Month: August 2011

Ready, Fire, Aim, for Oregon’s Payday Lending Policy

By Christopher Robinson

In 2006 and 2007 the Oregon legislature passed two bills which significantly curtailed the ability of traditional “brick and mortar” payday lenders to operate within the state. Senate Bill 1105 (2006) and House Bill 2203 (2007) capped interest rates greater than 36%, limited origination fees to 10%, established a waiting period between payday loans, and required a minimum 31-day maturity. The goal was to protect Oregon consumers from “predatory” lending practices.

Prior to the legislation, there were 346 licensed payday lenders in Oregon. As of 2008 that number had dropped to 82, according to data from Oregon’s Consumer and Business Services Department. On paper the crackdown looks good: “In terms of achieving what the legislation set out to do, it is a complete success story for consumers,” says Dave Rosenfeld, executive director for Oregon State Public Interest Research Group (OSPIRG). However, the reality goes beyond what is on paper.

History shows that when significant demand exists for a good or service, and people are denied access, they will find other methods to satisfy the need, including circumventing the law altogether. Alcohol and drug prohibitions are two notable examples. There is no question that demand for payday loans is, in fact, significant. In Oregon it was a $334 million business and $40 billion nationally.

The biggest proponent of the payday lending legislation was U.S. Senator Jeff Merkley, during his time in the Oregon legislature. Merkley’s website explains the reasoning behind his support: “Many Americans are being forced to turn to short term payday loans just to deal with day to day expenses…causing financial burdens that are practically impossible for families to escape.” This implies that those who seek most payday loans are families who have fallen on hard times. Academic research shows otherwise.

In October 2008, a researcher at Dartmouth University published a study on the Oregon payday loan rate cap. The purpose was to determine its effect on borrowers and also who those people were. “The results suggest that restricting access to expensive credit harms consumers on average,” the study says. This may come as a shock, but when given the facts it makes sense. All people surveyed for the study were payday loan customers. Less than 50% of respondents were married (with an average of 1.1 dependents), and only 12% were unemployed. 66% said they used the loan to pay for emergency expenses (such as car repairs and medical) as well as bills (such as utilities). 70% said if a payday loan hadn’t been available, they would have had no other option or did not know where they would get the money. Finally, 76% expected their financial situation to improve after receiving the loan. The study shows payday borrowers are primarily employed individuals with unexpected expenses. If they are unable to pay for these expenses, their financial situation will be worse in the long run.

Legislators have jumped the gun in banning traditional payday lending in Oregon. They aren’t protecting vulnerable consumers as much as denying a necessary service. Furthermore, there has not been a major push to provide consumers with a convenient, viable alternative.

Senator Merkley’s office could not be reached for further comment, but it appears legislators used the issue for political gain without doing significant research. Responsible advocates should have, at the very least, devised a new business model to provide quick cash at low interest rates to these high-risk borrowers. So far nothing has materialized, leaving former customers worse off than they were before.

Payday lending may seem negative because of high interest rates, but in any industry there will be a premium for last-minute transactions. If you book an airline ticket the day before a flight, the price usually will be much higher than if the ticket had been purchased six weeks in advance. The same principle applies to lenders, especially when the borrowers have poor credit and there is a relatively high risk of default.

Washington State also enacted payday lending restrictions, but some legislators there are already considering relaxing them. Oregon should consider doing so as well. According to the Portland Business Journal (February 11, 2011), there already has been a rise in complaints against out-of-state online payday lenders conducting fraudulent and illegal business practices. These are the real risk to consumers because the Oregon Attorney General’s office has little control over them. If legislators had looked deeper into the facts before enacting legislation from a politically favorable standpoint, this situation could have been avoided.


Christopher Robinson is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Is the Road to Economic Growth Paved with Broken Windows?

Columnist Paul Krugman is credited with a line of thinking that should be debunked before it gains traction. Krugman wrote after 9/11 that the terror attacks could “do some economic good” because “all of a sudden, we need some new office buildings.”

Before the real Krugman could weigh in on the recent East Coast earthquake and hurricane, a fake Krugman wrote that “…we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.”

Such statements may seem plausible to those without much knowledge of economics. But the fallacy was exposed as early as 1850 in Frédéric Bastiat’s essay, That Which Is Seen and That Which Is Not Seen.

The argument seems to be that paying money to replace a broken window creates more prosperity than having the original window and spending the money on something else. But, as economist Sandy Ikeda asks, “If destruction is so good for an economy, why wait for a hurricane or a bombing raid? Why not just bomb your own cities?”

We can all “see” the new window. But whatever the money could have gone for instead remains “unseen.” No net economic benefit results from replacing the broken window. In fact, the economy is worse off because we now have just a window, not a window and the money that went to replace it.

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“Ready for College and Life”

In just a couple weeks, students everywhere return to school. Have you ever thought of how important it is where a child goes to school? After their family, the greatest influence on growing children is usually their school.

Private scholarship programs like the Children’s Scholarship Fund-Portland help elementary children from lower-income families choose the school that is right for them.

