What is the value of an education?

An education is valuable. We all know that. Statistics tell us those with higher levels of education earn more over a lifetime.

But why?

In an interview with book author and college professor Bryan Caplan, Wall Street Journal editorial features editor James Taranto elicits an apt analogy. Caplan’s book is titled “The Case Against Education.”

In answer to the question as to why employers are willing to pay more for the more highly — or all too often really just longer — educated, Caplan explains the answer is “signaling.”

Caplan’s analogy:

“There’s two ways to raise the value of a diamond. One of them is, you get an expert gemsmith to cut the diamond perfectly, to make it a wonderful diamond.” That adds value by making the stone objectively better — like human capital in the education context. The other way: “You get a guy with an eyepiece to look at it and go, ‘Oh yeah, yeah, this is great — it’s wonderful, flawless.’ Then he puts a little sticker on it saying ‘triple-A diamond.’” That’s signaling. The jewel is the same, but it’s certified.

So, a higher level of education signals to the employer that the job candidate is capable of spending long hours doing stultifying menial tasks and conforming to expectations.

That’s why we have $1.49 trillion in outstanding student loans, not because anyone is really leaning any job-related skills.

 

 

Advertisements

Newspaper column: Census should ask about citizenship

Ignorance is not bliss.

Eighteen states and the District of Columbia have sued in an effort to block the 2020 Census from asking about citizenship status, claiming the question will prompt illegal immigrants to not respond and thus result in an undercount of population. That, they say, could result in the loss of congressional representation and federal funding for states, such as California, that have large immigrant populations.

According to the 14th Amendment, “Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed.” That’s the whole number of persons, not just citizens.

The stakes for Nevada are also high.

According to a Pew Research report, in 2012 Nevada’s population included 7.6 percent illegal immigrants, its workforce was 10.2 percent illegals and its school enrollment included 17.7 percent whose parents are not in the country legally. All of those levels were the highest in the nation and climbing.

According to estimates posted by the Census Bureau in July, fully 19.3 percent of Nevada residents were foreign born. Fully 27 percent of Californians were foreign born. The problem is that there is no accurate number for how many of those have attained citizenship or legal residency.

The citizenship question was asked up until 1950 and is still asked on the more detailed American Community Survey that goes to about 2.6 percent of the population each year.

The Census Bureau explains why the citizenship and place of birth questions are on the long form: “We ask about people in the community born in other countries in combination with information about housing, language spoken at home, employment, and education, to help government and communities enforce laws, regulations, and policies against discrimination based on national origin. For example, these data are used to support the enforcement responsibilities under the Voting Rights Act to investigate differences in voter participation rates and to enforce other laws and policies regarding bilingual requirements.”

Those who oppose asking about citizenship status do so under the purely speculative supposition that non-citizens will spurn the census entirely, ignoring the fact the Census Bureau is legally bound by strict confidentiality requirements. It may not share individual data with ICE, the IRS, the FBI, the CIA or anyone.

Additionally, refusing to comply with the Census can result in a $100 fine and providing false data can result in a $500 fine, though reportedly no one has been fined since 1970.

Nevada Democratic Sen. Catherine Cortez Masto railed, “This decision trades the accuracy of a census designed to provide complete count of the entire nation’s population for a political win for President Trump. This is a direct attack on immigrant populations that could lead to undercounted and underfunded minority districts across the country. It is an assault on our representative democracy and our Constitution which requires a complete and accurate count of everyone living in the country, no matter their citizenship status.”

Nevada Rep. Jacky Rosen, a Democrat running for Republican Sen. Dean Heller’s seat, said the citizenship question “politicizes the census and drags its integrity into question. It’s clear that the Trump administration is looking to ensure Nevada’s immigrant communities are underserved and underrepresented for the next decade.”

The mostly Democratic-majority states that are suing over the Census question about citizenship are claiming the knowledge will somehow dilute minority representation, but the opposite is the case.

A Wall Street Journal editorial recently pointed out, “The progressive critics are also missing that Commerce says the Justice Department requested the citizenship question to continue a longtime progressive policy: to wit, enforcing Section 2 of the Voting Rights Act, which prohibits voting practices that discriminate by race. Justice supposedly needs detailed data on citizen voting-age population by census block, which the American Community Survey doesn’t provide.”

