I don’t know who gets to hold President Biden’s cell phone these days, but whoever runs his Twitter account has been hyperactive.
The past few days have seen a blizzard of tweets attacking all the Left’s usual targets from Republicans and business to their old favorite 'trickle-down economics.'
So, what exactly is this ‘trickle-down economics’ that Joe Biden has been attacking? According to the Left, ‘trickle-down economics’ is a shorthand explanation of the way that conservatives run things. It involves massive tax cuts for the rich with a little bit allowed to ‘trickle down’ to everyone else.
This is a grotesque misrepresentation of what conservatives stand for. In over 30 years in the policy wonk world, I have not once heard a conservative use the term 'trickle-down economics' to describe their strategy.
The term itself was invented by the Left in the 1930s to misrepresent Cal Coolidge’s economic strategy. Neither then, nor now, do conservatives believe that the way to make poor people richer is to make rich people even richer.
Conservatives believe in cutting taxes across the board to the benefit of everyone – which is why in states like Mississippi, conservatives have been so proactive in cutting income taxes for the broad mass of working people.
This has not stopped the Left from repeatedly using the term to mischaracterize what conservatives actually stand for. It is a form of misinformation, up there alongside various other conspiracy theories. Indeed, one should regard people who make excitable claims about ‘trickle-down economics’ in much the same way that one might regard people who make excitable claims about QAnon or microchips in the water.
Ronald Reagan was attacked for ‘trickle-down economics’ in the 1980s, despite doing more than almost any other President to reduce the tax burden on those with the lowest incomes. That did not stop Bill Clinton, who was able to run a budget surplus thanks to Reagan’s tax cuts the previous decade, from also using the term in the 1990s.
How should the right respond? Keep cutting taxes for everyone.
The Left is always going to use the myth of 'trickle-down economics' to attack conservatives. The past century or so shows that they will relentlessly misrepresent – especially when there’s an election looming.
But the ‘trickle down’ attack only ever gains traction when we stop cutting taxes (See President Bush the Elder’s one-term career for details). Keep on cutting.
An education revolution is underway across America.
Last week, Sarah Huckabee Sanders, the newly elected governor of Arkansas, announced a plan to introduce universal school choice. By 2025, every family in Arkansas will be given an Education Freedom Account for each child. This will allow moms and dads to enroll their kids in whatever school is most appropriate for their family – be it “public, private, parochial, or homeschool”.
The month before, Utah and Iowa passed laws that will allow something similar. Texas, Florida and Wyoming are not far behind. Arizona and West Virginia have already implemented school choice.
It has been half a century since Milton Friedman, the great conservative thinker, first advocated a system of universal school choice. But over the intervening years, not a great deal actually happened.
Some states made a few incremental steps toward greater school choice. Our own state of Mississippi, for example, passed a law to allow children with special needs to have greater control over their share of the education budget.
At the same time, starting in the 1990s, several states in the midwest created what became known as charter schools. Phenomenally successful, these government-funded schools operate independently from the state school system and extended education choices to many families that would not otherwise have had any.
The reality is that until two years ago, no state in America had a comprehensive system of school choice. In a couple of years, it is likely that at least 10 of the 50 states will. What changed?
For decades, school choice has been the conservative movement’s Holy Grail, something much sought after, but seldom ever seen – until now. Why are we suddenly seeing the success of the school choice movement?
COVID lockdowns played a part. When schools were shut down, often for extended periods of time, parents found themselves asking questions about what and how their children were being taught. The culture of deference to expert educators dissolved. Dissatisfaction grew. Suddenly there was a large pool of parents wanting something different.
At the same time, leaders in several states have woken up to the way that they can build a coalition around parental empowerment. Gov. Ron De Santis in Florida, for example, is phenomenally popular. He was re-elected winning 62 of Florida’s 67 counties. Giving school choice to moms and dads from every background in the state has won him support from voters of every background across the state.
Nor should we overlook the role of state-based think tanks who have been patiently making the case for change. It is no coincidence that there is a handful of highly effective free-market think tanks advocating for change in states such as West Virginia, Arizona and Texas.
Perhaps the most revealing thing about the school choice revolution as it unfolds is that those opposed to school choice seem to be a lot weaker than was once assumed. For decades the lack of progress toward school choice was down to the powerful vested interests that opposed giving parents control over their tax dollars.
It turns out those vested interests who believe that the primary purpose of the state’s education system is to provide the payroll are not as strong as was assumed. Sure, they huff and they puff and complain about giving parents more power. But it seems that there are more moms and dads that want change.
So why aren’t we seeing any momentum toward school choice in Mississippi? If Arkansas’ governor can announce a program for universal school choice, why can’t we?
At times it seems as if the forces of ‘do nothing’ inertia in Mississippi are stronger than ever. During the current legislative session, for example, even fairly modest proposals that might have made it a bit easier to open more charter schools (Mississippi only has eight) were killed off in committee.
