• Researcher Blends • College Budget Cuts Education, Economics C A R O L I N A Not Just in N.C. New Tool for Taxman N.C. Museum of History

Volume 12, Number 9 A Monthly Journal of News, September 2003 Analysis, and Opinion from JOURNAL the John Locke Foundation www.CarolinaJournal.com www.JohnLocke.org

State Budget: Higher Taxes, More Borrowing, Federal Handout

N.C. leaders continue Freedom Budget 2003 heavy spending, avoid rearranges priorities, efficiency and solutions offers different approach

By PAUL CHESSER By PAUL CHESSER Associate Editor Associate Editor RALEIGH RALEIGH awmakers on June 30 heralded the riorities, priorities — every person’s “balanced” budget they produced lies in a different place. So does ev- L through bipartisanship, which sur- P ery agency’s. prised many political observers because it Lawmakers have to decide what is most emerged before the beginning of the new important for all of them. Democratic Rep. fiscal year July 1. Martin Nesbitt of Asheville voted in favor However like recent years, legislators of the budget and believed it was “pretty depended on tax increases and nonrecur- good,” considering the General Assembly’s ring revenues, which included $551.6 mil- struggle to find revenue and cuts. lion in relief from the federal government. “On balance I think they did the right In each of the last two years Democrats, things in terms of priorities,” he said. Still, despite possession of the governorship and some budget deletions troubled him. majorities in both chambers of the General “We cut teachers aides, and I think Assembly, failed to produce a balanced that’s terribly shortsighted,” he said. “We budget before mid-autumn. Delays were can get 2 1/2 aides for one teacher…and largely blamed on the near equally split Carolina Journal photo by Richard Wagner that allows teachers to teach. They are very House, where a group of liberal Democrats Easley advises the House to alter the budget at a press conference June 25 at the State Capitol. cost-effective.” often joined unified Republicans’ 58 votes The budget reduces the dollar allot- to block regressive tax increases. ment. Of those two funds the Health & million in fiscal 2003-04 and $698 million in ment for teacher assistants by $16 million This year, loyalties shifted. Despite a Wellness Trust Fund, which was to finance fiscal 2004-05. The total $1.3 billion is miti- over the two-year period. Nesbitt also 60-60 vote split between Republicans and public health programs, will lose $50 mil- gated by nonrecurring expenditures of thought cuts to the Vocational Education Democrats in the House, the liberals’ lever- lion the next two years. The Tobacco Trust $197.2 million over the two years. In 2005 Program, also $16 million, was a bad idea. age diminished and GOP solidarity, already Fund, which was established to give to- lawmakers will need to replace what Whether cutting those line-items was fragile, dissolved. Instead, a small group of bacco farmers relief for their product’s di- amounted to a nonrecurring $1.1 billion in appropriate is in the eye of the beholder. Republicans led by Co-Speaker Richard minished demand, will lose $80 million. revenue in the 2003-05 biennium. The John Locke Foundation’s Freedom Morgan joined with now-unified Demo- Budget writers also took: $10 million Budget 2003 offered the organization’s ad- crats to craft a timely budget. The new from funds recovered as the result of the Brother, can you spare a prison? vice on priorities for government. The plan, coalition marginalized legislators who op- attorney general’s lawsuit settlements; $58 which is on the Internet at www.John posed tax increases and budget growth. million from taxes earmarked for the im- Lawmakers also expanded plans this Locke.org, recommends cuts in many pro- The realignment didn’t change budget- provement of the 911 emergency telephone year to borrow money for capital projects grams and the elimination of other appro- ing habits from recent years. Government system; $109 million from the Hurricane through a controversial method they began priations where the foundation thinks gov- spending will grow by 3 percent in 2003-04 Floyd Disaster Relief Funds; and $40 mil- two years ago. In 2001 the legislature autho- ernment shouldn’t have a role. and will grow 5 percent by 2004-05. More lion originally headed to other special funds. rized a new way to get financing without One way to restore the reductions in than $1 billion in higher taxes will be col- Lawmakers in recent years have trans- the need for voters to approve new debt, as teacher assistants and vocational training lected through the end of fiscal 2005. ferred increasing amounts from the High- the constitution mandates. The method was would have been to follow the Freedom way Trust Fund. The reserve was sold to used to build three prisons. Budget’s recommendation on cultural and Finding new money taxpayers as a way to finance special road Called “certificates of participation,” recreational attractions. It estimated that if projects through gas taxes and car taxes. the legislature authorized the treasurer to the Tryon Palace, NC Maritime Museum, The extra levies didn’t alleviate the need This year the legislature moved $252 mil- create a nonprofit corporation, which would NC Museum of Art, NC Museum of His- to find other sources of revenue, though. lion out of the designated fund. be owner and landlord of the prison prop- tory, the division of Forestry, NC Zoo, NC North Carolina joined most other states, Fee increases brought in another $11.5 erties. The state was able to skirt the voter- Aquariums, and the Museum of Natural which are in similar budgetary difficulty, to million in revenue to the General Fund. approval requirement because technically Science could recover 50 percent of their plead for relief from the federal govern- Legislators think also that the state will it is the finance corporation taking on the costs through fees and donations, the an- ment. After much hand-wringing, Congress be able to gain $216.3 million through im- debt, then turning around and allowing the nual savings would be $32.4 million. came through with $20 billion, which in- proved tax collection measures. And they state to use the facilities under a lease-pur- But the Freedom Budget also proposed cluded $551.6 million for North Carolina. expect to raise $40 million through the sale chase agreement. a more dramatic reduction in teacher assis- Lawmakers also took $130 million from of surplus property. tants, recommending that $122 million two of the state’s trusts that were funded by According to legislative staff, the bud- worth of positions be converted into full its share of the 1998 tobacco lawsuit settle- get relies upon nonrecurring funds of $618.2 Continued as “Efficiency,” Page 3 teaching positions. CJ

Best Way to Solve Fiscal Crisis The John Locke Foundation NONPROFIT ORG. Contents 200 W. Morgan St., # 200 U.S. POSTAGE Cut Spending 64% Raleigh, NC 27601 PAID Raise Taxes 4% RALEIGH NC PERMIT NO. 1766 Do Both 32% Calendar 2 State Government 3 Education 6 Higher Education 10 Local Government 14 Books & the Arts 18 Opinion 20

% of NC Business Execs in March 2002 JLF Poll Parting Shot 24 C A R O L I N A Contents

ON THE COVER • Three different testing standards — the • Six North Carolina cities are proposing JOURNAL National Assessment of Educational incentives of $5.4 million to help establish •What was the General Assembly’s solu- Progress, the state ABCs, and the federal No additional airline service. Page 15 tion to the state’s budget problems this Child Left Behind Act — are creating con- year? Higher taxes, onetime money, more fusion and frustration over accuracy in • Many landowners along the border be- borrowing and ignoring efficiency ideas North Carolina. Page 8 tween Orange and Chatham counties re- seemed to be the answers. Page 1 main uncertain what their county of resi- Richard Wagner • Now that high-stakes testing has begun dence is, 14 years after the counties agreed Editor NORTH CAROLINA in North Carolina, parents and policy mak- to redraw their border. Page 16 ers want to know whether the process is Paul Chesser, Michael Lowrey •Two reports released in August conclude working to improve student performance. • An interview with U.S. Rep. Richard Burr Donna Martinez that North Carolina’s primary job creation Page 9 of North Carolina’s 5th District. Page 17 Associate Editors program, the William S. Lee Act, rarely cre- ates any jobs. Page 4 HIGHER EDUCATION THE LEARNING CURVE

Karen Palasek, Jon Sanders • The length of time for copyright protec- • A recently released report found that • Editorial intern Jonathan Jones reviews Assistant Editors tion, which exceeds 100 years in most cases, North Carolina’s institutions of public North Carolina’s Museum of History in is excessive and society would benefit if the higher education are hardly the only ones downtown Raleigh. Page 18 period were shortened, the dean of the in the nation affected by an economic down- Andrew Cline, Roy Cordato, Charles Davenport, Ian Drake, Barton College School of Business says. turn in their home state. Page 10 • George Leef reviews the book Pieces of Tom Fetzer, Nat Fullwood, Page 5 Eight by Edwin Vieira, Jr., and a review of John Gizzi, David Hartgen, • One of the last actions of the General As- the book The Great Tax Wars by Steven R. Summer Hood, Lindalyn Kakadelis, • Approval of the state budget June 30 also sembly before the legislative session ended Weisman. Page 19 George Leef, Kathryn Parker, marked the beginning of the fulfillment of was to pass a bill that increases eligibility Marc Rotterman, R.E. Smith Jr., a $10 million promise made by state House for a state grant that also ended what some OPINION Jack Sommer, John Staddon, Cospeaker Jim Black to a culinary arts have labeled a discriminatory practice. George Stephens, Jeff Taylor, school that planned to establish a campus Page 11 • An editorial on predatory politicians and Michael Walden, Karen Welsh in Charlotte. Page 5 what Roy Cooper can do about them. Page Contributing Editors • Like its public rival at University of North 20 EDUCATION Carolina at Chapel Hill, Duke University Jenna Ashley, Paul Messino, is requiring its incoming students to read a • Donna Martinez writes that none of us Andrew Symons • The NC Charter School Conference held controversial book this summer: Jonathan should be surprised, but all of us should be Editorial Interns in New Bern carried the theme “NCLB,” a Kozol’s Savage Inequalities: Children in concerned by some of the appalling results reference to both the No Child Left Behind America’s Schools. Page 12 of a survey conducted by the North Caro- Act, and an acronym for “Nurturing, Chal- lina Civic Education Consortium, released lenging, Learning & Believing in all chil- LOCAL GOVERNMENT earlier this year. Page 22 dren.” Page 7 • Finance officials in local government of- PARTING SHOT John Hood • Lindalyn Kakadelis writes that the State fices around the state are praising a rela- Publisher Board of Education’s meeting in August tively new and little-known debt collection • A student from UNC-Chapel Hill writes confirmed that its unqualified core value is program that has helped clear their books an open letter to North Carolina’s taxpay- Don Carrington that the “system” is more important than of more than $1.2 million in bad debts from ers, expressing anguish about his recent in- Associate Publisher the child. Page 7 thousands of North Carolinians. Page 14 teraction with state government. Page 24

Published by Calendar The John Locke Foundation 200 W. Morgan St., # 200 Raleigh, N.C. 27601 (919) 828-3876 • Fax: 821-5117 Woolsey to Speak Sept. 19; Epstein Featured at Luncheon www.JohnLocke.org

. James Woolsey, former director of homeland security. Pence participated in Bruce Babcock, Ferrell Blount, the CIA, will speak at a special John drafting the Patriot Act and legislation cre- John Carrington, Hap Chalmers, Locke Foundation event at 6:30 p.m. ating the Department of Homeland Secu- Sandra Fearrington, Jim Fulghum, R William Graham, John Hood, Sept. 19 at the Brownstone Hotel in Raleigh. rity. Kevin Kennelly, Lee Kindberg, Also featured with Woolsey will be U.S. Pence also traveled to Berlin after the Robert Luddy, William Maready, Rep. Mike Pence, of the 6th District of Indi- Sept.11 attacks as the only member of Con- J. Arthur Pope, Assad Meymandi, ana. gress to participate in an international con- Tula Robbins, David Stover, Woolsey is a partner in the law firm of ference on terrorism. Jess Ward, Andy Wells, Shea & Gardner in Washington, D.C. He Cocktails and heavy hors d’oeuvres will Art Zeidman returned to the firm in January 1995 after be served at the special event. Cost is $35 Board of Directors serving for two years as director of the per person. For more information or to pre- Central Intelligence Agency. He has prac- register, contact Summer Hood at (919) 828- ticed at the firm for 17 years, on four occa- 3876 or [email protected]. CAROLINA JOURNAL is a monthly journal of news, analysis, and commentary on state sions, since 1973. and local government and public policy Woolsey’s law practice has been in the Oct. 2 luncheon issues in North Carolina. fields of civil litigation, alternative dispute resolution, and corporate transactions. In- Leading free-market legal scholar Ri- ©2003 by The John Locke Foundation creasingly his practice has been interna- chard Epstein will be the featured speaker Inc. All opinions expressed in bylined ar- tional. at a John Locke Foundation luncheon Oct. 2 ticles are those of the authors and do not He has served recently as counsel for R. James Woolsey at the Brownstone Hotel. necessarily reflect the views of the editors of major American and overseas corporations Epstein is the James Parker Hall distin- Carolina Journal or the staff and board of the Locke Foundation. in both commercial arbitration and the ne- was first elected to Congress in November guished service professor of law at the Uni- gotiation of joint ventures and other agree- 2000 and was re-elected to the 6th Congres- versity of Chicago, where he has taught Material published in Carolina Journal ments. He serves regularly as a neutral sional District encompassing much of east- since 1972. may be reprinted provided the Locke Foun- (both as an arbitrator and a mediator) in ern Indiana in 2002. He has also been the Peter and Kirstin dation receives prior notice and appropri- commercial disputes between major com- Pence serves in the House leadership as Bedford senior fellow at the Hoover Institu- ate credit is given. Submissions and letters panies. a deputy majority whip and was named to tion since 2000. to the editor are welcome and should be Woolsey has also served in the U.S. chair a subcommittee during his freshman He was editor of the Journal of Legal directed to the editor. government as: ambassador to the Negotia- term — only the fifth freshman in the past Studies from 1981 to 1991, and of the Journal tion on Conventional Armed Forces in Eu- 50 years to hold such a position. of Law and Economics from 1991 to 2001. Cur- Readers of Carolina Journal who wish to receive daily and weekly updates from CJ rope (CFE), Vienna, 1989-1991; under secre- An ardent supporter of the U.S. mili- rently, he is a director of the John M. Olin editors and reporters on issues of interest to tary of the Navy, 1977-1979; general coun- tary and the war on terrorism, Pence ac- Program in Law and Economics. North Carolinians should call 919-828- sel to the U.S. Senate Committee on Armed companied House Speaker Dennis Hastert Epstein is the author of several books 3876 and request a free subscription to Services, 1970-73; advisor (during military and a small congressional delegation in the on law and economics, including Skepticism Carolina Journal Weekly Report, deliv- service) on the U.S. Delegation to the Strate- spring of 2003 to visit troops fighting in and Freedom: A Modern Case for Classical ered each weekend by fax and e-mail, or gic Arms Limitation Talks (SALT I), Helsinki operations Iraqi Freedom and Enduring Liberalism and Simple Rules for a Complex visit carolinajournal.com on the World and Vienna, 1969-1970. He was also ap- Freedom. World. Wide Web. Those interested in education, pointed by the president as delegate at large Following the Sept. 11, 2001 terrorist Lunch will be served at noon. The cost higher education, or local government to the U.S.-Soviet Strategic Arms Reduction attacks on New York City and Washington, per person is $20. should also ask to receive new weekly e- letters covering these issues. Talks and Nuclear and Space Arms Talks, D.C., Pence was appointed to the House For more information or to preregister, Geneva, 1983-1986. Judiciary Committee, where he serves on contact Summer Hood at (919) 828-3876 or Pence was born in Columbus, Ind., and the subcommittee on crime, terrorism, and [email protected]. CJ C A R O L I N A September 2003 JOURNAL North Carolina 3 Efficiency Commission’s Recommendations Get Short Shrift

Continued From Page 1 services. mission identified the • Sell certain state elimination of half of the Local governments have been allowed properties. What Went Wrong: “I was state’s 10,000 vacant posi- to use the financing method for years. • Consolidate admin- disappointed (the only Appropriations tions from 2001-02 as an “I don’t like it and I think it’s something istrative functions of small Chair to vote ‘no’ on the budget) with instant and significant way we need to put a stop to,” said Rep. Martin school systems and small the continuation of the sales tax in the to help relieve budget pres- Nesbitt, D-Buncombe. “I didn’t like it when community colleges. budget.” sure. The panel estimated the local governments did certificates of • Consolidate the that if half of those posi- participation. I guess everyone can justify it many workforce pre- What Went Right: “The taxes tions were eliminated at an by saying there’s no other way.” paredness programs. would have remained in force under average annual salary of Nesbitt said he was concerned about • Simplify the tax any form of House leadership when $30,000, about $180 million the rapid growth of the state’s bond debt code. you take into consideration the ‘less could have been saved. over the last 10 years. “If we simplified the than conservative’ Senate and gover- “We’re going to fund “Now we’re going into self-financing, tax code,” Hyler said, “it nor. The good news is, it didn’t take 10 over 5,000 empty posi- which will put us into it even further if we would make some of the months to do what was inevitably tions,” said Sen. Fred don’t put a stop to it,” he said. compliance issues go Rep. Debbie Clary, R-Gaston going to be done.” Smith, R-Johnston. “No- Lawmakers authorized lease-purchase away.” body’s in those jobs.” agreements to build three more prisons at a But the recently com- “I think the state cost of $234 million, in addition to several pleted legislative session should look very hard at other capital projects that pushed the state demonstrated that legislators mostly ig- recommendations. these positions that have become vacant $650 million further into debt. nored the commission’s lecturing. Most of “I don’t know how to answer that be- and have a disciplined program to elimi- the recommendations weren’t considered, cause it’s so unusual [for it not to pass],” nate them,” Hyler said last month. What efficiency commission? and most that found their way into a bill said Steve Tuttle, vice president of commu- The efficiency commission also said failed to go anywhere. nications for NCCBI. “We’ll just have to quick savings could be had in the state’s Gov. Mike Easley established the Com- NCCBI determined that only 14 bills wait and see.” technology purchases. mission on Government Efficiency and Sav- that addressed government efficiency is- The efficiency commission also pro- “Just a slight improvement in the ings on State Spending in posed that the state explore present disarrayed information technology February 2002. In Decem- consolidation of commu- expenditures could save $70 million in ber the panel released rec- nity colleges , an idea that spending,” Hyler wrote in an August 2003 ommendations that paral- What Went Wrong: “The most an independent consultant article for NCCBI. leled proposals by a simi- distinctive thing is we’re unique posed as feasible. MGT of Yet budget critics didn’t see that the lar commission 10 years among any other state in the country, America determined that legislative leadership had the will to over- ago. In the early 1990s, having a significant tax increase for the state’s three commu- haul government practices. Sen. Robert members of the Govern- three consecutive budgets.” nity colleges with enroll- Pittenger, R-Charlotte, successfully ment Performance Audit ment below 1,000 could be amended the budget to include the pur- Committee estimated that What Went Right: “There’s merged with larger neigh- chase of a software program that helps iden- their recommendations nothing good. We’ve not brought in boring schools, which tify Medicaid fraud — a problem the state is could save taxpayers about any cost savings efficiencies, and would save the state $2 mil- trying to control. $275 million the first year, therefore we maintain the highest lion a year. However, the “This software program has identified and greater long-range corporate, personal, and sales tax consultant said political $100 million in fraud in Georgia and Utah,” savings thereafter. rates of any state in the Southeast. and technical hurdles prob- Pittenger said. “The vendor guaranteed the Few of those ideas That clearly hinders our ability to ably make the idea not results.” The program was deleted in con- were implemented back Charlotte Sen. Robert Pittenger attract economic development.” worth the trouble. ference committee. then, and most were for- But MGT said chang- “In our excessive spending, we’ve not gotten when the economy ing the formula by which brought in any cost-saving efficiencies, and improved in the mid-1990s. The Efficiency sues were introduced in either chamber of the state’s community colleges receive therefore we maintain the highest corpo- Commission, which was unable to reach the Assembly. money is worth pursuing. Community col- rate, personal, and sales tax rates of any the level of dollar-figure specificity that Only two of the bills passed both the lege officials and state system President state in the Southeast,” Pittenger said. “That GPAC did, revived many of those sugges- House and the Senate, but as of mid-August Martin Lancaster discounted that idea, clearly hinders our ability to attract eco- tions, and added some new ones. they hadn’t been signed by Easley. One claiming that at least 36 schools would lose nomic development.” “We didn’t have the resources or the would allow government agencies to re- money. time to drill down to see what dollar sav- ceive sales tax exemptions ‘Pretty good budget’ ings might be there,” said Jim Hyler, chair- instead of refunds. The man of the Efficiency Commission, and vice other would authorize the Legislators who voted chairman of First Citizens Bank. The group sale of state-owned prop- What Went Wrong: “We cut for the budget, or were at was not given any funding in the budget. erty in Raleigh’s Blount teachers aides, and I think that’s least involved in the nego- Hyler said instead the commission fo- Street Historic District. terribly short-sighted. We can get 2 1/ tiations, found some posi- cused on broad themes. “We didn’t get into That measure would allo- 2 aides for one teacher…and that tives in the midst of what any policy issues; we just looked at pro- cate proceeds to the main- allows teachers to teach. They are was a struggle to keep from cesses,” he said. tenance and upkeep of the very cost-effective.” cutting what they consid- The commission’s report, full of con- Governor’s Mansion. ered essentials. solidation and reduction ideas, also took on Two more of those bills What Went Right: “I think for the “I think for the shape somewhat of a finger-wagging tone. were rolled into the bud- they were in they did a shape they were in they did a pretty “The commission has noted the work get bill. The first was to pretty good budget,” good budget. I look for us in these of previous commissions has tended to be consider the sale or lease of Nesbitt said. “We’re still difficult times to make sure we don’t ignored when the economy recovers and state property. The legisla- in a recession. dismantle an institution or leave some the immediate fiscal crisis passes,” the re- ture hopes to jettison $40 “I look for us in these people behind. We needed to spread port read. “Several steps should be million worth of the state’s difficult times to make sure the pain, and I think they did that.” taken…to avoid that process.” assets over the next two Asheville Rep. Martin Nesbitt we don’t dismantle an in- The commission identified dozens of years. stitution or leave some specific areas for potential government sav- The other bill that was people behind. We needed ings. The major recommendations included: placed in the budget will establish a state- “What we really need is more money,” to spread the pain, and I think they did • Zero-based budgeting. wide State Employee Benefit Committee, Lancaster told The News & Observer of Ra- that.” • Introduce incentives to control costs. which consolidates the evaluation and se- leigh. Nesbitt also believed a little fiscal re- • Prospectively eliminate longevity pay lection process of optional benefit programs. straint was shown, at least by the House. and fund additional pay for excellent per- Currently each state agency has its own Only so much was possible “That cancer hospital at UNC — we re- formance. committee, hindering economies of scale sisted some temptation to spend dollars in • Change eligibility standards for re- for the bid process. Tuttle said legislators could do only so future years.” tiree health insurance and retirement ben- “A couple of [bills] are still alive and in much on efficiency, given their busy agenda. And of course, there was at least some efits to mirror the private sector. study,” Hyler said. “There’s been a little bit “I think we made a good start,” he said. time efficiency. • Reduce duplicative personnel sys- of action, but there’s still a lot to be done.” “At least the issue of improving govern- “The taxes would have remained in tems. Four bills that would have considered ment efficiency received a good airing in force under any form of House leadership • Aggressively work toward the elimi- government program consolidation or re- the General Assembly, given they had to when you take into consideration the ‘less nation of positions that become open as a duction were themselves combined into a spend so much time balancing the budget.” than conservative’ Senate and governor,” result of attrition. larger studies bill. Passage of that bill along But lawmakers who opposed the bud- said Rep. Debbie Clary, a Republican Ap- • Change the administration of the with an appointments bill and a technical get thought a lot of the efficiency com- propriations Committee chair who voted state’s $700 million information technology corrections bill is typically perfunctory, but mission’s suggestions could have improved against the budget. “The good news is, it service programs. not this year. Efficiency commission sup- the budget immediately. didn’t take 10 months to do what was inevi- • Privatize additional state government porters aren’t sure how that bodes for their At the beginning of the year the com- tably going to be done.” CJ September 2003 C A R O L I N A 4 North Carolina JOURNAL

