Growth & Justice Blog

Top priority for transitway development should be employers and jobs

You are a policy-maker and you have a tough choice between  two major development proposals for the same site on a major light-rail line or transitway.   All things being equal, which do you choose:  a major employer or a large housing complex?

If overall accessibility improvement and employer access to labor is the goal, take the employer, says new research presented this week at the 23rd Annual Transportation Research Conference in St. Paul this week.   

The research by University of Minnesota Humphrey School Assistant Professor Yingling Fan was complex and aimed at planning professionals.   But the bottom-line key finding was straightforward:  "Locating new jobs near transitways produces larger increases in accessibility than locating new housing near transitways.''   Getting these fundamentals right are important because by 2030 we likely will have an integrated network of 14 transitways up and running in the Twin Cities, ranging from light-rail to commuter rail to express bus lines.   Few public investments are more important for business growth than transporation infractructure.   Equally important is better access for a workforce that is increasingly comprised of low- and middle-income communities of color, and who need much better connectivity to jobs in the new economy. 

Fan's research was sponsored by the McKnight Foundation, the Jay & Rose Phillips Foundation and the Surdna Foundation.   Abstracts from the conference provide rich state-of-the-art thinking on a wide array of transportation investment issues.

 

Dane Smith

 

St. Paul resident and son inspecting Central Corridor construction in downtown St. Paul (Metropolitan Council photo)

All of our kids will be in the minority, and very soon

Plain facts: By 2015, in just three years, white youth in the United States will  no longer comprise a majority, and then all of our kids will  be members of a minority group. The Star Tribune and other Minnesota media was abuzz last week confirming this transition.   In 2011, for the first time in our nation's history, more than 50 percent of our newborns were non-white or Hispanic and in Minnesota more than 30 percent of our kids under 5 are kids of color.

This will be good, for Minnesota must become a world community to compete in an age of globalization.  But the more important corresponding reality is that our white population and our education systems must adapt faster to changing demographic realities for this state and nation to thrive.   That was the key message delivered by Georgetown University Law Professor Sheryll Cashin  during a recent forum in Minneapolis.

Sheryll Cashin, Georgetown University Law Professor

“The Latino population grew at a rate 40 times that of the white population during the last decade, and these are people born here; not immigrants. Growth in the Asian population is high as well,” Cashin said during the 15^th Annual Julian Parker Lecture held earlier this month at the Minneapolis campus of the University of St. Thomas.

 Cashin, who writes extensively about issues of race and inequality, said that social psychology holds that most people harbor biases, and people who are the most isolated tend to believe the worst stereotypes.  This can be dangerous because separation perpetuates stereotypes of people perceived as “the other.''  

“It is no secret that American public schools are rapidly resegregating,” Cashin said. “Blacks and Latinos have become more segregated than ever in the last 30 years.”  Economic segregation is rising as well, she noted, noting that in 1970, 65 percent of the people in this country were middle class while today, 44 percent are middle class.

The better news is that some areas of the nation have been able to counter this segregation and the widening gap in various measures of  school success rates, to the benefit of all, Cashin said.  She cited Montgomery County, Maryland, where longtime zoning laws required 10- to 15-percent affordable units in wealthier communities.  Now, Montgomery County has emerged as a leader in closing the achievement gap between low income and affluent children, she said.   (See Growth & Justice policy brief on Montgomery County.)

Referring to different perceptions about race and inequality, Cashin said whites frequently view racism through its more blatant and outrageous history, in the context of laws and policies of the previous century that more brutally and intentionally held certain groups back.  So, whites are more likely to see progress around the issue. People of color, however, seek a future of true equality, which they see as quite distant, Cashin said.  

Although whites and people of color typically disagree about the subject of race and addressing disparities, Cashin urged unity and called for establishing multicultural coalitions that “narrow rather than widen gaps” between people.

 Louis Porter II

(Note from Growth and Justice President Dane Smith:  Louis  Porter II is a new Policy Fellow for Growth & Justice.   He's a communications teacher at the University of Minnesota, a former journalist for the St. Paul Pioneer Press, and he holds a doctorate in education.)

