by Rob Roper

I recall a story of Roman history in which a power hungry prefect manufactured a food shortage in the city in order to rile farside-agw-brickup the citizens against his rival. The same strategy at work in Vermont regarding childcare. The State and it’s allies in the public education “blob” are manufacturing a child care crisis in order to take control of children aged 0-5.

The Burlington Free Press reports that Vermont has lost 500 childcare over the past year due to new regulations passed in 2016. According to the article.

Vermont lost home-based child care programs about twice as fast after new regulations were announced…. The state lost 91 programs from May to November, while 40 new programs opened. The net loss of 51 programs represents as many as 500 slots for kids.

Odd policy to implement if you believe parents are facing a childcare access crisis. You’d think Montpelier would make it easier, not harder to impossible, for childcare providers to stay in business or expand. But no. This is the Roman “fake famine” strategy at work.

Parents who cannot find childcare spaces for their kids will now holler that “something needs to be done!” The state, authors of the crisis, will swoop in and “fix” the problem with copious amounts of tax dollars, sweeping mandates, and a consolidation of power. Their ultimate goal is to subsume control over all kids 0-5 into the public education system.

This will cost taxpayers a fortune – an estimated $850 million per year, eradicate several hundred small businesses in the process, and likely do great harm to our kids and culture. The time to stop this is now. (Really yesterday, but now will have to suffice.)

- Rob Roper is president of the Ethan Allen Institute.

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by Rob Roper

This is how desperate Montpelier is for money: the House Natural Resources Committee is seriously discussing a 5 cent per pound excise tax on coffee. If you’re willing come between Vermonters and our morning coffee – here in the land of Green Mountain Coffee Roasters, Vermont Coffee Company, and a host of other craft roasting businesses — you must be really desperate for that nickel. It’s safer to get between a mama bear and her cub!

The tax would ostensibly be used to help clean up Lake Champlain, and was justified by David Deen (D-Westminster) because,

According to Deen, wastewater treatment plants are unable to treat urine affected by coffee, because it contains caffeine, so the untreated urine eventually ends up in waterways. Deen said coffee has become “a compound of emerging concern.” (VT Digger, 2/14/17 )

I quoted that directly primarily because I have no idea what it means. But I did try to figure it out. And, as stupid as this tax is as a policy on the surface, its even dumber when you dig into it. This article from Nature, Caffeine Tracks Contamination, explains (and here are some quotes):

Caffeine is an ideal chemical indicator to distinguish domestic water flushed down sinks and toilets from agricultural effluent….

Although sewage treatment removes up to 99.9% of it, caffeine is so abundant and chemically stable that it remains detectable.

Caffeine levels provide a rough estimate of the amounts of household wastewater being washed into a lake, says Buerge – and of accompanying impurities such as detergents and solvents. “IT’S A MIRROR [emphasis added] for these kinds of pollution,” he says.

Caffeine is increasingly being used around the world as A MARKER [emphasis added] of water contamination.

I didn’t find anything that said this caffeine was actually causing any harm (about an hour of Googling, so there may be something out there that says otherwise). But its presence – detectible because of its unique chemical properties — is rather ALERTING scientists to the places where genuinely dangerous pollution is occurring. The things that are genuinely harmful, such as pharmaceuticals, raw sewage, phosphorus from detergents, etc., are for some reason immune from taxation by Rep. Deen and his colleagues. Great thinking!

So, when you pee out our morning coffee do so proudly because you are performing a public service, helping scientists to detect real polution in our waterways. Personally, I think we should be able to write off 5 cents a cup on our taxes as compensation for this important scientific contribution to the monitoring our water quality.

- Rob Roper is president of the Ethan Allen Institute

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by John McClaughry

What to do about Medicaid is a recurring question in Washington and Montpelier. Fortunately, there’s a solution. It’s called Healthy Indiana.

Prof. Regina Herzlinger of Harvard Business School explained its success this week. Each acute care Medicaid beneficiary buys a high deductible major medical health care plan, with state funding, and then pays normal health expenses from a health savings account, called a Power Account, which is also partly state funded.

Herzlinger cities the research findings: “Comparing enrollees who used health savings accounts with those who didn’t,  showed that the former used more primary and preventive care, adhered better to their drug regimens, missed fewer appointments and showed up less frequently at the emergency room.”

