Tuesday, November 3, 2015

Damning the School Funding Plan With Faint Praise, Part Two: In 600 Years, We'll Laugh About All That Money We're Taking From the Land Trust Fund.

Posted By on Tue, Nov 3, 2015 at 4:49 PM

Current Arizona State Treasurer Jeff DeWit thinks it's unwise to draw down the principle of the Arizona State Land Trust to increase education funding. Former State Treasurer Dean Martin, who spoke against the plan during the last week's legislative special session, agrees. So, according to DeWit, does former treasurer Carol Springer.

To be fair, former State Treasurer and current Governor Doug Ducey likes the plan just fine. And it's not fair to say he's outnumbered three to one. He is, but that doesn't really matter. What matters is, some people who have looked after Arizona's money, all Republicans, think this is a very bad idea.

But in Ducey's favor, the Koch Brothers like both him and his plan. And that's much, much more important than having three former treasurers disagree. The Koch Brothers have a hell of a lot of money (They're number 5 and 6 on the Forbes 400 list. Combine their net worths and they're Number 1, $6 billion above Bill Gates), and they're big Ducey supporters, so he has their money to help him sell—literally—his ideas.

Take, for instance, the Center for the Study of Economic Liberty at ASU. The libertarian think tank got its start courtesy of a $3.5 million gift from the Charles Koch Foundation. Executive director Scott Beaulier says the Center is not at all influenced by the Koch Brothers. Nevertheless, on October 7, a little over three weeks ago, Beaulier published a policy report about what a great idea it is to spend down the trust fund. Which, of course, was absolutely unconnected to the wishes of Ducey or the Koch Brothers. Because Beaulier says so.

Typical of scholarly work, the report—Should the Permanent Fund Sit On Its Assets?—is long, detailed and technical, far beyond my ability to critique. But there's one passage I don't need economic expertise to follow, and I love it because it's so wacky and un-scholarly. It comes straight from the clever-precocious-adolescent school of libertarian thought.

Beaulier says there's no reason to save all that trust fund money, partly because we need it so much now, but, more important, because we really won't need it later. He writes, just look at how rich we're all going to be — in 600 years.
On the conservative assumption US real per capita income manages to grow at just 1.5 percent per year in the future, in about 600 years the average Arizona family will have an income of more than $2 million per day!
Two million dollars a day (600 years from now)! And that's if we have slow economic growth. If we grow faster than that, it could be even better.
If the US economy, meanwhile, achieves the 4 percent real economic growth we enjoyed during some of the 1990s, the average US household would have incomes of $1.6 million in less than 100 years.
Since this is a scholarly paper, Beaulier footnoted his assertion. It comes from a book by Steven Landsburg, Fair Play, subtitled, What Your Child Can Teach You About Economics, Values and the Meaning of Life. Full disclosure: I haven't read the book, but I'll bet it's far more substantial than the popular All I Really Need to Know I Learned in Kindergarten. After all, Landsburg is an economics professor.

Landsburg describes himself as a "hardcore libertarian." He loves to play with contrarian ideas. Recently he said he thought scalping free tickets to see the Pope in Central Park is a fine idea. Some years earlier, he wrote that it might be a good idea to punish jurors if it's later proven they came to the wrong decision. (To be fair, he wants to give them a bonus if they're proven right.) He wrote that economic protectionism is a form of racism because, really, American workers shouldn't be given preference over poor workers in other countries. And he agreed with Rush Limbaugh that Sandra Fluke deserved to be censured for advocating that birth control should be covered by insurance—though, to be fair, he didn't think it was right to call Fluke a "slut" as Limbaugh did. He thought "extortionist" was a more appropriate term.

Then there's this. In a blog post, Landsburg argued that if someone is raped while he or she is unconscious, maybe there's no harm done. When he was called on it by angry students at the university where he worked, he said he was simply indulging in "abstract inquiry."

So why not say we can spend down the land trust fund because everyone will be rich beyond their wildest dreams of avarice in 600 years, or 100 years if we're lucky? After all, the idea comes from an impeccable source.

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