 

 

Jason Lewis' gaping omission in attack on nonprofits

Jason Lewis’ latest attack in his Star Tribune column on Minnesota’s nonprofit community--opening with disdain for the very concept of “shared responsibility"--is wrong in tone and content, and far removed from Minnesota sense and sensibility.

The smart-alecky dismissal of nonpartisan groups ranging from public radio to anti-smoking campaigns was mostly just unfair and cynical and predictable. But the biggest shortcoming was a glaring omission. Lewis did not say a word about the billions of tax-deductible dollars contributed nationally to fundamentalist churches, right-wing causes and conservative think tanks, including, in Minnesota, the Center of the American Experiment. All of those groups must adhere to the rules that forbid political endorsements while allowing religious expression, nonpartisan citizen engagement and communication around public policy.

It would have been fair enough for Lewis to propose reducing tax breaks for contributions to nonprofits, which actually would have the effect of raising federal and state taxes on the affluent. Some progressive tax reformers propose just that. But Lewis didn’t travel very far down that road at all. His obvious aim was to stir up anger on the far right against only those nonprofit, nonpartisan causes and foundations that don't line up with his extremely individualistic world view.

Finally, we at Growth & Justice were pleased to be associated with the other constructive Minnesota organizations listed in Lewis’ “rogues’ gallery." It was instructive to see that Lewis’ idea of roguish causes actually includes “reproductive rights, saving the planet, and world peace." (Horrors!!) But he got it half-wrong in dismissing us as “a merry band of collectivists." Growth & Justice is no more “collectivist" than the moderate Republican former office-holders, business managers and former CEOs who have supported us from our founding. We seek ways to broaden prosperity and business growth, with evidence-tested and cost-effective policies and interventions. And we have been allies with business leadership in this state on a host of policy fronts, including early childhood education, increasing transportation investment and gas tax revenue, and reducing some business taxes. But we are also almost entirely positive in our tone and content and therefore, I suppose, “merry."

Dane Smith

 

Five Reasons For Optimism in 2012

Five reasons, small and grand, for optimism in 2012:

• Even Katherine Kersten is hopeful. I like much of what the conservative firebrand said in her latest Star Tribune column about the "debilitating hail" of news that emphasizes "crisis and decline" and how American success has been founded on the "virtue of hope." This was a nice break from her relentless negativity about any and all things public and progressive about our nation and state. She missed some points about how Americans were always hopeful for justice and greater equality as well as freedom and business growth. But a little ray of sunshine from KK is wonderfully refreshing.
• A good friend of mine may have turned the corner in treatment for a nasty disease. A big reason health care costs keep going up is that people live longer, and thus more people need more medicine and more doctors during more of their lives. I'll got out on a limb and declare that people living longer is a good thing. Another reason for rising health care costs and increasing under-insurance is expensive financial administrative costs in the health sector. Growth & Justice will produce a study early this year that takes a look a the costs and benefits of a universal and unified system of health care for Minnesota.
• The American people are hopeful, amazingly. Although most Americans overwhelmingly view 2011 as a bad year, a recent Associated Press poll found that almost 80 percent of Americans are optimistic about the future of their own families in 2012, and more than 60 percent are optimistic about 2012 for the country as a whole. The polls suggests that Democrats are optimistic than their candidate will be re-elected and Republicans are optimistic than they will win, but hey, it's all optimism.
• Things actually are getting better for humankind as a whole. As Harvard professor Steven Pinker recounts in his convincing and exhaustive new book, "The Better Angels of Our Nature" (reviewed here), the current era is the safest and least violent in recent human history, and living conditions are improving everywhere. I like his theory about human progress being part of the “civilizing process," a term he borrows from the sociologist Norbert Elias, who attributes it to the consolidation of the power of the state above feudal loyalties, and to the effect of the spread of commerce. In other words: a happy synthesis of capitalism and good strong democratic governments.
• Finally, in Minnesota, we are well governed and our business leadership is better than elsewhere. Our public sector and our private sector are fundamentally sound, despite gridlock in Washington and depredations on Wall Street. I like what a recent Star Tribune editorial had to say at year's end about Gov. Mark Dayton taking us in the right direction, and the state Senate is now under the leadership of a Republican who is openly moderate.

