by John J. Metzler

UNITED NATIONS—Though the political setting of the recent French presidential election bears superficial comparison to the U.S. election of 2016, the contest is anything but an American rerun. While an establishment favorite was opposing an firebrand nationalist, the jarring reality remains that this is the first runoff election in the history of the Fifth Republic since 1958 where neither of the major parties have a candidate.

Two political outsiders faced off on May 7th. Emmanuel Macron, (39) the former Socialist economics minister and newly minted “wonder boy” of French politics, won in a landslide with 66 percent of the vote.   And, Marine Le Pen the rebranded longtime fixture of the Euro-skeptic right National Front and a political lightning rod was trounced.

Despite never having held elected office Macron, becomes the youngest man to lead France since Napoleon.

A former Socialist, Macron emerged out of nowhere as the darling of the establishment with burnished insider credentials and near unquestioned political acceptability to a wide swath of young and entrepreneurial French voters. Macron embraces “globalization,” long a dirty word across the French political spectrum. He supports the European Union and scoffs at Britain’s BREXIT.   A man of the center left, Macron could offer Clinton/Blair type economic policies, admittedly rare for any French politico.

His En Marche (Forward) movement has attracted not only widening support but an enthusiasm not often seen in the staid realm of French political circles. But is he the ultimate card of the ruling Socialist Party and the discredited President Francois Hollande?

Macron remains the Hologram candidate, a real but different shade and reflection on every issue to conform to what you see at the moment. He’s certainly pro business but lacks the support of a formal political party in the National Assembly to push through his policies.

Marine Le Pen, led the FN away from her father’s deserved political wilderness.   She remains Statist and a hardline rightist (certainly not an American conservative) who believes in Big government. A populist politician, she loathes the EU and the EURO currency, and supports unencumbered French sovereignty.   As a NATO skeptic, she’s not surprisingly an admirer of Russian president Vladimir Putin. She’s anti-American in a way which makes her quite acceptable to many marginalized and disaffected older Socialists and even communists who lost their jobs to globalization or to immigration.

Macron remains a committed Europhile.   Le Pen has ridden the wave of anti-EU sentiments which however probably crested last year at the time of Britain’s BREXIT.

Sadly the once dominant Republican right narrowly lost with Francois Fillon.   The traditional mantle of the late President Charles De Gaulle is missing in the mist and miasma of political uncertainty. The day following the first round vote, the center-right daily Le Figaro summed it up in a bold headline “The Right; Knocked Out.”

Surprisingly much of the center and moderate right has thrown its support to Macron. Many conservatives feared a Le Pen win would trigger a FREXIT to leave the EU.

Noted French political commentator Franz-Olivier Giesbert called the campaign “lamentable.”

Macron inherits a France whose economy has deteriorated under the tepid Socialist presidency of Francois Hollande. Unemployment remains solidly over 10 percent and jumps over 20 percent for the young. Many workers in manufacturing industries have lost their jobs. France is increasingly uncompetitive. Terrorism has become an entrenched threat.

A suffocating socialist welfare state saps not only taxes but especially economic incentive. No wonder that young French entrepreneurs often flock to Britain or the USA to pursue their dreams. Macron promises to trim, however politely, the bloated bureaucracy.

Yet Le Figaro adds editorially, that “much of Macron’s popularity comes from his vagueness.” How do his views on the identity of France balance with the country’s role in globalization? Now given Macron’s victory, we will have the next five years to find out.

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.


by David Flemming

Vermont has the seventh-highest minimum wage in the nation. At first glance, this might seem to make Vermont an attractive place to live. However, 2016 saw Vermont lose nearly 3,000 people through net migration, likely because our state lacks employment opportunities.

A $15 per hour minimum wage will merely compound the problem, not stop it. To make Vermont more competitive with New England, the Green Mountain State should consider lowering its minimum wage to the federal minimum of $7.25 per hour.

While some Vermonters extol $15 per hour as one step closer to “a living wage,” Vermont’s government is inadvertently dividing the working from the non-working, and the permanently poor from Vermont’s perpetually shrinking labor force who could soon pay even more of their paychecks toward proposals like “paid family leave.”

On the surface, enacting a higher minimum wage seems to be a mere matter of redistribution from employers to employees. Ironically, it redistributes opportunities from employers and young employees and gives them to experienced employees at a net loss to Vermont. Opportunities for college students and graduates, many of whom do not have the skills to earn $15 per hour, are redistributed to those who have been in the workforce long enough to justify earning $15 per hour.