Around the State Jobs program fails 96 percent of the time, researcher says Lee Act Is a ‘Colossal Failure,’ Legislator Says •House Cospeaker Jim Black, D-Mecklenburg, has changed sides on the state lottery issue. According By DON CARRINGTON to the Roanoke Rapids Daily Herald, Associate Publisher “(Black) said after seeing how people RALEIGH Cost of the William S. Lee Act, 1996-2001 wo reports released in August con- flock to South Carolina and Virginia Rounded numbers in millions of dollars to buy lottery tickets and how much clude that North Carolina’s primary money it takes out of the state, he is Tjob creation program, the William S. now in favor of a lottery.” Lee Act, rarely creates any new jobs. Credits Credits A UNC researcher’s report on the Lee Category Generated Utilized • Phone book publisher R. H. Act shows that 96 percent of the jobs associ- Machinery and Equipment $859 $116 Donnelley Corp., after vacuuming ated with the job-creation component of the up $4.3 million of North Carolina act would have been created anyway — Job Creation $162 $34 incentives to relocate here from Kan- without the incentives authorized by the Worker Training $13 $7 sas and New York, cast about legislation. Central Offices $14 $3 Durham and Wake counties to find A second report based on a survey of Total $1,155 $208 the best local-government offer the North Carolina manufacturers indicates that company could get. Wake County’s 95 percent of the time the Lee Act tax credits economic development office prom- are not a deciding factor for companies Source: 2003 Assesment of the William S. Lee Act, Michael I. Luger, July 31, 2003 ised $25,000 and wanted the Town when they are making investments or hir- of Cary to add $25,000 to keep ing workers. Donnelley from settling in Durham County. Officials in Cary and UNC director’s report counted for 74 percent of the credits gener- In addition, Commerce officials were Durham County demurred, ques- ated and 56 percent of the credits used reluctant to release the survey results to tioning whether Donnelley’s plans The first report, released Aug. 11 by the during the study period. Carolina Journal. Various Commerce Depart- qualify for incentives in their juris- N.C. Department of Commerce, was pre- ment officials referred to it as a “work in dictions. Reported by The News & pared by Michael I. Luger, director of the Department of Commerce survey progress” or an “internal document,” even Observer of Raleigh. Office of Economic Development for the though the North Carolina Public Records Kenan Institute of Private Enterprise at Luger’s research is strikingly consistent Law defines public records as “all docu- • The N&O also reported that UNC-Chapel Hill. with another Department of Commerce re- ments, papers, letters… made or received all but three of Patrick Ballantine’s The report was prepared for the depart- port released Aug. 13. The report was based in connection with the transaction of public 21 fellow Senate Republicans sup- ment in response to legislation in 1996 re- on a survey showing that only 5 percent of business by any agency.” When it was fi- port his gubernatorial bid. Andrew quiring a biennial assessment of the pro- the companies using Lee Act tax credits nally released Aug. 13, the report that took Brock of Mocksville supports former gram. claim they were a “deciding factor” in their more than seven months to prepare was State GOP Chairman Bill Cobey, and Based on his own research, Luger said, decision to expand. only two pages long. Hugh Webster of Burlington is un- “Only 4 percent of the jobs claimed to be In December 2002, the Department of committed. Fern Shubert, R-Union, created with Lee Act incentives actually Commerce surveyed 4,471 North Carolina Critics question impact is considering entering the race her- were induced.” In other words, 96 percent manufacturers as part of an effort to gather self. Former Sen. Jesse Helms en- of the employment associated with the tax- information for it’s Existing Industry Pro- “The Lee Act is an entitlement program dorsed Cobey for governor also. credit program would have occurred with- gram. for corporations that I don’t believe serves out it. The survey asked questions about job its purpose,” Dan Gerlach, then project di- • Two freshmen state senators Under the program, companies can claim creation plans, knowledge of existing in- rector of the State Budget & Tax Center, told who hope to overcome the formi- tax credits for adding new jobs. The state’s dustry programs, and about the types of The News & Observer in October 2001. “We’re dable fund-raiser power of State Sen. 100 counties are divided into five groups or support programs they would find useful. wasting a lot of money in entitlements for President Pro Tem Marc Basnight “tiers.” The amount of the credit varies Included in the survey were two questions economic development that would happen have created the Republican Sena- between $500 in tier five counties, the about the Lee Act. anyway. There is a real danger that pretty torial Trust. Sen. Fred Smith of wealthier counties such as Wake and Responses were received from 977 em- soon the Lee Act is going to topple over on Clayton and Sen. Robert Pittenger Mecklenburg, to $12,500 in tier one coun- ployers, and 896 answered the Lee Act ques- its own weight,” he said. Shortly after offer- of Charlotte will lead the effort to ties, poorer counties such as Halifax and tions. The first question was: ing that critique of the Lee Act, Gerlach raise enough money to help the GOP Swain. “When your business decides to expand, went to work for Gov. Mike Easley as a win control of the Senate. Basnight According to Luger’s report, from 1996 to what degree will or have North Carolina’s budget advisor. has raised millions for fellow Demo- to 2001 about $1.16 billion in tax credits Williams S. Lee tax credits be a consider- The John Locke Foundation staff has crats in the last several elections, have been generated, $208 million have ation in your decision to do any of the also been a frequent critic of the Lee Act and enabling them to prevail in many been used, and $947 million can still be following tax-credit-supported activities — other state economic development pro- tight races and keeping the chamber claimed. The amount is significant when modernize machinery and equipment, cre- grams that reward companies for doing in his party’s possession. “The Re- compared to actual net corporate state in- ate new jobs, undertake research and devel- what they were going to do anyway. The publican caucus got outspent 80 come taxes collected in North Carolina, opment, train workers, invest in central Foundation recommends instead broad- cents to 20 cents (last year),” Smith which total about $800 million annually. office administrative office property? based tax relief for all firms and the efficient said. “If we’re going to be competi- Luger’s report gives new ammunition The second question was: “In the past, delivery of core government services such tive, then we’ve got to show that we to critics of the program. have you used the credits?” A total of 154 as transportation, education, and public can raise money.” Reported by The “The Lee Act is a colossal failure,” said companies responded yes. safety. News & Observer of Raleigh. Rep. Paul Stam, R-Wake, a frequent critic of Combining the responses, the report said David Brunori, a research professor of targeted tax incentives. “Luger’s report that only 5 percent of the respondents that public policy at George Washington Uni- • A ninth Republican, Winston- should give the legislature the ammunition used the credits reported that the tax breaks versity, also is a critic of targeted tax incen- Salem investment banker Ed to terminate the program. A better eco- were a deciding factor. tives. Broyhill, announced his candidacy nomic development strategy would be to Another 25 percent responded that the A contributing editor of Governing Maga- for North Carolina’s 5th Congres- uniformly reduce taxes for all businesses.” tax credits were a “key consideration,” but zine, he debunked the policy in the August sional District, now held by U.S. Rep. A June 2001 Assessment of Results on not a “deciding factor.” Thirty-two percent 2003 issue. “With states still reeling from Richard Burr. Broyhill, son of former the Lee Act released by the Commerce De- said the credits were a “minor consider- falling tax collections, here’s an idea: End U.S. Sen. Jim Broyhill, is president of partment offered a more positive conclu- ation,” and 38 percent said the credits were the practice of granting tax incentives to the Broyhill Group. Ed Broyhill also sion even though the report did not address “not relevant” to their decision regarding individual corporations as a means of fos- started a furniture company in 1978. whether the availability of the credits actu- expansion. tering economic development,” he said. He is the grandson of J. E. Broyhill, ally induced investment or hiring. “The Lee Brunori offers four criticisms of targeted who started Broyhill Furniture In- Act is encouraging job creation and invest- Overdue reports tax incentives: dustries in 1926. ment in all parts of the state,” the assess- • They cost a lot of money. No Democrats have filed for the ment said. “Based on this review, it appears The General Assembly passed a law that • They are unnecessary — “Corpora- race. Burr will run for the Senate in that the William S. Lee Act is achieving the required the Department of Commerce to tions are far more interested in access to 2004. Reported by the Winston-Sa- goals set forth for it in the General Assem- biennially produce an Impact Study and market, and educated workforce and labor lem Journal. bly.” report the results along with its recommen- costs than tax burdens.” The Lee Act also allows credits for in- dations to the legislature. • Tax incentives are patently unfair [to • The N.C. Department of Rev- vesting in machinery and equipment, for The last report was due by April 1, 2001 existing businesses]. enue announced in a press release research and development, and worker and even though no specific date was men- • Tax-incentive programs suffer from a that it collected $187.5 million in training. It allows special credits for invest- tioned for the 2003 report, most observers lack of accountability. “Neither the public overdue taxes from citizens and busi- ment in central offices and aircraft facilities expected this year’s report to also be deliv- nor most political leaders know if the cor- nesses in the past two years. The as well as additional credits for investments ered by April 1 — in time for the General porations are doing what they promised. milestone surpassed the depart- in state-designated business development Assembly to review it. There are often no guarantees that the re- ment’s goal for Project Collect Tax zones. The Aug. 11 release of Luger’s report cipients will create good-paying jobs or that by $37.5 million. CJ The machinery- and equipment-credit came long after the legislature adjourned a company won’t close down the operation component is by far the most costly. It ac- July 20. a year or two later,” he said. CJ C A R O L I N A September 2003 JOURNAL North Carolina 5

Length of protection for copyrights is too long, Locke study finds Barton College Dean Analyzes ‘Economics of Intellectual Property’

By PAUL CHESSER resulting works would ensue, making so- Associate Editor ciety worse off.” RALEIGH Still, Bethune said, drastically shorten- he length of time for copyright pro- ing the length of copyright protection tection, which extends for the life of would benefit consumers through lower Ta creator plus 70 years, is excessive prices, yet preserve the impetus for indi- and society would benefit if that period vidual creativity. He said that a protection were shortened, the dean of the Barton Col- time as short as 15 years could be sufficient. lege School of Business says. “If creators of copyright-protected In “The Economics of Intellectual Prop- works were only given this length of time erty,” a study published in July by the John for protection,” Bethune said, “would they Locke Foundation, John J. Bethune wrote still write their books, songs, software, etc.? that “strictly speaking, patents and copy- How much would protection of these works rights are grants of monopoly privilege” — be limited, or output reduced, if the legal and rightfully so. But he said patents and length of protection was only 15 years?” copyrights should last for a period of time Bethune wrote that current copyright that will maximize the public good, yet still protection, which in most cases exceeds 100 protect the motivation to innovate. years, is detrimental to society. “It can be shown that protecting intel- “During this (protected) time, consum- lectual property creates important incen- ers will have to purchase the protected tives to pursue new research and create new work from the monopoly supplier, and will works of art, and without these protections not benefit from lower prices most likely many innovative works would never be available from copiers in a non-protected, pursued,” Bethune wrote. competitive environment. “…Analysis demonstrates that a time John J. Bethune, dean of the Barton College School of Business in Wilson, estimated in a John Locke “What we seek is just enough protec- period can be chosen for both copyright and Foundation study on intellectual property that copyright protection under U.S. law is excessive. tion to induce the creator to create,” patent protection that will maximize the Bethune wrote, “and no more.” benefit to society, while minimizing the new drugs, that the monetary and time tive situation. But removing the incentive Bethune noted that, contrary to his find- harmful distortions that monopolies cre- costs of development are not fully compen- to innovate would have negative conse- ings, trends in intellectual property law re- ate.” sated under the current legal structure.” quences also. cently have expanded already excessive While he concluded that copyright pro- Bethune considered the length of intel- “Without legal protections, the creators copyright protections, while reducing tections are too long, Bethune said he thinks lectual property protection mainly from an would be unable to reap any significant lengths of patent terms which he believes that in some circumstances the current 17- economic perspective. He acknowledged monetary benefits, especially in light of the are already too short. year protection for patents is too short. that monopolies are inefficient and restrict likely costs incurred to create the good,” Bethune’s study is on the John Locke “For example,” he wrote, “it is often the consumer choice and lead to higher prices Bethune wrote. “If this is the case, an Foundation website at www.johnlocke.org/ case in the research and development of than those that would exist in a competi- undersupply of these creative ideas and the policy_reports. CJ

Culinary arts university in Charlotte State Serves Appetizer to School

By PAUL CHESSER money on equipment purchases, structural Associate Editor improvements to buildings, new construc- RALEIGH tion, or infrastructure improvements in the pproval of the state budget June 30 state. also marked the beginning of the At the time of the announcement, news For more than 12 years, Carolina Journal has provided its fulfillment of a $10 million prom- organizations reported that Bank of A thousands of readers each month with in-depth reporting, ise made by state House Speaker Jim Black America, the Charlotte Chamber of Com- to a culinary arts school that planned to merce, Center City Partners, Compass informed analysis, and incisive commentary about the most establish a campus in Charlotte. Group North America, and city officials pressing state and local issues in North Carolina. With a The budget appropriates $1 million in had put together an incentives package for particular emphasis on state government, politics, the General 2003-04 and an additional $1 million in Johnson & Wales. The offers by Black, Assembly, education, and local government, Carolina Journal 2004-05 from the One North Carolina Fund Basnight, and Easley were not revealed until to Johnson & Wales University. The fund November 2002. However, there is no offi- has offered unique insights and ideas to the policy debate. did not receive any new money this year, cial obligation by the state to give incentive and its balance has fallen below $3 million. money to Johnson & Wales. Now Carolina Journal is taking its trademark blend of news, Black wrote in a letter May 23, 2002 to In an interview November 2002 with analysis, and commentary to the airwaves with a new program University President Jack Yena: “You have Carolina Journal, Johnson & Wales spokes- — Carolina Journal Radio. my personal commitment of support for a woman Judith Johnson said, “Jack Yena has $10 million investment over the next five said that we would not come without the years by the State of North Carolina for this $10 million.” Asked what assurance the A weekly, one-hour newsmagazine, Carolina Journal Radio project.” Johnson & Wales said a month school had, Johnson said, “We believe in is hosted by John Hood, publisher of Carolina Journal, and later that it would consolidate its Norfolk, business by a handshake. The legal docu- features a diverse mix of guests and topics. Education reform, Va. and Charleston, S.C. locations into an ments are being worked up.” tax policy, the state legislature, affirmative action, air pollution, $82 million Charlotte campus, to open in Beyond the three state leaders’ personal September 2004. Senate President Pro Tem letters of support, no legal documents com- freedom of the press and the courts — these are just a few of Marc Basnight and Gov. Mike Easley also mitting the state exist. “We do not have any the subjects that Carolina Journal Radio has tackled since wrote letters of support to Yena. incentive agreements or documents with the program began production in May. “…You have my commitment to make Johnson & Wales,” said Cooper Bratton, our best efforts to secure $1 million imme- spokeswoman for the N.C. Department of Currently broadcast each weekend on 14 commercial radio diately for the Johnson & Wales University Commerce. A Commerce Department campus in Charlotte and the remaining $9 spokesman said in November that there stations Ð from the mountains to the coast Ð Carolina Journal million over the next five years by the state was no “ironclad commitment.” The Gen- Radio is a one-of-a-kind program that seeks to inform and of North Carolina for this project,” Basnight eral Assembly was left in a position to help elevate the discussion of North Carolina most critical issues, wrote in a letter June 4, 2002. Easley offered Black and Basnight fulfill their promise by and to do so in a fair, entertaining, and thought-provoking way. support but no specific financial promise. usurping Easley’s money and authority The One North Carolina Fund is used through the One North Carolina Fund. at the discretion of the governor to grant Johnson & Wales signaled its intent to financial incentives for businesses to relo- come to the state well before the $10 million cate or expand in the state. Typically, funds in incentives was offered. The school filed are doled out incrementally as companies papers May 15, 2002 with the secretary of For more information or to find an affiliate of Carolina Journal meet targets for creating new jobs in the state’s office to do business in North Caro- Radio in your community, visit www.CarolinaJournal.com. state. The $2 million budget reallocation lina — more than a month before it an- only requires Johnson & Wales to spend the nounced it was locating in Charlotte. CJ September 2003 C A R O L I N A 6 Education JOURNAL

NC News in Brief What’s the Cost of a Proficient Student?

• The Charlotte-Mecklenberg Higher costs and lower productivity are measurable costs of low achievement school board may revise the CMS school-choice plan for the 2004-05 school year, according to The Char- By KAREN PALASEK lotte Observer. Superintendent Assistant Editor James Pughsley has made a bid to RALEIGH review the plan and to “see how it ow much does it cost to produce has worked.” a “proficient” fourth-grade stu- Among the items Pughsley Hdent? Several studies now focus will review is the magnet school on the dollars spent, as well as the oppor- program, in which Pughsley may tunities lost, in the quest for improved stu- make those schools and programs dent achievement. stronger. The system will also con- In 1998, Herbert Walberg, visiting sider how to even out enrollments scholar at the Hoover Institution, wrote The among schools. Some are oversub- Cost of a Proficient Student. Walberg used the scribed, while others have many results of the 1998 National Assessment of available seats. Educational Progress reading exam and av- According to the report, the erage per-pupil spending in North Carolina lottery system in Charlotte is also to calculate a “proficiency price” per fourth- under review. Currently, some stu- grade reading student. In the spring of 2003, dents get preference in the school Education Next published a kind of turn- choice program, even though the around on Walberg’s idea. The EductionNext system is constructed mainly as a article “Lost Opportunity,” by Eric lottery. The board may want to re- Hanushek, measures the dollar value of vise the lottery preference policies economic growth we have missed, as a na- for the 2004-05 year. tion, for failing to raise proficiency since the Charlotte-Mecklenburg’s zone mid 1980s. Hanushek calculates the loss at choice system has caused some $450 billion in 2002 alone, more than total Quality, growth, and potential capita was $34,950 annually. With an annual significant bus commutes for stu- K-12 expenditures annually in the United growth rate of 1 percent, average per-capita dents. Both parents and adminis- States. “In good part because of the Risk report, income in 2050 would be $57,480, “more trators have expressed an interest it is now generally recognized that students’ than a 50 percent increase over the period.” in shortening the commutes for Dollar costs and efficiency cognitive skills are a crucial dimension of The $450 billion “reform dividend” rep- students and in guaranteeing stu- educational quality,” Hanushek writes. resents a GDP level 4 percent higher in 2002 dents seats in nearby schools. A proficient fourth-grade student, ac- More than one study concludes that ad- than was actually realized. Even though in- The CMS board will make any cording to Walberg, is one whose NAEP vanced education leads to substantially in- creasing scores by 0.12 standard deviations changes in the student assignment scores place him or her in the proficient or creased earnings. per year would have been required, the plan public by Nov. 11. above categories. Twenty-nine percent of “The conclusions of this emerging body authors think that it was “within the North Carolina’s fourth-graders were pro- of research are clear: Education quality, as bounds of expectation,” especially in the •The State Board of Education ficient in reading in 1998. In 2002, 32 per- measured by test scores, is positively related United States. The 2002 Index of Economic has made some revisions to the cent earned proficient scores. to the earnings of individuals, national pro- Freedom, published by the Heritage Foun- social studies curriculum for pub- Walberg calculated the dollar cost for ductivity, and economic growth,” he says. dation, ranks the United States fourth in the lic school students, but not every- each student who reached the proficient Academic achievement is an indicator world in economic freedom and economic one is happy with the changes, mark. Stated in 2002 prices, Walberg’s study of better cognitive skills all around, and that potential. according to the News & Observer reveals that North Carolina spent $103,981 is significant, Hanushek says. Besides the of Raleigh. for each fourth-grader that was reading- link between earnings and personal stan- TIMSS and North Carolina One of the controversies fac- proficient in 1998. dards of living, Hanushek identifies several ing lawmakers was whether to re- But the state’s fourth-graders per- “positive spillovers” we can associate with The Third International Mathematics tain the eighth-grade requirement formed better on the 2002 test, raising ques- higher academic achievement. and Science Study conducted exams in for North Carolina history. Educa- tions about what North Carolinians paid to The spillovers, or “externalities,” im- math and science in 1995 and 1999. The tors wanted to remove the require- produce a proficient student on the latest prove the quality of the growth that occurs, United States participated as a nation, and ment for eighth grade, but legisla- NAEP exam. Calculations of the kindergar- he says. in 1999, North Carolina was one of 13 U.S. tors mandated the study. Students ten-to-fourth-grade cost of public education Examples of quality changes that come jurisdictions to participate as well. will continue to study North Caro- for the most recently tested students show with better cognitive skills are higher rates North Carolina eighth-graders tested in lina in both the fourth and eighth that North Carolina spent about $33,688 per of invention, improve- six science areas — life, grades. pupil in five years. Spreading this cost over ments in production earth, physics, chemistry, Some of the changes educators the 32 students per hundred who actually methods, and faster in- The unrealized gain for environment, and scien- favored were adopted in the new achieved reading proficiency, the public troduction of new tech- tific inquiry. The sample curriculum. In general, the educa- cost of each proficient student was $105,275 nology, according to the 2002 alone would have included 3,097 students tion establishment favored a shift in 2002, according to calculations by the author. But do qualitative amounted to $450 bil- from 67 schools. Students toward a more global perspective. North Carolina Education Alliance. changes translate into from North Carolina Supporters of the new curricu- Even with improved achievement, economic activity? They lion, or more than the ranked 12th among 13 lum say it represents “a major North Carolina’s schools appear to be less can, according to nation’s total annual participating states on the change in how North Carolina’s effective in 2002 than in 1998, when mea- Hanushek and Dennis expenditure on K-12… tests. students will learn about their sured by NAEP achievement standards. Kimko. TIMSS data for place in the world.” “This genera- eighth grade math shows tion must learn to understand and Lost opportunity The reform dividend United States students at respect other cultures,” Betty the bottom of the pack among seven par- Welsh, eighth-grade teacher, is Hanushek considered the problem of Kimko and Hanushek devised a model ticipants—Australia, Czech Republic, Hong quoted as saying. school effectiveness from a national per- that correlate changes in potential economic Kong SAR, Japan, Netherlands, and Swit- The new curriculum, with a spective in “Lost Opportunity.” His study growth with changes in test performance. zerland— in the 1999 TIMSS Video Study. “global” perspective, begins in compared potential economic growth since They found a significant correlation be- Japan led the group in both years. Com- kindergarten, and tries to get stu- 1983-84, to actual economic growth up to tween changes in test scores and changes pared to the U.S., the Japanese spent triple dents to “relate to groups around the present. in Gross Domestic Product in the United the amount of instructional time on new the world.” The mid-’80s starting point corre- States. Data for their study came from the concepts, and about half the instructional Writing exercises for the up- sponds to the appearance of A Nation At Third International Mathematics and Sci- time on practicing new concepts, and on re- per-elementary grades will in- Risk, the blueprint for education reform that ence Study, using 1995 and 1999 test results. viewing old ones. crease, and teachers will have to was supposed to revolutionize the Ameri- If reforms were instituted at the time of the These results show that despite increas- make an effort to connect global can education system. original Risk report, they conclude, the gain ing education budgets at the state and na- concepts to issues in North Caro- Hanushek’s premise in 2003 is that the in scores each year would have amounted tional levels, we have missed an opportu- lina for middle-school students. failure to reform K-12 education in the 1980s to a 1 percent difference in GDP by the be- nity, according to Hanushek. The curriculum also brings has left us with an economic gap between ginning of the 1990s. “In other words, we need to look for environment and geography more our potential and where we are instead. If “We find that a difference of one stan- ways other than merely increases in expen- strongly into the curriculum, proposed school reforms were carried dard deviation in test performance is re- diture or reductions in class size if we are Welsh said. High schools will of- through, the United States would have lated to a 1 percent difference in annual going to enhance the quality of our educa- fer more electives under the plan. gained a “reform dividend” that would growth rates of per-capita gross domestic tion system.” End-of-course tests in high school more than pay for annual public education product (GDP)” they said. If Hanushek is correct, further delay in will be replaced by final exams expenditures in the nation today, Hanushek One percent annually doesn’t sound education reform will have “significant im- until the 2005-06 year. CJ said. Because reforms didn’t occur, the divi- like much, but the compounding effect is plications for both individual and aggregate dend represents a lost opportunity. significant. In 2000, they report, GDP per success.” CJ September 2003 C A R O L I N A JOURNAL Education 7 Department of Public Instruction sponsors four-day event Education Options Charter School Chiefs Convene in New Bern Offer Hope To All By TERESA NICHOLS Policy Intern NC 3-8 Enrollment in Non-Charter Public, Charter, Private, and Home S RALEIGH t’s amazing how foolishness has trumped com- he sixth annual non-charter 86.2% mon sense in government — again! In this case, the education establishment obviously voted to North Carolina charter 1.6% I Charter School 5.9% merely protect itself. The State Board of Education’s T 6.3% private 6.3% Conference was held July meeting in August confirms its unqualified core 1.6% home 5.9% 22–25 in New Bern. The value of the “system” being more important than the theme of the conference child. It’s amazing how board members think they was “NCLB,” a reference exist in isolation and ignore what is happening around to both the No Child Left them. This behavior is either arrogance or foolish- Behind Act, and an acro- ness. Either way, students and parents suffer. nym for the conference’s The Department of Pub- focus —“Nurturing, Chal- lic Instruction’s staff pre- lenging, Learning & Believ- 86.2% sented to the board a manual ing in all children.” for new standards in alterna- According to the North tive learning. Alternative pro- Carolina Department of grams assist students who are Public Instruction in Ra- at significant risk of failure. leigh, the purpose of the The placement is due to a conference in New Bern student’s academic or behav- was to “provide charter school stakeholders the opportu- semination activities and works to promote promising ioral actions and provides a nity to come together to share innovative ideas and prom- innovations in education. “last chance” to help. Each ising practices.” Before his appointment to the department, he served as system must provide at least one such alternative venue. program director of an education-oriented nonprofit called Lindalyn The manual covers a va- Charter role in public education the Thomas B. Fordham Foundation, where he led school Kakadelis reform efforts in Dayton, Ohio. riety of topics and procedures Over the four-day conference, several workshops were Petrilli discussed how to receive grant money pro- to follow in administering the conducted that were geared toward the conference’s pri- vided by the Department of Education for charter schools. program. It even covers what to do when the pro- mary audience of charter school officials and board mem- According to Petrilli, a large supply of money has been gram cannot meet a student’s needs. It is refreshing bers. Sessions and workshops addressed a variety of topics allocated for charter schools under the No Child Left to hear the members of the education establishment ranging from school governance and curriculum design to Behind Act. The money is being administered through the admit they cannot meet “all needs.” DPI staff mem- the No Child Left Behind Act and sharing important infor- Office of Innovation and Improvement. bers drafted the document and included 14 place- mation on the North Carolina Report Card. The program supports planning, development, and ment/services. They suggested charter schools, pri- Roger Gerber, executive director of The League of initial implementation of charter schools, and those schools vate schools, home schooling, community-based pro- Charter Schools, was disappointed in the selection of work- awarded a grant my receive up to three years of assistance grams, community colleges, residential camps, and shops. In his view, the “education monopoly” should not provided the charter school does not use more than 18 others. These suggestions are feasible, but not under have been running the conference; according to Gerber, months for planning and program design and no more the control of the “Blob” (education establishment). “the topics missing are market-oriented than two years for the initial implemen- One could dream that the goal at this point would be subjects [such as] marketing and public tation of a charter school. the success of the student. A “whatever will work relations.” The charter school “This was one of the most important attitude” is especially needed in these situations to Also on-hand at the conference were speeches given at the conference,” prevent another adult from living off the system, and a number of private vendors, including movement is not just Kakadelis said. “A lot of the board mem- possibly in prison. However, the board would not book providers, architects, and other an educational strat- bers and officials didn’t know that this tolerate even a suggestion of these options. companies with products of interest to money was available, and it can substan- Credit must be given to DPI for acknowledging the charter school community. egy… it is a power tially help the charter schools across the educational options beyond traditional public “The vendors were the only portion relation shift, into a state.” schools. Parents and guardians of more than 169,000 of the conference that DPI was not re- social movement. NC students choose charter schools, home schools, sponsible for and they were really help- An uneasy alliance and private schools. These practicable alternatives ful to the attendees,” Gerber said. were listed in the document. However, before the Organizations such as the North Carolina Education Dr. Howard L. Fuller spoke to the conference specifi- board’s approval the following day, 11 of the 14 Alliance and The League of Charter Schools were present cally about the charter school movement. Fuller is a distin- suggestions disappeared. Only mental health ser- as well, to provide support and assistance to charter schools. guished professor of education, founder-director of the vices, juvenile justice services, and community-based Institute for the Transformation of Learning at Marquette services were listed in the final printing. In just a few Notable speakers at the conference University in Milwaukee, Wis., and a prominent advocate seconds, without one word of objection from the for school choice. Fuller discussed the importance of school board, all other options perished. Obviously some- Several high-profile speakers were spread across the choice. He said that individuals who have the foresight to one on the board had expressed contempt for these weekend. State Treasurer Richard H. Moore spoke to the start a charter school must accept all the challenges they viable education choices. Sadly, no one objected. conference first. As treasurer, Moore is solely responsible entail. The guardians of mediocrity continue to main- for more than $60 billion in public monies and state invest- “The charter school movement is not just an educa- tain control and sustain their monopoly by ignoring ments. He also serves on the State Board of Education and tional strategy, but it is a power relation shift, into a social possible options. One recipient of Children’s Schol- the State Board of Community Colleges. movement,” Fuller said. arship Fund of Charlotte, a charity that financial In his speech, “Leading the Way,” Moore covered a Fuller’s speech was the highlight of the conference, assists poorer families who wish to choose other variety of subjects, giving a description of his job responsi- both Kakadelis and Gerber said. Gerber expressed regret educational options, clearly illustrates that options bilities and the services provided to charter schools by his about the number of conference attendees who missed the are critical. The student, a sixth-grade minority male, office. In addition, he briefly touched on how North Caro- keynote talk. “Those individuals that did not attend that wasdisengaged academically and emotionally from lina is “leading the way” in the charter school movement speech were the ones who needed to hear it the most,” school. The school suggested he be labeled “Behav- and how charter schools in North Carolina illustrate the Gerber said. ioral Emotionally Disturbed” in order to receive creativity and innovation of citizens in the state. As the executive director of the League of Charter services. The parents were advised to place the child Moore concluded his speech highlighting the Un- Schools, Gerber said he was worried about the future of on a prescribed drug, and hold him back a grade. The claimed Property Program, which is designed to recover charter schools in North Carolina. “The Office of Charter parents contacted CSF and obtained a scholarship. unclaimed or forgotten property and return them to their Schools is performing a high-wire act; it’s a little bit of One year in a private school turned this student rightful owners. freedom and a little bit of socialism rolled into one, due to around. By the end of the year, he scored above Moore went so far as bringing unclaimed property their uneasy alliance with DPI,” he argued. national average on the Stanford 9 achievement test. claim forms to the conference for certain attendees with Gerber said the “uneasy alliance” between charter Members of the establishment say student suc- unclaimed items. schools and DPI is one of the fundamental issues facing cess is their goal. Is it? While these folks scream “When he started calling out names, it was like he was charters. He that because of that uneasiness, DPI should against intolerance, they are the same ones who giving door prizes,” mused Lindalyn Kakadelis, director of not have sponsored the charter school conference. demonstrate intolerance of other educational op- the North Carolina Education Alliance. “Richard Moore “Charter schools are the first step in redefining public tions. Do they think they are above what is best for a became the most popular speaker at the conference when education, from a top-down government monopoly, where child? Or is an individual child’s welfare consid- he started giving away money,” she said. parents and students are assigned to schools according to ered? Amazingly, the “Blob” refuses to think outside Michael Petrilli, associate deputy undersecretary of their geographical location, to a system where tax dollars of the box. Tragically, students are held hostage, and the state Department of Education’s Office of Innovation are given to parents and students so that they can shop for parents unaware. CJ and Improvement, also spoke to the attendees. Petrilli the best education that meets their needs,” Gerber said. oversees about two dozen discretionary grant programs “People [need to be] treated like citizens with a right to that support a variety of education reforms. choose. Fuller explained that, and all DPI officials should Kakadelis is director of the NC Education Alliance He also coordinates the office’s evaluation and dis- have heard it.” CJ September 2003 C A R O L I N A 8 Education JOURNAL

