According to Hillary Clinton, the rich aren’t paying their fair share of taxes, not just in the U.S. but throughout the world:

“The rich are not paying their fair share in any nation that is facing the kind of employment issues…whether it’s individual, corporate or whatever…taxation forms,” she told an audience at the Brookings Institute last week. But it’s what Clinton did NOT say that is most revealing. For example:

What is the definition of rich? Perhaps it’s the top 10% of wage earners, anyone making over 200K, or the entire middle and upper classes, all of whom could be “rich” by global standards.

How much should the rich pay? Is 50% of their income enough, or do we need to go higher?

Why should the rich pay more? The wealthy already pay taxes at higher rates and on higher amounts of income, and most of their taxes support programs for those in lower income brackets.

Why not just cut government spending instead? Is she really suggesting that the current level of government spending and intervention in our lives is justifiable and worth sustaining with higher taxes?

What, if any, additional government programs are needed? If we can continue to tax the rich, why not keep expanding the government even more? Don’t forget her $5000 baby bond idea in 2007.

What would happen to economic growth and development if taxes on the rich were raised to balance the budget? Raising taxes takes money out of the private sector that could be used much more efficiently to grow the economy and create jobs.

Clinton didn’t address these questions because the answers aren’t really important. She also didn’t consider the fact that confiscating 100% of the income from millionaires would not even be sufficient to balance the current budget. To her, it’s all about politics, class warfare, and economic philosophy.

Clinton did note an alleged correlation between high tax rates and high economic growth in Brazil, suggesting that we should follow the Brazilians as a means of growing our economy. Of course, she did not note some important distinctions, including the fact that Brazil doesn’t have Freddie and Fannie facilitating a housing crisis in the name of social justice. While its economy has grown, the notion that Brazil’s current approach should be the model for developed nations to follow is entirely without merit. History tells us that—other things being equal—low taxes and economic freedom foster growth. This has certainly been true throughout U.S. history.

At least Clinton was honest, but her solution to our economic woes—like Obama’s—is straight from the old liberal playbook—more government and more wealth redistribution. Karl Marx couldn’t have said it better himself.

This post was inspired by a caller on Thursday’s (5/20/10) Wilkow Majority who claimed that few economists accept the Laffer curve as valid. I hear this half truth from time to time, and it follows a left wing pattern of discrediting an idea by citing “experts” instead of developing a well crafted argument. Let’s go through the facts.

The Laffer curve illustrates what economists call taxable income elasticity, the idea that not all increases in the tax rate affect tax revenues in the same way. Tax rates of 0% and 100% generate no government revenues, so the key is to locate the point in between where increasing the rate becomes counterproductive, and NOT raise taxes beyond that point. If you’re not familiar with Laffer’s work, take a few minutes to visit the Heritage Foundation cite for a more detailed explanation and a picture of the curve:

http://www.heritage.org/Research/Reports/2004/06/The-Laffer-Curve-Past-Present-and-Future

Like supply and demand curves, the Laffer curve considers the relationship between two variables (that is, the influence of tax rate on tax revenue). The beauty of the curve is its simplicity, but it doesn’t consider other factors—wars, the price of oil, or developments in China, to name just a few—that also influence economic activity and ultimately tax revenue. The Laffer curve does not take into account the type of tax either, such as income, sales, or VAT. All tax hikes reduce personal or business activity to some degree, but some do more harm than others. Rudy Giuliani actually pointed this out in a 2008 presidential primary debate, but it went largely unnoticed.

Few economists question the basic premise of the curve. What some debate is the shape of the curve and our current position on it. Those who say they are “for the curve” believe we are at a point where increasing the tax rate will not significantly increase tax revenue. Those who are “against the curve” are really arguing that we are still at a point where tax increases will increase tax revenue with little or no lost economic activity.

Most liberals and economists are Keynesians (more or less) and discredit the curve because it challenges the role of government intervention in the economy in the first place. Some actually contend that if tax rates are hiked considerably, most people will work as hard or even harder to make up the difference, and government tax receipts will increase anyway.