College students and graduates don’t need higher wages to “make it.” We need experience – experience that we can only get when an employer is willing to take a chance on us at a lower wage. Employers are eager to give college students and graduates more when we can produce enough wealth to justify earning $15 per hour.

Unfortunately, by raising the minimum wage by an arbitrary amount (wouldn’t $30 per hour be twice as good as $15 per hour?) our legislators are preventing college students and graduates from gaining experience when we need it most: during and just after college.

Most Vermonters make smart hiring decisions and are not easily coerced into hiring more workers at higher wages. Many Vermont employers will face the impending likelihood of hiring one employee at $15 per hour instead of two employees at $12 per hour. If the minimum wage is increased to $15 per hour for all prospective employees, an employer is much more apt to buy an industry veteran’s labor.

A prospective job-seeking college graduate about whom the employer knows nothing about does not stand much chance of getting hired against an industry veteran. The Vermont employer would certainly like to hire both at $12 per hour and give both the chance to earn $15 per hour. But if coerced into a “choice,” the employer will likely choose the industry veteran over the college graduate.

If Vermont-born college students and graduates are not able to find work in the case of a $15 per hour minimum wage, we have two options. One, we can remain in Vermont and hope that a prospective employer won’t hold our coerced time out of the workforce against us. Or two, we can move to states like New Hampshire where it is legal to work for the federal minimum wage of $7.25 an hour. A $15 per hour minimum wage in Vermont would certainly be good news for New Hampshire employers, if not for Vermont employers. A $7.25 per hour minimum wage would help Vermont retain its college educated workforce and perhaps stem the flow of out-migration.

College students and graduates do not need paternalistic hand-holding as we step into the workforce. We need the freedom to pursue career-growing opportunities with Vermont employers. Since graduating from college, I found an excellent internship in Vermont for $11.50 per hour that my boss has said would never have existed if he was forced to pay me $15 per hour. I would hate to deprive future Vermont college students of resume-building opportunities at somewhat low pay.

Restricting my generation’s “right to negotiate” using counterproductive income redistribution schemes doesn’t do us any favors. You might be surprised at how much we are making in 5 years if you protect our freedom to gain experience now.

- David Flemming, of Essex, is a Young Voice Advocate, described on its website as organization that “cultivates the next generation of independent thought leaders in policy, journalism, and academia.”


by Chris Campion

As Vermont’s economy continues down its relentless path toward the ash bin of history, at least, um, several Vermonters are advocating for a “new” economy.  What’s the under-pinning of this new economy?  Innovation?  A removal of existing regulatory overheads so high that the state won’t finish building a road it started three decades ago?  A restructuring of its tax burden to entice businesses to move to or invest in the state, to grow an economy that ranks 2nd worst in the country?  A job climate that doesn’t scare college graduates into leaving the state at one of the highest rates in the country?

Nope.  Instead of those things, a group of concerned Vermonters calling themselves “Vermonters for a New Economy” have decided that the primary answer to the problems above is a bank.

Yep.  A bank.  But not just any bank.  A state bank.  Meaning a bank that is funded, and backed, to one degree or another by public funds (the funding issue is just another one of those thorny details that no one really needs to think about, just yet).  Which means, of course, that any risk or liability falls directly upon the shoulders and wallets of those who pay taxes.

And what is their mission statement?  Their raison d’etre?  Here it is:

Vermonters for a New Economy is a coalition of organizations, businesses, and individuals working to create a new economy for Vermont. You can work with us to design and enjoy the new ways we are owning and operating businesses, banking, exchanging goods and services, financing projects, and earning income.  This work enables us to pursue regenerative economic activities that strengthen our food systems, build renewable energy, reuse and recycle byproducts, and foster creativity, culture, and healthy lifestyles.

I must have missed Banking 101, but I’m pretty sure the bank didn’t ask me about my healthy lifestyle choices when I applied for a mortgage.  They wanted some details around income, liabilities, etc., because they’re crazy like that.  But no mention of how their capital would foster my creativity.  Which is mildly disappointing.  It’s also fantastic that they’re allowing Vermonters to work with these New Economists as to how Vermonters earn their own incomes.

That’s generous of them.

