INSIDE THIS ISSUE: DEPARTMENTS Should the North Carolina 2 C A R O L I N A Education 7 ‘Amazon Local Government 10 From Page 1 14 tax’ on on- Higher Education 17 line sales be Books & the Arts 20 Opinion 24 repealed?/3 A MONTHLY JOURNAL OF NEWS, ANALYSIS AND OPINION Parting Shot 28 JOURNALFROM THE JOHN LOCKE FOUNDATION September 2012 Vol. 21 No. 9 STATEWIDE EDITION Check us out online at carolinajournal.com and johnlocke.org Coastal Wind Projects Come Under Fire such, they are not compatible with the low-level military flying operations Concerns from three that take place in the coastal area. Col. Jeannie Leavitt, commander of Sey- fronts put wind plans mour Johnson Air Force Base, stated her concerns about the project in a July in jeopardy on coast 16 letter to Perdue. “Wind farms and the windmills By Don Carrington that comprise them will have a sig- Executive Editor nificant impact on the training ofF- RALEIGH 15E aircrews conducted by Seymour Beaufort County wind energy Johnson Air Force Base,” she wrote. project that won conditional ap- On Aug. 18, Perdue issued Executive proval in March from the North Order 124 requiring all state agencies ACarolina Utilities Commission faces to consider the military’s requirements major hurdles and may never get to Wind projects on the North Carolina coast are meeting resistance from three fronts: for low-altitude aviation training areas erect a single turbine. wildlife officials concerned that wind turbines would kill eagles and tundra swans, before approving any project. Among the obstacles facing the the military concerned that the tall turbines would imperil military flights, and Repub- In addition to the military’s con- Pantego project are the potential for a lican presidential nominee Mitt Romney’s preference for market-based approaches cerns, wind turbines may kill birds that Mitt Romney victory in the Novem- to alternative energy rather than government subsidies. (Eagle and Romney photos by CJ’s Don Carrington, F-15 photo courtesy of Seymour Johnson Air Force Base fly nearby, and several protected spe- ber presidential election, conflicts with Information office) cies of birds — including bald eagles military aviation training, and the and migrating tundra swans — occupy prospect that the wind turbines will could be enough to kill this wind proj- Large-scale commercial wind the Pocosin Lakes National Wildlife cause the death of too many birds. ect and others. projects depend on federal subsidies Refuge and surrounding area. Pantego Through spokesmen and position The Pantego project, being de- as well as state renewable energy man- Wind has not estimated the impact a papers, Republican presidential nomi- veloped by Pantego Wind Energy, a dates to create a demand for the elec- wind farm would have on these birds. nee Romney has made clear that he wholly owned subsidiary of Chicago- tricity produced by their wind farms. would urge Congress to end a federal based Invenergy, would generate up Without those subsidies, it would be The project tax credit for wind energy that makes to 80 megawatts of electricity using economically infeasible to build and Formed a year ago, Pantego the alternative power source economi- 49 wind turbines situated on approxi- operate them. Wind Energy is a subsidiary of Chica- cally feasible. But no matter who wins mately 11,000 acres of privately owned Wind turbines, essentially huge the White House, objections from the land located east of Washington, N.C., three-bladed windmills, typically rise military lodged with Gov. Bev Perdue near the town of Pantego. 400 to 500 feet above the ground. As Continued as “Coastal,” Page 14 Wilmington Could Become Home of the Braves

PAID council meeting. RALEIGH, NC U.S. POSTAGE The city would use rent paid by PERMIT NO. 1766 NONPROFIT ORG. Ballpark project Mandalay and the proceeds from a 2.5 cent per $100 tax increase to pay off the requires voter OK bonds. The tax increase would raise the of $37 million bond taxes on a house valued at $100,000 by $25 a year, or $50 a year for property By Barry Smith proved, the city plans to build a 5,500- Associate Editor valued at $200,000. seat stadium which a Class A Atlanta Baseball supporters say having WILMINGTON Braves affiliate would call home by bout one week after the 2012 a modern minor league stadium and 2014. team located on the riverfront can help World Series champion is de- The city plans to enter into an cided, Wilmington voters will stimulate the downtown economy. agreement with Mandalay Properties, They point to the success of the Dur- makeA their own decision about base- which manages other Braves affiliates, ball. They’ll be voting on a $37 million ham Bulls Athletic Park and surround- to manage both the stadium and the ing development as an example of bond referendum for a riverfront mi- minor league team. City officials said nor league baseball stadium. what such a facility can bring. at press time they hoped a final memo- Supporters also say the stadium The Wilmington City Council in randum of understanding between the early August voted to place the bond city and Mandalay would be ready for The John Locke Foundation 200 W. Morgan St., #200 Raleigh, NC 27601 referendum on the Nov. 6 ballot. If ap- approval in time for the Sept. 4 city Continued as “Wilmington,” Page 15 PAGE 2 SEPTEMBER 2012 | CAROLINA JOURNAL North Carolina C a r o l i n a State Wrestles With Medicaid Costs, Solutions By Dan E. Way built around market-oriented incentives. Journal Associate Editor “Until you align incentives to make that matter, es- RALEIGH pecially in a financial kind of way, you’re not likely to get Rick Henderson Managing Editor s North Carolina continues to shift most of its Med- much different [results],” Trail said. icaid recipients into its showcase Community Care But North Carolina’s system has passionate defenders. Don Carrington of North Carolina program, some say the central- “CCNC is a free-market intervention, but is readily Executive Editor izedA system needs free-market reforms to avoid chronic and distinguished from the managed care model in that it strikes costly budget overruns. at the cost and quality problems in a fundamentally differ- Mitch Kokai, Michael Lowrey But state lawmakers have little interest in embracing ent way,” said Robert Seligson, executive vice president and Barry Smith, Dan E. Way the full-risk, managed care programs used in other states. CEO of the North Carolina Medical Association. Associate Editors Health care provider organizations also oppose tinkering Like managed care, CCNC looks at financial perfor- Chad Adams, Kristy Bailey with a CCNC plan they say has improved patient outcomes mance data to identify potential cost-saving strategies, David N. Bass, Lloyd Billingsley while reimbursing them at higher rates than the national Seligson said. Kristen Blair, Sara Burrows average. But it also implements strategies at the provider level Roy Cordato, Becki Gray The debate mirrors arguments in other states that are that “are clinically driven, and make use of clinical expertise Sam A. Hieb, Lindalyn Kakadelis seeking, with limited success, to that is seriously lacking in tradi- Troy Kickler, George Leef constrain spending on Medic- tional managed care models,” Karen McMahan, Donna Martinez, aid, the program that provides Seligson said. Karen Palasek, Marc Rotterman health care to the poor and dis- “Our feeling is this: A lot of Michael Sanera, John Staddon abled. CCNC often is cited as a the things that full-risk managed George Stephens, Terry Stoops Andy Taylor, Michael Walden model that works. care will say it can do to reduce Karen Welsh, Hal Young “There is no silver bullet” Medicaid costs are already being John Calvin Young that addresses all Medicaid chal- done though CCNC,” said Don Contributors lenges in every state, said Rep. Dalton, vice president of public Nelson Dollar, R-Wake, who relations at the North Carolina Joseph Chesser, Garrett Hunter, chairs the Joint Legislative Over- Hospital Association. Xia Mai, Lexxie Monahan sight Committee on Health and “I’m not really sure why Hubert Papes, Daniel Simpson Human Services. But he is opti- it makes a difference who runs Shane Williams Interns mistic about North Carolina. Medicaid” if quality care is de- “We have found the solu- livered, budgets are met, and Published by tion. What we are working on savings are realized, said Chris- The John Locke Foundation now is maximizing better ways tie Herrera, vice president of 200 W. Morgan St., # 200 of what can be done with CCNC, policy at the Foundation for Raleigh, N.C. 27601 what sort of innovations, what sort of additional programs” Government Accountability, a free-market think tank in Na- (919) 828-3876 • Fax: 821-5117 can be added to the nationally recognized plan, Dollar said. ples, Fla. State-run plans also have high overhead costs, but www.JohnLocke.org Despite that praise, Medicaid spent $200 million more “are able to hide their costs more” than full-risk managed three years ago than lawmakers allocated in their initial Jon Ham care providers, she said. Vice President & Publisher budget and about $600 million too much two years ago. In Empowering patients to make their own choices the budget year ending June 30, Medicaid had a budget of among competing plans reduces the political power of en- John Hood $14.2 billion but still amassed a deficit of $375.4 million, said trenched advocacy groups, she said. As an example, she Chairman & President State Budget Director Andy Willis. cited a five-county pilot program in Florida that has saved Craigan Gray, director of the Medicaid program, was $118 million annually. Bruce Babcock, Herb Berkowitz fired in June after failing to curb the deficits. “Since the inception of CCNC, we saved state and fed- Charlie Carter, Jim Fulghum CCNC is a nonprofit management organization with eral funds in excess of $1 billion, and those figures are veri- Chuck Fuller, Bill Graham 14 regional networks around the state. The state paid the Robert Luddy, Assad Meymandi fied by a couple of reports that had been done,” Dollar said. company $7.2 million to manage the program in the 2010 Baker A. Mitchell Jr., Carl Mumpower, “We expect in [the current] two-year period of the J. Arthur Pope, Thomas A. Roberg, fiscal year, the most recent period for which it filed a finan- budget to have achieved around more than $600 million in David Stover, J.M Bryan Taylor, cial report with the IRS. federal and state savings to the Medicaid program,” he said. Andy Wells The CCNC model is described either as a primary care But in a peer-reviewed article in the August edition Board of Directors case management program or an enhanced, coordinated of The American Journal of Managed Care, Al Lewis, a health fee-for-service program. care consultant and founder and president of Disease Man- Carolina Journal is It assigns patients to a “medical home” — a primary agement Purchasing Consortium, challenged claims that a monthly journal of news, care physician whose services are paid by the state at 95 per- CCNC cuts costs. analysis, and commentary on cent of the national Medicare reimbursement average. At state and local government Lewis has written a book, Why Nobody Believes the that rate, doctors receive 127 percent of the national average and public policy issues in Numbers, published in late June. One chapter of the book for Medicaid reimbursement, and physicians also receive a North Carolina. blistered three state-ordered evaluations for claiming what separate fee per patient, per month. ©2012 by The John Locke Foundation he called impossible savings. Inc. All opinions expressed in bylined articles The medical home goal is to provide regular care with “At this point it would be easier to conclude that are those of the authors and do not necessarily the hope of avoiding high-cost emergency room visits and reflect the views of the editors of CJ or the hospital admissions. North Carolina lost money than that the state saved $300 staff and board of the John Locke Foundation. A full-risk managed care model also may include op- million in 2006 alone, let alone a [projected 2009] rate of ei- Material published herein may be reprinted as tions similar to a medical home. But managed care is capi- ther $681 million or almost $1 billion/year today, depend- long as appropriate credit is given. Submis- tated, meaning the state negotiates a set price with each ing on which stud[ies] you want to believe,” Lewis wrote in sions and letters are welcome and should be provider. If medical costs exceed the capitated rate, the his book. directed to the editor. Lewis also reported that one of the consultants CJ readers wanting more information management companies absorb the additional costs. They between monthly issues can call 919-828- risk losing future state contracts if they perform badly on “claimed about $250 million in savings in children’s inpa- 3876 and ask for Carolina Journal Weekly quality or cost. tient admissions, but HCUP [a federal database using state- Report, delivered each weekend by e-mail, By contrast, under CCNC, budget overruns are passed supplied numbers] says the state only had $114 million in or visit CarolinaJournal.com for news, links, on to the state. That is a major problem, supporters of the those admissions during the year of 2006, so it would have and exclusive content updated each weekday. full-risk model say. been impossible to save $250 million in 2009.” Those interested in education, higher educa- “If you don’t have the risks, and all I’m doing is spend- “That book that came out, I put no stock in that,” tion, or local government should also ask to Dollar said. “I don’t see that that author had the depth receive weekly e-letters covering these issues. ing your money, why would I worry how much money I spent?” Mark Trail, former Medicaid director for the state of analysis. It seemed to be more throwing slings and ar- of Georgia, said of CCNC and similar programs that are not rows as opposed to any sort of real objective analysis.” CJ SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 3 North Carolina JLF Expert Urges Lawmakers to Repeal State’s Amazon Tax

By CJ Staff in multiple locations, Hodgson said. RALEIGH “There are almost 10,000 different and orth Carolina’s so-called “Am- constantly changing sales tax rates azon tax” fails on all counts across the United States,” he said. “Un- and deserves to be repealed der an Amazon tax, online retailers are whenN state lawmakers return to work stuck with the regulatory burden of next year. That’s the conclusion of a charging customers at a variety of rates John Locke Foundation Spotlight re- that not even specialist firms can keep port. up with.” “The Amazon tax generates con- There is no evidence that the fusion by creating three tiers of sales tax Amazon tax has boosted state tax rev- collection, imposes a new regulatory enues, Hodgson said. “Projected rev- burden, and reduces economic activity enues of $3.8 million in 2010 and $8.5 by dissuading business relationships million in 2011 have simply failed to in the state,” said Fergus Hodgson, JLF arrive,” he said. “The N.C. Department director of fiscal policy studies. “In ad- of Revenue has not recorded Amazon dition to these problems, there is also tax revenues separately, but we know no evidence that the tax is increasing that North Carolina’s sales tax rev- state government revenues.” enues originating from out of state North Carolina is one of just nine dropped 28 percent in the first year af- states that impose an Amazon tax. It ter implementation.” forces out-of-state retailers to collect Retailers can avoid the tax with taxes on online sales if the retailer has North Carolina is one of only nine states that impose a tax on out-of-state online ease, Hodgson said. “They can simply an online affiliate located in the taxing retailers such as Amazon.com. (Amazon.com photo) disassociate themselves with in-state state. Affiliates include online adver- pressure for North Carolina to lower in-state presence. This includes police affiliates,” he said. “Amazon.com did tisers, bloggers, or marketers based in its sales tax rate and reduce the disin- protection, infrastructure, or any other North Carolina that receive a commis- this before the law took effect, and an centive for in-state purchases,” he said. government service.” estimated 1,000 online advertisers ter- sion on sales. “The state will also face increased pres- “Not only does the Amazon tax The National Conference of State minated their North Carolina affiliates sure to rely less heavily on sales tax fail to achieve an even playing field, when the law passed in 2009. An esti- Legislatures estimates that untaxed revenue to pay its bills.” it also undermines the fair play argu- mated one-third of impacted affiliates online sales cost North Carolina $436.5 A 1992 U.S. Supreme Court ruling ment,” Hodgson added. “That argu- moved out of state.” million in forgone tax revenue in the blocks states from imposing sales tax ment holds that one owes taxation While North Carolina should 2012 budget year. requirements on out-of-state vendors, only in exchange for government ser- “The trend of individuals toward unless those vendors have a physical vices received.” scrap its Amazon tax, Congress should buying online, avoiding state sales tax- presence or “nexus” in the taxing state. North Carolina ends up with a be careful about taking action, Hodg- es in the process, has many legislators Thirty states responded by introduc- confusing mix of three different levels son said. “If Congress does intervene, concerned, and in a bipartisan man- ing some form of Amazon tax. Most of sales tax treatment, Hodgson said. members ought to do so with an eye ner,” Hodgson said. “But even if one states have seen these taxes repealed “In-state retailers face taxation with on a uniform, origin-based system,” wished to maintain the sales tax rate or blocked in court. government benefits, out-of-state re- he said. “By origin-based, I mean the and base, as online activity erodes it, Hodgson rebuts a key argument tailers with in-state online affiliates applicable tax rate would be the one there does not appear to be a mitigat- conventional brick-and-mortar re- face taxation with no government ben- in force at the retailer’s location. This ing policy that could originate from the tailers use to support Amazon taxes. efits, while independent out-of-state would avoid the regulatory burden of North Carolina legislature.” “These in-state retailers complain retailers with no North Carolina con- keeping track of different destination- Congress might impose a na- about an uneven playing field,” he nection face no taxation and no gov- based tax rates. It would also main- tional resolution, Hodgson said. “Until said. “While out-of-state retailers com- ernment benefits.” tain the incentive for states to remain that happens, online sales from other pete with in-state retailers for custom- An Amazon tax also forces out- competitive in their taxation to invite jurisdictions will continue to generate ers, they do not enjoy the benefits of an of-state retailers to monitor tax rates business expansion.” CJ Subscribe to JLF’s Research Department Newsletters Go to http://www.johnlocke.org/key_account/ to sign up

Vice President for Research Director of Research Director of Fiscal Policy Director of Regulatory and Resident Scholar Roy and Education Studies Studies Fergus Hodg- Studies Jon Sanders’ Cordato’s weekly newslet- Terry Stoops’ weekly son’s weekly newsletter, weekly newsletter, ter, Environment Update, newsletter, Education Ferg’s Fiscal Insight, Rights & Regulation focuses on environmental Update, focuses on the offers pro-liberty per- Update, discusses cur- issues, and highlights rel- latest local, state, na- spectives on the latest rent issues concern- evant analysis done by the tional, and international research and news in ing regulations, rights, John Locke Foundation and trends in pre-K-12 edu- taxation and govern- and freedom in North other think tanks, as well as cation politics, policy, ment spending. Carolina. items in the news. and practice. PAGE 4 SEPTEMBER 2012 | CAROLINA JOURNAL North Carolina State Briefs Lawmakers Ease Regulations on Food Trucks Fundraiser returns By Sara Burrows water disposal. Lanny Wilson, a longtime Contributor Michael said, “It’s important to determine the source Democratic Party donor who was RALEIGH of the potable water supply so it can be inspected and sam- a key figure in the criminal inves- tigations of former Gov. Mike Ea- new law just cut through a chain that has stopped pled. …” sley and Easley’s top aide Ruffin countless food trucks in North Carolina from getting King argues it shouldn’t matter whether he fills his Poole, co-sponsored a late August out of the garage. truck’s water tank from his church, his law office, or even fundraiser for 7th Congressional AUntil now, the “commissary rule” had forced food from his home, as long as he’s using a food-grade hose. District Rep. Mike McIntyre, the truck operators either to rent space in brick-and-mortar “It’s all city water, so if the restaurants’ water is good, Wilmington Star-News reported. restaurants or commissaries or to buy their own restaurant- my water is good,” he said. Wilson was a key figure in quality kitchens to serve as home bases for their mobile King also argues that health officials shouldn’t be con- the State Board of Elections’ crimi- businesses. cerned about his wastewater, which they’ve said should be nal investigation of Easley. Wilson For many would-be entrepreneurs, the commissary poured down a drain with a grease trap. testified to the board that he gave rule is an impossible hurdle to jump. If a food truck opera- He says his employees dump all of the grease from the $10,000 to the state Democratic tor could afford to buy a deep fryers “right back into Party with the understanding restaurant, that’s what he the containers it came out it would be diverted illegally to would do. of.” He donates the grease the Easley campaign. Wilson also While health of- to the county, which resells fronted some of the money to fi- ficials have argued they it as biodiesel. nance the Cannonsgate develop- need a stationary commer- The only grease that ment in Carteret County at which Easley got a sweetheart deal. cial kitchen to inspect, the might end up in the truck’s Easley pleaded guilty to a new law requires them to sink, and thus the waste- felony charge of filing a false cam- inspect the food truck it- water, is what is left on paign report but served no jail self, provided it has all the the utensils, he said. “Any time. necessary equipment and greasy water we produce Wilson also was referred to storage space required of a is much less than would as the “Wilmington financier” in commissary. be in a person’s kitchen at the 51-count indictment of Poole The man who in- home.” on corruption charges. The indict- spired the law change — a Michael said health ment stated that Wilson provided pastor attempting to start inspectors also will have Poole free trips to Costa Rica over a food-truck “ministry” in to “ensure that there is ad- several years. Poole also was al- Salisbury — is rejoicing and equate storage for food lowed to invest at Cannonsgate; reluctant at the same time. and supplies to avoid food he received a $30,000 profit on a He’s both hopeful that the preparation and storage in $100,000 investment in less than four months. Poole did not dis- new law will allow him to unpermitted areas, such as close these gifts and benefits as re- employ dozens of jobless a private home kitchen.” quired by law. black men in the poorest King said he thinks part of Rowan County, and Food trucks like this one in Carrboro no longer have to have a health inspectors should worried that health depart- stationary commercial kitchen to act as a commissary under a find his storage space ad- Film incentives panned new law passed by the legislature this year. (CJ photo by Dan ment bureaucrats might E. Way) equate, but worries they’ll Less than a month after make it meaningless by im- find some other reason not North Carolina legislators ap- posing additional rules and regulations. to permit his truck. proved more money for the state’s Pastor Michael King has been trying for more than a “[Michael’s] agency has fought this idea the whole film tax incentives program, a John year to get a permit for the first of several food trucks he time,” King said. “They didn’t even want to consider it. And Locke Foundation Spotlight Re- owns, so he can use them as a source of employment for now they’re forced to do it. Anytime you lose a battle like port panned film incentives as a men who desperately need jobs and a source of good, in- that, you try to come through the back door and do what clear example of cronyism. expensive food for a community that sorely lacks culinary you cannot do now through the front door.” “The problem with these in- options. (He’d also like to sell grocery items from his truck, Rep. Paul “Skip” Stam, R-Wake, who worked with centives is that the lower tax bur- but that’s a battle for another day.) Rep. Pat McElraft to get the legal provision tagged on to the den on film productions comes Shortly after he got his first truck ready for the road, Regulatory Reform Act that passed in July, said he has the with the consequence of keeping same concern about his commissary rule “fix.” tax burdens high on nonfavored however, he learned there was a long list of requirements businesses and industries,’” said keeping him from operating the truck unless it was tied to a “Section 16.2 should solve their problem unless the report author Jon Sanders, JLF di- commercial kitchen or “commissary.” health department comes up with something else,” Stam rector of regulatory studies. “When His truck did not have a toilet, a source of potable wa- said. government chooses one industry ter, an approved place to dump wastewater, or an approved Stam, leader of the House Republicans, called the pre- or business for special deals and place to clean his trash cans. vious commissary rule “needless government interference breaks, there’s a good chance that Another justification health officials often give for the with freedom.” cronyism is at work.” commissary rule is that mobile vendors must have a place to McElraft, a Republican from Carteret County, agreed. State lawmakers added $60 store and prepare their food other than in their home kitch- Brick-and-mortar commissaries are not necessary to ensure million for film incentives in the ens, which health officials say they cannot inspect. public health and safety, as long as the trucks are equipped final days of this year’s legislative King has countered that, unlike many food trucks, his with all the same equipment required of a commissary, she session. has a large commercial refrigerator, countertops, and exten- said. “Before states began film tax sive shelving for dry goods and supplies. Nothing he would McElraft said the new law is an example of “govern- incentives programs, North Caro- lina was a popular off-Hollywood sell from the food truck would need to be stored or prepared ment getting out of the way so that our private sector, aka destination for film crews,” Sand- at his home. citizens, can create jobs.” ers said. “A right-to-work state Larry Michael, head of the Department of Health and The law is effective now, Michael said. “So our office with a pleasant climate and a range Human Services’ Food Protection Program, is in charge of will work with local health departments on a case-by-case of natural features, North Carolina food truck inspections under the new law. He said he’s no basis if a mobile food unit operator requests a review of their held significant advantages for longer concerned about trucks not having toilets, but he establishment for compliance with the commissary require- movie makers.” CJ questions whether the truck operators will be able to find an ments. To date, there have not been any requests.” King said acceptable source of potable water and a location for waste- he looks forward to making the first request. CJ SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 5 North Carolina Down-Ticket Auditor’s Race Showing Some Electoral Fireworks