The key is leadership. Arkansas looks set to get school choice because instead of kowtowing to the vested interests, Gov. Huckabee Sanders is reaching over their heads and appealing directly to families.
It turns out that allowing every family the freedom to make choices about their kids’ education that currently only a few wealthy folks can make is pretty popular. I suspect it is only a matter of time before someone makes that discovery on our side of the river.
It wasn’t Liz Truss’s failure to make big changes we should worry about. It was her inability to deliver even the most modest pro-market reforms after a decade in high office that ought to alarm us.
As Prime Minister for six weeks, Truss tried and failed reduce Britain’s tax burden to about the level it was under Gordon Brown.
As a cabinet minister for ten years, Truss – a mother as well as a free marketeer – tried to reduce the costs of childcare by reducing red tape. Her efforts to change legally mandated child/carer ratios, despite mountains of evidence it could be done safely, were persistently thwarted.
If even someone who served as Minister for Child Care, Minister for Women, Chief Secretary to the Treasury, Lord Chancellor, Foreign Secretary and Prime Minister, cannot manage minor regulatory changes regarding childcare, what hope is there for free marketeers?
The reality is that free markets are in headlong retreat around the world, not just in Britain. After decades of greater trade liberalisation, a new form of protectionism is emerging.
The United States is in the process of ‘re-shoring’ global supply chains, using subsidies and tariffs to ensure the domestic production of everything from microchips to electric cars. The European Union, too, under the guise of going green is seeking to make herself less dependent on Asian imports. China, admitted to the World Trade Organisation nearly 20 years ago in the hope that she might become more amenable to free trade, is aggressively mercantile.
Government has also been getting bigger. We tend to think of America as a land of limited government. In reality, there has been a remarkable expansion in the size of the state in the past decade or so. From 1990 to 2020, total government spending in the United States averaged around 25 per cent of GDP. By 2021, government spending as a percentage of GDP hit 42 per cent, the sort of level one might expect to see in Europe.
European governments, meanwhile, have reached the size one would expect to see in a socialist society. Government spending now accounts for over half of all output in France, Germany, the UK, Italy, Belgium and Sweden. The state in supposedly free market western countries is now larger than in communist China, where government spending as a percentage of output has risen from less than a fifth 20 years ago to a third today.
This is partly a consequence of Covid. All that ‘locking down’ made the world more authoritarian, normalising the idea that a small group of official ‘experts’ might decide what was right for the rest of us. As governments frantically scrabbled for protective equipment and vaccines their instincts become more protectionist. And, of course, government spending soared to cope with the apparent emergency, yet somehow remains high despite alarm about the virus subsiding.
But Covid, which emerged in 2019, cannot explain why public officials in Britain were introducing price controls in the energy market long before. Nor can it account for the tendency for public officials on either side of the Atlantic to, for example, tax soda drinks or regulate the level of salt in food.
Before anyone had heard of Covid, in 2008 western governments nationalised banks that overexposed themselves to bad loans. A decade or more before then, central bankers had redefined their role from being lenders of last resort to engineers of economic growth using massive monetary manipulation.
Covid accelerated a trend towards more top down government which was already there.
When Liz Truss complains that she had been undermined by a public policy ‘establishment’, she wasn’t being a crazy conspiracy theorist. Many of those that make public policy in Britain, America and Europe hold a world view deeply ill-disposed towards the free market. Why?
It’s not that the people that make policy making for a living set out to be anti market. Their déformation professionnelle merely reflects the way that universities have been churning out social science graduates imbued with a corrupted kind of empiricism.
The sort of folk that run the policy making bureaucracy in Britain, America and Europe have been taught to hold various theories and then make observations in search of facts to fit the theory. This they call ‘evidence-based’ policy making (and who could argue with that, right?).
Seeking out observations to fit the theory – whether setting tax rates, trying to change the trajectory of an epidemic or regulate childcare – produces a flawed set of assumptions. It is a form of reasoning that the physicist and philosopher David Deutsch calls ‘inductivism’. No matter how much emphasis inductivists place on ‘the data’ or on modelling, it also gives rise to an excessive belief in the ability of policy makers to engineer particular outcomes. Who is a mere minister to presume to know better?
Inductivist reasoning has given rise to technocratic managerialism, almost irrespective of who or what the voters vote for.
But here’s the odd thing. This retreat from free market thinking happened at a time when there have never been more organisations dedicated to defending it. Much of academia might be hostile to free market ideas, but free market think tanks have never been more active or better funded than right now.
Here in the United States, Washington DC is full of think tanks, brimming with brilliant people and ideas. A network of state-based think tanks exists, advocating for the free market from my own Mississippi to Maine, from California to Carolina.