But let’s let the New Economy Vermonters provide more of their own detail, in terms of why they think we need a state bank:

Our Planet —  a VT state bank can provide the game-changing, long-term, low-interest financing that will power a transition to a just and sustainable future

Students — to access low interest education loans.

Homeowners — to get mortgages and home loans from the bank.

Entrepreneurs — who need credit lines, loans, and other forms of finance to help their businesses succeed.

Municipalities – the bank can offer competitive interest on public deposits and lower cost financing for public works.

Taxpayers — who will benefit from both the profits the bank makes and the services the bank offers

Well, that’s quite a bit to digest, so let’s take it one at a time:

1.  Our Planet —  a VT state bank can provide the game-changing, long-term, low-interest financing that will power a transition to a just and sustainable future.
The planet.  So the planet needs a Bank?  How did the planet exist, then, before humans evolved?  Did Gaia patiently wait for first humans to evolve, then banking, in order to provide a high enough state of enlightenment before asking for funding?  Gaia’s patience here with us is considerable.
2.  Students — to access low interest education loans.
You mean like those low interest student loans current and former students enjoyed, courtesy of one of the biggest central banks in the world?  Loans that are at higher rates that mortgage rates, but worse, are also subsidized rates? The last large effort to nationalize the student loan program fell afoul of the same issues around health care, and that plan has now been shelved.
So the federal government can’t do it, with virtually limitless resources, but Vermont can, now, because of one bank? In fact, VSAC has said it’s “agnostic” on the idea of a state bank.  So why list student loans as a justification, when the one institution that has historically provided student loans doesn’t see the need?

3.  Homeowners — to get mortgages and home loans from the bank.
You can already get loans from banks, easily – they’ll happily lend you money for a house, or equity loans.  It’s how they make money.  For FHA loans, you only need 3.5% down.  Rates for fixed 30-year FHA loans are well under 4%.  Do Vermonters not know how to apply for a loan, and the state bank will save them from their own ignorance?
And why the incentive to increase – via public funds – the number of mortgage lenders, increasing competition, when, in many cases, the same people who tout this state bank (like Bernie Sanders) want to decrease competition in other markets, like health care?  Why is it a good thing to increase competition in one place, but not the other?
4.  Entrepreneurs — who need credit lines, loans, and other forms of finance to help their businesses succeed.
They can get this already from existing banks and investors.  What would a state bank provide that does not already exist?  Other than offering riskier loans that will be backed by taxpayers?  There’s a federal Small Business Administration that offers many channels for funding.  What would this bank offer that’s not already available?
5.  Municipalities – the bank can offer competitive interest on public deposits and lower cost financing for public works.
Municipalities already have access to funding through banks and bonds.  Like the Vermont Municipal Bond Bank, which has been in place since 1970.  If municipalities already have access to low-interest funding source, why do they need another one?
6.  Taxpayers — who will benefit from both the profits the bank makes and the services the bank offers.
You mean like the benefits current federal taxpayers enjoy, like $20 trillion in debt?  The profit the bank makes is the interest on the loan, which, for the federal government, increases as a percentage of total spending, and if the rates increase, even a little bit, will start to crowd out all other discretionary spending.
Which is really the heart of the matter.  The supporters of the state bank are looking for a way to finance spending now that someone else will have to pay for later.  It’s like giving a college student a credit card with no limit.  Sooner or later that bill will come due, and the people who want to create and support that state bank will then be asking taxpayers to bail it out, just like some other large financial institutions, like Freddie and Fannie.  Which have become, more or less, nationalized.
But the worst of the justifications for the proposed bank’s existence are in its own supporting documents, which make a few claims of fact that aren’t supported by reality.  A few examples (page 6):

Sub-prime mortgages are what Fannie and Freddie specialized in, and still continue to be the largest generators of these types of loans in the industry.  Taxpayers had to bail out their poor business practices and the fact that they were understating their sub-prime exposure; there is nothing in the call for a state bank that would prevent this from recurring.
Secondly, citing Vermont’s low unemployment rate as evidence of economic stability means they either a) willfully ignore the reality of Vermont’s declining workforce participation rate, or b) don’t understand what they’re talking about.  If they’re using this conclusion (below) as one of the underpinnings of the justification for the need for a state bank, they’re making a significant error:
 That Vermont’s housing prices didn’t tumble doesn’t mean anything about “integrity” of anything, and neither does unemployment.  As has been repeatedly shown, Vermont’s unemployment is low primarily because the workforce is shrinking, not because of new jobs created.  As the report’s earlier statements argue, correlation does not equal causation.

