Monday, May 27, 2013

With respect to taxes, Oregonians are laying in a bed we made

Does Mr. deLespinasse really mean to suggest Portlanders didn't know what they were voting for in the Arts Tax because it was too complex?  In the form approved by voters, I could tell you what any Portland resident's tax burden would be down to the penny just by asking three yes or no questions.  Try doing that with property, income, or sales taxes.  One can claim the arts tax is regressive, one can claim it is unconstitutional, but it surely is not complicated.

To the broader point of whether we have too many taxes, levies and fees, we're laying in the bed that we made.  Property taxes are the primary means of funding local services.  The limitations enacted by measures 5 and 50 arbitrarily restrict what we can collect in property taxes, ensuring a growing inability to fund service.  Every year we face the same choice of either finding new revenue through levies or fees, or cutting things that we used to take for granted.  Will it be gym class on the chopping block this year or the police mounted unit?  Will it be a fire station or another cut to road maintenance?  When confronted with the intolerable we turn to alternative funding.  If we can't fund services we want with regular property taxes then we fund them with fees, levies, and yes regressive and possibly unconstitutional income taxes. 

Oregonians are inventive, resourceful, and empowered by democracy to act on our interests.  If a service cut is unacceptable we will find a way to pay for it.  Adding more arbitrary restrictions as Mr. deLespinasse calls for would only encourage more bizarre assessment schemes and more hoops to jump through.  It would ensure our system of funding local service got more complicated, not less.

If we want a less complicated system the solution is obvious:  Reform property taxes, and allow them to pay for the things we want them to pay for.  What purpose has been served by doing otherwise?

Saturday, May 25, 2013

Is the commission form of government responsible for problems with the Arts Tax?

Do the problems with implementing the city arts tax reflect a problem with Portland's commission form of city government?  I think not.

On taking office Mayor Hales took control of all city bureaus.  In effect Portland has not had a commission form of government in that time, it's had a strong mayor system.

The problems with implementing the arts tax can't be put on the commission form of government, they belong solely to Hales.  By changing deadlines, monkeying with the definition of who was subject to the tax and generally badmouthing it he's given Portlanders every indication they should ignore the tax.  That so many have paid anyway is a testament to how popular the idea of putting art teachers in schools is.

The "kinks" in the arts tax demonstrate the weakness of a strong mayor system, wherein a city's priorities can be totally re-written by the election of a single office.  It encourages short term thinking and a focus on what one person can do in a four year term, rather than thinking about what a city should do in the long term.  And it's impossible to adequately vet candidates.  The arts tax drew more votes than did Charlie Hales, is it likely that people supported him knowing he'd undermine the tax?

Portland's problem isn't with the commission form of government, the problem is that we've abandoned it.

Saturday, May 18, 2013

Pearl District and Housing

The Oregonian published a modest story highlighting the economic diversity of the Pearl District, a well known urban renewal project.  I was surprised at how many negative comments the story drew.  Apparently it tweaked some people's noses to learn that poor people can live in the Pearl.

There are a lot of reasons to like or dislike urban renewal, but let's look at the most basic consequence.  Urban renewal added housing.  Between 2000 and 2010 the two census tracts which most match the Pearl added more than 5,000 units of housing.  And it didn't add it willy-nilly, it was concentrated within an area of 0.72 square miles, most of it reclaimed from industrial and commercial use. 

Now consider what would happen without such concentrated development.  5,000 units equals 50 100-unit apartment buildings.  Given the problems the east side has shown accepting multi-unit housing, how would nimby leaders feel about 50 additional big buildings heading their way?  Or you could suppose that demand would have been met with suburban housing.  Assuming the same housing density as Beaverton that would require developing over 1,500 acres of land.

There are only so many ways of dealing with a rising population and a corresponding demand for housing.  Urban renewal has its flaws, but if you don't allow multi-family housing in existing neighborhoods and you don't want sprawl then reclaiming land from other uses (and the subsidies that go with it) is what is left. 

Wednesday, May 15, 2013

Market structure matters

This story shows how the exchange may succeed, but it also points to a problem.  If insurers are allowed to arbitrarily adjust their rates after filing (and after they've seen competing filed rates) there can be de facto collusion.  Insurers could initially file high and then go only as low as necessary to be competitive.  If they all play that strategy everyone files high and there's no need to go lower.  That's not what we want the exchange to do.

On the other hand it isn't plausible or desirable to say that insurers who want to lower their rates and who can bear the risk should be prevented from doing so.