By Dan Way ried out properly. Associate Editor “I think if you would ask the RALEIGH members of the General Assembly t may be a down-ticket race, but the you might hear a different opinion” on battle for state auditor is showing whether lawmakers are satisfied with some pop. Wood’s results, Goldman said. I Democratic incumbent Beth Goldman also questions Wood’s Wood said she deserves re-election on aggressiveness, saying waste, fraud, the strength of her vigorous campaign abuse, corruption, and cronyism are against wasteful spending and sloppy, prevalent in state government. expensive state contracts. Her Repub- “I have a whole laundry list” of lican opponent, Wake County school items to investigate if elected, Gold- board member Debra Goldman, at- man said. She declined to name them, tacked Wood as a poor manager with saying she’s in a heated election and a spotty record of investigating cor- does not want to give Wood last-min- ruption who has carried water for Gov. ute scandals she might announce just Bev Perdue. before the election. The auditor is the state’s top fiscal Goldman rejects Wood’s conten- watchdog, empowered with investiga- tion that she has exposed hundreds of tive tools to ensure integrity in govern- Incumbent State Auditor Beth Wood Republican opponent Debra Goldman millions of dollars in waste. ment operations and accounting. “I’d love to see an accounting of Early voting for the Nov. 6 gener- “I say I run a nonpartisan office, contract monitoring,” and people not that,” Goldman said. Wood “has nei- al election begins Oct. 18. Goldman, a and that’s what we’re doing. No mat- being held accountable for tax money ther the knowledge nor the experience member of the Wake County Board of ter who you are, you leave your poli- they are spending. nor the proof of that. I’d like to see Education running her first statewide tics at the door,” she said. “We report In the past, vendors “took us to some real transparency coming out of campaign, trailed Wood 39-36 percent, whatever findings we have. … We’ve the cleaners” because of poor contract that office.” according to a survey of North Caro- done a great job of building that cred- writing and lack of vigilance, Wood For her part, Wood said her pro- lina voters taken July 5-8 by Public ibility since I came into office.” said. fessional training differentiates her Policy Polling. They were tied 36-36 in Wood, who talks about growing For example, she said, her office from her opponent. June. up poor and possessing an average revealed that the state contract with “I am a [certified public accoun- Still, Goldman believes that poll taxpayer’s understanding of the value Blue Cross and Blue Shield of North tant] and have been for the last 25 bodes well for her at this point in the of a dollar, said when she came into of- Carolina barred the state from auditing years. I have audited cities, counties, election against an incumbent and fice the state was facing a $4.8 billion an administrative fee it was charging. and large not-for-profits,” Wood said. with 25 percent of the electorate still shortfall in its budget. The arrangement “My opponent undecided. “My staff and I just rallied around also kept contract doesn’t have a CPA “It’s time for the link of arms be- and decided we had to identify waste- terms confiden- license. I’ve taught tween Bev Perdue and her cronies to ful, inefficient spending. So we looked tial, which, Wood The state auditor CPAs across the be broken. Beth Wood traveled around at projects across multiple state agen- argued, violates nation” in govern- campaigning with Bev Perdue and has cies and problems that might be sys- state law. is the state’s ment accounting. been Bev Perdue’s extension through temic to state government,” she said. “The state top investigative “I under- her entire term,” Goldman said. They weren’t targeting “$1 mil- of North Carolina stand every report Wood distances herself from par- lion here or there but tens of millions in 2007-08 started fiscal that goes out of tisan labels. of dollars,” she said. “We’ve identified losing $12 million this office, and if “We audit all the dollars, the red over $300 million in wasteful spend- a month on the watchdog you don’t have ones and the blue ones. It doesn’t mat- ing through poor contracting practices state health plan, the credentials, the ter who pays them,” Wood said. in the state of North Carolina, poor and nobody knew education a CPA about it, saw it, has, if you didn’t do tax returns, if you recognized it until August of 2008. It didn’t do financial planning,” you are cost the state of North Carolina over not equipped for the office, Wood said. $100 million,” Wood said. “There is nothing in the North Another poorly written and Carolina state constitution that even monitored contract, with Affiliated suggests a CPA is required for this po- Computer Systems, to upgrade the sition. This is not a tax accountant’s po- state’s 1980s Medicaid computer sys- sition,” Goldman responded. tem, resulted in an additional $20 mil- “In fact, what the process needs lion buyout after the company failed is someone with business management to meet expectations and deadlines on experience” like she has had in root- its $171 million contract, she said. ing out inefficient spending in Wake Wake Forest Baptist Medical County schools, Goldman said. “This Center in Winston-Salem, through is a position for a business manager.” which state employees received dis- While Wood touts job training counts on services, did not notify the initiatives she has put into operation state when rates escalated. No one in and how her office has rallied together state government was paying atten- in the face of budget-induced employ- tion to demand higher discounts guar- ee cutbacks, Goldman contends em- anteed in the contract, which, Wood ployees are disgruntled under Wood’s said, cost the state $1.3 million. leadership. “I’ve taken this information be- “I will bring a very different fore the General Assembly,” Wood type of leadership to the state audi- said. “We got accomplishment after ac- tor’s office, one that will showcase the complishment as far as bills that have employees’ abilities in that office, one been implemented to stop this waste- that will showcase the office in a way ful spending.” The office implemented that the audits that are performed will a policy to ensure corrective action be shared in a truly transparent fash- plans are being implemented and car- ion,” Goldman said. CJ PAGE 6 SEPTEMBER 2012 | CAROLINA JOURNAL North Carolina Paleo-Diet Blogger Expects To Lose First Round of Free Speech Suit

By Sara Burrows In Coburn’s written order, deny- includes spoken or written advice,” Coburn wrote. Contributor ing Cooksey’s request for a prelimi- the board’s lawyers wrote in their RALEIGH nary injunction, he appeared to accept memo. “The United States Court of ‘Other avenues’ federal judge said a Charlotte- the board’s argu- Appeals for the Coburn did note that Cooksey area man advocating a Paleo- ments. 4th Circuit has “remains free to advocate his nutri- lithic or “caveman” diet on his The extent considered this tional beliefs through other avenues: blogA is “unlikely to succeed” in his of Cooksey’s in- question and he may associate himself with a li- claim that the North Carolina Board jury is “question- answered with censed nutritionist; become a licensed of Dietetics/Nutrition has violated his able,” Coburn a resounding, nutritionist himself; or sell or endorse freedom of speech. said, because the ‘No.’” a line of nutritional supplements or In an order dated Aug. 7, U.S. board never took The crux products which would allow him to le- District Court Judge Max Coburn de- “formal action” of the case, the gally assert nutritional claims.” nied Steve Cooksey’s request for a pre- against him and board wrote, Cooksey’s lawyers responded liminary injunction against the board, because he “vol- was whether that the “case cannot be dismissed which Cooksey claims is stopping him unteered” to re- North Carolina as though it were about occupational from giving nutritional advice on his move the “prob- should have conduct such as performing heart blog, Diabetes-Warrior.net. lematic” parts of the authority to transplants without a license and not Three years ago Cooksey started his website. license occupa- about ordinary advice that laypeople a blog about his success controlling his “There is tions to “safe- exchange every day.” diabetes through a diet low in carbs and no evidence that guard the pub- As it stands, they argue, the North rich in pasture-raised meats, animal plaintiff pro- lic health and Carolina law violates the First Amend- fat, and vegetables. The blog attracted tested further or safety.” ment of the U.S. Constitution, in that it thousands of followers, led dozens of was otherwise ordered to comply,” he They noted that Cooksey’s “tar- prevents ordinary people from giving advice about nutrition. other diabetics to try Cooksey’s diet, wrote. get audience is a uniquely vulnerable “It does not matter whether the and prompted questions from readers, “We think, frankly, that is an ab- population that suffers from the chron- advice is for free or compensated,” which he began to answer in a Dear- surd position,” ic and life-threat- Cooksey’s lawyers wrote. “It does not Abby-style advice column. said Paul Sher- ening condition of matter whether the advice is one-time man, one of Cook- diabetes and often or ongoing. It does not matter whether ‘Support package’ sey’s lawyers from Cooksey’s lawyers struggles to con- the advice is published or in private. It Soon he started offering a “Dia- the Institute for say this is a trol blood sugar does not matter whether the advice is betes Support Package,” a life-coach- Justice, a libertar- levels,” and said between friends or strangers. Accord- ing service for people trying to adopt ian public-interest classic example his advice could ing to the Board, advice is the consti- his diet and lifestyle, for a fee. law firm. have “potentially tutional equivalent of criminal incite- But his progress came to a halt “When the of a person having serious health im- ment or child pornography.” in January, when the state nutrition executive direc- plications.” Sherman maintained that “ad- board caught wind of his website and tor of a govern- his speech ‘chilled’ Coburn said vice” speech is protected speech under informed him it was a crime to provide ment agency goes Cooksey is seek- the First Amendment, for all citizens, nutritional advice or “counseling” through your writ- ing “permission to not just those with occupational li- without a license. ing with a red pen provide one-on-one advice about med- censes. He said the Institute for Justice The board’s director went and tells you on a line-by-line basis ical issues, which by their nature, must looks forward to taking Cooksey’s case through his blog with a red pen, un- [that] you’ve violated the law, that is be highly individualized and person- to the Court of Appeals, and the U.S. derlining language she said was ille- a ripe controversy,” he said. “That is a ally tailored.” Supreme Court, if need be. gal, and “suggested” he remove it. If controversy the court can hear.” Cooksey’s claim that such speech He said Coburn could make Cooksey failed to comply, the director In a memo dated Aug. 10, the should be “permitted” without a li- his decision on the case’s mer- said, the blogger could be fined up to institute’s lawyers responded to Co- cense is “unlikely to succeed at trial,” its by the end of September. CJ $10,000 and spend as many as 120 days burn’s order. in jail. So he removed it. “Stopping speaking in response State law requires individuals to a formal government investigation to obtain a professional license before is the very definition of having one’s making such assessments, so Cook- speech ‘chilled,’ and that is a First Visit sey deleted anything that looked like Amendment injury,” they wrote. “advice” about what “individuals” or “Plaintiff Cooksey did not stop Carolina Journal Online particular “groups” of people should speaking voluntarily; his silence has be eating. He believes he has been cen- been coerced by monitoring and the sored, which violates his freedom of credible threat of sanctions,” the memo speech. continued. Coburn disagreed. ‘Protected’ speech The nutrition board’s lawyers argued in a July 27 memo that there The board also argued that the was no need for an injunction against First Amendment doesn’t apply to the board because the board never had speech that the government decides is made a formal or final decision about subject to occupational licensing. whether Cooksey’s speech was ille- “It’s a pretty extraordinary claim, gal. The board’s director merely had a claim that we do not believe is sup- “noted areas of concern” in Cooksey’s ported by U.S. Supreme Court prec- blog, “invited further discussion,” and edent, or even the 4th Circuit [Court “asked” him to make the recommend- of Appeals] precedent that [the board’s ed changes to his website. lawyers] rely on,” Sherman said. The board argued Cooksey had “The remaining question raised suffered no injury and had no grounds here, then, is whether an otherwise on which to sue. The board’s lawyers permissible professional regulation have asked the judge to dismiss the becomes subject to First Amendment case. scrutiny because the regulated conduct http://carolinajournal.com SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 7 Education Higher Graduation Rates Might COMMENTARY Not Reflect Better Performance Boundaries and the

By Barry Smith night achievement. Virtual Classroom Associate Editor “Under Democratic leadership, echnological and online tools shouldn’t teachers leverage sites RALEIGH our state invested in dropout preven- are revolutionizing education that students adore to foster closer, hen statistics came out in tion programs and improvements to in exciting and near-limitless more connected relationships? early August showing that public education that have resulted ways.T Web-based documentation The immediate rejoinder is North Carolina high school in tremendous gains,” Hackney said. means teachers can share on-the- patently obvious, but bears repeat- graduationW rates had topped 80 per- “Astoundingly, Republicans this ses- spot editorial input even as student ing: The teacher-student relation- cent for the first time in memory, poli- sion abolished the successful Dropout scribes craft essays at home. Inter- ship is, and must remain, a profes- ticians from both sides of the aisle were Prevention Grant program, an innova- viewing experts around the globe sional one. The lines that demarcate quick to claim credit and point fingers. tive program that put small grants into is a snap for students, using video the professional and the personal But an education policy expert at community-based dropout prevention calling over the Internet. And 48 do not fade when school days end the John Locke Foundation says nei- efforts across the state.” states offer supplemental or full- or locations change. Online or off, ther the Republicans nor the Demo- Stoops countered that the econ- time online learning programs, undue familiarity is unmitigated crats should be jockeying for position omy and other factors, such as fam- federal data show. Vast and virtual, folly diminishing teacher author- to gloat over the new figures. Instead, ily and parental influence, likely have Terry Stoops, JLF’s director of research the modern classroom knows no ity and increasing the likelihood of more to do with the improvement in geographic boundary. misconduct. and education studies, says policy- the dropout rate than either party’s makers should be But what about the Website age re- education policy. social side of the Internet, strictions provide yet focusing on the “Teenagers teeming with tweets and another reason to forgo quality of educa- are smart enough status updates? Even an teacher-student contacts tion that students to know not to ‘Teenagers are intrepid administrator on personal networking receive rather drop out when finds this tricky terrain. pages. Facebook’s terms than the number there are no jobs,” smart enough Some teachers have faced of service, for example, of people who re- Stoops said. suspensions or lost jobs require that users be 13 ceive a diploma. to know not to Stoops said State officials that while schools due to ill-advised posts or or older, based on federal announced that drop out when may on some inappropriate communi- privacy law. Though they cations with students on aren’t (and shouldn’t be) the high school there are no jobs’ small scale be able KRISTEN graduation rate to improve the social networking sites. responsible for enforc- for 2012 was 80.2 graduation rate, On the Internet, the di- BLAIR ing age requirements for percent. “it’s largely out of vide between the public, students’ personal Internet Republicans, who won control of their control.” the professional, and the use, this is still the job both chambers of the General Assem- He suggested that education truly private can be indistinct. of parents — teachers shouldn’t bly following the 2010 election, were policymakers should focus on what Concerned by teacher-student condone rulebreaking by accept- quick to praise their approach to edu- students are learning rather than how impropriety on social networking ing friend requests from underage cation policy and funding while also many of them are getting a diploma. sites, school districts — including students. giving a pat on the back to students, “There’s a larger question of the nation’s two largest — are mov- Moreover, district policies parents, teachers, principals, and su- whether improvement in the gradua- ing to codify their expectations. This don’t preclude teachers and stu- perintendents. tion rate indicates improvement in stu- past February, the Los Angeles Uni- dents from using social media in a “Our graduation rate shows dent performance,” Stoops said. “And fied School District issued a policy closely-monitored professional and that improving our education system I don’t think they do.” strongly discouraging employees educational context. Secure social is not simply a matter of dollars and Stoops acknowledged that North from accepting student invita- networks designed specifically for cents,” House Speaker Thom Tillis, R- Carolina’s public schools have made tions to “non-school-related social educational use have exploded, as Mecklenburg, said in a statement. “We academic gains, particularly in math. networking sites.” In the spring, the a new Education Week publication must continue to give superintendents, But reading performance remains dis- New York City Department of Edu- attests, and include sites such as principals, and teachers more flexibil- appointing, he says. cation released guidelines telling ePals and Edmodo. The ePals site ity and ensure that education is driven According to National Assess- employees they “should not com- dubs itself “the safe social learn- by factors inside the classroom rather ment of Educational Progress test re- municate with students who are ing network”; Edmodo, used by a than by distant administrations and sults, fourth-grade and eighth-grade currently enrolled in DOE schools number of North Carolina school political rhetoric. Our broad-based, reading scale scores were higher in on personal social media sites.” districts, boasts millions of custom- open-minded approach to education 2002 than they were in 2011, Stoops In June the Wake County ers worldwide. is helping students and educators im- said. Over that same time, fourth- Public School System sent a memo- Clearly, the times are a-chan- prove outcomes across the state.” grade and eighth-grade reading scores randum to all employees outlining gin’, as Bob Dylan once observed, House Minority Leader Joe Hack- have remained flat. the district’s social media policies, and education is no exception. Tech- ney, D-Orange, retorted and took aim Stoops also pointed to the efforts including a directive not to “friend” nology is transforming our class- at the Republican policies that he said that community colleges have to put students. Charlotte-Mecklenburg rooms rapidly, and in many cases moved education in the state back- into remediation programs as evidence Schools haven’t released official so- children are the better for it. But as ward. of lack of student performance. cial media guidelines for employees we push aside old conventions to “After firing more than 6,000 “Sixty-five percent, nearly two yet. But that could change. A CMS equip students with new technolog- educators in the past two years, Re- out of three students, who enroll in a spokesman says the issue is “on ical competencies as we must — we publicans are now unbelievably try- community college directly after grad- their radar” and under review. cannot forget that some boundaries ing to take credit for the remarkable uation have to enroll in one or more Fans of faculty-student inter- never should be moved. No screen improvement in our state’s graduation remedial courses in a North Carolina actions on personal social network- can erase the line of authority that rate,” Hackney said in a statement. community college,” Stoops said. ing sites view such restrictions as separates a teacher from a current “North Carolina’s graduation rate has He said that percentage has been legalistic and stodgy. After all, as student. Everyone loses when we improved 17 percent since 2006 as a re- increasing for years. Pew Internet Project data reveal, pretend it can. CJ sult of long-term effort and investment “They’re graduating with- 80 percent of online teens are avid in education.” out very basic skills,” Stoops said. users of social media; so, too, are Kristen Blair is a North Carolina He went on to say that the im- “Even if they don’t go to commu- millions of younger tweens. So why Education Alliance fellow. provement in the dropout rate is part nity college, these are skills that they of a six-year trend and is not an over- should possess.” CJ PAGE 8 SEPTEMBER 2012 | CAROLINA JOURNAL Education Education Administrator Claims at Variance With Class-Size Research By Kristy Bailey Stuck on size Contributor The General Fund budget al- RALEIGH lotment for K-12 public education in- orth Carolina Superintendent cludes $124 million, spread over the of Public Instruction June At- current budget year and the next, to kinson is traveling across the hire 3,324 K-3 teachers in an effort to NTar Heel State to educate voters about reduce class size ratios in those grades. the relationship between smaller class According to Civitas, classroom ratios sizes and improved student perfor- for those grades would be reduced mance. from 18 students per teacher to 17. Atkinson’s “Class Size Matters” But in a May 29 report, DPI puts tour, launched in late July, featured some current ratios at 1:33. “Many meetings with parents and educators have asked how class sizes could be in Elon, Winston-Salem, and Charlotte. this large since lawmakers and oth- “North Carolina has reduced ers refer to teacher-to-student ratios class sizes over the past decade, and that are 1:17 or 1:18 in grades K-3,” I do not want us to lose ground by DPI officials said in the report. By law, going back to a place where class- class sizes in grades K-3 shouldn’t es are larger, “ Atkinson told Caro- exceed 24 students, but that require- lina Journal. “Safety is also a factor.” ment has been waived in grades 4-12 Conflicting research results over the past several years to help Education administrators maintain that increasing the number of students in a class- school districts deal with budget room adversely affects achievement, but research does not bear this out. (iStock photo) But studies conducted over the cuts, DPI reports. The teacher allot- last 30 years show conflicting results. data from the federal government. class size did not have an impact on ment ratios are used to determine “State education officials advocate for After federal dollars ran out, student achievement; however, the how much money is sent to individ- smaller class sizes based largely on state lawmakers had to pick up the tab study stated that an important factor ual school districts to hire new teach- faith, not research,” said Terry Stoops, if they wanted to keep personnel lev- in improving student achievement ers as the student population grows. director of research and education els stable. The General Assembly in- was frequent feedback from a teacher. studies at the John Locke Founda- Average class size creased state funding for education by As a former teacher, I know that you tion. “Targeted class size reduction in $318 million. The shift resulted in an ad- cannot give frequent feedback to each The National Center for Educa- elementary school math and reading ditional 4,613 state-funded education tion Statistics put the average elemen- courses may benefit struggling stu- student with 35 students in a class.” jobs. The Obama administration ended “Research shows that most teach- tary class size in North Carolina at 19 dents. As a statewide policy, however, funding for the remaining 4,800 jobs. ers do not change their instructional students and the average secondary the benefits do not justify the costs.” class size at 21 students, according to Meanwhile, other top state Dem- Class size research approaches after class sizes are low- ered,” Stoops countered. “In other the John Locke Foundation’s Agenda ocratic leaders, including outgoing 2012. During their 2011 session, state Gov. Bev Perdue, continue pushing for Atkinson pointed to what she words, the promise of ‘individualized termed “one of the most extensive re- lawmakers put mandates in place re- more education funding. Perdue said attention’ seldom materializes in the search studies” for evidence of how quiring all public schools to have a dis- North Carolina schools would receive classroom. Estimates of the cost of class size affects student achieve- trictwide average of 21 students and $190 million less in the fiscal year that lowering class sizes vary. One study ment. “The researchers concluded a maximum of 24 students per class. began July 1 than in the previous year suggests that a two-student reduction that smaller class sizes have posi- Atkinson’s goal is clear. “I want and vetoed lawmakers’ adjustment to tive effects on improving student in average class size would require a teachers and principals to group and the General Fund budget, calling for learning, especially for boys and our permanent 10 percent increase in per- regroup students, especially at the el- another $100 million in addition to most vulnerable children,” she said. student expenditures. In most cases, ementary and middle school level, to the $242.4 million overall increase in The Tennessee Student Teacher two fewer students will have no signif- have smaller groups when students state spending. More than $7.5 billion Achievement Ratio Study, or Proj- icant effect on student achievement.” have more challenges,” she said. CJ goes to the state K-12 public school ect STAR, tracked the kindergar- system during the 2012-13 fiscal year. ten class of 1985, in which students “The net increase to the state’s were assigned to classes ranging be- K-12 public school budget is only $62 tween 15 and 22 students. Research- million, and when accounting for the ers found that students in the smaller loss of $259 million in federal recovery classes outperformed their peers in funding next year, public schools will larger ones, with black and lower- have to operate with $190 million less,” income students improving the most. analysts from the liberal N.C. Justice Even so, “[l]ongitudinal stud- Center concluded in a July report. ies of Project STAR indicated that Personnel data smaller classes improved student performance, but a number of imple- Final personnel data from the mentation problems may have biased N.C. Department of Public Instruc- the results,” Stoops wrote in an op-ed tion show a total loss of about 9,400 column. “For example, Project STAR jobs — 2,000 of them locally funded. likely suffered from the ‘Hawthorne The remaining 7,400 jobs had been Effect,’ a serious form of bias where- funded with federal stimulus money. by participants change their behav- A Civitas Review analysis found that ior (in this instance, students work- teaching positions accounted for ap- ing harder) because they are aware proximately 19 percent of positions that they are the subjects of a study.” eliminated. Other job losses included: Atkinson said additional re- teacher assistants (2,042); service work- search from 2001, 2003, 2008, and 2009 ers (1,051); and clerk/secretary (282). “have reached similar conclusions The state was awarded $7.6 bil- — there is a positive correlation be- lion in stimulus money in 2009, with tween smaller class sizes and student $2.6 billion earmarked for the K-12 achievement. A recent study about public school system, according to charter school class size reported that SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 9 Education State School Board, Court Stymie Online Charter School