School News: Nation Is NC’s achievement rising or falling? Academic Reform Proves Confusing And Uncertain • In a state vs. federal govern- ment jurisdiction issue, the U.S. By KAREN PALASEK “Different Yardsticks Measure Suc- House of Representatives debated Assistant Editor cess,” pleaded in advance for board the idea of placing more responsi- RALEIGH credibility on the upcoming release bility and control for Head Start in he opening of the 2003-04 school of state test scores. Lee and the the hands of state authorities, year is bringing both congratula- board are facing an uphill battle, AZcentral.com reports. tions and disappointment over test given the conflicting results and in- Head Start has been up for re- T results. Three different testing standards — consistent standards. A June 18, newal, and Republican lawmakers the National Assessment of Educational 2003 News & Observer of Raleigh have been trying to enact revisions Progress, the state ABCs, and the federal No article reported “Test Scores Leap- and amendments to the law. Eight Child Left Behind Act — are creating con- ing in N.C.” That article discussed states would be affected by the fusion and frustration over accuracy. the 2002 NAEP results. A month changes, if approved. later, preliminary results of the Head Start provides low-in- Standards-based school reform state ABCs and federal AYP stan- come families with health, nutri- dards appeared amid headlines tional, transportation, and educa- Standards-based school reform, under stating “Braced For Bad Marks,” tional services, including preschool the banner of the federal No Child Left Be- New Standard Raises Bar,” “More classes. hind law, is forcing school officials and par- Than Half of Schools Miss Mark,” Senate versions of the bill were ents to deal with multiple achievement and “AYP Isn’t as Easy as ABC.” also being considered. standards for North Carolina’s students. The latest reports point hope- Since 1995, the ABCs of Public Education fully to next year’s results. Com- • The Knowledge is Power Pro- program has reported the progress of the menting on adequate yearly gram is opening three charter state’s students based mainly on end-of- progress, Troy Peuler, principal of schools in the Atlanta area for the grade tests and expected academic growth. Vandora Springs Elementary School in Gar- schools are not standards or academics. 2003-04 school year, according to the By North Carolina’s internal standards, ner said, “It’s a matter of how you dissemi- The McREL focus research found that Atlanta Journal-Constitution. Non- about 77 percent of the state’s students are nate the information. If they know we’ve “most people, including parents, were not profit KIPP schools have been estab- proficient, or “at grade level” this year, ac- met 95 percent of our goals, they’ll see it’s familiar with their state standards,” even lished in 13 states and the District of cording to Gov. Mike Easley. all right.” though almost all believed that standards Columbia. But NAEP proficiency standards are Durant Road Middle School in Raleigh would be meaningless without testing. Par- Kipp academies are public char- much higher than North Carolina’s profi- was chosen as a national “Schools to Watch” ticipants were hesitant to judge schools ter schools that offer a tough aca- ciency standards, and use a national bench- model, but failed to meet AYP this year. It based on a single performance measure. demic program and schedule. Stu- mark to compare students. A third stan- will concentrate on helping the English as On another theme, parents said schools dents attend an extended school day. dard, adequate yearly progress, is calcu- a Second Language students in reading and and districts were sometimes “unrespon- They also attend on Saturdays twice lated on the federal No Child Left Behind math for the next round of tests. sive, impenetrable bureaucracies.” Because a month. Parents and students benchmark, using North Carolina end-of- accountability now makes schools respon- pledge that they will “do what it grade tests. The AYP benchmark is much Public perceptions sible to federal officials, it “may have the takes to catch up and get ahead,” the higher than North Carolina’s own “ex- unintended consequence of making schools report reads. pected achievement growth.” As a result, Early projections about ABCs results less answerable to parents and communi- What makes the three new KIPP it can be hard to determine whether student created a feeling of buoyancy in the state. ties,” the report says. school unusual is the age of their achievement in the state is rising, falling, Several administrators, including Susan “The biggest problems with schools new principals. New principals Kia or becoming stagnant. Agruso, assistant superintendent for in- have little to do with standards or academ- Norman and David Jernigan are 25, Preliminary reports indicate that about structional accountability in Charlotte- ics,” focus participants reported. The most and Marina Volankis is 30, making 53 percent of schools in the state are ex- Mecklenburg, praised the influence of the urgent concerns were worries about safety, them some of the youngest public- pected to miss their adequate yearly federal law. “As you put in accountability, violence, discipline, values, and character. school principals in the nation. progress benchmark this year. And only 32 people pay more attention to what the ex- “Parents were far more worried about percent of North Carolina’s fourth-graders pectations are,” Agruso said. “You’re see- ‘chaos on the playgrounds,’ bullying, or ‘a • As accountability standards were NAEP proficient-or-above in reading ing a lot of things coming together and pay- general lack of control’ in public schools under the No Child Left Behind law and writing in 2002. ing off for kids.” than in test results.” begin to take hold, schools are look- To make matters more confusing, North But disillusionment occurs when real- Will No Child Left Behind address pa- ing ahead at who qualifies for test- Carolina is using the ABC results in-house ity and expectations col- rental concerns about ing subgroups in a school. Schools to rate schools and determine bonuses, and lide. Test results will be schools? NCLB’s stan- are beginning to pay more careful separately, under the federal standard, to sending many schools dards-based reforms, to attention to the count on low-income …standards-based re- determine whether schools make AYP. back to the drawing the extent that they fail to students who receive free and re- Some schools that fail to meet the fed- board to give achieve- form efforts could fur- address the public’s duced-price lunches under the fed- eral standard will receive ABCs bonuses ment another try, and “deepest concerns about eral nutrition program, according to ther exacerbate what this year, based on the state formula. But public support for re- schools,” may cause pub- the New York Times. appears to be a grow- even schools that meet the federal standard forms may be fraying a lic support to waver. As Early in 2003 the Bush may not be recognized under the ABCs. CIS bit at the edges. ing rift between the McREL’s report states, administration’s announcement Academy in Durham was the only non-el- In its report for the “…by focusing educators about verifying students’ family in- public and its schools. ementary school in Durham last year to Kettering Foundation, on the technical aspects comes to qualify for the program make AYP. CIS operated as a school serv- “Digging Deeper: Where …and diverting their at- met with widespread criticism. But ing an alternative population of students Does the Public Stand on Standards-Based tention away from the public’s deeper con- if schools begin looking for ways to with “serious academic problems,” accord- Education?” the National Dialogue on Stan- cerns about its schools, it’s possible that move students out of their low-in- ing to the Durham Herald-Sun. dards-based Education, through Mid-con- standards-based reform could exacerbate come subgroups, they may take ac- CIS was able to meet the federal AYP tinent Research for Education and Learn- what appears to be a growing rift between tion to verify students data on their standard under No Child Left Behind’s ing, conducted focus group research on the public and its schools.” own. “safe harbor” rule. That rule can apply if public attitudes toward school reform. The The rift is larger for urbanites than sub- subgroups miss their individual bench- McREL research included public and pri- urban parents. It reflects a perception that •The Baltimore Sun reports in marks, but improve by at least 10 percent vate school parents, non-parent taxpayers, resources for low-income schools are given “How Many Times Can a Student Be over the previous year, and pass an alter- students, educators, business owners, and less willingly than for more affluent ones. Failed?” that education officials in native standard. policymakers. “Initially, people expressed And while most support their schools in Maryland are rethinking the no-so- The State Board of Education closed CIS opinions… in line with recent public opin- theory, they were only involved with cial-promotions policy they adopted in June on the recommendation of Durham ion polls that have revealed popular sup- schools in paying taxes, or in confronta- three years ago. Superintendent Ann Denlinger. According port for standards, assessments, and ac- tional situations. The reason for rethinking ad- to the Herald-Sun, Denlinger argued that countability,” the report reads. Eventually, Finally, the McREL study suggests that vancement in Baltimore is the num- “those students would be better off in main- four “key themes” emerged, according to less adult involvement in schools may re- ber of students who have already stream schools.” the authors. flect a decline in local community identity. been held back more than once. Ac- Fewer family and community ties exist than cording to the report, “Some strug- Certified Results Accountability and community in the past. “Schools feel more like a gov- gling students have been held back ernment institution than a church. There’s two or three times.” This year, 1,500 North Carolina education officials are The themes McREL identified were that a real disconnect in terms of community in- of those kids were promoted. In- scheduled to confirm the ABCs data in early 1) standards require tests, but accountabil- volvement,” according to one participant. stead of going to summer school, September. This will also allow them to cer- ity requires more than tests; 2) true account- McREL’s study suggests the need for they were given “summer learning tify the adequate yearly progress results. ability makes schools more responsive to two-way communication. The “public man- packets” to help them prepare for The different tests and standards are parents and communities, not outside offi- date to improve public schools” and pro- work in the next grade and “catch creating a public relations nightmare for cials; 3) parents and students are a crucial vide accountability to parents should be them up at home.” CJ education officials. State Board Chairman and often missing part of accountability; done by engaging communities in “ a genu- Howard Lee, in an opinion column titled and 4) the biggest problems with public ine dialogue about their schools.” CJ September 2003 C A R O L I N A JOURNAL Education 9

Research methods need accountability, too Do Accountability Standards Improve Student Performance?

By KAREN PALASEK pact of High-Stakes Tests on Stu- Assistant Editor dent Performance,” by Audrey Estimated Effect of State Accountability Systems on NAEP Perfor RALEIGH Amrein and David Berliner of esting and accountability are under the Education Policy Research attack by elements in the research Institute of Arizona State Univer- 2.00% community. Joining them are some sity. They set out to study 28 Math Gains 4th to 8th Grade T 1.80% parents, educators, and policymakers. states where test scores deter- 1.60% When education policies depend upon the mine significant consequences, 1.60% results of scientific research, it is important such as teacher bonuses, student 1.40% to understand that all research doesn’t have promotion, and transfers. The 1.20% the same scientific integrity. integrity of their influential 1.20% Now that high-stakes testing has begun study has come into question, 1.00% in North Carolina, parents and policy mak- however. ers want to know whether the process is In “Shopping for Evidence 0.80% 0.70% working to improve student performance. Against School Accountability,” 0.60% The News & Observer of Raleigh reported Margaret Raymond and Eric that projected scores for Durham schools Hanushek note that “Since test- 0.40% under the No Child Left Behind law will ing and accountability [form] the 0.20% leave 29 out of 44 schools failing to meet keystone of current reform ef- achievement standards. Some of the failing forts, it is essential that we ap- 0.00% schools are “among Durham’s highest per- ply rigorous standards of evi- formers under the ABCs program, which dence and of scientific method to none w/report card w/accountability uses the same testing data as the federal the analysis of accountability government.” According to Bert L’Homme, policy.” In “High Stakes Re- te Account none w/report cardw/accountab Durham’s assistant superintendent for in- search,” they say, “These stakes Source: Hanushek & Raymond, 2002 structional services, “We knew going in that go beyond less controversial ac- 0.70% 1.20% 1.60% certain groups of students would have countability measures such as problems. We now have to make sure we’re publishing test scores in the newspaper.” receives the full dose…while the control ing the policy process.” The standards for doing things right to bring all of our stu- The Amrein-Berliner study was sup- group receives a half-dose. It would not be education research have been in such dis- dents up to grade level.” posed to compare before-and-after test re- surprising to find that the full dose is dra- array, the National Research Council says, Since more than half of all schools in sults for states instituting high-stakes tests. matically more effective. The real question that in 2002 the council convened a panel North Carolina will probably fail the fed- “If the state’s gains exceeded the national is whether that full dose is more effective to decide which scientific principles should eral standard this first year, the possibility gains, they deemed that an increase,” than no medication at all.” apply to education research. The panel was of financial and other consequences places Hanushek reports. If state gains were less needed, the EdNext article says, because the a heavy burden on the influence of account- than the national trend, the Arizona team Research and policy situation was “contentious” and led to stud- ability. recorded a decrease. ies like Amrein and Berliner’s. Hanushek and Raymond criticized the “High Stakes Research” attributes the Instead of announcing that “High- Information and expertise study partly because the Arizona team ap- flurry of “hasty reports based on biased evi- stakes tests may inhibit the academic plied their own rules in- dence” to the fact that the window of op- achievement of students,” as the Arizona In the arena of ac- consistently. The NAEP portunity to discredit standards-based re- team did, Hanushek and Raymond made countability testing, pub- trend study included forms is disappearing quickly. “The hope their own discoveries. lic perception is based The hope of the anti- only 12 states of the 28 of the anti-accountability forces is that they When the new team corrected mistakes largely upon brief “execu- accountability forces is chosen. In eight of 12 can stop testing before it is fully in place in method, exclusions, and precision, and tive summaries” of a years, scores increased and before rollbacks would be impossible,” the results were dramatically different. With lengthy research project. that they can stop test- more slowly than the na- they argue. no accountability at all, the average gain in The summaries are writ- ing before it is fully in tional average. The re- The importance of an accurate assess- math scores from fourth to eighth grade in ten by the researchers port they published ment of the standards rests partly in the sig- the study was 0.7 percent. With minimal themselves, and are used place and… rollbacks stated the results as “67 nificance that policymakers attach to them. accountability — reporting scores in the as an introduction to the would be impossible. percent of the states Most policymakers are neither researchers newspaper — a gain of 1.2 percent was mea- longer published work. posted overall decreases themselves nor “schooled in the require- sured. States that had true accountability It’s an information short- in NAEP math grade 4 ments of good research,” as Raymond and for their high-stakes tests, with conse- cut researchers use to decide whether to performance as compared to the nation af- Hanushek note. They are dependent on the quences for teachers or schools, experienced work through an entire paper in depth. ter high stakes tests were implemented.” evaluations of others for their information. a 1.6 percent gain in math scores. Almost no one who works with re- Hanushek and Raymond objected to the “While it is certainly reasonable to Hanushek and Raymond state that a search information at the policy level reads method as well as the misleading report. question the effectiveness of particular ac- better basis for “reward or sanction” could the original data. As non-experts, they, When Hanushek and Raymond re-ran countability systems and the policy of ac- be had using a value-added technique, “but along with most of the public, accept the the data, they compared states that adopted countability in general, little thought has such value-added techniques need some researchers’ statements at face value. high-stakes tests with those that did not. been given to the scientific standards of evi- work before they can serve as reliable per- One of the most influential recent re- The research errors of the first study are like dence that ought to apply to research and formance measures.” They suggest refining search pieces on accountability is “The Im- “a medical trial where the treatment group evaluation aimed at informing or influenc- accountability, rather than scrapping it. CJ

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Your Home on the Web for North Carolina Public Policy ¥ Reports and columns on the legislature, politics, culture, and local government from Carolina Journal editors and reporters. The John Locke Foundation’s brand new, completely redesigned home page is your best source of research, analysis, and information on the critical public ¥ Carolina Journal Publisher John Hood’s exclusive “Daily Journal.” policy issues facing North Carolina state and local governments. ¥ Timely links to important stories and editorials from the state’s major A fully searchable, comprehensive database of reports, studies, briefing newspapers, magazines, and other media organizations. papers, datasets, press releases, events notifications, and articles can provide an excellent starting place for those drafting legislation, researching policy ¥ Instant access to state & national columnists, wire reports, and the issues, preparing news stories, planning political or lobbying campaigns, or John Locke Foundation’s other public policy web sites. seeking information with which to be an informed voter and citizen. See what one Raleigh paper called “Matt Drudge with Class” Just visit www.JohnLocke.org — and let us know what you think! September 2003 C A R O L I N A 10 Higher Education JOURNAL