Hans von Spakovsky explained in an essay penned for The Heritage Foundation, “Citizenship information collected in the 2000 census was vital to our efforts to enforce the Voting Rights Act when I worked at the U.S. Department of Justice. When reviewing claims of whether the voting strength of minority voters was being diluted in redistricting, it was essential to know the size of the citizen voting age population.”

So it certainly seems that the self-styled progressives are ignoring the facts, the statistics and the well-being of those they claim to wish to protect.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Newspaper column: Customers should be able to shop for electricity

Question 3 on the 2016 General Election ballot — the Energy Choice Initiative — passed by an overwhelming 72.4 percent to 27.6 percent. The measure failed in only one county, White Pine, but by only four votes.

Because the measure would amend the state Constitution it is back on the ballot this fall for final voter approval, but this time around a coalition headed by the state’s largest power monopoly, NV Energy, has vowed to spend $30 million to defeat it.

The Energy Choice Initiative proposes that the Constitution be amended to require the Legislature to pass a law providing an open, competitive retail electric energy market by July 1, 2023. The law must include provisions to reduce customer costs, protect against service disconnections and unfair practices, and prohibit the granting of monopolies for power generation, but could leave in place regulation of transmission or distribution systems.

One of the chief arguments for the measure is that competition would drive down cost.

Nevada and many other states were well on the way to breaking up their electricity generation monopolies 17 years ago until the Enron market manipulation debacle that led to blackouts and price spikes that scared lawmakers into backing off, even though the free market was not the problem. The problem was collusion and manipulation.

According to a Wall Street Journal article at the time, Enron charged California’s Independent System Operator for relieving power congestion without actually doing so. The company also avoided in-state price caps by moving power out of state and then reselling it to California — fraud.

Expect to be inundated in the coming months with “facts and figures” that are wildly contradictory and warnings of another Enron debacle.

Michael Yackira, the former CEO of NV Energy, recently penned an op-ed for the donation-funded news website The Nevada Independent that argued the initiative could jeopardize energy dependability and not lower power bills.

“Fourteen states plus the District of Columbia have implemented deregulation,” Yackira writes. “The result: Not one of these has lower rates than Nevada and 11 of these places have higher rates than the national average. When compared to prices throughout the country, Nevada’s prices are below the national average. For example, California’s electricity prices per kilowatt hour are nearly double Nevada’s.”

Days later, Jon Wellinghoff, a backer of the Energy Choice Initiative as well as former general counsel to the Public Utilities Commission of Nevada and chairman of the Federal Energy Regulatory Commission, fired back at the same website, saying the initiative is not “deregualtion” at all, because the grid would still be regulated and still operated by the power company and the various rural power cooperatives around the state.

Wellinghoff said it is a basic economic principle that competition lowers costs. “Consider the case of Pennsylvania,” he writes. “Since it enacted energy choice, consumers have saved close to $1 billion per year on their power bills and the residents of Pittsburgh are paying 50 percent LESS for energy than under the monopoly utility, according to former Pennsylvania Public Utilities Commissioner John Hanger.”

He also cited a 2015 study by two veteran utility regulators titled “Evolution of the Revolution: The Sustained Success of Retail Electricity Competition.” That study found that from 1997 to 2014 the states that had adopted customer choice for power saw inflation-adjusted residential rates fall 5.2 percent, while monopoly states saw those rates rise 3.9 percent.

Opponents of the ballot measure like to point out that Nevada’s rates are below the national average and nearly half that of California’s, which has driven up costs by demanding that a huge proportion of its power come from more expensive renewable energy sources, such as solar and wind.

According to the U.S. Energy Information Administration, as of December 2017 Nevada power rates for all sectors ranked in the middle of the 11 western states, but since commercial and industrial users get lower rates in Nevada, our residential rates were the third highest in the region 12.34 cents per kilowatt-hour. Arizona’s residential rate was 12.85 cents and California’s 18.48. The lowest was in hydropower rich Washington at 9.63 cents.

