Laura Brown Image An Oahu special education teacher suffered retaliation and eventual dismissal due to his reporting to Department of Education district administration two separate incidents involving the treatment of special education students in an elementary school. The first incident 3 years ago involved a principal manhandling and shoving an elementary student suffering from childhood psychosis and other learning disabilities. The second incident involved the teacher informing parents of their children’s right to have access to the general curriculum while receiving remedial education under the federal Individuals with Disabilities Education Act (IDEA). As a probationary teacher, Mr. John Doe — whose real name is omitted due to a pending federal civil suit against a principal, naively believed that by reporting the incident to a district level administrator, the principal would be disciplined. Instead, the district closed ranks behind the principal to assist in retaliation against the teacher. Although retaliation began as pressure and direct interference in the teacher’s work, a second principal escalated the harassment to culminate in unwarranted discipline. Seeking relief, Mr. Doe submitted a complaint to the DOE Office of Complaints and Resolution. This office of the DOE failed to investigate all charges. Letters to ex-Superintendent Paul LeMahieu, Superintendent Patricia Hamamoto, Special Education Director Deborah Farmer as well as the district superintendent were returned with refusal to investigate the matter. The teacher then sought assistance from the state Ombudsman and was told by that office that they did not have enough knowledge of the law and to return to the DOE Office of Complaints and Resolution. No independent investigator was assigned to the case by the DOE as required by federal law. The teacher testified at the Board of Education several times and filed a complaint with a federal agency. In February 2001, Mr. Doe was put on administrative leave. The investigation took over 14 months. The teacher remained on payroll, but was not allowed to teach, with the DOE “forgetting” to renew his contract or assign him to a school. He was finally terminated due to the principal stating that 4 people had filed complaints against him. When Mr. Doe contacted these individuals by phone, they said they had never made any complaints. The principal denied the teacher his right to due process when he did not allow the teacher to interview the complainants. A federal civil suit is now pending against the principal, but a decision is not due until October 2003. A separate arbitration decision on the teacher’s termination is due on Feb. 21. The decision may mean the teacher is allowed back on the payroll, but does not necessarily mean the teacher will be allowed to resume teaching. While the labor board found that Mr. Doe had made statements that the DOE was not obeying a federal court order protecting the rights of children with disabilities, his comments are protected under the Whistleblower’s Protection Act. The costs for this case continue to escalate as two Department of Labor and Department of Education Deputy Attorney Generals attend court proceedings in State Circuit Court and Federal Court. The lack of accountability for the egregious actions of DOE administrators has resulted in the loss of a skilled special education classroom teacher, depriving students of a desperately needed caring and competent instructor, as well as the loss of livelihood for the teacher. Meanwhile, the frantic search for mainland special education teachers continues as the state struggles to fill the quota of certified special education teachers required under the Felix Consent Decree. The recruiting company charges more than twice as much for mainland recruits than it costs the DOE to hire and retain qualified teachers locally. Once special education teachers get a taste of the DOE culture of recrimination and retaliation, as experienced by Mr. Doe, they will leave the state, leaving a vacuum of expertise, leaving children helpless. ”Laura Brown is the education writer and on the research staff of HawaiiReporter.com. She can be reached via email at” mailto:LauraBrown@Hawaii.rr.com
Dreams, Family Dashed by Unfair Family Court Decisions
I arrived in Hawaii a little more than five years ago with high expectations and na
Dreams, Family Dashed by Unfair Family Court Decisions
I arrived in Hawaii a little more than five years ago with high expectations and na
Critical Condition: Will Hawaii's Life Sciences Industry Survive?
For Hawaii to grow a life sciences industry and support the new medical school’s ability to recruit key biotech researchers, we must show that funding is available to commercialize laboratory successes. There is a limited supply of talent in the biotech arena. Some states such as Massachusetts and Maryland are losing talent because of the lack of funding in those states whereas other states such as North Carolina, Michigan and Pennsylvania are gaining talent because they have enacted policies that demonstrate a commitment to providing needed funding. In Pennsylvania, legislators carved $180 million out of their tobacco settlement to create three biotech greenhouses and a life science focused venture fund. In Michigan, a very small portion of that states employee pension fund has provided significant dollars to invest in biotech.