Bats in the Belltower Amid three years of tax increases, legislators protective of UNC Things are tough all over Not Just NC: Study Shows How Budget Cuts Just in case you wondered why the University of North Carolina at Chapel Hill is requiring incoming students to Affect Public Universities Across the Nation read Barbara Ehrenreich’s Nickel and Dimed: On (Not) Getting By in America: 1 University housekeepers held a dem- By JON SANDERS “just goes to show how Budget “cuts” at public universities onstration outside the South Building Assistant Editor North Carolina’s investment and university systems in the nation on UNC-CH over their salaries. The RALEIGH in higher education is pay- housekeepers brought a poster-sized orth Carolina’s institutions of pub- ing off for our students.” Institution Percentage Amount letter to UNC-CH Chancellor James lic higher education are hardly the The state’s economy, or System Cut ($millions) Moeser inviting him to attend a forum Nonly ones in the nation affected by however, has been strug- in September where they will “teach” an economic downturn in their home state. gling. As a June 2003 Locke Colorado State U. 26.5% $34.2 about being “Nickel and Dimed.” One A report released this summer shows how Foundation Spotlight paper U. of Virginia 23.7 39.6 said that “We do feel perhaps we have many public universities and colleges showed, “Since mid-2001, Virginia Tech. 23 26 a higher level of expertise on this issue across the country received cuts, some sub- North Carolina’s personal State U. of New York System2 20 — than the faculty.” stantial, in their budgets. income growth (3.98 per- California State U. System2 19.2 500 But UNC-CH staff aren’t the only Released by the National Association cent) lagged its neighbors’ ones who think they’re underpaid at of State Universities and Land-Grant Col- (5.03 percent) and the na- West Virginia State C. 16 2.3 the university. As a July 29 Durham leges, the report is entitled “Changes in tional average (4.23 percent). U. of Colorado at Boulder 15 16.7 Herald-Sun article reported, “In fact, Annual Tuition Charges at NASULGC In- Also since mid-2001, NC has University System of Maryland 14 122 UNC administrators are still under- stitutions: Academic Year 2003/2004.” The lost 119,000 jobs, or more University of Illinois System 13 104.7 paid when compared to many of their report’s focus on changes in annual tuition than one-third of all the net U. of Cincinnati3 11 17.7 peers, said UNC Provost Robert charges includes cataloging the sometimes job losses in the South.” Shelton.” In the article, “New top UNC large increases in tuition at NASULGC Nevertheless, as legisla- University System of Georgia 10.6 183.5 officials making much more than pre- member institutions in 37 states. Those in- tors reacted to the crisis, they U. of Oklahoma 10.3 12.9 decessors,” Shelton said: “salaries are creases stem from legislatures letting uni- have been protective of Montana State U. 9.8 3.6 low at Carolina, whether you’re work- versities compensate in tuition revenue they UNC. As an article Aug. 1 in U. of Montana 9.3 3.7 ing as a secretary or working as a lost in state appropriations. The News & Observer ob- Southern Illinois U. at Carbondale 9.1 11.3 dean.” The budget cuts (see accompanying served, “most agree the uni- table) some universities faced were stagger- versity fared extraordinarily A quick check by CAROLINA JOURNAL U. of Tennessee-Knoxville 9 15 showed that there was one worker at ing, but they were also offset by large tu- well in this year’s legislative U. of Arizona 8 26 UNC-CH this year who was not con- ition increases. The University of Virginia, session despite the state’s fi- U. of Illinois at Urbana-Champaign 8 58 sidered underpaid: former men’s bas- for instance, saw its budget cut by 23.7 per- nancial troubles.” Florida International U. 7.5 11.2 ketball head coach Matt Doherty. cent, but its tuition was raised by 19 per- The article, “UNC’s PAC Ball State U. 7 9 cent. The California State University a top player,” by Jane BTW, LOL (IIRC) System’s budget was cut 19 percent, but its Stancill, discussed the im- U. of Nebraska 7 30.9 tuition was raised 19 percent. The Univer- pact of “Citizens for Higher Texas Tech U. 7 7.4 Barbara Bell, assistant professor of sity of Colorado at Boulder’s budget was Education, a political action Auburn U.2 6.3 — elementary- and middle-grades educa- cut by 15 percent and its tuition raised 12.5 committee created last year U. of Nevada-Las Vegas 6 6.5 tion at Western Carolina University, percent, and so forth. One-third of the uni- by wealthy UNC-Chapel Northern Arizona U. 5.3 6.2 told the Associated Press that “instant versities in the study reported tuition in- Hill alumni, [which] do- messaging” (IM’ing) improves stu- creases greater than 14 percent. nated $182,000 to 91 candi- U. of Massachusetts at Amherst 5 11.8 dents’ writing skills. “My stance on this In North Carolina, the NASULGC dates and political groups in Kansas State U. 4.7 7.9 is anytime (students) are reading or study reports, the UNC system as a whole 2002, almost instantly be- U. of Kansas 4.7 6.5 writing, it’s going to help,” she said, experienced a 4 percent “cut,” offset by a coming one of the biggest- New Mexico State U. 4 — since they are “writ[ing] for real pur- tuition increase of 5.5 percent. East Caro- spending PACs in the state.” U. of New Mexico 4 — poses,” communicating with their lina University, covered separately, saw its PAC organizer and friends. budget fall by 3.8 percent but received a 4.9 UNC-CH trustee Paul U. of North Carolina System4 4 74 Responding to other educators’ percent increase in tuition. These “cuts,” Fulton said, “I’d like to think East Carolina U. 3.8 4.7 concerns that IM’ing relies on abbre- however, were not actual decreases from the we had an impact” on legis- Michigan Tech. U. 3.5 1.9 viations, incomplete sentences, and previous year but instead the difference lators’ decisions. U. of Washington5 3.5 40 other communication shortcuts, Bell between budget requests and final funding. Meanwhile, as the Spot- West Virginia U. 3.4 6 said that students using those short- The N.C. General Assembly’s recently light paper (viewable at cuts still must know what they mean. completed General Fund budgets for 2003- www.johnlock.org/spot- Idaho State U. 3.3 2.9 “The whole purpose of writing is 05 will increase the UNC system’s budget lights/2003060475.html) U. of Nevada-Reno 3 4.5 to construct meaning,” she told the AP. for both of the next two years — by 1.4 showed, North Carolina is Iowa State U. 2.9 6.7 “It may not be spelled right, it may not percent in 2003-04 and by 1.7 percent in one of a very few states to U. of Kentucky 2.9 8.6 be proper grammar, but constructing 2004-05. In contrast, the N.C. Community have enacted “large-scale, Ohio State U. 2.5 11.2 meaning through reading and writing College System’s budget decreases slightly broad-based tax increases continues.” in the biennium. It falls by 1.2 percent in every year since 2001.” U. of Arkansas, Fayetteville 2.39 3.7 2003-04 and by 0.1 percent in 2003-04. While 20 states enacted ma- U. of Iowa 2 4.5 AE! IOU. Earlier this summer the State Higher jor tax increases in either Northern Kentucky U. 1.8 0.7 Education Executive Officers reported the 2001 or 2002, only two states Cornell U. 1 1.6 Richard Veit, a professor of English results of an informal survey in which it — New Jersey and North U. of North Texas6 1 6 at UNC-Wilmington, stumped people noted that 24 states were expecting less state Carolina — enacted major nationwide with his submission to spending on higher education the next fis- tax increases in both years. U. of Hawaii at Manoa 0.8 3.28 National Public Radio’s Weekend Edi- cal year and only 18 expecting increases, Of those two, Hood wrote, U. of California System2, 7 — 440 tion puzzle challenge: “Think of five mostly small ones. The SHEEO survey, only North Carolina was U. of Michigan — 36.4 words that are all four or five letters which looked at 39 states, found that the likely to approve another Oklahoma State System — 83.3 long. Each word ends in the same pair average change in state spending was a major tax increase in 2003. In of Higher Education of consonants. The letters preceding decrease of 3 percent. July, lawmakers did, in fact, State University System of Florida2 —40 these consonants are vowels — A, E, I, Senior research analysts David L. approve another package of O, and U — and all five words rhyme. Wright told The Chronicle of Higher Educa- tax increases in 2003 — one Source: Changes in Annual Tuition Charges at NASULGC What are these words?” The answer tion, “It has been a tough year for a lot of that will cost North Carolin- Institutions, Academic Year 2003/2004, published by the can be seen at www.npr.org/pro- states. In some states, [these budget cuts are] ians $551 million. National Association of State Universities and Land-Grant grams/wesun/puzzle. a piling on in terms of cuts from last year North Carolina taxes Colleges or cuts from the middle of the year.” have increased every year What leftist bias on campus? since voters approved the Notes Just goes to show you higher education bonds in 1 “Cuts” are self-reported and do not include revenues A recent Psychological Bulletin pub- 2000. from offsetting tuition increases; most are for 2002-03 lished “research” by several professors Gov. Mike Easley touted the study as Voters will recall that the 2 Cuts listed are for 2003-04 in which they purported to identify proof of the state’s commitment to higher campaign for the bonds’ ap- 3 Cuts listed are for 2001-03 several psychological factors common education. In a press release on the subject, proval promised that “the 4 Figure does not include $57.5 recaptured from repairs in conservatives, such as Ronald the governor focused on the tuition in- Bond issue would not re- and renovations budget Reagan, Rush Limbaugh, and other creases rather than the apparent cuts, com- quire an increase in taxes,” 5 Listed as “3% to 4%” such well-known conservatives as paring UNC’s relatively modest increase as a pamphlet printed by the 6 Listed as “less than one percent” this year with the many, much higher in- UNC-CH Office of Govern- 7 Hitler and Mussolini. CJ Cuts upward of $440 million being mulled creases around the country. Easley said it ment Relations put it. CJ September 2003 C A R O L I N A JOURNAL Higher Education 11 General Assembly Extends State Grants NCSU Celebrates To Students at Accredited Religious Colleges Elusive Harmony

By JONATHAN JONES ied it, the more they realized it was an issue of basic fair- he Division of Student Affairs at North Caro- Editorial Intern ness. Legislators just needed some time to read the briefs lina State University will be “Celebrating Race RALEIGH and study it all a bit more,” Stam said. Tand Ethnicity” this semester. Really. It has even greater number of college students could be eli- Sponsors of the change say the Bill of Rights of the developed a full slate of programs by which to cel- gible for a state grant when classes start this fall. state Constitution is violated by the rule students from the ebrate these all-important nouns. A One of the last actions of the General Assembly two colleges are ineligible for the grant. The state is not A look at the division’s website (www2.ncsu.edu/ before the legislative session ended in July was to pass a permitted to discriminate against anyone on the basis of student_affairs/theme/index.html) and the accompa- bill that increases eligibility, ending what some have la- religion. No matter the final outcome, students and par- nying links to “University beled a discriminatory practice. ents of public colleges will continue to receive the better Resources” on its “Diver- The bill, H150, allows for students who are residents financial deal. sity Theme” make it crystal of North Carolina and attend certain accredited private Currently, North Carolina taxpayers pay $9,500 per clear that N.C. State’s gov- institutions to obtain a grant worth $1,800 per academic full-time equivalent to 14 of the 16 institutions within the erning idea of “diversity” is year. Sponsored by Reps. Paul Stam, R-Apex; Bill Owens, University of North Carolina system. The two “flagship” almost exclusively “Race D-Elizabeth City; and Rick Eddins, R-Raleigh, it has passed schools, UNC-Chapel Hill and N.C. State University, re- and Ethnicity.” You’ll see both the House and Senate and now awaits Gov. Mike ceive funding of $14,000 per student from the state. there was a staff retreat fo- Easley’s signature. The two colleges in question are accredited like other cused on efforts to achieve private universities. They were excluded from the grant in racial diversity. The univer- Religious schools currently excluded part because of their religious affiliation. Much of the leg- sity has an Office of Diver- islative argument arose from connections to institutions sity and African American Currently, all North Carolina residents enrolled full- that do not receive subsidies. Although owned by a semi- Affairs. It’s somehow sepa- time in a private college accredited by the Southern Asso- nary, for example, Southeastern has secular accreditation rate from its Office of Equal ciation of Colleges and Schools may receive the funds. But and is not limited to religious instruction. Opportunity as well as its Jon Sanders those who study at Roanoke Bible College and Southeast- That grants are issued to students and not schools was trifurcated office of ern College of Wake Forest are now excluded. a basis for claims that the current policy is discriminatory. Multicultural Student Affairs (comprising African “This measure is necessary because existing law dis- Supporters also pointed to the Supreme Court case of American Student Affairs, Hispanic Student Affairs, criminates against certain institutions,” Stam said. Witters v. Washington Department of Services for the Blind. and Native American Student Affairs). N.C. State even Both Roanoke Bible College and Southeastern College This 1986 decision found it was unconstitutional to deny has designated “Protected Classes of Race & Color.” have the same secular accreditation as other private uni- aid to a student studying pastoral theology at an institu- Why? Does N.C. State actually believe it will to versities. They also train public schoolteachers, among the tion that is pervasively sectarian. The court has ruled that create harmony on campus by deliberately making other traditional academic pursuits. to deny funding to students studying at institutions of faith students even more conscious of their racial differences? Their exclusion from the program meant to help North and support those who express their skepticism means the Harmony is step three of N.C. State’s diversity Carolina college students who chose a private higher edu- government is not truly neutral in matters of religion. process. Right now N.C. State is still at step one, fo- cation was a point of heated contention on the floor of the The bill, which grew less controversial as the session cused on its “climate” for diversity. Step one involves, House, where it passed narrowly. The Senate voted for the drew to a close, was presented to the governor July 19. If apparently, “celebrating” race and ethnicity, herding bill by a wide margin after the House debate. Easley signs it, about 250 students who had not been eli- students into “protected classes of race and color,” and “I think the difference was that the more people stud- gible will qualify for the grant. CJ asking students how poorly their particular class of race or color is received by students of the other classes. Nobody at N.C. State has a clue what the second step should be, just that it should lead to the harmony; Connerly Seeks Amendment in Michigan i.e., where race and color aren’t issues to students. As for step one, N.C. State recently released the results of a campuswide diversity poll of students. To End Racial Preferences, Told to ‘Go Home’ According to The News & Observer July 28, the poll “found that students generally feel good about inter- actions among one another and with faculty, but that By JON SANDERS mischief in your own state to last a lifetime. African-Americans and Hispanics on average were Assistant Editor “We reject your ‘black vs. white’ politics that were long less satisfied than white students” (emphasis added). RALEIGH ago discarded to the ash heap of history. Your brand of “Students say a series of incidents in the past two landmark loss in the U.S. Supreme Court has not divisive racial politics has no place in Michigan, or in our years illustrates the need for more understanding disheartened opponents of racial preferences in society. So Mr. Connerly, take your message of hate and about diversity on campus,” the N&O reports. It is a A higher education. fear, division, and destruction and leave. Go home and stay “series” of two. “In April 2002, a black student filed a In July, Ward Connerly, chairman of the American Civil there, you’re not welcome here.” complaint when a white student told him to ‘go back Rights Institute, and other prominent advocates for elimi- In response, Connerly cited the First and Fourteenth to Africa’ during a class discussion. In February, some- nating preferences met on the campus of the University of Amendments of the U.S. Constitution, and explained how one painted derogatory remarks about Arabs and ho- Michigan at Ann Arbor. There they announced their plans the Constitution “confirms my right to visit Michigan, as a mosexuals in the campus’ free-expression tunnel.” to get an amendment placed on the November 2004 ballot full-fledged American citizen and not simply as a tourist, Those are it; single acts by two of N.C. State’s that would rid the state of race, ethnic, is not contingent upon your invitation. nearly 30,000 students over two school years. As CARO- and gender preferences used in public As a taxpaying U.S. citizen, anywhere I LINA JOURNAL readers know, however, the “go back to education, employment, and contracting. ‘We will be exploring set foot on American soil is my ‘home,’ Africa” remark came before the class had begun and Connerly said that their cause was just as much as it is yours.” after the black student had denounced the United not limited to Michigan. “In the weeks the feasibility of under- Connerly noted the “eerie similar- States, Abraham Lincoln, and the Founding Fathers and months ahead, we will be exploring taking initiatives in ity” between Dingell’s advice and ac- as corrupt and racist. His complaint was also dis- the feasibility of undertaking initiatives other states, cities, and tions and “Southern segregationists who missed. And those familiar with the free-expression in other states, cities, and counties across sought the comfort of states’ rights to tunnel know how futile it is to nurse a grievance over the land,” he said. counties across the practice their discrimination against its quickly changing, gratuitously offensive graffiti. Connerly, who was instrumental in land,’ Connerly said. black Americans”: The examples do at least illustrate students’ “need the elimination of racial preferences in • “George Wallace, Lester Maddox for more understanding about diversity” beyond racial California in 1996 and in Washington in and others who shared their rabid and diversity. It’s an understanding they don’t get at N.C. 1998, faces opposition from both politi- abhorrent views believed in treating State. Offensiveness runs many ways in those ex- cal parties in the state. Democrats fear the measure might people differently on the basis of skin color… and so do amples, yet the focus is on only the offense to the “pro- pass. Republicans fear the measure might bring more you. tected class or color.” The free-expression tunnel is rife Democrat votes to the polls and hurt President Bush’s re- • “They wanted to practice their brand of racism free with offensive slogans, yet we hear of one complaint. election chances. from the interference of ‘meddling, outside agitators’… and The student making the offensive “go back to Africa” so do you. remark was herself offended by the other’s offensive ‘Go home and stay there’ • “They called those who disagreed with them and portrayals of her country, her heroes, and her heritage. merely wanted to exercise their right to assemble ‘carpet- The N&O article ends with a hopeful look at two Connerly also drew heated opposition from Michigan baggers’ and ‘non-resident troublemakers’ who were ‘stir- black football players at N.C. State, who “said they Rep. John Dingell. On July 9, Dingell sent Connerly a blis- ring up trouble where none exists’… and so do you. haven’t felt left out at all.” The athletes “say the rest tering missive. “The people of Michigan have a simple • “They were arrogant, intolerant bullies… and so are of the student body could learn from watching team message for you: Go home and stay there,” Dingell wrote. you.” interactions. There, they say, race isn’t an issue.” “We do not need you stirring up trouble where none ex- Connerly said that he and the other supporters of a That, ostensibly, is N.C. State’s goal. But where ists. Michigan Civil Rights Initiative “are doing what the Con- among N.C. State’s celebrations of race and ethnicity, “Michiganders do not take kindly to your ignorant stitution of Michigan allows; and you should not be seek- its protected classes by race and color, and the rest of meddling in our affairs. We have no need for itinerant pub- ing to abridge the right of American citizens to use pro- its racially focused diversity obsession can one find licity seekers, nonresident troublemakers, or self-aggran- cesses allowed by law to implement their civic belief and anything pointing to race not being an issue? CJ dizing out-of-state agitators. You have created enough values.” CJ September 2003 C A R O L I N A 12 Higher Education JOURNAL

Course of the Month Duke Summer Reading Program We’re Here! We’re Queer! Chooses ‘Savage Inequalities’ We’re Gettin’ College Credit Here! By JON SANDERS that.” Assistant Editor In May, National Review online ran a RALEIGH highly critical review of Kozol’s book. Re- uring the curriculum revolu- literature, in order to understand the his- ike its public rival, the University of viewer Jay P. Greene of the Manhattan In- tions of the latter 20th century, tory of corporeal control — and fights North Carolina at Chapel Hill, Duke stitute charged Kozol in Savage Inequalities D courses emerged that brought against it — in the United States. L University is requiring its incoming with “perpetuating the myth of school pov- academic exegesis to subjects in which As we cover topics such as abortion, students to read a book this summer. Duke’s erty [by] simply ignor[ing] the facts and students of college age were already in- miscegenation, the lesbian body, pornogra- summer reading selec- repeat[ing] the myth.” terested and engaged. Textbooks are ex- phy, sexual assault, and reproductive tech- tion is Jonathan Kozol’s Kozol “pulls our heart pensive, after all, and can become rather nologies, we will also look to Durham’s ac- Savage Inequalities: Chil- strings describing New dull. They aren’t as interesting as such tivist community in order to interrogate dren in America’s Schools. York City public schools” popular-culture items as, say, watching how the theories presented in this course Duke’s selection but “doesn’t mention that TV, going to movies, buying clothes, speak to current activism around sexual committee chose Savage New York City public meeting new friends, or meeting new politics. Over the course of the semester, Inequalities by a wide schools spend more per pu- love interests. So college courses moved each student will be required to complete margin over The House of pil than 95 of the 100 larg- into those areas, teaching students how sixteen community service hours relating Sand and Fog, a novel by est school districts in the to “read” TV, movies, clothes, friend- to one of the topics covered in this class. In Andre Debus. country” (citing National ships, and social or sexual interaction. the final paper, each student will use their According to Duke’s Center for Education Statis- Students are made to read those things [sic] encounter with contemporary activ- Dean of Students office, tics data), Greene wrote. the way an enlightened college person ism in order to discuss the relationship be- “Savage Inequalities offers “He can only point out that would, naturally, and that would be tween theories of corporeal control and po- a look at public school some other schools spend along Marxist lines of class, race, and litical practice. education in the U.S. and even more. ... And he never gender, judging individuals as either provides some very real considers that the short- oppressed or oppressor. The “Course Objectives” are given opportunities for discus- comings of New York City For the students, it’s an easy way to next, with the explanation that the sion.” Assistant Dean of public schools are caused earn three credits — just do what you course “is designed as both a survey of Students Ryan Lom- by wasteful spending would be doing anyway. Now there is a the history of activism around issues of bardi called the book “an rather than the shortage of sort of universal Cliff’s Notes behind all sexuality and an opportunity for ser- eye-opener” in the Duke funds. the courses, and CM thinks it won’t vio- vice learning.” That having been said: Chronicle. UNC-CH had also considered Savage late copyright to give it in full: White, Savage Inequalities “does resonate with Inequalities for its summer reading program. male, heterosexual, or any combination = bad. By the end of the course students will pretty much everyone who has come Kozol’s book was among the many in- If the students are lucky, they’ve already — be able to produce a narrative about through a public-school education,” cluded on the list of books, published by covered that in primary school, or at least the history of the regulation of women’s Lombardi told the Chronicle, “but also any- the Herald-Sun July 11, that were considered by junior high. Too bad for those home- bodies in the United States. one who has had a private-school educa- for the UNC-CH Summer Reading Pro- schooled kids, what with their arithmetic — be introduced to local nonprofit or- tion, because he compares and contrasts gram. CJ — hah, but we bet they don’t know how ganizations which are engaged in struggles to socialize. over sexual politics. As readers of CM are aware, the new — reflect on the alleged conflicts be- college courses also reach out to students tween academic theory and the practice of whose interests are in political activism. activism around sexual politics. CAROLINA JOURNAL Publisher This month’s selection from Duke Uni- versity is an example: While they are learning those skills, students read selections from such John Hood Garners Praise WOMEN’S STUDIES 150: REGULATING SEX works as Leslie Feinberg’s Stone Butch Synopsis: Andy Warhol once com- Blues, Dorothy Roberts’ Killing the Black mented that “sex is the biggest nothing of all Body, Michel Foucault’s History of Sexu- for His Most Recent Book: time.” We may agree or disagree with this ality, Lillian Faderman’s Odd girls and assessment, but it is clear that in the United twilight lovers: a history of lesbian life in States that people spend a great deal of time twentieth-century America, and others, monitoring, legislating, debating, critiquing, including the indispensable Susie and organizing around sex acts or practices Bright’s sexwise: America’s favorite X- associated with sexuality. This course is a rated intellectual does Dan Quayle. Investor Politics survey of the ideological and state sanctioned At least Duke has heard the com- regulation of sex, and of community and in- plaints from uncounted employers ev- The New Force That Will Transform American Business, dividual mediation and activism around this erywhere about the dearth of prospects Government, and Politics in the 21st Century regulation. We shall focus primarily on the who are able to produce a narrative his- regulation of and activism around women’s tory of U.S. women’s-bodies regulatin’. bodies because the female citizen’s alleged One hopes, however, that they won’t “John Hood has produced a timely and informative account of the most national responsibility to bear and rear chil- get fired for “goofing off.” In other significant demographic shift of this century — the rise of a shareholder dren has produced a massive number of po- words, don’t go reflecting on the al- democracy in America.” — Jack Kemp litical projects which turn on protecting and leged conflicts between academic utilizing the female body. The course will ex- theory about sexual politics and actual “Investor Politics is chock-full of interesting historical anecdotes, clever amine history, law, personal narratives, and sexual activism while on the clock! CJ policy analysis, and surprising musings.” — National Review