If anything, the state’s demographics and the general leveling off of already-high housing prices won’t require a state bank to support increased demand for mortgages.   In fact, the reason housing prices are (relatively) level is because demand isn’t increasing.  There are simply fewer Vermonters looking to buy homes:
Vermont’s economy, and its housing market, are clearly not divorced from national trends. But our housing market seems to be under performing the national housing market, which is worrisome. Over the last two years, Vermont’s housing market, at least measured by prices, has gone nowhere. Nationally, prices are up 7 percent over the same period—not great, but at least it’s a positive number.

One of the reasons for our weak housing market is our underlying demographics. First-time home buyers tend to be in their 30s and early 40s. That’s precisely the demographic that’s shrinking in Vermont. And if there are fewer first-time home buyers, people trying to sell their houses and trade up to more expensive homes can’t find buyers. That clogs up both sides of the home-buying and home-selling market, limiting both sales and price appreciation.

The New Economy site also encourages readers to read the study that justifies the new state bank.  Hilariously, the study recommends that the state not implement a state bank.  That the capital needs are already met.  That the current options available for financing are just fine.  From page 3:

Then what is the purpose of the New Economy site?  To ignore the realities of Vermont’s business climate, Vermonters’ incomes, the demographic changes, and historical policy overhangs that make the state a lousy place to do business?  Another bank won’t fix that.  Another bank can’t fix that.
Only Vermonters can fix Vermont, by dismantling the policies and governmental apparatus that have put them in the place they are today.  If that’s part of the New Vermont Economy, then maybe things will start to change.


by Rob Roper

The Agency of Administration reports that revenue for the State General Fund missed its target by a whopping $21.65 million, or 9.7% below expectations. The shortfall was due primarily to a $25.34 drop off in personal income tax receipts. Given that April is a significant tax month (April 15th and all), this is an ominous development.

The Vermont unemployment rate is just 3%, so there is not a large pool of people looking for work who, if they were to find jobs, could bolster the income tax.

Overall, the state is now $3.5 million below our annual revenue target with just two months left in the fiscal year to either make that up or dig a deeper hole. If the latter develops, another budget adjustment will be necessary.

Here’s the overall picture from the Secretary of Administration’s Report: “Year-to-date receipts in the Transportation Fund are $216.19 million against a target of $219.16. The Education Fund collected $15.75 million for the month of April, which is -$1.22 million below its $16.97 million target. Compared to revenues collected at this point in FY2016, there is an increase of 2.42%, or +$29.26 million in the General Fund; a 1.28%, or $2.73 million increase in the Transportation Fund; and a -0.01%, or -$0.01 million decrease in the Education Fund.

So keep in mind that with the slight exception of the Education Fund, the state is still taking more money out of our pockets year over year. We’re still paying more, just not as much as they would like.

Rob Roper is president of the Ethan Allen Institute.

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by John McClaughry

Rep. Diana Gonzalez (P- Winooski) has introduced a bill (H.531) to create a carbon tax and dividend plan for Vermont.

In a commentary promoting her measure on Vermont Digger, she pointed out that notable Republicans James Baker and George Shultz advocated such a measure. They did (WSJ 2/7/17), but we need to look closely at just what they actually advocated:  a large revenue-producing Federal tax on carbon-dioxide emissions that they claim would “put America in the driver’s seat of global climate policy.”

Under the Baker -Shultz proposal, the Federal government would distribute all of the net tax revenue as a “carbon dividend” among all American families.

The remaining two features are border adjustment for carbon content, requiring tax rebates on exports and “fees” (formerly known as “tariffs”) on imports from “countries without comparable carbon pricing policies,” and,  at some future time, the elimination of unnecessary Federal clean air regulations.

This combination, they say, “would strengthen the economy, help working-class Americans and promote national security, all while reducing regulations and shrinking the size of government.” This truly requires a willing suspension of disbelief.

Even if one bought into the Baker-Shultz plan nationally, it clearly could not be done by one state alone, even California. Rep. Gonzalez’ bill may be an amusing thought experiment, but it’s no model for Vermont (or anywhere else). And she would have more credibility if she forthrightly called her carbon tax what it is – a tax, not a “fee”.