Wellinghoff points out that large power consumers such as MGM, Switch, Caesars and Barrick Mining are already paying millions of dollars for the privilege of buying power on the open market — in the case of MGM, $87 million, which must mean they are going to save more than $87 million on the open market.

Why shouldn’t residential customers be able to shop for cheaper power?

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Update: An alert reader points out that a 2003 investigation of the power market manipulation determined that the underlying cause was poor regulatory plans. “Staff concludes that supply-demand imbalance, flawed market design and inconsistent rules made possible significant market manipulation as delineated in final investigation report. Without underlying market dysfunction, attempts to manipulate the market would not be successful,” the staff report concluded.

Is the U.S. nuclear arsenal still a deterrence?

WSJ graphic

The editorialists at the Las Vegas Sun are living in a mad, MAD world. You know: Mutually Assured Destruction. Never mind that some of the people with their fingers on nuclear triggers may well be suicidal seekers of the apocalypse.

But let’s dispel a factual error first. “There are nearly 7,000 warheads in the U.S. nuclear arsenal, deliverable across the globe at a moment’s notice by missile, aircraft and submarine,” today’s Sun editorial proclaims.

Well, not quite. According to the Federation of American Scientists, the U.S. has a total of about 6,600 nuclear weapons, but 2,600 are retired and awaiting dismantling. Another 2,200 are in stockpile and about 1,800 are deployed. Russia has similar numbers, they say. Enough to make the rubble bounce, as we used to say?

The Sun quotes a Time article that hysterically declares President Trump has put the Nevada National Security Site on notice to be ready to renew testing of nuclear weapons solely for the purpose of scaring potential enemies into backing down. The Sun declares that testing is totally unneeded. (The editorial did note that Gov. Brian Sandoval says he has been assured no nuke testing will take place in Nevada.)

The Sun says the mere idea of renewed nuke tests “demonstrates an astonishing lack of understanding about the nation’s military and the world’s perception of the U.S. More than anything, it proves that Trump’s feelings of inadequacy and inferiority know no bounds.”

But is our nuclear deterrence still a deterrence?

According to a recent Wall Street Journal op-ed, our ancient B-52 bombers and outdated cruise missiles are vulnerable to Russian and Chinese air defenses and we have only 20 penetrating B-2 bombers located at a few insufficiently hardened bases.

While we once had 41 ballistic-missile submarines, SSBNs, we are down to 14, the article notes, and those, too, are vulnerable.

“American ballistic-missile defense is severely underdeveloped due to ideological opposition and the misunderstanding of its purpose, which is to protect population and infrastructure as much as possible but, because many warheads will get through, primarily to shield retaliatory capacity so as to make a successful enemy first strike impossible — thus increasing stability rather than decreasing it, as its critics wrongly believe,” the writer, Mark Helprin, explains. “Starved of money and innovation, missile defense has been confined to midcourse interception, when boost-phase and terminal intercept are also needed. Merely intending this without sufficient funding is useless. As for national resilience, the U.S. long ago gave up any form of civil defense, while Russia and China have not. This reinforces their ideas of nuclear utility, weakens our deterrence, and makes the nuclear calculus that much more unstable.”

Helprin disputes the federation of scientists stats and states the Russians have 2,600 currently deployed strategic warheads compared to the U.S.’s 1,590.

Another WSJ writer points out that the U.S. has no tactical nukes, which means if confronted by another nation’s use of smaller nukes on the battlefield, the U.S.’s only ability to counter is with a full-scale nuclear exchange and a global holocaust — or to back down and lose all credibility for defense commitments.

Perhaps we should not be so fast in declaring there is no need for continued nuclear weapon development and testing. It is a mad, mad world after all.

Federation of American Scientists graphic

 

 

 

Lawsuit outlines compendium of allegations against Wynn

If you thought the sexual harassment allegations against Steve Wynn were horrendous, wait till you read the lawsuit filed today accusing him and his compliant board of excess pay and benefits. The Nevada Independent has posted a copy of the 42-page suit.

Most of the claims in the suit by shareholder Norfolk County Retirement System, filed in Clark County District Court, have been reported at one time or the other but the compilation is eye-opening. The suit accuses Wynn, his board and company executives of poor corporate governance and breaches of fiduciary duty at the expense of shareholders.

