Wednesday, May 27, 2015

Unhinged from Reality, Part I: Democrats, Socialism, and the Corporate State

For the past 14 years, I have worked in a place dominated by Democrats, and the most liberal ones at that. In the view of many of may colleagues, there is nothing that government cannot do as long as the political will exists to get it done.

Raise the minimum wage to $15 an hour and create instant prosperity? Done. Expand medical coverage to everyone, increase the regulatory state, have all forms of energy from electricity to fuel be "zero-emissions," and end all poverty by government fiat? Done! All it takes is courage on behalf of legislators to stand up to a few rich people, and the clean, prosperous, and free society is ours for the taking.

Frostburg State University, where I teach, is part of the University System of Maryland, and Maryland is one of the nation's most "blue" states, politically speaking. Let me correct myself. Three counties, Montgomery, Howard, and Prince Georges, and the City of Baltimore provide nearly all of the legislators that give the Democrats a huge majority in the state legislature. The other counties are flyover country, as far as the state government is concerned.

In many ways, Maryland today is like the Deep South between the end of Reconstruction and 1980 when the only competitive elections were Democratic primaries. Yes, the voters recently elected a Republican governor, but in 2018, I have no doubt that he will lose to an upcoming Democrat just as Republican Bob Ehrlich lost to Martin O'Malley in 2006 after serving one term. Democrats represent the political equilibrium in Maryland, and that is not going to change, given the demographics, both ethnically and occupationally, in this state.

Maryland, or, to be more specific, political attitudes and beliefs of Democrats here, are the future of the Democratic Party, so it is instructive to know what they see as the Good Society to know where the rest of us are headed. Like Republicans (with whom I will deal in a future post), Democrats where I work have become unhinged from economic and social reality to a point where what they believe about the economy is fantasy, but they believe that all it takes is an iron will on behalf of their party to make that fantasy reality.

What Democrats Believe, Economically Speaking

Thirty years ago, when I lived and worked in Chattanooga, Tennessee, I had a colleague who was the epitome of the Democratic Party activist. The Party was his religion, the Democratic nominee for the White House his god, and all Truth and Goodness sprang from the Party Platform. The only reason that Democrats did not own the White House, he claimed, was because of the Vietnam War, and had the Democrat's Democrat, Lyndon Johnson, not escalated the fighting there, he reasoned, LBJ's Great Society programs would have so transformed this country that all poverty would have disappeared and the United States would have one-party rule forever. If only.

He never could articulate as to why some government wealth transfer programs would have created such wondrous results; they just would. His occupation was being a city planner, and he had a planner's worldview in which planners like himself had the duty to impose their will on others because only they knew what would constitute the truly Good Society.

The first thing, he claimed, was total government control over the economy. After all, he claimed, since government had control of money, that was proof that government created all that was good in an economy and that without the guidance of government planners, the entire economy would collapse into chaos and ruin.

At the time, the Cold War still existed and so naturally the subject of the Soviet Union and its planned economy came up. When asked why the U.S.S.R. had what people recognized as a dysfunctional economy that was plagued by shortages, shoddy goods, and long lines for basic staples, he replied: "The Soviet Union has not been a country as long as the United States." That was it. Because the U.S.S.R. had existed as an official political entity for (at the time) 68 years and the USA was 209 years old, that situation alone explained why the Soviet economy performed so poorly. Thus, he reasoned, the longer the U.S.S.R. remained a political entity, the more the economy would improve. There was no causality, no logical movement from A to B, just a statement of what he believed to be fact.

At the time, I thought him to be on the fringes, since his beliefs lacked basic economic logic, but as I observe the campaigns of Martin O'Malley, Hillary Clinton, and Bernie Sanders, I have come to believe that my friend's radical views 30 years are now in the Democratic Party mainstream. How can it be that a political party could become that unhinged from economic reality?