Across the Atlantic, London is home to a number of world class think tanks. Thanks to the efforts of the late Linda Whetstone, a network of free market organisations now straddles much of the globe, too.
All that advocacy infrastructure we free marketeers have put in place has not arrested the expansion of the state. We need to ask why.
Defending the free market is difficult. The way that the free market works is counter intuitive. The notion, for example, that we might depend largely on foreigners to feed us can be unsettling. That self-sufficiency might actually increase the risk of food shortages seems contrary to common sense.
It is easy for a politician to get a round of applause for promising to fix prices. The secondary effects of their price fixing are often harder to discern. Each time the state intervenes, the benefits of that intervention are usually concentrated, but the costs dispersed.
No one is born with these insights. They are not innately understood but must be learned. Instead of learning them, young people are taught to see the world in a way that leaves little sympathy for the notion that human affairs might best be left to organic design.
Young Europeans and Americans have had it drummed into them that the world faces an impending climate emergency, necessitating massive state intervention. Implicit in climate change catastrophism is a profound pessimism, the sense that the world is getting worse. If you believe that the world is getting worse, you are much more receptive to the idea that things should be reordered by top down design.
‘Woke’ ideas, too, have gone from university campuses into mainstream society. Old-school Marxists divided the world by class – capitalist oppressor versus oppressed workers. ‘Woke’ ideology should be thought of as a form of neo-Marxism, one that divides the world not by class, but in terms of race and gender – race oppressors versus oppressed.
Now entrenched in the corporate and public sectors, these ideas purport to explain how the world works by co-opting each of us into a hierarchy of victimhood and guilt. Unequal outcomes, according to this leftist narrative, are caused by the injustices of ‘the system’, rather than any differences in behaviour (so-called ‘systemic’ accounts for unequal outcomes ironically deny agency to precisely those supposedly oppressed people the left claims to champion).
However absurd we might believe this to be, this narrative does at least offer young minds an overarching view as to how the world works. Where is our counter narrative?
We were too busy focused on the minutiae of tax reform as a new left-wing narrative went mainstream. No wonder only 40 per cent of American’s aged 18 to 29, according to research by Pew, have a positive view of capitalism.
There is nothing wrong with reforming taxes. My own think tank, the Mississippi Center for Public Policy successfully led efforts to reduce our state income tax. My point is that if we are to win the war of ideas, we need to convince people about the moral merits of the market, too.
In place of catastrophism, we should begin by showing that we live in an elevated age. Almost everyone alive today enjoys a vastly better existence than they would have had in any previous period in human history – thanks to the free market.
For most of our existence as a species, there wasn’t much in the way of markets. People produced most of what they consumed for themselves – which accounts for why there was so little to consume, and people remained poor. But then along came the modern market economy, which emerged first in Holland and then England in the sixteenth and seventeenth centuries.
Instead of the normal subsistence existence, the Dutch and the English began to buy and sell to get what they needed. This system of free market exchange meant they could eat food they had not grown, build houses with timber they did not fell, and cloth themselves with textiles they had not woven. As a result, living standards in early modern Holland and England began to soar, accompanied by a dramatic rise in life expectancy.
Over the intervening 300 years, this system of free market exchange has grown to become ever more complex, encompassing an ever larger portion of humankind. Wherever the free market system took hold – Europe or America, Asia, South America or Africa – people began to live wealthier and healthier lives.
This process of market-driven progress that began three or four hundred years ago accelerated in the past half century. As a result, most people alive today are at least twice as rich as their grandparents. In China and parts of Asia, average incomes are many multiple of what they were in the 1950s. Life expectancy has increased, too, with particularly pronounced improvements in Africa and Asia in recent decades.
As the free-market system expanded, it saw ever more specialisation and exchange. The effect of this has been to make technology – from search engines and iPhones to air travel and solar panelling – which was once the preserve of the rich available to billions.
Instead of oppressor versus the oppressed, the modern market economy has made us interdependent, each of us partners in a web of mutual prosperity.
It’s an exhilarating story that needs to be told. To stand a chance against the left’s advancing narrative, we must be more that analytically right. We can only win if we are able to explain how the world around us works.
So how might we popularise this counter narrative? How do we take ideas found in books such as Matt Ridley’s The Rational Optimist or Daniel Hannan’s Inventing Freedom, and make them part of the popular conversation? Frederick Hayek popularised the role that intellectuals played advancing socialism. How do we today popularise our critique of over confident elites attempting to engineer outcomes they cannot possibly control?
A generation ago, Milton Friedman realised that it was not enough for him to write a book, Free to Choose, which made the moral case for the free market. He also had to present them to people in a format that they would absorb. The result was a ten-part TV series. Aired on most major US networks, Friedman’s presentation changed how millions of Americans saw the world.
Some in the free-market movement have made a good job of doing something similar using the new media. PragerU, Reason and FEE (the Foundation for Economic Education) have produced content that articulates free market concepts that are watched by millions around the world.
