Venezuela of the Midwest

I listened carefully to J.B. Pritzker’s inaugural address and budget proposal last week, and it made my stomach lurch.

Last fall I heard University of Chicago economist Austan Goolsbee speak at a small luncheon.  His prepared remarks concerned the national economy, and I asked him in the Q &A, “By taking the House, it looks like we are back to gridlock in Washington, but now that Pritzker won, and has a supermajority, there won’t be gridlock in Illinois.  What does that mean for the state?”

Austan Goolsbee answered, “I said that the United States is not Greece.  But Illinois could be.”

When Bruce Rauner came into office, he proposed a series of reforms, each of which was summarily rejected by Speaker Mike Madigan, who runs the state with an iron fist.  Madigan’s Democratically controlled house overrode a Rauner veto, and Madigan was able to jam through a 32% income tax increase.

And yet it is not enough.

I heard Pritzker’s speech and rhetorically it might as well have been Bernie Sanders.  Laced with the usual “the rich have to pay more of their fair share,” and “fairness” Pritzker’s budget is laden with tax and spending increases, and Pritzker is itching to get a progressive tax implemented (which he will have to get a Constitutional amendment to do).

Ironically it is the Constitutionally mandated provision that forbids changing pension obligations that is the problem.   So sacred is that provision that when Quinn tried to alter the pension because it mandated 3% pay increases when inflation was 1% (which amounts to a direct wealth transfer to retirees).  With pension costs chewing up 25% of the budget, the only way to address the sad state of Illinois finances is to address the pension costs, as they are squeezing out other state services.   Worse, Illinois is losing population—and its most productive members.  Illinois had a 113,000 decrease in population and the net average income differential between those coming and going is $20,000 per year.  I personally know 5 people that have left Illinois whose decisions in part were based on the state’s financial condition and where it is headed.  New York governor Andrew Cuomo last week complained that tax rates have driven high earners out of New York and he now has a $1.3 billion shortfall as a result.  Amazon nixed plans to move to New York because of its hostile environment for business.

One of the benefits of living in a republic is that you can see what other states do to determine what works and what doesn’t.

Illinois appears to have learned nothing from New York’s experience.

Desperate for cash, Pritzker vows a headlong rush at a progressive tax system, legalizing cannabis and sports betting and slapping taxes on those activities.  Since Chicago has a long legacy with prostitution (See Sin in the Second City), I’m surprised that legalized and taxed prostitution wasn’t served up as an alternative.  Perhaps that’s next.  We will have to gamble, smoke and screw our way out of this fiscal mess.

Let’s face facts, Illinois is in a turnaround mode.  Illinois debt is near junk status.  It has a backlog of bills of $15  billion, accruing interest at 12%.   It has a structural deficit of $3 billion.  One legal definition of insolvency is not being able to pay your debts as they come due, and Illinois is there.  The state is meeting its obligations by borrowing—like borrowing under one credit card to pay off another.  In short, it’s a mess and we are in a financial recovery and have been for a decade. 

Much of my professional work has been working with struggling companies or companies in crisis.  I am a 25 year member of the Turnaround Management Association, a trade organization dedicated to revitalizing financially ailing entities.   At a roundtable of business executives a couple of years ago, I asked a simple question, “If your son or daughter had transferable skills, and you wanted him or her to have a happy and prosperous life with a bright future, would you advise them to settle in Illinois?”  The room responded with guffaws and mumbling. 

Pritzker’s speech violated basic precepts of any successful turnaround.  First, there must be structural and radical changes to your day to day operations.  Pritzker proposed none of it.  Nowhere did he address cuts, efficiencies, or cost reductions.  Not one word of it.  Second, all constituencies must take some pain.   Madigan and Pritzker propose once again that the Madigan patronage army and the retirees take no pain at all.  Instead, the pain will all be absorbed by the already overburdened Illinois taxpayers, many of whom are fleeing to other states as soon as it is practicable to do so.

There was nothing in his speech about attracting businesses, relieving the pressures on businesses to operate in Illinois, or any words about making Illinois a vibrant, robust place to do business.  Nothing.  Not a word.

