Tuesday, January 31, 2012

WSJ.com - Why Gingrich's Tax Plan Beats Romney's

Another two-fer day.  While I totally agree with the first article’s assessment that Gingrich’s tax plan is better than Romney’s, I also agree with the second article that Mitt could finish off Newt by borrowing a few bold conservative agenda items.


WSJ.com - Opinion: Why Gingrich's Tax Plan Beats Romney's


Jobs and wealth are created by those who are taxed, not by those who do the taxing. Government, by its very nature, doesn't create resources but redistributes resources. To minimize the damages taxes cause the economy, the best way for government to raise revenue is a broad-based, low-rate flat tax that provides people and businesses with the fewest incentives to avoid or otherwise not report taxable income, and the least number of places where they can escape taxation. On these counts it doesn't get any better than Mr. Gingrich's optional 15% flat tax for individuals and his 12.5% flat tax for business. Each of these taxes has been tried and tested and found to be enormously successful.

Fairness in taxation means that people and businesses in like circumstances have similar tax burdens. A flat tax, whether on business or individuals, achieves fairness in spades. A person who makes 10 times as much as another person should pay 10 times more in taxes.

In 2012, those least capable of navigating complex government-created economic environments find themselves in their worst economic circumstances in generations. And the reason minority, lesser-educated and younger members of our society are struggling so greatly is not because we have too few redistributionist, class-warfare policies but because we have too many. Overtaxing people who work and overpaying people not to work has its consequences.

When it comes to economic efficiency, nothing holds a candle to a low-rate, simple flat tax.


WSJ.com - Opinion: How Mitt Can Finish Off Newt


The most constructive way for Mr. Romney to kill off his rivals while bringing the party together is simple: Steal their best ideas. Mr. Gingrich has done precisely that with Ron Paul by calling for a commission to study the gold standard. Mr. Romney could easily do the same, echoing Mr. Paul's call for an honest dollar or adopting Mr. Gingrich's flat tax.

In the end, the arguments for Mr. Romney come down to this: He has executive experience in both business and government, he's got the most money and the best organization, and he's electable. They are good points. Still, they add up to one argument by résumé and two from process.

Those of us who believed that a primary fight would toughen Mr. Romney up have little to show for it. Far from sharpening his proposals to reach out to a GOP electorate hungry for a candidate with a bold conservative agenda, Mr. Romney has limited his new toughness to increasingly negative attacks on Mr. Gingrich's character.



Monday, January 30, 2012

WSJ.com - What's Wrong With the Teenage Mind?

Today’s article has nothing to do with politics (I know, you’re surprised), but I found it very interesting.  I’m glad I have a few more years before I have my first teenager.


WSJ.com - What's Wrong With the Teenage Mind?


The crucial new idea is that there are two different neural and psychological systems that interact to turn children into adults. Over the past two centuries, and even more over the past generation, the developmental timing of these two systems has changed. That, in turn, has profoundly changed adolescence and produced new kinds of adolescent woe. The big question for anyone who deals with young people today is how we can go about bringing these cogs of the teenage mind into sync once again.


In the past, to become a good gatherer or hunter, cook or caregiver, you would actually practice gathering, hunting, cooking and taking care of children all through middle childhood and early adolescence—tuning up just the prefrontal wiring you'd need as an adult. But you'd do all that under expert adult supervision and in the protected world of childhood, where the impact of your inevitable failures would be blunted. When the motivational juice of puberty arrived, you'd be ready to go after the real rewards, in the world outside, with new intensity and exuberance, but you'd also have the skill and control to do it effectively and reasonably safely.

In contemporary life, the relationship between these two systems has changed dramatically. Puberty arrives earlier, and the motivational system kicks in earlier too.

At the same time, contemporary children have very little experience with the kinds of tasks that they'll have to perform as grown-ups. Children have increasingly little chance to practice even basic skills like cooking and caregiving. Contemporary adolescents and pre-adolescents often don't do much of anything except go to school. Even the paper route and the baby-sitting job have largely disappeared.