The best economic case for the curve is historical evidence (especially the Reagan years), the current crisis in Europe where high taxes have reduced economic activity and government revenues, and human nature, as people tend to work more when they have more incentive to do so. The case against the curve cites the so-called Clinton budget surplus, but ignores changes in capital gains taxes and a massive artificial Internet stock bubble that sparked the economy for a short time before bursting.

Overall, the hard evidence suggests that Laffer has a point, but neither proving nor disproving the curve is possible anyway. The take home point is this: Beware of unintended consequences associated with tax hikes. The best way to deal with revenue shortfalls is to cut government spending.

In the end, I have found that most who attempt to debunk the Laffer curve seem to be less interested in economic reality and more interested in advancing a socialist worldview. When debating Keynesians on the curve, I am willing to assume that they are right to a point, for the sake of the argument. What if increasing the tax rate by 10% would increase tax revenues by 6% instead of the full 10%? That would still mean a 4% loss due to reduced economic activity. Do we really need to endure this economic pain just to finance more social programs and entitlements? At this point they usually digress to Marxists clichés about the rich not paying their fair share or the need for shared sacrifice. Even Obama admitted during the campaign that higher taxes that reduce revenues might be acceptable as a matter of fairness.

Conspiracy theories about a one-world government have been around for decades. Years ago I thought they literally referred to a universal government like the United Nations, but with real authority that trumps that of duly-elected national leaders. What we’re experiencing now is a major shift in the same direction, but it’s much more subtle. There is no authoritative global legislative body, but our leaders—particularly Obama and the Europeans—are colluding to tax and spend for the supposed betterment of the world economy. I call it a de facto one-world government because the effect is much the same.

We’ve seen several clear examples of this in the last several months. If CO2 is heating up the planet, then it doesn’t make sense for one country to limit its emissions while another picks up the slack. A “unified response” to global warming is required. While a cap-and-trade scheme represents collective action that would ostensibly reduce carbon emissions, it would also limit economic growth and redistribute wealth from developed to undeveloped nations. Most proponents of cap-and-trade refuse to consider the strong arguments against significant anthropogenic global warming. For them, the real objective is a de facto one-world government.

We’ve also heard about the proposed global tax on banks to create a fund to finance future bailouts. We were told that all nations must participate, lest customers move their money to banks operating in nations where it is cheaper to do business. Even socialists recognize that taxes and regulations stifle economic activity, so nations must work in unison to ensure that nations with limited taxes and regulations aren’t allowed to benefit at the expense of those with more intrusive governments.

Now it’s Greece, where government debt and the welfare state have spiraled out of control. The IMF’s $140 billion bailout of the nation includes about $50 billion from U.S. taxpayers. That translates to somewhere around $500 per family, a lot more for many if you consider that half of U.S. tax filers don’t actually pay federal income taxes anyway. And this doesn’t include subsequent bailouts that will likely be needed to “stabilize” the region.

Countries often address insolvency problems in part by devaluing the currency. It’s not an attractive solution, but at least it confines much of the pain to the troubled nation. However, this is not an option for Greece because the nation does not control its own currency. Greece’s options are limited. Raise taxes and the slumping economy gets worse. Cut spending and the entitled class riots in the streets (Don’t think this can’t happen down the road in the U.S., but that’s another story).

Thanks to the European Union, Greece’s financial catastrophe is a collective problem. Because of the common currency, neighboring countries can’t afford to let Greece (or any other country in the EU) implode, so a bailout is required. A common currency formally links one country’s economic destiny to that of others in the group. Collective oversight (AKA, de facto one-world government) must be a part of the arrangement, and the strong and responsible will always end up paying for the weak and irresponsible. This is why we should never give serious consideration to a North American currency, much less a global one.

The marriage of capitalism and socialism in much of Europe has largely failed. Capitalism is the stronger partner but is constantly blamed for economic problems that can often be traced to government intervention. Socialism’s clear and only advantage is that it can generate fast revenue by taxing, borrowing, or devaluing the currency. Capitalism produces the only real wealth over the long term, but requires work, discipline, and the recognition that equal opportunity doesn’t necessarily translate into equal outcomes. It’s more polite to be a socialist, or at least argue for some sort of middle ground.

