What a millage means to you.

Recently we had an election, and one of the most fought over issues concerned millages.

The city of Ypsilanti as well as the Washenaw Intermediate School District both had ballot proposals for 2.0 increases in taxation. Both failed.

I'm not going to try to explain why these millages failed, but I think there is a misunderstanding about what, and how much, a millage affects people.

A mill is 1/1000 of a dollar. It's not a lot of money. If you had an income tax of 1 mill on your income, that would mean that for every $1000 you earn, you give $1 to the government. If the government demanded a 2 mill increase on this purely hypothetical income tax, you would see a 300% increase in your tax level, and pay $3 instead of one.

A 300% increase in taxation sounds bad. A $2 increase per $1000..., well, if the government wanted so little money to begin with we probably wouldn't mind too much. As an aside, this example also illustrates why we need to be wary of people quoting percentage increases at us. A 300% tax increase! Oh, my stars and garters!

However, millages are not used for income taxes. Millages are usually used to pay for local government services, libraries, and schools. Millages are also almost invariable tied to property. In fact, millages are the primary source of the property taxes every homeowner in a municipality pays. Depending on the municipality, millages can be pretty high, or almost nothing. Usually, within a municipality the largest millage is for schools.

However, before we can do any calculations, we need to discuss property value. There are three values assigned to any piece of property in Michigan: the real value, what the home can sell for; the assessed value, in Michigan this is half the real value; and the State Equalized Value, brought to you by Proposition A back in 1995. What Proposition A did was limit the taxable value of the home, called the State Equalized Value (SEV), from rising as fast as the assessed value did. In other words, if you bought a house in Brighton in 1980 for $40,000, in the early 1990's when Brighton was an expanding community the real value may have risen to $200,000. Which means the assessed value was no longer 1/2 of the price you paid for it, or $20,000, but five times that amount $100,000. If you were expecting to pay property taxes on $20,000 and your property taxes went up 5 times the amount in a few short years, you may not have the money to pay. So Proposition A and the SEV was brought in to limit the taxable value of a home to no more than 3% a year until the SEV caught up to the assessed value (1/2 the real value).

BTW, this accounts for the "Bump" that people are upset about when they purchase a home. The previous owners may be paying on an SEV of say $70,000 (assessed value $140,000, and real value $240,000) on their home. When a house is purchased everything resets. If you purchase the home for it's real value, $240,000, (assessed value $140,000 and SEV now $140,000) your taxes are going to be twice what the previous owner paid, Ouch!

Now millages are property taxes against the SEV. Which is, at most, is 1/2 of the real value of your home. In many cases it's less.

So, let's say you have just purchased a $100,000 home in Ypsilanti. It's not a great place, but it's what you can afford. A millage is proposed to help pay for police protection. It's a 2 mill increase. How much is that going to cost you?

Real value of the property is $100,000.

Assessed value is $50,000.

State Equalized Value is $50,000.

Cost of increased police tax per year = 0.002 * $50,000 = $100.

The residents of Ypsilanti were unwilling to pay an additional $8.33/month/household to pay for their law enforcement. That's about the cost of one meal at a fast food restaurant per month.

Now, certainly if you just bought a $200,000 house, that's $200/yr; a house valued at $300,000 would pay $300/yr, etc.

There are other reasons for rejecting a millage, and I can't say that the citizens of Ypsilanti made a mistake in rejecting this one. The results of this millage are yet to be seen. Yet, if the reason most people had for voting against this millage was because it cost too much, I don't think they realize how little it actually would have cost.

Book Review: Republican Gomorrah

Over the past couple of months this book has gotten quite a few reviews. I haven't read many of them, but since the topic is of interest to me, I thought I'd throw my opinions into the pile.

The most misleading part of the book, to get the bad over with first, is the title. The full title, Republican Gomorrah inside the movement that shattered the party, suggests that the Republican party is split into numerous, ineffectual, factions. To take the literal meaning of Gomorrah, that of a town destroyed by god for it's sins, suggests that the Republican party is in fact defunct and no longer a force in politics. This is hardly the case, and the book doesn't even try to provide evidence to support that idea.

However, the title was one of very few things I disliked. Since I'm pretty critical of literature (even though reading it is one of my greatest pleasures), I have to say that for Max Blumenthal to have given me only a couple things to complain about is rather high praise.

Let's start with the style. The book is arranged into three sections. Apparently the idea being that the first section deals with the creation of the modern religious right, the second deals with the current personalities, and the last with recent events. Frankly, the sections are irrelevant. So I'll deal with the structure of the book without referring to the sections themselves.