This summer I attended a luncheon at Central Catholic High School to honor graduating seniors with athletic scholarships to college. I was invited by a young man who began to be sponsored by the Children’s Scholarship Fund-Portland when he was in grade school. One of Central Catholic’s star basketball players, he will attend Portland State and play for the Vikings. He was able to attend private schools because of scholarship assistance from caring Oregonians.

“I have learned that nothing’s going to be handed to you and that you’ll succeed through hard work,” he told me. “[Private school] was challenging, but it has gotten me ready for college and life.”

The Children’s Scholarship Fund-Portland helps lower-income Oregon children get a hand up early in life through a quality elementary education. That simple step puts kids with limited choices on a path to success that can change the rest of their lives. To see how you can help a child reach his or her potential through this program, visit www.cascadepolicy.org/links/children.

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REPORT: The Dirty Secret Behind Clean Jobs

With unemployment on the rise, new jobs are scarce. Creating jobs has become a top priority for politicians. One can hardly watch the news without hearing catch phrases like the “renewable energy economy,” “green jobs” and “leading the world in clean energy technologies.” In short, environmental policies have been rebranded as job creators.

Cascade Policy Institute’s new report, The Dirty Secret Behind Clean Jobs, reveals numerous flaws with this approach. The authors address the misconceptions behind creating “green jobs.” The definition of “green jobs” is vague, green job subsidies are based on flawed economic principles and, lastly, assumptions for job growth are inaccurate or downright false.

The report’s co-author, Nick Sibilla, states, “Our report focuses on Oregon, national and international attempts to create green jobs. Overwhelmingly, we found that green jobs are based on faulty economics and wishful thinking.”

The Dirty Secret Behind Clean Jobs reveals:

  • Numerous definitions of the term “green jobs” exist. In fact, most government agencies interchange the terms “clean” and “green,” adding to the confusion of what really constitutes an environmentally friendly job.
  • Proclamations about green jobs fixing the economy are exaggerated and misleading. Oregon employers predicted the number of green jobs would grow 14 percent between 2008 and 2010, which would have equated to 7,400 new jobs in the state. Meanwhile, statewide employment levels have dropped by 140,000 jobs over the same two-year period.
  • “Clean jobs” turns out to be just another term for big government. According to The Brookings Institution, the industry of “regulation and compliance” (i.e., government employees) was the fourth largest source of clean jobs in the United States. Meanwhile, in Oregon, three of the larger green jobs employers are the U.S. Forest Service, the U.S. Army Corp of Engineers and the U.S. Bureau of Land Management. All of those salaries are ultimately paid by taxpayers.
  • One clear example of green job pork barrel spending is the Shepherds Flat wind farm under construction in Gilliam and Morrow Counties. The project has obtained $1.2 billion in federal, state and local subsidies but will create only 35 permanent jobs. Each job will cost over $34 million to American taxpayers.
  • Green job estimates do not account for job losses in other sectors. Spain, a pioneer in renewable energy before the recession, is a sobering example. A recent Spanish economic analysis revealed that for every green job created, more than two jobs were lost.
  • Many green job advocates claim that green industries are more labor intensive and thus create more jobs than other sectors of the economy. Although inefficiency is not something to be praised, the claims are still downright false. A recent Italian study suggests the green industry is a capital-intensive, not a labor-intensive, industry and that the data show that green investments generate fewer jobs than investments in other sectors of the economy.

Cascade’s vice president and co-author of the report, Todd Wynn, stated, “Despite the continued rhetoric from politicians, our report shows the utter failure of the green job movement. It turns out to be more about corporate welfare and government handouts than actual job creation.”

DOWNLOAD THE DIRTY SECRET BEHIND CLEAN JOBS REPORT

FOR MORE INFORMATION:

Todd Wynn
T: 503.242.0900
F: 503.242.3822

 

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Hand-Up Versus Handout Tackles Homelessness

By Michael Bastasch

Since 1986, Portland and Multnomah County have launched a slew of programs targeting homelessness, culminating in the “10 Year Plan to End Homelessness” in 2004. Portland and Multnomah County have built thousands of housing units and shelter beds and provide many services, but homelessness is still on the rise. Despite evidence that their approaches may be exacerbating the homeless problem, public officials continue to use the same failed methods.

The city’s approach to eradicating homelessness is based on the Housing First strategy which focuses on getting people into housing, then providing them with services as needed. Emblematic of this approach is the recent construction of Bud Clark Commons. The Commons was finally completed and opened in June 2011 and contains 130 studio apartments for permanent residents, a 90-bed men’s transitional shelter and a day center offering a variety of services. The city wanted a place with as many services as possible under one roof to provide convenient services for the homeless without referring them to other facilities, increasing the likelihood they will get help.

Those living in the Commons’ apartments are the most vulnerable of Portland’s homeless population, and many suffer from severe mental illness and substance abuse. Just giving these people housing won’t help them, however, as many need an environment where they must commit to getting long-term help. In the Commons, recovery isn’t mandatory, and drug and alcohol use are permitted in the apartments (though not in the shelter and day center). Addicts trying to recover will live next to those who are still using, making recovery much harder.