You don’t need to be a conspiracy theorist to see the trend. No global dictator has emerged, but we are really getting a steady, less tyrannical shift in the same direction. At stake are our liberties, our nation’s sovereignty, and the integrity of the Constitution.

Arizona is now attempting to do what the federal government has refused to do for decades, seal its southern border. President Obama has done nothing to engage the federal government is carrying out its Constitutional responsibility to provide border security, yet was among the first to criticize Arizona for trying to do the job on its own. Former President Clinton is even calling for more legal immigration (i.e., legalize the illegals) as a short term fix for the Ponzi scheme known as Social Security. Those who demand that illegal immigrants be treated as illegal are once again branded as racists.

Polls suggest that most Arizonans and other Americans seem to understand the issue, however. It’s about border security, the rule of law, and economics. Gang and drug activity among illegals is rampant. Our republic is threatened when outsiders are allowed to game our legal system. The long term financial cost when one considers net taxes, schools, healthcare, and other factors is in the trillions (admittedly this is hard to calculate with precision, but Robert Rector’s study is the best effort I’ve seen; go to http://www.heritage.org/Research/Reports/2006/05/Amnesty-and-Continued-Low-Skill-Immigration-Will-Substantially-Raise-Welfare-Costs-and-Poverty). Racial profiling is not the objective, but we can’t keep looking the other way.

The irony here is overwhelming. When a bomb was found in Time Square, some leftists—including New York Mayor Bloomberg—actually suggested that a deranged right-winger could be behind the plot. When Faisal Shahzad was apprehended and confessed, we were told that he probably acted alone; it just couldn’t be an orchestrated effort. The emerging facts tell a different story, pointing to another case of premeditated radical Muslim terror. Given the chronology of events over the past decade, this should have been the most likely scenario from the beginning, but it just didn’t fit the left’s narrative.

Meanwhile, protests in Arizona continue. Some protestors are violent, and many are not even US citizens. The Constitution’s first amendment guarantees the right to assemble peacefully and petition the government for a redress of grievances. Non-citizens have no such Constitutional protection and have no right to be here in the first place.

Even the NBA’s Phoenix Suns got into the act. The last time I checked, Hispanics have less than their “fair share” of multi-million dollar contracts in the league. They might not play as much basketball, but they are not “underrepresented” in Phoenix as paying fans.

Sooner or later, some nut with alleged ties to a tea party somewhere will do something stupid. When that happens, the mainstream media will brand all supporters of limited government as radical anarchists. Stereotyping Muslims and illegal immigrants won’t be tolerated, but blanket assessments of conservatives, especially white Christian southerners, will escalate.

Make no mistake, illegal immigration is a massive threat to individual liberty. Amnesty means more Americans who would be net recipients of government wealth redistribution (i.e., socialism) and would likely vote for even more. Few illegals seem to understand the concept of private property rights, and amnesty sends a message that the rule of law is negotiable. There must be no compromise here. Requiring illegals to learn English and pay a fine is not just unenforceable, it’s an affront to our sanctity as a nation.

This is not a racial issue. I don’t necessarily blame the illegals who cross the border looking for work. Washington refuses to secure our borders, and proper documentation is not even required for a driver’s license, health care, or access to taxpayer-supported public schools. They don’t respect our laws because we aren’t serious about enforcing them. If I were impoverished and unemployed, I’d want to come to the US as well. I can’t blame most of them. The problem is really on our end.

This shouldn’t be a political issue either. Ronald Reagan, a Republican, tried amnesty and it didn’t work, and a second attempt will fail miserably as well. Don’t be fooled by references to fines and the supposed return to “the back of the line.” Don’t succumb to the race accusations. There should be NO PATHWAY TO CITIZENSHIP for those in our country illegally.

In his weekly radio address today, the President asserted that his proposed financial regulation scheme would end taxpayer-funded bailouts “once and for all,” adding that it would put an end to the “cycles of boom and bust” that have plagued our economy. I would concede that a certain amount of government involvement in the financial system is a necessary evil. Given the complexities of financial transactions, government can play a role in ensuring that all parties to a transaction are fully informed of the obligations they agree to incur and that remedies are available when contractual obligations are not met. I’m all for transparency. But the problem goes much deeper.