The economic collapse of late 2008 turned out to be as big a hole as we thought and there is lots of room for improvement all around, from redesigning our governments to restoring our public investments in education and public infrastructure to reducing racial and income inequality. Lots of things can and will go wrong. But there's no future in pessimism. See the doughnut, not the hole.

--Dane Smith 

On taxes, let's recognize business arguments for what they are

For years, Growth & Justice has been looking for and failing to find strong evidence that Minnesota is losing jobs, wealthy residents and businesses due to corporate and personal income tax rates.

Just last month, the Council on State Taxation, an association made up largely of corporate tax attorneys, released a study [PDF] by Ernst and Young that says differences in tax rates are not a main factor influencing businesses to build or hire in one state over another — and that Minnesota ranks 10th best in terms of the competitiveness of our investment tax climate.

Despite this — and absent more than anecdotal evidence of business flight — political figures, business executives and their hired guns always come back with the same line: Higher state tax rates kill jobs and drive job creators and wealth out of Minnesota.

The latest version of this old story was offered Saturday by Ecolab CEO Doug Baker.

But you don't have to take my word for it. According to the U.S. Bureau of Labor statistics, Minnesota employment growth has lagged the U.S. rate for a decade. More than 1,200 small and medium-sized businesses left the state from 1997 to 2008.

There are a lot of factors that influence growth rates, but the 1,200 number was intriguing — because it was so specific and because the state of Minnesota has so little worried about business flight, it hasn't bothered to track such data. I checked the BLS and couldn't find the basis for his figure. I did find BLS figures for business "births" and "deaths" for those years.

During the period cited by Baker, 159,294 business establishments died in Minnesota and even more were created.

If we take Baker's word for his number, we might estimate that about 0.75% of the establishments that died actually moved out of state. And further, based on an estimate of about six jobs per establishment reflected in the BLS data, that Minnesota lost an average of eight jobs a month over the entire period because of business relocation.

Of course, no one can tie the 1,200 to taxes.

It's telling the appeal to data rests on this out-of-context number and a comparative jobs growth rate that slowed after we cut income tax rates.

However, this back and forth makes me realize that the facts don't really matter here. Businesspeople believe what they believe, and that belief will affect their decisions. In a free country they have the right and the power to make decisions that are not in the best interests of the state or its citizens.

It's not any businessperson's job to worry about non-shareholders or to lose sleep over laid-off employees. It's not their responsibility to propose balanced solutions to the budget shortfall or acknowledge the impact of a weaker state university system. It's not even, as we are constantly reminded, a wealthy person's obligation to pay more than they want to or to live in the place where they built their wealth if they are happier elsewhere.

Baker and the Minnesota Business Partnership do exert positive energy about Minnesota as a great place to do business. Some of their policy prescriptions, including early childhood education investment, dovetail with our own. We're fortunate as a state to have CEOs who dig in on big issues.

Minnesotans should not ignore CEOs and retired executives who offer answers to our budget problems. But neither should we let business arguments be the only consideration.

— Charlie Quimby

Happy 10th Anniversary, Tax Cuts! But Where's the Fruit?

Watch for some ironic hoopla this week on the 10th anniversary (June 7) of President Bush's tax cuts, the largest federal income tax rate reductions in modern history, which were preceded in Minnesota by similarly historic cuts in the state's income taxes.

The main "celebrants" are progressive policy groups who are critical of those tax cuts, and considering the economic picture of the last decade, it's obvious why the anti-tax, anti-government zealots are not lighting the candles. Chuck Collins, an heir of the Oscar Mayer fortune and co-founder of Wealth for the Common Good, makes the case in a recent op-ed that the "magical'' conservative "one-point plan'' for everything has been an abysmal failure on every front, except the enrichment of the already rich.

