The Land of Steady Hazards

Longtime readers may have noticed that in recent months I’ve dialed down my griping about the state of Connecticut on this blog.

Because why give away the milk for free! Over at the Yankee Institute, I’ve been turning my criticisms into hard currency with a series of spitballs aimed at Hartford.

To wit:

Most economists agree that while raising minimum wages benefits a majority of workers, some jobs are lost no matter how small the increase. A paper by a DC think tank duplicated the methodology of a similar Congressional Budget Office study and found that those job losses affect young, unskilled entry-level workers, thereby disproportionately hitting the workforce in already struggling cities like Bridgeport and Hartford. The study suggests that governments can aid low-income workers without jeopardizing any jobs by instead expanding the Earned Income Tax Credit. I didn’t know this when I wrote the piece, but in 2011 Connecticut cut the state EITC to 25 percent of the federal credit, down from 30 percent.

Just last week I wrote about how CT’s Department of Labor mandates that employers report all new hires to the state within 20 days. The state even has a website telling you how to do it: just print out a form and either mail or fax it in. That’s right, unless you’re willing to use the state’s hyper-complicated FTP format, there’s no way to send the information online because the website hasn’t worked for at least three years. Instead you must send a piece of paper to Hartford, where presumably somebody manually punches it into a database. Connecticut — the land of tomorrow!

But my favorite so far has been a piece of investigative journalism in which I reported the state gave $5 million to a Wall Street company to move from White Plains to Stamford. You see, with companies like Aetna and General Electric routinely abandoning Connecticut for more salubrious shores, Malloy’s Department of Economic and Community Development has been throwing corporate welfare at anybody with more than two house elves on the payroll if they’ll move to CT or just simply stay put. In this case, the DECD handed out a $1 million grant and a $4 million loan to a company called FSC CT, of which only $1 million had to be paid back.

Except it turns out the guy running FSC CT, Leonard Tannenbaum, was a crook:

In October 2014, Tannenbaum went public with an IPO for Fifth Street Asset Management, a company which in turn invested in two other publicly traded companies he also started, Fifth Street Finance (FSC) and Fifth Street Floating Rate Corp. (FSFR). Both FSC and FSFR were business development companies (BDCs), financial instruments that offer loans to small and mid-sized businesses.

On the eve of the IPO, Tannenbaum owned 94 percent of FSAM, raising the value of his shares to $684 million once it went public.

Yet not long after the IPO, FSC revealed that many of its loans to businesses were considered nonaccrual loans, meaning they couldn’t generate interest because the borrowers hadn’t been paying them back and were in danger of default. On top of that, FSC had been overpaying fees to FSAM.

A bunch of lawsuits and one SEC investigation later, the whole pyramid collapsed, burying at least $2 million of the loan irretrievably. The state will probably never see the $1 million grant again either.

There’s more of my work to come at the Yankee Institute. In the meantime, Yay, Connecticut!

Laughing Last

I’m always amazed by the lack of awareness displayed by officials and executives when speaking with the press. Case in point: this recent interview in UConn’s newspaper The Daily Campus with UConn president Susan Herbst, who displays all the charisma of a Gila monster when asked about closing the satellite campus in Torrington:

Constable: There are those who argue the university set up the Torrington campus for failure, in terms of drawing down its faculty, in terms of drawing down its student enrollment and—

Herbst: Did you go the board meeting?

Constable: I didn’t have the chance to, because—

Herbst: Yeah, I think you need to talk to Sally Reis. Yeah. She’s been managing it, and she explained all that. And we have made tremendous efforts there in marketing all different kinds of apertures and venues. The demand is not there, and we did not set up the place for failure. And it is unfortunate that people use that kind of rhetoric, but I ask you to study the issues before you come here. You know, so, did you talk to Sally?

Constable: I’m merely asking the question.

Constable reiterates this conversation is for the graduation issue and is meant to be a transcribed conversation with Herbst.

Herbst: Yeah, so I would talk to Sally. Stephanie Reitz, did you talk to her about the issue at all?

Constable: Just looking for perspective, is all. So you don’t believe the university set up the Torrington campus for failure?

Herbst: Absolutely not. But I would not— yes.

Constable: That’s all I was asking.

Herbst: Yeah— probably better— yeah— I hope that in the future, you can look at all the university says and does and talk to the right people before you ask that kind of question.