For several decades, Rush Limbaugh used radio to present a conservative analysis of current affairs to millions of Americans. Today, a new generation of commentators has emerged achieving with the new media what Rush using radio. Joe Rogan, Ben Shapiro, Dave Rubin and Dennis Prager have each acquired audiences of millions. In Britain, assorted YouTubers have achieved something similar.
But is there not a danger that these new media pundits are speaking to an audience that already agrees with them? Such is the fragmentary nature of the modern media market, there is little prospect of reaching beyond those that already subscribe to their world view the way that Rush Limbaugh’s ubiquitous broadcasts were able to.
How can we reach beyond those that already agree with us?
It is not a coincidence that some of the most effective advocates of conservative viewpoints today are not politicians or policy wonks, but those that started out as stand-up comedians. Joe Rogan and Dave Rubin in America, Konstantin Kisin, Dominic Frisby and Andrew Doyle in Britain all started out on the comedy stage, making wry observations about the world around them.
Satire and subversive humour, more than policy papers, are going to be critical weapons in the drive to undermine progressive ideology. As conservatives adapt to using new media, I suspect we will see broader output. Moving on from the simple talk show genre we get today, we will see documentaries and mockumentaries. (Think of the fun a genuine satirist would have with Harry and Meghan, or Greta Thunberg.) Someday soon I suspect it might be possible to watch a drama that isn’t a subtle – or not so subtle – lecture on identarian ideology.
Politics and policy lies downstream from culture. If we engage far more broadly than with mere policy genres, we stand a much better chance of winning policy fights.
One reason this has not already happened is that Big Tech tends to be ultra-progressive and inclined to censor a world view that conflicts with their own. During the Covid panic, for example, many of those that even questioned the efficacy of state mandated lockdowns were censored. Can anyone really imagine YouTube allowing mockumentaries that skewered leftist orthodoxies?
Free marketeers need to ensure their ideas are heard, but the way to achieve this is not to demand state regulation of Big Tech. Giving the state oversight over Big Tech’s output might simply entrench its anti-free market slant.
When social media platforms manipulate what viewers see they pay a price. As Mark Zuckerberg seemed to admit in a recent interview with Joe Rogan, if the algorithms give us what they want, rather than what we want, we tune out – and the social media platforms lose market share. See Facebook’s audience data and share price for details.
Big Tech censors are engaged in a counter reformation. However vigorously they might suppress what they don’t approve of, they will not be able to stop the subversion of the leftist elite’s ideology.
Our greatest cause for optimism is America. Yes, federal spending has risen, and many states have raised taxes and smothered themselves in regulations. But many southern states have moved in the opposite direction, eliminating red tape and cutting taxes. Some have eliminated state income tax altogether.
As the traditional business clusters centered around New York, Chicago and California have faltered, states run along more free-market lines have flourished. From Texas to Tennessee and Florida, a ‘new South’ has emerged. It is already the most populous part of America, pulling in not only people but capital and innovation.
Free market Southern states are not only a rebuke to the more statist states. Their success provides a model to follow once they have exhausted the alternatives in states like Oregon and Illinois.
After the Soviet system fell apart 30 years ago, it became fashionable to believe that the world was converging in the same direction. Free markets, based on universal values, were going to become ubiquitous, and nation states and their peculiarities less important.
The free market system did indeed embrace the world to such an extent we even called the process ‘globalisation’. But in reality, it might have been better understood as a process of benign ‘Americanisation’.
Nation states did not cease to be unimportant in the new global order. Quite the contrary, one nation state in particular – the United States – underpinned it. The idea that the world is converging towards universal values is an illusion.
China under Xi seems to have pivoted away from the pro-market policies established under Deng, resuscitating a fondness for micromanagement. Turkey, too, is not run by those looking to emulate the West, but by those who speak of restoring Ottoman glory.
We often unthinkingly include continental Europe as part of ‘the West’. Wasn’t it the case that much of Europe was incorporated into a system of free markets and limited government by Anglo American force of arms 80 years ago? Does the European Union today, a multinational agglomeration of people, presided over by a remote elite owe more to an Anglo-American tradition or a Habsburg one?
Among the opinion forming classes in American and Britain, however, the delusion of universal values has taken hold. Both are presided over by those who see nation states, including their own, as mere geographic spaces, occupied by interchangeable people bound by little besides economic activity.
This cultural relativism – a belief that all cultures are equally capable of producing Shakespeare or vaccines or free markets or, for that matter, genocide – is the foundational fallacy of the modern left. Cultural relativism has spawned a deep antipathy not only to the free market, but challenges the very legitimacy of the Anglo-American nation states.
