Privatizing Baseball

Baseball has always been a sport dominated by club owners and business goals, but Bob Herbert has a nice piece on the meaning of the replacement of affordable old stadiums with new corporate parks, all publicly-supported at some point in their construction.  Yankee season tickets for a family of 4 were initially priced at $800,000.  Herbert note a familiar pattern of absolutely upside-down priorities: "the auto industry is on its knees and we’ve got school buildings in sorry shape and we can’t even rebuild a public hospital in New Orleans. But the Dallas Cowboys have a brand new billion-dollar-plus domed stadium that looks like something out of “Star Wars.”

Anti-Tax Dumbness

Howard Jarvis gave California Proposition 13, the cap on property tax assessments that has created chaos out of state budgeting for 30 years. It is the source of the 2/3rds majority requirement for tax increases, in addition to capping property assessments at the time of sale plus a little more than 1% annual increases maximum. The results were predictable at the time - gross inequalities in assessments of identical neighboring houses, with the new buyer paying much more, a transfer of wealth from young to old, from newcomer to old-hand, and endless controversy around the support of basic public services. The current Assembly speaker wants to have a blue-ribbon commission to study the problem, but the one thing she'll keep off the table is the straitjacket known as Prop 13.

The Howard Jarvis Taxpayers Assn writes me regularly, and their materials shows how the middle-class can be encouraged to fall on its sword. Their only figures are a "Homeowner's Property Tax Savings Chart" - if you bought a median house in 1993 ($188k), as I did, you have now "saved" $88k by having an assessment of 1% instead of 2.6%. What's missing of course is all the money we've paid out in other ways - for houses grotesquely overpriced in part due to suppressed assessments, for private services, e.g. private schools to get around crappy public ones and for big cars to avoid bad public transit. What's also missing are the costs for renters, for the state, for new businesses - for California society which is increasingly divided and still controlled by an entrenched landed class.

As a model for a "new economy" this is really really dumb.

To Do Nothing is to Die a Little

The hardest thing about any kind of decline is watching its victims take it lying down.

Lying down also takes the form of sheer ignorance, and standing up can take the form of correcting it. So on Memorial Day it's worth also remembering the teachers and the journalists who devote themselves to setting the record straight. The Sacramento columnist for the LA Times, George Skelton, offers a nice example of the genre today, correcting a few instances of massive middle-class dumbness about taxes and what they pay for.

Speaking of the uncorrected, our Governor has been spreading the myth that private companies will rebuild California more efficiently and cheaply than government can. His ode to public-private partnerships in his State of the State address last January is worth quoting in full:

Now, also over the next 20 years we have $500 billion worth of infrastructure that needs to be met. Now, as we head into this new century, we also need digital infrastructure to keep our economy growing. So the question is: How do we meet all those needs?

There isn't enough money in the public sector, we all know that. Can't do all of it. We need to expand partnerships where government and the private sector work together to meet the needs of the people. These partnerships can often deliver infrastructure faster, better and cheaper.

For instance, in British Columbia, public/private partnerships are common for building highways, bridges, rapid transit, water treatment and so on, and everyone is happy. The political leaders are happy, business is happy, the public is happy, the economy is happy, the future is happy.

Well, bond investors are happy. As Skelton points out, Arnold's champion borrowing has tripled the amount of state money that goes directly to service the states' debt. His latest plan, to increase state revenue by issuing bonds backed by future state lottery revenues, is another in his series of Wall Street Full Employment Acts - the fees and returns on these customized investment vehicles are huge.

In reality, private money increases returns by reducing costs, and one time-honored way of doing that is to externalize costs by getting the public to pay for them. You can make more money with your trucking business if the entire public builds and maintains freeways, rather than putting most of the cost on truckers themselves. The same is true of universities, as our two reports have shown: sponsorships and philanthropy flow to focused activities of interest to the donor, and not to general education. The reason is obvious once you start thinking about it: donors want effective results, and they leverage public money to do it. They use state-funded laboratories, federally-sponsored graduate students, and the like.

Other forms of private "partnerships" spring to mind:

• corporate sponsorships of Gov. Schwarzenegger's public events puts businesses with a financial interest in state decisions into the statehouse
• privatized utilities around the world, including electricity in California: one of the unavoidable cost increases that the University of California can't figure out how to pay for next year are elevated utility costs. Privatization has encouraged underinvestment in the electricity distribution system in many countries, as nicely summarized on page 10 of this book on solar energy. The logic is obvious: you make money by operating a grid that previous generations of taxpayers or fee payers already bought, not by investing in it. The same goes for the once-great British Rail and London Underground systems which pale by comparison with the far cheaper and more efficient SNCF and urban Metro systems in France.
  

What the hey. People do stand up a lot and figure things out. Leading recent examples are the California State Supreme Court decision legalizing gay marriage, which was written by a Republican jurist who said he was inspired by the Black civil rights movement (and the case Perez v. Sharp).

And there was also Barak Obama fighting back when Bush implied in his speech to the Israeli Knesset that the Democrat opposition are appeasers of terrorists. This is the only thing that will allow Obama to win in November - standing up.

And there is the memory of the war dead today - the ones who caught bullets and bombs thanks to the dumbness of the living, neither in vain nor forgotten, we will make sure of that.

Smarter Than Their Parents

The LA Times has a story covering the UC Regents meeting yesterday, where they voted 13-6 for a 7% increase in undergraduate fees next year, raising the average annual tuition for a UC undergrad to about $7350. The frame successfully created by the Office of the President (UCOP) was that it would be worse for you if you lived in Texas or Virigina, where fees are higher, so look on the bright side. This doesn't change the fact that the state is steadily replacing public with private funding, and that the university's social and personal impacts will change as a result. We'll talk a little about this in lecture today.

Another ominous note is that the Regents approved a proposal led by the law schools at Berkeley and UCLA to remove the cap on tuition increases there, meaning that they will soon rise from their current level of around $25k to $35k or more. The damage to public-interest law is obvious, since now even graduates of public universities can't afford to take the five-figure jobs that those non-profit entities can afford to pay.

The damage to the concept of public higher education is subtler but just as deep: as students and parents pay more for eduation out of their own pockets, they are naturally less interested in paying more for education in taxes. A few of the protesting students mentioned that the "high-tuition, high-financial aid" model wasn't working for them, but most people haven't figured out that only public funding can support higher ed that combines high-qualty with high-volume. That includes the middle-class folks who in many cases are middle-class only because they took a few steps up the social ladder because of very cheap but very good college instruction. To repeat a lecture question: will the California middle-classes give away the conditions of their own existence?