Despite the supposed differences between the Democratic candidates, they pretty much believe the same thing: the federal government can order a state of prosperity by raising taxes to confiscatory levels, implementing a $15 an hour minimum wage, expanding vast subsidies for "renewable" energy, expanding the Social Security and food stamp programs, shutting down whole industries, and provide "free" medical care to everyone. Out of that will rise the Golden Society just as Aaron tried to convince Moses that the Golden Calf in the book of Exodus simply rose from the flames when Aaron threw a bunch of gold jewelry into it.

Robert Reich, who is not running for president but who provides the so-called intellectual ammunition for the Democratic candidates, has publicly said that government must force up wages and expand spending. In so doing, he reasons, it will create what he calls a "virtuous circle" in which people at the lower rungs of the economy increase their spending, and that increased spending will result in more production of goods and services and, thus, bring about an upward spiral to an economic nirvana.

One reason for this move into economic fantasy is the grassroots leadership of the Democratic Party. While labor unions always have gravitated toward Democrats, in the past unions representing workers in private businesses knew that if they totally destroyed the Golden Goose, that there would be nothing left for them.

Today's Democratic leadership, however, comes from government employee unions and they are not bound by the same economic realities that governed the United Auto Workers or the steelworkers. In 1980, there was consternation when it was revealed that more than half of the delegates to the Democratic National Convention were government employees. When the 2016 DNC rolls around, no one even will care that the vast majority of delegates will be members of government employee unions who will demand that government use deadly force, if necessary, to protect their pensions, and give them pay raises. Paul Krugman will say this is good because the government employees will be "spending money," which means they can claim that by confiscating money from anyone not lucky enough to be a member of a government employee union, they actually are creating prosperity for all.

Democrats will argue that what is needed is more political will. Political will to raise the marginal tax rates to at least 70 percent. Political will to force closure of electric power plants that burn coal, oil, and natural gas. Political will to run oil companies out of business. Political will to bring about "renewable energy" that will result in clean air, clean water, and spiritual growth. Political will to force both Roman Catholic and Protestant churches to change their ancient theology about sexuality or face government sanctions and even forced closure, if that is what is needed.

In short, Democrats argue that what society needs more than anything else is political coercion and expanded confiscation of private property and the will to force people to accept all of the tenets of the Sexual Revolution. People won't give up their guns and their religious beliefs easily, nor will they be willing to gladly accept the real economic deprivation that would come about as the result of the policies Democrats are demanding. That is where an iron political will comes in, and an iron will requires the use of force, deadly force, if necessary, especially if churches refuse to accept the Holy Doctrines of the Sexual Revolution.

As Radley Balko has written, every government law that is to be enforced carries the threat of violence, and it is clear that government at every level has no qualms about being violent. Even Salon Magazine, which is little more than a Democratic Party media tool (as Fox News is to Republicans), admits that government violence is not a partisan issue.

The Implementation of the Corporate State

For all of their rhetoric, however, even Democrats know that they cannot implement the kind of economy that characterizes Cuba, North Korea, or the former U.S.S.R. and make the voters happy. It is one thing for Bernie Sanders essentially to call for an end to the oil industry. (His claim is that he just wants to end corporate welfare for private energy companies -- a laudable goal -- but it is clear that he wants to go much further. Likewise, he wants to create and expand the corporate welfare for companies pursuing so-called renewable energy and put their competitors out of business.) It is quite another for whole industries that provide vital goods and services simply to disappear with nothing to replace them.

Likewise, Democrats can rail against Big Pharma, but someone has to produce the medicine AND the campaign contributions. That is where the Corporate State comes in, and Democrats have embraced Crony Capitalism all the while condemning it in their rhetoric.

No one does that better than Hillary Clinton and she and her ex-president husband have lots of experience getting rich via the Corporate State. While Hillary is running as a populist who wants to end corporate abuses and shut down businesses she doesn't like, her income sources are dominated by corporate money via her speeches and contributions to the Clinton Foundation, which essentially is a slush fund for the Clinton family. (Yes, yes, I know. The Clinton Foundation will eradicate AIDS in the Third World, so contributions to the foundation are worthy and humanitarian. They have nothing to do with seeking political favors and enriching the Clintons.)