“Although Indiana’s “basic” traditional Medicaid was free, those in Healthy Indiana Plan were charged 2% of their income, but did not have to make copayments. If payments weren’t made for six months, they would lose insurance. Yet the program remained popular: 70% of enrollees contributed and 86% described themselves as satisfied, according to a survey from the Lewin Group last summer. As more data are gathered, policy makers can better understand what beneficiaries want and how Medicaid dollars can be efficiently spent to meet their health needs.”

EAI has been advocating this approach here for twenty years or more – but of course, the people running Vermont then and now are so fixated on handing out free stuff that they won’t try anything different.

- John McClaughry is vice president of the Ethan Allen Institute.

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by John McClaughryJohn McClaughry

The Vermont legislature is now well into the final chapter of a high-stakes saga that began in 2010. At its center is the phosphorus level in Lake Champlain, especially in St. Albans and Missisquoi Bays.

As a state document explains, “In excessive amounts, phosphorus and associated algal growth can impair recreational uses and aesthetic enjoyment, reduce the quality of drinking water, and alter the biological community. In some cases, algal blooms can produce toxins that harm animals and people.”

In January 2010 the Conservation Law Foundation filed a lawsuit against the Environmental Protection Agency.  It claimed that “CLF’s aesthetic, environmental, recreational, and economic interests in enjoying and using Lake Champlain are injured due to the lack of progress toward attainment and maintenance of water quality standards in numerous segments of Lake Champlain resulting in part from the numerous and serious flaws in [EPA’s] review and approval of the Champlain TMDL (Total Maximum Daily Load) of phosphorus.”

CLF argued that Vermont’s program for reducing phosphorus concentration in the Lake, based on 1991 data, provided “insufficient reasonable assurances” that the phosphorus TMDL standards would be met in the various parts of the Lake.

A year later the Obama EPA agreed to rescind its 2002 approval of Vermont’s water quality improvement plan, leaving Vermont to face possible sanctions on its municipal wastewater plants. That led to a plan issued in January 2013 that the State hoped would satisfy EPA and CLF by reducing phosphorus loading in Lake Champlain by 34% over twenty years.

The 2015 legislature enacted a new Clean Water Act. It expanded state regulatory authority and directed the State Treasurer to come up with some way to pay the price tag: an astonishing $2.3 billion over 20 years. After tapping an expected billion dollars in existing federal and state programs, a $62 million annual gap remains.

The assumption is that taxpayers will have to foot much or most of this bill, rather than the private landowners and businesses that are releasing the phosphorus.

Vermont agriculture produces forty percent of the phosphorus load flowing into Lake Champlain. To meet the EPA requirements, the agricultural sector would need to shrink that flow by 205 metric tons a year.

Will $2.3 billion spent over twenty years achieve this reduction? The Department of Environmental Conservation is quick to point out that much of that huge amount of money will be spent on things other than reducing phosphorus pollution from agricultural lands. That’s true, but it also illustrates how public perception of a problem as a crisis can be used to propel the environmental conservation forward. Let’s review.

CLF sues EPA to get it to require higher TDML standards to reduce phosphorus pollution in Lake Champlain. The Obama EPA agrees. It puts out new, stronger requirements, including obligatory recognition of the menace of climate change (more rainfall will erode more sediments, etc.)

The Shumlin administration and its legislative allies enact sweeping new legislation to require more plans, mandates, inspections, rules, site visits, and technical assistance, all by government employees, and of course require penalties for noncompliance and a large tax increase. The state response now races far beyond the original problem – reducing phosphorus runoff into Lake Champlain. Now it includes the entire enviro wish list of ecosystem restoration, stormwater management, wastewater treatment, nutrient management, erosion stabilization, buffer zones, highway maintenance, and much more.

This is not to say that those concerns are wrong headed or of little importance. Farms and businesses do need to be helped and prodded to adopt techniques like “Required Agricultural Practices” to reduce the pollution they cause (which, incidentally, originated with aggressive government encouragement fifty years ago).

