Free Markets Rule! Free Markets Suck!

A common meme in our city centers on the unfairness of how much some people earn versus what the typical senior earns. Of course, this is typically to bemoan tax rates and to pretend to care of the plight of seniors. You know the meme, “How can a [substitute a position] earn that much when we have so many seniors on fixed incomes?”

Ironically, I most often hear it coming from “conservatives” where, in every other circumstance, the free market reigns supreme and how dare there be any hand, other than an invisible one, that dare inflict itself upon the free market! So free markets reign supreme… except when “conservatives” don’t like the beneficiaries of said free market.

A while back there was quite a hubbub in the city about the city’s web page. Well, let me clarify: first there was a hubbub about whether the city should have a Web page — it’s true: folks actually argued the city should have no web page whatsoever ‘cus it’s way more efficient to inform the public by carrier pigeon here even though technology moves along at unprecedented speeds everywhere else. (Umm, I kind of made up the carrier pigeon part but you get the idea.)

Anyway, the second hubbub was that we had to pay money to hire web designers and web designers — you guessed it–  make more money than seniors and most people in the city! Thus they lament at how is it possible for web designers  to make so much money when it’s so ridiculously simple to create a web site for a municipality. Indeed, so simple that we could even get high school students to do it. For free!

I think it’s more than clear precisely what game is being played here. Namely, the game is to devalue the professional skills required to perform the job to justify their gripe against the market wage of the profession. The conservative embrace of this position in light of their self-professed crush on free markets is a delicious bit of hypocrisy on top of the sundae of conservative cognitive dissonance.

So when I read this comment from Alderwoman Hatzenbuhler (Mohawk Compass:Council approves golf course rates, new superintendent position) ,  I was struck by the utter silence on the excessive nature of the salary and amazingly, a suggestion that the salary could be higher, much higher :

“I was at the discussion last week at the commission meeting, and they were concerned because the ranges do go up to $80,000 for this position. I would hope that we could get someone who is really well qualified and not be locked into that $55,000 if the individual were looking for something more. I realize we have budget issues but our biggest problem at the course has been maintenance and the condition of the course. If we don’t hire somebody who really knows what they’re doing, well you’ve defeated everything in bringing out the [consultants] from Robert Trent Jones, ” said Hatzenbuhler.

For the record, I happen to believe markets work fairly well , not perfectly nor always fairly, in setting salary so the point of my post is not to dispute or challenge what salary ranges fit this position. I honestly don’t care about the salary assuming the hire is well qualified and the salary is competitive. Why? Because no rational person would believe that performing a job will be done for free by high school students or for a fraction of what the market rate is for qualified people.

No,  the point of my post is a simple question: why does this hire draw none of the usual rhetoric on how much people make and high taxes and seniors on fixed incomes and why can’t we get high school kids to do it and on and on? Why such silence?

I think the answer lies in which professionals we’re talking about. If we’re talking about teachers, firefighters, web designers , then free markets suck and there’s no way those jobs are worth as much as they demand on the free market Seriously, what value do well qualified and skilled educators contribute to our community and society? I daresay nothing compared to a lush green.

Apparently, the invisible hand of the free market is a pat on the back for some professions while for some of us, it’s merely to slap us across the face.

 

 

 

The Council’s Fiscal Recklessness

In light of the Council’s pending decision to resolve its wholly created budget woes by using contingency funds, I wanted to point out how truly reckless this is from a financial perspective.

Before proceeding, let’s remind ourselves how often we hear members of the current Council proclaiming how fiscally responsible and disciplined they are in affairs of money. I think the public record is pretty clear on that self-aggrandizement.

So how does a supposedly fiscally prudent, business-minded and taxpayer-protecting Council now find itself dipping into contingency funds to cover budget shortfalls? Is this not the very same Council which on a weekly basis decries the desperate straits of the city’s financials and the city’s impending bankruptcy? Do they not constantly tell us that we really have no money on which to expense a single item?

