The Opinion Minute (8/17)

I know that most readers are just too busy to wade through the entirety of a newspaper Sunday opinion section, especially as summer winds down and the Labor Day holiday is right around the corner.

For the benefit of the reader on the go, I’m instituting a new, occasional feature on this page, The Opinion Minute™.  This week, I’ll boil down the entire Minneapolis Star Tribune Sunday Opinion Exchange section published August 17^th to a handful of easily digestible sentences.  At least I’ll summarize the locally-generated content.

Good Deal—The cover piece by Growth and Justice’s Dane Smith spends 74 column inches delivering the message that Big Government is Good and Bigger Government would be Even Better.  Therefore, let’s double down on one-party Democrat rule in 2014.

House “Conservative” D.J. Tice writes about the U.S. Senate election this year.  He notes that Democrat incumbent Al Franken votes with President Obama 97 percent of the time.  Famously moderate Sen. Amy Klobuchar votes with Obama 98 percent of the time.  Since a Republican would vote with other Republicans most of the time, Minnesota would be better off re-electing Franken.

Weekly columnist Lori Sturdevant defends the controversial Senate office building now under construction in St. Paul.  She chastises taxpayers for not fully appreciating the courage Democrat politicians have demonstrated in voting your money to improve their own personal comfort.

For its part, the Editorial Board has heard a lot of loose talk from Republican candidates about repealing, or at least reforming, Obamacare and MNsure.  The Board is having none of it.  These programs were perfect in their construction and flawless in their implementation.  Why take a chance on change?  Vote Democrat in November.

Bottom line from this Sunday:  liberals are still good and conservatives are still evil.  I hope you enjoyed your weekend, see you next week!

Reconsidering the Economics of Marxist Puppet Shows

In news from the arts world this week, In the Heart of the Beast Puppet and Mask Theatre announced that they are experiencing some financial trouble.  The Theatre has announced some temporary layoffs and a reduction in programming.  The St. Paul Pioneer Press reports,

"Heart of the Beast has been at the edge of financial collapse before and, every time, as a consequence of hard work and generosity and sheer luck, we've managed to come through it," [the Theatre’s Executive Director Loren] Niemi said.  "There's no reason we can't do that this time, too."

On Twitter, I tried to make the serious point that if a Marxist papier-mâché puppet show can’t thrive in today’s political and economic climate, who can?  With French economist Thomas Piketty’s tome on income inequality featured on the best-sellers' list and progressive Democrats firmly in control in both Washington and St. Paul, audiences should be clamoring for anti-capitalist puppet theater.

Alas, the proximate cause of the Theatre’s money troubles appears to center on a mortgage balloon payment coming due at a particularly untimely moment.  A Marxist puppet theater can be forgiven, if not excused, for not being good at the nuts and bolts of capitalism.  After all, the Theatre is pursuing a higher calling than the grubby pursuit of coin.

The Theatre is probably best knows for organizing the annual MayDay parade in south Minneapolis.  Don’t worry, the show will go on, as Minnesota Pubic Radio reports,

In the Heart of the Beast is committed to continuing the annual May Day Parade, Niemi said, but for the company to remain financially sustainable, the parade needs more financial support from the community.

“So over the next six months I’m going to be looking at how we might partner with neighborhood organizations — the Lake Street Council, Meet Minneapolis and all the other organizations that benefit from the existence of May Day—to have them participate in the ongoing costs and management of May Day,” he said.

Isn’t that the very essence of the Marxist critique?  That the proletariat does all of the work, creates all of the value, and the beneficiaries won’t pay their fair share?

As documented in my 2012 profile of the Theatre, public money has been a big funding source for the group.  In particular, the state’s Legacy Fund, which grants money from state sales tax revenue to arts and environmental groups, has provided the Theatre with more than $416,000 in direct cash payments since the Fund began,

Fiscal	Grant
Year	Amount	Purpose
2010	39,756	operating support
2011	60,000	arts learning
2011	39,756	operating support
2011	18,000	Are You Thirsty tour
2012	39,604	operating support
2013	84,646	arts access
2013	44,106	operating support
2014	50,434	operating support
2014	40,050	arts learning
Total	$  416,352

Unfortunately, having received state money every year since the Fund began, the Theatre is among a number of organizations thought to have acquired a property right to receive taxpayer funding in perpetuity.