The experience of trying to achieve a real goal in real time in the real world is increasingly delayed, and the growth of the control system depends on just those experiences. The pediatrician and developmental psychologist Ronald Dahl at the University of California, Berkeley, has a good metaphor for the result: Today's adolescents develop an accelerator a long time before they can steer and brake.





Friday, January 27, 2012

WSJ.com - From the Fab Five to the Three Rs

Here’s an article I overlooked a few weeks ago, but discovered yesterday.  I remember watching the Fab Five back in the early 90’s and it’s great to see Jalen Rose involved in such a great project in Detroit.


WSJ.com - Opinion: From the Fab Five to the Three Rs


Mr. Rose plans to start with this freshman class and add a new grade each year until there are some 500 kids in grades 9-12. "This is college prep. We expect 90% to 100% to go on to college"—no mean feat when many students are entering ninth grade with only fourth-grade levels of reading and math proficiency.

he saw many promising high-schoolers who had earned straight-As but couldn't score higher than a 14 out of 36 on the ACT. "What were they teaching these kids? There are just so many poor-perform ing schools here, and there are so many kids in our city that want to do the right thing, and families that want to put their kids in a quality school. But they can't."

His school also doesn't have tenure for teachers. "I hate tenure. Tenure allows teachers to put their feet up on the desk and possibly have a job forever. That's why I got turned on to charter schools. It's a business model. Every employee and every teacher will be monitored by performance."

Kids too: "We have a code of conduct here. If they act up, they're suspended. They come back with a better attitude."

He also wants to influence parents—empowering them to demand better schools for their kids. The rigid system of school boards telling families where their kids have to go to school perpetuates poverty and a sense of entrapment, he says: "Forty-seven percent of Detroit area parents are functionally illiterate. So that puts their kids at a real handicap. Say my mom is one of those 47%. That doesn't mean that I shouldn't have a fair opportunity for a quality public education. But since my mom is functionally illiterate and we grew up on the west side of Detroit, I'm forced to go to this school that has been a poor-performing school for 30 years."

"There should be parental choice," he says clearly. "Schools should be open. If it's a public education, and the school in your district is poor-performing, you s hould be able to put your student or kid wherever you want."

Choice could be relatively easily implemented, he says. "I'm a taxpaying citizen, right? So if I'm paying $4,000 worth of taxes and I don't want my kid to go to this school, why can't they give me my $4,000 and allow me to pick where I want to put my kids?"

Mr. Rose wants to end this injustice by starting small, with 120 students, and then scaling up—but it won't be easy.




Monday, January 23, 2012

WSJ.com - The War on Political Free Speech


WSJ.com - Opinion: The War on Political Free Speech


Two years ago the Supreme Court upheld the right of an incorporated nonprofit organization to d istribute, air and advertise a turgid documentary about Hillary Clinton called, appropriately enough, "Hillary: The Movie." From this seemingly innocuous and obvious First Amendment decision has sprung a campaign of disinformation and alarmism rarely seen in American politics.

Super PACs have become the latest villain du jour of the anti-speech crowd, which plays off the general public distaste for the political rancor that surfaces every election year. Critics including Mr. Sanders say that Super PACs don't disclose their donors and rely on "secret" money. This is simply not true. Super PACs, like the traditional political action committees that have existed for decades, disclose all expenditures and all donors over $200.

There are organizations that spend on politics but don't disclose their donors: traditional nonprofits such as the NAACP, the NRA and Public Citizen. These groups have never had to disclose their donors—and the Supreme Court, over 50 years ago, upheld their right to keep supporters anonymous. But reformers intentionally seek to blur the lines between these traditional groups and Super PACs in order to whip up criticism of Citizens United.

The goal of this misinformation is clear. Reformers, who sit mainly on the political left, and their Democratic Party allies hope to silence voices that they perceive to be hostile to their political interests.

Two years after Citizens United, Amer ican democracy seems as robust as ever. This may be what its critics fear most—a vibrant debate that they cannot control and fear they will lose.




