a loss.

Debate organizers are particularly distressed. Ideally they have two or three people who might yell at each other or make dramatic gestures. Seventeen candidates make entertainment more difficult.

But democracy can be sloppy. In the good old days, a few power brokers made sure the right people got nominated and things weren’t open to just anybody. The wrong sorts weren’t allowed to compete openly with the guys who had carried water for us in the past. The primary system ruined all that. Now anyone can run, talk directly to voters, and try to build momentum. Very messy.

The sloppiness of so many candidates had led some broker to create early elimination deadlines — the Republican National Committee through its monopoly debate franchisees had dictated that only those in the top 10 in national polls may participate despite a primary system that used to be based on state primaries rather than national advertising.

Flouting the RNC and its monopoly, a group of early states had a debate — I’m sorry it’s a “forum” lest we anger the monopoly beast into retribution against candidates who dare be so open. Three early states insisted all candidates be invited and introduce themselves to voters.

Many candidates appeared but each received equal time to introduce themselves. Pundits the next morning however fretted the lack of opportunity for candidates to “engage” with each other.  These pundits were sad that candidates talked about themselves and their ideas rather than take potshots against each other. The punditry pouted because there were no fireworks.

The other complaint of the politically obsessed was that they “didn’t learn anything new.” Insiders didn’t want to hear the candidate’s talking points. Instead they need fresh phrases each time out.

These complaints are less about the needs of voters than the boredom of the chattering class.  It is a useful thing for someone learning about his or her choices to see all of the candidates one after another talk about each of their ideas. We learn more from Rick Perry talking about himself, his record, and his ideas than we would if he had been persuaded by the reportorial blob to attack one of the others.

This forum demanded candidates talk about themselves and their ideas. It is less thrilling than a boxing match and there is the horrific danger that some pundit may have heard that idea before. But it is the substance that we all pretend we want.

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Comparing New Hampshire’s Recoveries

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Joshua Elliott-Traficante

June 2015

Summary: Despite a history of leading the region out of recessions, New Hampshire’s recent track record of job creation falls well short of that legacy. Only as of March 2015 has the state returned to prerecession levels of employment and jobs numbers. This paper compares the last three recoveries to the current one, detailing the state’s increasing difficulty in recovering from economic downturns.

Econ Chart 1

New Hampshire has a strong track record of economic growth, especially in the 1980s, 1990s and early 2000s. This economic prowess helped give birth to the phrase “The New Hampshire Advantage” and made the state the envy of the region. Since 2002 however, the stiff wind that once filled the state’s economy’s sails has become a gentle zephyr at best. The last thirteen years in particular have seen mediocre growth in both employment and jobs. The recovery from the latest recession has been particularly slow. More than 5 years after the bottom of the recession, the state has only just recently returned to prerecession employment levels and jobs numbers.

Definitions and Layout:

Though ‘employment’ and ‘jobs’ are often used interchangeably, the Bureau of Labor Statistics has distinct definitions for each term, which will be used in this paper. ‘Employment’ counts the number of people employed based on where they live. ‘Jobs’ counts the number of paid positions based on where they are located. The employment figure for New Hampshire counts every state resident that has a job, regardless of where the job is located, while the jobs figure for New Hampshire counts the number of jobs based here, regardless of who fills it. For example, someone who lives in New Hampshire, but works in Massachusetts, would show up in the New Hampshire employment number, but their job would be counted in the Massachusetts job number. It is important to note that the unemployment rate is calculated off of the employment numbers, and not jobs numbers.

For this analysis, roughly the first 5 years of each of the last four recoveries are examined. The starting point is the lowest point in the recession (in terms of employment and job numbers), continues through the first 65 months of the recovery for employment numbers, and 63 months of for jobs numbers. This time frame has not been chosen arbitrarily; the state is now 65 months into recovery in terms of employment number and 63 months into recovery in terms of jobs. Doing so, accurately compares how well New Hampshire has recovered from economic downturns in the past, versus today.

Click here to read a pdf verson of the full report

 

 

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House “Conservatives” Lurch Into Price Controls

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Charlie Arlinghaus

June 3, 2015

As originally published in the New Hampshire Union Leader

In the world-turned-upside-down that is the New Hampshire legislature, a group of former conservatives has been reduced to arguing that the only real fix to health care is government price controls. Concerned about the lack of competitive pressures and other market mechanisms, they have decided the best of all solutions is to simply give up and give in to price controls. A legislator in search of a grand solution that can bear his signature in bold type is easily seduced by what he would eagerly call socialism if proposed by his opponent. But we are all easily persuaded that our own idea is merely “realistic” and that my case is an exception to the usual platitudes we espouse.