Rather than marvel at how a small island off the northwest coast of Europe began a series of innovations that was to lift herself – and eventually the whole world – out of poverty, Britain’s achievement, we are told, was made at the expense of others. Instead of celebrating the ascent of America, we are invited to regard the United States as a nation ‘founded by slave-owners on stolen land’.
If we really want to defend the free market our priority must be to tell the story of (Anglo) American exceptionalism.
That 13 ramshackle British colonies might rise up to become the greatest Republic in history is extraordinary. That they might have done so by proclaiming the principle that each of us are created equal, in possession of the right to ‘life, liberty and the pursuit of happiness’ makes the United States not just a material achievement, but a revolutionary moral achievement, too.
America is the first great power in human history that has used her strength not to subjugate people and create an empire, but to set people free and demand the dissolution of empires. Three times she has used her might to save the free world, first from German militarism, then from the Nazis and most recently from Soviet communism.
For all her imperfections, there is no other nation on the planet that people of every creed, colour and culture would rather call home than the United States.
America’s story is the story of freedom, a tale of how free individuals and free markets, not technocratic elites, produced the greatest society to have ever existed. If we want to defend free markets, it is time to tell it.
Douglas Carswell is the President & CEO of the Mississippi Center for Public Policy. He was a member of the British Parliament and co-founded the official Brexit campaign. He lives in Jackson, Mississippi.
This article was originally published in The Spectator.
Mississippi legislators missed the opportunity to repeal the CON laws and prevent the dangers they cause for Mississippians.
By any measure, America is experiencing a substance use crisis. In 2021, deaths from overdoses reached an estimated 107,622 people across the United States, with roughly another 140,000 deaths due to excessive alcohol use. Unfortunately, Mississippi has not been spared from this epidemic. In 2021 alone, 491 people died from opioid overdoses, and over 2,500 people required Narcan to be revived after an overdose.
Numerous factors contribute to a person’s substance abuse, and it can be very difficult for them to realize or be convinced by their loved ones that they need professional help to get sober and get their life back on track. However, as the substance use crisis continues to get worse, facilities that provide treatment are hamstrung by antiquated regulations that prevent them from scaling up their ability to care for patients in need.
In nearly every industry or sector of the economy, when there is an increased demand for a business’s goods or services the relevant companies will simply scale, either by expanding their current operations or building new locations altogether. However, thanks to Mississippi’s Certificate of Need laws, the health care industry is prevented from scaling up as needed.
And when that happens, it’s patients — the very people these laws were supposed to help — who suffer.
Our state’s CON law requires that facilities that provide rehabilitation care must receive regulatory permission to expand or establish new locations or even just to add additional beds at inpatient facilities. This process takes months and can cost up to $25,000.
Additionally, this process includes a provision to allow “affected persons” to request a public hearing to argue against granting the Certificate of Need. “Affected persons” includes health care organizations that already provide a similar service or have indicated to the state that it plans to offer similar services in the future.
This provision is ostensibly to ensure that there is adequate care and to keep medical costs down, but, in reality, it provides a way for competing health care providers to try and limit their competition. We would think it odd if Mcdonald's had to secure permission from Burger King to open a new location, yet for some reason this is considered a good idea when it comes to health care.
The data is overwhelmingly clear that despite whatever good intentions lie behind these CON laws, they simply serve to reduce access to care and make it more expensive. A study by the University of Washington’s School of Public Health and Community Medicine compared and contrasted results in states with and without CON laws and found that they are “not an effective mechanism for controlling overall health care spending” and that they had in some cases actually limited the supply of care. Before their total repeal in Pennsylvania, CON laws had limited the supply of alcohol and chemical dependency beds.
Recent reports have confirmed these results. A multitude of research has found that states with CON laws have higher costs and less access to treatment, beds, and medical equipment.
Substance use is a crisis, and there is no time to waste in months of bureaucratic paper shuffling to improve access to treatment.
Unfortunately, Mississippi legislators missed the opportunity to repeal the CON laws that are preventing Mississippians who are struggling with substance use from being able to access the care that they need. House Bill 10 was introduced at the beginning of this legislative session and would have amended the relevant laws to remove chemical dependency services and facilities from CON regulations. It failed in committee by vote last week.
Passing House Bill 10 would have ensured more access to care, lower prices, and shorter wait times for people struggling with substance use by allowing Mississippi health care facilities to expand their ability to treat them without months of bureaucratic hoop-jumping that in the end only leads to higher costs and worse health outcomes.
This bill would have been a win-win-win that would have saved health care providers months of bureaucratic headache, allowed people with a substance abuse problem to access quality care at lower prices, and saved taxpayers money by reducing the negative consequences that stem from untreated substance abuse.
Americans for Prosperity Mississippi will continue to educate the public about the dangers of Certificate of Need laws and encourage legislators to pass H.B. 10 next year to ensure that Mississippians in crisis can access the care they need.
