Let’s Try to Ignore the Political Soap Opera

Charlie Arlinghaus

December 11, 2014

As originally published in the New Hampshire Union Leader

We all need to start ignoring political soap operas and focus on the real work of government. Sadly, the media is likely to report frequently and breathlessly about who likes who and who’s mad at who while ignoring most of the substantive policy discussions that help determine the strength of our economy and whether you have any hope of finding a job. Like celebrity gossip, the backroom personal dramas are fun to cover and more interesting to far too many people in our increasingly substance free polity.

No true political coverage can completely ignore process nor should we expect it to. The process of selecting policymakers (i.e. elections) is very important as it determines which policy prescriptions are likely and even possible. But between elections something happens other than just posturing for the next election. Governing in a free society is not an extended preseason for the next election, rather the opposite is true. In theory, an election is simply a prelude to the real decision making.

I worry that the next two years, however, will be dominated not by descriptions of the choices before government but by a constant speculation about backroom politics and who is or isn’t positioned well. Two dynamics, one legislative and the other gubernatorial, have already established this threat.

Governor Maggie Hassan is about to start her second term. I wonder what she will advocate in her budget, how she will propose dealing with reasonably large budget imbalances the state faces, and whether she proposes expanded gambling again and how it will differ from her proposal of two years ago. In addition, I presume she will have other initiatives to change the direction of the state.

People regularly ask me about the governor. Rarely do they ask about spending levels, tax policy, or economic incentives. Always they ask “do you think she’s running against Kelly?” Sen. Kelly Ayotte will run for re-election in 2016 (not quite two years from now) and Gov. Hassan is widely expected to challenge her or at least face national pressure to do so.

Every action and proposal is going to be judged not on its merits but on “whether or not this sets her up well for 2016.” Every statement will be parsed for its 2016 meaning. Every reaction to the governor will be colored in the 2016 light. It makes for an easy discussion that avoids anyone having to figure out anything substantive.

Instead of endless political speculation, can we take a moment and attack or praise proposals the governor makes simply on their merits? It is possible she will have some good ideas you’ll actually support but vote against her two years from now. Similarly, you are free to think she’s the bee’s knees but still part company on a proposal or two.

If gubernatorial-senatorial politics weren’t bad enough, the latest State House drama has far too many lawmakers ignoring substance themselves and degenerating into name calling and petulance. There are many issues of process and tradition built into the surprising drama last week when the expected Republican speaker lost narrowly to another Republican elected by an apparent coalition of Democrats and Republicans.

There are very strong feelings on both sides and I don’t want to minimize them. I’m sure there will be attempted coups and backroom shenanigans of all sorts. But I would prefer not to care. I would prefer that each and every legislator with sore or triumphal feelings keep his internal angst to himself. There’s a lot of work to do. Retributive justice can be served quietly while the rest of us think you’re doing your job.

The budget has more holes in it than Swiss cheese. Our pension is still among the worst funded in the country. Our job growth is mediocre at best. Energy prices are depressingly (in an economic sense) high, and the old competitive New Hampshire is a distant memory.

There is enough to work on to keep 424 people quite busy. I may have preferred this person or that person win the procedural vote to preside just as I may have preferred a person or two in the November elections. But what really matters is not which personality occupies which chair but what they each do and what policies end up imposed upon us.

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Stagnation Needn’t Be Our Destiny

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Charlie Arlinghaus

December 4, 2014

As originally published in the New Hampshire Union Leader

One of the problems for all of us is that we are living in the past. We think reality is the same as it was 15 years ago but in actuality we’ve been left behind and are in danger of becoming a museum piece. New Hampshire has been left behind and most politicians are reduced to talking about a previous reality that no longer exists except in their mind. Prosperity has been replaced by stagnation, dynamic growth by brackish backwater. This mediocrity is the problem of our time but too many don’t notice the problem or admit to the new rules we operate under.

The 1970s, 1980s, and 1990s were heady times of rapid job growth in New Hampshire. Each decade featured a dynamic economy, an extraordinary competitive advantage over our neighbors that made New Hampshire a haven of in-migration and led to New Hampshire being called an island of prosperity surrounded by a sea of socialism.