At this point, one has to question the wisdom of continuing to supply taxpayer money to an organization—how shall we say this delicately—for whom money management is not among their strengths.  Instead of counting on “sheer luck” to come through again, perhaps the state should reconsider its policy of throwing good money after bad.

Unexpectedly, Part 2

As yesterday’s announcement that Minnesota has created only 2,900 jobs so far in 2014 makes the rounds, it will be important to put the numbers into a useful context.

For her part, the Democrat appointee in charge of Minnesota’s Department of Employment and Economic Development (DEED) says she isn't worried,

Minnesota’s economic indicators remain positive, and underlying employment data continue to look strong.

Unfortunately for the Democrats in charge of state government, the underlying data actually look even worse than the headlines.

As the Democrats whistle past the graveyard, touting a falling unemployment rate, the size of the state’s workforce continues to shrink.

That’s how the math works.  We have only created 2,900 jobs in 2014.  To make the unemployment rate fall—as it has since the start of the year—the number of people who have stopped looking for work must be more than the number of jobs created.

The only way to make that happen is for the size of the state’s workforce to shrink.  We have people quitting the workforce at a rate faster than we are creating jobs.

As I noted yesterday, the state’s workforce participation rate has fallen to 70.1 percent, the lowest level since 1980.

Since the peak of the last economic boom (June 2006), the state’s workforce has grown by less than four percent.  In that same time period, the state’s population has grown by something closer to five percent.  In other words, the only way we are keeping the unemployment rate down is to convince more and more Minnesotans not to bother looking for work.

I would not put that into the underlying strength column.

Unexpectedly, Part 1

[Note: this post has been updated to reflect a critique posted on social media.]

The monthly unemployment numbers issued by Minnesota’s Department of Employment and Economic Development (DEED) are much anticipated as a barometer of the state’s economic health.

This month's report contained the disappointing news that Minnesota lost 4,200 jobs during the month of July and the further bad news that the June number had been revised downward by 3,600.  In summary, we now believe that 7,800 fewer Minnesotans are employed than we thought were employed a month ago.

For its part, the agency was quick to distance itself from its own numbers,

According to DEED officials, recent divergences due to seasonal adjustment lessen confidence that Minnesota’s seasonally adjusted estimates are accurately reflecting recent trends in job growth.

Funny, last month DEED officials expressed no concerns about the data behind the headline “State Gains 8,500 Jobs in June.”

The latest downward revision fulfills a prediction I made last month and marks the fifth consecutive downward revision, as shown on this table,

Reporting	Reported	Later	Actual
Month	Gain	Correction	Gain
July	(4,200)	tbd	(4,200)
June	8,500	(3,600)	4,900
May	10,300	(3,100)	7,200
April	(4,200)	(1,100)	(5,300)
March	2,600	(700)	1,900
February	(100)	(1,100)	(1,200)
January	600	200	800
Total	13,500	(9,400)	4,100

The odds of randomly getting five consecutive downgrades works out to 1 in 32, or only a 3.125 percent chance.  I don’t know about you, but in my world, those odds work out to be a long shot.

[Note:  Twitter commenter Paul (@PJGJ03) suggests that these downward revisions are not random but follow a regular annual pattern, with the consecutive downward revisions ending in August, before turning positive in September.  Which means:  brace for two more months of downward revisions.]

In the last twelve months, DEED reports that Minnesota created 68,344 jobs—with only 4,100 created in the seven months of calendar year 2014, after initial revisions.  This recent trend would seem to indicate something other than seasonal adjustments going on.  The Minneapolis Star Tribune is reporting that the fully revised figure for the year so far works out to only 2,900 jobs gained.

