What happened?

While reading the following portion of this morning’s Wall Street Journal’s Weekend Interview, with New Jersey Governor Chris Christie, a metaphor occurred to me.

“What happened before in state government was that they would just spend, and then in April they would come to the governor’s office and say, ‘Oh, oops. Sorry, we need another 30 million. We need another 50 million.’ And there would be a huge number of supplemental spending bills that would get passed on June 30th along with the budget for the next fiscal year,” often with tax hikes to pay for them, says Mr. Christie. “And I said to my folks, ‘If you don’t manage to budget, you’re going to get fired.'”

Here’s the metaphor:  It’s suicide when a parasite begins think of itself as the host, as it will proceed to consume the host and then wonder what happened as it dies.

Here government is the parasite and the private market is the host.

I do not intend to use the word parasite in its pejorative.  I intend to use its biological meaning.  There are many cases of parasite organisms that provide benefits to the host and I do believe that government can provide benefits to its host.

Government is a parasite that feeds from the private market.   While it does provide benefits, like defense and a backing to the rule of law, it would not exist if it were not for a valuable resource from which it could draw its life force.

In some cases, that resource may be natural.  Middle Eastern governments are sustained by the proceeds of oil.  Warlord governments in Africa form around resources such as diamonds.  The crony kleptocracy of Russia persists on the bounty of Russia’s natural resources.

And our representative democratic government persists on the wealth generated in the private market.

But, few people see that.  They reflexively see each new perceived problem as a job for government to solve, without considering private alternatives, and then when the government runs out of money, they simply say, raise taxes.

Governor Christie describes this mindset in New Jersey.  “Ooops.  Sorry, we need another 30 million.”

This mindset leads the parasite to incrementally consume the host and then wonder why it’s dying.  Where did the jobs go?  Where are the new jobs!? Why are tax revenues declining?  Raise taxes on the rich!

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The clash of two systems

The video linked to in this post of New Jersey Governor Christie sparring with Diane Sawyer is a good illustration of what Arnold Kling writes about in this Econlog blog post, Two Systems.

Christie speaks from a perspective of System A where status is obtained by market acceptance, it’s retained by competing and enforced by choice (by market participants).

Sawyer defends from the perspective of System B, where status is obtained from credentials, it’s retained by tenure and enforced by authority figures.

I believe the primary source of the clash that occurs between these two systems comes from the differences in preference between the market participants and authority figures.

In this example, Christie and Sawyer discuss teachers.

Authority figures in education — such as teacher union leaders and their cronies in education administration and government — believe that college degrees (credentials) and tenure are the important factors in determining which teachers to hire and retain.

The market participants — parents of school age children — however do not give these preferences much consideration.  Rather they tend to rely on the reputations of schools and teachers and their own experiences with those teachers (e.g. do my kids appear to be progressing or not?).

The underlying and incorrect assumption made by authority figures is that they know better than the market participants and they seek to override their preferences.

I’ve seen authority figures in private organizations suffer from this same underlying and incorrect assumption with disastrous results.

One thing authority figures that produce good market results get right is that don’t let their own personal preferences override those of the markets they’re serving.  In fact, they build their organizations around meeting the preferences of the market participants.

Gov. Christie on how to tell a good teacher from a bad teacher

Diane Sawyer interviewed New Jersey Governor Chris Christie on the news this evening.  Video and article can be found here.  The 5 minute video is worth a watch.

The major topic of conversation is teachers.  At about the 3 minute mark, Sawyer asks (with a somewhat disturbed look on her face):

Are you so confident to know who is a really good teacher?

I like Christie’s answer.

Of course.  You talk to any parent who has children in a school, within weeks they know if they have a good teacher or a bad teacher.  And, the rumor mill in the school tells them too.

That goes along well with one of the things I wrote in this post about a good measure of teacher performance being parent recommendations rather than test scores.

Next, Sawyer fishes for a crack in Christie’s armor. Some teachers she spoke with didn’t like the tone of Christie’s voice.  She says:

My mom was a 30 year teacher.  All my aunts were teachers, and do you want to apologize to teachers if your tone seemed disrespectful to them?

Christie didn’t budge.  He looked her straight in the eye and said:

I don’t want to apologize to those teachers [the ones who complained about his tone].  If you treat me with respect, even if you disagree with me, I’ll treat you with respect back.

Finally, Christie is a big Springsteen fan.  Sawyer brings up that Springsteen wrote a letter to the editor criticizing Christie.  Christie’s response:

Are you surprised to hear that from Bruce?  I mean, you know…Bruce is liberal.  It doesn’t mean I like him any less. That’s fine.  It’s his point of view and he’s absolutely welcome to it.

I don’t trust politicians…any politicians.  But, I do appreciate that Christie brings something to the conservative argument that’s been missing for quite some time.

He doesn’t buckle to the emotional gotcha tactics and the non-arguments used by the media.  Other politicians would buckle in an effort to look agreeable and conciliatory.

I can imagine other politicians apologizing after Sawyer’s emotional plea, prefaced by her own history with teachers, or stammering about trying to explain why their music idol is an outspoken critic.

Christie didn’t have any of it.  In fact, his reactions were what I expect from adults when faced with childish and pointless diversions.

You mean Christie can still like someone’s music and even like the guy, even though the star disagrees with his politics?  Isn’t that way it should be?

You Can’t Handle the Truth

In this week’s Wall Street Journal column, Peggy Noonan calls attention to two politicians — Indiana governor Mitch Daniels and New Jersey governor Chris Christie — for their demonstration of leadership.

I bristle at the idea of referring to politicians as leaders — even the guys I think I like.   But, then again, my idea of leadership and politicians is probably different than most, though subjects of other blog posts.

Nevertheless, I  admit that I appreciate politicians who can deliver true and politically unpopular messages.  I especially liked Governor Christie’s:

He [Christie] introduced pension and benefit reforms on a Tuesday in September, and that Friday he went to the state firefighters convention in Wildwood. It was 2 p.m., and “I think you know what they had for lunch.” Mr. Christie had proposed raising their retirement age, eliminating the cost-of-living adjustment, increasing employee pension contributions, and rolling back a 9% pay increase approved years before “by a Republican governor and a Republican Legislature.”

As Mr. Christie recounted it: “You can imagine how that was received by 7,500 firefighters. As I walked into the room and was introduced. I was booed lustily. I made my way up to the stage, they booed some more. . . . So I said, ‘Come on, you can do better than that,’ and they did!”

He crumpled up his prepared remarks and threw them on the floor. He told them, “Here’s the deal: I understand you’re angry, and I understand you’re frustrated, and I understand you feel deceived and betrayed.” And, he said, they were right: “For 20 years, governors have come into this room and lied to you, promised you benefits that they had no way of paying for, making promises they knew they couldn’t keep, and just hoping that they wouldn’t be the man or women left holding the bag. I understand why you feel angry and betrayed and deceived by those people. Here’s what I don’t understand. Why are you booing the first guy who came in here and told you the truth?”

The standard template of a politician is to deliver good news and avoid delivering bad news.  That’s goes for public and private politics.  I’ve witnessed it in private organizations.  It’s always fun to see the politicians scatter with bad news.

It’s refreshing to see a politician willing to give bad news.