 

Recovery is easier when a community of recovering addicts is fostered as a mutual support network; but in the Commons, such a community may not occur. Jeanine Carr, a community health nurse at the Multnomah County Westside Health Center downtown, reportedly said, “It’s not like (the housing authority) is trying to build a community that will work well together.” Stacy Borke, housing and support services director of Transition Projects Inc., said, “The housing authority and the city are taking real leaps of faith,” with regard to fostering a community that works well together.

More concerning than the dynamics of the Commons’ residents, however, is the cost. The building cost $49.6 million dollars and will require federal and local subsidies to operate throughout the year. The permanent housing will cost somewhat less than $1 million annually, and the temporary shelter and day center will cost a little under $2 million annually. But even if all the services and housing capacity of this building were utilized, it still wouldn’t be enough to accommodate all the homeless in Portland. How many more $50-million-dollar buildings can the city afford or spare the land for?

These grandiose public projects may be well intentioned, but they cannot achieve results at a reasonable cost. The city of Portland and Multnomah County have poured tens of millions of dollars (over $31 million on average annually from 2001 to 2003) during the past 25 years into combating homelessness, but their spending is utterly useless when aimed at such projects. Much more efficient ways to combat homelessness require little government involvement.

One way is to allow private charities to take over where government intervention has failed. Private charities are voluntary and able to work with the homeless throughout their lives, requiring those they help to make a commitment to getting sober and back on track. Union Gospel Mission (UGM) in downtown Portland has a LifeChange program that works with homeless individuals suffering from drug and alcohol addiction and creates a recovering addict support network. UGM requires those in the LifeChange program to work in their store and at their mission downtown, giving them valuable career skills. They explicitly reject the Housing First approach and focus on getting people sober and responsible before transitioning them back to normal life.

Another way to combat homelessness is to follow the example set by Dignity Village, a homeless community near the Portland International Airport. The Village is campsite with wood shacks that was designated by the city in 2001. It requires all residents to pay $20 per month and to volunteer time to help the community. No drugs or alcohol are allowed, and the Village is self-governed by a board of directors elected by residents every year. The Village teaches residents to be entrepreneurial since they operate small-scale businesses on their properties. In fact, 50-75% of residents have income from work or benefits. Dignity Village also has a low cost to the city, estimated at $14,990 per year for city services and about $30,000 per year for internal costs (which Village residents pay themselves). It is much less expensive per person per night than transitional housing. Most importantly, the Village demonstrates that the homeless can take care of and provide for themselves when they are given a place to do so and are left unmolested.

The city continues to give handouts and spend millions of taxpayer dollars to achieve scant results. Bud Clark Commons, though generating a lot of attention, is just a repetition of the same failed policies of the past 25 years. More efficient and compassionate ways exist to tackle homelessness, with places like Dignity Village or through private charities. Spending taxpayer money doesn’t automatically yield results. No matter how much nicer homeless shelters get or how many more Portland builds, it doesn’t stop homelessness. Rather, it tends to exacerbate it and keep people dependent.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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You’re teaching my child what? And it is costing us how much!

Join U-Choose exploring public education. Speakers will present information on the history and degradation of curriculum, sex education, censorship of children in the classroom, and parents’ rights. The impact on youth, adults and the family will be addressed. Solutions provided.

Featured Topics/Speakers:

Progressive” Education: How did we get here? How John Dewey’s vision of progressive education was implemented, resulting in the weak “dumbed down” curriculum of today.

Rob Kremer, Host of Kremer and Abrams KXL Radio 101FM, Founder and President of Oregon Education Coalition, Principal Third Century Solutions

“Dumbing Down” of America’s Youth – Is this real? See examples of the watered down teaching in math, science and English that present day students are receiving in our schools compared to a century ago.

Dr. Chana Cox, Senior Lecturer in Humanities, Lewis and Clark College

Sex “Hyper” Education Indoctrination – Human Sexuality is a far cry from the biology of reproduction. Now by law students in Kindergarten through 12 grades will be taught everything from mutual masturbation to homosexual experimentation. Discover why this is important to government educators.

Suzanne Gallagher, Business Owner, Former Candidate for State Representative, Pro-Family Activist

Political Incorrectness and Censorship – What are your rights? Learn about “viewpoint discrimination” including Anti-Christian, and what you can do to defend your right to direct your child’s education.

Herb Grey, Esq.- Alliance Defense Fund Affiliated Attorney

 

America and our children face a bleak future. Their future depends on acting now!

Come share your views and experiences during U-Talk.

When: Tuesday, September 13, 6:30pm- 9:00pm

Where: Stafford Center, 21065 SW Stafford Road, Tualatin, OR 97062

$5 donation welcome at door.

 

 

If you can help with event publicity within Portland areas, please contact

Debra Mervyn 503-819-8800 at debrauchoose@gmail.com

 

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You’re teaching my child what? And it is costing us how much!