States that have been stalwarts in producing high profile biotech companies are starting to fall behind. According to a report released by the Massachusetts Biotechnology Council and the Boston Consulting Group, that state is already falling behind in the competition to be the premier center of biotechnology, and if it doesn’t act soon to reverse the trend, it stands to lose out on nearly 100,000 new jobs and $1 billion in tax revenue in the next eight years. A $20 million seed fund for biotechnology companies in southern Pennsylvania has renewed the worries of Maryland biotech advocates, who say such measures are sorely needed to keep Maryland in the biotech forefront.
The new Philadelphia-based fund, called BioAdvance, draws on tobacco settlement money to pump up biotech businesses. Maryland, meanwhile, has only small investments and grants to offer through state programs, and ranks ninth among biotech leaders in private venture capital available — about $25 million a year — according to an Ernst and Young study published last December.
The lack of private funding in Maryland means companies must either go out of state to find money, or turn to the sparse state-funded programs.
For Hawaii to succeed in growing its life sciences industry, we must show that there is funding available to commercialize laboratory research. We can build the best research facilities in the country, but if we do not make funding show up, we will simply not be able to fill those facilities with top-notch researchers and biotech entrepreneurs.
When Hawaii’s Employee Retirement System was authorized to put 3 percent of its then $10 Billion corpus into alternative investments, not one penny found its way into local venture funds. One half of one percent of today’s $7 Billion balance would go a long way toward establishing Hawaii as a State committed to biotech. Forty other states have established initiatives to build, attract and grow biotech industries.
North Carolina, for example, supports an office of 53 people dedicated to economic development efforts geared at the biotech sector, compared to a single person in the Massachusetts office of business development who also has other responsibilities. The Massachusetts Biotechnology Report also recommends that companies, research institutions, hospitals, and academic centers collaborate more effectively, by establishing cluster-wide initiatives and associations, committing to public outreach efforts, and developing guidelines that lay a clear foundation for industry and academic researchers to work together to discover, develop and test new drugs, medical products, and other advances. So what should Hawaii do?
Hawaii has a tremendous opportunity to look forward and carefully plan how to grow and sustain its fledgling life science industry. The medical school will serve as the catalyst, but it will take highly skilled people and significantly more venture capital than what is available today to complete the picture. Clearly, for Hawaii to succeed, we need to be able to attract researchers and companies from states where funding support is waning. But to do this, we need to have funding available. The private sector and mechanisms such as Act 221 may work together to make some funding show up. However many of our institutions and private trusts must elevate their commitment to investing their risk capital in Hawaii venture capital firms, rather than letting mainland investment advisors direct those resources to firms in other states, which to date has been the norm. We have already lost opportunities that could have put Hawaii on the life science map by letting promising companies slip through our grasp.
For example, Hawaii Surgical, a medical device company founded by local heart surgeon Francis Duhaylongsod, left Hawaii for California for lack of a couple of million in venture capital and an animal lab at the medical school that would have allowed completion of pre-clinical trials. The company has subsequently licensed its technology to San Diego based Edwards Lifesciences which expects to make more than a half a billion dollars in annual revenues from Dr. Duhaylongsod’s invention.
There is money in Hawaii that can be used to fund investments in the life science sector. The life science sector, which includes biotech, drug discovery, health services, health care information technology and medical devices is clearly much better understood by potential sources of funding than other high tech enterprises. The opportunity to find a cure for cancer, create new medicines or machines that can improve the quality of life are core values that resonate deeper than building the next generation of network switches.
For Hawaii to participate in this sector, however, we have to start marshalling venture capital resources now or else we will be at the end of yet another list. For the new medical school to be successful, we must show that there will be funding available to commercialize the results of research being conducted by the talent we recruit. We cannot just build a world-class medical research institution and expect to be able to attract top talent unless we can finish what we start. This means showing the people we recruit that Hawaii has the resources to close the loop and fund promising companies that emerge from the results of this research.