The speech was not lost on the rating agencies, Fitch and Moody’s, both of which indicated that they were not impressed by Pritzker and stood ready to downgrade Illinois debt and turn their outlook to negative.   Without a fix to the pension problem, Illinois’s fiscal situation doesn’t get better.  You don’t fix a problem unless the problem gets fixed.

Illinois should be a wonderful place.   It has a diverse economy and an educated workforce.   It is centrally located and is accessible by air, rail and via the Great Lakes.  Chicago is a magnificent world class city, with two great universities, a cultural scene that can rival any other city in the world, and ethnically diverse neighborhoods.  We should be firing on all cylinders.

But we are not.  We are circling the drain and in great danger of becoming the next Baltimore.

I have deep roots in Chicago.  A branch of my family was here before the Chicago Fire.  I grew up in one of the ethnic enclaves of Chicago, and even wrote my college admissions essay on The Jungle by Upton Sinclair.  I’ve never lived anywhere else. But I am not questioning how long I can stay.  Several friends have already abandoned the state for less punitive states, and many others are actively making plans to leave. 

When will they learn?

Walls and Nooses

The declaration of a National Emergency by Donald Trump and the discovery that Jussie Smollett likely fabricated his story that he was assaulted by two white men in MAGA hats, appear to be two unrelated stories.  But they are not.  They are very much related and symptomatic of a society that is in a pathological state.

First, let me put on the table that I do not support Trump’s declaration of a National Emergency to fortify our border.  Allocating funds for such things properly rests with the legislature in our system.  Trump’s executive overreach will be challenged in the courts and once again, it will be a battle to be resolved by the judiciary, where it does not belong.  It will be recalled that Obama dealt with DACA, not through the legislature, but through an executive order (a Constitutional power that he earlier asserted that he did not have). The judiciary then refused to allow Donald Trump to reverse this executive action.  I am confident that the Founders never intended unilateral executive action to be permanent.  But here we are again, stuck with a dysfunctional tug of war between the executive and the judiciary because the legislature cannot or will not develop a rational approach to immigration and border security.

A friend of mine contends that a nation is comprised of three elements—border, language, and culture.  To those, I would add a third--- a coherent narrative.

This week, we saw clearly that two of these four elements came under attack.

We often see countries that have border disputes with their neighbors.  Pakistan and India.  Israel and the Palestinians.  China and India.  Greece and Turkey over Cyprus.  But we are having a fierce border dispute with ourselves.  The more radical wing of the Democratic party represented by Beto O’Rourke, AOC and Kirsten Gillibrand don’t want a border or enforcement of one at all.  That does not bode well for us as a nation.

The second element that is under siege is our nation’s narrative, and nothing captures it more than the fabrication put forward by Jussie Smollett.  The narrative that most of us adhere to is that the United States is “land of the free, home of the brave,”  that the U.S. is a beacon of freedom and a “land of opportunity.”  Yes, we suffered through the stain of slavery and Jim Crow, but the Civil War and the Civil Rights Act, along with various other anti-discrimination laws have wrung out much of racial inequality.  Racism, while it still exists, is relegated to isolated pockets.

The Left, especially the New Left, has a competing narrative.  It is advanced by people like Michael Eric Dyson, Ta Nehisi Coates, and broadcast loudly by outlets such as the New York Times.   That narrative assert that is we are fundamentally and deeply a racist, oppressive nation, and a colonial power that not only oppresses minorities at home but also exploits resources and peoples abroad.  The New York Times has gone so far as to publish op-eds that support blacks not wanting the be friends with white people and claiming unconscious racism even if a person does not manifest it (therefore it can NEVER be eradicated).

It turns out that real demonstrable racial animus has been difficult for the New Left to find, so we’ve been subject to fabricated stories beginning with the Duke lacrosse team scandal (since disproven). 