By Dan Way vide at least one online class. approval, Shue said. Board members dren,” Stoops said. Associate Editor North Carolina is “kind of unusu- expected support from the State Board State education officials say RALEIGH al” in offering only one delivery option, of Education. North Carolina already has a robust e- s the traditional public school Patrick said. Other states have several But the state board rejected the learning opportunity through the De- year in North Carolina begins, full-time, statewide online schools in application, saying it did not have nec- partment of Public Instruction’s N.C. Cabarrus County proponents addition to a state-sponsored virtual essary policies in place for a virtual Virtual Public School. ofA a statewide virtual charter school school, and allow individual districts charter school. An administrative law “We have seen a real growth cling to long-shot hopes that their un- to set up their own virtual schools of judge then approved the academy to over the last five years or six years, and precedented e-learning institution can choice without jumping through state begin enrolling students this fall, but we serve roughly just shy of 50,000 stu- open this year. For that to happen, the regulatory hoops. Superior Court Judge Abraham Jones dents per year,” the majority of them North Carolina Virtual Academy will The Cabarrus County Board of ruled against the school. N.C. Learns high schoolers, said Tracy Weeks, in- have to prevail in a legal battle against Education at- has appealed terim executive director of N.C. Virtual the State Board of Education. tempted to get that decision. Public School. Meantime, nearly 50,000 North the process “I’m dis- The school offers “well over 100 Carolina students will receive limited jumpstarted in heartened by the courses, from AP to honors, world lan- online instruction delivered directly by North Carolina Superior Court guages such as Chinese, Russian, and the state under a tightly regulated pro- by approving ruling because Arabic [to] credit recovery courses for cess that some national online educa- N.C. Learns as I think it is fun- students who have previously failed,” tion experts believe is antiquated and the locally con- damentally in- Weeks said. There also are courses for counterproductive. stituted govern- consistent with exceptional children who need ad- “North Carolina has been a little ing body of what the law, and to ditional support, and for homeschool behind the curve in enabling full-time would have been me that is both- and private school students. [virtual] schools,” said Durham na- North Carolina’s ersome,” said There are up to 800 certified, part- tive and former Raleigh resident Su- first virtual char- state Sen. Fletch- time, contracted teachers. Schools and san Patrick. She is president and chief ter school, en- er Hartsell, R- students have varying degrees of flex- executive officer of the International rolling students Cabarrus, the ibility regarding when and where to Association for K-12 Online Learning across the state attorney rep- access online classes. in Vienna, Va. “There are just more as early as kin- resenting N.C. Weeks envisions continued opportunities that students in North dergarten. Learns. growth in her program, but also fore- Carolina deserve.” “We want to be a top 10 district in Hartsell contends state statutes sees the advent of startup virtual char- Her association provides advo- North Carolina, and we’re not afraid to allow a local district to approve a char- ters once the state adopts appropriate cacy, research, professional develop- get our feet wet and be a forerunner in ter, and he holds out the slim hope the policies. ment, and networking to more than education,” said Lynn Shue, Cabarrus school still might get approval. “There will be different models 3,800 members in the United States school board chairman. Joel Medley, director of the North that serve different students in differ- and globally. “It’s all about choice. People and Carolina Office of Charter Schools, ent ways. I don’t see virtual charter In the past 10 years, the number parents and kids, everybody wants said the state has not changed position, schools as harming our organization of U.S. students enrolled in distance choice,” Shue said, and online educa- and won’t until it has the “right fund- or affecting our organization in any learning ballooned from about 20,000 tion would be a better fit for some stu- ing and right accountability pieces in significant way,” Weeks said. to 1.8 million, according to the U.S. De- dents as the district strives to increase place, and they’re working toward Advocates “would be the first to partment of Agriculture, which tracks its graduation rate from 86.4 percent that.” He hopes the planning is com- say that online schools are not for ev- those statistics, Patrick said. About last year to 90 percent. pleted before next year’s application ery student, they’re not for most stu- 250,000 students take all their classes “I feel like our board did what round. dents, but for some students they are online in the 30 states that offer that we were supposed to do” under state “I don’t think it’s a fair excuse the right fit, and they are an important option. Supplemental online courses general statutes declaring the local to say we don’t know how to do this option in public education,” said Jeff are offered in 40 states, and all 50 pro- authority should grant preliminary and block opportunity,” Patrick said. Kwitowski, vice president for public “There are enough examples across the relations at K-12 Inc. in Herndon, Va. country that they can draw from on Sometimes online courses are Locke, Jefferson and the Justices: how to do that. “the only option for academic success” “The focus of the discussion for bullying victims, children with Foundations and Failures of the U.S. Government around the country is on allowing mul- medical conditions, and special-needs tiple opportunities to exist and having students, Kwitowski said. the taxpayer funds follow the student Single-parent students and stu- By George M. Stephens for what the best educational program dents with jobs can take advantage of for the student is,” Patrick said. “Lots online instruction, he said. The courses Preface by Newt Gingrich of states have figured this out.” Minne- are beneficial for accelerated learners sota and Utah have a funding formula and those falling behind who need “This book is about American for dividing tax dollars among districts more attention. And they provide politics and law; it is also about down to a student’s individual course teachers and courses otherwise not the roots of the Contract with level. available, especially to financially chal- America. A logical place to find “The more competition between lenged small and rural schools. online education providers, the better. “The actual impact of online ed- the intent of the Founders is in Competition between private, public, ucation will be modest — perhaps 1 Locke, [and] Stephens makes and charter providers promises to low- percent of the school-age population a contribution to highlighting er the cost of virtual school courses and will enroll in an online course,” Stoops this.” most importantly increase educational said. But while “students in urban Newt Gingrich quality,” said Terry Stoops, director of and suburban areas have multiple pri- Former Speaker research and education studies at the vate and charter school options, chil- U.S. House John Locke Foundation. dren in many rural communities do of Representatives “Families should weigh the pros not. If an online school is introduced and cons of online education providers statewide, families in many districts and choose the one — whether public, go from having no school options to charter, or private — that best meets complete choice without geographic Algora Publishing, New York (www.algora.com) the needs and interests of their chil- boundaries.” CJ PAGE 10 SEPTEMBER 2012 | CAROLINA JOURNAL Local Government Town and County Chatham Commission Gets ‘Back to Basics’ Triad incentive limits By Kristy Bailey In response to the dismissal, in July 2011, all eight The cities of Greensboro, Contributor members of the county’s volunteer human relations com- High Point, and Winston-Salem PITTSBORO mission resigned. “We refuse to participate in an ineffectual are working to establish a common he 2010 election saw a major turnaround in the make- commission and perpetuate the myth that this board cares approach to offering incentives to up of the Chatham County Board of Commissioners. about the welfare of minorities,” the group’s former chair- companies that may move to the In a county where Democrats outnumber Republicans man, Norman Clark, told commissioners, adding that the Triad region. The move aims to 2-to-1,T Republicans ousted three Democratic incumbents on commission did not have the resources or abilities to ad- prevent bidding wars between the the five-member board with promises to save taxpayers $2 dress discrimination complaints from local residents. cities, the Winston-Salem Journal re- million over four years. Coleman was hired to promote nondiscrimination ports. Among their first official acts, Republicans Brian Bock, practices throughout Chatham County. More specifically, The three cities have an in- Pam Stewart, and Walter Petty eliminated two high-profile her job was to “avert and pre-empt issues by dealing with formal agreement not to offer in- positions that the new members of the board considered discrimination, labor violations, hate bias and hate crimes centives to companies relocating make-work jobs — director of sustainable communities and before they become problems and expensive lawsuits for within the Triad. Earlier this year, executive director of the county’s human relations commis- the county,” Pittsboro activist Loyse Hurley explained last it came out that all three were bid- sion — for which the duties seemed nebulous at best. January to Chatham County commissioners. ding against each other (and other The move stirred con- Another Pittsboro resi- cities) in trying to attract CFS II, troversy at the time, but the dent bristled at the notion of a Tulsa, Okla.-based collections new majority says its focus creating the job in the first agency. was to restore funding to place. “They had a Commu- In response, the cities have the core functions of govern- nity Relations Department agreed in principle to a dollar limit ment, such as public safety to disseminate information per job they can offer in incentives, and education, while elimi- to the community,” Heather with the amount depending on nating programs unrelated Johnson told the commis- the size of the company being tar- to those goals. sion. “Why create a special geted. The first cut: Chatham department to target subsets Bob Leak, president of Win- County’s Sustainable Com- of their community for spe- ston-Salem Business Inc., said munities director, Cynthia cial attention? Claiming that communication among local gov- Van der Wiele, who had been certain racial minorities or ernments could avoid bidding on the job since June 2009. immigrant groups had spe- wars. Van der Wiele’s pedigree in- cial needs was insulting to “The best way is to have cluded two master’s degrees the many people within the open dialogue between the cit- from Duke University’s community who succeeded ies and counties being considered Nicholas School of the Envi- without special attention.” by a project and hold the line on ronment, and a bachelor’s, Bock said the total incentives until the project has master’s, and doctorate from The cover of the Chatham County 2012-13 budget, which the costs to the county including N.C. State University. She new Republican majority says is an effort to get back to the benefits of the Sustainable picked a site. That way, the real es- basics of government services tate drives the deal, not the incen- had worked previously as an Communities director po- tives,” Leak said. environmental specialist in sition were approximately the N.C. Division of Water Quality’s wetlands unit and as a $160,000, and the human relations position $100,000. stormwater engineer. The commissioners didn’t stop there. They also elimi- Chapel Hill cell phone ban Democratic Commissioner George Lucier, unseated by nated positions for an obesity prevention coordinator and a Bock after a single term, had argued at the board’s Decem- public transportation director, both vacant at the time. Bock A state judge has struck ber 2008 work session to create the position, saying it was suggested they would have been filled had the incumbents down Chapel Hill’s ban on talk- an important way to promote green building, transporta- won re-election in 2010. ing on a cell phone while driv- tion and affordable housing. “In my opinion, these positions were either poorly de- ing. In his ruling, Superior Court Van der Wiele’s duties included coordinating county fined or not necessary in a rural county such as ours,” said Judge Orlando Hudson found that units, including planning, environmental resources, soil and Bock. Chatham commissioners voted 3-2, along party lines, existing state laws on cell phone erosion sedimentation control, central permitting, transpor- to cut the positions, with commissioners Mike Cross and use while driving pre-empted tation, green building, and affordable housing. Kost opposing. the town’s restriction, reports the “I didn’t have a good handle on what her job was,” As a result, Bock said, Chatham’s discretionary spend- News & Observer of Raleigh. Bock told Carolina Journal. ing fell by 15 percent in the new majority’s first year, freeing In March, the town passed Positions for sustainable community directors were, at additional funding for education and public safety. In all, an ordinance prohibiting the use least in 2008, relatively few. In the minutes of the Dec. 15, 14 positions, both full- and part-time, were eliminated. At of cell phones by the driver of any 2008, meeting, Democratic Commissioner Sally Kost told just under $83 million, the fiscal year 2011-12 budget came moving vehicle. The ban extended the board that she knew of one county in the Pacific North- in roughly $1.5 million below the previous year’s budget. to the use of handsfree devices, west that had a similar position. That said, the 2012-13 budget increased spending by including Bluetooth systems in- “We said from the beginning that our goal was to re- roughly $4 million. Bock said those increases covered raises tegrated into cars. A towing com- duce and prioritize,” Bock said. “Our process would be to to county staff, teacher supplements, and a transfer to the pany challenged the ordinance im- county’s debt reserve for a new jail that’s in the works. Also, fund those items that are a ‘core’ function of government mediately, contending that Chapel he said, county education spending went up to offset reduc- and reduce those expenditures that were not.” Hill lacked the authority to pass tions from the General Assembly. In 2011, discretionary funding comprised 28.9 percent such a ban. Even so, the board’s conservative faction in June held The state bans texting while of the county’s general fund. Total expenditures for the the county’s tax rate steady at 62.19 cents. driving and limits the use of cell sustainable communities division Van der Wiele headed Ultimately, Bock said, controlling spending won’t be phones by those under 18 and topped $2.3 million in the 2010-11 county budget, with more enough. County policies will have to encourage business school bus drivers. than half that amount going to salaries alone. development and economic growth. During the hearing on the Also dismissed last January was Esther Coleman, ex- “In that light, we have worked very hard to stream- ban, Town of Chapel Hill attorney ecutive director of the Chatham County Human Relations line our permitting process, restructure our [Economic De- Ralph Karpinos argued “the Gen- Commission since 2007. velopment Commission], and change the attitude of our eral Assembly’s failure to act [on The county created the Human Relations Commission employees to be business-friendly,” said Bock. “I believe banning all cell phone use while in 2000 to deal with growing population diversity. Chatham these changes are working as we have had good success driving] in this matter shows they was one of 13 local entities to employ a full-time paid staff in attracting new business and creating new jobs. We have left the door open for local action.” member to address human relations issues. The county is lots of work still to do, but we will stay focused. We may at Hudson did not agree. CJ majority white, but Hispanics and blacks each make up some point need to raise our property tax rate, but it will about 13 percent of Chatham’s population. be a last resort rather than the first.” CJ SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 11 Local Government

Kernersville Condemnation COMMENTARY Said to Benefit Private Hospital Creative Class