”’Bill Spencer is the president of the Hawaii Venture Capital Association. He can be reached via email at”’ mailto:spencer@mdster.com
Critical Condition: Will Hawaii’s Life Sciences Industry Survive?
For Hawaii to grow a life sciences industry and support the new medical school’s ability to recruit key biotech researchers, we must show that funding is available to commercialize laboratory successes. There is a limited supply of talent in the biotech arena. Some states such as Massachusetts and Maryland are losing talent because of the lack of funding in those states whereas other states such as North Carolina, Michigan and Pennsylvania are gaining talent because they have enacted policies that demonstrate a commitment to providing needed funding. In Pennsylvania, legislators carved $180 million out of their tobacco settlement to create three biotech greenhouses and a life science focused venture fund. In Michigan, a very small portion of that states employee pension fund has provided significant dollars to invest in biotech.
States that have been stalwarts in producing high profile biotech companies are starting to fall behind. According to a report released by the Massachusetts Biotechnology Council and the Boston Consulting Group, that state is already falling behind in the competition to be the premier center of biotechnology, and if it doesn’t act soon to reverse the trend, it stands to lose out on nearly 100,000 new jobs and $1 billion in tax revenue in the next eight years. A $20 million seed fund for biotechnology companies in southern Pennsylvania has renewed the worries of Maryland biotech advocates, who say such measures are sorely needed to keep Maryland in the biotech forefront.
The new Philadelphia-based fund, called BioAdvance, draws on tobacco settlement money to pump up biotech businesses. Maryland, meanwhile, has only small investments and grants to offer through state programs, and ranks ninth among biotech leaders in private venture capital available — about $25 million a year — according to an Ernst and Young study published last December.
The lack of private funding in Maryland means companies must either go out of state to find money, or turn to the sparse state-funded programs.
For Hawaii to succeed in growing its life sciences industry, we must show that there is funding available to commercialize laboratory research. We can build the best research facilities in the country, but if we do not make funding show up, we will simply not be able to fill those facilities with top-notch researchers and biotech entrepreneurs.
When Hawaii’s Employee Retirement System was authorized to put 3 percent of its then $10 Billion corpus into alternative investments, not one penny found its way into local venture funds. One half of one percent of today’s $7 Billion balance would go a long way toward establishing Hawaii as a State committed to biotech. Forty other states have established initiatives to build, attract and grow biotech industries.
North Carolina, for example, supports an office of 53 people dedicated to economic development efforts geared at the biotech sector, compared to a single person in the Massachusetts office of business development who also has other responsibilities. The Massachusetts Biotechnology Report also recommends that companies, research institutions, hospitals, and academic centers collaborate more effectively, by establishing cluster-wide initiatives and associations, committing to public outreach efforts, and developing guidelines that lay a clear foundation for industry and academic researchers to work together to discover, develop and test new drugs, medical products, and other advances. So what should Hawaii do?
Hawaii has a tremendous opportunity to look forward and carefully plan how to grow and sustain its fledgling life science industry. The medical school will serve as the catalyst, but it will take highly skilled people and significantly more venture capital than what is available today to complete the picture. Clearly, for Hawaii to succeed, we need to be able to attract researchers and companies from states where funding support is waning. But to do this, we need to have funding available. The private sector and mechanisms such as Act 221 may work together to make some funding show up. However many of our institutions and private trusts must elevate their commitment to investing their risk capital in Hawaii venture capital firms, rather than letting mainland investment advisors direct those resources to firms in other states, which to date has been the norm. We have already lost opportunities that could have put Hawaii on the life science map by letting promising companies slip through our grasp.
For example, Hawaii Surgical, a medical device company founded by local heart surgeon Francis Duhaylongsod, left Hawaii for California for lack of a couple of million in venture capital and an animal lab at the medical school that would have allowed completion of pre-clinical trials. The company has subsequently licensed its technology to San Diego based Edwards Lifesciences which expects to make more than a half a billion dollars in annual revenues from Dr. Duhaylongsod’s invention.