But a program for “reducing phosphorus pollution in the Lake” has become an all- inclusive environmental improvement program, with a new taxpayer funding source. (Treasurer Pearce favors a per parcel “fee” on land throughout the state, because we all must go “all in” to preserve the recreational and esthetic qualities of mainly St. Albans and Missisquoi bays.)

And throughout this twenty years of  spending and regulation, we will unthinkingly accept the principal cause of that 40% of phosphorus pollution in the Lake: a dairy farm business model that relies heavily on over-fertilized croplands and purchased feed, fed to thousand-cow freestall farms of 20,000 pound producing Holsteins, to produce a commodity product that chronically (to hear many farmers tell it) fails to bring in enough to cover their cost of production, justifying a perpetual procession of subsidies to keep the model afloat?

Isn’t there some more sensible way to preserve Vermont’s independent dairy farms, without channeling all that phosphorus into watercourses? Like, for instance, cutting back on heavy feed and fertilizer in favor of more regenerative grass-based dairying? Or extracting phosphorus from the manure stream (as described in the Treasurer’s report), selling it as struvite, and making dewatered manure logs into boiler fuel? Just thinking out loud.

– John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org)

 

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by Rob Roper

A recent article on the latest push by the legislature to raise the minimum wage to $15/hr. and pass mandatory paid family leave in Vermont contained this jaw-dropping bit of naiveté from the Vermont Chamber of Commerce – they actually expected politicians to stick to a backroom deal.

Betsy Bishop, the chief executive officer for the Vermont Chamber of Commerce, says raising the minimum wage again would break a deal she and other business interests made with Gov. Peter Shumlin, former House Speaker Shap Smith, and former Senate President Pro Tem John Campbell in 2014.

As part of that agreement, according to Bishop, the Vermont Chamber of Commerce agreed to support raising the minimum wage to $10.50 by 2018, as long as leaders in the Legislature did not try to pass paid sick leave or raise the minimum wage again after 2018. (VT Digger, 2/10/17)

First the obvious: none of those three people is still in office. It does happen occasionally that politicians leave or lose, and those that follow them have no obligation to keep any deal – and they’re not going to!

Remember the promises made to local school districts when the legislature first passed taxpayer-funded, universal pre-k? That the program would be “voluntary” and subject to local control? It was a lie. The locals stopped resisting; the state got its nose under the tent. A few years later that “deal” was tossed into the ash heap and the politicians mandated that all districts offer pre-k. Period.

And Act 46! Remember promises of cost containment to get Republican votes and protections for school choice to get Democrats in tuitioning districts on board? Rep. Cynthia Browning (D-Arlington) described that best: “He [Speaker Shap Smith] screwed over the Democrats, and reneged on his promise to Republicans.” (VT Watchdog). That reversal took about six months.

So anyone who thinks that the Vermont state is willing to compromise on its totalitarian/authoritarian goals in any meaningful, long term way is engaged in fantasy. The state only takes half a loaf (or even just a bite) today with the expectation of getting the whole loaf down the road.

The moral of the story is never give in.

- Rob Roper is president of the Ethan Allen Institute

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by Rob Roper

The Senate Natural Resources & Energy Committee held a joint meeting with the Economic Development committee to hear testimony on S.51, which would codify into law the State’s goal of getting 90% of our energy from renewable energy from renewable sources by 2050. (The “Let’s Destroy the Economy Bill.”) Those testifying appeared to have been selected to bolster the claim that renewable energy is a real economic driver in Vermont. For those paying attention, it is pretty clear the opposite is true – it’s an unsustainable drain on state resources.

The story of 23 year old All Earth Renewables employee, Payne Morgan, told of the great opportunities he has to work, pay off his student loans, pursue a masters degree he enjoys as a result of Vermont’s commitment to renewable energy. However, he warns, that the uncertainty surrounding government mandates and subsides is a real threat to AER’s future in Vermont as well as his own.

His testimony confirms (perhaps without his realizing it) that the viability of All Earth Renewables is entirely dependent upon government support, both in terms of regulation, government mandates, and subsidization. He described the sad time when a net-metering subsidy went away he had to watch friends get laid off, and worries that further such actions will lead to his demise as well.

This is not a healthy economic situation. Successful businesses pay money into the system via taxes that are used to support necessary government services. Organizations that require government money and action on their behalf in order to survive – because in a free market nobody is interested in voluntarily paying for what they are peddling — are a drag on the economy, and an inefficient use of scarce resources.