New Hampshire seemed to be a haven for entrepreneurs and high tech companies, a dynamic new economy remaking itself time and again in the midst of candlelit old economies wedded to the old stagnation we associated with yesterday’s socialism.

At the end of those thirty years, the Federal Reserve Bank of Boston, not a traditional cheerleader for New Hampshire, referred to our state as the envy of its neighbors. But that was then, this is now.

At the height of the envy-causing boom, New Hampshire had 28% job growth in five years (1983-1989). The last eight years saw complete job stagnation – the same number of jobs in 2013 as 2005. No single economic statistic is more important to public policy than this.

We are no longer an island of economic dynamism. We are merely one more pebble in a stagnant economic gravel pit.

Yet too many politicians continue to refer to what was once called the New Hampshire Advantage – the competitive economic advantage we once enjoyed over our neighbors that no longer exists.

Our tax picture is broadly better than most. The Tax Foundation ranks us seventh largely because we have no income tax. But subcategories are troubling. Our business taxes are among the worst in the country and business recruiters report that the first thing they are asked about is tax rates.

Unemployment taxes, workers comp rates, the cost of health insurance (labor costs) are all among the highest in the country. Most troubling, and the biggest roadblock we currently face, are our highest in the nation energy costs.

So much of business relocation is psychological, and the psychology of measure after measure after measure being so high and out of range is that places like Texas and North Carolina look more and more attractive.

In the midst of splashing around in this brackish backwater we are treated to politicians talking about preserving some non-existent advantage.

It’s time to face reality. We are not competitive. College graduates of today do not remember a time when New Hampshire was a great place to look for a job. Their whole life has existed while New Hampshire was a place to be escaped to find a brighter future.

I have seen this film before and I don’t like how it ends. Growing up in Detroit, newsstands stocked the Dallas Morning News so people could read the Sunday want ads. It was more useful to them in finding their next job than the local papers could be. I would hate to see people trade in their Union Leader subscription for the Chattanooga Times.

But our die has not been cast. We have not crossed a Rubicon. Instead we have sat still and stillness can be cured by action. We should not resign ourselves to business as usual and the fate of being the third pea in a Northern New England pod of stagnation.

The dynamism of the past may be gone but we can work to tear down walls to competitiveness. Admit that our advantage is gone and we can fight to get it back. We are still a small state and somewhat more nimble than many would be competitors. We have not gambled millions on giveaways and irreversible programs.

Every action taken in the next legislature should be judged by whether it raises or lowers the price of doing business in New Hampshire, whether it makes us more or less competitive. Stagnation needn’t be our destiny.

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Divided Government Keeps Bad Things From Happening

Charlie Arlinghaus

November 19, 2014

As originally published in the New Hampshire Union Leader

For the next two years small changes are possible but nothing big can happen because politics and money conspire against change. It’s not true that nothing important will happen but it is true that most major initiatives will flounder on the shoals of budget pressure and political competition.

If you are content with the status quo, divided government is a blessing. It is generally true that Democrats are predisposed to hate Republican ideas simply because they are Republican. Republican politicians, of course, have the same myopia about Democratic ideas. Therefore, in any sort of power sharing arrangement  — for example, the current Republican legislature and Democratic governor – it is a good bet that each side will quash most of the ideas of the other and little will happen.

William Niskanen, the late, former chairman of the Cato Institute, long preached the virtues of divided government. He said,” The United States prospers most when excesses are curbed, and, if the numbers from the past 50 years are any indication, divided government is what curbs them.”

He pointed out that federal government spending increased by an annual average of 1.73% during periods of divided government but 5.26% during periods of one party control. The only two periods of reasonable fiscal restraint occurred when Eisenhower had a Democratic Congress and Clinton had a Republican one.

The basic reason is that Republicans dislike Democratic ideas for spending but tend to love their own and vice versa. During one party control, those in charge tend to be bold. This is fine if they wish to be bold in ways I support but all too often they are incapable of reading my mind or yours. It may be best then to keep them restrained.

In New Hampshire, Republicans enjoy comfortable majorities but can’t come close to overriding a veto. This likely means that things we do today are locked in and nothing will be extended or added without broad compromise.

The second limiting factor this year is budget pressure. The two-year budget document adopted in the first year of the session is the controlling roadmap in New Hampshire. Nothing significant can happen without funding and initiative depends on available money.