And immediately on the heels of the incident between Nathan Phillips and the teens at Covington in which the videotapes conclusively disproved Phillips’s story, Smollett made his claim that he was attacked in Chicago.  And just as they did just a few weeks earlier, the MSM and several politicians reflexively swallowed Smollett’s story whole, even though it sounded a little fishy from the start.  Cory Booker, Kamala Harris, Rashida Tlaib, along with the MSM decried this “modern day lynching,” and, of course, part of the narrative was the MAGA hat.

The problem is that it never happened, just as “Hands up. Don’t shoot” never happened, and the harassment of a Native American by the Covington kids never happened. But the New Left is so wedded to its narrative of pervasive racism, that it sticks to it, even when incontrovertible evidence says otherwise.

These faked hate crimes (whether there should be such a designation is a separate argument) are arguably worse than actual hate crimes.  And it is not simply because they divert law enforcement resources.  Hate crimes injure a single person.  Fake hate crimes are aimed at tearing at the fabric of our entire country.  They are intended to destroy the narrative that we are a melting pot and a basically tolerant society.  They aim to exploit fabricated divisions by race, and make us suspicious of each other. 

Fortunately, those that perpetuated the lie of the Covington incident will be sued.  Smollett may be prosecuted for his lies.  We are beginning to see that there are consequences for doing this and that provides a little hope that destructive incidents like that can be deterred.

But It is troubling that of the four elements that make up a nation---- language, border, culture, and narrative, two were subject to a full frontal assault last week. 

Fairy Tales and Fraud

 The amount of media attention that the 29 year old barista turned freshman Congresswoman Alexandra Ocasio Cortez has garnished since beating establishment Democrat Joe Crowley has been astonishing.  No other politician in memory has gotten as much exposure this quickly, with a gaggle of reporters hanging on every word, as AOC exhorts and pontificate America into revolutionary change, and hectors her opponents.   Her bold proposals include a 70% tax rate on the “tippy tops” and the elimination of ICE.   Her outlandish ideas have drawn responses from such figures as Alan Greenspan.   Her reasoning, rhetoric, and demeanor is more like a 12 year old than a 29 year old, yet here she is, confidently grabbing the bullhorn and telling America that she knows how to remake the American economy. 

AOC released her blueprint for her Green New Deal plan and within hours, several leading Democrats endorsed it.   After claiming that the world is going to end in 12 years due to climate change, her Green New Deal includes such radical ideas such as rebuilding every single building in the U.S.,  getting rid of cows (due to flatulence), building enough rail to make air travel unnecessary and providing guaranteed income for anyone unable or unwilling to work.   Under the Green New Deal, AOC envisions that of planes, trains and automobiles, Americans only get to keep one.  She brushes aside criticism with inane and senseless comments such as, “We have to invent things that haven’t been invented yet,” and “you just pay for it.”

Several Democratic leaders such as Cory Booker and Kamala Harris rushed to embrace the Green New Deal.  Liberal commentators such as Jessica Tarloff, could not defend ANY of its specifics but praised its “spirit.”

Republicans roundly ridiculed it, and even some sober Democrats distanced themselves from it.  Less filtered commentators were more blunt.  Ben Stein flatly opined, “She [AOC] doesn’t know her a**hole from her elbow.”

The advent of AOC echoes of another attractive young woman that burst onto the scene, with a bold “vision,” claiming she would change the world--- Elizabeth Holmes.   Like AOC, Holmes was pretty, energetic, brimming with confidence.   And like AOC, Holmes had charisma and charm.    Holmes was able to convince respected figures such as General Mattis, George Shultz, and a number of Walgreens executives of her entrepreneurial acumen.  Holmes and AOC both share an inflated sense of their own historical significance.  Carreyrou said of Holmes, “What Elizabeth had just said confirmed their armchair psychoanalysis of their boss: she saw herself as a world historical figure.  A modern day Marie Curie.”

Holmes dropped out of Stanford after her freshman year to start Theranos, and similar to AOC, had little real world experience and insufficient scientific background to undertake a truly rigorous scientific and engineering leadership role.   Like AOC, the MSM gushed over her.  So eager was the press to anoint this little starlet, all but one (John Carreyrou) failed to ask fundamental questions about the device’s efficacy.   The adoration of AOC is quite unprecedented, given her singular lack of achievement, yet Netflix is wiling to pay $10 million for a documentary on a woman whose New Green Deal would not be deemed substantive enough to win a grade school science project.