Submitted by Starla Brown. She is the State Director of Americans for Prosperity, an allied organization of the Mississippi Center for Public Policy.
Why do some firms go ‘woke’?
Disney recently got embroiled in a row about transgender identity in kindergartens. Why would anyone think that that was a good idea for a family-friendly business?
A couple of years before then, Gillette ran a campaign about ‘toxic masculinity’. What made a company that sells shaving products to millions of men think that was a smart move? (It wasn’t. Gillette dropped the campaign and was reported to have undergone a massive write-down).
Yesterday, I read that the CEO of BP was planning to dial back investments in wind and solar to focus more on oil and gas. How did a company called British “Petroleum”, I wondered, get into a position where it was being defensive about petroleum production in the first place?
Corporate executives make decisions for all sorts of reasons. We just don’t know the full story behind what happened at any of these firms. But what we do know is that a growing number of people fear that big businesses are coming under pressure from investment funds to make decisions that are not purely based on maximizing returns.
Over the past few years so-called Environmental, Social & Governance investing – or ESG – has become an established orthodoxy on Wall Street. Big investment firms have devised various metrics by which they measure corporate performance that is not necessarily related primarily to profitability.
What, they demand to know, is the business in which they are investing doing to promote diversity? How is the board looking to combat climate change? Is the business inclusive enough?
If large investment firms make their investments conditional upon meeting these kinds of metrics, those that run the business will do what they can to comply. I worry that pressure from ESG investors has made a lot of corporate America ‘woke’.
“So what?” you might well say. “It’s not your money, Carswell. It’s up to these investment funds to invest any way they want. If they insist on things that don’t make commercial sense, that’s their business.”
In a free market, we should not be in the business of telling those that own capital how they might invest it. The trouble is that the ESG investment firms on Wall Street don’t generally own the capital. They merely manage it.
Some of the large public investment funds on Wall Street might act as if they own the funds they allocate. In reality and in law, they are merely entrusted to manage other people’s money.
Investment managers have what is known as a fiduciary duty to those that invest in their funds – be they small retail investors or a large pension fund. A key part of that fiduciary duty is to aim to maximize returns for their investors.
When the high-flying CEO of a large Wall Street investment fund, hot off the plane from Davos, decides to disinvest in oil and gas in order to save the planet, are they fulfilling their obligation to maximize returns? Or, in pursuit of what is essentially a political agenda, are these large money managers, forgetting their fiduciary responsibilities?
We should have no problem with an investment firm wanting to invest any way it wants – provided they make it clear to their own investors if and when they are not aiming to maximize returns.
To try to tackle this problem in the US Congress, Rep. Bryan Steil has introduced the ‘Putting Investors First Act’. This is a sensible solution that every conservative ought to be able to support at a federal level. But what should conservatives seek to do to address this issue at a state level?
Here in Mississippi, state Senator Chad McMahan’s bill (SB 2849) is a great local solution. His bill clarifies the fiduciary duty of Mississippi’s Public Employees’ Retirement System board, making sure that the board sticks to maximizing returns and ensuring the safety of investments. It is encouraging to see his bill make progress through the Mississippi Senate.
I believe this is a good, conservative approach. An additional guardrail for PERS will help ensure the safety of money invested on behalf of our teachers, law enforcement officers and other public servants.
What possible justification is there for not wanting to ensure that those that run a state’s Public Employee Retirement System maximize returns? A bill that puts investors first and maximizes returns seems like an ideal solution.
Mississippi lawmakers have an opportunity to tackle ‘woke’ corporations, and ensure against government interference in the free market and attempts to pressurize corporations into implementing a ‘woke’ agenda. Let’s hope they take it.
Tuesday was the first deadline day in the Mississippi Legislature. For any general bill to potentially become law, it had to pass out of its original chamber's committee, or else it died!
The great news is that some of our bills made it!
OUR AGENDA
A bill to combat ESG in Mississippi PERS
In an effort to maximize returns to our state's public servants, MCPP created a coalition amongst the Mississippi Bankers Association, the State Treasurer's Office, the State Attorney General's Office and ourselves to clarify the fiduciary duty of the Mississippi Public Employees' Retirement System Board.
SB 2849 from Sen. Chad McMahan ensures the board invests the state's pension funds in a manner that prioritizes the safety and highest return on investment rather than on environmental, social and governance causes. This bill has passed out of the Senate Finance committee and is on the calendar to be discussed on the Senate floor.
Municipal Recall
HB 370 from Rep. Shanda Yates would give local residents the power to remove locally elected officials when they fail. Too many mayors in our state are not effectively accountable outside of election time, and we feel this bill would allow citizens to take a stand against neglectful politicians.
This bill was discussed a few weeks ago on the House floor but has since been subject to call.
Deficit Reporting Bill
SB 2053 from Sen. John Polk ensures that state agencies better manage their budgets. A new requirement to report deficits in a timely manner would enable our state officials to operate their overall budget in a more financially responsible and accountable way.