Every two years, there is some sort of supposed budget crisis but they come in degrees. Some years, the gap between expected revenue and programs is quite minimal and requires only a modicum of tweaking – not so much a crisis as management. The other end of the spectrum is the huge $800 million shortfall between revenues and projected spending that existed in 2011. Those changes were consuming and affected every area of government.

We don’t have all the information we would like just yet but the budget process that has begun is about halfway between cataclysm and triviality. With the election past, more specific information will emerge. We do know that a $72.2 million surplus bequeathed to the last legislature and governor was spent down to $19.5 million – a spending deficit of $52 million in just the first year. The problem is big enough that the governor has asked half of state government to cut $30 million while the HHS half of government has to make cuts of around $45 million.

That was then but it means that the baseline going forward is quite shaky and unbalanced. To that must be added significant increases in Medicaid caseloads, other changes at HHS creating a projected two-year hole of almost $90 million, and the additional shortfall that we can’t calculate yet caused by necessary changes to the MET tax. All told, the problem won’t approach $800 million but there’s no reason to suppose it won’t be calculated in the hundreds.

The problem is manageable if it is a few hundred million in a two-year operating budget of $4.5 billion. But agencies or programs that want more money are likely to hit a wall in this environment of scarcity. Spending as whole must decline so individual increases will be very few and very far between.

The governor will propose gambling but a Republican House like the Democratic House before it will consider it separate from the budget process not within it. No other revenue increases are politically possible.

The governor and legislature will likely agree from the outset that they don’t like each other’s ideas. Agreement after that will be difficult. That’s good news for those of us who would like government to do less.

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The Election Meant Nothing

Charlie Arlinghaus

November 5, 2014

As originally published in the New Hampshire Union Leader

This too shall pass. If your people lost this election or won this election, my words of consolation and words of warning are identical. The election didn’t mean what you thought it did. This was not a sweeping denunciation of your way of life, your philosophical outlook, or your taste in personalities. This was an aberration.

One set of people has been given a chance to do a few things or not do a few things. We are not a lost people turning searching eyes to our last hope of leadership, begging him and her to show us the way, teach us to see the light, and find a new way of living.

Rather we are a weary and apathetic bunch who have to elect someone and chose this lot this year. We know we will be disappointed – at least to the extent that we even care. In truth most of us are so disengaged that we don’t have the energy to be apathetic.

Consider that in an election that set numerous spending records, that bombarded us with television advertising, that burdened our mailboxes with remarkably similar pieces of direct mail for and against someone or the other – in a year like that most of us didn’t bother to exercise our voting privilege. Roughly 60% of those eligible to vote didn’t bother to do so. They could have but chose not to.

Let me take the opportunity to quote to you my favorite author: me. In 2010, I warned the incoming horde of Republicans not to presume a revolution. The landslide was temporary; “Sweeping landslides of the sort we experienced this month are not unusual but rather a now commonplace feature of the voters’ general annoyance with their elected leadership.”

I think this fickleness is as it ought to be. The elected official is not our new best friend. We have not placed our trust and hopes permanently in that person. Rather, we have temporarily hired someone to do a temporary job. We fully expect them to disappoint us. And rarely have they failed to do so.

Too many politicians think about doing as little as possible after the election. They decide the importance of their service outweighs any need to actually act. The melodrama of the election gives them some inflated sense of how much the tired, worn down voter actually cares.

Statewide candidates will run around proclaiming “Nebraska is Jones country,” proving only that narcissism and complete cluelessness can coexist. Nebraska is Nebraska. The voters don’t cede control to some two bit politician. The majority of them care so little they skip the election. The rest are merely annoyed about the pollution of political paraphernalia.

A typical voter, overheard at the polls yesterday, said “thank God it’s over. I hope they stop calling now.” This is how disgusted and annoyed someone who actually voted is. He’s thinking about politicians not with passion but with the same resignation one shows the dog who has torn up the couch.

I don’t mean to imply there is no hope or that it is a waste of all our time. There are things that need doing. The state budget needs to be fixed (again). The federal government could stand to actually have a budget once in a while. Those things can and might actually happen.