Janie, do you interrogate how theories You betcha! I interact with the “John Hood offers many astute observations about the reasons govern- of lesbian bodies speak to current activist community, so I could even activism around sexual politics? write a whole narrative about it! ment social programs are imperiled.” — Greensboro News & Record

Whoah … “I highly recommend Investor Politics to any reader interested in under- You go, girl! standing how our government turned into an entitlement trough.” — Kevin Hassett, AEI

“Hood has delivered a thoughtful and very engaging text that will help move the debate from last century’s entitlement-dependent view of society to the country’s Jeffersonian roots of self-reliance” — Chris Edwards, Cato Institute

Look for Investor Politics in bookstores or at www.TempletonPress.org. September 2003 C A R O L I N A JOURNAL Higher Education 13

Intellectual cotton candy replaces the traditional core curriculum UNC Schools Promise a Strong General Education, But Most Don’t Deliver

By GEORGE LEEF their benefiting from Fiction, American Country Music, Sex and Gender in Society, Contributing Editor a shared educational Parks, Parkways Diversity and Post-1945 World History, RALEIGH experience, but also and Estates, Women Hegel, Marx, and the Philosophical Cri- uppose that you have dropped your means that many Issues in and Gender in Sci- tique of Society, and Social and Economic son or daughter off at one of the will graduate with- ence and Technol- Justice. S campuses of the University of North out ever having Higher ogy and Textiles and Carolina system. You have plenty to worry taken the courses Society. In Humani- Let the student decide? about: housing, roommates, clothing, that are key to a well- ties and Social Sci- money, and so forth. It’s quite a load. rounded education. Education ences, students have How much different things are at some At the risk of further depressing you, Let’s look at to take seven courses of the smaller campuses. At Elizabeth City there’s one more thing that you should be some examples. — from more than State, for instance, about all the choosing worrying about, but probably aren’t. That A student at- 200 possibilities. students do is to decide whether to take is the college curriculum. Every one of the tending Appala- Some of the courses their two social science courses in basic campuses of the UNC system pays lips chian State has to take four humanities appear exemplary (Introduction to sociology, basic political science, basic ge- service to the idea of giving every student a courses, of which at least one must be a Shakespeare, Western Civilization, and ography, or basic economics. The rest of the strong, well-rounded general education in literature course and one a fine arts course. Practical Reasoning, for example), but oth- general education curriculum is set out for addition to his or her major, but most of This requirement could be fulfilled with ers are hardly the stuff of general educa- the student, and it consists of nothing but them don’t really guarantee it. If you are some excellent and thoroughly appropriate tion, such as Introduction to History of fundamental courses. coasting along on assurances that the school courses such as English Literature, Ameri- West Africa, Postmodernism, The Buddhist Conclusion: with only a few exceptions, you have chosen will give your child a good can Literature, Arts and Ideas, Introduction Traditions, Religious Cults, Sects, and Mi- the administrators at the schools of the UNC educational foundation, you’d better take to Philosophy, and Logic. But it could just nority Faiths in America, History of Film to system talk a good game when it comes to another look. as well be filled with African-American 1940, Women in Music, Psychology of Gen- general education, but don’t come through. The traditional core curriculum that Literature, Modern Studies, Introduction der, Race in U.S. Politics, France in the Old One of the hallmarks of modern intellect- distinguished our higher education system to Film, Introduction to Women’s Studies, Regime and Sexuality and Values. ualdom is its refusal to say that anything is in the past — required courses in literature, History of Rock Music or Religions of Asia. Finally, at Chapel Hill, students have a more important than anything else. Ameri- American history and government, science, Meat and potatoes, or side dishes and des- prodigious smorgasbord of course offer- can History or History of West Africa? Just college-level mathematics, and fundamen- serts? The university is completely indiffer- ings to choose from in order to satisfy their let the student decide. Shakespeare or His- tal courses in the social sciences and fine ent. general education requirements. Hundreds panic Literature? Let the student decide. arts — has been abandoned by most col- At UNC-Greensboro, students have to of courses are open to UNC students that Logic or Leisure and American Lifestyles? leges and universities in the country. The complete two courses in Social and Behav- count toward their requirements. Naturally, Let the student decide. UNC system is no different. ioral Sciences. They could choose such many are unobjectionable. But many others Since the administrators won’t make Instead of a real core curriculum, most worthwhile courses as Introduction to Eco- are too specialized, politicized, or academi- such judgments, parents or other concerned have adopted the “distribution require- nomics, American Politics, or General Psy- cally dubious for general education credit. family members should. They need to step ments” approach, wherein students must chology — or they could fulfill the require- Some examples: Environmental Advocacy, in and strongly encourage the student to take a course or two in each of several ment with the likes of Sociocultural Analy- Literature and Cultural Diversity, Intro- take courses that will add up to a good, different academic fields. ses of Sport and Exercise, Human Sexuality, duction to Rock Music, Introduction to fundamental education. CJ In the UNC system, only three schools Personal Health, or Leisure and American still have a core curriculum of key courses Lifestyles. Any two will do. that all students take: Elizabeth City State, Western Carolina students have to take North Carolina Central, and Winston-Sa- just one history course. It could be Ameri- lem State. can History, but equally good (in fulfilling the requirement, at least) are Lunatics, We Want Less! Lunatics, Dreamers, et al. Dreamers, and Ordinary People: Biogra- phy in American History, Ancient Greece At the other UNC schools, mandatory and Rome, or Religion and Science. Those Concerned About Issues Such As courses are rare. Students fulfill most of latter three courses are probably very good, Taxes, Regulations, Property Rights their general education requirements by but shouldn’t students become familiar with & Patient Choice in Health Care? choosing from lists (sometimes prodigious the history of their own nation (which most lists) of courses that qualify. The problem is high schools now shamefully neglect) be- Thousands of your fellow North that many of the courses are far from the fore taking more esoteric courses? Carolinians are, too — that’s why kind that should be regarded as providing North Carolina State spreads a daz- they have joined North Carolina the student’s general education. Many are zling array of courses before its students for Citizens for a Sound Economy to overly specialized; some are politically each of its general education requirements. fight for less government, lower charged; others are just educational cotton To satisfy the “Science, Technology and taxes, and more freedom. They are candy. Giving students such a range of Society Perspective,” students have more making their voices heard. choice not only eliminates the possibility of than 50 courses available, including Science North Carolina CSE members protest state Fighting for the People’s Agenda tax increases at an August rally in Raleigh.

North Carolina Citizens for a Sound Economy holds politicians accountable for their votes on taxes, regulations, and other issues. Its aggressive, real-time campaigns activate a grassroots army to show up and demand policy change.

And it gets results. CSE has helped to defeat three large tax increases in North Carolina and defended property rights, parental choice, and individual freedom before the state legislature, county commissions, city councils, and elsewhere.

Here’s what some are saying about Citizens for a Sound Economy:

• “They have been doing a great job all over the country educating people.” — President George W. Bush

• “CSE is a great organization . . . The hundreds of thousands of volunteer activists that are members of CSE are vital to this country’s economic prosperity.” — U.S. Rep. Richard Burr of Winston-Salem

• “You guys are everywhere! CSE is a great organization. CSE, thanks.” — Sen. John McCain

Get Involved! NORTH CAROLINA Join North Carolina CSE and Make a Difference!

115 1/2 West. Morgan St. Raleigh, NC 27601 www.cse.org 1-888-446-5273 September 2003 C A R O L I N A 14 Local Government JOURNAL

Town and Country Localities Use New Tool to Collect Taxes

Boeing eyes GTP, official says N.C. cities, counties use debt-collection program to harvest $1.2 million

The Global TransPark and other North Carolina sites are still in the run- By DONNA MARTINEZ ning to land Boeing’s new aircraft Associate Editor manufacturing plant, a state official told RALEIGH area economic development leaders in inance officials in local government Kinston on Aug. 4, The Free Press of offices around the state are praising a Kinston reports. Frelatively new and little-known debt “Boeing is dead serious, I’ll just collection program that has helped clear leave it at that,” said William “Bill” their books of more than $1.2 million in bad Williams Jr., aviation director of the debts from thousands of North Carolinians. state Department of Transportation. “I The North Carolina Local Government think whatever list there is now, we’re Debt Setoff Clearinghouse program recoups on it.” money owed to cities and counties by match- Williams was measured in his talk ing Social Security numbers of debtors with about 25 people who turned out against income tax refunds scheduled for for the meeting of the chambers of com- payment by the state. The Department of merce of North Carolina’s Eastern Re- Revenue subtracts the past-due bills from gion at the GTP. the refund, transfers the money to the city He did not discuss specifics of or county through the North Carolina Capi- Boeing’s ongoing site search, but did tal Management Trust, and then mails any indicate that sites in North Carolina, remaining refund to the taxpayer. particularly the GTP, were still in the hunt for the highly coveted operation. Ninety-five localities participate Earlier this year, Boeing invited states across the country to submit pro- The program began in January 2002 posals for siting the company’s plant, and is administered by the North Carolina like a private sector company. This (pro- from the notification letter is typical of what which will handle construction of the League of Municipalities and the North gram) helps taxpayers in general.” many governments report. More than $7 new 7E7 Dreamliner aircraft. Carolina Association of County Commis- Greg Allison, a certified public accoun- million has been collected statewide in re- The plant is expected to create sioners. It piggybacks on the state’s own tant and term lecturer in public finance at sponse to the notices and what Whitehead about 1,200 jobs. Support facilities effort using the refund-matching process to the University of North Carolina at Chapel calls the “fear factor” that sets in when could generate thousands more. collect money it’s owed by taxpayers. As of Hill, said he thinks Smith’s assessment is debtors receive them. “They look forward Twenty-two states, including mid-July, 54 cities and towns and 41 coun- right on the money. He calls the Clearing- to their tax refund and don’t want anyone North Carolina, responded to Boeing’s ties were actively participating in the Clear- house an excellent program and wishes touching it, so they pay,” he said. White- invitation. Besides the GTP, five North inghouse, while 19 municipalities and 14 more local governments took advantage of head notes that when Pasquotank County Carolina sites were submitted in the counties were preparing to use the service. it. Allison asked Whitehurst to explain the mailed notification letters, it was deluged state’s proposal: Charlotte, Greensboro, The service is available to local govern- benefits to finance officials who attended a with more than $100,000 in overdue pay- Elizabeth City, Raleigh, and Wilm- ments at no cost. recent meeting of the North Carolina Local ments. ington. Each taxpayer whose debt has been Government Investment Association, which Smith tops Pasquotank’s experience. matched against a refund is charged a $15 Allison helped organize. He described an incident in which Wayne Nonprofit lands lighthouse fee to administer the transaction. NCLM or Before Smith added the Clearinghouse County mailed 3,000 to 4,000 notification NCACC receives $3 of the $15, depending to his collection tool kit last year, Wayne letters on a Tuesday. By the next Monday, A federal official dashed the hopes on whether the debt is owed to a municipal- County relied primarily on mailing delin- people were lined up to pay their bills. of Currituck County officials July 30, ity or a county. The remaining $12 is paid to quent notices to its customers. That netted “People have reacted almost immediately,” granting ownership of the historic light- Five Star Computing, Inc. of Columbia, S.C, some dollars, but using the last-known ad- he said. The county has received nearly $2 house in Corolla to a nonprofit that re- the company hired to receive and process dress is a hit-or-miss proposition. Many million in payments from letters. stored the structure and has maintained the debt information from cities and coun- people move and don’t leave a forwarding There are many reasons why people it for more than 20 years, according to ties and transfer it to the Department of address, he said. If the county couldn’t find don’t pay bills owed to local government, The Daily Advance of Elizabeth City. Revenue, where matching occurs. If the the person, it would consider writing off the Smith said. Some may have simply forgot- “Under the circumstances, the debtor owes both the state and a local gov- debt. “This changed our ten to pay, others may county had a full and fair opportunity ernment, the state receives its money first. mindset about how we have moved before re- to compete and was simply outdone by collect money,” he said. ceiving a final bill, and a more experienced applicant,” wrote Governments benefit year round Cindy Miller, finance “It is fabulous. This is some may not have re- Craig Manson, assistant secretary for operations manager for an extra set of legs ceived a bill because of fish, wildlife and parks at the U.S. De- The list of governments using the Clear- the City of Asheville, said paperwork snafus. “But partment of the Interior. inghouse has grown steadily as local offi- the program has im- doing work for us to try it’s still the taxpayer’s re- The county and the Manteo-based cials hear success stories from their peers proved her city’s collec- and get this money sponsibility” and Smith nonprofit Outer Banks Conservation- and realize they may recover overdue tion efforts as well. In the back.” makes no apologies for ists Inc. have been competing for own- money throughout the year, not just during beginning, her depart- using notification letters ership of the light since fall 2001. Ear- tax season, since the state runs refund checks ment submitted debts it — Heather Herbert and the Clearinghouse lier this year, a committee of four Na- twice a month. “We get money all year long had previously given up match. “I pay my taxes, tional Parks Service employees picked because people have filed an amended re- on. Some of those have so should everybody,” he the nonprofit as the best steward for the turn or filed for an extension,” said Tom been collected, leaving a smaller backlog of said. lighthouse, and the decision was passed Medlin of NCLM. tough cases. They now submit past-due Heather Herbert, customer service su- on to Manson after the county ap- Any debt that’s more than 60 days past debts regularly in order to collect as quickly pervisor for the City of High Point, has a pealed. due to a local entity and is at least $50 is as possible. The city has recouped more similar attitude. She is adamant about the eligible for submission. Multiple bills from than $82,000 using the tax-return match. program’s value, effectiveness, and fair- Free rides for public workers the same person can be combined to reach ness. High Point has recouped nearly the $50 threshold. Most delinquencies are Debtors’ refunds withheld $175,000 from letters and setoffs, and there The Raleigh City Council on Aug. for water and sewer service, property taxes, have been no complaints from customers. 5 approved a one-year test of a program parking fees, and paramedic visits, but any Miller was pleasantly surprised to find “It is fabulous,” she said. “This is an extra that would provide state employees debt qualifies. that a pre-match operational requirement set of legs doing work for us to try and get free rides on the city’s Capital Area “Everyone has success with this,” said of the program is an effective collection this money back.” High Point has submit- Transit system in exchange for $27,000 John Whitehurst, Medlin’s counterpart at device on its own. Setoff program rules ted bills dating to 1999, debts it once consid- cash and $12,000 worth of marketing NCACC. “We haven’t had any counties not require the local government to send a writ- ered unrecoverable. Now, there’s hope the and advertising from the state, the News satisfied.” He points to Wayne County, ten notice to the debtor telling him of the city may one day receive what it’s owed. & Observer of Raleigh reported. About which has collected more than $135,000 this intent to submit the debt for collection by While the program’s success is wide- 23,000 state employees live in Wake year, as an example of the value to local tax-refund setoff. “Many, many folks have spread, the majority of local governments County. The council also extended the government. County Manager Lee Smith been collected from the letter. There’s some- don’t participate. Medlin said he thinks offer to the 3,200 city employees. said the program gives his staff an addi- thing about having their taxes withheld some may not get involved if their past-due The program could start Sept. 1. tional tool to increase its already impressive that feels like a punishment; they feel like debt is low and existing collection proce- State administration and transportation collection rate from 97.5 percent before us- they’re caught,” Miller surmised. In fact, dures are deemed adequate. But, he said, officials still need to sign off on the plan, ing the Clearinghouse, to 98 percent now. Asheville has collected more than $44,000 some localities still may not know about it, said David King, state deputy transpor- That may not sound like a big increase, but from the letters alone, retrieving payment despite his and Whitehead’s best efforts. tation secretary for transit. The city’s Smith views every percentage point as in- for services ranging from parking garage Once officials talk to participants, he said, Transit Authority also must approve the creased efficiency. “We’re like a service in- fees to wedding banquets held in the civic they usually opt in. “This is an economical deal. CJ dustry and we should be collecting what’s center. way to collect debts,” Medlin said. CJ owed,” Smith said. “We now can perform Whitehead said Asheville’s windfall September 2003 C A R O L I N A JOURNAL Local Government 15

Local Innovation Bulletin Board High Housing Costs Studied

ome advocacy groups claim that Cleveland (a low-priced area). America faces a nationwide hous- However, restrictive zoning is asso- S ing affordability crisis, and that ciated with high home prices, suggest- the solution is increasing the supply of ing that local government regulation is housing. However, economists Edward the main cause of higher home prices in L. Glaeser and Joseph Gyourko say two some areas. issues are being confused: poverty and Researched by Edward L. Glaeser housing prices. and Joseph Gyourko, “The Impact of Housing advocates define affordable Building Restrictions on Housing Af- housing as that which can be purchased ford-ability,” FRBNY Economic Policy with a fixed percentage of income. The Review, June 2003, Federal Reserve Bank authors reject this notion. “To us, a hous- of New York ing affordability crisis means that hous- ing is expensive relative to its funda- Car rental taxes Corporate Airlines may fly 19-seat Jetstream turboprops from Raleigh to six N.C. cities. mental cost of production — not that people are” they wrote. Taxes to pay for such amenities as It is more relevant, they say, to com- sports stadiums and airport fees are add- Six cities apply for federal grant, offer local incentives pare prices to the physical cost of new ing as much as 72 percent to the cost of construction. Restricting their analysis car rentals at some airports in the United to single-family homes, they found in States, according to a study by the travel Airports Aim for Added Service most of the United States, home prices web site Travelocity.com. appear to be close to the physical costs of Airports and municipalities have new construction. In some parts of the long looked at taxes on car rentals and By MICHAEL LOWREY funds, the six communities would also put country, home prices are far below new hotels to fund special projects ranging Associate Editor in up to a total of $1.8 million to help start construction costs. from sports stadiums to convention cen- RALEIGH service to Raleigh. Unlike the federal grant In only a few particular areas are ters. The fees have been rising in recent ix North Carolina cities are propos- request, however, the local incentives would housing prices substantially above con- years. ing incentives of $5.4 million to help vary widely; the cities that don’t have air struction costs. Unfortunately, they in- Of the 10 airports with the highest establish additional airline service. service are willing to contribute greater S clude both North Carolina cities in the taxes and fees tacked on to rental cars, six The communities, Fayetteville, Hickory, amounts of money. study. are in Texas, including Houston’s Bush Kinston, Moore County (Pinehurst and Fayetteville, which has flights to Char- Galaeser and Gyourko included Ra- Intercontinental Airport, where taxes and Southern Pines), New Bern, and Wilm- lotte and Atlanta, would provide up to leigh and Greensboro in their study. In fees added 71.7 percent of the cost of a car ington, hope to combine federal grant $76,000 to attract air service to Raleigh. Greensboro, 69 percent of city area hous- rental. Car renters at airports in Dallas money with local funds to attract a com- New Bern, which is served by an US Air- ing was valued at 140 percent or higher and Austin pay more than 50 percent muter air carrier to start flights to Raleigh. ways affiliated commuter airline from Char- of construction costs in 1999. extra in added fees. Many uncertainties, however, remain be- lotte, is willing to provide about $62,000 in In Raleigh, the percentage was 81 The national average of the 100 top fore the flights become a permanent fixture. incentives. percent. The only cities included in the U.S. airports is 24 percent. Wilmington would put up $79,000. Sev- survey with higher percentages of high- Taxes and fees at North Carolina’s The federal grant program eral airlines serve Wilmington and offer priced housing relative to construction three largest airports were about aver- nonstop flights to Atlanta, Charlotte, New costs than Raleigh were notoriously ex- age. At Charlotte/Douglas International The Small Community Air Service De- York City, and Washington, D.C. pensive West Coast cities such as San Airport the mark up was 23 percent to velopment Pilot Program is a federal initia- Kinston, Hickory, and Moore County Francisco, San Diego, Los Angeles, and cover taxes and fees. At Raleigh-Durham tive that helps smaller communities attract lost all of their scheduled air service in the Seattle. International Airport, taxes and fees new air service. Under the program, the last few years. As a result, they have been Housing prices are not high in these added 26.7 percent to the cost of renting Department of Transportation awards willing to ante up greater amounts to see areas because land is intrinsically scarce. a car. At Greensboro’s airport, the grants to up to 40 applicants a year. Pro- service restored. Land costs in these areas is not substan- markup was 27.1 percent. gram funds may be used to subsidize an air In the case of Kinston’s Global tially higher than average. Even in areas So called airport-concession fees carrier for up to three years. TransPark, the incentive package totals with high home prices, a house on a charged by airports to rental car compa- The law creating the program requires $280,000. Hickory, meanwhile, offers 10,000-square-foot property costs about nies wanting to do business at the airport priority consideration be given to commu- $339,000. The value of the package Moore the same as a house on a 15,000-square- are among the fees passed on to consum- nities or consortia of communities when: County is offering just under $1 million. foot lot, and although prices are higher ers. As a result, travelers may be able to • Air fares are higher than average; The application lists Corporate Airlines for lots with a view, land is generally 20 avoid some of the taxes by renting cars • The community or consortium will as interested in providing the service. The percent to 40 percent of the home price. away from the airport. In other instances, proved a portion of the from local sources airline operates 19-seat Jetstream turboprop High prices are not necessarily asso- rental car taxes and hotel taxes are county- other than airport revenues; aircraft under contract as an American Air- ciated with extremely high density — wide, leaving travelers with little choice • The community or consortium has lines-associated commuter carrier. Most of for example, there is as much land per but to pay them. established, or will establish, a public-pri- Corporate’s current flights are in support of household in San Diego as there is in Reported in the Wall Street Journal. CJ vate partnership to facilitate air carrier ser- American’s St. Louis hub. vice; Should the SCASDP application be ap- • Assistance will provide material ben- proved, Corporate would serve each of the efits to a broad segment of the traveling cities at least three times a day from Raleigh public, including business, educational in- on Jetstreams. Corporate has also pledged stitutions, and other enterprises, whose ac- to work to obtain an American Airlines Wanted: A Local Government Guru cess to the national air transportation sys- code share for the routes. tem is limited. As might be expected of a federal grant Success not guaranteed The John Locke Foundation is accepting applications for a new full- program, SCASDP is popular. In fiscal time position at the Center for Local Innovation, a special project 2002,179 applications were submitted re- Despite the airline’s interest and will- devoted to issues facing North Carolina counties and municipali- questing a total of more than $142 million. ingness of the communities to provide in- ties. Job responsibilities would include policy research, writing, ana- Most applications were turned down, how- centives, the success of the routes is far from ever, as Congress provided only $20 mil- certain. Federal funding is not assured. Even lyzing local government budgets, and con- lion for the program. Asheville was the only with the subsidies, the application projects sulting with local officials about issues such North Carolina airport have its application that Corporate will lose $3.2 million on the Center for as taxes, regulations, growth controls, approved in 2002. It received a $500,000 routes in the first year. The hope is that transportation, and privatization. grant. demand will build over time, allowing the Local routes to eventually become profitable. Experience in county or municipal govern- The application Whether that demand will materialize Innovation is questionable. Or as the Boyd Group, a ment is strongly preferred. Competitive For the 2003 round of the program, the respected, Colorado-based aviation salary with full benefits available. Please six North Carolina airports have formed a consultancy recently noted on its webpage New Ideas for Governing North send a cover letter, resume, writing consortium with and are requesting a total (www.aviationplanning.com): Carolina’s Cities and Counties samples, and references to Vice President of $3.6 million, or $600,000 each. The pro- “In lots of thinly-populated, non-grow- gram has $20 million to distribute this year ing areas, there isn’t a solution that will Kory Swanson, 200 W. Morgan St., #200, and requests for funding are again expected provide real connectivity to the air trans- 200 W. Morgan St., Suite 200 Raleigh, NC 27601, or email him at to greatly exceed that amount. portation system, at least not one under the Raleigh, North Carolina 27601 [email protected]. In addition to the requested federal current situation that consumers will use.”CJ September 2003 C A R O L I N A 16 Local Government JOURNAL