The suit notes, for example, that Institutional Shareholder Services, Inc. has recommended withholding votes to re-elect members of the Wynn compensation committee, citing “Wynn’s sizable pay packages compared with other CEOs and a severance agreement equating to $330 million that ‘exceeds the upper parameter of acceptable amounts,’ according to a report from ISS last year. Glass Lewis & Co, another advisory firm, also recommended that shareholders vote against the Company’s compensation package, citing ‘poor overall design’ and ‘performance disconnect.’ In fact, Glass Lewis gave the Company an ‘F’ for its pay-for-performance practices for the last two years.”

This past year ISS gave Wynn Resorts its worst ranking for governance risk.

The suit also recounts that the company leases Wynn’s personal art collection for $1 a year, but pays the cost of insurance, security and taxes.

Of course, it also relates the recent allegations of sexual harassment against Wynn, noting the board’s knowledge of and lack of action. The suit says that Wynn’s former wife Elaine Wynn’s lawsuit “accuses Mr. Wynn of using the Company ‘to fund his lavish lifestyle and personal politics’ and displaying ‘reckless risk-taking behavior’ that places the Company in jeopardy and has exposed it to legal challenges. Thus, regardless of whether Mr. Wynn initially concealed the settlement and allegations of egregious misconduct involving the Company, the Board knew of the settlement and allegations of patently egregious misconduct involving the Company by at least 2015 and failed to act and continued to support and recommend to the stockholders Mr. Wynn’s continued leadership and compensation. The Board knowingly failed to investigate the allegations of patently egregious misconduct by the Chairman and CEO and Mr. Wynn’s suitability for his fiduciary positions and regulatory compliance and his suitability as a gaming operator. Knowing failure to act by the Board on the allegations of such egregious misconduct involving the Company constituted a knowing and intentional violation of its fiduciary duties to the Company for which the Director Defendants are liable.”

Wynn’s current employment agree, the suit notes, runs till 2022 and pays him $2.5 million a year.

Then there is this chart:

 

 

Newspaper column: Why Nevada must hit the brakes on taxes

WSJ illustration

It’s called voting with your feet.

A remarkable number of well-heeled Americans are doing just that, and it should serve as a warning to Nevada voters and candidates as we enter an election year. Though Republican governors in recent years have shepherded through the Legislature record-high tax increases, Nevada still fares fairly well in comparison to other states when it comes to the tax burden borne by citizens of the Silver State.

According to the Tax Foundation’s analysis of state and local tax burdens per capita for fiscal year 2012 — which is after Gov. Kenny Guinn’s billion-dollar tax hike but before the $1.5 billion tax hike pushed by Gov. Brian Sandoval — Nevada ranked 43rd lowest in the nation, while neighboring Taxafornia ranked sixth highest.

Nevada tax collectors grabbed 8.1 percent of the state income through state and local taxes or $3,349 per capita. Meanwhile, California snatched 11 percent of state income or $5,237 per capita.

Perhaps that explains why, according to Internal Revenue Service data on taxpayer migration, from 2014 to 2015 about 10,500 Nevada taxpayers moved to California, while 17,700 California taxpayers moved to Nevada. Even more telling is the fact that the Californians fleeing to lower-taxed Nevada averaged $91,000 in gross adjusted income, while the Nevadans heading to California averaged only $47,400 in adjusted gross income.

It seems people with higher income have a tendency to find ways to keep more of it for themselves.

From 2014 to 2015 Nevada netted an increase in total adjusted gross income reported to the IRS of $1.43 billion. Of that, $1.1 billion came due to the influx of Californians changing residencies.

An analysis of a sampling of that IRS data shows the California-Nevada migration pattern is no anomaly.

In that one year, the state of New York, which has the highest state and local tax burden of any state at 12.7 percent of income and $6,993 per capita, lost $4.4 billion in income.

No. 2 highest Connecticut lost $1.3 billion in income. No. 3 highest New Jersey lost $2.46 billion. No. 5 Illinois lost $3.47 billion. No. 6 California lost $2.09 billion.