Other business owners (Weatherization, solar installation, etc.) testified similarly. Business is good! We’re hiring new people! But if you cut off the money spigot and stop mandating that people buy our products, we’re screwed. And, that’s why they were there in support of S.51 – to make sure the spigot not only stays on, but is opened wider.

- Rob Roper is president of the Ethan Allen Institute

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by Guy Page

“Here we have yet another independent study confirming that the fossil fuel divestment is all cost and no climate gain. The study, ordered by the State of Vermont, concludes that divestment of any scope is costly, harms pension beneficiaries, and does nothing to address climate change. Vermont’s careful approach to divestment, led by the Treasurer, and its clear findings that divestment is bad policy should be a lesson for any pension fund or endowment facing pressure to divest.” Here’s the overview:

*          *          *

Report finds divestment a “slippery slope” that “has not been shown to be in the best interests of VPIC pension beneficiaries, and conflicts with VPIC governance structure.”

new report conducted by an independent consulting firm for the state of Vermont confirms what economists, pension fund managers and academics have long said about fossil fuel divestment: it’s costly, hurts pension fund returns, and has no tangible impact on climate change.

For over a year, Vermont has been a battleground state for divestment with prominent activists like 350.org founder Bill McKibben urging schools and pension funds to divest, and former Governor Peter Shumlin making divestment a signature issue in 2016. Yet at every turn, efforts to divest have been rejected by everyone from the Treasurer’s office to pensioners – the same sentiments reached by colleges and funds across the nation.

After legislative proposals to mandate state pension divestment failed in March 2016, a subcommittee of the Vermont Pension Investment Committee (VPIC) was assembled to study the issue. The result of that process is a new report, released today by the Pension Consulting Alliance (PCA), analyzing several fossil fuel divestment scenarios for the Vermont pension fund at the request of the VPIC. Across all scenarios studied, PCA concluded that divestment would have adverse impacts for pension beneficiaries. The executive summary concludes divestment from fossil fuels, thermal coal, or ExxonMobil could:

  • “Increase costs”
  • “Add diversification and technological change risks to VPIC’s portfolio”
  • “Only effect potential stranded assets risk, not other material climate change risks and opportunities”
  • “Leave unaffected the financial situation of companies offering alternatives to fossil fuels”
  • “Conflict with VPICs governance in its asset allocation, equity investment strategy, and proxy voting and direct corporate engagement”
  • “Introduce a slippery slope of potential for other restrictions on VPIC’s investment universe whose potential benefits have not been shown to outweigh the potential harm to the VPIC portfolio”

Today’s report is one of a growing list of reports at the college, state, and national level that find divestment to be a costlyineffective, and overblown campaign. Below we break down the report’s top five key findings and why it is the end to the divestment debate in Vermont – and should be for pensions across the country.

  1. Divestment imposes high costs and fees. 

As of June 30, 2016, the VPIC held 3.6 percent ($134 million) of its $3.74 billion total portfolio in fossil fuels, with nearly all of these holdings in commingled funds.  This may not seem like much by comparison to the overall fund, but in order to divest the VPIC would have to incur substantial management costs to remove these securities from its portfolio. From the report:

The largest measurable explicit costs of divestment to VPIC would be ongoing increased management fees. Management fees would increase under each of these three divestment scenarios because VPIC commingled funds, where the bulk of VPIC’s fossil fuel were held, would have to be restructured into materially higher-cost SMA funds.” (emphasis added)

The report continues, explaining just what these costs entail:

“VPIC’s commingled fund managers, which held the vast majority of VPIC’s fossil fuel positions, cannot divest VPIC from individual securities, because VPIC does not hold direct ownership of individual securities in a commingled fund.Thus these funds would have to be closed and restructured as SMAs. In addition to the ongoing higher management fees of a new SMA, the costs to close down these funds and reopen SMAs, where possible, would include the administrative costs of opening an SMA, new custodial costs to allow VPIC to hold the individual securities, and transaction costs to buy in VPIC’s name the full set of ex-fossil fuel, ex-thermal coal, or ex-Exxon securities.” (emphasis added)

In fact, the report highlights how management fees should actually be spent on real investment strategies, stating “Divestment constrains active managers in their mandate to find the best opportunities to invest. Thus divestment conflicts with the underlying reason VPIC pays active managers higher management fees.”