From Cherokee to Currituck Government Conspires Counties Adjust Their Border To Steal Private Property But Residents Still Confused

report recently issued by the zation of nonconforming uses.” Trans- Swedish Research Institute of lated into everyday language, the term By MICHAEL LOWREY also troubled by the accident data the DOT A Trade confirmed America’s con- means your house could be virtually Associate Editor used to help justify the project. The agency tinuing unrivaled wealth. confiscated for no reason other than that CHARLOTTE argued originally that the stretch of road The group’s analysts reported the it does not conform to the vision of any landowners along the bor- had an accident rate four times the state average Swede receives less income than urban planners as contained in local, der between Orange and average for urban interstates, when, in fact, the average black person in the United state, or even federal land use plans. M Chatham counties remain un- the road really had an accident rate one- States. Because Sweden is in the middle This is not merely some nonthreat- certain what their county of residence is, 14 fourth that of comparable roads. of the European income distribution, this ening policy report for filing and forget- years after the counties agreed to redraw The state has decided not to appeal the means the average Euro- ting. Growing Smart is being their border. While a resolution may be decision. “Our conclusion is, from a timeli- pean’s annual income is widely distributed to gov- likely soon, landowners remain confused ness standpoint, we believe the best course similar to, or even less than, ernment agencies nation- by the process. of action would be to prepare another envi- the annual income of the wide as part of an effort to In January 1989, the counties agreed on ronmental document and combine the sec- average black person in the “update” land-use planning a new border and a process to complete the tions of I-26 in Buncombe and Henderson United States. and zoning in the United adjustment. Five months later, they agreed counties,” N.C. Highway Administrator Len Of course, conventional States. As part of former to let landowners affected by the new bor- Sanderson told the Associated Press. wisdom holds that the dis- Vice President Al Gore’s ders choose whether to stay with their origi- Boyle’s decision is not the first court tribution of income in the “Livability Agenda,” the nal county of residence or to change their ruling requiring the DOT to consider the United States is so unequal Growing Smart guide has residence to the other county. Recording of environmental impact of several projects that our low-income house- achieved near-official status the actual border survey, however, was not together. Construction of an outer beltway holds are less well off than as a result of millions of dol- completed until last March, when the agree- around Winston-Salem has been held up those in “more enlight- lars in financial support ment came up for final approval. while the state completes a study detailing ened” economies. That Wendell Cox from the U.S. Department It’s at that point that officials in both the cumulative environmental impact of view does not stand. The of Housing and Urban De- counties realized they the entire project. A fed- Swedish Research Institute found U.S. velopment. had interpreted the 1989 eral judge ruled that ear- low-income households receive more agreement differently. lier environmental impact income than low-income Swedish house- A new way to take property Chatham County offi- Chatham took it to statements that examined holds. cials interpreted the mean only owners at impacts of sections of the The confiscation clause would work agreement to mean that the time could pick. project separately were in- Property rights prevail like this: Local government officials, fol- only property owners at adequate. lowing the Growing Smart recommen- the time of the agree- Orange County would The I-26 widening Why does the United States consis- dations, would revise their community’s ment, and not anyone also allow subsequent would cost about $54 mil- tently report the highest per-capita in- land-use and zoning regulations, adopt- who later bought the lion and be a design-build come of any nation with more people ing APA’s confiscation policy as part of land, could elect their owners to select. project, allowing for an ac- than Rhode Island? There are a number the new code. In the process, those offi- county of residence. Or- celerated construction of reasons, but a contributing factor is cials would decide a particular neigh- ange County officials, schedule. Because the the strong (though not strong enough) borhood should be zoned for multifam- however, took the agreement to mean that widening involves putting the extra lanes protection of property rights. ily dwellings. In keeping with APA’s subsequent landowners could make the in the existing median, it would have only A principal role of property rights is confiscation policy, they would require election as well. minimal environmental impact. the creation of greater wealth: not be- that nonconforming structures, such as For homeowners Ronnie Johnson and cause property rights make owners detached, single-family homes, be his wife, Janet Mousley, the entire process Animal shelter to be privatized? richer; but because they make every- brought into conformance with the plan has been frustrating. The couple bought a body, especially those in the lowest in- (be made multifamily) by a certain date. house in 1990 thinking their county of resi- A nonprofit group in Forsyth County come classifications, richer. That date might be 20 years into the dence was Orange County and paid prop- has renewed its attempts to take over op- Property rights are much stronger future, or 10, or five, or even fewer. erty taxes to Orange County. In August eration of the county’s animal shelter. The in the United States than in most other When the deadline comes, the home 2001, however, they got a property tax bill move comes as a county task force exam- developed countries, and that contrib- owner would no longer be able to use from both counties. To make matters worse, ines an extensive list of recommendations utes mightily to our affluence. Accord- the house as a single-family dwelling. both the valuations on the bills were sub- by the Humane Society of the United States ing to Peruvian economist Hernando De He would have no choice but to sell the stantially different after 2002 revaluations on the operation of the county’s existing Soto, author of The Mystery of Capital, the land for multifamily redevelopment, by both counties. Johnson and Mousley’s animal shelter. lack of clear property rights explains redevelop the property herself, or sim- property is now considered part of Chatham Under the proposal by Save the Ani- why so many post-communist and newly ply abandon it. County, though they would prefer if it were mals, the county would contract with the democratic nations have been unable to There are serious problems with in Orange County. group to operate the shelter for $778,000 per replicate the economic success of West- APA’s confiscation agenda. For one, it “The biggest thing is how unfair it year. The group would generate the re- ern nations and Japan. clearly violates the Takings Clause of seems, to have thought we were buying a maining funds toward a proposed $1.3 mil- In America, the greater wealth avail- the Fifth Amendment to the U.S. Consti- house in Orange County, and then wake up lion budget through fees for adoption, vac- able to middle-income and low-income tution, which states: “nor shall private 10 years later and find out otherwise,” cination clinics, and grants and donations. people is, to a large degree, facilitated by property be taken for public use with- Johnson told the Durham Herald Sun. The groups’ request to take over the shelter home ownership. Nearly one-half of the out just compensation.” “There’s nothing we can do about it. There’s will go before the county commission once net worth of middle-income Americans For HUD to be involved in funding no recourse for us.” the task force completes its review of the is in home equity. this assault on fundamental constitu- HSUS’ recommendations. The group origi- This equity is capital that can be tional rights is akin to the Department of Interstate 26 widening on hold nally suggested that the county contract out marshaled to finance educations, new Justice financing development of local operations in November. businesses, and home improvement. ordinances to limit free speech. A federal court has put on hold the N.C. “It can be run very well, ” Vernon Ferrell, Homeowners are considerably more af- While the confiscation agenda ap- Department of Transportation’s plans to Jr., chairman of the group’s board of direc- fluent than renters, with an average net pears to be the most threatening ele- widen a stretch of Interstate 26 near Ashe- tors, told the Winston-Salem Journal. “It could worth 30 times as great. ment of Growing Smart, there are other ville. In his ruling, U.S. District Judge be the shining star of the whole state of The public-policy message is clear. causes for concern, such as recommen- Terrence Boyle said the state cannot pro- North Carolina with the right people run- Since home ownership creates wealth dations that would destroy local de- ceed with the work until it conducts a ning it.” and improves both real and relative eco- mocracy by taking local land-use deci- broader environmental impact study. Save the Animals helps low-income pet nomic positions, home ownership sions to the regional or even state level. The DOT had originally planned to owners get their pets sterilized and vacci- should be encouraged and expanded. For at least seven decades, expan- begin work last year on widening from four nated. In addition, it may build a regional sion of home ownership has been a prin- lanes to six lanes a 13-mile stretch of I-26 in spay-neuter clinic in Kernersville. Discouraging home ownership cipal objective of U.S. economic policy. Henderson County between Asheville Re- Animal issues have been gaining addi- For even longer, the United States has gional Airport and East Flat Rock. Four tional attention across North Carolina in Regrettably, many (if not most) of sought to expand the economic pie and groups sued, however, contending the recent months. The General Assembly re- America’s urban planners are encourag- increase the standard of living of those DOT’s environmental impact study was cently charted a special commission to ex- ing just the opposite: policies that would at the bottom of the income scale. This is inadequate as it did not also consider the amine conditions in the state’s animal shel- reduce home ownership and gut the no time to turn back. CJ impact of a separate project to widen nine ters and the state’s high kill rate for equity many already have in their homes. miles of the interstate in neighboring Bun- unadopted pets. Recent articles in The Char- In its Growing Smart Legislative Guide- combe County. lotte Observer has focused attention on the book, the American Planning Associa- Wendell Cox is a senior fellow at the Heart- Boyle agreed, noting that the record issue in Charlotte as well. A city council tion proposes something called “amorti- land Institute. indicated the department had not taken a committee is examining ways to reduce the “hard look” at the widening. Boyles was number of animals euthanised locally. CJ September 2003 C A R O L I N A JOURNAL CJ Interview 17 Richard Burr: U.S. Congressman, Candidate for Senate

By PAUL CHESSER the agreements made at the end of the Gulf House-passed bill, the federal government ward, we should continually reassess these Associate Editor War in 1991. As a result of continued defi- is required to subsidize insurance compa- programs and their funding. WINSTON-SALEM ance by the Iraqi regime, as well as the nies’ costs by 73 to 99.99 percent and the .S. Rep. Richard Burr, a Republican prolonged inaction of the United Nations, I government has no bargaining power dur- CJ: Years ago one of the GOP’s big issues representing North Carolina’s 5th feel that the president’s decision to aban- ing those negotiations. Given that struc- was the need for a balanced budget amendment. U District, is serving his fifth term in don diplomatic efforts and employ military tural flaw, there is no guarantee that the bill Now the budget deficit could possibly surpass Congress. He also is a candidate for a U.S. force was an inescapable conclusion. will only cost $400 billion. I could not vote $450 billion. Why has the concern for such an Senate seat held by Democrat John Edwards. As you mentioned, I voted against Presi- for the passage of a bill that is certain to cost amendment fallen by the wayside?Does the GOP Edwards declined an invitation to be inter- dent Clinton’s deployment of U.S troops in $800 million to $1 billion in a few years and in general now believe in having a “strategic viewed by CJ. Kosovo, because I felt that the mission he does not increase the quality of benefits my budget deficit?” proposed was unclear and had not been constituents receive. CJ: It has been reported that you have considered sufficiently explained to Congress or the Balancing the budget is a central con- a run for U.S. Senate for sev- American people, and the CJ: Do you believe the president, and the GOP cern of both the entire Republican Party eral years now. More recently Kosovo situation did not as a whole, has drifted from conservative prin- and me personally. This task, however, must news stories have said that represent a direct threat to ciples because of its overall increase in govern- be approached in a manner that is sensitive close associates of President our nation. Our troops are ment spending; its increased involvement in to issues such as national security, educa- Bush strongly encouraged you still in the Balkans. As education; increased spending on foreign aid; tion, and Medicare. While it is necessary to to run for the seat now held by Liberia’s situation does not etc? work towards balancing the budget, I feel Sen. John Edwards. How pose a direct threat to our that it must be done in a manner that pro- much did the president really security, I would prefer to Burr: In recent years the U.S. has been influ- tects important federal programs while cut- need to persuade you to run? see our troops in a support enced by the drastic economic adjustment ting unnecessary government expenditures. role for a multilateral force. that is required to successfully wage the I believe that the Republican Party remains Burr: Since coming to war on terror. This challenging and very dedicated to balancing the budget; how- Washington in 1995, I have CJ: Do you believe there needs costly duty has led to momentous changes ever, we must first aim at recovery, then at tried to serve as a model of to be a change in the struc- not only in our economic climate, but also in reform. constituent service to the ture, and the leadership, of the way our government must balance people of the 5th District. the CIA? Where or how is it spending. As the Republican Party and CJ: Should the federal government have pro- My experiences have given Rep. Richard Burr failing, and where and how is myself remain steadfast in our dedication vided money to the states to help bail them out of me a strong foundation on it serving its purpose? to fiscal responsibility and conservative eco- their budget crises? Where do you believe the which to build in the future; however, much nomic principles, this new challenge has bulk of the responsibility for those shortfalls work remains to be done. Burr: I am a member of the House Perma- led to the necessity of increased spending falls? I feel certain that the U.S Senate is the nent Select Committee on Intelligence. One for the protection of our nation and the best place for me to utilize my legislative task of this committee is to conduct over- safety of our people. Securing our home- Burr: We have taken steps to ensure that experience while continuing to serve North sight of our intelligence agencies and, con- land and working towards global stability our economy recovers fully — and ensure Carolina. I am heartened that friends, col- sequently, it is my job to remain an objective simply cannot be done “on the cheap.” We that the recovery reaches into all corners of leagues, and supporters from North Caro- investigator in evaluating the necessity of have had several initial costs, such as creat- our country and state. In May, I voted in lina, along with the White House, have reform in our intelligence community. This ing the U.S. Department of Homeland Se- favor of an economic stimulus package that encouraged me to seek this office. These is an ongoing process, but we are dedicated curity, and will need to continue to ensure provided both tax relief and $20 billion in pledges of support were critical to my deci- to working to improve the structure, accu- that proper funding be given to all aspects assistance to states suffering from budget sion. I will keep fighting for what I feel is in racy, and efficiency of our intelligence re- of this battle. crises. I feel that the best way to address the the best interest of North Carolina and the sources. It is my commitment and responsibil- problems that remain is through strong eco- nation. ity, however, to see that the money we nomic growth, and I believe the president’s CJ: Do you agree with Senate Intelligence Com- spend is used correctly. As we move for- plan was a step in the right direction. CJ CJ: A delegation from your committee, after a mittee Chairman Pat Roberts that weapons of trip to Baghdad, reported that “large numbers of mass destruction will be found in Iraq? U.S. troops are likely to remain in Iraq for years.” As a representative from a state with a Burr: I agree with Chairman Roberts’ as- large constituency of soldiers in that area, does sessment. As a member of the House Select that square with what your expectations were Committee on Intelligence, I stand behind going into the war? Do you agree with that the work that both intelligence committees assessment? Does it affect how you view the way have done in considering the evidence re- the president and the administration handled garding the existence of weapons of mass the war before, during, and after major hostili- destruction in Iraq. Though weapons have ties? yet to be found, the available intelligence indicators continue to point to their pres- Burr: I think that everyone in Congress ence on Iraqi soil. Although our military understands the importance of achieving forces continue to scour Iraq for Saddam’s peace and stability in post-war Iraq. While WMD, there can be no question that Saddam keeping our troops safe and expediting their possessed such weapons. He went to great return is certainly a major concern, history lengths to deceive and obstruct the search has taught us that we must not be hasty or for WMD, and had 12 long years to perfect unrealistic when approaching the challenge his regime’s ability to build and hide those that is before us. Recently, multiple units of weapons. the North Carolina National Guard, many comprised of my constituents, were alerted CJ: Do you agree with Rep. Jeff Flake of Arizona to the possibility of their deployment in that with wide Republican support for expand- Iraq. I remain dedicated to achieving a swift ing by $400 billion for Medicare to cover pre- departure from Iraq, provided our mission scription drugs, that the Republican Party has there has been accomplished and a stable abandoned its principles by creating such an Iraq can be turned over to a democratic entitlement? Iraqi government. Burr: As vice chairman of the Energy and CJ: How do you, as a member of the House Commerce Committee and a member of the Permanent Select Committee on Intelligence, Health subcommittee, I have worked closely measure whether intervening in another coun- on Medicare prescription drug legislation try is crucial to our national interest, for secu- for more than four years. rity or otherwise? You voted against involve- At the beginning of this Congress, I ment in Kosovo, but supported the Iraq War. hoped to help pass a fiscally responsible Should we get involved in Liberia? Medicare prescription drug bill that pro- vided all Medicare beneficiaries with ac- Burr: I feel that the most important issue to cess to lower-priced drugs, gave low- to consider when measuring the necessity of middle-income beneficiaries monetary as- military action abroad is the threat, or po- sistance with their drug purchases, estab- tential threat, that the situation poses to our lished tax-incentives for saving money for national security. Prior to Operation Iraqi future drug purchases, and capped benefi- Freedom, it was clear that Saddam Hussein’s ciaries’ catastrophic risk. Unfortunately, the hostile regime had a passionate interest in bill considered and passed by the House challenging our nation’s security and had did not follow those principles and con- little interest in acting in accordance with tained a large structural flaw. Under the September 2003 C A R O L I N A 18 Learning Curve JOURNAL

From the Liberty Library Museum review

• The rapid spread of the liberal market economy throughout the Museum Captures North Carolina’s Role in History world poses new and complex ques- tions for the consideration of reli- By JONATHAN JONES gious believers, as well as anyone Editorial Intern concerned with the intersection of RALEIGH ethics and economics. Is the liberal orth Carolina’s Museum of His- market order, particularly as it affects tory in downtown Raleigh is a the poor, compatible with Christian Npleasant surprise for the visitor moral and social teaching? Or is it in expecting political correctness at the ex- some ways in substantial tension pense of actual history. Across the street with that tradition? In Wealth, Poverty, from the State Capitol, it presents an enjoy- and Human Destiny, editors Doug able, educational overview of the state. Bandow and David L. Schindler The “pioneers of aviation” exhibit oc- bring together some of today’s lead- cupies much of the first floor. Hanging above ing economists, theologians, and so- the visitor’s desk is a large replica of the cial critics, including Wendell Berry, Wright Flyer, which the Wright brothers Michael Novak, Richard John flew at Kitty Hawk. Immediately behind it, Neuhaus, and Max Stackhouse, to memorials to aviation include pieces of the consider whether the triumph of original machine, representing one of capitalism is a cause for celebration mankind’s greatest accomplishments. The or concern. See www.isibooks.com historic first flight lasted only 12 seconds for more information. and 120 feet, but it ushered in an explosion of mechanical improvement that rivaled A replica of the Wright Flyer hovers over the visitor’s desk at the N.C. Museum of History. • In some quarters of the globe, the automobile. This story of advancement hatred of Jews has assumed epidemic in aviation makes the Museum of History a glimpse into North Carolina’s contribu- When viewing the exhibit, one cannot proportions and is intensifying by the worth a visit. Years of failure preceding the tion to that laboratory of success and ge- help but wonder what life was like without day. In The Return of Anti Semitism, Dec. 17, 1903 success of Orville and Wilber nius. It is our common heritage, including modern means of communication. Its ab- Gabriel Schoenfeld explores how and Wright add to the impressiveness of their efforts for greater liberty and self-determi- sence could be deadly. In North Carolina, why a murderous anti-Semitic rage accomplishment. nation, that make America unique in world for instance, the last skirmish of the Civil has once again come into being and Museum visitors also learn about North history. War was fought in White Sulphur Springs examines its likely trajectory. Carolina innovators such as Dr. Daniel on May 6, 1865. Robert E. Lee had surren- Schoenfeld traces the confluence of Ashbury, who died while experimenting War Between the States dered to Ulysses S. Grant in Appomattox, several lethal currents: the infusion with cylindrical hot-air balloons. Stories, Va. one month earlier. of anti-Semitism into Islamic funda- myths, and legends of aviation originated This struggle is chronicled in the Civil mentalism; the rise of terrorist move- from across the geographic landscape of the War exhibit. North Carolina had about Intelligence-gathering exhibit ments, which are motivated in large state, gaining wide audiences as human 34,000 slaveholding families on the eve of measure by a pathological hatred of flight rose in prominence and commercial the conflict. Only Virginia had more “free Other displays of note include Jews; the deliberate and well-fi- promise. blacks,” and one-third of the state’s popula- America’s Secret Warriors: The OSS and the nanced export of anti-Semitism from Rumbling Bald Mountain, for example, tion was of African origin. When North George Watts Hill Collection. The Office of the Muslim world into Europe and borders Rutherford and McDowell coun- Carolina succeeded from the United States Strategic Services was formed to tempo- from there into the United States; and ties in the western area of North Carolina. It on May 20, 1861, citizens were deeply di- rarily gather military intelligence as World the re-emergence of older anti- was the scene of the 1904 Jules Verne novel vided like no other time before or since. War II drew to a close. Once an ally against Semitic traditions in the West, which Master of the World, home of the memorable In January of that year, voters had re- greater evil, the emerging imperial menace were thought to have ended along mad scientist Robur and his flying machine fused by referendum to consider secession. of Soviet communism endangered world with Nazism. Learn more at of terror. The economic system supported by slavery peace and security. Then considered a suc- www.encounterbooks.com. was not as widespread as in other states. cess that must continue, today’s intelligence North Carolina and technology Sure the national government was intent on services trace their origin to this agency. It • Some environmental activists, wrecking its economy and way of life, South was formed to keep the United States cur- politicians and celebrities have sup- As technology grew, the state offered Carolina and most of its neighbors were a rent with new global realities and is yet ported “sustainable development” as the nation more than its share of inventors, hotbed of Confederate sentiment. Not so in another example of American creativity and though its meaning and value were aces, astronauts, and daredevils. “Pro- the Tar Heel State, especially the staunchly tenacious determination. clear. But the concept has barely been flight” newspapers such as the Daily Char- Republican counties of the western moun- This collection of material from a North defined, let alone subjected to scien- lotte Observer were among the chroniclers of tain expanse. Carolina native and clandestine operations tific, economic, and philosophical the colorful scene. Samples from newspa- Displays throughout the Civil War sec- officer contains some remarkable real-life scrutiny. Oxford University econo- pers, diaries, and literature help to bring tion highlight this dichotomy. More than spy supplies. The first large-scale confron- mist Wilfred Beckerman puts the these times alive. Personal letters and pho- 125,000 North Carolinians, many of them tation of superpowers waged without tra- theory to the test in A Poverty of Rea- tographs, some from the only eyewitness teen-agers, fought in the Confederate army. ditional war utilized both ideas and weap- son: Sustainable Development and Eco- account of the first flight, are especially The state lost more sol- ons. Gun silencers, small nomic Growth, questioning several of insightful. Although this is not a large mu- diers than any other knives disguised as its core claims. After examining the seum, the section offers plenty of interest- Southern state; 40,000 It is our common heri- grooming items, pinhole evidence, Beckerman finds “sustain- ing material for amateur history buffs. died in battle or from tage, including efforts cameras, microfilm view- able development” lacking on both Soon, more pieces of history will be on wounds and disease. In ers, and unconventional scientific and moral grounds. Al- the way. A traveling exhibit of more than addition, a large number for greater liberty and radios, among other though millions of people lack clean 400 Charles Lindbergh artifacts will open at from North Carolina, self-determination, items, are a good starting air and water, and are plagued by the museum Nov. 8. Lindbergh’s transat- 15,000 white soldiers and point for learning about deteriorating ecosystems, these prob- lantic flight and immediate worldwide ce- black soldiers, chose to that make America the Cold War. lems are caused not by “unsustain- lebrity, only a few decades after the Wright battle alongside Union unique in world history. Another must-see ex- th able development” but by poverty, brothers, remind observers of how the 19 regiments. Some of their hibit is From the poorly defined property rights, and century faith in the power of science and symbols, such as the 1861 Museum’s Attic. The mu- lack of freedom of opportunity. Pub- human reasoning was a mixed blessing. silk flag of the Eighth Regiment North Caro- seum has a collection of more than 150,000 lished by the Independent Institute Technology made travel faster, cheaper, lina State Troops, are presented for public artifacts, some dating back thousands of at www.independent.org. safer, and more comfortable. But in times of view in very good condition. years. One feature worth viewing is a war, it also provided a means for slaughter The muskets, pistols, uniforms, pic- wooden canoe used by the Algonquian In- • Intellectuals and the American on a scale previously unimaginable. tures, and everyday items of the young men dians. Discovered around Lake Phelps in Presidency: Philosophers, Jesters, or who died are a reminder of the struggles for Washington County and more than 2,300 Technicians? examines the relation- Museum celebrates progress progress, as well as the bloody sacrifices, years old, its smooth interior is still mostly ships between presidents and Americans have undertaken. Among the intact. America’s intellectuals since 1960. That the museum resists the tempta- most striking exhibits are large portraits of There are parts of the museum, how- Author Tevi Troy looks at the advis- tion to wallow in victimology instead of soldiers and civilians accompanied by the ever, that leave something to be desired. ers who served as liaisons to the aca- highlighting achievement and progress may story of their short lives. Hunger and dis- Health and Healing Experiences in North demic community, the presidents’ be a feat unto itself. Fortunately, there is not ease were constant threats, and the likeli- Carolina is particularly out of place. Adver- views of those intellectuals, and how much of the Balkanization one will find in hood of death on the battlefield seems to tised as “environments and stories of self- they fit in with the presidents’ plans. Washington D.C.’s American History Mu- sharpen their valor. care, conventional medicine, faith, and other In this bipartisan study, Troy analyzes seum. American Indians, blacks, women, By neither minimizing nor concentrat- healing systems,” it’s simply a nod to our how American presidents have used and every group a curator could categorize ing on the undeniable immorality of sla- therapeutic culture of feelings and affirma- intellectuals to shape their images have at least one very important thing in very or the heroics of soldiers, the tragic tion. Although such “learning” usually and advance their agendas. More at common. We belong to the fabric of America story of the Civil War and its impact on comes at the expense of more valuable edu- www.rowmanlittlefield.com. CJ as citizens of a grand, rare, and unusually North Carolina is presented in a straight- cational pursuits, at least most of the mu- successful experiment. This museum gives forward and somber way. seum is actually devoted to history. CJ September 2003 C A R O L I N A JOURNAL Learning Curve 19 Book Review Great Tax Wars: History Laced With Pro-Government Philosophy