As outlined in a 10-point analysis published by the Economic Policy Institute, the Bush income tax cuts were overhwelmingly "expensive, ineffective and unfair.'' The United States budget went from black ink to red ink in short order, suffered two downturns and twice as many recessions as previous decades, and folks in the top 1 percent got 38 percent of the tax breaks, even as their take of total income and wealth increased dramatically. And you don't have to take the word of progressive policy groups on ranking the decade. A recent report by Investors Business Daily ranks the last decade as the worst for private-sector wage growth since the 1930s.    

Tax cuts can have a positive effect on private-sector growth and no serious liberal economists would argue that tax increases, by themselves, have zero effect on business decisions. But reasonable conservatives also know that the right kinds of taxes and government  investments in human capital, research and physical infrastructure are a foundation for long-term growth. Relatively high income taxes and smart investments in those business-building goods and services has been Minnesota's formula for success, endorsed by moderate Republicans and DFLers for decades.

At the state level, a very insightful take on the subject recently was offered by one of Minnesota's prominent local economists, Paul Anton, who in a Star Tribune op-ed suggested that marginal differences between the states in tax increases and spending cuts have little effect on jobs and economic growth. Recent articles by business columnist Eric Wieffering offer similar hard-headed wisdom on the value of public investments over tax cuts as a business stimulant.

The case for repealing those trillions (at the federal level) and billions (at the state level) of accumulated tax cuts for top incomes seems to grow daily, as federal and state budget shortfalls escalate.

- Dane Smith

 

 

Letters from the edge: State leaders warn of precipice ahead

Call them “Letters from the Edge," a flurry of messages last week from state government agency heads and business leaders, summarizing the view from the precipice created by an anti-government, all-cuts response to a $5 billion revenue shortfall. The view is of a shabbier and less fair Minnesota, and also not good for business in the long run.

The letters were professional in tone and yet dire and almost frantic, detailing exactly what would have to happen to bus service, nursing homes, services for disabled Minnesotans, protection for abused and neglected children, and tax compliance.

The letter from Human Services Commissioner Lucinda Jesson and Minnesota Management and Budget Commissioner James Schowalter was typical, laying out the damage that would be done to our growing elderly population from more than a billion dollars in reduced funding for Human Services, including institutionalization of many who rely on less costly interventions than nursing homes. Bottom line in Human Services, as elsewhere, is that costs for both governments and ordinary citizens actually would increase long-term from some of the proposed cuts.  A similarly stark picture was painted by Metropolitan Council Chair Susan Haigh in a letter that spelled out alternatives ranging from $7 bus fares to 40 percent cuts in transit route service.

The Minneapolis Regional Chamber of Commerce sent a letter expressing alarm about the severity of the proposed cuts and advised that "business supports investments in transit because it's good business."  Business leaders in Greater Minnesota, particularly, have been highly critical of proposed cuts to or elimination of state aids to local government.

The Department of Natural Resources, suggesting mass closures of state parks, and the Revenue Department, predicting net revenue losses from cuts in compliance and enforcement, also have responded with messages that begin to paint a picture of a cuts-only Minnesota on the brink, and looking a lot more like Pottersville (from the movie, It's a Wonderful Life) than the Bedford Falls we've enjoyed for decades.

We all know that the cuts-only budget bills are destined for veto by Gov. Mark Dayton and that the authors in the legislative majorities are not entirely serious about their proposals, some of which appear to be written to appeal to the conservative geo-political base.  And some key legislators were basically saying that the cuts are an opening round in negotiations with the governor, whose opening proposals for income tax increases are unlikely to gain final passage.

But the facts are that both Dayton's proposal and the budget strategy outlined by Independence Party gubernatorial candidate Tom Horner in last fall's election are more humane and realistic from the get-go, calling for both painful cuts and reasonable revenue increases. Those two candidates got 56 percent of the vote and that's a reflection of the Minnesota mainstream's wisdom about the value of the public sector.