The President is arguing that unbridled capitalism results in booms and busts, requiring Washington to fix the mess and save “average Americans” with taxpayer-funded bailouts. He’s got it backwards. Booms and busts are facilitated by government intervention into the capitalist framework, and the very notion of a bailout denies a fundamental principle of a free society, personal responsibility. I have NO OBLIGATION to bail out a bank, an auto manufacturer or any other firm to promote the so-called common good. The “average Americans” he seeks to save are the taxpayers, or at least some of them still are.

Consider the housing market. The free market did not create an oversupply of homes, Washington did. Artificially low interest rates promoted by the Fed, manipulation of lending practices through legislation like the Community Reinvestment Act, and the very existence of Freddie and Fannie have muddled the market. Simply stated, many people bought homes before they were ready financially, or bought more expensive homes than they could afford. Everything went well as long as home prices continued to appreciate. Eventually the bubble burst, prices fell, and the crisis ensued. Washington blamed the evil bankers, but the root of the problem was a fundamental lack of understanding of and respect for markets. Subsidized housing through the Fed, the tax code, or banking regulations artificially increases supply, thereby increasing prices. Sooner or later the house of cards must tumble, which it did. In an effort to fix the problem, central planners in Washington continue to do more of the same. Another bust is inevitable.  

Obama doesn’t see the pivotal role government plays in causing economic problems in the first place. His view of economic progress includes massive government intervention that promotes booms and busts. During the booms, successful firms and wealth in general is demonized; the rich just aren’t paying their fair share. During the busts, the left excoriates the evils of capitalism and more government intervention is proposed as a counterbalance. In the end, Washington not only creates a cycle of boom and bust, but also a cycle of ever-increasing regulation, deficits, taxes, and class warfare.

There is a much simpler way to end taxpayer-funded bailouts and substantially reduce the severity of economic cycles. The answer is less government involvement in business activity, not more. Washington should limit intervention into markets to the promotion of transparency in transactions and providing an appropriate legal infrastructure to addressing grievances. If Washington would JUST SAY NO to bailouts, then private investors would take greater steps necessary to protect their own capital and taxpayers would not be on the hook anyway.

The problem here is one of worldview, not just of regulatory specifics. The President either does not understand how the economy functions or is more concerned with social or political objectives than economic growth.

A Value-Added Tax (VAT) is a levy that is factored into the prices of goods and services at every stage of production. By the time a product hits the shelf at your local store, its price already includes the tax. The VAT is popular in many other nations, especially those in Europe where the typical rate is around 20%. At such a rate, a $100 product would actually cost $120. While some products (often certain food essentials) might be excluded from the VAT, this varies by country. The cumbersome, arbitrary, and political nature of these exclusions is no small matter, but I will not delve into this topic at the moment (see Irwin Stelzer’s April 5 piece in the Wall Street Journal for more on this).

Ben Bernanke, Paul Volker and others have floated the VAT as part of a long term solution for the left’s current spending spree. Obama created a so-called “bipartisan fiscal commission” to examine the tax-and-spend problem instead of tackling it himself. I believe he favors a VAT but wants the idea to come from this (left-leaning) commission after the midterm elections.

When it comes to taxes, I favor a national sales tax (i.e., the “fair tax”) IN LIEU OF an income tax. Some view a VAT as a form of sales tax, so I am frequently asked why I so vigorously oppose it. There are many reasons, but I’ll cove the top three here.

First, the VAT is being suggested as AN ADDITION to the present tax system, not a replacement. During the 2008 elections, some shameless democrats charged that their republican opponents who favored REPLACING the income tax with a national sales tax were “supporting new taxes.” Of course, replacing one tax with another is quite different from adding a new one. We don’t need any new taxes.