The profile and grandiose visions of these two women are hauntingly similar.

Holmes hurt a lot of people with her fraud—a vision that was unanchored by any reality:  investors, creditors, employees, and the reputations of some executives at Walgreens.  One employee even committed suicide as a result of her actions.   But the scale of the damage she wrought was limited.  Her investors lost $700 million and creditors a few hundred million more.  All her employees will eventually be re-employed.  AOC seeks to put at risk the entire U.S. economy, commandeering trillions of dollars of resources and the well-being of over 300 million people.

After the Theranos case, do we really want to wager Western Civilization on AOC’s vision and ability?

I leave you with a contrasting vision—that of Janis Powers.  Powers, a health care consultant, has just written an intriguing book, Health Care: Meet the American Dream, in which she proposes a major overhaul of the health care system that takes government and health insurance companies out of the business and replaces them with the Dream Plan, the cornerstone of which is the LHCP, an investment account used to pay for an individual’s health care. She envisions using genetic testing and other data points to assist in estimating the costs of an individual’s health care needs.

Powers supplements her plan with her podcasts (The Powers Report) that I highly recommend.  The undergirding of her approach, which she puts right out front in her first podcast, is her conviction that any successful transformation of the health care system must meet two criteria: (a) financial viability, and (2) behavioral incentive alignment.

I intend to re-read and study more closely Powers’s proposal.  But from the outset, Powers, unlike AOC is anchored in reality.  The two criteria that Powers puts forward in order to overhaul the health care system are completely absent in AOC’s Green New Deal.  And, unlike AOC, Powers has deep first hand experience in the health care delivery system.  AOC has limited experience and most of that has been in mixing and serving drinks, and not in energy or the economics of energy.  Powers does not take a fanciful approach, but rather a hard and realistic look and an enormously complex problem.

Is Powers’s proposal viable?  I don’t know, but it is worth examining.  It will require close scrutiny and modeling. I suspect it comes down to the math.  It is an ambitious and visionary approach, but unlike AOC’s Green New Deal, it is grounded in reality and spun out with specificity.

Powers understands that bold proposals are bounded by math (finance), science, and human nature.  If you don’t recognize those boundaries, it’s either fairy tale or fraud.

Slouching Toward Gosnell

This week, Chicago was gripped by the Polar Vortex, a jet stream of frigid air and wind that descended from Canada, plunging temperatures into the minus 20’s with midday highs not reaching zero.  For a couple of days, the city was nearly paralyzed.  Many businesses and institutions closed.  The trains ran on  reduced schedules and the rail companies set fire to tracks to warm them.  At the moment of contact, the frigid cold took your breath away.

But the Polar Vortex wasn’t the only thing that took my breath away this week.  Following on the heels of New York’s new abortion law, Virginia delegate Kathy Tran introduced a similar measure in that state that would permit an abortion until birth.  The video of her defense of the bill went viral and was as stunning as the blast of Chicago’s winter wind off the river and is available on YouTube:

(https://www.youtube.com/watch?v=t0kC1B__CJ4)

Later, Virginia governor, Ralph Northam defended Tran and her bill in a radio interview and goes much further, suggesting that there may be instances where infanticide is permissible:

"When we talk about third trimester abortions, these are done with the consent of obviously the mother, with the consent of the physicians, more than one physician, by the way. [the proposed VA statute would reduce it to one]  And it's done in cases were there may be severe deformities, there may be a fetus that's nonviable.  So in this particular example, if a mother is in labor I can tell you exactly what would happen.  The infant would be delivered.  The infant would be kept comfortable.  The infant would be resuscitated if that's what the mother and the family desired, and then a discussion would ensue between the physicians and the mother.  So I think this was really blown out of proportion."

