Commentary on life in Kentucky

By wmadministrator

Average Grade for State Government

Kentucky state government just got an annual report card and pulled a B-, which was the average for the entire 50 “student” class. Grades were issued as part of the Government Performance Project by the Pew Center for the States, Governing magazine and a group of academics. The project has been under way for a decade.

Kentucky scored significantly above average on infrastructure and slightly above average for information. The commonwealth earned an average grade in its handling of people (personnel) and slightly below average on money.

The mission of the Government Performance Project is to improve service to the public by strengthening government policy and performance. The project systematically evaluates how well states manage employees, budgets and finance, and information – as well as ensuring that roads, bridges and state buildings are well planned and in good repair. A focus on these critical areas helps ensure that states’ policy decisions and practices actually deliver their intended outcomes. The information, in turn, helps state policy makers understand the steps they can take and the policy changes they can make to strengthen government performance.

•     Information pertains to planning and gathering appropriate input, transparency, giving managers data they need, and access by the public to what is being done on their behalf, which directly affects trust in government.
Kentucky’s grade was B
(average grade B-)

•    People assesses whether states have adequate and stable personnel to deliver the services that are their responsibility, monitor their performance and hold workers accountable. At its most fundamental level, it’s simply the job of paying the bills on time. A key metric was how many public employees stay on the job at least a year.
Kentucky’s grade was C+
(average grade C+)

•    Money grades are related mostly to the budgeting process. A key here is using fluctuating revenue wisely, such as avoiding the temptation to act as though temporary surges will continue to pay for ongoing expenses. Collection and spending processes should be efficient and regularly updated.
Kentucky’s grade C+
(average grade B-)

•    Infrastructure grades were earned primarily for adequately maintaining the structures required for smooth operation of society; that means roads, bridges, sewer systems and prisons. It takes planning to foresee what demands will be and providing the resources to meet them. Good communications with federal and local agencies is crucial.
Kentucky’s grade A-
(average grade B-)

You can read the full report, see how the grading was done and get Kentucky’s individual scores at www.pewcenteronthestates.org/report_detail.aspx?id=36228.

Looking for a Market Bottom
Many in the business and financial world are studying the tea leaves regarding whether a recession is underway or in the offing. The looking-for-opportunities crowd, though, is assessing recent stock market gyrations for signs it might have touched bottom. Choosing accurately can produce big profits – but the converse is costly.

Kiplinger Personal Finance magazine recently passed along some of the indicators used by experts with a good record of calling market bottoms – a racket so risky one admits it’s good work if you can recognize a bottom two months after the fact. As we entered late March, Kiplinger reported that the experts hadn’t logged any of their tested bottom markers.

Here are a few of those technical indicators:
The volatility index (VIX) on options scores higher as fears rise. Past bottoms saw VIX highs of 45.1 in October 2002, 45.7 in August 1998 and 36.5 in October 1990. The most recent high was only 31.2, said Kiplinger.

Another measure watches the percentage of stocks whose prices top their running 200-day average. The lower that number, the more likely selling has overrun actual fundamentals and an upward reversal will begin. Past bear market bottoms saw lows of 4.6 percent in 2002, 12.5 percent in 1998 and 11.1 percent in 1990. The March figure on that 200-day average measure was at 13.8 percent.

Kiplinger reports that Ned Davis Research watches a 90-day ratio of advancing to declining stocks; past lowest-ratio levels indicated oversold markets. Market bottoms saw ratios of 78.3 percent in 2002, 74.8 percent in 1998 and 73.0 percent in 1990. The recent ratios were still around 83.9 percent.

Other indicators are the number of stocks hitting 12-month lows. That number has been in the 500s, but Kiplinger’s quoted Jim Stack of InvesTech Research as saying the bears will have tired when that number falls below 25, and the bulls will be on the run when fewer than 12 stocks are hitting yearly lows.

Kiplinger editors remind us that median bull markets lengths are 15 months, while the most recent peak came in October, only six months ago.

Why Government Planning Always Fails

Special interest groups ensure plans do not change – no matter how costly
by Randal O’Toole

Government officials claim their plans will help us live happier lives. But planners’ predictions of the future are no better than anyone else’s, so their plans will always be flawed.

