Mathew Binkley's Blog

Since the primary election is almost here, I wanted to forgo another question, and instead dig into the candidate’s finances a bit, as they tell us interesting stuff about the candidate that they normally don’t go out of their way to advertise.  I will (probably) be adding more to this.

If you would like to play with them yourself (and I know you all do…), click here for the Tennessee PAC database.

Notable stuff:

• Unique among candidates, Mary Littleton has accepted $10,800 in PAC and party money:
  • $7,000 (Leaders of Tennessee)
  • $1,400 (Harwell PAC)
  • $1,000 (Barley Republican Group)
  • $500 (Frog-Jump PAC)
  • $500 (Joe PAC)
  • $250 (State Rep Steven Daniels of Jackson, TN)
  • $150 (District Rep of Congressman Fincher from Jackson, TN)

  In particular, “Leaders of Tennessee” is a PAC which has raised eyebrows before for some of its practices.   Call me crazy, but I prefer it when candidates are elected by voters, not outside interests with mountains of cash.

• Kirk Low has loaned his campaign $81,900. This is by far the largest pile of money, almost as much as the other 9 candidates combined.  Why is he self-funding so much?  Despite his pile of cash, he has 0 other contributors, which also begs the question why not?

Top 5 candidates with the most campaign contributors (excluding themselves and close family members with same last name).

Mary Littleton     (R, Dickson):           38
Donnie Kemp        (R, Ashland City):      15
Jane R. Crisp      (D, Pegram):            14
Linda Hayes        (D, White Bluff):       14
Gary Allen Binkley (R, Ashland City):      12

Top 5 candidates with most money to spend:

Kirk Low           (R, Pleasant View):     $81,900
Mary Littleton     (R, Dickson):           $32,220
Donnie Kemp        (R, Ashland City):      $25,645
John L. Haines     (R, Kingston Springs):  $22,784
Gary Allen Binkley (R, Ashland City):      $15,872

Top 5 candidates with the most money to spend, excluding money they or a family member with the same last name gave or loaned to the campaign:

Mary Littleton     (R, Dickson):           $30,820
Donnie Kemp        (R, Ashland City):      $12,645
Linda Hayes        (D, White Bluff):       $10,999
Gary Allen Binkley (R, Ashland City):       $7,372
John-Paul Wood, Jr (R, Pleasant View):      $5,531

Top 5 average dollar amount give by contributors (excluding self and family members with same last name):

Donnie Kemp        (R, Ashland City):      $843
Mary Littleton     (R, Dickson):           $811
Linda Hayes        (D, White Bluff):       $786
John-Paul Wood, Jr (R, Pleasant View):     $691
Gary Allen Binkley (R, Ashland City):      $614

I still plan to post a few more questions in the weeks ahead (I’m hard at work on the next one), but since the election primary date is rapidly approaching, and honestly since a majority of the candidates are not responding (though I can see them reading the website), I wanted to go ahead and thank the candidates that did respond.

Given what good sports they’ve been the past few weeks, I hope you will give Donnie Kemp (R) and Linda Hayes (D) extra consideration for the time they spent here when you vote in the primary on August 2, and Rick Wilson (as an independent) in the general on November 9.

I originally decided to conduct my little experiment in participatory democracy after Leadership Cheatham County’s candidate forum was canceled due to lack of candidate participation (sadly that does not appear to be an isolated incident).

I wanted to get inside candidate’s heads a bit.  Resumes and degrees tell you little about the character and wisdom of the candidate.  Given the duties of a politician, *how* they think is often as important as *what* they think.  And with the uncertainty of the times, character and wisdom are more vital than ever.

You are never going to find a candidate you agree with 100% of the time (even if *you* are the candidate).  So rather than apply up-or-down tests on positions, I try to gauge the whole person.

It is in a weak candidate’s best interest to avoid calling undue attention to themselves lest the public realize the emperor has no clothes.  They try to skate through on the basis of a smile, a name, and who has the best campaign signs.  Opening yourself to scrutiny means taking a chance, and requires confidence and conviction.

And even strong candidates face brutal time constraints.  Handing out fliers, putting up signs, raising funds, organizing volunteers, going to events to meet voters, not to mention the more mundane work like making sure the tables they borrowed for their booth get back and ensuring the volunteers get fed.  All that, and they juggle their regular job and trying to find time for their family.

I thank the candidates who took time to respond to my little invitation to parley.  Like all candidates they are busy as bees, but they choose to make talking to little folks like myself a priority, for which I am grateful.

Reducing unemployment, growing incomes, and getting things back to normal are at the top on everyone’s wish list nowadays.  Both Tennessean’s real income and employment crashed in 2008, and have yet to recover to their former levels.

In normal times, it typically takes a country 4-5 years to fully recover in the aftermath of financial crises.  However, those crises occurred against the background of an otherwise healthy world economy, and were usually cured by wage deflation stimulating increased exports to healthier countries.