Now, the Occupy Democrats and others on the Bernie Sanders Left supposedly don't like Crony Capitalism and claim they want to eradicate it. However, they also know that the Clintons really bug Republicans, and if there is one thing that Occupy Democrats and their allies hate, it is Republicans. In fact, they hate Republicans much more than they hate Crony Capitalism and the Corporate State.

Furthermore, they reason that if they can get corporations on their side (and simultaneously get lots of corporate money for their own political initiatives, then they would rather live with the furtherance of the Corporate State than see a Republican in the White House). They even can convince themselves that they are doing nothing more than providing much-needed regulation of corporations, which would be running amok and creating chaos if it were not for the far-sighted actions of the Democratic Party.

Such viewpoints truly are unhinged from any reality. The Democrats' brand of corporate welfare will cause production to shrink, not expand. Furthermore, every initiative that I have seen from the Democratic candidates for president will increase costs of production of goods and services, and when those kinds of costs increase systematically over a large scale, the overburdened economy slowly implodes.

True, Sanders, O'Malley, and Clinton will claim that forcing up production costs will expand the economy because such actions will increase the amount of money being spent on production. In reality, higher production costs will mean less will be produced, which translates into a lowering of real standards of living.

Notice that not one Democrat is going to run on a platform of reducing the standard of living for everyone. They might argue that their tax-the-rich schemes might lower living standards for the so-called One Percent, but that overall everyone else will experience a cornucopia of wealth.

I'm sorry, but the One Percent cannot buy prosperity for the rest of us. They CAN buy prosperity for the likes of Hillary and Bill Clinton, Martin O'Malley, and even Bernie Sanders, who I guarantee will quietly float his own versions of corporate welfare all the while denouncing it in his political rhetoric.

Tuesday, May 5, 2015

Would Ben Carson be Permitted to Work as a Surgeon in our Present Politicized Society?

Last year, while visiting the home place in Chattanooga, Tennessee, an old family friend asked me if I was excited by the prospect of Ben Carson running for president? I replied that given Carson never had been in a political campaign, I doubted that his candidacy would amount to much, and it seems Carson is working overtime to prove my point.

I admit to cringing when I read some of Carson's statements, especially on homosexuals and gay rights, and on his view that U.S. armed forces overseas should not be held accountable for war crimes and atrocities. As one who has been critical of U.S. armed intervention overseas for the past three decades, I believe that this country through its military might has been spreading death and destruction on a huge scale.

Still, I would like to see Carson do well if for no other reason than he has exemplified determination and courage throughout his life and became one of the best neurosurgeons in the world. This is a man who came from the kind of background that would condemn most young men to a violent life on the streets, and yet he rose above it in a way that most of us cannot even comprehend.

In 1984, at the age of 33, Carson was appointed head of pediatric neurosurgery at the prestigious Johns Hopkins Medical Center in Baltimore, one of the most prestigious medical institutions in the world. During his years in neurosurgery, he distinguished himself as being one of the best in the world in his field, yet I wonder today as to whether or not a person with Carson's views would be allowed to clean toilets at Hopkins, given the abyss of modern Political Correctness that infects Hopkins and just about every other American institution these days.

Ben Carson does not believe gay marriage is "legitimate" marriage. He is a Christian and I suspect that his views would put him in the company of Moses, King David, St. Paul, and, yes, Jesus Christ himself. (I, too, am a Christian and believe that the best "solution" to this situation is for government to get out of the marriage business altogether. Ours is a pluralistic society and I favor legal institutions that minimize the prospect of people of different interests and points of view being at each others' throats.)