Meanwhile, state income tax-free Texas, ranked 46th lowest, added $3.61 billion, and state income tax-free Florida, though only 34th lowest, added $11.65 billion. The latter might have something to do with weather as well, since $2.62 billion of that came in from former New Yorkers, $1.49 billion from former New Jersey residents and $1.47 billion from former Illinoisans.

The New Jersey residents who moved to Florida had an average income of $121,000, while Floridians moving to New Jersey averaged $72,500.

This is hardly surprising nor a new phenomenon. In an article in The Wall Street Journal in 2009 under the headline, “Soak the Rich, Lose the Rich,” economist Arthur Laffer and WSJ economics writer Stephen Moore updated previous studies and found that from 1998 to 2007, more than 1,100 people every day of the year relocated from the nine highest income-tax states — such as California, New Jersey, New York and Ohio — mostly to the nine tax-haven states with no income tax — including Florida, Nevada, New Hampshire and Texas.

Laffer and Moore determined that over that period of time the no-income tax states created 89 percent more jobs and had 32 percent faster personal income growth than the high-tax states.

“Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair?” they asked. “No. Dozens of academic studies — old and new — have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.”

A recent WSJ editorial noted that billions in income are still flowing out of New York, New Jersey and Connecticut and into Florida.

“As these state laboratories of Democratic governance show, dunning the rich ultimately hurts people of all incomes by repressing the growth needed to create jobs, boost wages and raise government revenues that fund public services,” the editorial concluded.

Voting with the feet is sure to increase since the recent tax reform limits federal income tax deductions for state and local taxes.

Let this be a lesson for Nevada. Chase the rich, they’ll run away.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

News coverage of net neutrality changes reveal nuances in news neutrality

FCC Chair Ajit Pai (AP pix via NYT)

Words can convey considerable nuance, suggesting approval or disapproval without coming right out and saying so. Compare the news flashes this morning from The New York Times and The Wall Street Journal about the Federal Communications Commission’s decision to vote next month to end net neutrality rules. There is a difference in tone and emphasis.

The third paragraph of The Times piece reads:

The clear winners from the move would be telecom giants like AT&T and Comcast that have lobbied for years against regulations of broadband and will now have more control over the online experiences of American consumers. The losers could be internet sites that will have to answer telecom firms to get their content in front of consumers. And consumers may see their bills increase for the best quality of internet service.

The second graph of The Journal article reads:

The changes are expected to be approved at a Federal Communications Commission meeting in mid-December. They would create a range of new opportunities for internet providers, enabling them to form alliances with media and other online firms to offer web services at higher speeds and quality. They also would help clear the way for creative pricing and bundling of services to attract more customers.

The Obama administration imposed the net neutrality rules in 2015. They prohibit internet service providers from charging more for faster connection speed. Sort of like prohibiting a trucking company from charging more for heavier shipments. (No neutrality here, of course.)

The Journal noted that critics argued the rules “stifled investment and innovation in the still-developing broadband industry. Providers also worried the rules could open the door to rate regulation and other new oversight.”

The Times did quote FCC Chairman as saying, “Under my proposal, the federal government will stop micromanaging the internet. Instead, the F.C.C. would simply require internet service providers to be transparent about their practices so that consumers can buy the service plan that’s best for them and entrepreneurs and other small businesses can have the technical information they need to innovate.”

The next graph in The Times states:

The plan to repeal the 2015 net neutrality rules also reverses a hallmark decision by the agency to declare broadband as a service as essential as phones and electricity, a move that created the legal foundation for the net neutrality rules and underscored the importance of high-speed internet service to the nation.

Hallmark. Importance.

The Journal outlined the two sides of the argument:

Many conservatives view the FTC’s case-by-case regulatory approach as more appropriate for the internet economy, to encourage more innovation.

Progressives prefer the FCC’s rule-based approach for the online environment to prevent unfair and anticompetitive practices by internet providers from ever taking root.

The Journal also noted that on Monday the Trump Justice Department filed suit to block a proposed merger of AT&T with Time Warner on antitrust grounds, saying this suggested the administration’s   support for big telecommunications combinations has limits. The Times made no mention of this.

News neutrality is difficult to achieve, too.