Search This Blog



Ignorance finds voice in LA privatization debate

As budgetary strains buffet Louisiana, in the fight to preserve the status quo observers can expect buffoonery propagated and ignorance exposed – and this emanating from our state legislators.

One such example comes from Democrat state Rep. Pat Smith, who warned of a great impending apocalypse in the making – potentially hordes of ex-state workers, laid off because of privatization efforts such as in the area of mental health treatment, condemned to lower standards of living if not unemployment and poverty that would drain state welfare systems. “You’re going to see those people in your hospitals as uninsured (patients) … You’re going to get it backwards,” this sage predicted. Also, she complained that privatization will result in state workers receiving less money and fewer benefits, asserting that usually is the case with a shift to the private sector.

Such statements make it all too clear that not only does Smith have no idea about what she talks about, but that she is an economic illiterate. In fact, scholarly evidence demonstrates (the latest cross-national example, which also includes the impact of foreign provision, is here; a summary of an older one is here) that, at worst, impacts are negligible in terms of overall unemployment rates and pay for former government employees and on the larger economy.

This should be intuitively expected. If government is providing the identical service at higher cost than the private sector, the resources that are being wasted in the process now after the shift can be put to better and more productive use. This will stimulate economic growth, creating more jobs and higher-paying jobs. Overall, some former government workers will be better off, but those whose contributions were overpaid under government monopolistic conditions may be worse off in terms of compensation, but in the aggregate society benefits.

Yet this common sense eludes Smith, and the implications of her remarks reveal a remarkably constipated view of how the world works economically. To Smith, government appears to be the main creator of jobs and the higher compensation she assigns to it a powerful force of economic development, for without them, she stated, we get higher unemployment or underemployment and downward mobility in wages, requiring more reliance on government services. Under her model, government should do everything – if the entire economy were controlled by government, et voilĂ , there would be no unemployment and everybody could be paid a decent wage.

Naturally, the real world failure of this ideology remains unrealized, to our detriment, by policy-makers like Smith and her ilk. That people with these views even get elected amazes the sane among us, but, fortunately, there appear too few of these ignoramuses in power to prevent the state’s continuing shift to realizing the many benefits of privatization.


Jindal must lead on pay plan, school funding issues

Government bodies raised stakes in the ongoing grappling regarding Louisiana’s current and looming budget deficit, and Gov. Bobby Jindal needs to respond.

Last week, the Board of Elementary and Secondary Education, despite a request by the Jindal Administration not to do so, decided to boost spending for the upcoming fiscal year, about $100 million, after not doing so last year for this current year. This area of the budget, known as the Minimum Foundation Program, has its amount and distributions to districts and other schools determined by a complicated formula from BESE the results of which can be accepted or rejected, but not amended, by the Legislature. If all plans are rejected by the end of the session, the previous year’s applies.

Meanwhile, in the wake of Jindal’s veto of a state pay plan for next year more closely based on performance that Jindal said offered insufficient flexibility for state budgeting, the State Civil Service Commission said it uniformally would withhold pay raises to all classified employees. Jindal could do this in fact by not budgeting money for them (with legislative approval) as happened last year for this fiscal year, but this did not stop some agencies from shifting funds around to give some anyway for this year, so this order would prevent agencies from doing that for next year.

The SCSC said it would approve this on Friday, and hinted that a blanket prohibition might have something to do with Jindal’s rejection, indicating that it was unwilling to review the issue again anytime soon, meaning in time for the next fiscal year. This puts some pressure on Jindal, who, if he could get a plan to his liking through in time, then could budget in a way selectively to permit the giving of some raises. Otherwise, he might get blamed by these employees for the flat prohibition and suffer loss of political capital.

It would be a shame for the reform momentum to be lost, so Jindal, which at this point he seems disinclined to do, should make another effort to get his preferred plan through in time for the next fiscal year. Part of the complaint from the SCSC seems to be a lack of guidance from him, and, if that’s true, he needs to provide it. A reminder to the six of its seven members he appoints that they will be eligible for reappointment sometime soon also might light a fire under the body which seems reluctant to approve the more radical reform plans that Jindal seems to prefer. To not try otherwise for swift resolution makes Jindal simply look obstinate after his latest rejection and the one before that combined with the assertions by the panel that he refuses to lead.

As for BESE, Jindal should remind the Legislature that $100 million to compensate to keep the budget balanced will have to come from somewhere and his line item veto may come into play in ways they may not like in order to do it unless they reject this request. He also should drop some hints to the six (of 11) members of BESE that consistently have voted against reform measures in addition to driving the increase request that they could face some tougher opposition in their next election bids around the corner unless they get with the program.

In both cases, Jindal must lead or else perceptions of his ability to do so and his program for more efficient state spending become threatened.


Health policy must serve clients, public, not big govt

As Gov. Bobby Jindal continues to seek out spending fewer taxpayer dollars on state delivery of services without reduction in quality, a curious argument has emerged against the strategy which bears reviewing for its veracity and what it can tell us about the motives of its advocates.