Join U-Choose exploring public education. Speakers will present information on the history and degradation of curriculum, sex education, censorship of children in the classroom, and parents’ rights. The impact on youth, adults and the family will be addressed. Solutions provided.

 

Featured Topics/Speakers:

 

§  Progressive” Education: How did we get here? How John Dewey’s vision of progressive education was implemented, resulting in the weak “dumbed down” curriculum of today.

Rob Kremer, Host of Kremer and Abrams KXL Radio 101FM, Founder and President of Oregon Education Coalition, Principal Third Century Solutions

 

§  “Dumbing Down” of America’s Youth – Is this real? See examples of the watered down teaching in math, science and English that present day students are receiving in our schools compared to a century ago.

Dr. Chana Cox, Senior Lecturer in Humanities, Lewis and Clark College

 

§  Sex “Hyper” Education Indoctrination – Human Sexuality is a far cry from the biology of reproduction. Now by law students in Kindergarten through 12 grades will be taught everything from mutual masturbation to homosexual experimentation. Discover why this is important to government educators.

Suzanne Gallagher, Business Owner, Former Candidate for State Representative, Pro-Family Activist

 

§  Political Incorrectness and Censorship – What are your rights? Learn about “viewpoint discrimination” including Anti-Christian, and what you can do to defend your right to direct your child’s education.

Herb Grey, Esq.- Alliance Defense Fund Affiliated Attorney

 

America and our children face a bleak future. Their future depends on acting now!

 

Come share your views and experiences during U-Talk.

 

When: Tuesday, September 13, 6:30pm- 9:00pm

 

Where: Stafford Center, 21065 SW Stafford Road, Tualatin, OR 97062

 

$5 donation welcome at door.

 

If you can help with event publicity within Portland areas, please contact

Debra Mervyn 503-819-8800 at debrauchoose@gmail.com

 

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How many presidential buses does it take to equal the cost of one light rail car?

President Obama is traveling the Midwest on a new bus purchased by the Secret Service. The vehicle is painted all-black with tinted windows and appears to be the size of a standard Greyhound bus. Inside, we can assume that it’s tricked out with the latest in high-tech security gear and telecommunications and designed with a kitchen, shower, bedroom and lounge area.

Given its purpose, the price tag must be enormous.

Actually, it’s not. It was purchased for $1.1 million. A typical light rail car in Portland costs $4 million.

Regular transit riders might want to ponder that. A light rail car has hard seats, no headrests, minimal legroom and no on-board internet access.

The Presidential bus can go on any road in America, while light rail is limited to just a small part of the Portland region.

The proposed Milwaukie light rail project will cost $1.5 billion. If we cancelled the project, we could buy an entire fleet of presidential buses and run them to Milwaukie, with free coffee and donuts for everyone, and we still couldn’t spend as much as TriMet plans to spend on one mile of light rail.

Maybe transit customers would like to try the Presidential bus for a few months before we waste $1.5 billion on a slow train to nowhere.

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Germany’s Energy Mistake of Nuclear Proportions

By Gordon J. Fulks, Ph.D.

“Quem deus vult perdere, dementat prius ― Whom the gods would destroy, they first make insane.”

Germany’s precipitous decision to shut down eight nuclear power plants last March and the remainder by 2022 is curious coming from a German chancellor with a doctorate in physics. Under pressure from Greens who exploit scientific illiteracy and promote fears they find useful, Chancellor Angela Merkel has become a pure politician. Nuclear power evokes many fears in Germany. As in the English-speaking world, irrational perceptions about technical matters from nuclear energy to alternate energy to global warming transcend all reason.

The German political situation started to melt down after the most powerful earthquake and tsunami in modern times struck Japan in March: More than 24,000 people lost their lives, and the Japanese nuclear power installation at Fukushima made ominous headlines for weeks. With reports of radiation leaking from three reactors and large evacuations of the local population, European Energy Commissioner Gunther Oettinger of Germany declared the nuclear incident to be an “apocalypse.” Three reactors out of 11 in the Fukushima area were destroyed, resulting in large economic losses and a long, complex cleanup. But the widespread devastation elsewhere was the real tragedy.

Of the huge death toll, not a single death was attributed to nuclear radiation. Two workers at Fukushima died from drowning and one from a heart attack. Although two other workers received non-life-threatening radiation burns from standing in highly radioactive water, no one died from radiation sickness. The large amount of dangerous iodine-131 initially released has largely decayed away.

Long-term effects attributable to radiation exposure should be minimal, even among those workers who received the largest doses as long as established procedures to limit total exposure were followed. In the far worse Soviet Chernobyl accident in 1986, where the reactor burned and workers were unprotected, 57 died from direct effects and 500 in the local population from telltale thyroid cancer. But the vast majority of the population escaped unharmed.

The rational response to major industrial accidents is to carefully understand what went wrong and make improvements to existing procedures and infrastructure to minimize the chance of a recurrence. Because Germany uses far better reactor designs than the Soviets had and experiences few giant earthquakes and tsunamis like those in Japan, these disasters are not particularly pertinent to them. Moving toward more wind and solar power was the politically expedient decision for Merkel, but it has huge practical and environmental drawbacks. Because windmills and solar arrays produce very erratic electricity, backup from new turbine power plants burning natural gas is necessary. Leaving conventional steam plants running as “spinning reserve” is hugely wasteful.