Four years ago, a state representative asked me “what happens if we make all the difficult decisions to fix this thing but then get voted out because it was difficult.” He was speaking of an $800 million budget problem. I said, “You will have the satisfaction of knowing that you, unlike most politicians, actually did something.” That was good enough for him.

The state and the country face a lot of problems. None of them will be resolved to the satisfaction of everyone. There is another election coming up in just two years. But that’s not an excuse to stall for two years. Elections are aberrations and useless if politicians simply hold office and play a waiting game.

You got elected this time but you can and will be thrown out. Why not use the time you have to actually do something? Remember, nobody likes you. They are merely renting you and fully prepared to be disappointed. Surprise them.

 

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Don’t do Something, Just Get Out of The Way

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October 22, 2014

As originally published in the New Hampshire Union Leader

To help create jobs, politicians regular have to decide whether to do something or get out of the way. New Hampshire can do more by doing less and try to stay out of the way of people who know what they’re doing. We can’t compete with big states in an expensive and unfair bidding war to lure jobs to the state. Our best strategy is to create a climate in which job creators can flourish and avoid the managers looking for handouts and subsidies.

Regularly we read about some large auto company or other concern who gets states to bid millions of dollars in handouts of money and soon-to-be “forgiven” loans – money those politicians take from other taxpayers in their state in the hope of landing some high profile press release factory.

New Hampshire’s history is to avoid such politically driven games. We don’t enter bidding wars with money taken from other taxpayers to transfer to a chosen few.

The state’s long standing philosophy was summed up quite well by one of the government’s most senior economic development professionals. Michael Bergeron of the state’s Division of Economic Development talked to Sarah Palermo of the Concord Monitor about jobs that moved from Concord to Connecticut.

Connecticut had offered a million dollars of “loan forgiveness” (which sounds better than a cash handout which is what it really is) and New Hampshire had no similar program of cash handouts.

Bergeron said “a lot of companies will shop around to find the best deal. Some states will give away the bank. The law of physics says the money comes from somewhere, and it’s the taxpayers.”

This lesson is often forgotten when people think “the government should do more.” Any subsidies that we hand out to lure businesses to the state are paid for with dollars taken from other businesses – businesses already here and creating jobs, employment, revenue, and economic activity. In essence we would be taxing existing business to transfer their money to the relocating business. We would penalize a company for being here already and being a good corporate citizen.

Bergeron went on to summarize our less controlling philosophy: “instead of taking money away from you and giving some of it back some of the time, why don’t you keep it and use it as you see fit for your company.”

Without question, New Hampshire’s strategy makes us unable to compete for those companies that demand handouts before they ever expand. Yet, no one business development plan will attract 100% of all companies. We choose not to try and pursue those companies who demand greater and more expensive handouts. That allows us, however, to compete for those companies that have a philosophy more suited to our own.

Many companies are not interested in the gamesmanship of new programs. Instead they want a climate like the one Bergeron describes. They want a stable climate where government is not constantly picking winners and losers. They don’t want to compete to be this year’s favorite of the current crop of government planners. Instead they want to run a business in the way think makes most sense, the way that provides the greatest number of jobs and return on investment.

In Bergeron’s terms, they aren’t seeking to pay into a kitty and try and get the government to pick them as this week’s winner. They want to keep the money and use it as they see fit for their companies.

This is New Hampshire’s traditional philosophy. We compete on climate not unusual events.

Unfortunately, our climate needs some work. Our business taxes are the highest in the country. In an historical oddity that would have seemed impossible years ago, our Business Profits Tax is higher than even Massachusetts. That and a series of smaller taxes must become more competitive.

If we aren’t competing through government handouts – and we shouldn’t be – we have to do everything we can to create a very competitive environment not just kind of competitive.

Activist politicians often speak of “investing” in this program or that. But lowering our highest in the region tax rates is a better investment. We don’t rely on hoping that government planners have managed to see the right trends. We get out of the way and let entrepreneurs risk their own capital to fail and succeed.

Our government’s best action is to do less and get out of the way more.

 

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How the Cult of Celebrity Destroys Our Political Culture

Charlie Arlinghaus

October 29, 2014

As originally published in the New Hampshire Union Leader

Our political culture is being destroyed by a cult of celebrity. Slowly but surely any meaningful discussion of ideas is being crowded out by personalities and the occasional meaningless poll number. Campaigns will never really become a battle of philosophies and spreadsheet but our state’s obsession with famous figures ensures that politics and policy resembles Entertainment Tonight more than the Nightly Business Report.