By Sam A. Hieb disputed Kernersville’s claim that the Contributor taking of land was for a public pur- Crackpottery KERNERSVILLE pose, adding that another major road ould condemnation under emi- provided adequate access to the medi- n Raleigh, it’s being heralded as ida’s theory is just silly. Its flaws nent domain increase the value cal center. the next big thing, a relocation should be obvious to anyone who of land? “They’ve got plenty of access,” decision that could help rede- spends some time thinking about CThat’s the argument the attorney Sharpless told Carolina Journal. Ifine and redevelop the old ware- the implications of Florida’s theory. for a Kernersville property developer The complaint also states that Dr. house district near downtown. As members of the creative is making. The only problem is it’s not Joyce Reynolds, a stockholder in Joyce Last year, Citrix Systems, class age from their 20s to their his client’s land that would become Development and the mother of the which is based in California and 30s, they do what the general more valuable. Someone else’s land company’s president, was invited to Florida, bought the local informa- population does in their 30s (if not would increase in value. Meantime, his lunch by the husband of a former pa- tion technology firm ShareFile. In earlier): settle down, get married, client would receive considerably less tient and was met by representatives August, Citrix announced that its and have kids. And once you have than market value in compensation. from Novant, who — according to the newly acquired division was mov- offspring, the appeal of urban liv- “Go out there and ask 99 people complaint — pressured Reynolds to ing into a converted warehouse on ing that the creative class is alleged out on the street if it would be OK to “gift” the land to Novant. West Street, near a planned transit to prefer — and on which many make a real estate developer’s land The suit goes on to say that Joyce hub. cities, including Raleigh, more valuable by Development presi- “It can really start are spending vastly condemning — not dent Dick Reynolds a domino effect that is to create — suddenly buying, condemn- offered to sell the going to bring a Raleigh disappears as the draw ing — access across land to Novant in version of what Durham of owning a house with a their neighbor’s 2007 but received no has done so well,” Citrix yard increases. land,” said Freder- counteroffer. Reyn- Vice President Jesse Lip- There’s zero talk of ick Sharpless, the at- olds met in Septem- son told the Triangle Busi- doing anything to retain torney representing ber 2008 with repre- ness Journal. “It’s going these former hipsters af- Joyce Development sentatives of Trade to start a trend of these ter they reach that point. Corp. “And 99 peo- Street, this time companies moving out- MICHAEL That’s especially puz- ple are going to tell offering to sell the side of Research Triangle LOWREY zling, given that people you you’re out of your mind. What’s land for $4.5 million. Again, no coun- Park and the suburbs tend to earn higher in- different about this situation?” teroffer was made at that time, but in and moving back into the comes as they get older. Here’s the situation. Joyce De- April 2012 Trade Street finally coun- downtown area.” It’s also questionable whether velopment owns land along N.C. 66 in tered with an offer of $540,000 that the Lipson’s comments were one even can talk of a creative class Kernersville. It’s prime land — sections lawsuit states “is substantially less” mild compared to those of David of eastern Forsyth County and western than its tax value. as a unified whole. As Ann Marku- King, general manager of Triangle sen of the University of Minnesota Guilford County between Kernersville Dick Reynolds rejected that of- Transit, who told The News & Ob- and Greensboro are being targeted for fer. In a June 26, 2012, e-mail obtained notes, what constitutes human server that “this is the first gunshot creativity is fuzzy. Florida uses development by both cities. by CJ, Trade Street president Hank in the land stampede that will The area is considered so desir- Perkins informed Town Manager Cur- Census occupational groups to come to West Raleigh.” come up with his classification, but able for economic development that tis Swisher and Town Attorney John Normally, local corporate not everyone within a particular the Kernersville Town Council over- Wolfe that Reynolds’ position was moves don’t generate much public industry really could be considered whelmingly rejected Guilford County “that he does not want to sell and that reaction, but this case is clearly dif- to be creative. Schools’ request to rezone land for a no price is sufficient compensation for ferent. For that we can thank urban new high school. his land.” Claims adjusters, for ex- studies theorist Richard Florida’s It’s also close to the Kernersville In its complaint, Joyce Develop- ample, are included in business concept of the “creative class.” Medical Center, which Novant Health, ment maintains “upon information Florida argues that knowl- and financial occupations, which a nonprofit health care network based and belief, Mr. Perkins made a know- edge workers, intellectuals, and Florida considers to be part of the in Winston-Salem, built in 2008. ingly false statement when he claimed artists of various sorts will be the creative class. And there are plenty Another development company that Mr. Reynolds told Mr. Perkins leading force for economic growth of highly skilled professions that that owns land in the area is Trade ‘there was no amount of money that in coming years. The places that aren’t part of the creative class. Street Development Corp., which acts would be enough to purchase his can attract the creative class will Moreover, academic studies as Novant’s agent in the extension of property.’” have called Florida’s work into the Kernersville Medical Parkway. The Perkins did not respond to re- prosper, he says, while those places that can’t attract these individuals question. Essentially, Florida fails proposed extension of the parkway quests for comment. to account for workers’ educational would cross Joyce’s land. It ostensibly On Aug. 21 Kernersville filed will stagnate. achievement. Once that’s included would make Trade Street’s land more both a motion to dismiss Joyce De- Local government officials in the analytical framework, it’s suitable for commercial development, velopment’s and its official notice of often take this theory to mean that clear that human capital matters thus increasing its value. condemnation, stating the Town of communities are essentially in a That’s the case Joyce Develop- Kernersville “estimates the sum of bidding war for the creative class. a lot more to regional economic ment made in a complaint filed in Au- $502,951.00 to be just compensation for They must provide more of the ur- growth than how funky your gust seeking to stop the town from us- the taking of property described.” ban, bohemian amenities — restau- downtown may be. ing eminent domain to seize 2.3 acres The town also maintains that the rants, loft apartments and condos, So yes, it’s nice that an old of property. taking of the land is justified as a pub- mass transit — the creative class is warehouse is being refurbished The complaint maintains, “the lic purpose not only in order to relieve said to value or risk the economic in a stagnant part of Raleigh. But Town of Kernersville improperly seeks congestion along N.C. 66 but also to consequences. Younger creative if you’re expecting some sort of to wield the public power of eminent provide better emergency access to the types are especially sought. That magical transformation to ensue, domain for the private benefit of the medical center. is why Citrix Systems’ move was you’ll be disappointed. CJ commercial developers who have or- “We look at it in the sense that seen as a win for Raleigh in general chestrated and funded the taking and it’s a connector road,” Swisher told and downtown Raleigh in particu- whose property cannot be developed CJ. “It’s also an outlet to an emergency lar. Michael Lowrey is an associate unless the road is constructed.” service. We need two ways in and out There’s one problem: Flor- editor of Carolina Journal. In a phone interview, Sharpless from the hospital.” CJ PAGE 12 SEPTEMBER 2012 | CAROLINA JOURNAL Local Government Lumberton Case Could Put End to Judicial Review of Tax Rates

By Dan E. Way “When adopted in 1936, the Just to invent some new right.” will wield the taxing power on good Associate Editor and Equitable Tax Clause neither ex- She expects to file a friend-of- and productive taxpayers and individ- RALEIGH panded nor created taxpayer challeng- the-court brief supporting the business uals,” Doran said. umberton officials are using an es to the amount of taxation,” the city’s owners. But the city’s brief contends the unprecedented taxation defense brief states. The safeguard of the constitution- sweepstakes parlors failed to demon- in an Internet sweepstakes law- “Several restrictive protections al clause “doesn’t mean everyone gets strate “substantial evidence” that the suitL before the state Supreme Court were conceived to have the exact tax amounts would harm their busi- that features constitutional separation by the Constitu- same tax rate,” nesses. of powers issues and arcane legal pro- tional Commis- Doran said. “It In its supporting brief, the tections dating from the Great Depres- sion and imple- means if we’re 540-member League of Municipalities sion. mented by the going to have states that Lumberton should be ac- Joined by the powerful North North Carolina different tax corded “a high bar for demonstration Carolina League of Municipalities, the General Assem- rates on different of a constitutional violation” because city is advancing the novel legal argu- bly to replace classifications, it ment that the judiciary has no consti- judicial chal- needs to be rea- courts traditionally provide great def- tutional authority to review legislative lenges,” the brief sonable.” She erence to “complicated, policy-laden, branch decisions setting rates for busi- states. Those in- believes Lum- legislative-executive decisions involv- ness privilege taxes. clude the use of berton failed that ing resource allocations.” Attorneys for the Internet café a gubernatorial test. The state constitution contains no businesses say if the Supreme Court veto, debt limit “Everyone “explicit limitation ... pertaining to lo- upholds the Court of Appeals ruling in m e c h a n i s m s , else in Lumber- cal taxes such as the property tax or the the case, it will swing open the doors oversight by the ton pays business privilege license tax,” the brief argues, of municipal mischief by creating an General Assem- privilege taxes and the only specific constitutional cap unchecked legal framework for state bly, and a popular vote to oust legisla- of no more than a few hundred dol- is for the state income tax. and local governments to abuse their tive members. lars,” and some get a privilege license In their filing, the Internet café taxing authority. Since the constitutional amend- for as little as $12.50, Doran said. Yet lawyers contend that the court should Government would be granted ment was ad- some sweepstakes not accept arguments by the city in- “unfettered, unreviewable power to opted, “judicial operators are now voking claims that the court has no tax anybody and anything within its review has been charged as much jurisdiction over the amount of taxes municipal reach,” said Richard Gott- limited to distinc- Critics say such as $137,500, “and levied because the city did not pres- lieb, an attorney with the Winston-Sa- tions between the city doesn’t ent that argument in the lower courts. lem law firm of Kilpatrick Townsend, taxpayers and taxes give local bother to explain Thus, the city waived the right to that which is defending the businesses not the tax rate or governments the anything about the claim now. against 2010-11 tax increases ranging amount,” the brief reason for that.” For the same reason, the lawyers from 6,000 to 11,000 percent. states. If the Court say, the city’s claim that the tax hikes “No court has ever said that it “If the tax power to of Appeals deci- were needed for its budget was not didn’t have the power” to decide con- survives the chal- punish businesses sion stands, “then I stitutional cases involving the state’s lenge, it will really think cities would raised before now and must be reject- just and equitable tax clause, Gottlieb give government a have the green ed. said. new tool to regu- light to use the tax- Indeed, in a separate case before Sweepstakes operators The Inter- late businesses that they don’t like,” ing authority to gouge McDonald’s for the Supreme Court involving these net Business Center, G&M Co., Sweep- said Adam Charnes, an attorney with selling Happy Meals or gun shop own- businesses, attorney Lonnie Player Net Internet Business Center, and EZ Kilpatrick Townsend. That regulatory ers for selling guns,” she said. said the city presented “no evidence Access of North Carolina say they intent would be “an impermissible use “If we allow the government to of any kind” that it experienced higher were targeted with exorbitant taxes to of the tax power.” abuse the taxing power to injure the costs for police, fire, or other services, drive them out of business. The busi- Richard Dietz, also an attorney unpopular and unsavory, it is only a and the revenue from the tax was not ness owners and the city cross-filed for with Kilpatrick Townsend, said ele- matter of time until the government even included in that year’s budget. CJ summary judgment in Robeson Coun- ments of the case extend to the seminal ty Superior Court. 1803 Marbury v. Madison case, in which The city won, and a divided U.S. Supreme Court Chief Justice John Court of Appeals upheld the trial Marshall concluded that the courts can court. The Supreme Court is expected overturn a legislative decision. A case to hear the consolidated cases in Octo- in North Carolina established a right of ber or November and issue a ruling in judicial review 16 years earlier. the first half of next year. Still, the city’s brief contends: The just and equitable tax “For the most part there is a dearth of clause is an unusual taxpayer protec- cases on point for judicial challenges tion among the states. It passed as an to tax amounts. This is because it has amendment to the state constitution been long and firmly understood that in 1936 to replace common law provi- there was no judicial challenge avail- sions proscribing confiscatory taxes. able.” Setting the amount of taxes has The sweepstakes parlors claim been reserved to the legislature, it says. the clause requires that tax levels must Jeanette Doran, executive direc- be reasonable and related to the pur- tor and general counsel of the North pose for which they were levied. They Carolina Institute for Constitutional aver in a brief filed July 30 with the Su- Law, acknowledges the just and equi- preme Court that the Court of Appeals table tax clause has not been litigated erred in deciding the case based on the heavily. outdated common law. But since being added to the state “I take the position of not com- constitution in 1936, “there have been menting on pending litigation,” Lum- at least three significant decisions that berton City Attorney James Bryan said. all address lawsuits that were based on Instead, he provided the city’s filing, the just and equitable clause,” Doran which advances the opposite claim of said. “It’s not as though the business the businesses. owners down in Lumberton are trying SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 13 Local Government Court Rules Charlotte’s Favoritism Not Discriminatory By Michael Lowrey ditional pickups and pursued a con- to court, contending that Charlotte’s customer of the city. Associate Editor tract with O’Leary Group Waste Sys- policies were a discriminatory viola- The appeals court concluded that RALEIGH tems for this service; O’Leary offered tion of state law. Cedar Greene had standing to chal- he N.C. Court of Appeals recent- the apartment complex a lower rate Superior Court Judge Wil- lenge the policy, but could not show ly delivered a mixed verdict to than Republic for extra collections. liam Constangy ruled in favor of the that Charlotte’s policy discriminated Charlotte in its dispute with Ce- O’Leary’s bid, however, con- apartment complex and O’Leary. The against it. McCullough wrote, “we fail darT Greene Apartments over garbage tained an important condition: It was city then brought the matter before to see how the City’s reimbursement collection. The apartment complex contingent on re- the court of ap- policy treats Cedar Greene differently wanted to hire — at lower cost — a ceiving the same The North Carolina Courts peals. In its ap- from other multifamily complexes in vendor other than the city-approved treatment as Re- peal, Charlotte the provision of solid waste disposal company that provides trash collection public at the city’s contended that services.” services for apartment complexes in garbage dump. O’Leary shouldn’t Judge Ann Marie Calabria dis- the city. C h a r l o t t e be allowed to sented from the majority holding, find- Charlotte’s refusal to reimburse imposes a $27 per challenge the ing that O’Leary had standing to chal- the apartment complex for use of an apartment unit fee city’s refusal to re- lenge the city’s policy. She found that outside vendor led to the lawsuit. A for garbage dis- imburse the fees. the protections in state law could ex- trial court favored the apartment com- posal, which cov- “The City tend to service providers. plex and the outside vendor, but the ers both primary maintains that the “The law does not explicitly limit appeals court reversed much of the tri- and any supple- anti-discrimina- discrimination solely to customers, but al court’s ruling. The court’s majority mental collections. Per its agreement tion principle embodied in N.C. Gen. instead provides guidelines that differ- would allow the case to return to the with the city, Republic is reimbursed Stat. § 160A-314 as enunciated under ent rates must be justified by a differ- trial court to resolve other issues, but at the city dump for all collections our case law protects only customers of ence in the class of service,” Calabria a dissenting opinion at the appellate from apartments and condos within public enterprise services, not service wrote. Charlotte had not done that. level could lead the case to the N.C. the city, including providers, and Supreme Court. additional collec- therefore, O’Leary “The City… has admitted that the If the city prevails, it could limit tions for which the lacks standing to solid waste disposal service provided, the incentive for business owners to apartment com- Charlotte gives maintain a dis- whether by Republic, O’Leary, or an- seek bids from service providers that plexes contracted. crimination claim other disposal service, is effectively the compete with those approved by mu- The city re- discounts to under the substan- same,” Calabria wrote. “The identity nicipal governments. fused to reimburse tive law of this of the provider does not indicate a dif- The city of Charlotte contracts O’Leary for any one waste statute,” wrote ferent class of service. with Republic Services Inc. for garbage additional col- management Judge Doug Mc- “However, in refusing to pay any collection at apartment complexes, lections it might Cullough for the provider other than Republic, the city condominiums, and trailer parks in perform at apart- company but appeals court. “We effectively subjects multifamily com- the city. Each multifamily complex ments in the city. agree.” plexes to pay elevated rates for their qualifies for a set number of collections State law refuses to give McCullough solid waste disposal.” per week based on the ratio of residen- gives local gov- noted that exist- Court of Appeals rulings are tial units to Dumpsters. If a complex ernments a great it for another ing case law had binding interpretations of state law wants collections beyond the number deal of discretion established that unless overruled by the N.C. Supreme allowed by the city’s formula, it must to operate public cities “may not Court. Because of Calabria’s dissent, contract with a private waste hauler enterprises so long discriminate in the the high court is required to hear an for additional pickups. as they don’t discriminate or act in an distribution of services or the setting of appeal if O’Leary seeks it. The Cedar Greene Apartments arbitrary manner. rates.” But O’Leary did not qualify for The case is Cedar Greene, LLC v. wanted to provide its tenants with ad- O’Leary and Cedar Greene went those protections because it was not a City of Charlotte, (12-212). CJ Help us keep our presses rolling Publishing a newspaper is an ex- Share your CJ pensive proposition. Just ask the many daily newspapers that are having trouble making ends meet these days. It takes a large team of editors, re- Finished reading all porters, photographers and copy editors to bring you the aggressive investigative the great articles in this reporting you have become accustomed to seeing in Carolina Journal each month’s Carolina Jour- month. Putting their work on newsprint and nal? Don’t just throw it then delivering it to more than 100,000 readers each month puts a sizeable dent in the recycling bin, pass in the John Locke Foundation’s budget. That’s why we’re asking you to help it along to a friend or defray those costs with a donation. Just send a check to: Carolina Journal Fund, neighbor, and ask them John Locke Foundation, 200 W. Morgan St., Suite 200, Raleigh, NC 27601. to do the same. We thank you for your support. Thanks. John Locke Foundation | 200 W. Morgan St., Raleigh, NC 27601 | 919-828-3876 PAGE 14 SEPTEMBER 2012 | CAROLINA JOURNAL From Page 1 Coastal Wind Energy Project Under Fire From Three Directions Continued from Page 1 Tax credits and subsidies go-based Invenergy, which calls itself The federal Renewable Energy the nation’s largest independent wind Production Tax Credit program allows energy owner, operator, and develop- companies a 2.2 cent-per-kilowatt- er. The company operates large-scale hour tax credit for electricity generated wind energy, solar energy, and natural and sold to another company during gas-fueled electric generation facilities the taxable year. The program, essen- in North America and Europe. tial to the economic viability for wind Pantego Wind has secured con- farms, will expire Dec. 31 unless Con- ditional land leases for the windmills. gress renews it. The facility will be connected with Vir- Instead of the tax credit and ginia-based Dominion Power’s Pan- other subsidies, Romney has said free tego Substation. Power it produces can market approaches, not top-down, be sold to Dominion or other investor- central government policies, would be owned utility companies, electric co- more fruitful. operatives, and municipal electric sup- “Mitt Romney is a strong sup- pliers. porter of wind power and appreciates The Obama administration has the industry’s extraordinary techno- come under fire for its habit of giving logical progress and its important con- federal funds to alternative energy op- tributions to America’s energy sup- erations that happened to be owned ply,” Romney spokesman Robert Reid or operated by key political donors. told CJ. “Unfortunately, under Presi- The Pantego project seems to fit that dent Obama’s approach, the industry pattern. Michael Polsky, the owner has lost 10,000 jobs while growth in of Invenergy, is a major contributor wind power nationally has slowed ev- ery single year of his term.” to President Obama’s 2008 and 2012 The wind turbines planned for the Pantego project on the North Carolina coast would presidential campaigns. Polsky also be similar to these near Palm Springs, Calif. (CJ photo by Jon Ham) Romney’s alternative, Reid said, contributed the individual $50,000 would be “promoting policies that re- maximum to Obama’s 2009 presiden- of Seymour Johnson Air Force Base lands to forage. “While there are few move regulatory barriers, support free tial inauguration committee. and potentially other Department of data on the potential impacts of wind enterprise and market-based competi- Polsky was one of several indi- Defense users of the airspace near the farms on tundra swans, it seems rea- tion, and reward technological innova- viduals named in Peter Schweizer’s planned projects,” she wrote. sonable to be concerned about 1) site tion.” recent book Throw Them All Out. Sch- Even before receiving Leavitt’s avoidance (which means a loss of for- Obama remains a strong support- weizer, a research fellow at the Hoover letter, Perdue attempted to address aging habitat), and 2) direct mortality er of federal subsidies for the industry. Institution at Stanford University, concerns about the state’s relationship from turbine blade strikes (especially “Unfortunately, what we thought was noted that Polsky, along with Duke with the military bases. She held a se- at night),” he said. a bipartisan consensus in supporting Energy CEO Jim Rogers, was one of ries of “military summits” in October He said also that the wind tur- wind power has been fraying a little several major financial contributors to and November 2011 at North Carolina bines could kill other bird species, such bit during election season,” the presi- the Obama campaign and the Demo- bases, establishing several task forces as bald eagles. And while Invenergy dent said during an Aug. 14 speech at cratic Party who received millions of afterward. planned to study the bird population the Laurel wind farm in Iowa. “My op- dollars in federal stimulus funds for One, named the Governor’s Land for one season, it may take years to ponent in this election says he wants to their companies. Carolina Journal has Compatibility Task Force, was charged get an accurate count because of crop end tax credits for wind energy, wind learned that Invenergy has collected with developing recommendations for rotation patterns and other variables. energy producers that make all this at least $199 million in stimulus pay- preserving land uses that are compat- Phillips urged the commission to delay possible.” ments for its wind farm operations. ible with the missions of the military approval of the Pantego project until Invenergy understandably wants facilities. The committee’s report, is- Invenergy completed risk assessment the tax incentives to continue. “We’re Air hazards sued in May, specifically noted the po- studies covering the area’s bird popu- not suggesting that renewable power is the single solution to our country’s Leavitt’s military concerns re- tential problems posed by wind farms lation. energy needs,” Gronberg wrote in an volve around hazards posed by the in training areas used by the Air Force The commission did not post- email to CJ. “Rather, it complements height of the structures as well as the and Marines. pone approval, but in March, when it other sources of power generation — radar interference produced by the issued a Certificate of Public Conve- Bird kills helping diversify our national energy turning blades. nience and Necessity to Pantego Wind, supply. … With the demand for new Before approving the Pantego the commission declared that the facil- “Please understand that we are power sources growing — especially project, the Utilities Commission solic- ity “shall be constructed and operated troubled that building windmills in the for clean energy — and the cost of re- ited comments from interested parties. in strict accordance with all applicable proposed areas will adversely affect newable power declining, it makes laws and regulation, including the En- Seymour Johnson’s most frequently In a December 2011 letter on behalf of good, common sense for wind energy used low-level training routes, the pri- the U.S. Department of the Interior and danged Species Act, the Migratory Bird incentives to continue.” mary bomb range used to train F-15E the Fish and Wildlife Service, Pocosin Treaty Act, the Bald and Golden Eagle The American Recovery and Re- aircrew, and the most frequently used Lakes National Wildlife Refuge man- Protection Act, and any environmental investment Act of 2009, also known F-15E low-level flight training area,” ager Howard Phillips wrote, “[T]he permitting requirements.” as the stimulus package, offered de- Leavitt wrote in her letter to Perdue. location of the Pantego Wind Energy, In an email sent to CJ, Invenergy’s velopers an alternative to the renew- “Additionally, windmill structures LLC project causes us great concern.” vice president for development David able energy production tax credits. and rotating blades have a demonstra- Federal laws protecting species Gronberg said the company takes the Wind project developers could receive ble negative effect on the F-15E’s main of birds and other wildlife can require bird issue seriously. “Invenergy LLC a 30 percent investment tax credit up radar and its terrain-following radar businesses to estimate the impact of has concluded that additional stud- front for facilities placed in service in system. The effects are significant at a project or development on the local ies are needed to learn more about 2009 and 2011 and for facilities placed both medium and low altitude flight animal population. Phillips explained the Pantego Wind project in Beaufort in service before 2012 if construction levels.” that, over a period of four to six months County with regard to the region’s bird began before the end of 2010. The pro- Leavitt hinted that wind farms every year, the area is home to about population. Invenergy is confident that gram is named Treasury Department’s pose a similar threat throughout the 70 percent to 80 percent of the eastern a full, fair, and factual study will dem- 1603 Program. eastern part of the state. “I believe that population of tundra swans. onstrate that the Pantego Wind Farm An audit report released in Au- wind farm developments in any part While the swans concentrate in will protect and conserve the region’s gust by the Treasury Department’s Of- of eastern North Carolina have the po- the refuge areas, they routinely fly to wildlife, bird population, and natural tential to harm the training missions surrounding agricultural and other resources.” Continued as “Coastal,” Page 15 SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 15 From Page 1 Wilmington Ballpark Could Become Home of Braves Continued from Page 1 League have made their major league debut. will provide a sense of pride for the “This is going to be a decision of city and offer affordable family enter- you the citizens,” Mayor Bill Saffo said tainment. following a public hearing that lasted Among the Wilmington residents about an hour and preceded the unani- speaking in favor of the proposed ball- mous vote. park during an August public hearing Supporters emphasized that as- was Margaret Stargell, the widow of pect, saying it would be up to the vot- Pittsburgh Pirates legend and major ers to make the ultimate decision. league Hall of Famer Willie Stargell. Durham’s success in generat- “I’m excited at the prospect of ing economic development around its having minor league baseball here in new ballpark seems to be an outlier. Wilmington,” Stargell said. “A new Most economists have concluded that ballpark and professional sports team any economic benefits from stadiums would be an incredible benefit to our largely flow to team owners and the city. … I bet you on opening day, with construction firms that build the facili- the first crack of the bat, that everyone ties. will rally around and support minor Robert Baade of Lake Forest Col- league baseball in Wilmington.” lege and Allen Sanderson of the Uni- Supporter Jim Hundley, chair- versity of Chicago, among others, have man of the Wilmington Ballpark Coali- found that stadiums are not economic Supporters of a ballpark in Wilmington believe it will be a way to revitalize Wilming- tion, said that the city has “an incred- engines. Most of the spending that is ton’s Riverfront area, much as Durham Bulls Athletic Park engergized development ible opportunity before us.” He said concentrated in and around ballparks in downtown Durham. (CJ photo by Jon Ham) a minor league ballpark would bring people downtown to spend money in would have been spent at other din- estimate that Arlington would see just be increased to pay for it. stores and restaurants. ing and entertainment venues in the $1.8 million a year in new tax revenues WWAY-TV in Wilmington reports Opponents at the hearing argued area anyway — leaving local taxpay- while spending $20 million a year on that the Wilmington Chamber of Com- stadium subsidies.” that the proposal amounted to taxpay- ers stuck retiring debt on a facility that merce has commissioned a poll on the If a recently released flash poll ers financing a private business. failed to generate any net economic stadium proposal to be taken by Public by the Civitas Institute is any measure, Stadium opponent Ben McCoy growth. Policy Polling. Callers will be asked if supporters have their work cut out for said that Mandalay “is doing what Stadium backers typically hire they support the bond referendum to them in convincing Wilmington resi- they do. They roam around and look consultants to mask this “crowding pay for the stadium, and if they think out” effect. “Economic Research Asso- dents to support the stadium bond ref- there is enough affordable family en- for suckers, people that are going to erendum. ciates told the city of Arlington, Texas, tertainment in Wilmington, the station give them money to run their busi- The poll found that 23 percent of that spending $325 million on a new reports. ness.” Wilmington voters considered build- stadium for billionaire oil baron Jerry Attorney Clay Allen Collier told ing a stadium either a high or medium The Wilmington club would the council that Wilmington didn’t Jones’ Dallas Cowboys would generate priority, while 22 percent considered be the same Class A Carolina League need a minor league team since it al- $238 million a year in economic activ- it a low priority, and 54 percent said it franchise that operated as the Durham ready has the Wilmington Sharks, a ity,” wrote subsidy critic Neil deMause was not a priority. Bulls from 1980-97. The team left when summer college team that plays in the in The Nation. “Critics immediately The poll also said that 80 percent the Tampa Bay Devil Rays placed their independent Coastal Plain League. pointed out that this merely totaled up would oppose building a $40 million, AAA International League affiliate in “Folks, baseball in Wilmington is all spending that would take place in 6,500-seat stadium financed by taxpay- Durham and kept the Bulls name. The here,” Collier said. He said 55 players and around the stadium. Hidden deep ers, and 84 percent said they would op- current Carolina League Braves team who have played in the Coastal Plain in the report was the more meaningful pose building a stadium if taxes had to plays in Lynchburg, Va. CJ Coastal Wind Energy Projects Under Fire From Three Different Directions Continued from Page 14 dated Nov. 17, 2011, Perdue pleaded hold because the company could not show that 12.5 percent of their energy with Duke Energy, Progress Energy, secure any contracts to purchase the needs are met either by energy from fice of Inspector General showed that and Dominion to sign contracts for electricity. renewable sources or energy efficiency Invenergy and its affiliates have re- Desert Wind power. In addition, Invenergy is pursu- measures. ceived $199 million in payments from “Developing our green economy ing another project in northeastern The standard remains controver- the 1603 Program. is one of the cornerstones of my vision North Carolina, a 100-turbine project sial. Some critics have urged that it be Other projects for North Carolina’s economic future. in the Hales Lake area in Camden and modified or repealed. A longtime out- Projects such as the proposed Desert Currituck counties. The company has spoken critic of wind energy subsidies Pantego Wind is the second of Wind Power Project by Iberdrola Re- not applied for a state permit. is Morehead City resident and retired two wind energy projects that have newables can help us lay the founda- physicist John Droz. He maintains his been approved by the Utilities Com- tion for North Carolina to lead the na- Renewable Portfolio Standard concerns are rooted in science and eco- mission. The first, Desert Wind Energy, tion in clean, homegrown energy,” she nomics. operated by the Spanish company Iber- wrote. “What is urgently needed now, Large-scale commercial wind “Whether an alternative/renew- drola Renewables, was approved in to ensure its viability and long-term projects depend on federal subsidies able is acceptable is a highly techni- May 2011. The project would involve success, is an agreement with a utility as well as state renewable energy man- cal matter that should be decided on 150 wind turbines in a 31-square-mile company to purchase the power gener- dates to create a demand for the elec- the basis of a comprehensive, inde- area near Elizabeth City. The project ated from this landmark project.” tricity produced by their wind farms. pendent, objective, and transparent has not yet secured any contracts to Perdue’s plea to the power com- In 2007, North Carolina became evaluation of three key conditions: its purchase energy produced there. panies came the same month she set the first state in the Southeast to adopt technical performance, the economics Utilities are reluctant to buy from up the task force to address military is- a Renewable Energy and Energy Effi- of the power produced, and its full en- wind power companies because that sues, including the conflict with wind ciency Portfolio Standard. Under the vironmental impact,” he told CJ. “All power costs more than the energy they farms in northeastern North Carolina. law, by 2021, the energy portfolios of independent evidence to date indicates generate from their own coal, natural In December, Iberdrola officials investor-owned utilities such as Duke that industrial wind power fails on all gas, and nuclear facilities. In letters announced that their project was on Energy and Dominion Power must three of these critical counts.” CJ PAGE 16 SEPTEMBER 2012 | CAROLINA JOURNAL Interview Staddon Discusses What’s Wrong With Our Financial Markets