New Hampshire’s workers compensation rates are higher than average. Although in recent years we are one of only sixteen states that have seen our rates decline, they started out above average. Because of certain rules, the health care component of workers compensation has few competitive features.

Now comes the giant abandonment of principle that turns erstwhile conservatives and libertarians into reluctant statists embracing big government solutions.

The current system which requires employers or insurers to pay whatever charge is presented to them by whatever medical provider the injured worker chooses is rightly decried as anti-market. Legislative supporters of a pseudo-reform bill seek not to fix the competitive failure but instead to have the insurance department set up a schedule of “reasonable charges.” Their supposed past support of competition and angst at market failure has nonetheless driven them headlong into a scheme of government set and managed price controls.

Supporters argue quite nonsensically that their price setting isn’t a “fee schedule.” It is merely a calculation of the reasonable charge where the maximum charge the government permits is set as the average (which under basic math means the average and maximum are necessarily identical). The government (in this case the department of insurance) will set a price (reasonable charge) but we are told that this isn’t a price control. George Orwell call your office.

What I find most distressing is that so many tentative supporters of the price control scheme argue sincerely that their price control is better than other price controls because they use a different and perhaps better set of numbers to create their price.

Under this logic we are expected to endorse government control if the calculation is better. These legislators then must object to Obamacare simply because the right administrators have not been selected. Under their logic a single payer would be best if we let the author of the workers compensation pseudo-reform administer the system.

Of course now I’m being silly but that’s precisely how silly this headlong dive into government price controls really is.

The sad part of this debate is that the problem is understood and the solutions readily available.

The biggest problem is the first line of the workers compensation law requiring the insurer to pay the entire bill of whatever provider the employee selects no matter what unless the insurer can show just cause. This eliminates fraud and little else. It forces costs higher leaving the payer of the bill (employer or its agent) with no negotiating power.

Instead of forcing the employer to prove just cause, shift the burden to the provider and thereby change the negotiation. Or allow the employer and insurer to establish in and out of network pricing to pressure cost outliers.

In short, government set and managed price controls are not the only answer. Competition can easily be introduced to the system.

We faced this with state employees. The ability to go anywhere coupled with little or no exposure to price drive costs high. But the legislature never considered mandating a list of prices for the 80 or 90 most common or costly procedures. Instead, they created incentives in their own contract for consumers to receive a cash reward for using, if they chose, a low cost provider. My own health insurance has a similar competition-inducing mechanism and they are becoming more common throughout health care.

I don’t understand the number of conservatives who prefer price controls of one variety or another to trying to introduce competition. Saying the system isn’t free market so we must introduce government set pricing is quite different from the saying the system is not free market so let’s eliminate the anti- competitive language. Price controls are the same thing as giving up. 

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NH has Slipped from Mediocrity into the Terrible 10

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Charlie Arlinghaus

May 20, 2015

As originally published in the New Hampshire Union Leader

Recent college graduates and others trying to decide whether to commit to New Hampshire long term have every reason to leave and few to stay. I hope that by now it is universally accepted that New Hampshire’s prospects are, at best, mediocre. What seems increasingly likely is that those of us hoping for mediocrity are pie-eyed optimists. Things are bad and the state is losing pace. States don’t become backwaters actively. The rest of the world just passes by lackluster states while they go along pretending everything is fine. We’re pretending, doing little or nothing, and life is passing us by.

In the last week, the Pew Charitable Trust released data pointing out that recovery from the last recession is complete but robust in some states and pathetic in others. Guess which category we fall into?

Pew’s research service on state government policy Stateline found that “while all states have added jobs since their economies hit their nadir during the recession, some have added far fewer than others.” Pew went on to highlight ten states with anemic growth of 5% or less. In this group, which might well be dubbed the pathetic 10, is New Hampshire.

Consider a recent college graduate thinking about where to start his or her career. New Hampshire is a pleasant spot and has much to offer. But what is has little of and little hope for is job growth. Why on Earth would you start your career by shackling yourself to one of the pathetic 10 — the worst states in the country in which to hope to find a job?

The national average was growth of about 8%. But more likely, if you are just starting out, you want to go to one of the Top 15 states who all boast growth rates of at least 10%. Michigan’s growth rate of 11% is more than double New Hampshire’s of just 5%.

Did you ever think we’d reach the day when Detroit was the land of opportunity compared to the decaying former economic power of New Hampshire?

Actually, I grew up in Detroit. It’s nice to follow the remarkable progress they’ve been making in recent years — jettisoning me might have been the spark they needed.

States across the country are doing things to attract jobs, to make themselves more competitive, to make their economies more dynamic. While they act and act often, New Hampshire is content to rest on its laurels.

