Marketplace of Ideas Blog

In European countries, August is traditionally the month where vacations are taken; in fact, it is said that some countries essentially shut down for most of the month.

The U.S. isn’t like that; no part of the country shuts down for any length of time, and Americans spread their vacations over June, July and August.

Another traditional feature of vacations: They’re never long enough.

We begin this week with two items about the state’s comparative business climate. The Lakeland Times’ Richard Moore compares what Gov. James Doyle has said about our economy with the recent Wisconsin Policy Research Institute study that panned our business climate:

There are, then, two views of that garden — Doyle’s (it’s been wilted by the national environment but is still beautiful and poised for a spectacular blossoming), and those who think the flowers are all but dead, the garden all but given over to weeds.

To Doyle and his supporters, there have been glitches, but overall things point to a solid future. …

What Doyle was obviously seeing was pretty flowers, but, to [WPRI study authors Tom] Hefty and [John] Torinus, the bloom long ago fell off the Badger state economy.

Among other things, they quoted from data from the Center on Wisconsin Strategy, the national economy has grown more rapidly than in Wisconsin, and the state’s per capita income has fallen to more than $2,500 behind the national average.

Comparisons to other Midwestern states didn’t make the authors feel any better.

For instance, they reported, Minnesota’s per capita income was nearly 20 percent greater than Wisconsin’s, though 25 years earlier the two states’ economies were roughly equivalent, while Illinois also outpaced the state, and in Iowa job growth between 2006 and 2008 was three times that of Wisconsin, with overall economic growth 70 percent higher.

Another view comes from the north — that is, the Great White North. Small Business Times editor Steve Jagler quotes a New Brunswick Business Journal story lauding Wisconsin’s “love affair with startups and investors”:

The story says Rick Hancox, executive director of the New Brunswick Securities Commission, recently returned from a trip to Wisconsin, his second in three years, to learn how Wisconsin’s economy “has benefited from new investor and entrepreneur networks, research and development commercialization programs, aggressive tax reform and a governor’s business plan competition.”

Wisconsin? Really?

The story says, “Hancox got turned onto Wisconsin years ago when commission employees had begun scouring the globe for examples of jurisdictions fostering investment growth. After months of eyeing examples out of the United Kingdom and Australia, staff was continually pointed by experts to Wisconsin — a place where declining traditional sectors could not continue to be relied upon heavily to backstop the economy.”

That’s a very interesting view given that other observers give Wisconsin low marks in attracting “startups and investors.”

One of those is Richard Schilffarth, senior vice president–financial consultant with the Schilffarth-Schnoll Group RBC Wealth Management in Milwaukee:

Wisconsin has the creative engines. What we lack is the fuel to run them. That fuel is money. In the case of start-up companies, that money comes from venture capital.

A few facts:

The United States averages $100.50 of venture capital per person per year. Wisconsin averages $17.60. In 2007, Illinois raised $510 million and Minnesota raised $427 million of venture capital for its new, creative companies. Wisconsin raised $87 million.

We have all the elements except venture capital. … We have the people — we don’t have the money. As these great, new companies grow, they rely on venture capital to finance their growth. Wisconsin is in the bush league in developing venture capital money. It wouldn’t take much to build a medical, biofuel, freshwater research corridor between Madison and Milwaukee — just the availability of venture capital. …

Gov. Jim Doyle included our request for funding the Venture Capital Network and the increased licensing fees in his current budget, but on the last Friday of the budget process the Venture Network funding was gutted.

That’s right — the increased fees are still there but go to fund some politician’s pet pork barrel, not to create high paying jobs in Wisconsin.

More point/counterpoint on a different subject can be found in two Fond du Lac Reporter columns — one touting Sunday's Taxed Enough Already rally in Fond du Lac, the other panning its participants.

First, pro:

As if out control spending, excessive and unsustainable debt were not enough, we have a “czar” for every season and reason, (remember these were made famous in Russia), government takeover of banks and auto companies, placing unsecured debt holders ahead of bond holders by “executive” decree, deciding which auto dealerships survive and which fail (I am sure with no thought to political affiliation) and the list goes on and on.

But you should be most worried about two major bills in Congress right now — CAP and Trade — also known as the American Clean Energy Bill and the “Health Care Destruction” bill. Sorry, I meant to say “reform.”

If you are a true conservative, you don’t waste energy. I will debate and challenge any liberal to compare my energy usage against theirs, including Al Gore.

Next, con:

I can’t get over how these so-called “tea parties” attempt to send the message of anti-taxation and fiscal responsibility, yet they promote and lobby with all the sleazy tactics of big tobacco and big government. …

Well, if this is actually the case, then where were any of these people during the last eight years while a cadre of executive spending orders, poor intelligence practices and tax cuts for only the wealthiest Americans were being sent out left and right? Obviously, “fiscal conservatism” is still a pick and choosers club when it comes to which Americans can be treated fairly and receive tax relief or which politicians can receive approval even after causing trillions in economic damage.