These high management and monitoring costs come as no surprise. A study last year by Prof. Hendrik Bessembinder of Arizona State University found that the transaction and management costs related to divestment, also known as “frictional costs,” have the potential to rob divested endowment funds of as much as 12 percent of their total value over a 20-year timeframe. Likewise, in November 2014 the Vermont Treasury calculateddivestment would cost the state pension funds $10 million per year in lost returns and $8.5 million in implementation fees.

If that wasn’t enough, divestment imposes new diversification losses associated with implementing such a complex procedure. As the report notes, “Divestment does not consider short-term financial risks or long-term diversification risks, which increase as the universe of divested stocks increases.”

  1. Divestment stands in opposition to the purpose of pensions: supporting retirees.

The study’s findings conclude that the high implementation costs and lower returnsdivestment imposes would be an explicit breach of pension managers’ fiduciary responsibility to ensure high returns to the beneficiaries whose livelihoods depend on the fund. The PCA report notes:

“Divestment conflicts with VPIC governing policies: Given the financial and governance costs that come with fossil fuel divestment, in PCA’s opinion, divestment of fossil fuels, thermal coal, or Exxon has not been shown to be in the best interests of VPIC pension beneficiaries, and conflicts with VPIC governance structure.”

VPIC chair Tom Golonka also pointed out that pension beneficiaries would ultimately be forced to pay for the losses, despite the pensioners not supporting divestment themselves. He notes, “Divestment is a hot button issue, and it’s not coming from the pension beneficiaries — it’s coming from the governor’s office and from the environmental groups here in Vermont.”

The consultants behind this report agreed, noting “Divestment from fossil fuels sets a ‘slippery slope’ precedent for VPIC to restrict its manager’s stock selection based on criteria that are not proven to benefit VPIC.”

  1. Divestment does nothing to support the environment.

The PCA report confirms what environmental experts have been saying for years about divestment’s inability to effectively combat climate change. As the study notes, divestment “does not reduce the global economic dependence on, or demand for, fossil fuels, or impact the financing of the targeted companies.”

The report continues:

“In our opinion, fossil fuel supplier divestment can be a tool primarily in public equities to remove exposure to potentially stranded fossil fuel owner assets. In our opinion, other portfolio-wide potentially material financial risks and opportunities posed by climate change are not addressed by fossil fuel divestment. Divestment does not: address climate change material risks (including technological, policy, physical) evident in other industries from agriculture and forestry to infrastructure, buildings and insurance. Divestment does not provide enhanced exposure to companies involved in energy efficiency and renewable energy. Publicly held equity divestment only transfers ownership of fossil fuel securities; it cannot provide fossil fuel alternatives with any new financial resources.” (emphasis added)

Many others have come to the same conclusion, including Frank Wolak, director of the Program on Energy and Sustainable Development at Stanford, who similarly argued that divestment “comes at the expense of meaningful action” as it does nothing to reduce global greenhouse emissions or change a company’s funding or behavior.

  1. Vermonters don’t want divestment. 

Not surprisingly, last year five different groups representing state employees and Vermont retirees submitted formal resolutions calling for VPIC to maintain fiduciary responsibility in making investment decisions, rather than allow them to be legislated. As we reportedearlier, Vermont Pension Investment Committee (VPIC), Vermont Troopers’ Association, Vermont Retired State Employees Association (VRSEA), Vermont League of Cities and Towns and Vermont State Employees Association (VSEA) were among the groups calling on VPIC, not the Legislature, to make “prudent investment decisions.”

  1. Many other pensions across the country have said the same to this costly, empty gesture. 

As a part of the report, the consulting team looked at decisions from other funds across the country to decipher who else had moved forward with divestment to date. What the report found, is “divestment from fossil fuels is a sparsely used strategy among U.S. public pension plans, including by those plans, large and small, that are active on potential climate change risks to their investment portfolios.”