Given that demagoguing, how then do they find themselves drawing money from the very thing that they claim has no money , namely the contingency fund?

Here’s how:

City of Amsterdam Budget

City of Amsterdam Budget

If you look at the chart, you see that the Council’s recent budget , achieved by ignoring the reality of actual budgets as evidenced by the shortfall in the fire department, returns a pittance of a tax return to the typical city homeowner. A typical single family would see a $3.46 tax savings while a two family homeowner would see $2.41 tax savings. The key point here is not the level of tax cut but the politics of a tax cut. Even if taxes went down two cents, politically, you are cutting taxes. And you are a hero.

While that’s great politically, fiscally it is reckless and imprudent if — like the current Council claims– you truly believe the city has no fund balance or contingency on which to draw. In other words, you cannot have it both ways: you decry the lack of cash and fund balance while at the same time adopting a budget which increases the likelihood that you will have to dip into the contingency budget. By the Council’s own reasoning, this is reckless and dangerous. And it is wholly of their own creation.

If you look at the chart again, I calculated what tax rates should be if you want to not risk dipping into the contingency by adding $100K of expenses for things like the fire department overtime which by any measure cannot be reduced but was reduced by the Council to hit their tax cut target. The problem as you can see with this is that taxes would need to rise. In short, you must raise taxes to protect the city from dipping into its contingency fund. Or more pointedly, you must raise taxes to hedge against the risk that you claim is so imminent to the fiscal health of the city.

But as that fiscal reality runs counter to political dreams, you see that the Council’s actions are not driven by the financial calculus but the political calculus. So either the fiscal risk is not really as bad as the Council would have you believe or they simply ignored it for the political benefit. Either way, it’s recklessness.

So that is why the Council is demonstrably reckless in its financial thinking — it’s politics first, finances last. The financials here tell the story.

 

 

Let’s Stop Pretending We’re a Small City With a Big Heart

I’ve never been a fan of the city slogan as it never quite resonated with me as to the true character of the city nor with what I think the slogan should project — something aspirational and something that looks to the future. Still, I’ve never been opposed to it like I am of late.

Before I proceed, let me state a few things for some context to this post. First, I do recognize that there are a number — a significant number — of individuals and groups with big hearts as evidenced by their deeds in the community, in business, in their family and in their interactions. I am not disputing that big hearts exist here, quite the contrary, you will find many laudable examples of kindness and good deeds here. Second, the test of big-hearted , in my opinion, matters in what you do and what you strive for versus what you merely say. In short, it’s about deeds versus words.

So if the city is to adopt a slogan and by extension, a marketing pitch, characterizing itself as big-hearted, then it really suggests that this city is truly and exceptionally big-hearted in a significant way compared to other places. And for me, this is where the problem lies.

What crystallized my issue with the slogan is this excellent piece by Tim Becker talking about the Council’s priorities on spending and budgeting, specifically this piece on the homeless:

Lastly, I believe we should definitely contribute to help keep the homeless shelter open this winter. It’s simply unconscionable to me for our city to revert back to the situation we had years ago when people were camping out in the wooded areas through the freezing winter. When someone is living out in the cold, that’s an indication that their problem is far more serious than the friendly advice to “get a job” is going to help. The short-term assistance that the homeless shelter provides is critical to helping those in the most severe conditions of poverty get back on their feet.

If you accept the premise that hte city is big-hearted, then you would expect that something would be done to protect the homeless. In other words, we would not merely get words but we would also get action to help the homeless. Similarly, if the city saw no action or unwillingness to help, a significant outcry would occur as that would run so counter to our collective bigheartedness. After all, if bigheartedness is truly the character of our city, such a small-hearted action would violate our very core principles.

But we saw little of that. What we saw instead was disregard, derision and callous indifference to the plight of the homeless by our elected leaders and barely a ripple of an outcry at the unwillingness of the city to act in what is unquestionably a test of bigheartedness.