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

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New study quantifies for the first time the true costs divestment imposes directly upon students, faculty and retirees. Reprinted here with permission.

Numerous reports conclude that fossil fuel divestment is a costly and ineffective endeavor for universities and pension funds to undertake, but little research has calculated how this impact affects the people that matter most: students, faculty, and retirees. Released today, a new report for the first time quantifies the true price of divestment for these groups.

Previous studies have calculated the general costs divestment inflicts upon a portfolio due to higher risk, reduced diversification and increased transaction fees.  This new research by Prof. Hendrik Bessembinder, professor of finance at the Arizona State University’s Carey School of Business, applies these financial principles to understand the direct impact of divestment on endowment spending and, in turn, the services such funds support. Focused on analyzing the finances of the nation’s public and private universities, Prof. Bessembinder found that divestment would lead to a 15.2 percent average reduction in endowment spending.

“Endowments are a vital financial resource for university spending,” stated Prof. Bessembinder. “Due to the significant financial shortfall imposed by divestment, universities who choose such a strategy will have to make serious decisions on how to make up for this loss in funding or lower their endowment spend by increasing tuition, cutting faculty, or reducing on campus services.”

Since private institutions typically rely more heavily upon endowments for expenses, these colleges pay an even higher price for the same amount of divestment than do public universities. Prof. Bessembinder calculates that to fund fossil fuel divestment, private universities would be forced to raise annual tuition by approximately $1,043 to $3,265, depending on how reliant each school is upon its endowment.  A private university could also make up for lost endowment value by cutting spending on faculty by 11.5 percent, leading to fewer classes and increased class sizes. Though smaller in dollar value, most public universities would also face difficult financial decisions from divestment, such that keeping spending at current levels would necessitate tuition increases by approximately $123 to $385 on average or reductions in spending on faculty costs of 3.5 percent, or a combination of these.  Universities could also forego future expected spending increases and spend down their endowments, but that would simply delay the costs of divestment at the expense of future students, alumni, and faculty.

“Divestment would make a college degree even more expensive for students who are already graduating with record levels of debt,” said Jeff Eshelman, senior vice president for operations and public affairs at IPAA. “Activists should not ask students to pick up the tab on this symbolic act which has no impact on the environment. When it comes to the impacts of divestment, whether in the form of increased tuition or cuts to instruction time and faculty, students only stand to lose.”      

According to the new study, commissioned by IPAA, the same basic issues that make divestment costly for university endowments also apply to pension funds.  Prof. Bessembinder calculated that the financial losses a typical pension fund would incur due to divestment would equate to a reduction in monthly benefits to be paid to pensioners of approximately five to seven percent, depending on the extent of the pension fund’s fossil fuel assets. While accomplishing little or nothing beyond a symbolic stance, divestment would do nothing to harm fossil fuel companies, but would transfer wealth that should go to beneficiaries to large banks or trading firms who capture transaction fees as revenue.  These fees tend to be even higher at environmentally focused funds who charge on between 0.38 and 0.73 percentage points more per year than the more widely used broad market funds.  Read the full report and fact sheet online.

Additional Background

The Bessembinder report is an ongoing part of the Divestment Facts program, launched by the Independent Petroleum Association of America in 2015 to provide data-driven research and facts on the ineffectiveness of fossil fuel divestment. This new report represents the fourth installment in a series of recent studies that have sought to quantify the true costs of the #DivestmentPenalty. The first study, authored by Prof. Fischel, a former dean of the Univ. of Chicago School of Law, found that divested equity portfolios would incur an annual loss of 70 basis points over a 50-year period, representing a 23 percent reduction in returns relative to a diversified portfolio. The second report, authored by Prof. Bradford Cornell of Caltech, quantified the impact of divestment on Harvard, Yale, MIT, NYU, and Columbia, with divestment-related losses for those institutions ranging up to $107.8 million per year.  The third report, also authored by Prof. Bessembinder, found that transaction costs and other frictional costs associated with divestment could rob an endowment by as much as 12 percent of its value over a 20-year timeframe.