New Hampshire has the misfortune to be home to the first Presidential Primary. It has unfortunately turned us into political creatures who worship political celebrity, preferring the allure and supposed glamour of nationally famous politicians (at least famous to cable news groupies) to any real attempt to get to know local politicians and understand what new ideas they would each inflict on us.

The activist base of both parties is fascinated by political celebrity. Hold a candidate forum and a handful of people or perhaps a dozen will show up to hear those who would represent us tell us what they stand for. On the other hand, Bill Clinton shows up and hordes turn out to hear him. Technically, he’s there to push the politicians seeking office but crowds in this presidential primary state are reliving the supposed good old days.

That same fascination and political star gazing extends to much of the political media. Clinton explaining a federal candidate’s positions would be meaningful but it’s disappointing to hear reporters gushing “The Comeback Kid is Back in New Hampshire!” Clinton’s fame in the primary chronicles was that he turned a second place finish here into a quasi-victory by saying “New Hampshire, tonight, has made Bill Clinton the Comeback Kid.”

Arguably, those reporters who pride themselves on writing the first, rough draft of history should be interested – to at least some degree – in explaining the substance of that history. Perhaps we can forgive the star struck giddiness when faced with a famously charismatic former president of these United States. But surely that giddiness ought not to extend to every politician from away who happens to visit like Elizabeth Warren, Chris Christie, or George Pataki.

Charlie Perkins, long time New Hampshire journalist and former editor of this paper, commented recently “Every time a key NH political reporter covers a surrogate’s rally, one issue-focused story doesn’t get written or broadcast. Just say no.”

Perkins is quite correct and has put his finger on a problem with both modern campaigning and reporting. Celebrity has a tendency to crowd out substance. We cover extra personalities at the expense of message. For candidates, the coverage of the supposedly larger personality may offer reflected stature but it tends to overshadow any ability to deliver a campaign theme or message.

But, in an era of fewer and fewer outlets for coverage, the celebrity is an easier way to make it into the newspapers or onto the airwaves. Nonetheless, it comes with a price.

Watch the coverage lately. To be sure, the major candidates in each party are touring this restaurant or that pharmacy with a known national figure. Occasionally, they even hold an old fashioned rally with the celebrity. The coverage focuses on the fact of the appearance – “McCain and Havenstein greet voters in local restaurant.”  Or “Warren holds rally with Shaheen.”

Is this persuasive? It certainly shouldn’t be: one famous officeholder endorses the candidate of his or her own party. Who’s surprised here? On another level, it is particularly unhelpful to the would-be future officeholder.  The appearance overshadows your ability to tell me what you believe and how it differs from my other choice in the election. If all you want me to know is that you are a party member in good standing then I suppose this works. But I learn nothing much about what you want to do.

The celebrity is useful for the reporter too. Rather than sift through a hodge-podge of inarticulate prose to find the newsworthy proposal, the famous person provides drama and a story. Readers and listeners are, after all, not particularly interested in substance so why not give them the political version of Entertainment Tonight?

Perhaps no one is to blame.  The political celebrity has an ego boost from campaigning in the first presidential primary state. The candidate is happy to be covered and doesn’t have to get into too much detail.  Readers and watchers get an easy story with pretty pictures.  In the end, perhaps, we get what we deserve.

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The Importance of Dispersed Bits of Incomplete Knowledge

Charlie Arlinghaus

October 1, 2014

As originally published in the New Hampshire Union Leader

Politicians suffer from both too much information and not enough information at the same time. The result is that we need to ask them to have fewer ideas and try their best not to come up with any plans for the future. When one of them unveils his or her grand scheme, the best thing to do is ignore them or tell them to go away.

We are bombarded with information today perhaps because some pundit chose to try and call this era “the information age.” But we’ve always had too much information or perhaps I mean more information than we can process and synthesize. This is not an insight but one of the most important theses of Friedrich Hayek.

Hayek famously wrote about the problem of knowledge: “the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”

Hayek’s discussion of “The Use of Knowledge in Society” is seen primarily as a critique of centralized planning and of the planned economy so widely accepted before he wrote in 1945. It is also a cautionary tale to those who would solve the problems of society and the public sphere.