I should have warned about the spittle beforehand. Sorry.

One might think those who might agree with the last viewpoint should be pretty happy right now, with a Democratic president, Congress, governor and state Legislature. Or not, in the case of a FightingBob.com contributing editor:

Now that Democrats have the Assembly, the Senate and the governor’s office, the budget was settled earlier than it had been since 1977 and we no longer hear about the scourge of gridlock. Indeed, we no longer hear about much of anything.

Instead, the Democrats balanced the budget on their own before the 4th of July. Several Republicans sent out press releases complaining about taxing-and-spending, but one gets the sense that they are saving their best lines for the 2010 election postcards. And the press mostly ignores everyone because it mostly ignores state government in general. Without gridlock, it seems, the press can’t find anything to write about.

Meanwhile, we have a state budget that slashes school funding, lays off and furloughs state employees, and generally does less of everything that anyone would want it to do. Is this progress?

If partisan warfare and ideological extremism would bring us a real discussion about why we have government, why we live together in communities, and why we should or should not pool our resources and invest in our shared future, then I’m all for it. Let’s have some real gridlock and not the phony kind.

When might a tax increase be a good idea? I would argue never (well, maybe not never), but the Milwaukee Journal Sentinel makes an interesting case for taxing health insurance benefits to pay for extending health care to the uninsured:

During last fall’s campaign, we were cool to the idea of taxing benefits, but we now see that it would help to accomplish two important goals: containing costs and paying for extending coverage to the 46 million Americans who have none.

The Senate committee envisions levying a tax on insurance companies that offer what President Barack Obama has called “solid gold Cadillac” policies. This is only part of the solution and would be difficult politically. These plans aren’t used only by the rich — many unions and government workers have them. And it’s also true that this tax wouldn’t raise enough money to cover the $1 trillion cost of reform over the next decade. A basket of other taxes and incentives would be needed. A surcharge on the wealthiest Americans is another good option.

But taxing health benefits, even in a limited manner, would inject some discipline into the market and send a powerful signal to industry players: The government is serious about “bending the cost curve” of health care in America.

Congress has three goals: covering every American, paying the bill for doing so and controlling health care costs. All three must be achieved for reform to succeed.

For that to happen, citizens must be persuaded that most of the time all they really need is a good, reliable Chevy — even if they want the Cadillac. Whether the average American is willing to make that choice will be clearer over the next few weeks.

I will be more persuaded of the need to raise taxes when I see such people as union members and government workers be willing to pay more taxes on their “solid gold Cadillac” benefits. So far, you may note, the proposal percolating in Congress doesn’t affect government workers, or members of Congress. There should be a rule about tax increases: Never propose them unless you will pay them yourself. (Which is why journalists’ proposing higher taxes on the “rich” fails that test.)

Moreover, raising taxes on health benefits runs into the truism that if you want less of something, tax it more. And if people are willing to pay for a “solid gold Cadillac,” why should they be required to buy a “Chevy”?

Speaking of buying cars (metaphorically in the previous case, literally here), the Journal Sentinel’s Patrick McIlhearn observes how the government’s Cash for Clunkers program, and its running out of money in less than a week, and public schools are both previews of federally run health care:

The supposed point of subsidizing car buying was to restore public confidence. The selling of Congress” various health-care schemes revolves around confidence, too: Polls show that while most Americans are happy with their own coverage, they feel for that small share of the population that isn’t insured, and they fear becoming part of it. This, for many, is the charm of a “public option” — that if the government is tending to it, health care coverage would be a no-worry thing, available equitably.

Nice sentiments. What’s the record? The forecast blunder of cash-for-clunkers is unsettling, but other than that, it’s not an instructive example.

The more relevant parallel to funding health care for all — that is, services ensured universally to individuals of varying needs, paid via taxes — would be education.

That record is not encouraging.

To be sure, public education works for most people. Then again, so does health care. Most patients are covered, and virtually everyone gets treated (more or less). The problem in health care is mainly that people worry about it.

Which they do about schools. We worry collectively and have for decades, from asking why Johnny can’t read to why our students are routinely outperformed by a dozen or more other countries in math and science. Blue-ribbon studies, task forces, studies, books and unending furrowed brows have not discernibly eased our worries. …

This is a lesson for health care. Congress’ plans, with mandated benefits and centralized decisions on what’s worth covering, resemble what we've tried in education. Washington’s competence runs little farther than handing out money. If it’s so determined to do so to ease our worries on health care, it might concentrate on putting more money in the hands of individuals and in freeing up markets rather than mapping out a new system to make us all carefree.