[If Paul is right, The 2,900 figure for 2014 jobs may be overly optimistic.  If the expected downward revision of July's job loss is as big as either of the last two monthly revisions, then I don't even want to think about it.  For his part, Paul thinks the July revision will come in at -1,500 and could range from -500 to -3,000.]

If that wasn’t bad enough, the Star Tribune reports that the state’s workforce participation rate has fallen to 70.1 percent, the lowest level in more than 30 years.

As he runs for re-election, Democrat Gov. Mark Dayton’s political allies have been quick to attribute the state’s alleged low unemployment rate to Dayton policies.  Now that the numbers are heading in the opposite direction, we’ll see if the tune changes.

In Part 2, I dive deeper into the numbers.

Election? What Election?

Minnesota’s legacy media have been working hard trying to convince voters that there is no excitement around the Republican challengers in this election cycle.  The subtext is that the Democrats have this round in the bag, so don’t bother with volunteering for or donating to the GOP.

But even careful readers of our state’s newspaper of record—the Minneapolis Star Tribune—would be surprised to find out that there was a primary election today.

The Tuesday print version of the Star Tribune did not include a single news article about the day’s election.  Not one.

The only mention I could find of the event was this blurb on the editorial page urging readers to get out and vote.  The Editorial Board wrote on Election Day,

Experts say that today’s election will be a low-turnout affair, and that when turnout is low, insiders hold sway over the results.  It need not be so. 

True.  But with zero coverage of the event by the paper’s news division, how would outsiders even know that today was the day?

Below Expectations

Once again, the state office of Management and Budget (MMB) has issued a monthly state revenue total that falls below its forecast.  For the month of July, state government revenues fell $69 million below expectations, with individual income tax receipts representing most of the shortfall.  Not a good start to the new fiscal year.

Last month, MMB did not produce a monthly report, issuing instead a recap of the just completed fiscal year, which showed a small surplus.

So, for those scoring at home, July’s report marked the fifth consecutive (1, 2, 3, 4, 5) monthly report that came in below forecast (excluding the June report).  Five out of six months below forecast does not sound like a state with a booming economy.  At some point, all of these monthly shortfalls will add up, and we will be faced with a budget deficit.  At present, they are still being dismissed as “variations” that will even out over time.

Sorry.  If our economy really were the strongest in the nation, then tax collections would be running ahead of forecast every month.

More curious has been the media reaction to this phenomenon, or more accurately, the complete lack of any reaction.  Back in 2009, when we had a similar run of disappointing revenue results, local media used the occasion to bash Republican “cuts only” budgeting.  Now that the regular shortfalls have return, who do the media blame?  Well nobody—certainly not Gov. Dayton’s “taxes only” budget—because they aren’t reporting on it.

In the phrasing of the old Churchillian saying (“A lie can be halfway ‘round the world before the truth has got its boots on”), local media are burying the truth, boots and all.  It seems that they are determined to drag the limp carcass of the Dayton Administration through to a second term come what may.

By the way, I saw Limp Carcass open for Frampton at the Hollywood Bowl back in 1978.

Apparently, MN’s Economy is “Good Enough”

Minnesota’s media and political elites have now decided that the state is fully recovered from the Great Recession of 2008-09. 

“Lowest unemployment in the country,” we're told.  It’s a “strong economy,” they tell us.  So strong, in fact, that state Republicans won’t be allowed to bring up the economy as an election issue this year. 

Yes, Minnesota’s unemployment rate (4.5 percent) is now lower than it was during the depth of the last recession (8.3 percent, June 2009).  Unfortunately for the state’s long-term unemployed, we are still a long way from the low rate enjoyed back in mid-2006 of 3.9 percent, and forget the 2.5 percent level from the late 1990s.

Most of the recent bragging around Minnesota’s economy centers on a single fact:  that Minnesota’s unemployment rate (4.5%) is below that of Wisconsin’s (5.7%).  But Minnesota’s unemployment rate has been lower than Wisconsin’s since February 1997.

I suppose maintaining an advantage into an 18^th year is something to celebrate.  But it’s something like beating your big rival in football, only to discover the win merely secures your second-to-last place position in the league.