By CJ Staff RALEIGH nyone who has spent much “They say, ‘Well, risk should be time studying economics has passed to those best able to bear it,’ heard about the “invisible as if there’s some kind of, you know, Ahand,” a concept tied to the classical economic notion of the power of free socialistic welfare state. It’s a gro- markets to improve our lives. But Dr. John Staddon, James B. Duke profes- tesque idea. Of course, what they’re sor of psychology and professor of doing is shedding responsibility. biology and neurobiology emeritus at Duke University, has written a book They’re shedding responsibility for about a much less praiseworthy force. the actions that they have taken, and The book is titled The Malign Hand of the Markets: The Insidious Forces On I think rules should be in place to pre- Wall Street That Are Destroying Financial vent that, and they’re not complicat- Markets and What We Can Do About It. Staddon discussed key concepts from ed. They’re really not complicated.” the book with Mitch Kokai for Carolina Journal Radio. (Head to http://www. Dr. John Staddon carolinajournal.com/cjradio/ to find a James B. Duke Professor station near you or to learn about the Duke University weekly CJ Radio podcast.)

KOKAI: The “malign” hand: Tell STADDON: The invisible hand is a federal agency, but it was brought to KOKAI: People will have to read us how you came up with this concept. where benefit to me is also benefit to its finest peak of perfection by one Lew the book to learn more about the ma- everybody else, and this is simply the Ranieri. … And what it involves is tak- lign hand and how it exists, but let’s STADDON: Well, it’s actually opposite effect: benefit to me, but cost ing not one, not two, but hundreds of take the remaining moments that we pretty well-known, but it’s known un- to everybody else. And to the extent mortgages, putting them into a bond, have to talk about some of the ideas der a whole variety of names. The most that one of them predominates over dividing the bond into tranches, that is you have for addressing it. You do common one is the tragedy of the com- the other, you have a systemic prob- layers. Layer one always gets paid off. think that there are some things that mons. The tragedy of the commons lem. Layer two only gets paid off if layer can and should be done to help ad- works like this: You’ve got Farmer Joe. one has been paid off, and so on and dress the possible impact of the malign He has his sheep. He adds another KOKAI: I get the sense in read- so on. And this is generally regarded as hand. What are they? sheep. He makes more money as a con- ing through the book that one of the a really bad idea, but not for Professor sequence of that, and so he adds an- reasons you wrote it was that you feel Shiller. He thinks that it’s great because STADDON: One of them is to other and another, and all of his friends that the economics profession has not now we can really assess the risk asso- fight the tendency of all financial mar- add them, and eventually they deplete adequately addressed this issue, or has ciated with these mortgages. kets to shed risk. I mean, the whole the resource on which they all depend. completely ignored it in some respects. If you look at the data, it’s the op- aim of everybody in the financial sys- So, it’s a time-dependent phenomenon posite. I mean, in fact, if you have Joe tem is to pass on risk to other people. from where benefit to the actor, to the STADDON: Yeah, well, they Blow as the mortgage originator, and And there are wonderful phrases for agent, continues, but the effects on the have names for it, as I say, tragedy of he gives the mortgage to some poor this. They say, “Well, risk should be community are sometimes positive the commons and so on, but it tends guy who wants to buy a house, well, passed to those best able to bear it,” as and eventually negative. to disappear with sort of free-market he’s got an interest in seeing that this if there’s some kind of, you know, so- So, if you put one final sheep on fanatics. When they think it’s always guy is capable of paying, I mean, that cialistic welfare state. It’s a grotesque the commons, the whole thing collaps- the invisible hand — well, I’m a free- he is a good credit risk, and so on. But idea. Of course, what they’re doing is es, and everybody loses money. And market guy, I believe in free markets — once this mortgage is bundled up with this mechanism operates in all markets but I think you have to have rules that others, it becomes harder and harder shedding responsibility. They’re shed- at one time or another, and the prob- minimize the chance that you’re going and harder. What’s the solution to ding responsibility for the actions lem is, the benefits are focused on the to wind up with the malign hand. that? that they have taken, and I think rules individual, but the cost is delayed and To Professor Shiller, the solution should be in place to prevent that, and then shared by everybody. KOKAI: Now, much of your book is rating agencies. So you can look at they’re not complicated. They’re really focuses specifically on what’s wrong what the rating agencies actually did, not complicated. KOKAI: What we hear from with the financial markets. As you and over the years, the proportion of One rule I talk about, I call the economists sometimes is “concentrat- were putting this together, what were what Matt Taibbi might call “crappy “insuranburn rule.” This comes from ed benefits and disbursed costs.” some of the key things you saw that mortgages” increased in these bonds a wonderful book by V.S. Naipaul, A just don’t work with the financial mar- over the years, but the rating for all the House for Mr. Biswas. “Insuranburn” kets? bonds stayed the same. So the rating STADDON: You’ve got it. You’ve refers to the fact that in Trinidad dis- agencies in fact were complicit in al- got it. And it has too many names: reputable people would buy a house at STADDON: Let me give you an lowing these folks to market very bad a discounted price, insure it for a much externalities, the tragedy of the com- anecdote. I’ve been reading a book by securities. mons, the agency problem. There are higher value, and then burn it and col- a very able economist, Robert Shiller. Why? Because [of] what psychol- lect the insurance. Well, great for them, a whole lot of names for this thing, He’s the co-inventor of the Case-Shiller ogists would call a bad reinforcement right? It seems like a good idea. How and that’s the problem. There are too Index of [Home] Prices. That’s pretty schedule. The mortgage guy — the could that possibly happen in financial many names for it. But, really, it’s all well-known, and it’s a defense of the mortgage originator — had every in- the same thing, which is benefit to the free markets and finance in particular terest in giving mortgages, and very markets, when in fact, if you look at individual but cost to everybody else. as a contributor to the common good. little interest in worrying about their financial markets, you might find that And he takes, as an example of the security, because he could sell them on many of their products amount to “in- KOKAI: And I understand that wonderful way that these free mar- … into these securitized things, these suranburn”? They’re insuring some- one of the reasons to label it the “ma- kets work, something called securiti- securitized bundles. So securitization, thing that they have very little interest lign hand” is as a contrast to this notion zation. And you’ve probably heard of in fact, far from being a good idea, is in, and now they have an interest in of the beneficial or beneficent “invis- securitization. It was apparently first a really bad idea — I mean, extraordi- destroying it. So an “insuranburn rule” ible hand.” Why make that distinction? engaged in by Freddie Mac, which is narily bad idea. is one very obvious thing to do. CJ SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 17 Higher Education Hillsdale College Resists COMMENTARY Higher Ed Not Causing Accreditation Organization Income Inequality By Ford Ramsey and Jane S. Shaw vealed “the incongruence of holding Contributors students accountable for performance cademics love to have social cants — even for work that calls for RALEIGH while holding teachers accountable problems to analyze, even nothing more than basic trainabil- n 2007, Michigan state government only for their qualifications,” wrote if they’re problems only in ity — are shut off from good career made a policy shift that may have Arnold Shober, referring to licensing theirA own minds. A good example paths. ramifications around the country, credentials. is the wringing of hands over the What did the other writers Iincluding in North Carolina. The state Also, he said, new programs that increasing “wealth gap” in society. have to say? stopped accrediting Michigan’s teach- measure a teacher’s “value-added” Recently, the Chronicle of Higher One was Richard Kahlenberg, er education programs and required by tracking student progress and cor- Education asked whether our higher who never misses an opportunity them to obtain accreditation from a na- relating it with the student’s teachers education system is responsible for to beat the drums for his favorite tional professional organization such make it feasible to focus on teacher that supposed problem. policy change — affirmative action as the National Council of Accredita- effectiveness. Furthermore, blatant The editor set up the debate based on socio-economic class. He tion for Teacher Education. efforts by the states to evade stricter with some statistics from a recent wrote, “Higher education in the One school, Hillsdale College, teacher-quality standards made it clear Pew Charitable Trusts study: “62 U.S. is highly stratified, showering decided not to seek national accredita- that there is something wrong with the percent of Americans raised in the the most resources on the most- tion. The small liberal arts school with process for certifying teachers. top one-fifth of the in- advantaged students. a fiercely independent spirit — it does So how has Hillsdale changed its come scale stay in the top Low-income and minority not accept any federal funds, including program? two-fifths; 65 percent born students are concentrated student loans — decided to follow its “We realized that many of our in the bottom fifth stay in in community colleges. own judgment about how to teach its existing courses had been developed the bottom two-fifths.” …” education students. only to meet the state’s onerous stan- It isn’t obvious why True enough. Per The school recognized that meet- dards, which had tightly controlled that represents a problem. student spending at elite ing NCATE’s standards would be what was taught in teacher education Look at it this way: 35 colleges and universities costly for a school of its courses,” wrote Coupland percent of people who is much higher than at size, with 1,300 students on the Pope Center site in are born in the poor- community colleges. But in total. And while officials July. “With those require- est quintile eventually it does not follow that the of the school had not been ments no longer binding, earn enough to make it GEORGE usefulness of the educa- happy with the state’s re- we were free to keep what LEEF quirements, they consid- was useful, eliminate that into one of the top three tion a student receives ered that going to national which was not, and cre- quintiles, and 38 percent varies directly with the accreditation would make ate new courses to address of those born into the amount of money a school matters worse. The Hill- whatever was being over- wealthiest 20 percent eventually fall spends. sdale Education Depart- looked.” into one of the three lowest quin- Simply because a student goes ment considered NCATE’s Students at Hillsdale tiles. to a pricey college, where much of standards too vague, the always have majored in a Then we read that a Universi- the spending underwrites nonaca- process costly, and the re- specific discipline rather ty of Michigan study found that the demic frills and amenities, does not sults meaningless. than “education,” and the disparity in college completion rates mean that he or she will learn more “At some point, you school has a strong liberal between students from wealthy than attending a lower-cost college want someone to stand up and say that arts curriculum. But these changes families and poor ones has grown where the faculty concentrate on the entire process is a scam,” Daniel were made: by 50 percent since the 1980s. their students. Coupland, an assistant professor of • Courses in methods and edu- Let’s assume that’s true. Is it Degrees aren’t destiny. What education at Hillsdale, told the Pope cational psychology and technology because our colleges and universi- you make of your life is up to you. Center. “Well, it is a scam, and Hills- were eliminated. ties are somehow shortchanging Another contributor, Anthony dale College is better off without it.” • Courses such as “Philosophy students from poorer families? Or Carnevale, said that college educa- Faculty and administrators at of Education,” “Explicit Phonics Read- is it perhaps because students from tion has become “a highly stratified the schools have to supply massive ing Instruction,” and “Children’s Lit- poorer families are less likely to be bastion of privilege.” amounts of material about their “in- erature” became more rigorous. well-prepared for college than they I think that is a misuse of the puts,” with no need to measure stu- • A course in English grammar were 30 years ago? word “privilege.” Under monar- dent success. Yet for all that trouble, was added. We then get the editor’s main chies, people born into the nobility the NCATE standards are vague. • A semester-long apprentice- question: What role has higher edu- had privileges. In America, just “Specificity would quickly show that ship for students was established at a cation played in society’s stratifica- because you have a college degree the emperor has no clothes.” local private school. tion? — even one from an elite institution So Hillsdale embarked on a major Finally, Hillsdale made sure that Society’s stratification. Those — does not confer any “privilege.” revamping of its program. It will aim words set pulses racing among It doesn’t make you entitled to a to be one of the best colleges preparing students who want to teach immedi- liberal academics. All the other good job, or even any job at all. graduates to teach in private and char- ately after graduation can obtain state ter schools — or in other schools that certification through Spring Arbor respondents wrote that higher Many of last year’s Occupy don’t require national certification. University, a nearby school accredited education was indeed to blame and Wall Street protesters were, after all, Hillsdale’s decision could have by the Teacher Education Accredi- needed to make amends for having unemployed college graduates. a national impact because it coincides tation Council, a national organiza- made society more stratified. Our higher education system with a re-evaluation of education tion similar to NCATE. But graduates My response was that to the has many faults, but it does very schools. A new report from the Ameri- who don’t do so still can be outstand- slight extent that our higher edu- little to keep the rich rich and the can Enterprise Institute says that there ing teachers, thanks to Hillsdale’s cation has increased social strati- poor poor. CJ has been a “transformation” over the new freedom. CJ fication, it is due to the mania for past decade in awareness of the prob- college credentials the system has lems of teacher quality. Ford Ramsey is a former intern with helped unleash. Some people who George Leef is director of research Growing concern about student the John W. Pope Center for Higher Educa- can’t obtain the credentials that are for the John W. Pope Center for Higher performance — exemplified by the tion Policy and Jane S. Shaw is the center’s increasingly required of job appli- Education Policy (popecenter.org). 2001 No Child Left Behind Act — re- president. PAGE 18 SEPTEMBER 2012 | CAROLINA JOURNAL Higher Education Campus Briefs Colleges Eye Using Video Game Reward Systems ewsweek and College Prowl- er have released rankings By Duke Cheston to incorporate video game technology percent of freshmen passed the course. Contributor of the 25 most liberal and on a far wider level. At the Rochester She noted that she couldn’t “claim N25 most conservative universities RALEIGH Institute of Technology in New York, causality” — other factors may have in the nation. n an average week, human beings the entire school was invited (starting contributed — but she still thought The methodology is spend roughly 3 billion hours play- last year) to participate in a campus- “Undying” showed Just Press Play’s simple,and data are self-reported: ing video games. For all that time wide game called Just Press Play. Cre- potential for making a positive impact. To determine the most conserva- Ispent, their reward is small: some ated with a $350,000 gift from Micro- In another encouraging finding, the tive universities, Newsweek mea- points, a level up, a higher ranking soft, it is intended to combine students’ older students found they liked help- sured the percentage of students among fellow gamers. And yet more academic and social experiences and ing the freshmen, even telling Lawley who deemed their campus “con- and more people devote their time to encourage attributes that make stu- they would do so in the future without servative” or “very conservative,” video games. dents successful, such as willingness to any formal recognition. as well as students’ rating for the What if you could turn that pow- talk to professors, form study groups, Both socialPsych and Just Press political diversity on campus. (The erful but inexpensive reward system and the like. Play are experimental, and both have reverse methodology determined into something more useful, even ap- When students arrive on cam- had limitations. But they also have the most liberal schools.) plying it to higher education? That pus, they receive trading cards with yielded valuable insights. is the question secret codes and Based on his experience with so- Most liberal in U.S. a handful of re- a radio-frequen- cialPsych, Landers offered a list of cur- Warren Wilson College in searchers across cy identification rent best practices for using games to Swannanoa, N.C., was rated the the country are keychain that improve learning. These include using most liberal university in the asking. By incor- they can use to a meaningful social context (i.e., in- country. One hundred percent of porating aspects “check in” at var- teracting with friends), using rewards students surveyed deemed the of games into col- ious locations on that are recognizable in that social con- university “liberal.” The school lege life — “gami- campus. To suc- text, and providing rapid feedback. scored 3.3 (out of 10) on campus fying” courses ceed in the game, Lawley said a key to making an political diversity. and school-relat- they complete enjoyable and useful game was giv- That rating confirms the Pope ed activities — various chal- ing recognition for things students al- Center’s findings. On the center’s they hope to lenges designed ready do rather than for extra work. North Carolina College Finder make learning to make them feel Doing the latter would be like serving website, Warren Wilson’s faculty is easier and more more comfortable “chocolate-covered broccoli” — trying listed as “Very Unbalanced: Dem- fun. with the school. to make something unpleasant superfi- The word Challenges in- cially attractive. ocratic,” and its trustees are listed Graphic from Rochester Institute of Tech- as “Unbalanced: Democratic.” “game” is fa- nology’s “Just Press Play” website. clude finding a Another discovery was the im- The Foundation for Individ- mously difficult professor’s of- portance of renewing enthusiasm for ual Rights in Education rates stu- to define, but as researchers have used fice, visiting a restaurant with friends, the game. This year, therefore, Just dents’ First Amendment rights on it in higher education, it generally re- and even dancing to Michael Jackson’s Press Play will include new achieve- campus as a “red light” — indicat- fers to reward systems: points, new “Thriller.” ments announced throughout the year ing serious restrictions on freedom levels, and awards in the forms of Other challenges are more aca- rather than all at once. of speech, religion, or assembly. badges and ranks. demic, such as one called “Undy- Both Landers and Lawley in- Warren Wilson has a strong Some researchers have tried gam- ing” in which upperclassmen earn an tend to keep improving, and both are commitment to “green” education ifying the websites that professors use award if 90 percent of freshmen passed willing to share their software for free — including an “Eco-Dorm,” a to pass out supplemental information a programming class. According to with any college that asks. CJ 300-acre working farm, a 700-acre to students. One of these is Richard Elizabeth Lawley, RIT professor and managed forest, and academic Landers, a professor of industrial and production leader for Just Press Play, it programs focused on sustainabil- organizational psychology at Old Do- was one of the program’s greatest suc- Duke Cheston is a writer for the John ity and environmental steward- minion University in Virginia. cesses so far: Older students organized W. Pope Center for Higher Education Pol- ship. In 2010, Landers created social- a study session for 40 freshmen, and 92 icy (popecenter.org). The next four schools in Psych, an online platform that al- Newsweek’s liberal ratings are lowed psychology students at Old Do- Macalester College in Saint Paul, minion to chat with each other using Minn.; Hampshire College in Facebook-like personal profiles and to Amherst, Mass.; Oberlin College take online practice tests. Depending in Oberlin, Ohio; and Sarah Law- on how many tests students took and rence College in Bronxville, N.Y. how well they did, they earned little No North Carolina school made the top 25 on the con- digital ribbons signifying their rank servative end of the rankings. from “newbie” to “master.” The pro- gram focused on test taking because, Most conservative according to available research, test- ing improves long-term learning more The five most conservative than mere studying. universities are Dordt College Landers was ecstatic about the re- in Sioux Center, Iowa; Freed- sults. Out of 592 students invited, 385 Hardeman University in Hen- derson, Tenn.; Franciscan Uni- created personal profiles and 113 com- versity of Steubenville in Ohio; pleted at least one practice test. Grove City College in Grove City, “If you’re an educator like I am,” Pa.; and Ave Maria University in wrote Landers on his blog, “you are Ave Maria, Fla. CJ probably shaking your head in disbe- lief right now — 29 percent of students willingly completed optional multiple Jenna Ashley Robinson is direc- choice quizzes that would never have tor of outreach for the John W. Pope an effect on their grades.” Center for Higher Education Policy On average, students who took (popecenter.org). these optional tests passed 4.4 of them. Elsewhere, researchers have tried SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 19 Higher Education Opinion Desperately Seeking Principled Leadership at UNC-Chapel Hill NC-Chapel Hill’s football problems arise. intransigence was troubles at his own university seem scandal is starting to resemble The expo- the school giving beyond his intuitive grasp. another recent unsettling sure of fraudulent Issues public records to Even when Thorp does the right Uepisode in the University of North courses in Julius the News & Observ- thing, it still seems unsatisfying. It’s Carolina system: the Mary Easley af- Nyang’oro’s Afri- in er apparently so hard to justify the fact that former fair, which toppled the North Carolina can and African- Higher Education “redacted” (with football coach Butch Davis lost his State University administration in American Studies supposedly sensi- job due to severe corruption and still 2009 and tarnished the system presi- department did not tive information collects a $2.5 million contract buyout. dency of Erskine Bowles. “shock” savvy ob- blacked out) that Likewise, or worse, Thorp decided The two servers, as it did to they were unread- it was more “expedient” to permit scandals started UNC-Chapel Hill able. Nyang’oro to retire on the state’s dime differently — one chancellor Holden Thorp. Among the In such a secretive atmosphere, after he mocked the public trust. with a governor recent revelations was the inadvertent it is not surprising that Nyang’oro’s In a more recent move, in pressing N.C. online publication of a transcript, later AFAM department was able to oper- response to allegations that advisers State’s administra- traced to football star Julius Peppers, ate beyond acceptable boundaries for steered athletes to no-show classes, tion for a sinecure showing the All-American athlete so long. And that UNC’s leadership Thorp shifted Robert Mercer, the di- for his wife, the barely maintaining his academic eli- initially circled the wagons for his rector of academic support programs other with an out- gibility even though he was enrolled protection. for athletes, to a new job as a “special of-control football in fraudulent courses. College athletic Thorp has begun to take some assistant for operations” in another program. But the scandals happen so frequently that action, by commissioning not one, but department in which he would con- subsequent in- JAY it’s naïve not to assume that many two, investigations into academic mis- tinue to receive his $81,000 annual vestigations have SCHALIN major universities drop standards for conduct. One, an internal report by salary. contained many athletes. faculty members, is complete. Former It was time to be bold, not ex- common elements: University administrators also Gov. Jim Martin was put in charge of pedient. How much more of a leader disgraced employees walking away don’t seem to grasp the outrage felt the other. Thorp would have appeared had he with sweetheart severance packages, when the public trust is betrayed. In The faculty committee report declared, to Davis, Nyang’oro, and administrative resistance, public in- the Easley case, instead of voicing in- found problems that go beyond a Mercer, “How dare you sully my uni- formation requests for email evidence, dignation about being lied to, Bowles single professor, department, or ath- versity? Your unethical behavior voids a doggedly persistent media, and a supported disgraced N.C. State chan- letic program. One is the absence of your contract, and I will fight with my long, gradual unfolding of the truth. cellor James Oblinger to the very end “set or clear criteria for appointing or last breath to make certain you don’t Most of all, both cases show top and continued to call him his “good reappointing department chairs.” The get another dime!” university administrators who are friend” even after Oblinger’s forced committee, which focused on aca- College administrators should slow to react to problems and who resignation. At Chapel Hill, a News & demic problems relating to the athletic not only recognize problems when stand behind employees long after the Observer article said that Thorp “con- department, also uncovered poor they appear, but also seek opportuni- rest of us have realized they must go. tinued to stand behind Nyang’oro” communication and transparency. ties to reform, educate, and inspire. It Furthermore, UNC-Chapel Hill’s and called him “a great colleague,” These are the real difficulties that is time for principled stands over po- scandal highlights the need for a new even after the AFAM corruption was administrators should address. Thorp, litical expediency, and firm, hands-on type of reformist university admin- known. a brilliant scientist, may be too aloof management over risky expansionist istrator who is fully aware of aca- Thorp failed to get in front of to run UNC-Chapel Hill effectively. dreams. It almost always is. CJ demia’s weaknesses, rather than shel- the issue, letting the media lead the In his book, Engines of Innovation tered academics with grand schemes charge for two years, as UNC set up (jointly written with Buck Goldstein), Jay Schalin is director of state policy for expansion and politicization who roadblocks. he envisions universities solving all for the John W. Pope Center for Higher seem out of sorts when the inevitable One recent example of UNC’s the world’s biggest problems, but the Education Policy (popecenter.org). PAGE 20 SEPTEMBER 2012 | CAROLINA JOURNAL Books & the Arts