Too much information is accessible to us – too much to fully research and fully assimilate. At the same time, no one person, committee, or commission can gather as much information as they need to construct the perfect scenario or scheme to fix the problem they hope to address. What they can do is admit that the dispersed bits of knowledge which all the separate individuals possess are what might solve the problem.

In the modern, overly jargonistic speech we might call this crowd sourcing. The unassembled multitude has greater collective wisdom than any one of us. No single person this side of Samuel Johnson could write an encyclopedia but the collected multitude could produce something like Wikipedia by each person contributing his own dispersed bit of knowledge.

It is similarly jargonistic to say “let the market fix this problem.” Yet what the market proponent really means is that no government official, however wise, is likely to come up with a solution on his own because the knowledge of which he must make use does not exist in a concentrated and integrated form. Better to use all the dispersed bits of information possessed by individuals and massaged, synthesized, and implemented – however imperfectly – in that uncontrolled but organic mechanism we think of as rational economic order.

Steve Jobs left the government advice they might well take. Jobs spoke eloquently about the imperfections of backward looking research: “you can’t just ask customers what they want and then give it to them. By the time you get it built, they’ll want something new.” Research is hampered by imperfect knowledge and the whims of the individual.

One of the best comments about a potential government controlled gas pipeline mirrors Jobs. Once the government has decided to finance, design, collect taxes or rates for, and build a pipeline, you can be sure that it’s no longer a good idea. The government’s best skill is not figuring out markets in a timely manner. Better to let others risk their capital and either fail or reap a reward.

Analysis of static systems is easier. It’s easier to figure out how to build a Model T more efficiently if you can presume that no one will ever want to move on to a Model A – which they will love even if they haven’t heard it yet.

Steve Jobs’s most famous comment about the imperfectability of research and knowledge is “people don’t know what they want until you show it to them.” Why, for example, would anyone ever want to turn their cell phone into a computer when they have a nicer one on their desktop? How much market could there possibly be for putting that computer on your lap? Or for some silly device that pretends to be a computer even though it’s the same size as your mousepad?

Government can and should get out of the way. I don’t mean that in a slighting way. It can figure out the ways in which it is not merely policing the playing field but has turned into an obstacle. Let’s allow the freer flow of dispersed bits of individual knowledge.

 

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The State’s Job Problem Can’t Be Fixed By Changing Just One Thing

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Charlie Arlinghaus

September 17, 2014

As originally published in the New Hampshire Union Leader

The biggest problem with the anemic job growth New Hampshire has been saddled with for the last decade is not the lack of jobs but the forlorn hope of policymakers that there is one silver bullet that will fix everything.

It used to be true (and is no longer) that New Hampshire grew faster than most states when the economy was strong and came back from recessions before other states and more aggressively than other states. The explosive growth of jobs in the 1970s, the 1980s, and at least to some extent the 1990s was something we took for granted and defined what we perceived as the dynamic economic character of the state.

In the 1980s, New Hampshire’s economy went through an explosive boom cycle. At our job creation peak there were more jobs than available workers – we were the North Dakota of our time. For example, from 1983 to 1989 the number of jobs in New Hampshire increased by 28% in just six years.

That kind of an explosive jobs boom will create opportunities for entry level workers, improve the chances for good workers to move to better jobs faster and more regularly, and makes for a generally comfortable society.

Even booms didn’t make us immune from recessions and we went through a slow time. Our growth in the 1990s after the early decade recessions was 14% over six years – about half of the boom 1980s but still quite strong.

The policy challenge of recent times has been that even that more mature growth has not returned. We had the same number of jobs at the end of 2013 as we had eight years earlier despite a growing population. Two recessions over the last fifteen years have hurt but we no longer experience strong growth coming out of the recession. No one writes anymore that “New Hampshire led New England out of the recession.”

That frightening job situation leads policymakers to routinely ask “what’s the one thing you would do, the one change you would make, to promote job growth?” The right answer is to tell them it’s the wrong question. The one thing I would do is to try and convince lawmakers that there isn’t one thing.