It’s worth noting that Minnesota’s job growth during the past year has merely kept pace with the job growth in the rest of the country.  Like the rest of America, much of the improvement in Minnesota’s unemployment rate has not come from the creation of new jobs, but from discouraged workers giving up on the idea of finding employment.

Iowa (4.4%), South Dakota (3.8%), Nebraska (3.5%), and North Dakota (2.7%, the nation’s lowest) all enjoy lower unemployment rates than Minnesota.  We may be beating Wisconsin, but we are losing badly to those states with which we compete for new residents and businesses.

What about that claim that the Minneapolis-St. Paul metro’s unemployment is the nation’s lowest at 4.0 percent?  That’s was May’s number.  In June, we shot back up to 4.5 percent, according to the U.S. Department of Labor.  Even at May’s 4.0 percent figure, we were not keeping up with Des Moines at 3.9%, Omaha’s 3.8%, Sioux Falls’ 3.2%, or Fargo’s 2.5 percent. 

The “nation’s lowest” claim only comes by comparing MSP to the biggest American cities.  If you are a sprinter, you’ll be happy to edge ahead of the fattest guy in the race, but you need to notice that all the other runners have already crossed the finish line.

Rather than comparing Minnesota’s economic performance to the relevant benchmarks, it seems we are determined to find someone, somewhere we can brag over.  Yes, we are doing better than Detroit, but does that really mean we are doing well?

The Media’s Obsession with Republican Money

The legacy media’s obsession with Republicans and money is well-illustrated by two pieces filed this week in the Minneapolis Star Tribune’s Hot Dish Politics blog.  Both were posted by newish political reporter Allison Sherry and each involves a Republican challenger to a vulnerable incumbent Democrat Congressman.

The media’s obsession with Republican money stems from three sources.  First, liberal newspapers still pine for the days of yore when they could control the narrative around political campaigns based on their near monopoly on the mass market for information.

Rethinking Electricity Policy

Thursday morning, I had the privilege of presenting the electricity chapter of the Center of the American Experiment’s new Minnesota Policy Blueprint.

We were hosted by the River Heights Chamber of Commerce and in the capacity crowd, elected officials, candidates, policy wonks, and utility managers were well represented.

Just a couple of days before our launch, I was pleased to see columnist Joel Kotkin echoing many of the themes from our report in a recent piece written for the Orange County Register.  Green energy policies are increasing the costs of energy and the working classes are the hardest hit.

We’re hoping to start a conversation about energy policy in Minnesota, which has seen the price of energy go from among to most affordable in America to among the least.

Birds and Parks

Two adjacent headlines at the top of Saturday’s Minneapolis Star Tribune metro section neatly encapsulate the status of modern government.  Oddly enough, both involve the under-construction new Vikings football stadium.

“Park Board now balks at 'Yard'” tells the take of a much-hyped public private partnership going sideways.  “Council flocks to birds' support” is the too cute headline for a story describing the   

Let’s take the latter, first.  Bird advocates are concerned that the design of the new Vikings football cathedral, with floor to ceiling windows may not be…how do we put this…bird friendly.

The government agency actually building the stadium—the Minnesota Sports Facilities Authority—doesn’t want to bust the budget to make the building more bird friendly.

So the Minneapolis City Council leapt into action, passing (via voice vote) a non-binding, symbolic, resolution in favor of birds.  As one city council member put it,

I believe this is a way to show the seriousness of the environmental issue at hand.

It’s all a very post-modern way of looking at the legislative function.

The other story involves government actually trying to do something.  The City of Minneapolis is working with a private developer to build a big development near the new Vikings stadium to revitalize the east end of downtown.  Unfortunately, no one bothered to check whether the City had the power to do the particular deal it did, first.

And now the Park Board is balking at the “fix” for papering over the legal niceties of the deal.  (It turns out that only the Park Board—not the City—can create a new city park.)

But why let the letter of the law get in the way of a much-needed public/private partnership that will make everyone so much money?