Carson's views on gay marriage might be out of favor with the editorial page of the New York Times, but I suspect that they don't differ with the vast majority of people who have lived before us, including almost all of the previous residents of the White House. To put it another way, Carson hardly is out of the historical mainstream and I daresay that most Protestant denominations have not endorsed gay marriage as being consistent with Holy Scripture, and the Roman Catholic Church takes the same position. Muslims as a whole have not joined the gay marriage bandwagon, either.

It is safe to say that at least 50 percent of Americans and certainly millions of American Christians, Jews, and Muslims do not support gay marriage, yet the Southern Poverty Law Center declared Ben Carson to be a security threat to this country, putting him on its Extremist Watch List, a list that includes white supremacists, leaders of the Ku Klux Klan, and people calling for violent overthrow of the U.S. Government.

In other words, the SPLC (which later reluctantly took Carson's name off that list after a public outcry) wanted us to believe that Ben Carson was a violent man whose views were so extreme as to pose a real danger to other Americans. Now, I suspect that a lot of readers a rolling their eyes regarding the SPLC, given its controversial statements and the negative exposure it received when a former associate blistered the organization and its founder, Morris Dees, in an article in Harper's Magazine in 2000.

However, to the typical American faculty member of a college or university, not to mention a large portion of the Democratic Party, the SPLC is the Very Voice of God. If the SPLC essentially declares Ben Carson to be in league with the Ku Klux Klan, then I'm sure that lots and lots of Democrats and other lefties believe that Carson must have walked around Johns Hopkins in a Klan robe and hood.

This brings me to my main point. Given Carson's political and religious views, would Johns Hopkins today permit him to be on its medical staff? This is not an idle question, nor do I think it silly or irrelevant. After all, Johns Hopkins University does not permit Chik-fil-A facilities on its campus because the company's chairman has said publicly that he does not believe gay marriage is permitted in the Bible. (Duke University also prohibits Chik-fil-A from being on its campus and the city government of Chicago will not permit a Chik-fil-A franchise from being located within the municipal limits of the Windy City.)

Students of the history of the former Soviet Union know that one's political views determined the kind of employment one might have. A person might have been a brilliant nuclear scientist, but if he or she did not have the "correct" political viewpoints as determined by the U.S.S.R.'s government leadership, then that person got a job sorting paper clips.

I have no doubt this is where we are headed in the USA. When a cyber mob drove Mozilla's CEO out of office a couple years ago because in 2008 he had contributed $1,000 to an initiative to define marriage as being between a man and a woman in California, no one cared as to whether or not this was good for Mozilla. It didn't matter. All that mattered was that people were demanding that the CEO of Mozilla be in favor of gay marriage.

Likewise, we see small businesses in this country being hounded by government agents, lawyers, and gay rights advocates because a baker or a florist will not accommodate a gay wedding out of religious beliefs. (So far, states like Oregon and Colorado have gone after only Christians; one wonders what will happen if the same challenge is thrown at Muslim-owned businesses.)

Furthermore, there are boycotts, secondary boycotts, and Twitter mobs to harass anyone who might make a public statement on gay marriage that does not meet President Barack Obama's approval. (It turns out that Obama was against gay marriage before he supported it.) So, it is very clear that at least when it comes to gay rights and gay marriage, the pro-gay forces are declaring openly that one's politics should be a determining factor as to whether or not one is permitted to work or own a business.

So, it brings me back to my original question: Given his religious, social, and political views, would Ben Carson be permitted to be on the pediatric surgical staff at Johns Hopkins? Would he be permitted to be in a classroom at Hopkins teaching future pediatric surgeons? Would he be permitted to operate on children?

I don't believe he would. What I do believe is that the politicization of American society is becoming so expansive and so overwhelming that there is little we can do but watch the horror show unfold around us.

Some time this year, I most likely will be having knee surgery. When I "go under the knife," I really won't care as to whom the doctor supports in the upcoming presidential election or even his views on Obamacare. I won't care if he supports gay marriage or even if he is gay himself. I will care about his abilities to fix the trouble in my knee. Unfortunately, it seems that views such as mine are becoming archaic and even regarded as "dangerous" in modern, Politically-Correct America.