The current crisis hearkens back to the Great Depression, in that most of the world’s major economic powers are experiencing a simultaneous slowdown, and thus there is little hope of an export-led recovery (unless Little Green Men show up on our doorsteps wanting to trade).  And there are more negative economic signs than positive on the horizon.  Given that, full recovery is likely to take a further 5-10 years.

The chart below highlights the essential differences between a normal economy and one experiencing a “balance sheet recession”, which is a polite academic term for a depression.

In normal times, the desire to consume exceeds the desire to save. Supply-and-demand allows savers to charge consumers (via the interest rate) to borrow their money. For their part, consumers do their best to keep all those dollars circulating through the economy, creating a virtuous cycle that causes the economy to grow.

While that is usually true, a depression is the exception that proves the rule. Because people are now underwater due to the housing collapse, they have switched from consuming to saving.  Now that savers outnumber consumers, consumers have pricing power when it comes to borrowing, and that has pushed interest rates on savings accounts and CD’s near 0% (and in the case of US bonds, *below 0%* in real terms), hurting savers.  For their part, consumers increased savings rate sets off a vicious cycle which causes the economy to shrink.

It has similarly affected business investment. Companies are now avoiding profitable investments that require long horizons to pay off in favor of short-term debt minimization.  From their perspective, why invest in a new factory or new machinery when consumers aren’t in any position to increase their spending?  Paying off debt is much less profitable, but also much less risky.

That simultaneous drop in both personal consumption and business investment has generated distressing levels of unemployment.

The “natural” rate of unemployment (absent the economic crisis) is roughly 5.5%. Today after three and a half years of recovery, unemployment still stands at 7.9%. Arithmetic says:

6.4 million Tennesseans x (7.9% – 5.5%)
= 154,000 Tennesseans unemployed by the crisis

If it were a city, it would be the 5th largest in the state, ahead of Clarksville (136,231).  And that does not include people who are working part-time but want to work full-time, or people who have given up looking altogether.   So the 154k Tennesseans is only a lower limit on the size of the unemployment problem.

Even if you still have a job, the tough economic outlook combined with abundance of unemployed has hit incomes hard, especially for blue-collar workers.  It’s hard to negotiate for a pay raise when there’s 5 unemployed people who would happily do your job for less.

Economics can be a constant source of irritation to politicians, because while it always gives the answer you need to hear, it rarely gives the answer you want to hear.  Unfortunately, when it comes to solving problems of this scale, the intersection of what’s economically desirable and what’s politically possible can be achingly small.

The public always wants political decisions to be pain-free and in their favor.  On the other hand, politicians often take a short-term ideological view, and advocate “solutions” that cause further long-term harm because it helps them today and they will be out of office before the butcher’s bill comes due.  And the state’s year-to-year balance-budget requirement, while normally a wise constraint on legislative ambitions, in current circumstances prevents the state from taking steps that are in the public’s long-term best interest.

With all that said, what steps do you believe the state can take (via tax structure, expenditures, infrastructure investment, training, economic development, etc.) to stimulate the state economy, help put people back to work and put us on a sustainable path to growth?

After last month’s Supreme Court ruling, Obamacare (officially known as “The Patient Protection and Affordable Care Act”) is now the law of the land.   Almost everyone sees it as merely the beginning of actual healthcare reform, not the end.  It is likely to be the most contentious issue of the upcoming legislative session, and no matter what is decided it is likely to leave bruised feelings for some.

In general, government policy towards markets can be divided into three categories:

1. Laissez-faire (you can chose both what and whether to purchase)
2. Individual mandate (you can chose what to purchase, but not whether)
3. Single-payer (you can chose neither what nor whether to purchase)

The laissez-faire approach is usually seen as the optimal choice from markets ranging from oranges to iPods to automobiles, as robust competition usually yields better results at lower costs.

Healthcare has unique differences from other markets which render a pure laissez-faire policy challenging at best.  Put simply, it is difficult to square the laissez-faire philosophy of “if you don’t pay, you don’t receive” with the Christian ethos of the Good Samaritan.  For most people, compassion ultimately trumps capitalism, but the cost for the uninsured must inevitably be paid, and today that someone is either the taxpayer, the insurance holder, or the hospital, but *not* the person receiving the “free” healthcare.

Given the remaining policy options, the Republican party has historically supported solutions based on the individual mandate (prior to its recent Damascas road conversion on the issue at least), and Democrats have supported single-payer solutions.   While the PPACA is admittedly a unwieldy amalgamation of policies, its core approach to the healthcare market uses the individual mandate.

As attempts to “repeal and replace” the PPACA appear increasingly unlikely to prevail, reshaping it at both the state and federal levels appears to be the most probable path towards refining the law.

1.  Do you support/accept the base PPACA plan, or do you think Tennessee should request a “waiver for state innovation” to implement our own alternate healthcare reform plan (single-payer like Vermont, or perhaps a different form of individual mandate such as Health Savings Accounts plus catastrophic insurance)?   What do you believe leads to the best outcome for all Tennesseans?