In fact, the report went as far as to debunk previous findings from Arabella Advisors and the Divest/Invest network, stating that of the “seven U.S. public pension plans that have divested from some version of fossil fuel securities…only four of those seven plans have divested from any version of fossil fuels.”  

The report continues, stating:

“None of these pension plans have divested from Exxon individually, all fossil fuel companies, companies based on high stranded carbon reserve assets, high carbon emissions, or broader climate risk.”

Ultimately, the PCA report and the definitive outcome of this divestment debate can serve as an important example for other state pension funds and universities to follow when considering activist demands to divest.

Bottom line: Vermont’s careful study of divestment, and its financial impacts, can be a model for the nation. 

The findings of the report on costs and governance should put an end to a long standing campaign launched by divestment activists to get pension funds to drop fossil fuel holdings. As the report sums up, “Given the financial and governance costs that come with fossil fuel divestment, in PCA’s opinion, divestment of fossil fuels, thermal coal, or Exxon has not been shown to be in the best interests of VPIC pension beneficiaries, and conflicts with VPIC governance structure.”

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by Rob Roper

Governor Phil Scott announced at his press conference today an experimental healthcare plan involving roughly 30,000 Medicaid patients in Northwestern Vermont designed to end the fee-for-serIMG_3323vice model of payment. In a nutshell, the plan will set a “global budget” of $93 million to cover the costs of these people’s healthcare for one year – and that’s it! (with, it sounds like, some flexibility.)

OneCare, an Accountable Care Organization (ACO) will run the project “with participation from four area hospitals, as well as Federally Qualified Health Centers, independent practices, and Designated Agencies” under the purview of the Department of Vermont Health Access.

The good thing here is that this is, at least, not a statewide plan. We can watch and see if the canary in the coalmine drops dead. (Hopefully only figuratively.) But there are some red flags to keep an eye on.

None of the speakers from the Governor to HHS Secretary, Al Gobieille, to the doctors present could or would really define what success would look like after the pilot year is up. What signals that we should ramp up statewide or, conversely, pull the plug?

The big worry with any global healthcare budget is the incentive to ration service, like we see in Canada. If providers get to keep a portion of the budget that they don’t spend, the incentive is to not spend money caring for patients. The doctors argue that such short term thinking would lead to long term loss as withholding early preventative care ultimately results in a sicker more costly patient. Unless the patient dies, leaving all the money on the table.

Another attempt to allay any fear of neglect made was the idea that everybody participating in the program is “altruistic” and “we care.” I’m sure they do, but if that’s the case and you’re immune from financial incentives inherent in the system why aren’t you providing preventative care already?

Also worth consider is that the 30,000 Vermonters identified to take part in this study must be notified and they have the option to not participate. You have to be a willing guinea pig! Will this lead to self-selection on a meaningful scale affecting success or failure? Will the folks who expect a lot of medical bills opt to stay with fee-for-service, or vice versa? Or will everybody just say “Screw that! Count me out!” We’ll have to see.

 

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by John J. Metzler

UNITED NATIONS—Modest global economic recovery is expected, but a return to robust and sustained growth remains elusive, according to the World Economic Situation Report, the UN’s barometer of international economic trends. The current survey states that while the world economy grew by a a modest 2.2 percent in 2016, this was the slowest expansion rate since the 2009 Recession. Though growth prospects for the new year are modestly better, the yet to be determined effects of the new U.S. Administration’s economic and trade policies as well as the aftershocks of Britain’s BREXIT remain unknown.

The Report adds that while moderate improvement is expected for 2017, this “is more an indication of economic stabilization than a signal of a robust and sustained revival of global demand.

“Weak investment has been at the foundation of the mediocre global economy,” the survey warns.

The U.S. economy is expected to “have expanded at a modest pace of 1.5 percent in 2016.”

Last year’s lackluster growth was the lowest since 2010. While the study cautions that uncertainties concerning trade, monetary, fiscal, environmental and foreign policy prospects “have increased the margin of uncertainty,” the survey adds, “a rise in infrastructure spending could accelerate growth in the United States in 2018.”