I think the solution is to make such changes expensive.  If a company fudges filed rates the "error" should be widely publicized so as to create reputational damage.  Who wants to pay higher rates just because?  There should also be a financial hit, perhaps by the state contracting out for third party review at the filing company's expense.  Not only does it create a penalty to discourage such behavior, it's prudent since where there's one "error" there may be more.

And I have to add, I'm shocked... shocked that Providence had fat rates.

Thursday, May 2, 2013

Great quote from Stephen Flynn

A few years ago I heard a really interesting podcast discussion with Stephen Flynn about the need to strengthen our infrastructure.  I finally got around to getting his book, and was immediately rewarded with this great passage.  From the introduction to The Edge of Disaster: Rebuilding a Resilient Nation,
Coming to grips with perils that can lead to catastrophic consequences is not about living in a perpetual state of fear.  We become fearful only when a sense of imminent danger is coupled with a feeling of powerlessness.  But there is no reason to doubt our ability to confront and manage these risks.  Every American generation has had to confront serious dangers, and they have always passed the test.  While we must be prepared to acknowledge that there are dark clouds on the horizon, it is vital that we not lose sight of our most important and endearing trait:  our sense of optimism about the future and our conviction that we can change it for the better.
Flynn wrote this back when George W Bush was still in office and troops were still dying in Iraq, but it is no less meaningful.  It might be even more meaningful now, looking at the dual tragedies of the Boston Marathon and the Texas fertilizer explosion, or the destruction wrought by Hurricane Sandy.  

We can quantize information of all types as never before.  With that data we can project risk.  It isn't something to be afraid of, nor is it something to ignore.  I think incorporating knowledge of risk, and deciding what warrants action and what does not, is a critical challenge for self government.

Book Review: The Activist

I picked up The Activist: John Marshall, Marbury V. Madison, and the Myth of Judicial Review as part of an informal study of American politics in the Adams/Jefferson years.  It was a much better read than I expected.  Ostensibly about the road to Marbury vs. Madison, Goldstone details the critical role of partisan machinations in early American politics. 

The Constitutional Convention was not expected to produce anything of significance and most participants attended meetings sporadically.  That the convention produced a new constitution reflected the skill and determination of a core of Federalists, particularly James Madison.  They had a specific agenda to strengthen the federal government at the expense of the states, there was nothing "bipartisan" about them.

Once the Constitution was passed it faced pitched ratification battles in the states, particularly in Virginia and New York.  Again those debates were anything but bipartisan, with anti-federalists striving desperately to derail the constitution or to approve it subject to amendment, which since it would require every other state to agree amounted to the same thing.

Nothing shows the role of partisan considerations better than the career of James Madison.  He bested Patrick Henry in debate and got Virginia to ratify the constitution.  In retaliation Henry blocked him from a Senate appointment and recruited Monroe to run against Madison for a house seat.  Monroe drew popular support with his call for amendments to the constitution, enough to pose a serious threat to Madison.  Madison had spent all of the Constitutional Convention and the ratification debate in Virginia fighting off such amendments, but now in order to earn a seat he flip flopped and embraced amendments himself.  He switched from being among the most ardent Federalists, writing with Hamilton and Jay the seminal Federalist Papers, to being an anti-Federalist and ultimately Jefferson's right hand man. 

Madison was truly brilliant, understanding first that popular disdain for the Articles of Confederation created leeway for an aggressively Federalist constitution, and then in betting correctly that the political center was shifting south and west and that expansion territories would not be Federalist.

Goldstone shows how narrow partisan interests were attached to broader conflicts over the role and strength of the federal government.  The Judiciary Act of 1801 for instance served a narrow purpose by allowing Adams to pack the courts with Federalist judges, but it also expressed a political view that the Federal courts should have broad authority and required a broad presence.  Jefferson attacked the courts both because they were federalist and because he wanted to disable federal courts so that state courts would take more responsibility.

This was the context in which the Federalist John Marshall confronted Marbury vs. Madison.  Had he ruled for Marbury he almost certainly would have been impeached.  He struck a balance by ruling against Marbury using a selective reading of the constitution as pretext, and using the opinion to excoriate Jefferson for not delivering the commission.  This was the high art of politics, incorporating partisan calculations and the broader principle of constitutional review.

Ruling the Judiciary Act of 1789 unconstitutional was certainly a means to an end.  But how strongly did Marshall believe in the concept of judicial superiority, and the idea that the court stood above Congress?  He never again struck down an act of Congress and it wasn't until Dred Scott that another court would do so.  A question for further reading.