Lots of Universities and Pensions Agree:

  • Harvard University: “Significantly constraining investment options risks significantly constraining investment returns.  The endowment provides more than one-third of the funds we expend on University activities each year.  Its strength and growth are crucial to our institutional ambitions — to the support we can offer students and faculty, to the intellectual opportunities we can provide, to the research we can advance.  Despite some assertions to the contrary, logic and experience indicate that barring investments in a major, integral sector of the global economy would — especially for a large endowment reliant on sophisticated investment techniques, pooled funds, and broad diversification — come at a substantial economic cost.” LINK
  • American University: “AU’s endowment includes funds from a number of sources and from thousands of donors over a period of more than 100 years. These donors have relied on the board’s fiduciary stewardship to generate the maximum, risk adjusted return to support the scholarships, fellowships, professorships, construction, and other purposes for which the funds were given, regardless of the personal views of board members on climate change or other issues. The board’s primary responsibility is to fulfill its fiduciary duty to the university.”  LINK
  • Middlebury College: “At this time, too many of these questions either raise serious concerns or remain unanswered for the board to support divestment.  Given its fiduciary responsibilities, the board cannot look past the lack of proven alternative investment models, the difficulty and material cost of withdrawing from a complex portfolio of investments, and the uncertainties and risks that divestment would create.” LINK
  • CUNY College: “The majority of spending derived from the University’s investment pool is utilized for student scholarships. We are concerned that a restructuring of current investments would restrict diversification, lower expected returns, and result in higher transaction costs.” LINK
  • Tufts University: “The endowment provides a critical piece of Tufts’ annual operating budget, supporting financial aid, department budgets and research programs, among other key components of our academic mission. Spending from the endowment is directly tied to its market value. To put the projected impact in perspective, $75 million would provide endowment income to fund scholarships for 100 undergraduates or annual stipends for 125 Ph.D. students, or fund the entire 2012 state appropriation for the Cummings School of Veterinary Medicine. In short, in today’s environment, divestment would likely result in a significant reduction in operating funds and would have an immediate adverse impact on the educational experience at Tufts. It would not be prudent to expose the university to that kind of risk at this time.”  LINK
  • Vermont Pension Investment Committee Report: “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.” LINK
  • New York State Comptroller Thomas DiNapoli: “My fiduciary duty requires me to focus on the long-term value of the Fund.  To achieve that objective the Fund works to maximize returns and minimize risks.  Key to accomplishing this objective is diversifying the Fund’s investments across sectors and asset classes – including the energy sector, where fossil fuels continue to play an integral role in powering the world’s electricity generators, industry, transportation and infrastructure.” LINK
  • California Public Employees’ Retirement System (CalPERS) CEO Anne Stausboll: “Engagement is the first call of action and is the most effective form of communicating concerns with the companies in which we invest. That is why, when it comes to climate change and its risks, Calpers’ view is that the path to change lies in engaging energy companies, instead of divesting them. If we sell our shares then we lose our ability as shareowners to influence companies to act responsibly.” LINK

Biography of Professor Hendrik Bessembinder

Professor Hendrik Bessembinder is a leading market microstructure and trading expert who currently serves as a professor of finance at the W.P. Carey School of Business of Arizona State University, in addition to holding the honorable title of Francis J. and Mary B. Labriola Endowed Chair.  Professor Bessembinder also serves as an Affiliate Professor in Business Economics and Finance at the Foster School of Business of the University of Washington, and a Senior Consultant to Compass Lexecon, an economic research and consulting company.  His research focuses on financial markets, including stock, bond, energy, foreign exchange, and non-traditional markets, and has been published in the most prestigious peer reviewed finance journals.

Prior to the University of Arizona, Professor Bessembinder held faculty positions at the University of Rochester, Emory University, and the University of Utah where, from 2006 to 2015, he was a member of the Investment Advisory Committee for the University of Utah Endowment.  Professor Bessembinder has published over 35 articles and still serves as the Managing Editor of the Journal of Financial and Quantitative Analysis and Associate Editor of the Journal of Financial Economics and the Journal of Financial Markets.  Professor Bessembinder received his PhD from the University in Washington in 1986 and his MBA from Washington State University in 1978 shortly after graduating with a Bachelor’s of Science degree from Utah State University in 1977.

The study, Fossil Fuel Divestment and Its Potential Impacts On Students, Faculty and Other University and Pension Stakeholders, was commissioned and financed by the Independent Petroleum Association of America (IPAA). The views expressed by way of this paper are Professor Bessembinder’s own; he does not speak for Arizona State University, the University of Washington, Compass Lexecon or IPAA.  Prof. Bessembinder was assisted in preparing this report by members of Compass Lexecon’s professional staff.