Jindal has placed great store in identifying government functions amenable to privatization and moving in that direction. This has raised the hackles of both some state employees, who would lose state jobs and possibly not be hired by the private sector afterwards, and some politicians who believe in a model of bigger government doing more using more resources. They try to counter the Jindal initiatives by arguing that provision of the services will suffer in doing this, both in a relative and absolute sense.

This means that two objections could be raised. One is that the service will be performed adequately, but not to the same level as it had been done by the state previously. An example of this comes from the state’s decisions to remove from veterans’ homes run by the state pharmacies with a variety of compounds. Those disappointed in this argue that this causes inconvenience and possible threats to the health of aged veterans.


Melancon promotes unrealistic campaign template

How badly Gannett News Service wants Democrat Rep. Charlie Melancon to wrest incumbent Republican Sen. David Vitter’s seat from him and/or at least to have something interesting to write about became evident in a puff piece about the contest.

In the parlance of the media, reporter Mike Hasten produced a “second-day” story the theme of which asserted that Melancon was “competitive” in the contest after looking selectively at some results from an internal poll conducted by the campaign. Several stories with more general information about it appeared last week at this time. This kind of story is different because, unlike when fresh news comes about and is reported with some general information, since it is some time after the fact – for whatever reason Hasten did not initially report on the release of the information – a new angle that does not concentrate on the general information must be found and presented.

That’s why the theme was “competitveness” – although, as previously noted, if the brightest thing that could be argued about the Melancon campaign’s status is he has a chance to win, that’s about as bleak a forecast as possible without actually conceding the race. What the story decided to emphasize and not, however, is as big a story.


Distrust makes Jindal try for grand slam on pay plan

Lingering distrust of a political past versus current budget realities were resolved by Gov. Bobby Jindal in favor of not just his swinging for the fences, but with the bases loaded regarding pay scales for classified state government employees.

Presently, the state offers an all-or-nothing annual pay raise of four percent to its classified employees which make up over 60 percent of the state’s total full-time workforce, if they achieve a performance rating as satisfactory or better which in recent years around 99 percent of those evaluated have gotten. Jindal has wanted this changed to make raises actually reflect performance and to give agency heads greater budgetary discretion in awarding pay raises.

This led the Department of State Civil Service to create a set of alternatives of which the State Civil Service Commission first chose a mild improvement that graduated pay scales according to scoring on evaluations for the highest three categories and SCSC approval of deviations. But Jindal vetoed that early this year as insufficiently flexible. The SCSC then approved a more extensive improvement that did not lock raise levels for all agencies, lowered the maximum levels, and allowed flexibility by agencies across all categories in the case of layoffs. Last week, Jindal vetoed this, again citing the same reason.

Now, Jindal writes that the rationale to allow rewarding at any of lowered but fixed rates, somewhere below them, or not at all must have no conditions – this can happen not only related to a reduction-in-force situation. Such a criticism points to his belief that only one of the two most revolutionary plans originally estimated will suffice (although it is unclear whether he actually ever has publically and unambiguously stated this). That one flaw reveals that Jindal does not trust supervisors to make realistic judgments in evaluations which could, as he terms, make the system less a pay-for-performance plan and retain more of its cost-of-living aspect.

Obviously, he has good reason to think so, despite SCSC indications that they will deal with the overrating phenomenon, given the past scenario of unrealistically inflated scores. A plan that gives total discretion to agencies to determine actual increase percentages largely would negate the ability of supervisors to be too generous, as detection of this tendency by agency heads could be countered with lowering the percentages used for each category. Fiscal stress would not be a necessary condition for this to happen under Jindal’s request as opposed to the plan just refused.

In essence, Jindal rejected the certainty of a good plan for the probability of a great plan. This is despite the fact that for the upcoming fiscal year the two would have been indistinguishable in most cases as huge projected budget deficits would mean layoffs again for most if not all agencies in state government. Thus, Jindal intends any change not only for short-term convenience for him, but also that which will last over the long term.

Yet this strategy carries some political risk. A plan only can go into effect at the Jul. 1 beginning of the fiscal year and it’s being left rather late for 2010-11. While the process can begin with the SCSC’s next monthly meeting, the earliest it can go through it all (including collecting, if the past two iterations prove anything, a considerable number of negative state employee comments) is June 8 or 9, less than a month before the end of the legislative session and the beginning of the fiscal year. While it is unlikely since six of the seven SCSC members are gubernatorial appointees, a revolt among them or other bizarre circumstances might mean the deadline gets missed and another year would pass under the current system.

If so, to save money that would mean Jindal would have to repeat what he did this current year, deny any money for any raises. This would cause the deserving classified employees to suffer as well as the undeserving to be denied for two straight years, damaging morale and fomenting more opposition to Jindal’s expected reelection bid among this constituency that any changed pay regime could. To try to dramatically change the game with one swing of the bat and the sacks full carries risk, but in this instance it’s one that appears likely to succeed with the maximum payoff.