There is money in Hawaii that can be used to fund investments in the life science sector. The life science sector, which includes biotech, drug discovery, health services, health care information technology and medical devices is clearly much better understood by potential sources of funding than other high tech enterprises. The opportunity to find a cure for cancer, create new medicines or machines that can improve the quality of life are core values that resonate deeper than building the next generation of network switches.
For Hawaii to participate in this sector, however, we have to start marshalling venture capital resources now or else we will be at the end of yet another list. For the new medical school to be successful, we must show that there will be funding available to commercialize the results of research being conducted by the talent we recruit. We cannot just build a world-class medical research institution and expect to be able to attract top talent unless we can finish what we start. This means showing the people we recruit that Hawaii has the resources to close the loop and fund promising companies that emerge from the results of this research.
”’Bill Spencer is the president of the Hawaii Venture Capital Association. He can be reached via email at”’ mailto:spencer@mdster.com
Critical Condition: Will Hawaii's Life Sciences Industry Survive?
For Hawaii to grow a life sciences industry and support the new medical school’s ability to recruit key biotech researchers, we must show that funding is available to commercialize laboratory successes. There is a limited supply of talent in the biotech arena. Some states such as Massachusetts and Maryland are losing talent because of the lack of funding in those states whereas other states such as North Carolina, Michigan and Pennsylvania are gaining talent because they have enacted policies that demonstrate a commitment to providing needed funding. In Pennsylvania, legislators carved $180 million out of their tobacco settlement to create three biotech greenhouses and a life science focused venture fund. In Michigan, a very small portion of that states employee pension fund has provided significant dollars to invest in biotech. States that have been stalwarts in producing high profile biotech companies are starting to fall behind. According to a report released by the Massachusetts Biotechnology Council and the Boston Consulting Group, that state is already falling behind in the competition to be the premier center of biotechnology, and if it doesn’t act soon to reverse the trend, it stands to lose out on nearly 100,000 new jobs and $1 billion in tax revenue in the next eight years. A $20 million seed fund for biotechnology companies in southern Pennsylvania has renewed the worries of Maryland biotech advocates, who say such measures are sorely needed to keep Maryland in the biotech forefront. The new Philadelphia-based fund, called BioAdvance, draws on tobacco settlement money to pump up biotech businesses. Maryland, meanwhile, has only small investments and grants to offer through state programs, and ranks ninth among biotech leaders in private venture capital available — about $25 million a year — according to an Ernst and Young study published last December. The lack of private funding in Maryland means companies must either go out of state to find money, or turn to the sparse state-funded programs. For Hawaii to succeed in growing its life sciences industry, we must show that there is funding available to commercialize laboratory research. We can build the best research facilities in the country, but if we do not make funding show up, we will simply not be able to fill those facilities with top-notch researchers and biotech entrepreneurs. When Hawaii’s Employee Retirement System was authorized to put 3 percent of its then $10 Billion corpus into alternative investments, not one penny found its way into local venture funds. One half of one percent of today’s $7 Billion balance would go a long way toward establishing Hawaii as a State committed to biotech. Forty other states have established initiatives to build, attract and grow biotech industries. North Carolina, for example, supports an office of 53 people dedicated to economic development efforts geared at the biotech sector, compared to a single person in the Massachusetts office of business development who also has other responsibilities. The Massachusetts Biotechnology Report also recommends that companies, research institutions, hospitals, and academic centers collaborate more effectively, by establishing cluster-wide initiatives and associations, committing to public outreach efforts, and developing guidelines that lay a clear foundation for industry and academic researchers to work together to discover, develop and test new drugs, medical products, and other advances. So what should Hawaii do? Hawaii has a tremendous opportunity to look forward and carefully plan how to grow and sustain its fledgling life science industry. The medical school will serve as the catalyst, but it will take highly skilled people and significantly more venture capital than what is available today to complete the picture. Clearly, for Hawaii to succeed, we need to be able to