About the Independent Petroleum Association of America
The Independent Petroleum Association of America (IPAA) is a national upstream trade association representing thousands of independent oil and natural gas producers and service companies across the United States. Independent producers develop 90 percent of the nation’s oil and natural gas wells. These companies account for 54 percent of America’s oil production, 85 percent of its natural gas production, and support over 2.1 million American jobs. Learn more about IPAA by visiting and following @IPAAaccess on Twitter.


by Rob Roper

Mary Sullivan (D-Burlington), a leading Carbon Tax sponsor and supporter, has an op-ed out this week arguing that such a tax is “needed” and complaining about its opponents who succeeded killing the bill last year, at least temporarily.

Sullivan calls for “honest” debate, then tars those who disagree with her as “Trumpian” before predictably summoning the specter of the Koch brothers – none of whom had anything to do with the Carbon Tax debate in Vermont leading up to last election (the time period Sullivan’s piece refers to).

So, let’s talk about honesty….

Sullivan claims that under her and David Deen’s Carbon Tax, “every Vermonter would receive a tax cut.” Really? A NET tax cut? That’s what she implies, but it’s not true.

Under her bill, only 90% of the revenue generated by the Carbon Tax would go towards tax reduction, rebates, etc. So, overall Sullivan’s Carbon Tax represents a $50 million tax increase on Vermonters (the proposal would have ultimately raised roughly half a billion).

But, beyond that flagrant, mathematically impossible dishonesty Sullivan fails to point out that not every Vermonter will qualify for all the tax credits and rebates in the bill. Those making 200% of poverty level or less might be made whole, or even come out ahead depending upon how much they drive, but those with annual household incomes higher than $24,000 will get hammered.

And, this has to be the case. Think about it. Sullivan wants us to use less fossil fuels. She wants to accomplish that goal by making fossil fuels so expensive we won’t buy them. But if the tax on fossil fuels is completely counterbalanced with cuts and rebates to the point where it’s a wash for “every Vermonter,” what’s the incentive to switch?

- Rob Roper is president of the Ethan Allen Institute. 


by John McClaughry

The Vermont House is off on another tear to pass a mandatory seat belt law for adults. For some years we’ve had a secondary seat belt offense on the books. If a cop stops a driver for a broken taillight, he can also ticket the driver for not wearing a seatbelt, for an additional penalty. But he can’t ticket somebody he just happens to notice is not wearing a seatbelt.

Now a majority in the House want to make it an offense to drive about not having your seatbelt buckled. More tickets! More paperwork! More fines! And all because only a reported 83% of Vermont drivers regularly buckle their seat belts.

What a primary seat belt law gives the cops is the opportunity to imagine a broken taillight, stop a safely operated car or truck, notice the driver’s unbuckled seatbelt, write that ticket, maybe smell some pot smoke, write another ticket, maybe confiscate the vehicle as evidence, and leave the driver to attempt to cut a plea bargain with the state’s attorney.

When I was in the Senate, I opposed a primary seat belt mandate, but supported a secondary seat belt bill that credited a driver with ten dollars off his fine for some other infraction, as a reward for being buckled up at the time of the incident. The House wouldn’t buy that, and the conference committee dissolved without acting. Maybe they ought to bring that idea back.

- John McClaughry is vice president of the Ethan Allen Institute


By Rob RoperRob Roper

Folks celebrated Earth Day this year with a “March for Science” around the nation. The marchers’ message is, ostensibly, that policy should be based on science and not things like emotion, morality, or politics. But is this really what they’re after? Or is this more of an attempt to legitimize their own emotions, morality, and politics by claiming for them the label of “science”?

It’s ironic that nationally and locally the science marchers’ most visible spokespeople, Bill Nye and Bill McKibben respectively, are not actually scientists (nor is Al Gore for that matter). McKibben is a journalist, and Nye got his big television break performing as a stand up comedian. Nye calling himself “the Science Guy” instead of “the Scientist” is kind of like the cereal Froot Loops using creative spelling to avoid a fraud lawsuit over the fact that there isn’t any real fruit in them.