Second, THE VAT IS A HIDDEN TAX. After a VAT is implemented, we would begin to think that things just cost more without realizing we are paying the tax every time we make a purchase. A VAT would be buried deeper than income, sales, and most other taxes because we would pay it indirectly. Even worse, it can (and will) be raised from year to year in a way that is less obvious to consumers than hiking income or sales taxes. It is no surprise that the VAT was introduced in Europe in the 1960s at a rate of around 5% and has risen ever since.

Finally, adding a VAT, like any tax hike, ignores the real problem—massive government spending. The need for any type of new taxes would be eliminated if Congress refused to feed the beast in the first place. We can address this problem in November.

I think Obama’s long term plan is to institute massive spending increases under the guise of a stimulus (already done) and then seek a “bipartisan compromise” that keeps most new spending in place while raising taxes, preferably with a VAT. However, adding a VAT to the present tax scheme legitimizes the current level of government spending through taxes that are higher, more complicated, and less visible. The alternative is clear—we should focus on SHARP SPENDING REDUCTIONS while CUTTING AND SIMPLIFYING TAXES.

The Service Employees International Union (SEIU) has formally proposed what some on the left have been hinting at in recent years, a government takeover of your 401(k) plan. Instead of investing your funds privately, your retirement contributions would be pooled with everyone else’s and “professionally managed” by government “experts” to ensure that you have adequate income in your retirement. There is some discussion that we could be required to rollover our 401(k) accounts into such a system.

My initial response to hearing the SEIU proposal was to laugh, but I’ve seen too much lately not to take this proposal seriously, so I went to the union’s “Retirement USA” website (www.retirement-usa.org) for a firsthand look.  These guys are serious. Apparently the current confiscation of 12.4% of your income to support the Ponzi scheme known as social security is not enough. They want the government to control your other retirement investments as well. There are so many things wrong with this idea, but I will focus on a few obvious problems.

Let me clarify a few things upfront. I am not a fan of social security. The tax rate is too high, the system is improperly managed, and we don’t have access to our own accounts. But you could argue that a basic social security system has some merit. Requiring everyone to contribute to a plan that provides a basic income upon requirement keeps society from picking up the tab if an individual fails to save anyone on his own. But retirement planning is my responsibility, and the government’s only possible legitimate interest here is the extent to which I might become a burden on society if I don’t save on my own. That’s debatable, but I’ll come back to this point another day.

I am also completely aware that the social security tax rate is 6.2%, with a matching contribution from your employer. If you’re buying the idea that you only contribute 6.2% and the employer’s part is not your money anyway, then you don’t understand how companies look at payrolls.

According to the website, “Retirement USA is a national initiative that is working for a new retirement system that, along with Social Security, will provide universal, secure, and adequate income for future retirees.” From this introduction, we can already see where this plan wants to go. There is no simply need to another universal retirement plan, especially when the first one is approaching insolvency. My retirement is my business, and I have a right to earn as much as I can, save as much as I choose, and live with the consequences. A 401(k) plan allows me to defer taxes on income that I won’t take as income until I retire. Besides, shouldn’t I be the one to decide what is “secure” and “adequate” when it comes to my financial planning?

Click on the “12 Principles for a New Retirement System” linked to the site. I urge you to read them for yourself, but they can be summed up in a single word, COLLECTIVISM. Their argument for “shared responsibility” stresses the idea that you are only PARTIALLY responsible for your retirement; the government and your employer(s) are also responsible. Their argument for “required contributions” means that companies should be forced to contribute to your account (remember—it’s really your money anyway) and government should subsidize the contributions of low income workers by taking others. Their argument for “pooled assets” with “professional management” means that the federal government would become major shareholders in more companies than just GM and Chrysler. Many states already assist in the management of retirement funds for state employees, but this would take this to another level altogether. Government control of private enterprise through regulation and intimidation is bad enough. Government control through ownership is a disaster.

It is clear that the SEIU and other unions (this proposal is also supported by the AFL-CIO) are interested in much more than fair labor negotiations. Like Obama, they also seek to fundamentally change America as we know it, replacing individual liberty and personal responsibility with collectivism anchored by wealth redistribution. They claim to favor a market economy, yet they constantly seek to redistribute wealth when the market does not value the economic contributions of everyone the same. This is a battle against socialism, and we better take it seriously.