Monday, May 4, 2015

Arenas, Stadiums, and Glitzy Shopping Centers: Baltimore and Keynesian Trickle-Down Economics

During his presidency, Barack Obama on many occasions has claimed that the market economy is based upon what he (and other leftists) call "trickle-down economics." A few years ago, Obama declared:
Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If only we cut more regulations and cut more taxes – especially for the wealthy – our economy will grow stronger. Sure, there will be winners and losers. But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else. And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.
It’s a simple theory – one that speaks to our rugged individualism and healthy skepticism of too much government. And that theory fits well on a bumper sticker. Here’s the problem: It doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible post-war boom of the 50s and 60s. And it didn’t work when we tried it during the last decade.
The idea, according to Obama and his supporters, is that markets only benefit wealthy people, and that standards of living for the vast majority of Americans have fallen since 1980. The only way to "restore" the middle class and bring others to that state of well-being is to employ massive wealth transfers from wealthy people to those who are less-fortunate. According to Travis Waldron of ThinkProgress:
Obama is right. The trickle-down policies put in place since the Reagan administration haven’t brought prosperity to the middle- and working-classes; if anything, they have made prosperity an illusion for the vast majority of Americans who don’t directly benefit from them. 
As I look through the Internet for references to "trickle-down" economics, the critics of markets claim that Progressive government policies from high tax rates to promoting subsidies, massive regulations, and high minimum wages are the key to prosperity. Writes American University Professor of Economics Jon Wiseman:
Until recent times, government was indeed the enemy of the overwhelming majority of people. Although it provided for defense and a degree of social stability, until the nineteenth century, elites used the state to ensure that they could extract as much as possible from the working population. Workers, whether slaves, serfs, indentured servants, or wage workers, retained merely the wherewithal to survive. Yet, the goodness of government was rarely in doubt. Ideology, crafted and controlled by elites, depicted the state as sacred, its rulers chosen by gods, or themselves gods. Government was part of the sacred order of things. Even when the state came to be legitimated in secular terms (as a social contract), elites continued to use the state to ensure that they could capture most of the workers' output beyond that needed for survival.

All of this came under challenge when the maturation of capitalism in the nineteenth century created the conditions in which the working class would, through the threat of violence, successfully petition for higher wages, better working conditions, education for their children, and the franchise. The franchise gave workers the power to peacefully claim a fairer share of society's income, wealth and privilege. The role of the state was in principle reversed from a social agency that enabled elites to capture virtually all income beyond subsistence, to one that could impede them from doing so. If the state were to become truly democratically controlled, then for elites, government would indeed become "the problem" as Reagan put it in his inaugural address in 1981. Their only remaining weapon would be in maintaining control over ideology. They would have to convince enough of the electorate that their best interests would result from those policies that would in fact enable elites to retain, if not augment, their wealth, power, and privilege.

Although worker living standards improved after the franchise was democratized, so too did inequality. The big break came in the 1930s during the Great Depression. The dire conditions of that decade delegitimated the elite's ideology, permitting the widespread acceptance of doctrines and policies that produced a 40-year period of declining inequality and substantial improvement for the lives of practically all Americans. It was the "great compression" in income, wealth, and privilege.

Government measures reducing inequality and improving conditions for the broad population included workers' rights to bargain collectively, Social Security, the G.I. Bill, Medicare, Medicaid, Food Stamps, public housing, rent subsidies, Project Headstart, Job Corps, Occupational Safety and Health Administration, the Consumer Product Safety Commission, the Mine Enforcement and Safety Administration, and the Environmental Protection Agency. The franchise was further extended to African Americans and desegregation began in earnest. Public goods that benefit the general population such as schools, parks, playgrounds, and public transit were vastly expanded in quantity and quality. Highly progressive income taxation also reveals the intent of redistribution toward greater equality. The highest marginal income tax rates were: 1942-43: 88 percent; 1944-45: 94 percent; 1946-50: 91 percent. Top marginal tax rates remained in the upper 80 percent from 1951 until 1964, and at 70 percent from 1965 until 1981.
Thus, one would argue, a government whose leaders and employees believed in the ideals espoused by Wiseman would create an atmosphere of equality with employment and opportunities for all. A political entity that would be devoid of the "market ideologues" who would argue for a return to free markets and a minimal governmental presence then would be free to impose those policies that would end the tyranny of economic inequality. Instead of "trickle-down" economics, the people would experience "trickle-up" in which government gives money to poor people who then spend it and create prosperity for everyone.