This bill passed out of committee and will head to the Senate Floor.
Several other bills made it out of committees in both chambers over the past week that we feel represent positive, conservative change in Mississippi.
GOOD POLICY IN THE STATE
HB 1317 from Rep. Lee Yancey authorizes pharmacists to test or screen for and administer treatment for minor, non-chronic health conditions. This would reduce delays and costs for patients.
HB 1150 from Rep. Randy Boyd authorizes state institutions of higher learning and community and junior colleges to authorize charter schools. This would allow more charter schools to open, progressing educational prosperity for children of our state.
HB 1045 from Rep. Jill Ford provides that library books and collections aimed at children and teenagers shall not be allowed to include sexual or explicit materials.
SB 2338 from Sen. Joel Carter ensures just, reasonable and transparent billing in municipal waterworks. This legislation bases water bills on usage rather than property value.
SB 2054 from Sen. Kevin Blackwell provides for the removal of appointed state officers for certain forms of willful neglect. If the Governor, State Auditor, House of Representatives or Senate feels an appointed member of a state board or agency has not properly fulfilled their administrative duty, they can file a complaint of neglect.
HB 729 from Rep. Kent McCarty establishes The "Mississippi Successful Techniques Resulting In Delivering Excellence In Education And Employability (STRIDE) Scholarship Program." This bill would make scholarships available to students who become eligible to participate in dual-enrollment courses.
In August 2022, President Biden signed the so-called “Inflation Reduction Act,” a $370 billion spending package that will do little to reduce inflation, but it will do a lot to subsidize solar power production. Unfortunately, these subsidies will lead to market distortions that will increase the cost of electricity for Mississippi families and businesses.
The biggest problem with subsidies is that they incentivize rational actors to do irrational things.
In this case, the Inflation Reduction Act provides a 30 percent Investment Tax Credit (ITC) for solar that will incentivize Magnolia-state electric companies to build facilities that otherwise would not make sense from a business standpoint.
To understand why it is irrational to subsidize solar, it helps to understand some basic facts about how this technology works.
A solar power facility, often referred to as a solar “farm” because of the large amount of land required for utility-scale electricity production, is referred to by its maximum capacity – 100 megawatts, for example. That is known as their “nameplate” capacity. But the reality is that power plants rarely operate anywhere near their capacity, and solar plants are among the worst in that regard.
Statistics from the United States Energy Information Administration (EIA) show solar farms in Mississippi only generated about 22 percent of their capacity in 2021. That means a 100 megawatt plant is operating, on average, like a 22 megawatt plant, although customers are paying for a 100 megawatt plant.
This productivity percentage is commonly referred to as a “capacity factor.” The capacity factor of solar facilities in Mississippi compares poorly to other energy sources like nuclear, which produced 96 percent of its potential output in 2021 (though it averaged only 62 percent over the previous five years), natural gas combined cycle plants, which are the most efficient natural gas plants, which produced 63 percent, and coal plants at 44 percent, as shown in the graph below.
Even these data points may overstate the usefulness of solar power because the panels can only produce electricity if the sun is shining, which is obviously beyond our ability as humans to control. On the other hand, the capacity factors of natural gas and coal plants could be improved by simply burning more fuel.
This point is crucial because one of the most important things to know about the electric grid is that electricity is generated to meet demand when that demand occurs .Think about what happens when you turn on a lamp or the air conditioner – you expect, or “demand” electricity to be there.
If demand rises as Mississippi households turn on their air conditioners or heaters, an electric company must increase the supply of electricity on the grid to meet it. Generating more electricity on demand is relatively easy with natural gas power plants and nearly impossible with solar power when the sun doesn’t happen to be shining. This is why natural gas or nuclear power plants must remain online regardless of how many solar panels are built, to ensure the lights stay on when the sun goes down.
Understanding these physical realities is essential for understanding why the Biden administration’s subsidies for solar will ultimately drive up the cost of electricity for Mississippi families and businesses.
Some economists have suggested that utility companies are not truly private companies in the sense that they are government-approved monopolies that have the exclusive right to sell electricity in their service territories. Customers living in those territories are legally obligated to purchase their power from the monopoly.
Because electric companies are monopolies, it would be unfair to allow them to charge whatever they wish, so the price of electricity must be approved by regulators at the state Public Service Commission (PSC) using a formula that allows an electric company to charge enough to cover the cost of providing power plus a government-approved profit, generally between 9 to 10 percent on equity, whenever they build new infrastructure that is approved by the Public Service Commission, whether it be a natural gas plant, a solar plant, or even new corporate offices. They even get reimbursed – and earn a profit from electricity customers – when they buy new furniture!