I spent an evening with WE THE PEOPLE OF BRUNSWICK COUNTY (www.wethepeopleofnc.com) last week. I addressed a number of topics, including what I see at the top 10 liberal misunderstandings that must be countered when we engage our friends, neighbors, and co-workers between now and November. I’m sure my list is incomplete, but here goes: 

1. It’s Bush’s fault. I agree that Bush made some mistakes, particularly near the end of his presidency, but Obama is amplifying those mistakes. Everything’s on his watch now.
2. Capitalism fails from time to time and must be countered with government intervention. Those who complain about the inadequacies of capitalism and demand more government fail to see how individual choices and current government intervention contribute to the crisis at hand. Healthcare is a great example. While Washington has been deeply embedded in healthcare for decades, we are told that millions of Americans (with cell phones and cable TV) just can’t afford health insurance. Yet we are also told that capitalism—more specifically the evil insurance companies—is the obvious problem. Really?    
3. The government can be trusted. While private industry must meet its contractual obligations, Washington can change the rules that govern its obligations at a whim. Your social security benefits can be changed at a stroke of a pen.
4. The “rich” can pay more taxes to fund whatever new programs we need. The money just isn’t there. The Wall Street Journal did the math last year, but many on the left just don’t seem to get it.
5. The government can print money to fix the deficit. They don’t seem to understand that every dollar printed eventually devalues the currency. Wealth cannot be created by a printing press.
6. Government can be efficient if managed properly. The IRS, Amtrak, and the USPS are but a few examples of long term government inefficiency.
7. The issues are often too complicated to understand, so how can we (capitalists) be so sure that Obama’s proposals (socialism) won’t work? Sure, many of the problems we face are complex, but it’s not too difficult to understand the basic causes. This defense is just an excuse for ignorance, regardless of who uses it.
8. All politicians (and both parties) are the same. Perhaps you could have made a case for this a few years ago, but it’s hard to watch the healthcare debate and actually believe this is true.
9. I don’t care because I’m a net beneficiary of bigger government. This sad argument comes from zero liability voters (thanks to Andrew Wilkow for this descriptive term) who don’t pay net federal income taxes anyway. This group is approaching 50% of the population and many don’t see that income redistribution mandated by Washington is simply legalized theft.
10. “We have to do something.” Really? Should government take action just because there is a problem? What if the action won’t solve the problem, makes it worse, or creates another one? Liberals instinctively think that government can solve most of the challenges we face, so they often intervene even when there is not clear solution. Conservatives favor limited government because we know that most societal problems cannot be remedied by government action.

I am convinced that most liberal arguments boil down to a short list of flawed arguments or assumptions about the role of government, how wealth is created, and the importance of personal property rights. I hope this list helps you organize your own defense of liberty and you help the liberals in your life find make sense of the world…

It’s time to update my earlier blog on the Toyota situation. By now we’re all familiar with James Sikes, the California driver who alleged uncontrollable acceleration with his Toyota Prius.

I was highly suspicious of Sikes when I first heard the story. The setup was just too clean—nobody else in the car, acceleration on a relatively open stretch of road, his inability to shift the car into neutral, and a Toyota dealer that supposedly “turned him away” when he requested a fix several days earlier. I hesitated then (and still do now) to say that he fabricated the incident. I don’t know for sure, but I’d certainly bet on it, and I rarely gamble.

This case might seem déjà vu to some of you. The 1986 Audi sudden-acceleration scare turned out to be baseless. Audi, however, suffered staggering sales declines during the period because of the hype.

The number of formal complaints to the NHTSA about uncontrollable acceleration has skyrocketed since Transportation Secretary Ray LaHood targeted Toyota for national disgrace a few months ago. In other words, dozens of cars that have been driven for months or years without incident now accelerate on their own. Unless we believe that the cars are responding to our government’s desire for turmoil at Toyota, then we must conclude that most of these claims are probably unfounded.

The feeding frenzy on Toyota is in full swing. Dana and Douglas Weller of Seattle are now suing Toyota for excessive depreciation of their 2009 RAV4. Following that logic, homeowners should be able to sue Congress for excessive housing depreciation as well.