Now let’s sharpen the issue a bit more: the very same represenataives who could find no purse from which spend $15,000 to help the homeless can readily and happily “figure out” how to spend $20,000 to pave a parking lot for a tent at the golf course. How is this even a plausible scenario if the city were truly bighearted? Well, I hate to say, it’s only plausible if the city might not have such a big heart after all. Choosing to spend money on what is comparatively a luxury to letting folks freeze in the woods should create an untenable spot for our elected leaders. Instead, I’d argue that it makes a swath of our city embrace them all the more.

To them, hearing “those people” resonates profoundly with all who believe “those people” create all that is wrong here. To them, this city would be a virtual utopia if not for “those people”. Often coupled with this attitude is that homelessness and poverty are choices resulting from moral or character flaws; in other words, these people do not find themselves homeless due to misfortune or the random chaos of life but indeed, have only themselves to blame. That is why you hear that the solution is “to get a job”; it’s not misfortune that leaves them homeless but sloth and lack of work ethic. It’s just more fuel to the fire of the crusade against programs to help the less fortunate if you can dehumanize them and cast them as undeserving. “Are there no prisons? Are there no workhouses?” — even Scrooge would blush.

I hate to say, but in many ways, that derision and contempt for “those people” is not a fringe element in our city. In many ways, it’s the heart of many more than we might want to admit driven by their pettiness and vindictiveness that sometimes drives what happens here and creates the social fabric here. In this case, it is quite crystal clear, but oftentimes, you don’t get to see it in such sharp relief. Think of this as a teachable moment, if you will.

If a community allows people to freeze and starve so they can give handouts to the privileged instead, then the actions here speak much, much louder than any words, as reprehensible as those words have been.

So let’s finally admit that the city’s heart ain’t so big after all and stop kidding ourselves on the true affairs of our small, indeed very small, city.

Council Feelin’ Pretty Good About a $20,000 Tent for the Golf Course, Not So Good for $15,000 for the Fire Department and Public Safety

I’m not making this up. Note that the request for $20K of paving at the golf course for tent did not elicit a single mention of “can’t afford it”:

Later, in regards to the $20,000 cost to to move the tent, Controller Matt Agresta asked, “Where’s that money going to come from?”

“We’ll figure it out,” replied Barone.

But when faced with the results of their budget cuts, the Council cries: “We can’t afford it” when it comes to staffing the fire department:

We’ve got to start slapping hands,” said Barone, “stay within the parameters of the budget or guess what, you’ll get layoffs. That’s another way – attrition,” said Barone.

I admit to not knowing all the details but if we can’t afford something for $15K, how can we afford $20K? Or why can we figure stuff out sometimes , but not other times?

Oh right, it’s for the golf course.

And there’s your answer.

A Failure to Pursue Growth Oriented Strategies

I took this from the NY State Comptroller’s Office Fiscal Stress Monitoring Report  on Montgomery County and to be clear: Montgomery County is not considered to be under fiscal stress. What struck me about the Environmental Indicators is not what they show but what we are doing, or more aptly, not doing in light of them.

If you look over the numbers, you basically see no growth whatsoever, low income , high unemployment and a shocking child poverty rate.

Given that, you would conclude that the county really needs to focus on reviving the local economy through some growth oriented approaches to counter the negative indicators along with a more active role for the state and the federal government to drive dollars into the local economy.

It’s also more than clear that the county faces serious structural and systemic issues in its economics. So no matter how folks harp on cutting costs, consolidating, getting rid of waste, yadda, yadda, you see that it will not deal with the underlying fundamentals facing the county. Of course, the picture is similar for the city of Amsterdam as well.

The vital political, business and economic challenge here is restoring economic growth — through public and private means, everything else is just a sideshow.

Montgomery County Environmental Variables

Montgomery County Environmental Variables