2. While mostly upholding Obamacare, the Supreme Court struck down the provision allowing the federal government to withhold all federal Medicaid funding towards states that failed to expand their Medicaid program in accordance with the PPACA.  Several Republican states have subsequently promised to refuse additional federal funding to expand their state Medicaid program.  What are your thoughts on this?

Outside those two questions, please feel free to explain your beliefs about healthcare at length.

Added:

I am including a graph of the percentage of Tennesseans covered by health insurance.   You can see that it has been trending down for over a decade.  Given a state population of 6.4 million, the roughly 5.5% decrease in the coverage rate between 1999 and 2010 equates to approximately 350,000 Tennesseans who can either no longer get or no longer afford health insurance.  This is equal to the combined population of Knoxville (180,761) and Chattanooga (170,136).

Previous posts on healthcare reform:
https://www.mathewbinkley.org/?p=146
https://www.mathewbinkley.org/?p=384

Hello!  My name is Mat Binkley.  I am a life-long citizen of Cheatham County (you may know my dad Roland or my mom Janice who worked at Bank of America in Ashland City for 35 years).

I run a blog (www.mathewbinkley.org) where I like to examine political and economic issues.  I would like to ask you a few questions (over time, just one today) and post your responses on the blog.  I don’t pretend to be The Tennessean, but my posts are usually read by 20-30 people in the area, and they are on average more politically active than the average person (and thus are more responsive to substance than to soundbites).   Any responses will also be made available to other local media.

It is difficult to believe that 20th century businesses like State Industries and Flexible Whips could have been founded in Cheatham County without the widespread availability of 20th century infrastructure such as electricity and water.

It is equally difficult to believe that 21st century businesses such as IT and healthcare (not to mention all the fields yet to be invented) will set up shop in Cheatham without the widespread availability of 21st century infrastructure such as broadband internet (both for themselves, as well as for the workforce they need to attract).

In the middle 2000′s several under-served TN cities which were tired of being overlooked by private ISP’s like AT&T and Comcast (who were cherry-picking lucrative neighborhoods and ignoring the rest) began evaluating municipal internet as a way to provide broadband access to unserved constituents. In addition, several electric utilities (including CEMC, our local electric utility) were also looking at providing service.  Electric utilities have particular advantages, as they can provision both electricity and fiber internet over a single cable, reducing costs and speeding up roll-out.

Allow me to quote a passage from my college economics textbook (McConnell & Brue):

A natural monopoly exists when economies of scale are so extensive that a single firm can supply the entire market at a lower unit cost than could a number of competing firms.   Clear-cut examples of natural monopoly are relatively rare, but such conditions exist for many public utilities, such as local electricity, water, natural gas, and telephone providers.   Where there is natural monopoly, competition is uneconomical.   If the market were divided among many producers, economies of scale would not be achieved and unit costs and prices would be higher than necessary.

There are two possible alternatives for promoting better economic outcomes where natural monopoly exists.   One is public ownership, and the other is public regulation.

Tennessee’s legislature passed the “Competitive Cable and Video Services Act” in 2008 after furious lobbying by private ISP’s, based on their promise to accelerate their own broadband roll-out.   The legislation shielded private ISP’s from competition and effectively blocked municipalities and electric utilities from rolling out internet service to their constituents by forbidding them to issue debt to pay for the infrastructure.   However, it did not actually compel ISP’s to provide service.  It is actually a worst-of-both-worlds solution.

You can imagine the lasting economic damage that would have been incurred if similar legislation had prevented CEMC from borrowing to roll out electricity in the 1940’s.   This is a textbook case of rent-seeking behavior on the part of private ISP’s and regulatory capture on the part of the legislature, and was no doubt passed based both on some mixture of ideology unrestrained by real-world results, and private ISP’s increasing their political donations that year by a factor of 100 (as Upton Sinclair bitterly mused, “It is difficult to get a man to understand something when his salary depends on his not understanding it.”)

In the 4 years since then, private ISP’s have failed to deliver on their promise. Charter and AT&T have curtailed any further roll-out of broadband. Today 15% of the households in Cheatham County cannot get *any* broadband access, and the remainder pay prices for service that people in more advanced countries would consider a bad joke (and as a US citizen I bristle at the term “more advanced countries”, but in this case it is sadly warranted.  Our internet is currently rated 35th in the world, behind several former Soviet bloc countries.)

I ask you, what do you intend to do to promulgate widespread broadband internet to your constituents?   There is the public ownership route (taking the financial handcuffs off municipalities and electric utilities and allowing them to compete) and the public regulation route (regulating private ISP rates and behavior, and compelling them to use the monopoly the legislature has effectively granted them).  Or there could be a valid alternative solution.  Can you tell us what yours are?

Other posts I have made on this issue:

https://www.mathewbinkley.org/?p=96
https://www.mathewbinkley.org/?p=14