That raises the inconvenient question: Why not just build advanced and highly efficient gas turbines and forget about expensive alternate energy? Wind and solar installations typically fail in 20 years, just as they have paid back the energy and cost of their construction. In other words, they produce little net energy, making them very inefficient. Their erratic nature also means that they reduce the reliability of the grid.

Germans are likely to get the additional natural gas they will need from their present supplier, Russia. Why? Because Germany also has a phobia about the shale-gas revolution that is sweeping the rest of the world. Germany has meager gas reserves, but friendly neighbors like France and Poland now have huge reserves.

If Germans want to avoid shipping the remainder of their industry to China and shivering in the dark when the sun is not shining and the wind is not blowing, they will have to choose between viable sources of electricity: nuclear, natural gas and coal. The smart move for Merkel would be to get full value out of Germany’s existing nuclear power plants during their design life and then consider environmentally friendly gas turbine replacements.

Although nuclear power has many advantages and new reactor designs coming from places like Oregon State University show great promise, natural gas appears to be the most competitive solution for advanced industrialized societies needing clean, reliable power in coming decades. Is Germany still capable of making rational decisions? Very recent news suggests that they may restart one nuclear reactor to avoid power shortages this winter. They are also talking about using millions of euros from a fund for promoting alternate energy to encourage new coal and natural gas power plants. These are steps back from the abyss.


Gordon J. Fulks holds a doctorate in physics from the University of Chicago, Laboratory for Astrophysics and Space Research. He is an Academic Advisor at Cascade Policy Institute in Portland and lives in Corbett.

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Cascade Requests Congressional House Committee to Delete Funding for Milwaukie Light Rail

Portland, OR – Today Cascade Policy Institute sent a letter to Rep. John Mica, Chairman of the Congressional House Committee on Transportation and Infrastructure, requesting that he delete all $750 million in federal funding being requested by TriMet for the Milwaukie light rail project.

Noting that the recently-signed Budget Control Act of 2011 requires Congress to reduce federal spending by $917 billion over the next 10 years and that Rep. Mica has released a draft six-year transportation spending bill forecasting a 35% cut in federal highway/transit spending, Cascade President John A. Charles, Jr. stated that the price tag of $205 million per mile for Milwaukie light rail was “indefensible” and should be terminated.

Cascade sent a second letter to Gov. John Kitzhaber, informing him of the letter to Rep. Mica and asking that he intervene to terminate the Milwaukie project, but implement a low-cost alternative concept with the following elements:

  • Finish the new bridge over the Willamette River
  • Cancel the light rail portion
  • Connect the streetcar loop
  • Offer more “express” bus service to Milwaukie

Charles stated, “The Milwaukie project offers no new transit service, forces the relocation of 68 businesses and 20 residences, and degrades current bus service to Milwaukie. We can improve service while saving about $1.3 billion, and that plan would free up about $600 million in local dollars for other civic improvement projects.”

For the letter to Rep. Mica click here.
For the letter to Gov. Kitzhaber click here.
For a summary of the low-cost alternative plan for Milwaukie light rail click here.

 

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The Debt Downgrade Blame Game

Politicians and pundits upset that tax increases were not part of the recent debt-ceiling deal in Congress are now blaming the Tea Party for last Friday’s unprecedented downgrading of U.S. sovereign debt by Standard & Poor’s.

Some are even calling Tea Party congressmen and activists “terrorists” for daring to stand up and demand that the American government live within its means. In this case, its means are the taxes that hard-working individuals and companies are able to afford in the face of runaway government spending and debt.

Blaming the Tea Party for pointing out that our national government is well on its way toward a financial cliff is like blaming someone who sees a house on fire for calling 911.

“No new taxes” is a perfectly acceptable political position. It bears no resemblance to any tactics that can remotely be described as terrorism. Letting people keep their own money, the money they’ve legitimately earned, doesn’t inflict violence on anyone else.

Terrorists do just the opposite; they take others’ property and lives for their own political, religious or other causes.

The Tea Party is more like the little boy in Hans Christian Andersen’s tale who stood up and pointed out that the Emperor is not wearing any clothes. Such honesty then, and now, is cause for praise, not name-calling.

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John Charles message to the TriMet Board Members

Below is the message John Charles sent to TriMet board members on August 9, 2011. This comes one day before they vote on Resolution 11-08-58, which is the resolution “Authorizing TriMet to Acquire by Purchase or by the Exercise of the Power of Eminent Domain Certain Real Property Necessary to Construction of the Portland-Milwaukie Light Rail Project”.


Board members:

Before you vote on Resolution 11-08-58, I encourage you to stop by SW Lincoln Street tomorrow morning on your way to the Board meeting, and spend a few minutes enjoying the tranquility of this neighborhood. It has all the mixed uses that Portland planners love – residential, commercial and retail businesses, transit service (bus line #17), and two great pedestrian paths – along with more than 65 stately shade trees that were planted some 50 years ago as part of Portland’s first urban renewal project. Please visit the beauty shop that you will destroy with property condemnation, and talk with some of the clerks inside who are very distressed at what is about to happen.