Thursday, January 19, 2012

WSJ.com - Bain Capital Saved America


WSJ.com - Opinion: Bain Capital Saved America


We are of course putting forth "Bain Capital" as not merely the Romney private-equity house but as the stand-in for the period of American economic history that ran from 1980 to 1989. Back then it was called the Greed Decade, with asset-stripping barbarians at the gate. Virtually everything about this popular stereotype is wrong. Properly understood, the 1980s, including Bain, were the remarkable years when an ever-resilient America found a way to save itself from becoming what Europe is now—a global has-been.

Read through S&P's justification for last week's downgrades of nine European countries. Along with the expected dumping on those countries' fiscal profligacy, one finds as well a blunt recognition of Europe's moribund "fundamentals," meaning their ability to produce "strong and consistent" economic growth.

If not for Bain Capital and the other, bigger players who commenced a decade of leveraged buyouts and hostile takeovers in the 1980s, the odds are that the U.S.'s "fundamentals" would be similarly weak. Instead, the U.S. corporate sector remade itself during the Bain years.

In a comprehensive 2001 re-examination of the buyouts and takeovers of the 1980s, economists made clear that the results were far from the stereotype of zero-sum pillage revived last week by economic historian Newt Gingrich and un-Texan Gov. Rick Perry ("vulture capitalism"), and sure to be promoted in grainy, tear-soaked campaign ads by the Obama team.

"When large-scale hostile takeo vers appeared in the 1980s," Messrs. Holmstrom and Kaplan write, "many voiced the opinion that they were driven by investor greed; the robber barons of Wall Street had returned to raid innocent corporations. Today, it is widely accepted that the takeovers of the 1980s had a beneficial effect on the corporate sector and that efficiency gains, rather than redistributions from stakeholders to shareholders, explain why they appeared."

Singling out this or that Bain case study amid the jostling and bumping is pointless. This was a historic and necessary cleansing of the Augean stables of the American economy. It caused a positive revolution in U.S. management, financial analysis, incentives, governance and market-based discipline. It led directly to the 1990s boom years.




Wednesday, January 11, 2012

WSJ.com - The Bain Capital Bonfire

WSJ.com - Opinion: The Bain Capital Bonfire


We have our policy differences with Mr. Romney, but by any reasonable measure Bain Capital has been a net job and wealth creator. Founded in 1984 as an offshoot of the Bain consulting company, Bain Capital's business is a combination of private equity and venture capital. The latter means taking a flyer on start-ups that may or may not pan out, something that neither Mr. Gingrich nor Mr. Obama seem to find offensive when those investments are made by Silicon Valley firms in "clean energy."

One Bain investment during Mr. Romney's tenure was to back an entrepreneur who was convinced he could provide savings for small-business owners if they were willing to shop at a store instead of taking deliveries. Today, the Staples chain of business-supply stores employs 90,000 people.

Bain also backed a start-up called Bright Horizons that now manages child-care centers for more than 700 corporate clients around the world. Many other venture bets f ailed, but that's capitalism, which is supposed to be a profit and loss system.

The loss part is what seems to trouble the Gingrich-Perry-Obama critics, especially in Bain's private-equity business. Like some 2,300 other such U.S. equity firms, Bain looks to buy companies that are underperforming or undervalued and turn them around.

Far from "looting," this is a vital contribution to capitalism and corporate governance. One of the persistent gripes of the left is that too many CEOs make too much money even as their companies flounder. Private-equity firms target such companies or subsidiaries, replace their management, and try to unlock the underlying value in the enterprise.

Private equity helps to promote dynamic capitalism that creates wealth, rather than dinosaur capitalism of the kind that prevails in Europe and futilely tries to prevent failure. Sometimes this means closing parts of the company and laying off employees, but the overriding goal is to create value, not destroy it.

The larger political point is that Mr. Romney has a good story to tell if he is willing to elevate this ugly rumble into a debate over free enterprise and America's future.  Mr. Romney needs to rise above the personal and base his claim to office on a defense of the system of free enterprise that has enriched America over the decades and is now under assault.