But here is why I am most skeptical about the motives of the marchers: they are trying use “science” – the word, not the process — as a way to end debate rather than to further it, and that’s not what science is about. Science is an ongoing process of open-minded experimentation and learning, not a mic drop slogan.

Real science doesn’t accept consensus; it challenges it. And great scientists obliterate consensus. A sign featured at one of the marches said, “Think You Can Stifle Science? Ask Galileo How That Worked Out!” This is a great example. Galileo went down in history for standing up to a scientific consensus at the time probably exceeded 97%. He was jailed for being an Earth-Centric Denier, and forced to recant his findings. Today, like the Inquisitors who persecuted Galileo, Nye very unscientifically called for criminalizing and jailing scientists who do work challenging the consensus on climate change.

What the marchers are really attempting to do is politicize and weaponize the word “science” so that they can use it a means to avoid debate and shut down their opposition without actually having to present facts or a cogent argument. This is the opposite of real science, and is actually dangerous to real science.

Science constantly questions assumptions and forces conventional wisdom to defend itself through a rigorous process of experimentation. As Einstein explained, “No amount of experimentation [science] can prove me right. But one experiment can prove me wrong.” I didn’t get the impression these marchers had any interest in allowing a process, scientific or otherwise, to question their assumptions about the world, let alone open themselves up to the possibility of being proven wrong.

Here in Vermont, for example, activists and some legislators are pushing hard to pass a carbon tax. They say we need to do this in order to save Vermont winters and the maple syrup industry from climate change. Anyone who disagrees with this carbon tax policy is a climate or science “denier.” End of debate! Drop microphone. Walk off stage.

But, if you genuinely believe science should be driving policy, you would demand to see the scientific data showing how Vermont’s passing a carbon tax and related energy policies would impact local and global climate trends. You would demand to see scientific proof that these policies would impact weather in Vermont to a degree where winter snowfall levels and maple trees will remain as they are into the future. Without such data, you couldn’t support the policy because it’s not based on science.

Nobody’s asking to see the scientific data here because it would show pretty definitively that a carbon tax and Vermont going to 90% renewable energy sources by 2050 would have zero impact, would not affect winter or maple trees, and, scientifically speaking, it would show Vermont’s energy policy to be about as sound as ritually sacrificing a goat to the volcano god. They want to do it anyway. To heck with science.

Science is certainly a critically important tool for learning about ourselves and our universe, and it plays an enormous role in human progress. But, it is by nature a learning process, and let’s not forget it is often wrong.

A great article came out a couple of days before the March for Science titled “How Settled Science Caused a Massive Public Health Crisis” about sugar vs. fat. The scientist who forty-five years ago warned that sugar, not fat, was the real culprit behind obesity, heart disease, and diabetes was vilified, his career destroyed, for challenging the scientific consensus and public policy of the day.

Science claimed the victory for sugar. Really, it was politics that won. Lesson learned? It doesn’t appear so.

- Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.


by Rob Roper

Governor Phil Scott proposed what should be an absolute no-brainer policy change that would save Vermont property taxpayers $26 million next year and more than $100 million over the next five years – all while holding teachers’ benefits and local school budgets harmless.

Scott’s idea is to create a statewide teacher contract for health insurance. This is only possible because the Affordable Care Act (Obamacare) requires that this November all teachers move out of their “Cadillac” plans and into a Vermont Health Connect plan. In other words, everybody’s contract is uniquely up for renegotiation at the same time. It is a one-time chance with a small window of opportunity.

Currently, health insurance benefits are negotiated locally and separately by scores of school boards. Under Scott’s proposal, all teachers would negotiate for healthcare benefits through the state. The School Boards Association is on board. The Superintendents Association is on board. Taxpayers should be ecstatic.

But the NEA is opposed. Why? Because they and their lawyers make a lot of money handling all of those local negotiations, and they don’t want that gravy train to end. And, the NEA spent $300,000 in the last election cycle, mostly on members of the majority party in the legislature, so, majority leadership is doing the NEA’s bidding and refusing to move forward.

This is… well, I can’t write what this is.

Property taxes relief has been and is the biggest issue on Vermonters minds and wallets over the past two decades. A $100 million fix over five years is a lot of money, and the fact that these saving can be realized without causing harm to student programs or teacher benefits is miraculous. Put your special interest campaign money aside and make it happen!

- Rob Roper is president of the Ethan Allen Institute.


About Us

The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

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