attract researchers and companies from states where funding support is waning. But to do this, we need to have funding available. The private sector and mechanisms such as Act 221 may work together to make some funding show up. However many of our institutions and private trusts must elevate their commitment to investing their risk capital in Hawaii venture capital firms, rather than letting mainland investment advisors direct those resources to firms in other states, which to date has been the norm. We have already lost opportunities that could have put Hawaii on the life science map by letting promising companies slip through our grasp. For example, Hawaii Surgical, a medical device company founded by local heart surgeon Francis Duhaylongsod, left Hawaii for California for lack of a couple of million in venture capital and an animal lab at the medical school that would have allowed completion of pre-clinical trials. The company has subsequently licensed its technology to San Diego based Edwards Lifesciences which expects to make more than a half a billion dollars in annual revenues from Dr. Duhaylongsod’s invention. There is money in Hawaii that can be used to fund investments in the life science sector. The life science sector, which includes biotech, drug discovery, health services, health care information technology and medical devices is clearly much better understood by potential sources of funding than other high tech enterprises. The opportunity to find a cure for cancer, create new medicines or machines that can improve the quality of life are core values that resonate deeper than building the next generation of network switches. For Hawaii to participate in this sector, however, we have to start marshalling venture capital resources now or else we will be at the end of yet another list. For the new medical school to be successful, we must show that there will be funding available to commercialize the results of research being conducted by the talent we recruit. We cannot just build a world-class medical research institution and expect to be able to attract top talent unless we can finish what we start. This means showing the people we recruit that Hawaii has the resources to close the loop and fund promising companies that emerge from the results of this research. ”Bill Spencer is the president of the Hawaii Venture Capital Association. He can be reached via email at” mailto:spencer@mdster.com
Critical Condition: Will Hawaii’s Life Sciences Industry Survive?
For Hawaii to grow a life sciences industry and support the new medical school’s ability to recruit key biotech researchers, we must show that funding is available to commercialize laboratory successes. There is a limited supply of talent in the biotech arena. Some states such as Massachusetts and Maryland are losing talent because of the lack of funding in those states whereas other states such as North Carolina, Michigan and Pennsylvania are gaining talent because they have enacted policies that demonstrate a commitment to providing needed funding. In Pennsylvania, legislators carved $180 million out of their tobacco settlement to create three biotech greenhouses and a life science focused venture fund. In Michigan, a very small portion of that states employee pension fund has provided significant dollars to invest in biotech. States that have been stalwarts in producing high profile biotech companies are starting to fall behind. According to a report released by the Massachusetts Biotechnology Council and the Boston Consulting Group, that state is already falling behind in the competition to be the premier center of biotechnology, and if it doesn’t act soon to reverse the trend, it stands to lose out on nearly 100,000 new jobs and $1 billion in tax revenue in the next eight years. A $20 million seed fund for biotechnology companies in southern Pennsylvania has renewed the worries of Maryland biotech advocates, who say such measures are sorely needed to keep Maryland in the biotech forefront. The new Philadelphia-based fund, called BioAdvance, draws on tobacco settlement money to pump up biotech businesses. Maryland, meanwhile, has only small investments and grants to offer through state programs, and ranks ninth among biotech leaders in private venture capital available — about $25 million a year — according to an Ernst and Young study published last December. The lack of private funding in Maryland means companies must either go out of state to find money, or turn to the sparse state-funded programs. For Hawaii to succeed in growing its life sciences industry, we must show that there is funding available to commercialize laboratory research. We can build the best research facilities in the country, but if we do not make funding show up, we will simply not be able to fill those facilities with top-notch researchers and biotech entrepreneurs. When Hawaii’s Employee Retirement System was authorized to put 3 percent of its then $10 Billion corpus into alternative investments, not one penny found its way into local venture funds. One half of one percent of today’s $7 Billion balance would go a long way toward establishing Hawaii as a State committed to biotech. Forty other states have established initiatives to