Anyone who says cut this tax, pave this road, fund this program and all will be well is naïve. New Hampshire has become less and less competitive but not by making one big change that can be reversed. Nor do businesses locate on the basis of one factor alone. A business looking to compete with other businesses looks at dozens of factors and their cumulative fiscal and psychological effect. Our state government needs to be the same.

It is true without question that business taxes have gotten to a troublesome place. The Tax Foundation finds New Hampshire among the worst states in the country in the business tax component of their competitiveness index. That means that businesses making tax burden a significant consideration will frown on us. The bad news is that economic development professionals will almost uniformly tell you that the first question any potential business they are recruiting asks is about taxes.

But it isn’t just business taxes. Our unemployment taxes are quite high. The workers compensation rates that businesses are required to pay are among the highest in the country here. The cumulative effect of seeing each of those things on a spreadsheet is that New Hampshire begins to lose a bit of the “low-tax New Hampshire” reputation that defined our brand in the 1980s and 1990s. The psychological effect of that reputation goes well beyond the totals and averages of any particular spreadsheet.

But any business will tell you that there are other factors like the cost of doing business. New Hampshire ranks 49th in the cost of health insurance. Only Massachusetts is higher. Family coverage here is about 20% higher than in average states – states we compete with for jobs.

More troublesome are our electric rates. A lot of the high tech and manufacturing jobs we want to attract use a lot of electricity. It’s not clear why any concern which uses a lot of electricity would even consider New Hampshire. Our rates for industrial users are more than double what the 10 or 15 most competitive states charge and higher than all but a handful of neighbors.

No one thing will change our competitiveness nor are the handful of things I’ve mentioned the only ones that matter. But if we want jobs for our kids we need to pay attention to many details or just tell them to move to Texas.

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There are Fewer Reporters Because Nobody Cares

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Charlie Arlinghaus

August 20, 2014

As originally published in the New Hampshire Union Leader

Though we all pretend to care about state and local affairs, few of us actually can be bothered to pay attention. A tiny sliver of the population votes, participates, or even seems to care. Despite that epidemic of apathy, people can always be counted on to be annoyed by changes they themselves helped cause. Changes to journalism are one example of this trend.

There has been a great deal of angst lately as the Nashua Telegraph closed their State House bureau and released veteran reporter Kevin Landrigan. Following the retirement of longtime Associated Press reporter Norma Love, observers worried that no one in an increasingly lonely press room had any historical knowledge and that the public would be poorer because of it. The concern is real but exaggerated and sometimes expressed by people who helped cause it.

In a small press corps, losing two reporters who have witnessed so much definitely lessens the knowledge base but they weren’t the only veterans around. The Union Leader has a strong presence at the State House with Gary Rayno, a veteran of three decades and multiple newspapers, whose knowledge of the inner workings of the State House is equal to that of any current or former reporters.

Though a paper or two no longer has a full-time reporter, few of them will stop covering the State House. The Associated Press made a strong move by hiring the well regarded Kathleen Ronayne to replace Norma Love. In addition, the much lamented Mr. Landrigan didn’t miss a step as he was picked up immediately by a broadcast and internet concern.

Without question though, there is less coverage of everything local than there once was. A decade ago, the State House considered doubling the size of an overcrowded press room. More recently, they removed unused desks from a less utilized room. There are fewer newspaper reporters. That fact is often lamented by people who can’t be bothered to subscribe to newspapers themselves. It is a little disingenuous to complain about coverage while refusing to help pay the salaries of the reporters who provide said coverage.

The decline is not limited to print. Veteran radio man Ken Cail told me that when he first came to New Hampshire radio in the 1970s, a large Manchester station had a six person news room. Into the 1980s and 1990s multiple radio stations had news staffs of various sizes. Today, I’m not aware of any commercial station with dedicated news staff. Dedicated reporters exist at New Hampshire Public Radio but not elsewhere on the radio dial.

We all know some blowhard or another who insists to us that he only gets his news “from twitter and the internet.” Somehow, a friend of yours making a smart aleck comment in the 15 words twitter allows counts as news. A Facebook link to a newspaper story or a blog which recasts information gathered by a reporter grants the feeble minded the illusion that somehow the nebulous monolith of the internet created news from ether.