As I watched parts of Baltimore burn, I came to realize that for the past four decades, that city has been able to engage in the very kind of political economy experiment that Wiseman and others quoted claim would bring prosperity for all. No longer would governmental leaders permit "trickle-down" markets to exist, looking to create "trickle-up" opportunities, instead. So, what has been the result?

For about 30 years, we have seen the construction of state-of-the-art stadiums for professional football and baseball, and the development of the Inner Harbor at Baltimore's waterfront. Indeed, these are all beautiful facilities and the Inner Harbor has a famous aquarium, shops, good restaurants, and high-end apartments and condominiums. Parts of Baltimore are an urban showplace, and then there are the affluent white neighborhoods throughout the city, along with the gleaming edifices of Johns Hopkins University and its world-class medical facilities and medical school. The city is full of good restaurants and is a Mecca of varieties of musical genres from Early Music (a favorite of mine) to authentic Irish Music.

The idea behind this development was to create an atmosphere that would attract more investment downtown with the benefits somehow trickling (or maybe flowing) into the areas dominated by African Americans. Success in one area was supposed to translate into a ripple effect of success elsewhere, but it has not happened. The black communities of Baltimore might provide some of the inexpensive labor that helps to facilitate much of the redevelopment and there might even be black residents of Baltimore who patronize the various "investments" of the redeveloped parts of that city, but for the most part, the problems plaguing black areas of Baltimore seem to be intractable and there is no real connection between the glitz of the for-show projects and the grime of nearby poor residential areas.

Baltimore black neighborhoods, not surprisingly, have high dropout rates from school, lots of crime, up to 50 percent unemployment, drug dealing, low academic achievement, substandard housing, and huge numbers of people on public assistance. No one argues with these facts. The argument, instead, centers around what to do about this situation, and the Progressives that have dominated politics in Baltimore for many decades have decided that the best way to change the fortunes of black residents of the city is to employ Keynesian Trickle-Down Economics. That's right: the so-called critics of "trickle-down" actually are its biggest supporters.

Who Benefits from Baltimore's Version of "Trickle-Down" Economics?

When I worked in Chattanooga's office of Economic and Community Development 30 years ago, I met a number of developers who flocked to the promise of government money to help subsidize their projects. Some of them had good ideas, but most of them were politically-connected Democrats who were creative and intelligent people, but with little understanding of basic economics. They wanted the subsidies, the low-interest loans, and the up-front fees they would make before they sold out and moved on to the next idea.

People do get rich off these projects, but not in the way one would think. Much of the wealth comes not from the actual performance of these enterprises, but rather the fees that developers always make when they create the projects. Now, I will say that other people benefit, too. Owners of the Baltimore Orioles and Ravens -- along with the millionaire athletes on these teams -- benefit from the subsidies, and people who actually can afford to watch the teams play are the consumers.

Furthermore, the young people who enjoy living in an urban environment with all of the bars, restaurants, and other amenities, also benefit from the high-profile benefits that people claim will "revitalize" the cities. Here is the problem, however: the main beneficiaries of subsidized redevelopment are affluent whites, from the developers to the young people who populate these "redeveloped" areas.

Without subsidies and political favoritism, these redevelopment projects never would exist, which means that taxpayers are helping to subsidize the lives of some of the most affluent among us. The irony is that for all of the talk about wanting to "help the poor," Progressive whites tend to be the main beneficiaries of the very projects created in the name of creating opportunities for Baltimore's black residents.