build, attract and grow biotech industries. North Carolina, for example, supports an office of 53 people dedicated to economic development efforts geared at the biotech sector, compared to a single person in the Massachusetts office of business development who also has other responsibilities. The Massachusetts Biotechnology Report also recommends that companies, research institutions, hospitals, and academic centers collaborate more effectively, by establishing cluster-wide initiatives and associations, committing to public outreach efforts, and developing guidelines that lay a clear foundation for industry and academic researchers to work together to discover, develop and test new drugs, medical products, and other advances. So what should Hawaii do? Hawaii has a tremendous opportunity to look forward and carefully plan how to grow and sustain its fledgling life science industry. The medical school will serve as the catalyst, but it will take highly skilled people and significantly more venture capital than what is available today to complete the picture. Clearly, for Hawaii to succeed, we need to be able to attract researchers and companies from states where funding support is waning. But to do this, we need to have funding available. The private sector and mechanisms such as Act 221 may work together to make some funding show up. However many of our institutions and private trusts must elevate their commitment to investing their risk capital in Hawaii venture capital firms, rather than letting mainland investment advisors direct those resources to firms in other states, which to date has been the norm. We have already lost opportunities that could have put Hawaii on the life science map by letting promising companies slip through our grasp. For example, Hawaii Surgical, a medical device company founded by local heart surgeon Francis Duhaylongsod, left Hawaii for California for lack of a couple of million in venture capital and an animal lab at the medical school that would have allowed completion of pre-clinical trials. The company has subsequently licensed its technology to San Diego based Edwards Lifesciences which expects to make more than a half a billion dollars in annual revenues from Dr. Duhaylongsod’s invention. There is money in Hawaii that can be used to fund investments in the life science sector. The life science sector, which includes biotech, drug discovery, health services, health care information technology and medical devices is clearly much better understood by potential sources of funding than other high tech enterprises. The opportunity to find a cure for cancer, create new medicines or machines that can improve the quality of life are core values that resonate deeper than building the next generation of network switches. For Hawaii to participate in this sector, however, we have to start marshalling venture capital resources now or else we will be at the end of yet another list. For the new medical school to be successful, we must show that there will be funding available to commercialize the results of research being conducted by the talent we recruit. We cannot just build a world-class medical research institution and expect to be able to attract top talent unless we can finish what we start. This means showing the people we recruit that Hawaii has the resources to close the loop and fund promising companies that emerge from the results of this research. ”Bill Spencer is the president of the Hawaii Venture Capital Association. He can be reached via email at” mailto:spencer@mdster.com
The State Fiscal Calamity and Competitive Sourcing
Nearly every state is facing a budget crunch — not all severe as Minnesota ($4.3 billion of $20+ billion general fund) or California (between $21 and $34 billion of $75+ billion general fund). Tax and fee increases are considered by many as a necessary evil to prevent services from being cut. However some policy makers, including the newly elected governor of Minnesota, Tim Pawlenty, have taken no new tax pledges. They realize that since state government swelled in the fat years of the mid- and late-90s there has to be room for cuts. Simply getting government back to the mid-90s level will all but solve the current crisis.
Essentially, these policy makers are addressing the budget crunch as a revenue issue. They know that tax revenue collected by state government has more than doubled over the last 10 years, and that expenditures have more than doubled in the same time period. With coffers full, policy makers couldn’t help themselves. Rather than return the money, they funded every pet project they could while giving generous pay raises to state employees. When you or I spend more than we bring in, we tighten our belt and cut unnecessary expenses; its time that state government had to do the same. However, if you listen to California Gov. Gray Davis, the problem is that “millionaires aren’t making enough money,” a very short-sighted and unrealistic interpretation of the issue.
However, all is not lost. There is a powerful tool available to policy makers as they attempt to tackle this crisis. Competitive sourcing is a proven policy tool that can save upwards of 30 percent off of the provision of government services.