Everybody plans. We plan our workdays, we plan our careers, we plan for retirement. But private plans are flexible, and we happily change them when new information arises. In contrast, as soon as a government plan is written, people who benefit from the plan form special interest groups to ensure the plan does not change, no matter how costly to society as a whole.

New Deal planning did more to prolong the Depression than it did to end it. Urban-renewal planning in the 1950s and 1960s displaced more than a million low-income families from their homes and turned some inner city neighborhoods into bombed-out landscapes. And President Nixon’s wage-and-price controls didn’t stop inflation.

Despite these failures, governments continue to plan. Almost every city and county in the country has a planning department. More than a dozen states have passed laws requiring local governments to write comprehensive land-use plans that place strict limits on how people can use their property. Congress has passed numerous laws requiring federal agencies to plan, including the National Environmental Policy Act of 1969 (which requires agencies to write detailed plans for any action affecting the environment).

32,000 professional planners
Who writes these plans? The Bureau of Labor Statistics says the United States has about 32,000 professional planners. About 30,000 of them belong to the American Planning Association, which says two out of three of its members work for government agencies.

Most professional planners graduated from a planning school that is closely affiliated with an architecture school. This gives them faith in what is known as the “physical fallacy,” the idea that urban design has a huge influence on human behavior.

This arrogance leads planners to propose draconian rules on private property owners in the hope that such rules will reduce driving (which planners consider bad) and increase people’s “sense of community.”

Taking your property rights
Planners believe private property rights are flexible and can be changed at whim. The Land We Share, a book promoted by the American Planning Association, argues that private property is an “institution that communities reshape over time to promote evolving goals.” If government decides that your property has historic, environmental or scenic values, it can take your right to use it without any compensation.

Amazingly, the Supreme Court has endorsed this view. In 1926, the court held that cities could zone land for certain purposes only to prevent nuisances. In 1978, the court allowed New York to prevent the PennCentral Railroad from modifying Grand Central Terminal. Writing for the majority, Justice Brennan stated that because New York had “a comprehensive plan to preserve structures of historic or aesthetic interest,” it could prevent property owners from changing their properties without compensation.

Planning also played a role in the infamous Kelo vs. City of New London decision, where the Supreme Court in 2005 said cities could take property from private owners and give it to other private parties. New London could do this, said Justice Stevens, because it had “carefully formulated an economic development plan that it believes will provide appreciable benefits to the community.” As the American Planning Association gleefully observed, the Kelo “decision validates the essential role of planning.” Apparently, all a government has to do is write a plan and the Constitution goes out the window.

Shortages and surpluses of goods
Given this kind of power, government planners are good at producing two things: shortages of goods that people want, and surpluses of goods they don’t want. We can see this by looking at the congested highways in almost any major urban area of the country. Since 1980, the number of miles Americans drive on urban freeways has nearly tripled, but the number of miles of urban freeways to drive on has increased by only 65 percent.

Part of the reason for traffic congestion is financial, but a big part is due to planners who deliberately promote congestion in order to discourage driving. “Congestion signals positive urban development,” say planners in Portland, Ore., and any effort to relieve congestion “would eliminate transit ridership.” Similarly, Twin Cities planners decided to stop building roads. “As traffic congestion builds,” they commented hopefully, “alternative travel modes will become more attractive.”

The housing bubble
The recent housing bubble is also a result of planning. More than four out of five Americans say they prefer a house in the suburbs over higher-density housing near jobs, shops and transit. But planners believe a greater share of Americans should live in high-density housing, partly because planners erroneously think people living in higher densities will drive less.

It is time to say: The emperor of planning has no clothes. Congress and the states should repeal planning laws. Instead of long-range planning, cities and counties should solve problems using market forces and user fees.

Public or private toll roads can relieve congestion. Privatized transit systems can provide mobility for those who can’t or prefer not to drive. Restoration of property rights will allow developers to meet the demand for housing and other uses. Various fees and market mechanisms can protect air quality. Private, voluntary efforts can protect critical open space. Market-based solutions will do far more to improve our quality of life with far fewer unintended consequences than the policies that result from government planning.

Editor’s Note: This commentary has been edited for length.

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