• Steven R, Weisman: The Great Tax Wars, Myopic view of history The dark side of the tax bureaucracy had Simon & Schuster, 2002, 419 pp., $27. manifested itself long before the 16th Amend- Weisman’s narrow view of tax history ment was enacted, but Weisman turns a By BURT FOLSOM leads to three problems. The first is impre- blind eye to it. Guest Contributor cise definitions. He talks constantly of the The third problem with the book is that HILLSDALE, MI need for a “fair” income tax that targets Weisman never views taxation as dynamic he Great Tax Wars describes the 60- those with the ability to pay; but as an — that is, lower tax rates can yield larger year battle (from Presidents Lincoln advocate of a progressive tax, he never can revenues. He stops his story at 1920, when T to Wilson) that led to the permanent say with any precision what a “fair” top rate the top rate was over 70 percent. What that adoption of the federal income tax. As im- is for the income tax — 7 percent (the 1913 misses is the Mellon tax cuts, which, during portant as the income tax is to explaining rate), 77 percent (the 1918 rate), or 100 per- the 1920s, slashed all rates by about two- the rise of big government in the 20th cen- cent (President Roosevelt’s advocated rate thirds and resulted in sharply increased tury, we have regrettably few books on why in 1942 on all income over $25,000). Weisman revenue from the income tax — entrepre- and how the income tax came into exist- is committed to progressivity — the more neurs, under the lower rates, were encour- ence. Weisman’s book, therefore, is wel- you make the more you pay — but he never aged to invent products from radios to air- come even though the author’s analysis is says exactly what, or even roughly what, conditioners. often unsatisfying. that top rate should be. Weisman’s second problem is that he is Weisman’s historical errors Author blinded by statism so eager to show a need for an income tax after the Civil War that he misses the dan- Weisman makes a variety of historical On the positive side, his account is in- gers to liberty that existed when the income errors. The top tax rate after the revenue act formative and he sprinkles his narrative tax was in place during the Civil War. He of 1932 was 63 percent, not 55 percent; the with interesting biographical sketches of does not seem alarmed that Lincoln’s secre- top rate after Roosevelt’s tax bill of 1935 was key figures in the tax debate. If you’re inter- tary of Treasury, Salmon P. Chase, said, “It jacked up to 79 percent, not 75 percent. ested in the historical battle over the consti- is not the business of the Secretary of Trea- Also, Albert Fall was U.S. senator from tutionality and desirability of the federal tax, in Weisman’s view, is “desperately sury to receive an ultimatum, but to declare New Mexico, not Nebraska, as Weisman income tax, Weisman’s book covers it well. needed to underscore the idea of social one if necessary.” Weisman also expresses insists. On the negative side, though, he is blinded justice in the distribution of rewards and no alarm that George Boutwell, the first The Great Tax Wars has some useful by statist presuppositions on the role of sacrifice in our society.” commissioner of the IRS, concealed rev- information on a neglected subject, but read- government and never seriously questions With this framework, Weisman depicts enue from the income tax, thus creating a ers must separate its history from its statist the conventional liberal/progressive view those who favored an income tax, espe- shortfall that undermined President Ulysses philosophizing. A recent and better book of American history. cially a progressive tax, as heroic and coura- Grant’s case that the income tax was no on the subject is W. Elliot Brownlee’s Federal At least he announces his biases at the geous; their opponents are labeled as “ul- longer needed. The power to tax, as the Taxation in America. CJ beginning. “The income tax is… a kind of traconservative” defenders of entrenched, Supreme Court insisted long before the in- leveler,” Weisman writes. “[I]t softened the selfish, and wealthy interests. It evidently come tax, was the power to destroy: It was edges of the distribution of wealth in the never occurs to him that lusting after the only another step from Chase and Boutwell Burton Folsom, Jr. is Kline professor of history interest of justice and fairness — and among income of individuals in order to lavish it to Franklin Roosevelt and his use of the IRS at Hillsdale College, and the author of The progressives, in the interest of maintaining on politically-driven programs might be to investigate political opponents such as Myth of the Robber Barons, now in its fourth a certain level of social stability. The income the quintessence of greed. Huey Long and William Randolph Hearst. edition.

Book Review Vieria’s Pieces of Eight: Monetary Policy and the U.S. Constitution

• Edwin Vieira, Jr.: Pieces of Eight, controlling today.” would have been spared the boom and bust Sheridan Books, 2002, 1666 pp. (two vols.), Or at least it should be. What Vieira cycles that we have endured at its clumsy $49.95 subsequently shows is that the Constitu- hands. In the court of history, those who tion’s monetary strictures, like its strictures planned and acquiesced in the destruction By GEORGE C. LEEF in so many other areas, have been evaded of the Constitution’s monetary framework Guest Contributor and destroyed by politicians and that the have much to answer for. RALEIGH Supreme Court has chosen to turn a blind There is no part of this fascinating story ake out your wallet and examine eye to the monetary shenanigans of Con- that Vieira doesn’t cover in detail. The pre- the rectangular pieces of greenish gress. The surprising conclusion of Pieces of cise meaning of the relevant Constitutional Tpaper in it. You’ll probably first think Eight is that there is no legal authority for provisions; the several Coinage Acts of the “money” and then “dollars.” Looking our present system of irredeemable fiat cur- early 1800s, the First and Second Banks of closely, you see the words “federal reserve rency. “To introduce the FRN (federal re- the United States; the Supreme Court’s blun- note” and “legal tender” printed on the serve note) as a new paper currency in 1913, der in sustaining the constitutionality of paper. You have perfect confidence that the government had to tie it by a right of legal tender U.S. notes; the institution of the you can exchange the pieces of paper for redemption to the circulating money of that Federal Reserve system; FDR’s gold sei- valuable goods and services. Whether those day, gold coin. And then, to transmogrify zure; the severing of the final ties to re- paper bills have any constitutional validity the FRN into a currency fit for limitless deemability in gold and silver — all that certainly does not cross your mind. The inflation, the government had to cut that tie and far more is covered in these volumes. government prints the stuff, so it must be to gold (and silver as well)… If the FRNs People who fancy themselves as “real- legit, right? Edwin Vieira, Jr. were not ‘dollars’ when ists” might snicker and If, however, you have read Edwin they explicitly promised say, “So what — we can’t Vieira’s monumental work on our mon- a “dollar?” For Vieira, that is the essential to pay in gold, they did The Constitution gave go back to an antique sys- etary system, you would look quite differ- first question. The answer, under Article I, not magically become tem with people carrying ently upon the money in your wallet. With Section 9, Clause 1, is that it is a coin con- ’dollars’ when they the U.S. a monetary around silver dollars to remarkable breadth and depth of scholar- taining 371.25 grains of fine silver. How stopped promising to pay system under which make their purchases.” ship, lawyer and constitutional expert Vieira odd that seems. But that was the weight of in anything at all, and money could be coined Vieira’s task here is not to has given us a treatise on, as the subtitle of the most widely circulated coin in the colo- statutorily can be re- set forth the ways in this two-volume work says, “The monetary nies and early United States. The coin was deemed in nothing better by government, but not which our monetary sys- powers and disabilities of the United States the Spanish milled dollar, commonly know than base-metallic coin,” created out of thin air. tem could have evolved Constitution.” First published in 1983, this as a “Piece of Eight” and hence the title of Vieira says. to suit modern commer- is a second, expanded edition, beautifully the work. Vieira writes that silver coins of Inflation. There’s the cial needs without de- printed and bound. The author has woven 371.25 grains are the lawful foundation of key. The Constitution gave the United States stroying the constitutional base, but other together constitutional provisions, statutes, our monetary system, “not any gold coin or a monetary system under which money scholars have done so. The problem is not court decisions, and his own sharp legal base-metallic coin, let alone any paper cur- could be coined by the government, but not that a modern economy is impossible with- analysis into a encyclopedic work on our rency, be it the first legal-tender United created out of thin air. Once they had been out government monetary control, but that monetary system that should be the start- States notes (the “Greenbacks”), the later freed from the Constitution’s restraints, poli- the politicians will fight like mad to keep ing point for anyone with an interest in the National Bank Notes, or today’s Federal ticians were able to spend money without the power they have taken illegitimately. chasm between the system we now have Reserve Notes. And, the Constitution never the unpopular need to levy taxes. Absent Pieces of Eight is an indispensable work and that which the Constitution ordained. having been amended in this particular the monetary mismanagement of our cen- for anyone who believes in upholding the What is the Constitution’s definition of since 1788, that meaning remains legally tral bank, the Federal Reserve, our economy Constitution. CJ September 2003 C A R O L I N A 20 Opinion JOURNAL

EPA Study Exposes Hype in the Media

nvironmental pressure groups regularly pub- lish “studies,” blindly reported by the media, Emeant to convince people that the environment is falling apart. We are also told that as a consequence our health and quality of life are declining. In June the U.S. Environmental Protection Agency exposed all of this as nonsense. With no fanfare, the EPA published its “Draft Report on the Environment 2003.” This is a book of facts that paints an opti- mistic and comforting pic- ture of environmental im- provement. The most notable data relate to air pollution. All air pollutants are declin- ing and four of the six pol- lutants regulated by the EPA are at levels, through- out the country, that are well below the maximum allowed. The exceptions Dr. Roy Cordato Editorials expected next year, the fund was too fat a pigeon for the are ground-level ozone state’s scam artists to resist. So they plucked it, they said, to and particulates, where most of the country was, until help balance the state’s teetering 2004-05 budget. Now, recently, meeting federal standards. implementation of the system will be needlessly delayed What changed are the standards, not the amount PREDATORY POLS for an unspecified length of time. And the human casual- of pollution. Ozone, in particular, has declined con- ties of the legislature’s cavalier action wait to be counted. tinuously for the last 20 years. But new and much Taxpayers cry out for Roy Cooper’s help The number of victims waylaid by predatory politi- more stringent standards, which have moved many cians over the years continues to mount. areas from being in compliance to being out of compli- In 1998 North Carolina voters approved $200 million in ance, are being put in place. However, even using the here’s state Attorney General Roy Cooper when bonds to extend natural-gas pipelines to 22 unserved coun- new standards, ozone concentrations have decreased North Carolina’s taxpayers really need him? ties in the state. Although pitched as a project that would by more than 11 percent in the last 10 years. It is also W We’re in serious trouble. reap benefits around the state, the pipeline eventually was notable that acid rain, a byproduct of particulates, has For quite some time now, the mild-mannered defender steered to 17 counties in eastern North Carolina. Senate Pro declined; reductions of as much as 30 percent have of truth, justice, and the North Carolina way has been Tem Marc Basnight, D-Manteo, commandeered the project been reported in certain areas of the Northeast and waging a never-ending battle on TV, warning the public of by wielding influence over several commissions and boards Midwest. various con artists, hucksters, and other undesirable char- after the bond referendum. Probably the best indication of air-quality im- acters who prey on trusting consumers. He has run an- None of the money is likely to be paid back because the provement is captured in one significant trend. Be- nouncements on identity theft, predatory lending, and a bond legislation doesn’t require it, and because the pipe- tween 1988 and 2001 “based on EPA’s Air Quality settlement with a home equity lender. Most recently he has line project isn’t expected to be economically feasible for Index…the percentage of days…on which air quality reminded consumers of a national no-call list they can sign decades, if ever. exceeded a healthy standard dropped from almost 10 to ward off telemarketers. Remember the higher-education bonds approved by percent to 3 percent…” Strangely enough, though, Cooper has been silent North Carolina voters in 2000? State leaders assured tax- The EPA report covers a range of other environ- about a gang of rip-off artists who re- payers at the time that the $3.1 billion in mental indicators. For example, in the area of wetland side in his own backyard. They don’t new debt wouldn’t add to their tax bur- preservation, there has been a dramatic improve- call us at home at suppertime. They They are North den. Numerous state tax increases, some ment. Between 1954 and 1974 there was a loss of don’t break our fingers if we don’t re- of them necessitated by payments for in- nearly 500,000 acres of wetlands annually. Between pay a loan. And they don’t rifle through Carolina’s predatory terest on the bonds, have followed. 1986 and 1997 that fell to 58,000 acres out of a total of our trash or computer files. politicians. The moun- Taxpayers also might remember that nearly 106 million acres of wetlands nationwide. This No, they gradually wreck our pock- tains of money they the bonds were sold to them on the prom- constitutes a loss of one-twentieth of 1 percent of the etbooks and our lives while our backs ise that they would be used primarily to total annually. are turned. They are North Carolina’s steal put all the other repair and renovate dilapidated buildings. In the chapter on land protection, the EPA reports predatory politicians. And the moun- villains in the shade. A report by the Pope Center for Higher that the continental United States has more than 2 tains of money they steal put all the Education Policy in May 2002 found, how- billion acres of land. Only 98 million acres, or 4.3 other villains in the shade. ever, that universities were using most of percent of the total, are considered developed. The the money for new construction rather than for repairs and other 96 percent is designated as farmland, grazing A bait-and-switch binge renovations. land, wilderness, etc. This is a very different picture Gov. Mike Easley, too, got in on the act. Since fiscal from that portrayed by the Sierra Club and other Bait and switch is their game. First, they tell taxpayers 2001-02 he has seized hundreds of millions of dollars in pressure groups that constantly tell us that the coun- that a certain tax is needed to fund some worthy-sounding special tax revenue that traditionally was reimbursed to try is over-populated and being swallowed up by cause. Then, when the political climate is right, the backroom localities around the state. Easley’s confiscation angered “urban sprawl.” shades are drawn, and the accrued revenue is high enough, local officials, many of whom accused the state of stealing Most encouraging is the EPA’s report on health. they siphon the money into other pet projects under the their money. Dozens of localities filed a lawsuit to recover Over the last century, life expectancy at birth in- guise of an “emergency.” the lost revenues. creased from age 51 to 79.4 years for women and from Once unusual in North Carolina, bait-and-switch poli- In another lawsuit against the state, former Transpor- age 48 to 73.9 years for men. Rates of heart disease, tics appears to have become the preferred way of conduct- tation Secretary James Harrington and former state Sen. cancer, and most other chronic diseases are down and ing government business today. Almost anything goes William Goldston seek $285 million that Easley shifted decreasing. While it is noted that death rates from nowadays, under the convenient excuse that the state is so from the Highway Trust Fund to the General Fund in 2001 cancer have increased, the EPA points out that this is strapped for cash that state leaders are justified in transfer- and 2002. Harrington and Goldston, rightfully contend due to the good news that we are living longer. ring money from one fund to another that they find more that the money was earmarked for specific road projects Diseases such as polio and tuberculosis, which once politically expedient. and that the fund cannot be used for any other purpose. killed Americans at younger ages, have either been Like thieves on a rampage, predatory politicians grow In 2003 Easley proposed, and the legislature obliged, eradicated or rendered curable. As cancer researcher bolder with each new heist. Demonstrating the epidemic using $700 million from voter-approved bonding author- and National Medal of Science winner Dr. Bruce Aims proportions of the larceny were actions taken by the Gen- ity associated with the trust fund for projects that weren’t has shown, when the data is adjusted for age, cancer eral Assembly this year. included in the 1989 legislation that established the fund. death rates are also declining. Among the legislature’s recent victims were cellular More generally, motorists have been paying higher The EPA report should be required reading at telephone customers. Since 1998 cellular customers have taxes on gasoline and cars for 14 years, but they aren’t every newspaper, television, and radio newsroom in been paying 80 cents a month into a special fund that would enjoying the full benefits of the fund, as some of the money the country. It is a sober and refreshing antidote to the pay for updated 911 technology. The new equipment, goes for general government or even transit. “scare” reports offered by special-interest groups, which was to have been completed by the end of 2005, How much longer can Cooper ignore the widespread whose purpose is to shock people into closing their would have enabled officials to reduce from five miles to looting of North Carolina’s taxpayers by predatory politi- minds and opening their checkbooks. CJ 100 yards the location of an emergency call. cians? The extent of the crime spree demands immediate Totaling $33 million this fiscal year and $25 million action, perhaps a bulletin on prime-time TV. CJ September 2003 C A R O L I N A JOURNAL Opinion 21 poses. We don’t know whether biotech is the wave of the future, and frankly neither do the politicians spooning out MORE PROMISES this latest serving of higher-education pork. Certainly some intimately acquainted with the industry think so, and they Education, Medicaid Another misguided round of pork for NC have every right and opportunity to invest their own money or attract venture capital into building plants and Can’t Be Off Table training workers. Markets allocate resources well precisely because those e’re optimists at heart, particularly about the ince 2001, North Carolina politicians, state in a position to gain from a successful investment are also future of North Carolina. We live in a place that employees, lobbyists, and policy analysts in a position to lose from a bad one. Taxpayers shouldn’t W is frequently underestimated, that has gener- have been debating the causes of our string ated more than its share of industrious and innovative be forced to weave someone else’s financial safety net — S of budget deficits. There are nearly as many expla- again. people, and that has recovered time and again from mis- nations as they are commentators. fortunes and mistakes. Some arguments have more validity than oth- So when we see a burst of enthusiasm around a new ers. But one that I’m tired of hearing goes like this: initiative that promises great things, it brings us no plea- “Our problem can’t be wasteful spending. If you sure whatsoever to try to tamp it down. But it has to be add up elementary and secondary education, uni- done. North Carolinians have also had more than their TAIL WAGS DOG versities, and health care programs, that’s the vast share of false promises and costly political boondoggles. majority of our state General Fund budget right We’re afraid it’s happening again. The strange logic behind Smart Growth there — and surely you can’t seriously suggest that On Aug. 7, the board of the nonprofit Golden LEAF we not fund those programs!” Foundation approved a proposal to spend $64.5 million to Yes, I can. And don’t call me Shirley. create a biotechnology training plant at North Carolina It is fallacious to suggest that if you support State University, undergraduate and graduate programs t’s like giving criminals a reduced sentence if they the existence of a program, you must blindly sup- in biotech at North Carolina Central University, and train- promise to commit their crimes only during the day- port whatever amount ing programs at the state’s community colleges (though I light hours, so that the police department could cut of tax money the politi- only $9.4 million of the total goes to that last, slightly less back staff during the night shift. cians would like to objectionable, purpose). It’s like pressuring parents to move closer to major spend on it. In elemen- Advocates of the program insist that it offers the bright highways so that school buses will take less time and gas tary education, for ex- hope of expanding the state’s existing biotechnology in- to pick up students. ample, North Carolina dustry to replace jobs currently disappearing in traditional It’s like having the Division of Motor Vehicles close all spends hundreds of mil- industries such as textiles and furniture — and tobacco, but one of its offices and requiring would-be license re- lions of dollars a year they hasten to add, since the Golden LEAF money is sup- newers to camp outside as if waiting for tickets to the next placing teacher assis- posed to help tobacco-dependent communities. Star Wars movie. tants in classrooms. The Gov. Mike Easley said in a statement that the grant Uh, make that the next Harry Potter movie. best available evidence John Hood would “place North Carolina in a prime position to corner What are we talking about? Try the latest manifesta- — including the same the market on high-paying jobs.” One of Easley’s former tion of the “Smart Growth” mentality, this time in Char- study from Tennessee that advocates of smaller aides, who currently sits on the Golden LEAF board, said lotte. City planners there are taking flak from developers class sizes cite as justification for their proposal — that “an industry such as this can generate 100,000 jobs in for proposed land-use rules that try to steer future devel- suggests that teacher assistants have no statistically 10 years.” opment into corridors served by the planned regional-rail significant impact on student achievement. Spend- system. The rules would make it difficult to respond to the ing fewer dollars on teacher assistants would not A history of failed promises demand of actual consumers who might want houses in harm the educational process in any meaningful between the transit stops, or who want to live in neighbor- sense, and I’ve been glad to see some lawmakers Sounds great. But we’ve heard it all before. hoods that aren’t optimal for train travel. warming to the idea of economizing in this area to Remember the Global TransPark in Kinston? In the The result, say those in the real-estate business whose fund higher-priority needs. early 1990s, proponents of the project promised that it job it is to predict consumer demand, would be either a lot Similarly, to say that every dollar requested by would create 50,000 new jobs in North Carolina by 1998. It of dissatisfied Charlotteans — or perhaps a lot of satisfied administrators of the North Carolina Medicaid pro- actually did nothing but reduce overall employment ex-Charlotteans. gram is a dollar that must be spent, else we end up through the waste of tax dollars (the jobs currently at the Poppycock, respond the planners. They insist that the with a humanitarian crisis worthy of United Na- site are either tax-subsidized or moved from elsewhere in public wants alternatives to the auto-friendly development tions intervention, is to double a rhetorical bet with North Carolina). patterns that typify Charlotte and other North Carolina a pair of fours and hope no one calls your bluff. Remember the Information Highway project? In the communities. Sure, the public doesn’t show any signs of In this case, though, the cards are showing. For mid-1990s, then-Gov. Jim Hunt pitched a plan to construct realizing that, yet — but that’s why governments exist, to one thing, we keep hearing of cases in which North a high-speed system to link public and private institutions “lead.” Improbably, they also reject warnings from the Carolina seems to have significantly overpayed its across the state. Taxpayers were forced to “invest” millions business community that too many controls will choke off Medicaid vendors and generally to have managed of dollars in the initiative, which was supposed to create growth. Instead, the planners say that controls are needed its program with accounting controls somewhat an economic bonanza. to keep growth from slowing. You think we jest. The city’s below those of the average charity fish fry. Most In reality, there was very little interest in signing on to planning director “told council members the revised poli- recently, The News & Observer reported that the state the relatively expensive system. For one thing, most busi- cies will create more sustainable growth,” The Charlotte Ob- might have to repay the federal government as nesses and institutions found that the non-subsidized server reported. “Without the changes, he said, ‘In fact, much as a quarter of a billion dollars. Internet could do pretty much what they wanted. The Charlotte will peak and development will run out of Char- State administrators and politicians have ad- project petered out. lotte.’” vanced a variety of excuses for the Medicaid surge. Remember the William S. Lee Act? Enacted in the late Unless you step on the brake, the car will slow down. They are, for the most part, either misplaced or 1990s, this and related legislation introduced an aggres- Got it. exaggerated. As an invaluable analysis from the sive and complicated system of tax incentives linked to American Enterprise Institute reveals, North Caro- how much a business invested in plants, machinery, and What’s the point of being urban, again? lina and other states expanded Medicaid spend- research as well as how many and what kind of jobs were ing during the 1990s far beyond what was needed created. The Lee Act was supposed to make North Caro- Charlotte will never be a “true urban city,” according to keep up with caseload growth or general medi- lina competitive with other giveaway-happy states and to newspaper’s version of the Smart-Growther argument cal inflation. Indeed, from 1994 to 2000, only four induce net new employment. — one wonders whether the reporter or the planning di- states in the union had a faster growth rate in state Shortly afterward, North Carolina sank into a reces- rector come up with that nonsensical phrase, as if there Medicaid spending than North Carolinas’ stagger- sion more serious than that in the rest of the country. Its could be a “false urban city” or a “true rural city” — un- ing 62 percent. This couldn’t possibly be due to an unemployment rate soared. The Lee Act didn’t cause these less it uses urban-planning devices to increase density and increase in the truly needy population for which woes, of course, but it didn’t prevent or alleviate them, mixed-use developments. Medicaid was originally created, since North either. OK, let’s assume that’s true for the moment, but only Carolina’s poverty rate shrank by 15 percent dur- And on the very same day, Aug. 7, the Golden LEAF for the moment. One might wonder what the point is of ing the same period. Foundation agreed to the expensive biotechnology-incen- having a “true urban city,” as opposed to the current sub- No, there was nothing inevitable in our state’s tives plan fashioned by its political patrons — so much for urban hellhole that, well, seems to be such a popular place massive Medicaid expansion. The system wasn’t the foundation’s vaunted independence — the N.C. De- to move to. The answer is simple: It would be easier to run on autopilot. Its budget wasn’t forced upward by partment of Commerce released a long-awaited outside trains around in. federal mandates, or by general medical inflation evaluation of the Lee Act incentives. The findings were so- Real people in the real world want to choose how they (Medicaid spending grew twice as fast as Medi- bering. will live, and then see private and public services respond care and far faster than private health-care spend- From 1996 to 2001, eligible companies earned nearly to their preferences. Real government planners in the un- ing). Former and current legislators, governors, and $1.2 billion in state income-tax credits, though they have real world want to chose how to deliver services, and then state administrators bear the responsibility for cre- so far claimed only $208 million. But of the thousands of force consumers to comply with their — the planners’ — ating the Medicaid monster that has already torn jobs supposedly created, the study found that only 4 per- preferences. up the laboratory and is now rampaging through cent were actually induced by the offer of incentives. Al- Which is why this policy is like trying to tow burning the countryside. No more excuses. Let’s act. CJ most all the jobs, in other words, would have occurred mobile homes from all over town into a single block so anyway. that the fire department can concentrate its water-hose fire. It is simply foolish for government to make grandiose This is like the cart before the horse. This is like the tail Hood is president of the John Locke Foundation, pub- projections and risky bets with the taxpayers’ money — wagging the dog. This is like scrimping on dessert in or- lisher of Carolina Journal, a syndicated columnist, and which is a far characterization of Golden LEAF’s assets, der to save room for the appetizer. host of “Carolina Journal Radio,” now broadcast each by the way, in that they could and should be returned to A not-very original conclusion presents itself. There’s week on 14 stations across the state. the state treasury and used for general governmental pur- not much smart about Smart Growth. CJ September 2003 C A R O L I N A 22 Opinion JOURNAL

Editorial Briefs

States spend themselves silly

Financial problems racking many state govern- ments this year have less to do with the weak national economy than with the inability of governors and legislators to manage money wisely, according to a USA Today analysis of how the 50 states spend, tax, and balance — or don’t balance — their budgets. Utah, Georgia, and Delaware are the best finan- cial stewards, according to the analysis of the states’ financial performance. The key to their success: re- straint — during the economic boom of the late 1990s, these states limited both spending growth and tax cuts. After the economy weakened in early 2001, they acted swiftly and decisively to keep their finances sound. To make ends meet, some states have removed thousands of low-income adults from Medicaid and reduced benefits for others. Many states have raised college tuition, cigarette taxes, and other narrowly targeted fees. At least six states have increased sales and income tax rates. But one thing has remained constant throughout the crisis: state spending keeps growing. It went up 6.3 percent for the fiscal year that ended June 30, 2002, and it’s on track to rise about 5 percent in the 12 months that end June 30. Reported in USA Today.