Currently the federal government, under the direction of President Bush is undertaking a massive competitive sourcing plan within the federal government. Recently Bush announced his ambitious plans to competitively source 850,000 federal jobs
In Favor of the Liquidator
“StuartHayashi Image”
Corporate raiders help the economy when they take over struggling
companies in order to save them. But what can be said of the corporate raider who acquires a failing corporation just to liquidate it and sell off its assets at a profit? “Detestable?”
One such raider of Hollywood lore is in the movie “Other People’s
Money,” based upon the eponymous off-Broadway play. He’s Lawrence Garfield (“Lawrence Garfinkle” in the play), a.k.a. “Larry the Liquidator.”
In the tale, Larry notices that the company New England Wire & Cable’s stock sells at $10/share, but that, since all of the company’s assets minus liabilities come out to $100 million, and since it has four million outstanding shares, the real worth of an outstanding share is $25. Therefore, if Larry can buy up the stock and then liquidate the company, he’ll make a $15-per-share profit.
So isn’t it vile for Larry to destroy a company or even downsize one? Don’t we need laws to protect jobs from such practices, as well as other threats, like foreign competition and job-replacing technological innovations?
It’s widely believed that “all these factors destroy jobs, ”’period.”'” That’s not the whole truth; the jobs they “destroy” are replaced with new ones and, in the long run, they make consumers, on average, richer.
A corporate raider only liquidates a company if its net worth outweighs its projected future earnings. If he thought the corporation still had a chance at succeeding, that would mean it would make ”’more”’ money for him in the future, so he’d better keep it alive.
But isn’t it still unethical to liquidate failing companies, when that
necessarily means firing people? No, because, if a company’s bound to fail, it’ll go broke and those workers will lose their employment anyway. The difference: when corporate raiders liquidate companies, they cut the companies’ losses before the shareholders lose even more money and before the workers futilely waste more time and labor.
When a corporation’s liquidated, its assets are sold off to be used for
other, more productive endeavors, thereby helping other companies improve their productivity in satisfying their consumers. And the money the stockholders make from the sale is re-invested in other activities, too.
Who takes care of the fired employees? The mainstream media frequently scream about mass layoffs, but omit mention of how often laid-off workers find new occupations.
When AT&T downside in 1996, “Newsweek” demonized the company for putting people out of work. But scientist-businessman T.J. Rodgers pointed out that what “Newsweek” neglected to report was that many of AT&T’s fired engineers were instantly hired by his company Cypress Semiconductor and its rival Cirrus Logic. Said Rodgers, “The bad news from big companies gets front-page coverage, but the near-immediate absorption of their skilled
workers is rarely discussed.”
In addition, life seemed hopeless in Youngstown, Ohio, when its steel
mills closed down, creating a horrifying 25 percent unemployment rate. But what the media failed to mention was that smaller companies later moved in, people learned new skills, and now Youngstown has unemployment levels below the national average of 5 percent, with positions that, on average, ”’pay better”’ than the previous ones.
As Federal Reserve economist Michael Cox puts it, “We recycle labor
from unproductive uses to productive uses.”
The same holds true for foreign companies: if they out-compete domestic businesses by offering a cheaper product to domestic markets, then American consumers receive cheaper goods and can use the money they save (what otherwise would’ve been spent on more expensive goods) to invest in industries where America ”’can”’ dominate.
If technological innovations replace some jobs to cut costs, that
lowers prices and saves consumers money too, also to be be-reinvested. Besides, progress must march on. Larry Liquidator correctly noted, “[A]t one time, there must’ve been a dozen companies making buggy whips. And I bet the last one around made the best goddamn buggy whip you ever saw. Now how would you have liked to have been a stockholder in ”’that”’ company?”
Some buggy-whip companies still exist, but they’re not as lucrative. Many investors took their money out of carriage-producing and put it into automobile manufacturing. Carriage-crafters were fired, but a number of them found new jobs, and automakers were hired.
In keeping with the process that economist Joseph Schumpeter called
“creative destruction,” the free market re-allocates resources from where they’re in lower demand to where they’re in higher demand. Inextricably, real-life Larry Liquidators actually help ”’create”’ even more valuable new jobs and thereby provide an important service for us all.