Then imagine all the beautiful trees getting clear-cut by TriMet contractors on or before September 15. Imagine the entire street being blown up and widened to accommodate a slow, noisy light rail line. Picture a big light rail station in the middle of the block, with all the aesthetic glamour of light rail stations such as those located at East Burnside and 102nd, 122nd, 148th, or 162nd; or perhaps the station at North Interstate and Killingsworth, or the Beaverton Round.

Try and remember that even though Urban Renewal is supposed to be used to clean up “urban blight”, most light rail stations create urban blight. And remember that part of your light rail project is being financed with Urban Renewal dollars.

To truly understand the significance of the Milwaukie project, you need to go out to the neighborhoods and see how construction will actually affect them. It is not enough for you to stay above the fray. Light rail is not an abstraction, or just a series of drawings on a board. Light rail affects real people. You need to be aware of that before you pull the trigger and wreck their street.

The staff report is disingenuous when it states, “The business on site, Ed Wyse Beauty Supply, will not be directly impacted by construction. The building will not be affected and no relocation is required.” Of course it will be affected. It is a land-locked site. Customers cannot get to it from the west, south or east. Once you take their street frontage and have construction materials piled right up their front door, they will slowly twist in the wind and then go out of business. We saw this repeatedly on Morrison and Yamhill on the first MAX line, and again on North Interstate.

Don’t kid yourselves that your project is making some kind of surgical intervention onto Lincoln Street. You will be putting the Candlelight Café and Budget Rent-a-Car out of business directly (near 5th Avenue), and the Ed Wyse Beauty Supply out of business indirectly. You can’t pass the responsibility off.

Before you vote, I hope you will be able to state publicly for the record, in your own words, WHY you are doing this. If some businesses must be ruined and beautiful trees mowed down, what greater good is being sought? I don’t have an answer; I hope you do.

Sincerely,

John Charles

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John Charles responds to attacks made by Metro Councilor Rex Burkholder and Metro Councilor Carlotta Collette

At the July 14, 2011 JPACT meeting, accusations were made about John Charles and the Cascade Policy Institute. The response from John is below.


Metro Councilor Rex Burkholder
Metro Councilor Carlotta Collette

600 NE Grand Avenue
Portland, OR 97232

 

Dear Councilors Burkholder and Collette,

I am responding to the personal attacks that the two of you made at the July 14, 2011 JPACT meeting. Although there were many inappropriate comments made by numerous committee members, in the interest of brevity I will focus my concerns on just a subset of remarks made by the two of you.

 

Councilor Burkholder, you started it with your uninformed opinion about the so-called Drive Less/Save More (DL/SM) campaign, a topic that was not even on the formal agenda. After Randy Tucker’s legislative report, you stated:

 

“My understanding is that it was brought up by John Charles of Cascade Policy Institute.  And the stories I’ve heard is that they’ve received a significant boost in funding from the Koch brothers, a wealthy set of people who are funding climate denial kind of actions and anti-transit and anti-urban redevelopment issues, and so they have significant numbers of staff people who are out there fanning the flames and providing misinformation…”

 

In that entire paragraph there is only one factually correct statement: the issue was brought up by me. However, you seem to have no knowledge of the context, or what I actually said.

 

I brought up the DL/SM program in a legislative Ways and Means Subcommittee hearing on the ODOT budget. Although most of ODOT’s budget is characterized by restricted funds, I pointed out two discretionary programs: the 6-year-old DL/SM program, and the 17-year-old Transportation-Growth Management Grant Program. I suggested that regardless of how much merit they might have once had, in the case of DL/SM, “probably everything that can be said about driving less and saving more has already been said.”

 

I encouraged the subcommittee to euthanize both programs and re-allocate the roughly $8.5 million to other more productive endeavors, such as actually improving our road system.

 

My testimony ignited an avalanche of criticism of the DL/SM program from both sides of the aisle. Almost every legislator on the committee joined in, expressing outrage that we were spending valuable tax dollars on silly marketing campaigns. Eventually the issue became the topic of a front-page story by the Oregonian about the role of former State Senator Paul Phillips in fighting for the program, because so much of the money is funneled to his lobbying firm.  As Mr. Tucker informed you, the program eventually took a cut of roughly $500,000, which is minor by legislative standards.

 

From this brief legislative exchange, Councilor Burkholder now concludes that Cascade Policy Institute is receiving significant funding from the Koch brothers, which is threatening Metro’s transportation vision. There is no truth to this claim. We do not receive one penny from the Koch brothers, nor have we ever in the seven years that I have been CEO.

 

Our only link to the philanthropy of these gentlemen is that we have two college interns this summer who are “Koch Fellows”, courtesy of the Institute for Humane Studies (IHS) in Washington, D.C.  The two of them are paid directly by IHS for an eight-week internship at Cascade, where they research and write on various topics, and in return, we provide them with training and experience. One of them has recently published a paper on Medicaid; the other is researching Renewable Energy Credits.