For most of my adult life, I have been "uncomfortably pro-choice."  In college, and a little bit beyond, I was pro-life.  Bernard Nathanson’s anti-abortion polemic, Aborting America, published in 1979 had a strong influence on me, and by my mid-twenties, I had known perhaps a half-dozen women that had had abortions and all but one had expressed deep regrets about having one.  But as I moved into my mid-twenties, I began to shift into libertarianism.   The basic problem was that I could never convince myself with any certainty that I knew the answer to the question of “when does life begin?”  My liberal friends seemed to know with certainty that life did not begin at conception and that it began somewhere down the path to birth.  My conservative friends knew with certainty that life began at conception.  I could never reach certainty in my mind in either direction.  My pro-life inclinations  conflicted with my libertarian instincts and libertarianism for the most part prevailed.   I bought into the “safe, legal, and rare” argument and the “our bodies, our choice” argument, and the libertarian view that “if you are anti-abortion, don’t get one.”

But I vastly underestimated Leftist Incrementalism.

But over the past few years, I also have spent a great deal of time and effort understanding the Holocaust, how it happened, who did it and how the world permitted such a thing.  I have attended several programs at the Illinois Holocaust Museum.  I have read Laurence Rees’s masterpiece, The Holocaust: A New History.   Some of my most widely read blog posts concerned the Holocaust or were film reviews of Holocaust related films (e.g. Son of Saul and Austerlitz).  Last year, I wrote an impassioned blog opposing the proposed Polish law which would have prohibited the use of the term “Polish Holocaust.” (http://commonsense-mark.blogspot.com/2018/03/polish-folly.html)  I began to understand the dehumanization of the Jews and other “undesirables” that the Nazis undertook that led to mass killings.  And they started with the mentally infirmed.

My shift in views have not come from my Catholic upbringing but rather my understanding of the Holocaust and from the New Left itself.   And now I understand how incorrect my position has been.

Until recently, the Left was careful to camouflage itself.  It covered itself in innocuous and libertarian language- "women's health " "women's choice," "safe, legal and rare."  It lured us in with the 3% Lie of Planned Parenthood. And it got people like me to take the bait.  How can a libertarian be against women's choice?

But the New Left has been exposed for where it is really going and what really goes on and the abject hideousness and inhumanity of it. There was the film of the National Abortion Federation with abortionists yukking it up about rolling eyeballs.  There was Michelle Wolfe sickly joking at the National Correspondents dinner with her liberal audience laughing and clapping like a bunch of trained seals, "He [Mike Pence] thinks abortion is murder.  Which first of all, don't knock it 'til you try it---and when you do try it, really knock it. You know, you've got to get that baby out of there."   There were the films of Planned Parenthood staff bargaining over the sale of baby parts.   There was Gosnell and now NY passing its law permitting abortion until birth and then cheering this “accomplishment” and celebrating it in the city with pink lights.

We began with "choice" and we ended with Michelle Wolfe,  rolling eyeballs and auctioning body parts.

If you want more to read on how dehumanization works, please see the films Austerlitz (http://commonsense-mark.blogspot.com/2017/04/austerlitz.html) and Son of Saul (http://commonsense-mark.blogspot.com/2016/02/son-of-saul.html) , both of which affected me greatly.  In Son of Saul, the Nazis referred to the corpses as "pieces" to disguise the ghastliness of what was actually going on.

My libertarian stance did not take into account the evils of Leftist Incrementalism.   First trimester and Safe, Legal and Rare were only the jumping off points.  And here we are now- up to the moment of  birth—and cheering about it.   Bet that the New York statute isn't the end point either.  It never is.  There is always a new frontier and new boundaries to push.  Now, under the proposed Virginia statute, I’m not certain that you could get a conviction on Kermit Gosnell.

So now it’s out in the open.  The same folks that abandoned anytime, anywhere inspections for the Iranian nuclear program have embraced anytime, anywhere abortions.  And the governor is on record suggesting that a post-birth abortion might also be an option.

If you like your baby, you can keep your baby.  But if you don’t, the Left is ok with that, too.

Just remember, the Nazi regime did not start with the ovens.