From the Liberty Library Book review

• The Great Global Warming Blunder provides a simple expla- Fast And Furious Documents Obama’s Anti-Gun Agenda nation why forecasts of a global warming Armageddon constitute • Katie Pavlich, Fast and Furious: Barack Obama’s Bloodiest prove a falsehood: that weapons sold by U.S. gun shops are a major scientificfaux pas: Climate Scandal and Its Shameless Cover-Up, Regnery, 2012, 224 pages, the source of Mexico’s drug violence. researchers have mixed up cause $27.95. She writes, “By creating public outrage, President and effect when they have ana- Obama, Eric Holder, and other administration officials, all lyzed cloud behavior. Combin- By Elizabeth Lincicome with longstanding records of hostility against the Second Contributor ing illustrations from everyday Amendment, hoped to reinstate the assault weapons ban experience with state-of-the-art RALEIGH … which had been one of their early, but failed, political satellite measurements, Roy W. o matter who wins the White House in November, goals.” Holder admitted as recently as February that the re- Spencer presents evidence that one legacy the Obama administration will never implementation of the assault rifle ban — which expired in recent warming, rather than be- shake is being at the center of the outrage surround- 2004 — continues to be a priority of the Obama administra- ing the fault of humans, is a result Ning Operation Fast and Furious. tion. of chaotic, internal natural cycles In her new book, Fast and Furious: Barack Obama’s In light of all that’s been unearthed about Operation that have been causing periods of Bloodiest Scandal and Its Shameless Cover-Up, Townhall.com Fast and Furious, it’s unclear how the Obama administra- warming and cooling for thou- News Editor Katie Pavlich exposes how top U.S. govern- tion would pursue its anti-gun agenda if given another four sands of years. Learn more at ment officials shamefully orchestrated and covered up an years in office. While liberals use the recent shootings in www.encounterbooks.com. operation that put more than 2,000 guns into the hands of a Aurora, Colo., and Wisconsin to push for tighter gun con- Mexican drug cartel, resulting in the death of hundreds of trol laws, support for gun rights in America may never have Mexican citizens and U.S. Border Patrol Agent Brian Terry. been higher. • In 2000, just a few hun- Pavlich conducted exhaustive research to write this “The [National Rifle Association] boasts 4 million dred votes out of millions cast in book, including personal interviews with whistleblowers members. Self-reported gun ownership in the United States the state of Florida separated Re- in the Phoenix field office of the Bureau of Alcohol, Tobac- is at its highest point since 1993,” Pavlich notes. “One in publican presidential candidate co, Firearms, and Explosives as well as with members of three Americans personally owns a gun. According to Gal- George W. Bush from his Demo- Terry’s family. Nearly every paragraph here is cited, often lup polls, support for new gun cratic opponent, Al Gore. The reminding the reader of a scholarly laws, regulations, and the reinstate- outcome of the election rested on dissertation. Pavlich, a graduate ment of the assault rifle ban is at an Florida’s 25 electoral votes, and of the University of Arizona, dem- all-time low.” Unless Republicans legal wrangling continued for onstrates her familiarity with the and pro-Second Amendment Dem- 36 days. Then, abruptly, one of Southwest border’s local politics as ocrats are voted out in the upcom- the most controversial Supreme well as its geography, making Fast ing elections, it’s doubtful Obama Court decisions in U.S. history, and Furious a convincing read. will have a Congress willing to pass Bush v. Gore, cut short the battle. As the author points out, a gun control legislation. Since the Florida debacle, we handful of bloggers first uncov- Pavlich closes by arguing that have witnessed a partisan war ered the truth about Fast and Fu- Fast and Furious is Barack Obama’s over election rules. Election liti- rious, sharing it with the public at Iran-Contra, yet Obama has re- gation has skyrocketed, and elec- CleanUpATF.org. fused to face the music as President tion time brings out inevitable “The website had been found- Reagan did. “Where the Reagan accusations by political partisans ed in 2009 as an online forum for administration insisted on account- of voter fraud and voter suppres- agents to expose wrongdoing in the ability, the Obama administration sion. In The Voting Wars, Richard bureau,” Pavlich writes. “Shortly has moved to cover up its scandal,” Hasen, a respected authority on after Brian Terry’s death, anony- Pavlich writes. “After congres- election law, chronicles and ana- mous users on the site suggested sional hearings and a presidential lyzes the battles over election that there was an ATF program that commission to investigate Iran- rules from 2000 to the present. He deliberately trafficked guns across Contra, 14 Reagan administration explains why future election dis- the border into Mexico. The chat- officials were indicted, including putes will be worse than previous ter immediately gained the atten- Secretary of Defense Caspar Wein- ones. More at www.yalepress. tion of two bloggers, Mike Vander- berger, for perjury. And though yale.edu. boegh and David Codrea. Working President Reagan was not aware of, together, they vetted the informa- and certainly did not authorize, the operation, he nonethe- tion through their vast network of informants in the ATF. less took full responsibility in a primetime address to the • When in 2003 President Vanderboegh reached out to sources through an anonymous American people. It is difficult to imagine this coming from Bush bestowed a National Hu- email system called ‘Desert Telegraph’ and connected them his successor, a president who has taken every opportunity manities Medal on Elizabeth with the staff of Sen. Charles Grassley, the ranking Republi- (Betsey) Fox-Genovese, citing can on the Senate Judiciary Committee.” to evade and shift blame.” her as “a defender of reason and Pavlich also documents how open the mainstream me- In hindsight, Americans find themselves asking what servant of faith,” he recognized dia’s liberal bias has been throughout its coverage of Fast the real purpose of Fast and Furious was. Pavlich says it’s the achievements of a uniquely and Furious. “To the extent Washington Post journalists cov- hard to grasp how it could have succeeded because while accomplished American intellec- ered the Fast and Furious story, it was to blame gun shop the guns could be traced to crime scenes (only after a crime tual. Long a Marxist and briefly a owners for knowingly selling arms to cartel members. Like was committed), there was never going to be any way to feminist, Betsey converted to Ca- the New York Times and The Washington Post, the explicitly trace them to cartel kingpins. tholicism in 1994 and became an liberal media treated the Fast and Furious story as the leftist “If the point was to gain evidence to arrest the straw exceptionally strong voice for the magazine Mother Jones did, calling it ‘one of the right’s latest buyers, they could have been arrested well before they culture of life and the rights of the conspiracy theories.’ The George Soros-funded Media Mat- walked guns across the border,” she notes. “Really the only unborn. In Miss Betsey, Eugene ters for America called it ‘hysterical rhetoric.’ [MSNBC’s] thing Operation Fast and Furious could do was link Ameri- Genovese — Betsey’s husband of Chris Matthews said that those who deemed Fast and Fu- can gunshop-sold guns to Mexico crimes — even if these 37 years and an equally accom- rious worthy of investigation were ‘another strain of the sales were in fact forced by the ATF. Was Fast and Furious plished scholar — tells movingly crazy far right.’” designed to help build a case for new gun control measures the story of their courtship, life It’s clear that the administration has attempted to use that could not otherwise pass Congress? Did the Obama ad- together, and professional and the deadly consequences of Fast and Furious to restrict gun ministration and its political appointees put their zeal for political collaboration. More in- rights. Pavlich reports that under Attorney General Eric their own political agenda ahead of public safety?” formation at www.isi.org. CJ Holder, the ATF was deputized to change the nation’s gun As Pavlich asserts in her new book, evidence sug- laws by putting in place a shadowy operation designed to gests the answer to these questions is a resounding yes. CJ SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 21 Books & the Arts Success of Postwar Freedmen a Worthy Study for Historians oo often in histories, the questions to ask, then, are how black 1910 estate worth $100,000 would be lot. He later bought a small farm out- achievements of African-Amer- entrepreneurs and property hold- valued in today’s terms at $2,310,263. side of Smithfield. By 1885, 20 years icans are overlooked, and their ers found niches of liberty within an There were others who earned after the Civil War, he owned 36 acres Tsuccess stories are untold or under- oppressive system, and what can we less yet still serve as examples of en- and three town lots. He had office stated. learn from their experiences. trepreneurial drive and success. Their buildings constructed on these lots To be sure, African-American Historians have called the Jim stories are worth telling. during the late 1880s and early 1890s. history is filled Crow era (1890–1950) the nadir of One was Willis Hinton of High For his “pluck, energy, per- with accounts of American race rela- Point. Hinton severance, and close application to discrimination, tions. It was an age was born in business,” he was respected in the and African-Amer- predominantly of 1840 and had community and served on the Board icans endured de jure segregation Many overcame been a slave for of Town Commissioners in the 1890s. numerous legal in the South and 25 years before Smith’s life provides an example of restrictions during de facto segregation disadvantages becoming a free what a freed black could accomplish and after slavery. in the North. Even man. A farm in a small town during the late 1800s Even free blacks so, some African- with ambition, hand, Hinton and early 1900s. during the colonial Americans accu- moved to High Despite these difficulties, en- and antebellum mulated significant thrift, and a Point in 1868 to trepreneurs like Hinton and Smith era, in the North TROY wealth and owned sound work ethic lay track for the overcame a disadvantaged past and and in the South, KICKLER sizable estates. One North Carolina exhibited ambition combined with were considered 1990 history, Black Railroad. Hinton thrift and a sound work ethic. They second-class Property Owners embarked on an ran respected businesses when Afri- citizens. When those experiences are in the South, 1870–1915, compiles the entrepreneurial career in 1883 and can-Americans struggled for respect omitted, a far too rosy picture is paint- records of 241 prosperous black prop- opened a café. Five years later, he sold and participated in a free market in ed and the past is misrepresented. erty holders — those with total estate the café to open the Hinton Hotel, an which each held his own. But there’s another deficiency in wealth exceeding $20,000. 11-room establishment that he owned One wonders how much wealth many recent histories that ignore how In today’s terms, those 20,000 and operated until he died in 1924. and how many jobs these former- more than a few African-Americans 1870 dollars would be worth about Ashley W. Smith (1850? – 1928) slaves-turned-entrepreneurs might found a way to prosper even during $340,000. A $20,000 estate in 1910 of Smithfield is another example. Like have created had they been able to difficult times. African-Americans would equal to $462,000 today. Willis Hinton, Smith was illiterate, but participate fully in a free economy. CJ often were agents of change, even Among the 241 prosperous blacks in he embodied the values of thrift and within a repressive environment. the study, 66 accumulated more than hard work and evinced an entrepre- Those stories often are unheard, and $100,000 in wealth. In 1870, a $100,000 neurial spirit. After the Civil War, Dr. Troy Kickler is director of the those particular lessons from the past estate would be $1,702,786 in today’s Smith worked hard, saved his money, North Carolina History Project (northcar- are unstudied. Two good historical terms after considering inflation. A and eventually purchased his town olinahistory.org).