Cost of federal regulations soars

President Bush and Congress will eventually answer to taxpayers for the $2 trillion federal budget. Ignorant Electorate Endangers Nation, State But who answers for the $860 billion — 8 percent of gross domestic product — that federal regulations now cost on top of federal outlays? By DONNA MARTINEZ year-olds are only 15 months shy of being able to vote in In “Ten Thousand Commandments: An Annual Associate Editor the 2004 presidential election. Their uninformed votes have Snapshot of the Federal Regulatory State,” analyst RALEIGH just as much impact as those cast with an understanding Clyde Wayne Crews finds regulatory spending takes V talk shows are a consistent source of humor about of who, what, and why. up more than one-third of the entire federal budget, the American public’s ignorance of politics and gov- With that in mind, it’s scary to think that just three of a larger burden than the entire federal budget in the Ternment. In a post-Sept. 11 world, 10 teen-agers knew the General Assembly 1960s. The Federal Register, where new rules are pub- you’d think people would know top elected makes the laws in North Carolina. Consider- lished daily, hit a high of 75,606 pages last year (up officials in Washington D.C., but man-on-the- ing we’ve lived through six months of legis- from 49,795 in 1990). In the pipeline are 4,187 rules at street interviews tell us otherwise. These lative and budget battles that made news various stages of completion. laugh-out-loud Q&A’s never fail to produce nearly every day, this is another educational Five agencies are responsible for more than half people who can’t name someone as high pro- red flag. We shouldn’t expect teen-agers to cite of this torrent: Environmental Protection Agency file as the vice president. You just know they chapter and verse on the session’s bills or the and the Transportation, Treasury, Agriculture, and wouldn’t get the joke if “an undisclosed lo- budget, but when 70 percent don’t know or Interior departments. cation” were offered as a possible answer to answer incorrectly about who makes the laws, Many such rules are well-intended, while others a question about where Mr. Cheney lives. there’s something wrong. Adding to the are questionable, Crews said. Congress takes credit Given that reality, none of us should be puzzle is that 68 percent said politics is some- for popular regulations, but then blames agencies for surprised, but all of us should be concerned times or very often discussed around their costs. Phasing out inefficient rules, making regula- by some of the appalling results of Civic In- Donna Martinez house. What are they talking about? Evidently tory costs as transparent as direct taxes and making dex 2003, a survey conducted by the North not Edwards. Or Dole. Not the General As- Congress directly responsible for those costs are Carolina Civic Education Consortium and released earlier sembly. Not the state budget. crucial to economic health, Crews said. this year. Housed at the UNC-Chapel Hill School of Gov- The free enterprise system is more understood by the Reported in Investor's Business Daily, based upon ernment, the project conducted interviews with a random teen-agers who were surveyed, but respect for business and Clyde Wayne Crews Jr., “Ten Thousand Command- sample of our state’s adults and teens, revealing what we’ve entrepreneurship is lacking by the majority. Only 31 per- ments: An Annual Snapshot of the Federal Regula- unfortunately come to expect: paltry knowledge of the most cent told surveyors they have quite a lot or a great deal of tory State,” 2002 Edition, Cato Institute. fundamental aspects of American government and history. confidence in large corporations, while 44 percent ex- Only four of 10 adults surveyed knew the first 10 pressed positive sentiments about small business. Yet while For sale: cities’ names and prestige amendments of the U.S. Constitution are called the Bill of they’re skeptical of business, 70 percent said they’re likely Rights. Three of 10 didn’t have a clue, and the rest gave a or very likely to consider a job with a for-profit business at Cities across the nation are striking deals with wrong answer. Imagine the dismal responses had the sur- some point in their careers. corporate sponsors, in effect selling their names and vey delved into the amendments themselves. prestige to the highest bidder as they try to ease Confident in Carolina financial problems without raising taxes. Care-free in Carolina Portland, Ore., had 92 basketball courts resur- Despite their acute lack of knowledge, North Carolina faced by Nike; in exchange, the company was al- Tar Heel adults’ knowledge of state politics was just teens are confident in themselves, as reflected in what the lowed to put its swoosh logo on the courts. The as bad. Only 31 percent correctly named our two U.S. sena- survey calls their “civic skills.” Translation: politically cor- Buncombe County, N.C. Parks and Recreation De- tors, John Edwards and Elizabeth Dole. rect attitudes grounded in our self-es- partment is offering naming rights to tennis courts, Only 25 percent could name one. That’s teem-obsessed culture. Almost half, 49 swimming pools, and hiking trails. bad news for both senators, but particu- As awful as these re- percent, said they’ve boycotted a prod- Phoenix is considering a naming rights program larly stinging to presidential hopeful uct because of the conditions under that could generate up to $1 million annually; Phila- Edwards, who’s spent lots of face time sults are, the societal which it was produced or because they delphia hopes for $3 million. Palo Heights, a suburb outside the state trying to raise his pro- and policy implications disliked the company’s conduct. Six of of Chicago, is trying to sell naming rights to Lake file. To be fair, these respondents weren’t 10 said they’re effective at compromis- Katherine, a 158-acre nature preserve. New York classified as likely voters, but he still has of the survey of North ing and weighing pros and cons, and 82 Mayor Michael Bloomberg has hired a consultant to a recognition problem here at home. Carolina teens are of percent said they’re effective at listening consider selling sponsorships for parks in the city. As awful as these results are, the so- equal significance. to others’ ideas. Although some cities have reaped millions of cietal and policy implications of the OK, our teen-agers like themselves, dollars by selling naming rights for stadiums and survey’s results of North Carolina teens but that’s not enough. What transforms arenas to corporations, some opponents decry the (age 13-17) are of equal significance. Only good people into good citizens is what growing popularity of such deals as gross commer- 8.8 percent of the group — not even one in 10 teen-agers they do at the intersection of politics and civic skills. If cialism that intrudes on their life and culture. — could name both Dole and Edwards. That’s a sad per- young men and women don’t know who leads the state or Boston, San Francisco, and Los Angeles have formance by middle- and high-schools students who are how policy decisions are made, all the boycotting, listen- rejected sponsorships for subway stations, a football presumably being taught government and history in North ing, and compromising in the world won’t do much to stadium, and other facilities. Carolina’s classrooms. Clearly, somebody’s asleep at the improve North Carolina’s future. Reported in USA Today. CJ chalkboard. The unanswered question is whether the prob- It’s time to stop focusing on self-esteem. Let’s address lem is with the kids or the teachers. Remember, the 17- what our teen-agers think and what they don’t know. CJ September 2003 C A R O L I N A JOURNAL Opinion 23

A summary of common terms Breaking the Language Barrier When Talking Economics

By MICHAEL L. WALDEN positive, and a recession occurs when economic growth is trying to sell the same product or service to consumers. Contributing Editor negative for at least six months. The reason economists Monopoly is one firm selling the same product or service to RALEIGH now say the recession ended in November 2001 is GDP has consumers. However, the distinction gets fuzzy if firms very field of study has its own jargon. A few years increased since then. tweak their products or services so they are not exactly like ago when I had surgery I was astonished by the Unemployment, Discouraged Workers, and Underemploy- those offered by competitors. E medical terminology the doctor used to describe ment: Unemployment includes people who want to work Cost and Price: Cost is the value, usually in monetary what he did! I was impressed, but I really didn’t under- but don’t have jobs. But unemployment does not include terms, of resources used to make a product or service. Price stand much he said. people who have stopped looking for work (discouraged is the value received when a product or service is sold. Economics also has its own set of terms. But while few workers) or people who take jobs for which they are over- Money: Money is simply a measure of resources. Most of us will practice surgery, we all participate in the economy. qualified (underemployment). people strive to have more money because it represents So to better understand the economy, it’s good to know the The Fed: The “Fed” is short for the Federal Reserve control over more resources. lingo. Here’s a summary of some common System, headed by Alan Greenspan. The Fed Private goods and public goods: Private goods are prod- economic terms you’ll come across in press has strong influence on, but not direct control ucts and services that, once used by an individual or and other reports. over, interest rates and economic growth. household, are not available to other individuals or house- Monetary and Fiscal Policy: These are gov- holds. Big Macs are private goods because if I eat a particu- Common economic terms ernment policies designed to affect economic lar Big Mac, you can’t. Public goods are products and growth. Monetary policy is operated by the services that, once available, are able to be used by many Gross Domestic Product: Also known as Fed and involves changing interest rates and individuals or households to the same degree. National “GDP”, it’s the monetary total of everything credit available for loans. Fiscal policy is oper- defense is the premier example. Private goods are usually made in the economy, including products ated jointly by the president and Congress paid for by the individual using them, and public goods are and services, during a specific period of time. and involves changing federal taxes and fed- funded with tax dollars. The distinction gets messy, both GDP is used to measure the size of the eral spending. Needless to say, there’s intense economically and politically, for products and services economy. The state version of GDP is Gross disagreement over the effects of monetary having a mix of private and public characteristics. Educa- State Product, or GSP. and fiscal policies. tion is an excellent example. Inflation, disinflation, and deflation: Infla- Budget Deficit and National Debt: A budget Demand, Supply, and Markets: I’ve saved the best for tion is an increase in an average of prices. Michael L. Walden deficit occurs in any year in which the federal last, because everything in economics revolves around Disinflation is an increase in an average of government spends more than it collects in demand, supply, and markets. Demand shows how much prices, but the increase is getting smaller. taxes and other revenue. The national debt is of a product or service people are willing to buy at a given Deflation is a decrease in an average of prices. The Con- the accumulation of past deficits minus what has been price. People are willing to buy more the lower the price. sumer Price Index uses an average of retail prices faced by repaid. The size of both is best judged as a percent of GDP, Supply tells how much of a product or service businesses the average consumer, and the Producer Price Index uses an not by their dollar amounts. are willing to sell at a given price. Businesses will want to average of prices paid by the average business. Trade Balance: There are two trade balances. The current sell more the higher the price. Markets are where buyers Nominal Dollars and Real Dollars: Nominal dollars are account compares imports of goods and services to exports meet sellers, and the job of the market is to equate demand the dollars we observe as a price, cost, or salary. So, last year of goods and services. The current account is in surplus if and supply at a single price. you may have earned $40,000, and this year you earn exports exceed imports and is in deficit if imports exceed I’ve hit only the highlights here. There’s much more to $41,000. Real dollars are dollars adjusted for changes in exports. The capital account compares new foreign invest- the language of economics. But this gives you a start to average prices (inflation) and measure purchasing power. ment in the United States to U.S investment flows to foreign “Economese”, and I hope you’ll decide to take the ad- So if inflation was 2 percent last year, then $800 (0.02 x countries. The capital account is in surplus if foreigners vanced levels! CJ $40,000) of the $1,000 increase in your salary was due to invest more in the United States, and it is in deficit if the U.S. inflation. In “real” or “purchasing power” dollars, your citizens invest more in foreign countries. Interestingly, the salary this year is $40,200, not $41,000. current account and capital accounts offset each other in Michael L. Walden is a William Neal Reynolds distinguished Economic Growth, Expansion, and Recession: Economic any year. That is, if the current account is in deficit, the professor in the Department of Agricultural and Resource Eco- growth is the percentage change in GDP, measured in real capital account will be in surplus. nomics at North Carolina State University and an adjunct dollars. An expansion occurs when economic growth is Competition and Monopoly: Competition is many firms scholar with the Locke Foundation. The Passing of Jazz Man Benny Carter, the Musician’s Musician

By MARC ROTTERMAN Wells, played in this band. Among jazzmen his band was In Hollywood, he became the first black musician to Contributing Editor known as “the musicians’ band.” In fact, over the years, write and arrange film scores. It was Carter who opened RALEIGH that was the case with all the bands that Carter formed. the doors and broke down the racial barriers for people like ittle noticed by the pop culture was the recent death In 1935, Carter was invited to Paris to play with The Quincy Jones. Although Carter kept a relatively low pro- of jazz “legend” Benny Carter. When Carter died in Willie Lewis Orchestra. From Paris, at the suggestion of file, he was not averse to standing up for his rights. In the L July, a month shy of his 96th birthday, it ended a music critic Leonard Feather, he headed for England, where ’40s he fought and won a legal case against restrictive career that spanned more than eight decades. he served as arranger for the BBC Dance Orchestra. Carter covenants that had prohibited blacks from owning homes Although he never received the celebrity status that his was one of America’s first “jazz ambassadors” abroad. in specific areas of Los Angeles. contemporaries such as Duke Ellington, Count For three years he played throughout From the mid ’40s to the late ’60s, Carter continued to Basie, Benny Goodman, or Louis Armstrong Europe performing as well as recording with write and record jazz. During this time he did few live achieved, Carter was widely recognized as the premier British, French, and Scandinavian concerts, preferring the home life in Los Angeles. one of the most influential figures in jazz. As jazzmen of his time. During the late ’60s, he re-emerged and began touring Ellington wrote, “the problem of expressing American stars, such as friend Coleman more frequently. In 1975 he traveled through the Middle the contributions that Benny Carter has made Hawkins, also did a stint with his band. East on a tour sponsored by the U.S. State Department. He to popular music is so tremendous it com- Around this time, in Holland, Carter formed visited Europe often and became a virtual commuter to pletely fazes me, so extraordinary is he.” That and led the first international, inter-racial band. Japan, where he achieved rock-star status among jazz statement was made in 1943. Carter returned to the states in 1938. In aficionados. this period, the “big band sound,” which During the ’80s he received a Lifetime Achievement The budding of a legend Carter had helped shape, was taking the coun- Award from the National Academy of Recording Arts and try by storm. Carter quickly got another band Sciences. Carter was born in New York City in together and from 1939 to 1940 was one of the He also led an orchestra for the 1984 inaugural of 1907. As of age 15, he was sitting in at Harlem Marc Rotterman featured performers at Harlem’s famed Sa- President Reagan and played at the White House in 1989 as night spots as a features soloist. He and Johnny voy Ballroom. a guest of President Bush. In 1990 he received the Jazz Artist Hodges were the models for the swing era Carter’s arrangements were featured on of the Year Award in both the Down Beat and Jazz Times alto sax players. You might say that Carter and Hodges recordings by Goodman, Basie, Ellington, Gene Krupa, International Critics’ polls. In December 1996, President were the Hendrix and Clapton of their era. and Tommy Dorsey, among others. In other words, the Bill Clinton presented him with the Kennedy Center’s Self-taught Carter helped to chart the course for big giants of the swing era came to Carter to help create the Honors Award for an extraordinary lifetime of contribu- bands. His arrangements, such as “When Lights Are Low” “beat.” Along the way, other greats such as Billie Holliday tions to American culture. and “Blues in My Head,” have become jazz standards. and Miles Davis also worked with Carter. Carter had an amazing career as a composer, arranger, In the early 1930s, Carter became music director for the bandleader, and jazz virtuoso on both the alto saxophone Detroit-based McKinney Cotton Pickers. Having estab- New challenges on the West Coast and trumpet. As Mile Davis said, “Everybody ought to lished himself as a major player on the alto sax, Carter listen to Benny, he’s a whole musical education.” Known to returned to his first love, the trumpet. On both instruments In the early ’40s, Carter, the nomad once again, up- his contemporaries as the “King,” Carter was the musician’s he was considered an acknowledged master. rooted and moved to the West Coast, where he lived the musician. CJ Around 1932, Carter returned to New York and began rest of his life. It was during that time he increasingly did forming his own orchestra. Numerous swing-era stars, studio work and for almost 25 years was out of the public including Chu Berry, Teddy Wilson, Sid Catlett, and Dickey eye. Marc Rotterman is a senior fellow at the John Locke Foundation. September 2003 C A R O L I N A 24 Parting Shot JOURNAL Dear Tar Heel Taxpayers: Thanks for the Cash Civic lesson for dummies: Legislature allows new residents to reap a windfall at public universities

An Open Letter to North Carolina’s Taxpayers: public education rely heavily on that fact. But what if a student from somewhere else leaves as soon as their time is s a college student, newly minted resident of North up? That’s my most likely course. North Carolina is a fine Carolina, and political conservative, I am torn by place, but it’s not home. A my latest interaction with state government. Tax- payers will subsidize a large portion of my existence until Thanks for the memory, now I must go I graduate in May. They were already doing so heavily before I became eligible for in-state tuition. My new resi- I’ve tried to rationalize my part in this process. And it dency status amounts to legislators dangling about $12,000 is true that soon enough I will be the one shelling out cash of taxpayer money before me. I simply did not have the for some spoiled know-it-all to determine whether Lewis willpower to turn it down. Carroll liked little girls a little too much, which “gangsta” The logic of pouring so much cash into public higher rap lyric is the finest form of new poetry, or whether Homer education is well known and perhaps entirely valid. Yet I and the Greeks represent the earliest example of warmon- cannot help but feel guilty in accepting the same rate of gering, patriarchal exploitation. Still, small tinges of guilt tuition as someone who is part of a family that has filled remain. North Carolina’s coffers for years. As for myself, one year My delusions of grandeur don’t include the belief that of employment has been compensated at less than $10,000. the state’s taxpayers will miss any professional contribu- Taxes paid on my earnings are small compared to a full- tion of mine sometime in the future. The amount of money time wage earner. If measured in terms of payment in, and spent on my education, certainly a very small part of a services received, my ratio probably beats the worst wel- bloated state budget, may not be of much concern. But fare offender. something larger is at stake. If out-of-staters take advan- tage of the legislature’s generosity and then take off, it hurts One year later, living large in Carolina North Carolinians both in their pocketbooks now and later down the road. Although lacking in conservative principle How did this come about? It was easier than one might translated into action, I would feel a little guilty if I don’t think. After living in North Carolina for a year, filling out stay and start paying taxes. Might that be worth some- a form, sending it in, and waiting for about a week, I closed thing? the deal. I will pay about $4,000 in tuition and fees for the The Old Well at the University of North Carolina-Chapel Hill. In the meantime, I will remain anonymous to avoid the upcoming academic year, as opposed to the $16,000 of the embarrassment of facing up to rightfully displeased citi- (still partially subsidized) out-of-state student. There is no tion consisted of two pages of general information and an zens, as I would be if the circumstances were reversed. An way ideological remorse can overcome that financial car- essay asking a student to “describe the factors involved in important part of my education since moving here is the rot. your decision to move to North Carolina.” Three hours and first-hand understanding of how entrenched human self- Having no idea of how many applicants were rejected, 1,000 words later, I was ready to go. interest and hypocrisy actually are. I do not know how lucky, or proud of myself, to feel. But the This presents a small, temporary problem of conscience process was simple and fast, and I am no grand intellect, for me and a rather different one for taxpayers. An edu- Anonymous Student and Lucky New Resident community citizen, or wordsmith. The residency applica- cated populace benefits the entire state. Arguments for Chapel Hill, N.C.

Host Tom Campbell Chris Fitzsimon Barry Saunders John Hood

Whether it’s politics, education, taxes, growth, or the legislature, the issues that affect North Carolina are important to you, so…

THE NC SPIN NETWORK (Partial) Every week, hundreds of thousands of NC SPIN has been called ‘the most WLOS-TV ABC Asheville Sundays 6am North Carolinians watch NC SPIN for a full, intelligent half-hour on North Carolina TV’ WWWB-TV WB55 Charlotte Sundays 11pm all-points discussion of issues important to and is considered required viewing for WJZY-TV UPN46 Charlotte Sundays 6:30am the state. Politics. Education. Growth. anyone interested in state and local politics WHIG-TV Indep. Rocky Mount Sundays 10am, 7pm Taxes. Transportation. and public policy issues. WRAZ-TV FOX50 Raleigh-Durham Sundays 8:30am WRAL-TV CBS Raleigh-Durham Sundays 6:30am A recent poll showed 48% of North Caro- If your organization has a message for WILM-TV CBS Wilmington Sundays 11am lina ‘influentials’ — including elected officials, CEOs or government and education WXII-TV NBC Winston-Salem Sundays 7am lobbyists, journalists, and business leaders leaders, NC SPIN’s statewide network is WRXO-TV Indep. Roxboro Saturdays 6pm — watch NC SPIN, with 24% saying they the place for you to be! Call Rudy Partin WCTI-TV ABC New Bern Sundays 11:30am watched the show ‘nearly every week.’ (919/274-4706) for advertising information. WCTI-DT UPN48 New Bern Sundays 5:30 pm Cable-7 Indep. Greenville Fridays 8pm Tuesdays 6:30pm Saturdays 9pm Mountain News Network Sundays 9:30am (WLNN Boone, WTBL Lenoir) Mondays 7pm