 

Your statement that I am personally “fanning the flames and providing misinformation” is a serious charge. To remind you, I have worked on transportation policy for over 20 years. I’ve served on numerous public advisory committees, have published hundreds of essays, and testified in front of dozens of governing boards. Please provide me, in specific detail, examples of where I have knowingly given “misinformation” to anyone. If you can’t do that within 10 business days, I’ll be expecting a public apology.

 

And if you are unwilling to provide an apology, then we will soon be having a legal conversation about the meaning of the term “defamation.”

 

Councilor Collette:  after Councilor Burkholder got done with his attack, you piled on by saying, “for those who don’t know the Koch family is a major oil industry family, so we know where at least that portion of the opposition is coming from – a real pro-automobile, oil-industry group.”

 

You perpetuated the falsehood that Cascade receives major funding from an outside source tied to the fossil-fuel industry, which in your mind explains everything about CPI testimony – my testimony – that you disagree with. I will be expecting a public apology from you as well.

 

I suggest that both of you carefully listen to the entire audio recording of the JPACT meeting. After your early comments, the meeting quickly turned into a marathon whining session about mean Republicans in Congress, climate “deniers”, and all the other alleged enemies of the vaunted Metro 2040 plan. You set the tone for, and encouraged, this unprofessional behavior.

 

I will note in closing that we received a letter dated June 14 from Metro Council President Tom Hughes extolling the virtues of bringing a “diversity of voices and experience to Metro.” He then goes on to invite us to participate in the Opt In campaign.

 

It is certainly true that Metro suffers from a lack of diversity, but that problem will not be solved by internet polling or offering small bribes to groups to receive “free surveys” of their memberships. The problem will only be solved when the Metro Council recognizes how severe the group-think mentality has become, and includes contrarian voices in meaningful conversations at the decision-making level.

 

I look forward to receiving your respective apologies, and to your joint commitment to raising the quality of public discourse at Metro by showing respect to the people with whom you disagree.

 

Sincerely,

 

John A. Charles, Jr.

President & CEO

 

 

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Renewable Energy Credits: The Ultimate Greenwash

By Nick Sibilla

News Corporation claims it’s greener than Starbucks.

That’s one of many surprising insights gleaned from the first-ever global Corporate Renewable Energy Index (CREX). According to CREX, published by Bloomberg New Energy Finance and Vestas Wind Systems, News Corporation (the parent company of FOX News and The Wall Street Journal) procures 67% of its electricity from renewable energy (RE). That makes News Corp. the 8th highest corporate consumer of renewable energy. Meanwhile, Starbucks ranks below at 14th, with 58% of its energy purchased from green sources. Despite the current recession, among those surveyed, corporate purchases of RE increased by more than 50% over the past year.

Yet many of the corporations on CREX did not actually buy renewable energy. Instead, they purchased a fabricated commodity, known as renewable energy credits (RECs), or “green tags.” A REC represents the alleged “environmental amenities” associated with certain forms of electrical power production such as wind or solar. For those in the trade, one REC is created every time one megawatt-hour (MWh) of renewable energy is generated. (For comparison, the average American household uses just under one MWh every month.)

In other words, two distinct commodities are associated with renewable energy: the electric output itself and the intangible environmental benefits. RECs represent the latter and are sold separately from the power generated by a “green” facility. But by purchasing RECs, corporations can still claim they are using green power. In fact, according to CREX, RECs accounted for over 70% of all corporate green power purchases in 2010.

However, buying RECs is troubling for two reasons. First, the price of RECs is far too low to induce investment in clean energy. As CREX notes, the average price is a little under $1 per REC. But according to exposés published by Bloomberg News and BusinessWeek, the actual cost of generating one new MWh of green power can range anywhere from $40 to over $90 per MWh. In fact, in a study published by the National Renewable Energy Laboratory, the cost of solar power can reach as high as $680 per MWh.

Second, RECs are often a marketing gimmick for corporations to prove they care about the environment. For example, back in 2008, Nike was the 24th-largest corporate buyer of RECs. But that same year, it emitted 1.6 million tons of carbon, one of its highest years in the past decade. One year later, Nike slashed its RECs purchases by almost 70%. Now Newsweek ranks Nike as the 10th Greenest Company in America, as determined by over 700 different metrics. Yet Nike is conspicuously absent on CREX. Meanwhile, News Corp. plummets from #8 on CREX to 107th on Newsweek’s list. Clearly, going green takes much more effort than buying RECs.

Furthermore, for those concerned about global warming, RECs do not reduce total carbon emissions. According to the EPA:

If you are buying renewable electricity or RECs, you are reducing your indirect emissions…An organization buying green power can claim to be reducing its carbon footprint, but cannot claim to be reducing its total emissions to the atmosphere. (Emphasis added.)

Not using fossil fuels may be admirable. But by providing negligible investment for renewable energy, RECs are little more than a waste of other people’s money. As a fabricated commodity, RECs are the ultimate greenwash.