The book is a series of short biographical sketches of the founders and leaders of the modern evangelical movement. While it misses a few, like Abram Vereide, it covers a great deal of ground. There are chapters on Howard J. Ahmanson Jr., the sugar daddy of the Discovery Institute; Ted Haggard, the discredited former head of the National Association of Evangelicals; to Larry Craig and James Dobson. Because the book is primarily a set of biographical sketches, it is, it is possible to read the chapters out of order without losing much in the way of content.

The key thought in the book, however, is not the fact that these people are part of the Republican party. In fact, should a few of the core identifying ideas of these christians have been slightly different, it could have been the Democratic party which could have been infiltrated and have become the home of these religious bigots. However, since the Republican party was closer, ideologically, to the religious right, the Republican party has suffered.

The key to the book is not the political party these people belong to, the key is explicitly stated in the introduction of the book. The key, and point, of the book is summed up in a quote from Eric Hoffer's The True Believer, "A rising mass movement attracts and holds a following not by its doctrine and promises, but by the refuge it offers from the anxieties, barrenness and meaninglessness of an individual existence."

Republican Gomorrah demonstrates how the modern evangelical movement, which has co-oped the Republican party for itself, is, for most of it's followers, a place of refuge for people who have lost faith in themselves.

Adam Smith, the forgotten liberal

For many, many, years Adam Smith has been praised by conservative thinkers and condemned by liberals. However, I am beginning to think that neither side has really read his Wealth of Nations. During my MBA program I had two economics professors and I asked both of them, both with PhDs in Economics, whether they had read Adam Smith’s famous work. One of them admitted that he hadn’t and the other claimed to have read it at part of his graduate studies, but didn’t remember much about it. His recollection was that it was a dry and uninteresting work which spent far too much time on the manufacture of pins.

I’m not going to claim to be an expert on Adam Smith, or economic theory for that matter. However, there are parts of The Wealth of Nations which strike me as completely opposed to the common belief that he recommends that government stay out of all business transactions.

The main reason for such a belief was that The Wealth of Nations was written to show government’s how to extract the most income from their economy. It was written to show government, in his case a monarchy, how monopoly power stifles business and reduces the income available to the government. It’s hard to be anti-government with that agenda.

What his thesis really boils down to is that should a government grant a monopoly, making it illegal for other people to engage in the same business as the person holding that monopoly, government revenues suffer. That is his point, the whole bit about the “invisible hand” is justification for his point, but to accept his analysis without acknowledging his point about how government regulates business is to miss his entire thesis.

However, that’s not what I want to mention in this post. What I want to do is point out a few quotes from Adam Smith’s The Wealth of Nations and let you decide how conservative he is:

When the toll upon carriages of luxury … is made somewhat higher in proportion to their weight …, the indolence and vanity of the rich is made to contribute in a very easy manner to the relief of the poor, by rendering cheaper the transportation of goods to all the different parts of the country

What Smith is saying is that on toll roads we should tax the rich more in order to keep the cost of tolls down for transporting goods. He acknowledges that there is a cost to build and maintain a road, and that if the rich will bear a greater percentage of that cost, the entire country will benefit from a lower cost of goods, stimulating the economy. Yes, you got it, Adam Smith says it's okay to tax the rich more!

Or, how about this quote:

The tolls for the maintenance of a high road cannot with any safety be made the property of private persons. … The proprietors of the tolls upon a high road, … , might neglect altogether the repair of the road, and yet continue to levy very nearly the same tolls. It is proper, therefore, that the tolls for the maintenance of such a work be put under the hands of commissioners or trustees.

Yeap. Once again, Adam Smith is saying that private individuals or corporations cannot be trusted to maintain the roads and the only way to be certain the maintenance occurs is to have government be responsible for them. Hardly the Libertarian ideal here.

I admit that Smith goes on to say that there can be problems with governments managing the roads too, and even the problem of collecting more taxes than are required to maintain them. However, that doesn’t negate the point that Smith felt that private individuals or private corporations cannot be trusted by the monarchy (or any government) to adequately maintain the roads in a condition necessary for commerce. In fact, since Smith’s time we have developed a democratically elected government system which can be used by the citizens to ensure the roads are maintained, unlike the monarchies of his own day. So even Smith’s worries about government tolls and tariffs can be addressed in today’s system of government roads, which may not be as easily addressed in a corporate state.

Smith continues by having a long discourse on education, whether it is in the state’s interest to provide public education or not. Here is the money quote:

A man without the proper use of the intellectual facilities of a man, is, if possible, more contemptible than even a coward, …. Though the state was to derive no advantage from the instruction of the inferior ranks of people, it would still deserve its attention that they should not be altogether uninstructed. The state, however, derives no inconsiderable advantage from their instruction. The more they are instructed the less liable they are to the delusions of enthusiasm and superstition, …. An instructed and intelligent people, besides, are always more decent and orderly than an ignorant and stupid one. … They are more disposed to examine, and more capable of seeing through, the interested complaints of faction and sedition, and they are, upon that account, less apt to be misled into any wanton or unnecessary opposition to the measures of government.