The final agreement, which might not come until we are on the brink of a total government shutdown, simply must be a lot closer to the Dayton-Horner formula than the all-cuts precipice.

Dane Smith 

Watch for tax expenditures as the solution in June, despite last week's chain yanking

Two months in to the legislative session, some of the more moderate and independent conservatives were daring to suggest reasonable revenue options, such as eliminating tax breaks and deductions.  But then somebody yanked the chain and gave the order to get back in line.  And that helps explain the letter to Gov. Dayton late last week, signed by all 37 senators in the majority caucus, affirming that they are still opposed to raising taxes to balance the budget.

But let's consider the door ajar, and certainly not locked and bolted, especially on the option of removing "tax expenditures" (basically exemptions, credits and loopholes that favor certain folks or activities within a broader tax type).  The rationale is well established for going after tax expenditures as not only a way to raise revenue, but also as a redesign overhaul that will bring more progressivity and stability to our state's increasingly complex system.

Sound advice on how to think about tax expenditures and ideas for evaluating them and even "sunsetting'' some of them are contained in a report submitted to the Department of Revenue entitled "Tax Expenditure Review Report: Bringing Tax Expenditures Into the Budget Process.'' Among those on the panel that produced the report are our Growth & Justice Policy Fellow, Marsha Blumenthal, professor emerita at the University of St. Thomas, and John Spry, also an economics professor at the University of St. Thomas, whose expertise is often sought by conservatives.  Former Minnesota Finance Commissioner Jay Kiedrowski and Judy Temple, both professors at the University of Minnesota, and each of whom have served on advisory panels for Growth & Justice, are co-signers of the report.

The report calls for establishing a Tax Expenditure Commission to oversee an evaluation process and to define a clear and measurable purpose for each tax expenditure.  The report even calls for a process whereby tax expenditures could automatically expire.  Helpful information about tax expenditure redesign and reform efforts in other states is included.  The report also provides an invaluable tool for amateur budget-balancers, because it lists all tax expenditures and the multi-billion cost to the public for breaks ranging from the home mortgage deduction to the tax breaks given to ministers for their housing, to a very long list of sales tax exemptions on a seemingly random list of services and goods.

The political benefits of removing tax expenditures are obvious.  They plausibly can be described as expenditures that cost the state revenue, not just tax increases.  Removing them constitutes a form of redesign and reform.  And Republican majority members in the House and Senate are to be commended for openly debating the merits of this approach to rasing new revenue.

And finally, it's a hopeful sign that the letter to Dayton was not actually written in blood and the tone remains civil and hopeful.  While the signers affirm they are "opposed'' to tax increases, they also say they are "working diligently...to indentify and develop the concepts for long-term redesign and reform."  And one of the more hopeful signs of possible compromise is that we simply don't hear much at all about ironclad "pledges" not to raise any new state taxes under any circumstances whatsover.   Those were a fixture of all-cuts sessions a decade ago, and many thoughtful Republicans such as former House Speaker Steve Sviggum never signed them, and warned against them.

Dane Smith 

Check out "Soul of the Community,'' to see how Minnesotans love their amenities and aesthetics and public stuff

It's sometimes hard to get top business executives to locate to Minnesota -- what with the cold weather and progressive income taxes -- but once they've lived here awhile, it's even harder to get them to leave.  I've heard some version of that story many times in business quarters, most recently at a BioBusiness event in Rochester.