What role has our government played in this scandal? A big one. Before all’s said and done, Toyota will suffer massive losses in sales and its brand image far beyond what the market would have dealt out without LaHood’s intervention. Opportunists in our country know they will find a sympathetic government if they join the bandwagon of complaints against this evil company whose greatest sin has been to produce affordable, quality vehicles without union control.

Toyota recently issued a statement challenging Sikes’ claims. Sikes, however, says he “just wants to be left alone.” I’m happy to see Toyota fighting back. If I ran the company, I’d give Sikes two choices—retract his story or face a defamation lawsuit from Toyota. Sikes’ story has contributed to massive losses for the company. If he’s right, then Toyota should bear the responsibility. If not, then the company has every right to set the record straight.

Unfortunately, this is what you get when our government owns major stakes of two failing competitors. LaHood and others have a perverse incentive to beat down Toyota, Honda, Nissan, and the rest of the pack. Let this be a lesson. If you don’t like government bullying, then consider what would happen to private insurance companies if healthcare reform included a “public option?”

By now everyone has heard about the fate of Central Falls High School in Providence where 93 teachers, guidance counselors and administrators were fired two weeks ago. Eleventh graders at the school had a 7% passing rate on a standardized math test this year. Fewer than half of the students graduate in four years. The school is clearly underperforming. Firing the teachers was not the Board’s first choice, but occurred after talks with the union broke down. The Superintendant was clear about his expectations and intentions well in advance, so the firings came as no surprise.

 My favorite version (tongue in cheek) of the story can be found at the Party for Socialism and Liberation website:

http://www.pslweb.org/site/News2/1499632738?page=NewsArticle&id=13738&news_iv_ctrl=1261

There you will find all of the reasons why the firings were justified, but I will focus on a few key points.

The main problem with government run schools like Central Halls is the government role and the structure it creates, not the teachers. Like any profession, there are good teachers and bad ones, but the system does little to distinguish between the two. Unions and most educators alike argue against “running a school like a business” because “the kids are too important.” Instead of emphasizing real outcomes, they concentrate on inputs such as certifications, degrees, years of experience, and following proper procedure in preparing lesson plans. There’s nothing wrong with any of these inputs per se, but they miss the point. In the end, it’s all about the progress kids make at the end of the year.

Educators often oppose the use of test scores and other outcomes for evaluating teacher effectiveness, arguing that teachers can’t control what goes on at home. This is both true and an obvious hindrance to good teaching. Teacher evaluations should be based on actual test scores, with an emphasis on the progress their students make—the difference between proficiency on day-1 and day-180 of the school year. Those who teach kids in poor neighborhoods shouldn’t get a complete pass because of the trying circumstances they must endure. Blaming the problem on “low funding” just doesn’t cut it.

Most of all, I am struck by the defense proffered by the fired teachers. I saw a photo of one holding a sign that read “We care about our students. Our students care about us. We are family!” Frankly, caring is just not good enough. This decision is about performance, and many teachers don’t seem to get it. We expect our mechanics to fix our cars, not care for them. We expect our doctors to cure our maladies, not just view us as a family member. Sure, caring about kids is a great thing, but it’s not sufficient. Schools should be managed for the benefit of the kids, not the teachers.

There’s another lesson here. Join a union and you get the union, for better or worse. I suspect that some of the fired teachers are doing a good job, but they were part of the collective. The good teachers in the group are now enduring the wrath that should have been directed at their poor performing colleagues.

I must close by giving tentative credit where it’s due. While I favor a reduced (or eliminated) federal role in education, Secretary Arne Duncan is one of the few competent Obama appointees. Obama and Duncan are arguing that the firings are necessary, at least for the time being. Frankly, I expect Obama to capitulate to union pressure on this issue in the coming months. I am guessing that some sort of “compromise” will be forged and many of these teachers will be “un-fired” before new ones are actually hired. The amount of federal education money flowing into education budgets is staggering, and this funding gives politicians and bureaucrats in Washington a lot of indirect control over what happens at the local level. For the kids’ sake, I hope that the Board in Providence stands its ground.