It would be hard to find a more ringing endorsement of public education for the purposes of government stability.

Other examples abound in Smith’s great work. My title is, I admit, misleading. In fact, Smith was writing long before our modern definitions of liberal or conservative were forged. Smith was not a conservative, nor was he a liberal, not in the modern sense at least. Smith was a realist, and a monarchist. He believed in a strong central government, which regulated trade for its own benefit. He understood that the wealth of a nation increases when opportunities for individuals increase, and proposed using the power of the monarchy (the government) to increase the opportunities of individuals.

Many of his proposals, like the need for government owned public goods and government subsidized education are sometimes considered liberal proposals in the fractious political environment of the modern United States. However, it is clear to me that our Founding Fathers read Adam Smith’s seminal work and understood it. In fact they understood it far better than the cliff-notes version that many of today’s economists appear to use. Many of the checks and balances, the requirements for local control, and other facets of the government the framers of the Articles of Confederation and the United States Constitution attempted to establish are clearly responses to the difficulties raised by Adam Smith in the later chapters of The Wealth of Nations.

To claim that he wanted to eliminate government oversight of business is to defame one of the greatest economic theorists of all time.

Mr. Mouse's Wild Ride!

Cracky, a month gone already!

I need to spent more time on this, but not today. 

Earlier today I was on the way to pick up my mail at the house I'm trying to sell.  It is a bright, sunny day and I had the top down, the music on, and feeling in great spirits.

Then, as I was tooling down the freeway at seventy-five, I noticed something moving right by my windshield wiper.  In fact, it wasn't just flapping in the breeze, it was crawling along it.

There, apparently escaping the heat of the engine compartment was a very frightened field mouse!

As it gripped the wiper, fur blowing in the wind, I considered what should be done.  Clearly, it would not do the mouse any good should it relax its hold in the midst of a seveny-five mile an hour breeze.  Turning the wipers on would probably fling it off, but also probably fling it into traffic!  

So I pulled over, got out of the car, and grabbed at the mouse.  I missed.  He scurried across the windscreen and leaped with all his might off the car!  He landed about ten feet away in the grass at the side of the highway.

He's got a long walk home, but he's probably glad that the ride is over.

Career Advancement Agencies

I had an interesting experience yesterday.

One of the reasons I have the time to write this blog right now is because I have been laid off from my position as an automotive engineer.  So a good deal of my time is spend in looking for another job.  

On one of the job sites an advertisement was placed for a "career advancement" agency.  Well, I have the time, so I asked them what they could do to help.

When I went to their office, I found a few things that raised some red-flags.  First, there were no other job seekers at the place.  With the Michigan economy as it is, I would expect at least one or two other job seekers.  Then, while reading their literature about how they plan to help me get a job, they suggested I don't talk to anyone about hiring them.

Further, while the head of the office was using a hard-sell to get me to use their service, he very casually mentioned a fee.  So casually that I almost missed it.  Later when the subject of fees came up again he indicated the there was no set schedule for fees, it depended on the customer.  He indicated that the fees usually ranged around $2,000, and laughed about one fee which was over $6,000.  But he wouldn't give me a fixed number at that time.  Finally, he made a big deal about the fact that the fee would be paid in three installments as the work was completed.  However, it appeared from the fee schedule that the three installments would be paid within a couple weeks of signing the contract, long before anyone would hope to find a job.

There were a few other things that raised a eyebrow.  The literature, and the salesman, both made a point of letting me know that 80% of job openings never get posted.  Well, I knew that already.  The literature and the salesman implied strongly that they would be able to tap into that 80%, but they never flat out said they could.  In fact, the salesman did say that they didn't like to take on clients who had sent out too many resumes, which strongly suggests that they are using the same listings as clients.  

So, being unable to get a word in edgewise with the salesman.  I took their literature, and a copy of their contract and left.  One interesting part of the contract was a state-mandated page telling me that the agency is not an employment agency and they are not permitted to schedule interviews or directly put one of their client in touch with a potential employer.  Sounds like I'm not getting a great deal for my money.

However, I'm willing to try something if it works.  Not that they gave me any information about how well it did work.  So, since they said I should ask any questions I want, I sent them an e-mail with two questions.

1.  How many new clients did they get in 2008?

2.  How many clients found jobs through their agency in 2008?

They wouldn't answer the questions.