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Learning from Mistakes in Health Insurance Policy

By Michael Bastasch

The Oregon Health Plan (OHP) was implemented in 1994 as Oregon’s attempt to improve health care for the state’s low-income Medicaid population. The program set out to increase access to health coverage, ensure early preventative treatment and reduce premium increases for the insured. Despite its lofty goals, the program largely failed as financial instability forced it to impose higher costs on its own beneficiaries and to disenroll many participants.

Recently, the National Bureau of Economic Research released a controlled study analyzing the effects of “expanding access to public health insurance on the health care use, financial strain, and health of low-income adults” in Oregon. In 2008, the state expanded Medicaid enrollment by 10,000 under the Oregon Health Plan (OHP) Standard program. The Standard program covers only a limited number of uninsured adults ineligible for traditional Medicaid programs and charges monthly premiums but no copayments. This recent study has been trumpeted by some as a vindication for the national Affordable Care Act (Obamacare), but the results simply echo a return to the same failed approach to health insurance that Oregon has already experienced with the OHP.

The results of the 2008 study were as follows: There was an increase in utilization of health care services among those who received insurance. The probability of having a hospital admission increased 30%, the probability of having an outpatient visit increased 35% and the likelihood of taking any prescription drugs increased 15%. Likewise, there was an increase in reported compliance with recommended preventative care including mammograms and cholesterol monitoring.

As for financial strain, there was a 25% decline in the probability of having unpaid medical bills sent to collection agencies and a 20% decline in having to pay any out-of-pocket medical expenditures.

In terms of the benefits of insurance to physical health, the results show a 13% increase in the likelihood that someone reported feeling “good, very good, or excellent;” and the likelihood of screening positive for depression fell as well.

All of these would seem to indicate that the program was successful, yet a closer examination reveals the fundamental problems with the program. First, the increases in the utilization of health services and the reduced financial strain add significantly to overall costs. In fact, average annual individual expenditures increased by 25% ($778). This isn’t surprising, given that merely a decade after OHP was implemented expenditures per enrollee had increased 58[SB1] %. OHP’s total Medicaid expenditures increased 113% from 1994 to 2008[SB2] , well over the rate of medical inflation for that time period. These huge cost increases put heavy burdens on the system which eventually resulted in large-scale disenrollment of beneficiaries.

Second, the push for preventative care did not decrease emergency room visits or generate cost-savings. Proponents of preventative care argue that expanded public insurance should encourage preventative treatments in order to reduce health care costs as fewer people use hospital emergency rooms for preventable diseases. They believe that emergency room visits are often the most expensive form of health care provision. However, the recent study points out that there was no such decrease in emergency room use, despite the fact that compliance with recommended preventative care increased. In fact, OHP has never caused any measurable change on emergency room usage over its lifetime.

Third, self-reported measurements of health indicated improvements. However, two-thirds of the increase in self-reported health came shortly after enrollment and before enrollees began utilizing any medical services. Also, the increase in self-reported health doesn’t mean enrollees were actually physically healthier. In fact, the report indicated it is most likely that the increase in self-reported health reflects a general sense of improved wellbeing. In other words, people feel better off with insurance even if they are not physically healthier.

 

The recent study provides a clear insight into the effects of expanded public health coverage in Oregon, and the results of the study provide additional evidence to the failure of OHP. However, proponents of Obamacare see the Oregon experiment as vindication for their nationwide endeavor. Comparing Oregon’s results to the national stage is premature, as even this report’s researchers have warned: “[C]onsiderable caution must be exercised in extrapolating from our estimates of the causal impact of insurance eligibility and coverage to other settings.”

Policymakers should use the study as a blueprint for how not to go about reforming health care. The Oregon experience has shown that further centralization of health coverage and layering of subsidies ultimately fails. Instead, it would be prudent to decentralize health coverage to promote competition and consumer choice.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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“The Boondoggle of Boondoggles”

By Nick Sibilla

Oregon is a pioneer in green power. But we’re also a pioneer in wasting other people’s money. Right now, Oregon is home to one of the largest energy boondoggles in the nation: Shepherds Flat wind farm.

Currently under construction in Gilliam and Morrow counties, Shepherds Flat soon will have the largest wind farm in the world. Since wind power is expensive, Shepherds Flat has received over $1.2 billion in federal, state and local subsidies. Apologists say these subsidies will create jobs. But according to The Oregonian, this wind farm will create only 35 permanent jobs. In other words, each job created will cost American taxpayers over $34 million.

Meanwhile, Caithness Energy, the developer of Shepherds Flat, will bear only 10% of the cost. But Caithness will earn a 30% return on investment. In addition, this wind farm will not even power Oregon. All of the subsidized output will go to Southern California Edison, which provides electricity to places like Orange County. This project is nothing more than a triad of corporate welfare, government subsidies and exorbitantly expensive jobs. So is it any wonder residents in Shepherds Flat are calling this project the “boondoggle of boondoggles?”


Nick Sibilla is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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