But what about the poor? Progressives ask this question all the time, and they also believe they have the answers: high taxes, subsidies, programs, subsidized housing, and high minimum wages. In a recent New York Times column, Paul Krugman declares:
The poor don’t need lectures on morality, they need more resources — which we can afford to provide — and better economic opportunities, which we can also afford to provide through everything from training and subsidies to higher minimum wages. Baltimore, and America, don’t have to be as unjust as they are.
Understand that Progressives like Krugman actually are hostile to people who might actually engage in real investment in urban areas, those low-profile entities that create real wealth. Jay Steinmetz, who owns a supply-chain management business in an area of Baltimore not known for its glitz, writes of the real hardships that Baltimore's anti-private enterprise politicians impose on enterprises like his.

City policies and procedures fail to help employers address these problems—and make them worse. When the building alarm goes off, the police charge us a fee. If the graffiti isn’t removed in a certain amount of time, we are fined. This penalize-first approach is of a piece with Baltimore’s legendary tax and regulatory burden. The real cost of these ill-conceived policies is to the community where we—and other local businesses in similar positions—might be able to hire more of those Baltimoreans who have lost hope of escaping poverty and government dependency.

Maryland still lags most states in its appeal to companies, according to well-documented business-climate comparisons put out by think tanks, financial-services firms, site-selection consultants and financial media. Baltimore fares even worse than other Maryland jurisdictions, having the highest individual income and property taxes at 3.2% and $2.25 for every $100 of assessed property value, respectively. New businesses organized as partnerships or limited-liability corporations are subject, unusually, to the local individual income tax, reducing startup activity.

The bottom line is that our modest 14,000-square-foot building is hit with $50,000 in annual property taxes. And when we refinanced our building loan in 2006, Maryland and Baltimore real-estate taxes drove up the cost of this routine financial transaction by $36,000.

State and city regulations overlap in a number of areas, most notably employment and hiring practices, where litigious employees can game the system and easily find an attorney to represent them in court. Building-permit requirements, sales-tax collection procedures for our multistate clients, workers’ compensation and unemployment trust-fund hearings add to the expensive distractions that impede hiring.
 The vast majority of the politicians in Baltimore and urban Maryland are chosen by the strange coalition of affluent Progressive whites and low-income and middle-class blacks, and practically none of them actually understand what it is like to run a business enterprise. For example, Martin O'Malley, the recent governor of Maryland who now wants to be the Democratic Party nominee for President of the United States, declared that regulations that impose high costs on businesses have no negative affect on business performance:
“It is not true that regulation holds poor people down, or regulation keeps middle class from advancing,” O’Malley, the former governor of Maryland, said Monday in an interview with NPR’s Steve Inskeep. “That's kind of patently bulls---.”
 Like Krugman, O'Malley believes that the federal government should impose a $15 minimum wage, with the idea being that if government imposes higher production costs, those higher costs actually create more wealth. What they really are saying is that the best way to create a better economic atmosphere in places like inner city Baltimore is to make it more costly for people to create and own businesses there.

Economists are fond of pointing out the perils of imposing "deadweight losses" upon economic exchange, but to people like Krugman and O'Malley, those "deadweight losses" actually benefit the economy because they mean someone must have to spend more money, and spending more money creates wealth.

In order to facilitate this spending, according to Krugman, government must print more money, raise taxes, and borrow and spend. The new spending, no matter what it entails, will boost the economy, employ more people, and make things better for poor people in the inner cities, including Baltimore.

This is nothing but Keynesian Trickle-Down Economics. Spend money on high-profile projects, employ a few poor people, bring in rich young people who can populate the bars and restaurants,  spend lots of money, and then impose high costs upon actual businesses that might actually improve the lot of real people who need new opportunities. We can see how well it has worked in Baltimore.