More research at your fingertips at the redesigned JohnLocke Foundation home page You can now search for research by John Locke Foundation policy analysts much easier than before. Our new web page design allows you to search more efficiently by topic, author, issue, and keyword. Pick an issue and give it a try. Or choose one of our policy analysts and browse through all of their research. Ei- ther way, we think you’ll find the infor- mation presented helpful and enlight- ening. http://www.johnlocke.org PAGE 22 SEPTEMBER 2012 | CAROLINA JOURNAL Books & the Arts

At the movies Book review ‘2016’ a Call to Activism A Weak Argument For Labor Rights

• “2016: Obama’s America,” direct- sent and idealized Kenyan father at • Richard D. Kahlenberg and Moshe And yet the authors lament the ed by Dinesh D’Souza and John Sul- the encouragement of his mother. Z. Marvit, Why Labor Organizing Should efforts by politicians such as Wisconsin livan, Rocky Mountain Pictures, 89 “We are all shaped by our Be a Civil Right, Century Foundation Gov. Scott Walker to rein in the power minutes, released July 15. past, and we carry elements of the Press, 2012, 147 pages, $19.95. of the unions. past into the future,” D’Souza nar- While the underlying rationale By Hal Young rates over images of Jakarta and Ko- By George Leef for their proposal to make labor orga- Contributor gelo, “but nothing can threaten the Contributor nizing a “civil right” is weak, there is RALEIGH future as much as the debts of the RALEIGH something to be said for changing the s the credits rolled, a man’s past.” n June 2012, the U.S. Senate rejected law, although not the way the authors voice rang out from the back While other black political fig- a bill that would have changed the have in mind. of the theater. “Time to go ures see America as a land that has federal law covering labor relations Under the NLRA, it is an un- vote!”A he hollered. failed to live up to its ideals, even I(the National Labor Relations Act) to fair labor practice for an employer to I’ve heard applause at the end in its failure they see potential for permit employers to give individual “discriminate” against an employee of a film before, but never a call to redemption. Obama’s cultural his- employees merit raises where there is because he has exercised his statutory the electorate. tory is less about Birmingham and a union collective bargaining contract right to seek unionization. Critics and entertainment Selma and more about the Mau in place. The problem, Kahlenberg and pundits are puzzled, if not stunned, Mau Rebellion and Current law protects the sup- Marvit argue, is that the current ave- by the reaction to overthrow of co- posed need for worker solidarity by nue for redress of violations is so slow producer Gerald lonial empires — preventing employ- and uncertain that employers can fire Molen’s docu- among which he ers from unilaterally pro-union workers mentary “2016: counts Israel and granting raises or bo- and face few conse- Obama’s Amer- the United States. nuses. The union es- quences. Employers ica.” Based on Policies which tablishment lobbied can avoid a poten- Dinesh D’Souza’s raise Third World for the bill’s defeat, tially costly conflict 2011 best-seller The nations at the ex- and afterward the with the NLRB by Roots of Obama’s pense of America Service Employees terminating pro- union workers. Rage, the film fol- and our allies are International Union K a h l e n b e r g lows D’Souza’s simple fairness, in cheered that, by killing and Marvit would worldwide quest this view. it, they had upheld the allow such individ- to understand the sources of Barack D’Souza traveled to Kenya, “fundamental rights” uals to sue under Obama’s political philosophy. Thir- Indonesia, Hawaii, and other loca- of workers. the more plaintiff- ty days into its release on a limited tions which formed the context of It is worth keep- friendly Civil Rights number of screens, the film already Obama’s education, interviewing ing that incident in Act. Favorable judg- has grossed $9.3 million and is the neighbors and the president’s half- mind when reading ments for workers No. 6 documentary in box office brother, George Obama, and visit- Why Labor Organiz- would come faster revenues of all time. ing the grave of Obama’s father. ing Should Be a Civil and with much more D’Souza, a former policy ad- Quotations from Obama’s autobi- Right. Authors Richard sting for the offend- viser for Ronald Reagan and long- ography, Dreams From My Father, Kahlenberg (a senior ing companies, they time political writer, found many are in the president’s own voice fellow at the Century maintain. Unions then would be es- of Obama’s policy decisions “baf- from the audiobook recording. The Foundation) and Moshe Marvit (an tablished at many more companies, fling.” Why the pointed snub of editing is tight, and the narrative is attorney who practices labor and em- and the country would be on its way Great Britain over the Churchill persuasive and troubling. ployment discrimination law) see labor toward an egalitarian future. bust, and taking Argentina’s side When Obama told Russian unions as great champions of workers Instead of creating a new cause of in the ongoing Falklands dispute? Prime Minister Dmitri Medvedev, and their interests, which happen to action under the Civil Rights Act, we Why would his administration “This is my last election. After the dovetail with the authors’ belief in the squash the Keystone XL pipeline redistribution of income and “social ought to move in the opposite direc- election I will have more flexibili- and hold up permits to drill in U.S. justice” legislation. tion and repeal the NLRA. Before the ty,” what did he have in mind? Free waters, while funding petroleum They argue that the union move- NLRA eviscerated the common law of from the accountability of a re-elec- exploration in countries like Brazil? ment would be greatly energized if the contract for labor, employers were just tion bid, D’Souza believes, Obama Why the suspicion of our Israeli al- Civil Rights Act of 1964 were amended as free as anyone else to contract only would be emboldened to carry out lies, and the strange diversity of to prohibit employers from acting in on agreeable terms. They could say response to turmoil in the Middle disarmament plans that would re- ways that penalize or inhibit workers “no” to unionization, and some but not East? duce America’s strategic capabili- from union-organizing activities. That all did so. The key, he realized, might be ties to less than 20 percent of Rus- course is necessary, they contend, be- There are other means to counter found in his and Obama’s common sia’s; increase the national debt and cause the NLRA and its slow-moving hard-line employers. If Acme Com- experience. D’Souza grew up in In- move toward greater government enforcer, the National Labor Relations pany declined to hire anyone who dia and attended Dartmouth Col- control of industries beyond health Board, are not adequate to the task wouldn’t agree to a no-union pledge, lege as a foreign student. Obama care, energy, and automotive seg- of protecting workers who advocate labor and other groups could exert spent his formative years in Indone- ments, thereby slowing our eco- unionization. pressure on it through information sia and then Hawaii under the influ- nomic juggernaut; and generally I do not find the authors’ case campaigns on the Internet or other ence of family and mentors deeply retreat from America’s influence on persuasive. media. Socially minded consumers hostile to Western values and ide- the international stage. The entire book is marred by might boycott Acme, and good work- als. This gave him a decidedly “ex- Is America’s strength a force the authors’ magnifying of the ben- ers might be poached by other firms otic” and left-leaning outlook when of oppression that needs to be re- efits of unions while ignoring their that offer a more employee-friendly he entered Columbia and Harvard. moved as a matter of global justice, costs. Their arguments are particularly environment. As he delved into Obama’s or is it a restraint against rogue na- flawed when they laud the growth of American labor law does need to biography, D’Souza recognized a tions and an engine of economic public-sector unions, which already change, but by encouraging the labor pattern from his own childhood — opportunity? Everything hinges on have driven a number of jurisdictions movement to keep relying on the anti- a strong current of anti-colonialism that question — that, and the vote to bankruptcy by the cost of their pub- quated tactics of coercion, this book’s that Obama adopted from his ab- in November. CJ lic union contracts; more governments recommendation would make a bad are on the brink. situation worse. CJ SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 23 Books & the Arts Book review Rusher Biography Explains How Squares Made Conservatism Cool • David B. Frisk, If Not Us, Who? Wil- plenty here for anyone not interested plied San Francisco Bay on the “SS standard-bearer, but for Buckley and liam Rusher, National Review, and the in such minutiae. Frisk even outlines Young Conservative” cruise. YAF sing- much of the National Review circle, Conservative Movement, ISI Books, 2012, what Russian revolutionary Leon ers “The Goldwaters” performed at Reagan was a “second-tier Hollywood $34.95. Trotsky thought about his American the Cow Palace. Then Barry Goldwater type.” In this account, Rusher made followers such as Burnham, a “strut- told the world that “extremism in the Reagan “credible to Eastern intellectu- By Lloyd Billingsley ting petty-bourgeois pedant.” As it defense of liberty is no vice” and that al conservatives.” By 1976, Reagan had Contributor happened, communism also played a “moderation in the pursuit of justice become “the brightest hope for nation- RALEIGH role in Rusher’s political odyssey. is no virtue,” what Frisk calls the “fa- al leadership” for movement conser- e are all here,” William The Harvard-trained lawyer tal words.” The Republicans duly got vatives. Buckley and Rusher, in turn, Rusher said at a conference served as a counsel for the Internal Se- their heads handed to them, but Rush- were also national figures due to pro- grams such as “Firing Line” and “The of conservatives some years curity Subcommittee, where concern er saw benefits. Advocates,” both ironically on PBS. Wago, “because we are not all there.” The about communism made him a “mili- “The Goldwater candidacy had If Not Us, Who? scores the Reagan line scored a laugh, but maybe Rusher tant conservative” and given the conservative years as good ones for conservatives. was citing a wider reality. A reading of got him tagged a Mc- movement its baptism In 1987, National Review earned more David B. Frisk’s If Not Us, Who? con- Carthyite. The trouble of fire,” he said. “It had than $1 million in gross advertising firms that you had to be a bit crazy to with McCarthy, Rusher bloodied an enormous revenue, unheard of for an opinion attempt what Rusher and National Re- said years later, after number of conservative journal. But after the Reagan years, view did during the 1950s and 1960s. revelations from Soviet troops and given the Rusher wrote, “it was as if a great cur- Rusher perceived that the Demo- archives, was that “he conservative movement tain had descended on a long and suc- cratic and Republican parties had sold didn’t know half of it. control of the Republi- cessful play. It was time for me to find out to the big-government ethos. On And none of us did.” can Party ... these were new channels for my energy.” the other hand, the conservatives of Rusher saw Buck- not negligible achieve- He moved to San Francisco, a city the day included conspiracy-mongers, ley as “a literary man ments.” he previously lamented as “infested anti-Semites, racists, and assorted ... starting a political Goldwater was with beatniks, acid-heads, bums, and kooks. The task was to overcome such movement was not re- toast, but for the con- weirdoes.” He remained involved in obstacles and advance the conservative ally what he was about. servative movement political issues such as the success- cause to the point that it wielded pow- It was very much what it was “Neither Nixon ful California Civil Rights Initiative er on the federal level. The spearhead I was about.” Both were Nor Woodstock,” as against race and gender preferences for this effort would be a magazine, what would then be one chapter explains. in government. He saw the collapse of National Review, out of New York, edit- called “square,” fastidi- Rusher saw “nihilism” communist rule in Europe, and he out- ed by William F. Buckley, published by ous about proper dress and manners. behind the student radicals of the day. lived Buckley, two years his junior. William Rusher, who passed Rusher, and with former communists Buckley savaged the Beatles as “the On the other hand, “a centrist or liber- away last year, believed that “the such as James Burnham (The Manage- crowned heads of anti-music.” Rush- al-leaning Republican administration 21st century is quite likely to be a rial Revolution) and Frank Meyer in the was a dangerous disappointment, and er supported conscription and called big improvement, in many respects, background. The odds were against draft protesters “glue-sniffing creeps” conservative politicians who didn’t at- over the 20th.” That remains uncer- them, but this crew enjoyed consider- who wouldn’t make good soldiers tack one for such failings were shirk- tain, but Rusher proves that even able success. anyway. ing their responsibilities to the cause.” a “square” can make a difference If Not Us, Who? is the official, au- Frisk packs in more material Nixon drew fire for wage-and-price through hard work, clear thinking, in- thorized story, starring Rusher as the about Barry Goldwater than most controls and his overtures to commu- formed debate, and respect for facts. unsung hero of the conservative move- readers will want to know, but the nist China. As one of his favorite poems says, ment. Those who want to know what scene at the 1964 Republican conven- By the late 1960s, California Gov. “The truth is great, and shall prevail, Rusher said in a memo to Buckley in tion in San Francisco will reward at- Ronald Reagan, a former liberal Dem- when none cares whether it prevail or 1960 are certain to love it, but there’s tention. Young Americans for Freedom ocrat, became a possible conservative not.” CJ Books authored By JLF staFFers Free Choice for Workers: Selling the Dream A History of the Right to Work Movement Why Advertising is Good Business

By John Hood President of the John Locke Foundation By George C. Leef Vice President for Research at the John William Pope Center for Higher “[Selling the Dream] provides a Education Policy fascinating look into the world of advertising and beyond ... “He writes like a buccaneer... Highly recommended.” recording episodes of bravery, Choice treachery, commitment and April 2006 vacillation.” Robert Huberty www.praeger.com (Call Jameson Books, 1-800-426-1357, to order) Capital Research Center PAGE 24 SEPTEMBER 2012 | CAROLINA JOURNAL Opinion

COMMENTARY Court Election Is Key erhaps the most important Sam Ervin IV, a Democrat. If Newby election in November will be wins, the court stays Republican; if that for an eight-year term on Ervin wins, the court goes Demo- theP North Carolina Supreme Court. crat. Legislative decisions often are Because the issue is compli- challenged in the courts, and good cated, the Supremes most likely outcomes depend on who sits on would hear the case in spring of the bench. 2014, delaying candidate filing and The Republicans won the the primary for the 2014 election General Assembly in 2010 and are until everything is sorted out. A rul- favored to retain control in 2013. ing that comes out in July or August EDITORIAL But will control of the General 2014 would be perilously close to Assembly, a potential gubernato- the November 2014 election. rial victory, and wins in Current law says Leaving several Council of State only the legislature can seats be enough to ensure draw redistricting maps. implementation of conser- Expect a lawsuit question- Leandro? vative ideas? ing the constitutionality Both sides have used of that law, which could he N.C. Court of Appeals But if there’s a silver lining in the the courts to enforce or succeed. This would allow inadvertently may have given court’s latest swipe at Leandro, it’s that undo laws over the years, the Supreme Court to state lawmakers a green light to the judges have provided an opening and court challenges draw new maps. Because Texpand school choice for low-income for new school choice alternatives. were plentiful during the North Carolina falls students across North Carolina. When The judges said: “[W]e would 2011-12 session. Lawsuits BECKI under the jurisdiction of the General Assembly returns to like to emphasize that while [More at have been filed opposing GRAY the federal Voting Rights Raleigh, it should take what appeared Four] was the remedy chosen by the a dues checkoff for state Act, we would have to get to be a setback in the interminable legislative and executive branches in 2001 to deal with the problems employees, annexation reform, and preclearance from the U.S. Depart- Leandro school litigation and make the presented by ‘at risk’ 4-year-olds, funding for preschool programs. ment of Justice. New maps and an proverbial lemonade. In late August, the appeals court it is not necessarily a permanent or Additional lawsuits are expected abbreviated election cycle mean upheld a decision by Superior Court everlasting solution to the problem. … opposing reforms to medical mal- a short filing period, a September Judge Howard Manning Jr., which Therefore, should the problem at hand practice, worker’s compensation, 2014 primary prior to the Novem- said the General Assembly could cease to exist or should its solution be regulations, and drilling procedures ber 2014 election for all legislative not cap the percentage of “at-risk” superseded by another approach, the for extracting natural gas. and congressional seats — and the children receiving slots in North state should be allowed to modify or But the biggest fight will be U.S. Senate seat now held by Kay Carolina’s prekindergarten pro- eliminate [More at Four].” over redistricting. Soon after the Hagan. gram. The ruling is part of the nearly One possible “modification”: 2011 enactment of new maps, a Hagan’s opponent, who most two-decade-old Leandro case, which Divert more money from the N.C. lawsuit was filed asking the courts likely will have a heated and expen- requires the state to provide students Education Lottery to NC Pre-K. When for an injunction to reject the maps sive primary and only two months from low-income districts adequate the lottery started, by law half of the immediately. It was denied. Then of a general election to recover and funding. revenues were targeted to class-size came a series of hearings regarding campaign against the incumbent, As we’ve said before, the deci- reduction programs and More at Four. procedural questions. The Supreme will be at a disadvantage. sion to surrender policymaking duties During the recession, lawmakers raid- Court heard oral arguments, but a The court will determine the in North Carolina’s public schools to ed the lottery to fund other programs, including Medicaid. decision is slow in coming. Chief maps that will be in effect for the the courts undermines the constitu- Directing enough lottery money Justice Sarah Parker, a Democrat, next decade, until the next state- tion’s guarantee of separation of pow- to fund all eligible 4-year-olds’ NC sets the calendar for the court. wide redistricting. Whoever holds ers. If another Leandro appeal reaches Pre-K instruction would satisfy the the state Supreme Court, the justices If the Court throws out the the pen for redistricting holds the court’s mandate and restore the lot- should toss out the entire mess and current maps, based on 2001 litiga- key to power. We’ve assumed that tery to its original mission. tion, here’s what may happen with the penholders were in the General restore education policy decisions to Another possibility: Create a tax Rucho v. Dickson, the lawsuit chal- Assembly, but in 2013 the Supreme the governor and the General Assem- credit or means-tested scholarship lenging the legality of the maps. A Court may hold the real power. bly, where they belong. for “at-risk” 4-year-olds. The General three-judge Wake County Superior In the meantime, all eyes will Last year, Manning ruled that Assembly considered a law giving Court panel would hear the chal- be on the N.C. Supreme Court to the General Assembly’s budget vio- corporations a tax credit if they con- lenge first. Expect a ruling in late determine whether the 2011 maps lated the rights of low-income young- tributed to scholarship funds so that 2013. Count on an appeal. The case are legal. Other questions regard- sters when it capped the percentage low-income kids could attend private then would head directly to the ing education, tax, and regulatory of poor students who could enroll in schools. A similar measure targeting Supreme Court. reform will come before the court. the state’s prekindergarten program, NC Pre-K students could make the The November 2012 election Which way the court rules on these previously called More at Four. judiciary happy. Manning’s ruling — backed will determine the makeup of the important matters might depend on “It would be unwise for the by the appeals court — converted a courts to attempt to lock the legisla- Supreme Court. Republicans now who is elected in November. CJ program that the General Assembly tive and executive branches into a hold a 4-3 edge. Republican Justice created to help some low-income solution to a problem that no longer Paul Newby is standing for re-elec- Becki Gray is vice president for 4-year-olds into an entitlement for works, or addresses a problem that tion against Appeals Court Judge outreach at the John Locke Foundation. every low-income 4-year-old in North no longer exists,” the appeals court Carolina. noted. Legislators, it’s your move. CJ SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 25 Opinion