This regulatory structure means that every dollar spent on new infrastructure will increase electricity rates. This unfortunate reality is compounded by the fact that solar power, which is not available 24 hours a day, cannot replace natural gas plants, meaning that customers will pay for the natural gas plants and the solar plants, not whichever one happens to be lower cost.
The subsidies enacted by the Biden administration will make solar power appear more affordable on paper (never mind that subsidies don’t change the cost of a product or service, merely who pays for it) and this will entice electric companies to build more solar facilities to bolster their bottom lines for their shareholders, even though it would make more sense for ratepayers to utilize the natural gas facilities.
In this instance, it is the job of the Public Service Commissioners to scrutinize proposed projects and protect ratepayers from the rising prices that would accompany the construction of the new solar facilities.
Sadly, the fact that PSC commissioners have approved $1.4 billion in renewable energy projects since 2020—which will necessarily drive up prices— suggests that the PSC commissioners have not put the interests of ratepayers first.
While the subsidy package signed into law by President Biden was called the Inflation Reduction Act, it would be more aptly named the Inflation Production Act because the end result of the solar subsidies will be higher electricity prices for Mississippi families and businesses.
Ten years ago, amid much fanfare, Mississippi’s state legislature passed a law to allow Charter Schools. A decade later, what do we have to show for it? Not much, if we are honest.
So far, a mere eight Charter Schools have been approved across the entire state. Of the 450,000 or so children in public education in our state, a minuscule number are enrolled in Charter Schools.
“Maybe that means there’s not much need for them?” some might suggest. Actually, there’s far greater demand for Charter Schools than there are places available.
Many families in Mississippi are happy with public education as it is – and not only those fortunate enough to live in ‘A’ rated school board districts such as Madison, De Soto or Rankin. The problem is those that are not satisfied. For all the talk about School Choice in our state, right now there are very few dissatisfied moms and dads can do about it unless they are prepared to opt out of public education altogether.
Opting out is precisely what has been happening. Approximately 25,000 schoolchildren have been taken out of the system entirely and are home-schooled. Well over 45,000 are now privately educated.
The precious few Charter Schools we are fortunate enough to have often done an extraordinary job. There just aren’t that many of them.
We have seen pathetically little progress toward school choice in our state – and it is time to be honest as to why.
Mississippi only has a tiny number of Charter Schools not because parents do not want them, but because the administrative state in our state will not permit them. The inappropriately named Charter School Authorizer Board has done a brilliant job of not authorizing Charter Schools. By my count, eight out of ten applications have been rejected.
School choice means much more than Charter Schools. Giving moms and dads the freedom to decide what kind of education best suits their child might mean Charter Schools, but it could mean a micro-school or using open enrollment to switch school districts.
But various attempts to allow open school enrollment between school districts died in committee in the state legislature, the chairman apparently unwilling to allow the issue further consideration. Why? A modest scheme that allows children with special needs a degree of choice has been watered down. Again, we need to ask why?
Conservatives hold a supermajority in our state, for goodness’ sake! So why is the Charter School Authorizer Board that conservatives appoint so unwilling to approve new schools? Why does a state legislature with a conservative super majority seem so reluctant to even allow votes on open enrollment or Charter School Authorizer reform?
If we are serious about School Choice in this state, we need to see the anti-School Choice agenda for what it is, whether it is declared or undeclared.
“Too many vested interests don’t want change” I keep being told. Indeed. There are plenty of people who earn a good living working in the education sector who don’t want School Choice. There seems to be no shortage of expert ‘educationalists’ who recoil at the idea of letting moms & dads decide. But that does not mean they are right.
The argument that giving parents more power leads to better education outcomes is irrefutable. The moral case for giving families control over their tax dollars is overwhelming.
We know that School Choice is opposed by many progressive activists and the left-wing media. So why would any conservative in our state want to make common cause with the hard left to prevent any serious extension of School Choice?
It is good that we have a dedicated “School Choice week” in our state, but it is not enough. Nor should we console ourselves with the occasional nod given to School Choice. Instead, we need to take on those holding back our children’s education.
Across many states in America, conservative leaders have created winning coalitions by promising to empower parents. In Florida, where Gov De Santis has emerged as a presidential contender, he made his name by extending School Choice for all. Betsy DeVos, who will soon be coming to speak in Jackson, led the fight for more parent power across America. In states where conservatives have advanced over the past two years, such as Virginia and North Carolina, it has been by making School Choice a central pillar of their platform.
Those that oppose School Choice in Mississippi might be many things, but they aren’t conservative.
Douglas Carswell is the President & CEO of the Mississippi Center for Public Policy.
We had a great THIRD Leadership Academy session!
Our students are continuing to see what it means to be a productive and effective leader, while also learning about how to create good public policies in the state. The speakers for this session were Attorney General Lynn Fitch, Daniel Erspamer from the Pelican Institute, and author Matt Ridley.