”’Stuart K. Hayashi is the president of the Reason Club of Honolulu and an undergraduate in Entrepreneurial Studies at Hawaii Pacific University, though his opinions do not necessarily reflect that of either institution. He can be reached at mailto:radical_individualist@hotmail.com and an index of his past editorials for HawaiiReporter.com can be seen at”’ https://reason_club.tripod.com/stuart_editorials.html
The State Fiscal Calamity and Competitive Sourcing
Nearly every state is facing a budget crunch — not all severe as Minnesota ($4.3 billion of $20+ billion general fund) or California (between $21 and $34 billion of $75+ billion general fund). Tax and fee increases are considered by many as a necessary evil to prevent services from being cut. However some policy makers, including the newly elected governor of Minnesota, Tim Pawlenty, have taken no new tax pledges. They realize that since state government swelled in the fat years of the mid- and late-90s there has to be room for cuts. Simply getting government back to the mid-90s level will all but solve the current crisis. Essentially, these policy makers are addressing the budget crunch as a revenue issue. They know that tax revenue collected by state government has more than doubled over the last 10 years, and that expenditures have more than doubled in the same time period. With coffers full, policy makers couldn’t help themselves. Rather than return the money, they funded every pet project they could while giving generous pay raises to state employees. When you or I spend more than we bring in, we tighten our belt and cut unnecessary expenses; its time that state government had to do the same. However, if you listen to California Gov. Gray Davis, the problem is that “millionaires aren’t making enough money,” a very short-sighted and unrealistic interpretation of the issue. However, all is not lost. There is a powerful tool available to policy makers as they attempt to tackle this crisis. Competitive sourcing is a proven policy tool that can save upwards of 30 percent off of the provision of government services. Currently the federal government, under the direction of President Bush is undertaking a massive competitive sourcing plan within the federal government. Recently Bush announced his ambitious plans to competitively source 850,000 federal jobs?nearly half of the non-postal civilian positions in the federal government. The feds have one advantage. For several years each federal agency has had to classify every job within its agency. The Federal Activities Inventory Reform Act, or FAIR Act, classifies every federal job in several different job categories?the most basic are inherently governmental (activities that can only be provided by government employees) and commercial in nature (activities that can and are provided by the private sector). Having this in tow and knowing exactly what every federal employee does makes the competitive sourcing process easier and more targeted. To date, only one state takes such an inventory — Virginia. For years the federal budget has been printed by the Government Printing Office (GPO). When President Bush announced his plans, one of his goals was to competitively source the printing of the federal budget. After first objecting, the GPO reevaluated its bid and resubmitted its proposal — which was 30 percent less than the first. The fear of being competed forced the GPO to be innovative and hold itself to a bottom line resulting in savings of 30 percent. Stories like these can be told every day, whether the activity is ultimately outsourced or remains in house. Competitive sourcing is about injecting competition into the provision of government services. Like the GPO example there are countless other opportunities to save tremendous amounts of money. After conducting an inventory of activities, governments will be able to identify not only the activities that can be competed but also those services that the government can simply stop providing, and return to core governing principles. Every dollar saved through the competitive sourcing process is one less dollar that needs to be cut from services or one less tax dollar that needs to be raised. Policy makers cannot afford to ignore the tremendous power and opportunity that lies with competitive sourcing. It must play a large role in righting the ship and getting government finances back where they belong. As a taxpayer I value the services that governments provide me — as long as they are provided as efficiently and effectively as possible. The competitive sourcing process is a powerful tool that can help governments achieve that goal. ”Originally published by Reason Foundation, which is a public policy think tank promoting choice, competition and a dynamic market economy as the foundation for human dignity and progress. For more information, contact Geoffrey Segal, Director of Privatization and Government Reform Policy at:” mailto:geoffrey.segal@reason.org ”Visit the Reason Web site at:” https://www.rppi.org ”or go to the Reason Public Policy Institute’s Privatization Center at:” https://www.privatization.org ”for information on government reform, privatization, contracting out and public/private partnerships.”