They said they couldn't answer them, but for a employment company to not know how many clients they get or place is inconceivable.

I gave them one last chance.  For if they could break into that 80% of unposted jobs it would be worth it.  I informed them that I would use their service and pay their fee if they would be willing to modify the contract so that I paid them after I got a job.  

They were unwilling to accept that offer.

I'll hold onto my money.

First Principles - The role of Government part 2

Yesterday we had a short discussion of the social contract, and I suggested that this concept is quite a bit wider than Hobbes or Locke ever used.  In short I suggested that the social contract, in its broadest sense, covers all our expectations of how we (and everyone else) should relate to society.

Let's think about that for a moment.  For I feel this notion can explain a lot of the things we find hard to comprehend about our society.  

Each of us carries about a social contract.  Every one of these contracts is different.  Maybe greatly different, maybe subtly different, but every one is different.  These social contracts include our expectations of behavior, both our own and others.  It defines how each of us relate to society and how we expect everyone else to relate to society.  

Now I'm not suggesting that this is a well-written document floating around in your brain, with sections and sub-paragraphs.  This idea is simply a metaphor for our expectations about society.  If it was a document, a real contract, it would be hundreds of pages long and full of special clauses, exemptions and plenty of contradictions.  

Some of these special clauses are probably hard-wired into our brains.  For example, most of us have a clause which prevents us from feeling sexually attracted to children, which is a trait we share with other animals.  This clause is very likely hard-wired into our genes, which regrettably doesn't prevent a few people from creating personal exceptions to that clause.  

Some of these clauses are contradictory, many a bigot will proclaim that all men are equal then complain about the laziness of men with a different color skin.  This hypocritical opinion is so deep in the psyche that the bigot won't see a contradiction.  If we put it in terms of the social contract, there is a general statement about all men, then a clause which creates an exception about a particular race.   Which may lead to the next exception for personal acquintances, i.e. even though their personal friend has a different color skin, they are not themselves lazy.  An exception clause to an exception clause. 

Nor is this social contract static.  It changes every day as we are exposed to new information about acceptable behavior and unacceptable behavior.  Surprisingly, however, there is a part of everyone's social contract which doesn't seem to change that easily, although there is still wide variation among people.  This section is concerned with the other side of the social contract; that is, what a person expects society to do for them if they fulfill their side of the agreement. 

Which relates, in a big way, to the functions of of modern government, and brings us back to Hobbes and Locke.

First Principles - The role of government part 1

I know there is a lot of scholarly work done on the various opinions of what the role of government is.  I've read a few, and I've probably not even scratched the surface of the writings on the subject.

The earliest government theory book I think I've read was, of course, Plato.  Frankly, while I think Plato had a few good points, he doesn't inspire me as much as some of the others.  One of my favorite authors, and I think the first what I would call modern authors, on the theory of government is Hobbes.

It has been many years since I first read Hobbes' Leviathan but even though I disagree with some of his statements, this work seems to me to be the foundation on which much government theory is based on.  It is clear from the writings of Jefferson, Madison and Jay that they were not only familiar with Hobbes' theory, but believed in large portions of it.  In fact, I would argue that the seperation of powers in the federal constitution of the United States is a reaction to Hobbes' proposition that ultimately a strong authority is necessary for a stable society.  

However, Hobbes' great insight is not his much maligned concept that a stable society requires a single strong authority, but the recognition that without society an individual man's life would be "solitary, poor, nasty, brutish, and short."  Hobbes postulated the idea of a "social contract" wherein people form a society for the betterment of the group.  

But let us be clear on this point, this social contract does not mean centralized government.  In fact, it is a rather nebulous term which describes interactions at all levels.  The customs of a culture are a form of the social contract, an example in our western society is shaking hands when meeting a person for the first time.  Leaving someone's offered handshake in mid-air without an apology or comment is an insult.  A minor insult to be sure, but it suggests a more combatative attitude will ensue in any subsequent interactions.  

But I believe the point is clear even with this trivial example, part of acceptance into a society is through conforming to the customs and practices of that society.  The customs and practices of societies vary, in fact they vary incredibly widely within a society, every level of the social strata within a society has customs which are unique.  Acceptance into a society means conformance to those customs, in return the society will extend the benefits of belonging to that society to the person.  

Societies treat non-conformance in different ways.  Some societies are fairly tolerant of non-conformance, others less so.  Further, non-conformance of a societies expectations in specific areas can result in different tolerance to non-conformance.  Consider the deep-rooted antipathy to providing assistance to the homeless in the United States; for a multitude of reasons they do not conform to what we typically consider social norms and have violated much of our expected social contract.

I know, it seems a long way from a discussion about society to the role of government, but we'll get there.