Look at all the university says and does and talk to the right people before you ask that kind of question — I cannot count the number of times I’ve interviewed someone who has said something almost identical to me. Translation: Don’t challenge me, just parrot the official doctrine in our press releases. Rather than use the interview as a chance to confront the opposing narrative and articulate UConn’s argument for closure, Herbst swings for the reporter. I love how Constable throws Herbst a life preserver by stopping the interview to explain it will appear as a word-for-word transcription but Herbst ignores him in favor of tying more cinder blocks around her ankles. I can only imagine what her deputy chief of staff was thinking as he overheard this exchange, no doubt while trying to climb out a nearby window unnoticed:

Constable: The Co-op has been an institution at the university for a very, very long time. There were questions about its ability fiscally sustainable in the long term for some time. Looking at the Storrs Center bookstore location – folks over at the Co-op would say they were forced into it despite the fact that they knew it would put them in a position to make the fiscally unsustainable. Did the university make a decision that ultimately resulted in the Co-op not being able to remain its bookstore?

Herbst: No, and we have communicated a lot on this subject, yeah, we’re done. (Looking at deputy chief of staff Michael Kirk) You have anything to add?

Constable certainly asked loaded questions but, again, Herbst was completely oblivious to the opportunity to counter criticism. The real punchline is that Herbst coauthored a book on how mass media shapes public opinion. I guess if you can’t do, teach; but if you can’t do that either, then go into administration.

State of Decay

Living in the Constitution State means never lacking material for a blog post, even if it’s just another list of metrics ranking how many cartoon stink lines radiate off Connecticut. Weekly, if not daily, some new measure is announced showcasing our slow-motion slide into the sea. GE moving to Boston? That’s so January news. These are from February alone:

  • The latest estimate of the state’s budget deficit is $266 million, ten times what it was estimated to be last month. Our deficit for fiscal year 2016–2017 is projected to be $900 million (Connecticut Post).
  • Likewise, the city of Hartford projects a $32 million deficit in the upcoming fiscal year (HartfordBusiness.com).
  • And while we’re talking about Hartford: After measuring 35 indices (unemployment, foreclosure rates, number of coffeeshops), Hartford is ranked the worst of the 50 state capitals to live in, worse than Trenton, New Jersey (and if you’ve never been to Trenton then good, you’re winning at life). Hartford has the lowest median household income, the highest unemployment rate, the highest percentage of residents below the poverty level, and the second least affordable housing. On the plus side, Hartford residents have the lowest debt as percentage of median income — presumably because everybody is already broke and out of work (WalletHub).
  • Only 39 percent of Connecticut residents have confidence in the state government, the third lowest in the nation (Gallup).
  • “[Connecticut] state employees earn an average of 25 to 46 percent more than their private sector counterparts.” We also have the second-most expensive retiree health-care benefits in the country (CT Viewpoints).
  • And finally this is from late January but too noteworthy to ignore: An audit of the State Comptroller and other offices found they’ve been breaking Connecticut law by not using GAAP standards. As a result, they’ve been underreporting obligations and liabilities and overreporting contributions and capital gains (Yankee Institute).

Mrs. Kuhl tells me to stop posting and tweeting bad news about the state; after all we own a house here, so if I want to move away then I have to convince a buyer that Connecticut is just aces. I respond that the first step to recovery is admitting the problem exists.

The Cult of Irrationalism

The word cult is often thrown around to describe things somebody doesn’t like, things like Islam, Scientology, or the brand loyalty of Apple users. It’s usually wielded pejoratively toward something that stands in opposition to a larger orthodoxy like mainstream Christianity or Chrome usage, but a better definition of a cult is a group that neither tolerates dissent nor criticism of the group’s leaders or doctrines — at least that’s how it was used when I was in school. In that sense Islam is not a cult, though some subgroups certainly are; and I doubt even the most extreme Apple-heads qualify. Scientology does sound like a cult based on what I’ve read although I think it’s more of a criminal syndicate than anything else, but that’s a post for a different time.

Just up the street from me in New Haven, Erika Christakis has found herself tied to the altar beneath the cultists’ sacrificial knives. In response to the hysteria incited by a benign email she wrote about Halloween costumes, Christakis, a lecturer at the Yale Child Study Center with nearly a dozen alphabet blocks of advanced degrees after her name, announced that she would stop teaching and focus on her research, far from the teeth and claws of the Dionysian mob. She and her husband will remain as masters at one of the undergrad residences, though likewise her husband will take a sabbatical next semester to work on his research.