GDP growth in Japan was expected to improve modestly to 0.9 percent in 2017; growth was 0.5 percent last year. “Economic activity in Europe will remain subdued, with growth expected to stay at 1.8 percent for the EU from 2016 to 2018,” the survey says and warns that the United Kingdom growth rate of 2 percent in 2016 is expected to fall to 1.1 percent this year. Greece is expected to lift last year’s negative growth of 0.3 percent to a robust gain of 1.7 percent this year, the first sizable uptick in nearly a decade.

While East Asian expansion has moderated to 5.5 percent, China still shows impressive numbers at 6.6 percent in 2016 with a slight decrease for 2017.   South Korea’s growth improved moderately to 2.8 percent. The survey adds that both Hong Kong and Taiwan “are estimated to have experienced the slowest growth among the largest economies in the region in 2016.”   Hong Kong grew by 1.4 percent while Taiwan reached only 0.9 percent.

South Asia remains the world’s fasted developing region the report stresses, with India reaching an impressive 7.6 percent growth last year and 7.7 percent slated for this year. Pakistan’s growth is expected to “remain robust, above 5 percent.”

Given the fall in petroleum prices and continuing economic sanctions, Russia’s growth remains negative 0.8 percent last year and is expected to reach only 1 percent this year. Ukraine’s 2016 growth reached an anemic 0.8 percent but is expected to reach 1.9 this year.

The World Economic Situation Prospects laments that GDP growth in the least developed countries is projected “to remain well below the Sustainable Development Goals (SDG’s) target of at least 7 percent.” As UN Secretary General Antonio Guterres told global grandees assembled in Davos, “Without the private sector, we will not create enough jobs, we will not bring enough dynamism and stability to the societies that need to be enhanced with the implementation of the Sustainable Development Goals.”

Equally poor growth in the Caribbean and Latin America over the past few years has turned around slowly. Oil rich but stubbornly socialist run Venezuela has hit negative 8 percent growth last year and this year is expected to moderate to minus 3.7 percent.

The Report underscores weak investment as a major cause of the slowdown in global growth.

Secretary General Guterres stressed, “Without the private sector we will not have the necessary innovation, we will not have the necessary capacity to discover new markets, new products, new services and to be able to develop new areas in the economy. ”

Countering conventional wisdom, the new Trump Administration in the U.S. has been able to cajole manufacturers to keep industrial jobs in the USA and moreover been able to attract major

high tech investments. Foxconn a major Taiwanese electronics firm, is weighing whether to build a $7 billion display screens plant in the U.S. Given that the U.S. is the second largest market for televisions, the Foxconn investment could create between 30,000 and 50,000 American jobs.   Earlier Japan’s SoftBank, a major technology and information company, pledged to invest $50 billion in the USA.

Though the private sector plays a powerful if not the dominant role in job creation, nurturing the conditions and policy to encourage entrepreneurial investment and growth remains paramount.

- John J. Metzler is a United Nations correspondent covering diplomatic and defense issues. He is the author of Divided Dynamism The Diplomacy of Separated Nations: Germany, Korea, China.

 

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by John McClaughry

Our own Bernie Sanders issued a tweet last month that attracted national attention.

Glenn Kessler runs the Washington Post fact checker page. He wrote “”we looked at this tweet from Vermont Senator Bernie Sanders: “As Republicans try to repeal the Affordable Care Act, they should be reminded every day that 36,000 people will die yearly as a result.”

“Sanders obtained the figure of 36,000 from a calculation by ThinkProgress, a left-leaning website, according to his aides. Essentially, ThinkProgress assumed that repeal will result in 29.8 million people losing their insurance and that one person will die for every 830 people who lose their insurance. That yields a number of 35,903.

“The number of 29.8 million comes from an Urban Institute report that assumes Republicans will repeal parts of the law through the reconciliation process without outlining any replacement plan, thus leading to a near collapse of the nongroup insurance market. That’s a pretty big assumption.

“Sanders has tweeted as a definite fact an estimate that a) assumes Republicans will gut Obamacare without a replacement b) assumes the worst possible impact from that policy and c) assumes that data derived from the Massachusetts experience can be applied across the United States.

Those are three very big assumptions. Take away any one of them, and Sanders’s claim that repeal of the law will cause 36,000 people to die a year falls apart.

The Post Fact Checker gave Sanders a maximum of Four Pinocchios.

- John McClaughry is vice president of the Ethan Allen Institute

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