Those of us who have lived elsewhere have theories about this.  And my own conviction is that our attractiveness and our affection for this place is built on a stronger sense of community, inclusiveness and economic fairness than exists in other places.  We simply have had better public stuff, better schools, better parks and trails, better infrastructure overall, more publicly supported arts and cultural amenities, which all adds up to a state and cities that are classier and cooler than other places, not just colder (but I like that bracing climate too).  And in the end, it makes for a better business climate too, owing to a more productive and creative workforce.  More clues as to how this is true can be found in the Knight Foundation's lastest study, The Soul of the Community, which measures 26 U.S. cities from this refreshingtly distinct perspective:  how attached citizens are to their place, and why.  News articles on the study were published in the Star Tribune and the St. Paul Pioneer Press and the two papers offer interesting variations on the essential findings of the study.  Here's the bottom line of the report summary itself, as to why people become attached to their community:

While the economy is obviously the subject of much attention, the study has found that perceptions of the local economy do not have a very strong relationship to resident attachment.  Instead, attachment is most closely related to how accepting a community is of diversity, its wealth of social offerings, and its aesthetics.

And this excerpt from Chris Havens' STrib story adds a little texture to the analysis. 

St. Paul is a city that has welcomed poetry stamped into its sidewalks, a photography exhibit along bustling University Avenue and various music and ethnic festivals.  "It's a cool place to live," (Mayor Chris) Coleman said. "It's a unique place to live."  Sue Buchholz walked her Yorkie, Pandy, in downtown St. Paul's Rice Park on Monday. She moved into a downtown condo within the last year. "I knew this is where I wanted to be," she said. "There's always something to do."  She made a sweeping motion with her arm, pointing to the Central Library, Ordway Center for Performing Arts and Landmark Center.  A few blocks away runs the Mississippi River, which attracts joggers, bicyclists and others interested in the nature along the banks. There are more bike lanes and trails than ever before in the Twin Cities and suburbs.

We've known about this comparative advantage from our better public stuff  for some time.  We hope our new leaders in the governor's office and the Legislature do not lose sight of this bedrock economic asset when they begin to balance the budget shortfall next year.  (And by the way, the Knight report suggests that we are not that high in our regard for our leaders).

Dane Smith

 

 

 

 

Labor Day, economic justice, and progressive capitalists

For a second consecutive year on Labor Day Sunday, I had the privilege of delivering the sermon at my Unity Church in St. Paul (Unitarian Universalist).   I focused on the the great tradition of progressive capitalism in Minnesota,  embodied by people like William Drew Washburn, the founder of the forerunner of General Mills and the founder of the First Universalist Society of Minneapolis, and the subject of a new biography, "Prairie Ligthtning.''    Reviewing Washburn's enormous contributions and his serious shortcomings, I made this point: 

 There are a couple of key points in all this on Labor Day weekend, when we celebrate the vast majority of Americans and Minnesotans who labor for a living, and who mostly don’t OWN OR INVEST for a living, and with whose perspiration our  civilizations have been built.     The first point is a reminder, that some of our direct (Unitarian Universalist) intellectual and spiritual ancestors valued the “me’’ every bit as much or more than the “we.’’   They were intensely self-interested people, empire builders and capitalists, who also tried to balance that side with a conscience and recognition that public stuff, the things we do together for our common good with our  democratic governments, were every bit as valuable as the things we do for ourselves for own profit and enrichment.    Elites like the Washburns and Pillsburys and the Daytons passionately and personally invested in public interest,  and as the decades wore on Minnesota’s capitalists earned a reputation as among the world’s most generous and enlightened, unafraid of social experimentation and democracy, generally supportive of the idea of public-sector growth and  intelligent and humane distribution of an often unfair redistribution imposed by capitalism and the marketplace, on the sound theory that more sharing would be good for private-sector growth in the long run.

 Among the most eloquent and authentic Labor Day op-eds during  the last week was Janice Thurn's excellent commentary ("America Can't Rise Without Its Workers")in the Star Tribune Op-Ed section, and this very clear and compelling  answer to the question "What Does Organized Labor Want?", by AFSCME Council 5 Executive Director Eliot Seide.

It will take a few days to process my latest Unity Church  sermon so that it's available online,  but here is a link to "She Works Hard for the Money (So You'd Better Treat her Right)", the Labor Day sermon I gave last year, focused in particular on the struggle for justice by women workers.

Solidarity Forever!

Dane Smith