It’s difficult to imagine how such a kitchen match as Christakis’s email, which you can read in its entirety here, could create so much smoke. With typical academic navel-gazing but harmless language, Christakis merely suggested that cultural norms of what constitute appropriate Halloween costumes should derive from within the student body and not from top-down authority. That Summer-of-Love sentiment was apparently too John Galt for the mob who confronted her husband on campus. If, like me, you’re confused about what precise opinion or phrase it is that the students objected to, you won’t find it no matter how hard you look because this isn’t about rationalism. Rather the Yale protesters, like their fellow travelers at too many other colleges, have embraced an anti-Enlightenment emotionalism, a kind of dark angry Romanticism, where feelings and demands for “safe spaces” supposedly transcend logic, and where the marketplace of ideas, whether spoken, emailed, or worn on October 31st, is somehow a jack boot stomping on them. Don’t bother to question it either, because to question it is just freedom of speech, which in the words of one recent Brown University grad, “should be valued but not when it infringes upon the freedom of others.”

I cannot blame Christakis for retreating into her work. It’s difficult to imagine who is the worse for it: Christakis, who after years of studying and working and paying student loans has now had an income avenue closed to her by the horde (apparently she was paid for each course she taught); or those students who were not among the protesters, who have now lost access to Christakis’s knowledge and experience. What’s really eye-opening here is how quickly statements of inclusion for women and minorities go out the window as soon as one of them strays from the cult’s dogma; and how loudly the cult claims to speak for women and minorities but how cynical they are in silencing a woman when she fails to chant in unison. Erika Christakis is too good for Yale.

It’s Over

The towns of Darien, Easton, Monroe, Trumbull and Wilton will pay Ronald Terebesi $1.25 million to settle a lawsuit stemming from a fatal 2008 police raid in Easton.

The U.S. Supreme Court previously denied an appeal by the five Connecticut police departments. The high court’s action meant a federal lawsuit by Terebesi, formerly of Dogwood Drive in Easton, could go forward against the Easton, Monroe, Trumbull, Darien, and Wilton police departments, the named police defendants in the case, and the municipalities of Easton and Monroe.

“Mr. Terebesi is satisfied,” according to Gary Mastronardi, Ronald Terebesi’s lawyer, a former member of the FBI. “Money is always important; what he feels is equally significant and quite impressive is that in order to get us to accept it they had to agree to allow judgments to enter against each and every one of the defendants, both the municipalities and the individual defendants, for multiple violation of his constitutional rights.”

Full story here.

My coverage of the whole saga here.

Declare the Pennies on Your Eyes

Last night I attended a public forum on taxes hosted by the Yankee Institute for Public Policy. The forum panelists consisted of Institute experts and local Republicans and was moderated by Joe Scarborough, who ran the proceedings much like his radio show, which is to say he mostly talked over his guests in his excitement to hear his own voice. The event was a commercial for the Republican party (we were told that Democrat invitees declined) but nonetheless they made their point: Republicans in Connecticut are a toothless minority and our economic tailspin will continue as long as control of the state budget remains in the hands of our one-party junta.

Consider:

  • Based on wages, taxes, cost of living, unemployment, and workplace illnesses and injuries, Connecticut is among the top ten worst places to live and work in the US (MoneyRates.com).
  • In 2014, Connecticut was ranked the worst state for job creation (Gallup).
  • Though declining, Connecticut’s unemployment rate remains above the national average (CT News Junkie).
  • Connecticut has the fifth highest gas taxes in the country (Tax-Rates.org).
  • Connecticut was tied with New Jersey for having the latest Tax Freedom Day in 2015 (Tax Foundation).
  • Although US population is growing overall, the population in Connecticut is declining; in 2013–2014, CT was one of just six states to lose people  (US Census Bureau).
  • Forty-nine percent of Nutmeggers would move out of the state if they could (Gallup).

Now, just weeks after passing the second-largest tax increase in state history, General Electric is considering moving their headquarters from Connecticut to Georgia. Governor Malloy is reportedly negotiating a package with GE to keep them here, but as my state senator Tony Hwang said last night, this kind of piecemeal approach — special tax breaks and corporate welfare for big boys, nothing for others — is not only patently unfair, it’s also a bald admission that broad tax increases damage our economy. GE pays an estimated $3.5 million $1.8 million in local property taxes annually, and the vacuum created by their departure will suck the loose change from the pockets of everyone living in my town. In their fervor to blast their favorite bogeymen, the Democrats aim their drones at the Taliban corporations but instead the bombs and missiles, as usual, fall on us luckless citizens sitting in our mud huts.