EDITORIALS COMMENTARY Pension Problems Standards Don’t State looking at billions in new liabilities

f during the past few years of fiscal either can raise additional current Measure Up instability, you consoled yourself revenue for the system by sticking long with most other states, paid by performance, not longev- with the fact that at least North current employees and taxpayers with North Carolina is adopting ity. It will require greater parental ICarolina’s pension fund for teachers higher bills. Or it can try to cut the re- new Common Core national choice and competition among and state employees was sound, we’re tirement benefit (though probably not standardsA for reading and math- educational providers. And it will going to ruin your day. for employees near retirement). ematics. The good news is that the require the kind of clear, rigorous Bond-rating agencies and regu- The more interest, dividends, Common Core is much better than academic standards that top-per- lators are about to change the system and capital gains the pension’s invest- North Carolina’s previous reading forming countries tend to publish for evaluating state and local pension ment portfolio earns over time, the and math standards. The bad news and follow. funds. Rather than use the average less vulnerable it will be to cash-flow is that, at least in the area of math, Unfortunately, the Common stock-market return to estimate the problems. the new standards are inadequate to Core math standards North Caro- future returns of pension funds, they In the past, managers of pub- the task of raising North Carolina’s lina is about to implement satisfy neither the “clear” nor are going to use the average rate of lic pension funds have assumed a math performance to that the “rigorous” criterion. return on bonds. relatively high rate of return — 7.25 of the highest-performing I admit that they will be The change could have great percent to 8.25 percent, depending on states and nations. significance for your taxes, for your Higher math and an improvement over the state. North Carolina’s previ- retirement planning (if you are a state These projected returns are science proficiency among employee or married to one), and for ous state standards — almost certainly too high, however. our young people would the business climate of North Caro- which earned a D from Moody’s and other agencies are about have big payoffs in the lina. modern international the Thomas Fordham to make the pension accounting rules A pension is a promise to pay economy. You’ve probably Foundation’s nationwide more realistic by using private or even employees a certain amount of money heard politicians, business assessment of math stan- government bonds as the benchmark. each month after they retire. That’s leaders, and educators dards back in 2010 — but Doing so will expose unfunded pen- called a defined-benefit system. To make this point a million JOHN the Common Core stan- sion liabilities as about triple what fulfill the promise, public pension times — OK, well, maybe HOOD dards nevertheless fail to everyone thought they were. managers direct the money contrib- only a thousand times or set the bar high enough. Education- uted by employees and taxpayers each In our state, the probable result so, but who’s counting? In a recent Next article, several independent year into a diverse portfolio of stocks, will be to add somewhere between This proposition may sound reviewers offered candid assess- bonds, and other investments. When $12 billion and $30 billion to our like a cliché, but it happens to be ments of the new math standards a government employee retires, his government’s fiscal liabilities. Will empirically demonstrable. In my North Carolina and other states are benefits are financed by those accu- our next governor and legislature new book Our Best Foot Forward, I adopting. According to Stanford mulated assets and returns, plus new respond by raising taxes by $500 mil- discuss recent research on the rela- University mathematician James contributions coming into the system. lion or more a year to build up future tionship between student perfor- Milgram, a member of the Common If the pension fund proves inad- reserves? Will they slash benefits for mance and economic growth. One Core committee who declined to en- equate to the task of paying promised future workers? study I cite estimated that for every dorse its results, the math standards benefits, North Carolina government They’ll have to do something. CJ half a standard deviation increase set expectations the equivalent of in average math and science scores, about a grade level below those of a country’s subsequent rate of the highest-performing American economic growth averaged a full states and about two grade levels The Right Direction percentage point higher per year. In below those of the highest-perform- the current environment of anemic ing countries. Legislature spent less time in Raleigh in 2011-12 GDP growth rates, this qualifies as a Another expert, Jonathan huge effect. Goodman of New York University, on’t look now, but North Caro- meet. By that measure, you get 224 Right now, the math profi- described the Common Core math lina seems to have survived calendar days — 167 in 2011 and 57 in ciency of North Carolina’s students standards as perhaps comparable a significant reduction in the 2012. would rank 18th out of 24 industri- to those of competing countries in Dduration of the state’s legislative ses- North Carolina needs a formal alized nations in Western Europe early grades but as setting “sig- sions. length on legislative sessions. Virginia and the Pacific Rim if we were a nificantly lower expectations with According to the official count, has a constitutional limit of 60 calen- separate country. If we increased respect to algebra and geometry the 2011-12 biennium of the Republi- dar days in even-numbered years and our average math proficiency to that than the published standards of can-led General Assembly convened 30 calendar days in odd-numbered of high-ranking countries such as other countries.” January 26, 2011, and adjourned for years. Florida’s constitutional limit is Korea, Japan, Switzerland, Finland, In particular, the Common good July 3, 2012. In between there 60 calendar days. Georgia’s is 40 legis- and Canada, that would represent Core’s “college readiness” standard were two regular sessions — the lative days. Overall, 39 states impose about half a standard deviation, doesn’t require material such as “long” session in 2011 and the “short” some kind of formal session limit, meaning that we could expect trigonometry, the binomial theorem, session in 2012 — plus several special most often via their state constitu- a one-point annual rise in our logarithms, exponential functions, sessions devoted to redistricting, veto tions. North Carolina doesn’t. That’s a long-term GDP growth rate. That and complex numbers that are the overrides, or other matters. mistake on our part. would transform North Carolina’s indispensable building blocks of If you add up all the days in Even so, the North Carolina economy from a laggard back into any higher-level math work. which the General Assembly held ses- legislature under new management is a leader. We can do better. And in the sion over the past two years, you get moving in the right direction. In legis- Increasing the math proficien- interest of economic competitive- 138 days. That’s 103 legislative days in lative days, the 2011-12 biennium was cy of North Carolina students from ness alone, we need to do better. CJ 2011 and 35 days in 2012. the shortest since 1979-1980, when its current middling rank to a high There’s another way to count the count was 123 days. If you look at session lengths: The number of calendar days, the 2011-12 biennium rank will require significant action calendar days between the time a ses- was the shortest since 1985-86, when across multiple policy fronts. It will John Hood is president of the John sion starts and the time it concludes, the count was 208 days. require higher-performing teachers Locke Foundation. including days the legislature did not Let’s continue the trend. CJ PAGE 26 SEPTEMBER 2012 | CAROLINA JOURNAL Opinion EDITORIAL BRIEFS Multiple Families, One Roof

n aging population and a slow economy are fueling a drive toward more multi- generational and shared households. A Amajor impediment: Local regulations limit such living arrangements, reports The Wall Street Journal. America’s suburbs largely have been dominated by single-family housing. Chang- ing demographics, the housing bubble, and the persistently sluggish economy are challenging that arrangement. One in five college graduates age 25 to 34 now live with their parents. The number of shared households, defined as two unrelated adults not attending school, increased by 11.4 percent between 2007 and 2010. As more people are unwilling or unable to buy homes, apart- ment vacancy rates have become very low in many markets. Hence, a shift away from suburbs domi- nated by traditional family units. “People are occupying housing that is three to four times what they need,” noted We Can Agree — Somewhat Patrick Hare, a leading advocate for accessory housing. “If you take all that surplus space, it s there any agreement about the economy? You If taxes are a necessity, then it’s better to have those can be utilized for accessory apartments.” wouldn’t think so by listening to various cam- that are easy to understand, transparent, and clear Zoning regulations vary widely by local- paign ads, news debate programs, or lunch dis- in their calculation. Hidden and complicated taxes ity, but many places frown on the trend. Icussions at work. It seems like rather than coming lead to distortions, misunderstandings, and — quite “In some markets, like Washington, New together on solutions and approaches, we’re pulling frankly — concern by individuals that they are be- York, San Francisco, [people] can’t rent some- apart. ing treated unfairly. But although most recognize thing in the areas they want to rent, and they One conclusion is that this is just the nature of this principle, changing from a complicated tax sys- don’t want to commute two hours away,” said our discourse. Especially in an election year, can- tem to a simple one is a task worthy of an Olympic Mark Obrinsky, chief economist for the Na- didates want to distinguish themselves from their medal! tional Multi Housing Council. “This may be opponents, and this is usually done not by agreeing, 4. A long-run fiscal plan is needed for the country. making some communities more open to rent- but by disagreeing. The federal government — in particular — faces als and to think about housing more broadly But what if I told you that, immense challenges over the next 50 years with than they have.” behind the scenes, there actu- respect to taxes, spending, and debt. Rather than ally is substantial consensus in making decisions “on the fly,” most economists and at least six areas spanning the policy analysts agree an adopted long-term plan Energy rebound effects economic and political divides. addressing these issues would be enormously help- Here they are. ful. Several such plans have been presented in great Over the years, innovations have im- 1. The increased borrowing detail. Obtaining consensus over the details is, of proved energy efficiency. Such improvements by and growing debt of the federal course, the issue. don’t always lead to lower energy consump- government is a problem that even- 5. Low and predictable inflation is preferred to tion, writes Ronald Bailey for Reason. tually must be addressed. Under high and variable inflation.Successful people and Between 1980 and 2006, automobile fuel MICHAEL virtually every current scenario, businesses plan. Importantly, they plan where their efficiency increased by 60 percent. But because WALDEN the national debt is expected income is coming from, and they plan where their curb weight and horsepower also have in- to increase, not only in dollar spending goes. Rapidly rising prices — and even creased over that time, average fuel economy amount, but more important, as a proportion of the worse — prices that are rising at erratic rates — has gone up only a little: from 23 mpg in 1080 economy. Numerous economic studies show this make this financial planning harder. It increases the to 27 mpg in 2006. situation will lead to slower economic growth and likelihood we’ll miss our targets and overspend, or This pattern of increased efficiency not more modest improvements in living standards. So it means we’ll have to cut back in areas that ulti- necessarily leading to lower energy consump- the debt “growth curve” must be bent downward. mately will harm us. In short, high and variable tion holds over a wide range of items, including While there’s agreement over this conclusion, inflation rates add stress to our financial lives. lighting and space heating. there’s disagreement about how it should be done, 6. Government is needed. Few would disagree The degree of such “rebound effects” is and when. There are competing camps focusing on with the notion that government is needed. In- controversial, notes Bailey. There are two types taxes and on spending. There’s also debate about stead, the disagreement is over what government of rebound effects: direct, when customers use whether moving toward austerity now or later is should do. Those espousing limited government see more of a product as increased efficiency makes better for promoting economic growth today. the public sector’s actions focused on protection, it more affordable, and indirect, when increased 2. Certainty about economic policy is good. enforcement of contracts, the encouragement of eco- energy efficiency raises the demand for other Although surprises are sometimes fun, in the busi- nomic competition, and certain regulations related goods and services. Indirect effects in particu- ness world, unpredictable events create confusion, to public safety and public health. Those seeing a lar are tricky to estimate. Five of the 11 papers questions, and a reluctance to take risks that can broader role for government would add roles for suggested energy rebounds of more than 100 lead to more prosperity. While uncertainty can’t be income support and income redistribution. Much of percent, implying that as energy becomes more removed from all decisions, government can do its the debate about government in the last 70 years has productive, more of it will be consumed. part by laying out a clear policy path and sticking to been about where the pendulum lies between these “The upshot is that energy efficiency it. Continuing shifts in policy over taxes, spending, narrower and wider roles. mandates advocated by environmental activists regulations, and programs can motivate investors Maybe these six ideas are the policy path with the aim of mitigating future man-made and entrepreneurs to take the equivalent of “putting for the future. CJ global warming will likely fall far short of their their money in a mattress” rather than building and goals,” says Bailey. CJ expanding companies and ventures. Michael Walden is a Reynolds Distinguished Pro- 3. Simple taxes are better than complicated taxes. fessor at North Carolina State University. SEPTEMBER 2012 | CAROLINA JOURNAL PAGE 27 Opinion There’s Got To Be a Better Way hat if they held an elec- of the vote. This means we have fewer eral Assembly to reduce the threshold ber of American municipalities, in- tion and nobody voted? second primaries than South Carolina, to 40 percent. cluding Hendersonville, and to fill ju- Well, that’s almost what where the threshold is a simple major- Today, however, that figure dicial vacancies across North Carolina. happenedW July 17 in North Carolina. ity. But our rules also make much less makes little sense. Most African- It was utilized in a 2007 experiment In runoffs for three Democratic and sense than those in the Palmetto State. Americans are Democrats and, at for Cary council elections. Critics say 12 Republican primaries for five Basic principles of American democ- least in statewide races, candidates it is complicated and cumbersome, statewide seats, three congressional racy justify second elections if the in that party’s primary nearly always but it really isn’t. Voters just need to districts, and seven state legislative winning candidate does not get more need a biracial coalition to win. Race rank their choices. The computation races, just 222,154 residents cast their than 50 percent. A case can be made is similarly irrelevant in Republican of votes is criticized as opaque, but votes. Turnout was that a majority of the electorate prefers primaries. In 2010, for instance, black we don’t get to see physical counting a miniscule 3.61 someone else. candidate Bill Randall won both his under the current rules. percent. The 40 percent figure seems ar- first congressional primary and runoff IRV also allows citizens to dis- Inevitably, bitrary to say the least. Why should a against white opponents — the second cern between all the candidates, not this year’s “sec- candidate who wins a North Carolina by the wider margin. just pick one they like. Regardless, ond” primaries primary with the support of 41 per- Runoffs aren’t free. Gary some still worry voters cannot tell the have motivated cent of voters avoid a runoff but one Bartlett, the executive director of the difference between candidates lower many political ob- with 39 percent State Board of down their list of preferences. IRV servers to question possibly go back Elections, esti- forces them into decisions they do not the point of run- to the voters? Is it mates July’s elec- feel adequately equipped to make. offs. These contests ANDY that much worse tion cost between Why should But even if he cannot discern between tend to occur in TAYLOR to be opposed by $6 million and $7 the summer when 61 percent of the taxpayers bear million. That’s the candidates on substantive issues, people’s interest in electorate than 59? about $27 per the system encourages an individual politics is low. They are never used ac- Race is the the cost of voter who showed to rank his favorite’s competitors for tually to elect someone to office. There reason for the settling internal up, spent at a time the nomination in an additional and is no mechanism for runoffs in general rule. Until the when the state has more strategic way, the reverse order elections in North Carolina as there is early 1980s North party matters? significant fiscal of their strength. in several other Southern states. We Carolina used the problems. Or the state could just get just implement them for party nomi- simple majority There are rid of runoffs. They are used to solve nations. Particularly below the guber- standard. But the alternatives. We internal party matters. Why should natorial and federal offices, therefore, 1982 amendments to the Voting Rights could use instant runoff voting, some- taxpayers shoulder the cost if an candidates are largely unknown. Act compelled states to evaluate the times called IRV. With this method initial primary determines no winner? Given the ideological homogeneity effect their primary rules had on the citizens rank their preferences, and If the parties want further clarifica- of the parties these days, there’s also political power of racial minorities. the candidate who finishes last has tion from the public about whom their often very little information to help In the same year, current state Rep. his voters distributed to their second nominees should be, they ought to the industrious voter to distinguish Mickey Michaux won a large plurality choices until one candidate achieves pay for it. CJ among them. of the vote in the 2nd Congressional a majority. There is only one elec- North Carolina’s peculiar District Democratic contest but was tion, saving money and allowing the Andy Taylor is a professor of rules mean that second-place candi- handily defeated by a white candi- civic-minded to enjoy their vacations political science at the School of Public dates can request a runoff only if the date, Tim Valentine, in the runoff. The uninterrupted. and International Affairs at N.C. State winner received less than 40 percent two events conflated to press the Gen- IRV is currently used in a num- University. An Unsung Hero n times of crisis and war, our na- War II, FDR began sending Donovan essential to the national security and dialect, weapons use, map read- tion has been blessed with patriots to Europe on intelligence-gathering interests of the United States. Shortly ing, and sabotage. who stepped forward to lead and trips, reporting solely to the president. thereafter, Roosevelt established the These men and women who serveI when called to do so. As Donovan had an international law office of the Coordinator of Informa- went behind the lines into enemy ter- One such practice, it afforded him opportuni- tion, or COI. ritory endured tremendous hardships patriot was Maj. ties to travel throughout Europe and In Sisterhood of Spies, OSS agent and grave danger. Gen. William J. give Roosevelt candid, unvarnished Elizabeth McIntosh wrote the COI These patriots understood the Donovan, aka assessments. was “the first U.S.-organized venture stakes and the high level of risk as- “Wild Bill” Dono- Donovan sought out and eventu- into the combined fields of espionage, sociated with their jobs. Some were van, the leader of ally became a confidant of Winston subversion, propaganda, and related captured, tortured, held in prison America’s wartime Churchill and the British Secret Intel- activities under a single centralized in- and concentration camps, and killed. OSS, the Office of ligence Service. SIS had been building telligence agency. … After a year-long Sadly, some were betrayed by the very Strategic Services intelligence files since the turn of the tumultuous trail of intergovernmental networks they had built to defeat the turf struggles, mainly in the field of enemy. — the forerunner century. America’s OSS would have overt propaganda, COI operations What is clear is that our nation of the CIA. been hampered greatly without this MARC were transferred to the Office of War owes these unsung heroes a debt of In the years crucial information and cooperation of ROTTERMAN Information and the OSS functions gratitude. They were selfless, and like leading up to the SIS. were set up under the Joint Chiefs of most in the “greatest generation,” World War II, Returning from London in 1940, Staff.” never sought the limelight. America had no Donovan was one of the first to report In June 1942, Roosevelt formally And the work they and their real covert spy operation. to Roosevelt that only with American created and authorized the OSS. The leader “Wild Bill Donovan” accom- Understanding the need for materials and resources would it be OSS staff came from varied back- plished laid the groundwork for what information on what was transpiring possible for the British to ward off a grounds and participated in all the was to become the CIA. CJ overseas, President Franklin Roos- German invasion. theaters of war. There were legions evelt turned to Bill Donovan, a feisty Both men concluded in1941 that of secretaries, clerks, typists, lawyers, Marc Rotterman is a senior fellow Irishman and World War I recipient America was destined to be drawn code breakers, shortwave radio opera- at the John Locke Foundation and a former of the Congressional Medal of Honor. into the war, and that an organized tors, and researchers. Agents (spies) board member of the American Conserva- Prior to our involvement in World wartime intelligence operation was were taught self-defense, language tive Union. PAGE 28 SEPTEMBER 2012 | CAROLINA JOURNAL Parting Shot Revenue Chief Sees Need For Double-Tax Weekend (a CJ Parody)

By Mia Black Friday tax-free shopping. Retail Correspondent The North Carolina sales tax holiday program RALEIGH began in 2001. It exempts retail sales of specific items new report by the N. C. Department of Rev- — generally “back-to-school” products — from enue recommends that the state institute a all state and local sales and use taxes. Included are “double-tax weekend” to make up for the clothing items priced at $100 or less, recreational revenueA lost from the annual back-to-school sales tax equipment at $50 or less, school supplies at $100 or holiday. less, computers at $3,500 or less, and textbooks at “It’s one thing in flush times for the legislature $300 or less. to be generous and pass things that make the pub- Hoyle said he would like to start the double- lic think they care about the average taxpayer,” said tax program immediately, but acknowledged that it Revenue Secretary David Hoyle, who voted for the requires the General Assembly’s approval. tax-free weekend when he was in the state Senate. “I know it’s a long shot, but we’re in such a “But when times are tough, it’s pretty idiotic to keep bind for revenue, and even some Republicans hate giving people back their money.” the thought of cutting pork out of the budget, that Hoyle’s report proposes that the double-tax this just might fly,” he said. weekend should begin the Friday after Thanksgiv- He said that since it’s unlikely he would remain ing, with the higher tax rate — covering all retail revenue secretary when a new governor is elected, purchases — staying in effect through Saturday and his successor can feel free to blame the whole idea Sunday of that week. on him. “I’m willing to fall on my sword for bigger government,” said Hoyle. In Wake County, for example, the sales tax rate The plan, as envisioned by Revenue Secretary David While some rank-and-file Republican members is 6.75 percent, consisting of 4.75 percent state sales Hoyle, would recoup losses incurred during the popular might be open to the plan, the party’s leadership is tax and 2 percent county sales tax. For double-tax annual no-sales-tax weekend. (CJ spoof photo) not. weekend, the rate would total 13.5 percent. North Carolina typically loses about $12 mil- House Majority Leader Rep. Paul Stam, R- The report caught most state government ob- lion in revenue during the weekend of the program. Wake, told CJ that Hoyle’s double-tax weekend is a servers off-guard because neither the governor nor “The whole idea behind the tax holiday pro- bad idea. “We shouldn’t enact another silly gimmick the General Assembly requested it. gram is the theory that when shoppers get some to fix the first silly gimmick,” he said. Hoyle told Carolina Journal he came up with the temporary tax relief they think favorably of their Perdue, taken by surprise by Hoyle’s propos- idea. “It was a natural progression for me,” he said. benevolent government leaders,” he said. “But with al, called it “a little out there at first glance.” But “After all, I’m a Democrat, and we like taxes.” Republicans now in charge, and probably for some she said she couldn’t quibble with Hoyle’s logic. He said he may have voted for the tax holiday time, it makes no sense to keep this up.” “There are two ways to balance the budget,” gimmick 10 years ago when in the state Senate, but North Carolina is one of 17 states offering shop- she said. “One, you can cut spending, and we know now has to “deal with the folly of not having enough pers a sales tax holiday on back-to-school items in that’s bad for the economy. Or, two, you can raise money to satisfy all our interest groups, er, our es- August. Most holidays, like North Carolina’s, last taxes, which I’ve always thought was the easiest way sential needs, I mean.” one weekend. Some states offer an entire week of to balance a budget and create jobs.” CJ An Investment Plan For N.C.’s Economic Recovery The ongoing debate in Washington and the upcoming national campaigns for president and Congress will offer plenty of opportuni- ties for pro-growth politicians to craft, explain, and sell reforms of the federal budget, federal taxation, federal regulation, and federal agen- cies and programs. In the new book Our Best Foot Forward: An Investment Plan for North Carolina’s Economic Re- covery, John Locke Foundation President John Hood tells North Carolina’s policymakers and citizens that economic policy is not the exclusive domain of presi- dents, federal lawmakers, or the Federal Reserve. John Hood States and localities can play critical roles in econom- ic policy — for good or for ill. We invite you to read and share this plan for our state’s recovery with your family, friends, and co-workers. Go to http://johnlocke.org for more information.

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