The truth is that fewer people care anymore. Things like the internet have disassociated us from each other. We are less likely to know our neighbors, participate in anything like a community, or have a social network that includes living beings. A sociological analysis our growing independence from human contact was called “Bowling Alone.” Bridge clubs, bowling leagues, discussion groups, church suppers and the like decline in favor of social media memes and something called “tweet-ups.”

The result in a civic sense is that we don’t care. New Hampshire’s noble and Norman Rockwellish institution of town meeting is a museum piece rolled out for people from away to see. The truth is that 90% of the people aren’t there. Controversies increase turnout but otherwise most of us stay home. Local elections are not much better. State primary elections next month will see between 10 and 15% of the population of the state actually cast a ballot. For the vast overwhelming majority, elections and public policy are just a nuisance or a slightly annoying background noise.

Most of us are less engaged in our geographic community or other communities of interest. As our civic engagement declines so too does our interest in local affairs. A decline in local news coverage – or at least our interest in it – is a reflection of that decline not a cause of it.

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Why is the Government Hiding Its Problem From Us?

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Charlie Arlinghaus

August 13, 2014

As originally published in the New Hampshire Union Leader

The state budget is in shambles but that information is not being shared publicly. To guess at the nature of the overspending and budget shortfall, we can only estimate using some incomplete public documents. This problem can be resolved by the quick release of information the executive branch has but is not sharing. Longer term spending should be made transparent in a timely fashion in exactly the same way revenues are currently transparent.

For months now Concord has been awash in rumors of a significant budget shortfall.  The governor has already said she expects the state spend more money than the budget allows. Yet despite what would ordinarily be seen a crisis, no further or complete information has come out. Senators including Senate President Chuck Morse and Finance Chair Jeannie Forrester have repeatedly asked for a spending update from the executive branch.

But such is political life in this day and age that – probably because the two senators are from the opposing party to the governor – that information is not being released. Suspicion and gamesmanship accompany every information request and guide too many decisions.

On the revenue side of the equation, politics is not involved. We know precisely how much money the state has collected from us. Each month, the state publishes and posts on the internet a list of how much the various taxes raised, how it compares to last year, and how it compares to the budget itself. Budget watchers follow those numbers intensely.

But revenue tells us nothing if we don’t know what’s going on with its dance partner, spending. If we raise a little less but also spend a little less, everything is fine. If we raise a little less but spend a little more that’s a problem.

What we know about state revenue is that the estimates were remarkably accurate. The state estimates as part of the budget how it much expects each tax to collect and then uses that estimate to budget spending. Overestimates are a nightmare. But this year the state collected one-tenth of 1% more than its estimate – the statistical equivalent of a bullseye.

That should be good news but rumors of overspending worry any believer in fiscal responsibility. If there were monthly estimates of spending we would know now and would have known for months where things stand. State law requires those estimates to exist but not to be made public.

State statute titled “Execution of the Budget” (RSA 9:11) requires Accounting Services to report to each state agency “once each month” the total amount spent that month and year-to-date. If there is a problem, the executive branch knows. That’s why the governor can predict overspending even though no public documents exist and nothing has been shared with the legislature.

The law should be changed to require spending updates placed online just as revenues are. In the meantime, we have a right to know if our budget is in crisis. Why is this information not being shared?

What we do know about the budget comes from the largest and most complicated department in state government. Because Health and Human Services accounts for about half the state budget unique pressures are placed on them. One of their responses is to present regular updates even when the news is bad. Their monthly “dashboard” is presented to the legislature, full of statistical information, and includes budget updates.

Commissioner Nick Toumpas should be applauded for his effort at transparency but his dashboard is depressing budget news.

Every year that department struggles to comply with service mandates but also significant pressure to spend less money while reducing no service. Governors and legislatures routinely push decisions of what to cut over to the department: “I don’t want to cut anything but you guys find an extra $40 million in cuts somewhere.”

The most recent dashboard predicts the department will end the final accounting having spent $30.9 million more than the budget in the fiscal year just ended and will be another $71.2 million over budget for the current fiscal year. If these numbers – the only ones we have to go by – are correct then half of the budget will be overspent by $102.1 million despite revenues being right on target.

If the hole is that big – and that’s a big hole – why have no steps been taken to curtail spending and eliminate the deficit? Why are we not being told anything yet? Problems don’t go away just because you hide them from the public.

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