A very long time ago (in economic terms) we were a robust, thriving economy. People moved here in droves. Jobs expanded here so fast that at times the labor force couldn’t keep up. Unemployment was below full employment and jobs went unfilled ( a problem North Dakota now has because of the oil boom).

The experience colored us and changed the way too many people think. Too many policymakers had that vision burned into their retinas and have been very slow to catch up. These are not the 1980s and our economy is not attracting thousands of economic opportunity migrants every year. We resemble Maine more than we resemble the land of milk and honey.

We are not the envy of our neighbors — as the Federal Reserve wrote about us 15 years ago. Instead we are one of the pathetic 10 and the so-called New Hampshire Advantage is a mythological creature of the past not the present.

The two worst measures that doom us are taxes and energy. When industrial users of electricity would have to pay more than twice the national average price for the privilege of being here, don’t expect them to show up.

On corporate taxes, we are better in some areas than others but we’re 48th in the Tax Foundation’s Corporate Tax Index. Very high corporate taxes coupled with ridiculous energy rates weed out an awful lots of jobs.

While we stagnate, other states are making an effort to improve their position. States all around us are lowering corporate tax rates in an attempt to get out of the bottom 10. In contrast, even a pathetic little cut in our business taxes is controversial here.

Gone is the time when we needed to preserve a New Hampshire dynamism. Now we have to try to figure out how to create one. Mediocrity is something we can hope to achieve in the future. In the meantime we are stuck in the pathetic 10.

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Too Many Bananas Are Ruining Our State

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Charlie Arlinghaus

May 6, 2015

As originally published in the New Hampshire Union Leader

Are you a Banana? New Hampshire has too many bananas and is suffering because of it. The world is populated with millions of us who seek to live in the modern world when we want to enjoy its conveniences and then turn on our back on that same world and hope that someone else with pay attention to the details that make that convenience possible.

There is a common aspect of human nature that infects so many decisions about the infrastructure that surrounds us. Most of us are familiar with the acronym NIMBY — an abbreviation for Not In My Back Yard. You picture someone saying “that’s a great idea, we should have one of those but not in my back yard. It would better in yours. Big giant compost heap in your yard and we can use mine to sip lemonade.

New Hampshire’s response to infrastructure has always had a bit of a NIMBY element to it. But lately we seem to have graduated to tropical fruit. Our best acronym now is BANANA — Build Absolutely Nothing Anywhere Near Anything. Every new project is opposed for some reason or another, often for any reason at all. There seems to be an active and vocal group traipsing from one meeting to another seeking to stop anything new from happening.

The problem with these banana people that the status quo is a bad thing and needs to be changed not preserved. The state has spent decades pretending everything is fine with its electricity markets and that nothing needs to happen. and it’s killing us.

Slowly but surely the dynamism that used to be our job market has turned to stagnation. Mediocre job growth means people don’t move here much, younger people can’t stay even if they want to, and too many Granite Staters have to work in Boston or some other place at the end of a horrific commute

And the biggest hole in our competitive armor is electricity.

The fight for jobs needs to be fought on as many fronts as possible but on the electricty cost front we’re not just losing but getting routed.

Last week, new data was released about just how bad we are and how much worse we’re getting. Then again, a glance at your own electric bill probably told you everything is not fine.

In February, New Hampshire’s electric rates were 68% higher than the national average. This is even worse than a year ago when we were an already too high 54% above average. To add insult to injury, we are least competitive in the area we need to be most competitive: the industrial sector. The grotesque 86% above average rates of a year ago for industrial users have ballooned to 105% above average.

This is not a minor expense. It amounts to hundreds of millions of dollars of costly drag on our economic competitiveness.

Think about it this way: the companies that create the best paying jobs in the high tech and manufacturing sectors — the areas we would give our eye teeth to attract — would see double the electric bill if they had the misfortune to locate here. And your banana friends think that’s fine.

If you believe a banana, life is grand and all those people worried about jobs are just being silly. Actually, if we’re being fair most of them don’t care. Their analysis has only gone as far don’t build it. They presume the juice for their iPhone and electric car will materialize some other way. Exactly how is someone else’s problem.

The someone else is us. It’s our problem. We can read the numbers and realize that New Hampshire is on the verge of becoming a backwater. The dynamic state we once were is now limping along, sore and bedraggled.

Stagnation and electric costs are not two different things. Reducing the cost of electricity requires having more of it. Having more of it requires building things — the infrastructure necessary to create a modern life, to power the machinery and technology that are part of well paying jobs.

No one would suggest we build everything anyone wants but we have a big problem and it will require living in a modern world (I live a few hundred feet from a power line). We are going to have to allow more building and fewer bananas.

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