Tom Keane

The Tax Code Fight

Obama should have proposed closing loopholes, not making more

“ASKING A billionaire to pay at least as much as his secretary in taxes? Most Americans would call that common sense.’’

So said President Obama in this week’s State of the Union speech. The billionaire in question was Warren Buffett, and his secretary, Debbie Bosanek, sat with Michelle Obama as the president delivered his remarks.

More than common sense, the notion that Bosanek - presumably earning more modest secretarial wages - pays more than a man earning millions is outrageous. Outrageous if true, that is. But Buffett says in 2010 he paid $6.9 million in federal taxes. It’s a safe bet Bosanek paid far, far less.

Obama’s statement, an attention grabber, was a piece of rhetorical overreach. Elsewhere, the president made clear his concern was tax rates, not tax amounts. Ordinary incomes (such as salaries) are taxed from 10 percent to as high as 35 percent (for amounts in excess of $388,350). But taxes on capital gains (the likely source of Buffet’s income) are usually around 15 percent.

Is that as bad as Obama makes it out to be?

Since we haven’t seen Bosanek and Buffett’s returns, it’s not even clear she paid a higher rate of taxes than her boss. An analysis prepared by the Tax Policy Center, a think tank, pointed out that the top 20 percent of income earners pay, on average, 25.5 percent of their incomes to the feds (including income and payroll taxes). Those in the middle bracket average 14 percent. In other words, if Bosanek indeed had paid a higher rate, she would be the exception, not the rule.

Note to Obama speechwriters: 25 is bigger than 14.

At the heart of Obama’s disgruntlement is that the government taxes capital gains at a lower rate than ordinary income. Even the rich get treated differently. A professional hockey player making $10 million a year would find most of his income taxed at 35 percent. An investor making the same amount would pay just 15 percent. Rather than shunning a visit to the White House, perhaps Tim Thomas should be protesting outside Mitt Romney’s home in Belmont.

Those who support lower rates for capital gains argue that those gains are derived from corporate profits, which are themselves already subject to corporate income taxes. The lower rate, they say, is an offset for what amounts to double taxation. More importantly - and this was an argument voiced frequently by Republicans and Democrats such as the late Paul Tsongas - the lower tax rate encourages people to make risky investments, which in turn spur the growth of the economy.

In other words, the rationale for the lower rate is to get people to change their behavior in ways politicians think desirable. That’s the same rationale that underlies all of the other deductions, exclusions, credits and the like that one finds in the tax code.

In fact, most of these loopholes don’t accomplish much; there is, for instance, little evidence lower capital gains rates have spurred more investment (an argument Buffett himself makes). But more broadly, tax policy should be “neutral’’ – it shouldn’t try to distinguish between differing kinds of economic activity, favoring some over others. That should be the job of a free market, not politicians.

But the tax code is anything but neutral. All of the varying exceptions we have built into it have made it horrendously complex and, inevitably, create bizarre loopholes (such as hedge fund managers being able to treat ordinary income as capital gains). It is also the reason Americans collectively spend an estimated 6.1 billion hours yearly preparing their tax returns, a fruitless drag on the economy.

It would have been terrific if the point of Obama’s claim about billionaires and secretaries had been that the code should be simplified, eliminating loopholes and treating all income the same. Far from it though. In his speech, the president proposed even more loopholes: breaks for companies than shun overseas operations, increased deductions for high-tech manufacturers, a bigger tuition tax credit, and new clean-energy tax credits.

Doubtless, all worthy goals. But their effect ultimately will be to increase further the difference in the amount of taxes some pay versus others. Obama is right. Taxes should be fairer. But by larding the tax code with even more complexity, all he’ll be doing is making it worse than ever.

Originally published in the Boston Globe on January 28, 2012.

Republicans against capitalism

IT SEEMS the level of vitriol rises with every election cycle, and this year’s Republican nominating contest is no exception. Maybe that’s simply because there is so much fodder. It’s hard to resist mocking a morality-preaching candidate accused of sexual harassment, or another who denounces Washington while making millions as a lobbyist.

Still, little compares to the venomous attacks that are now targeting Mitt Romney’s tenure at Bain Capital. Supporters of Newt Gingrich released “King of Bain,’’ a 28-minute video trashing Romney for destroying jobs, businesses, and communities. Rick Perry called the former Massachusetts governor a “vulture capitalist.’’ Jon Huntsman said, “Romney enjoys firing people.’’ Even Sarah Palin — how can we miss her when she won’t go away? — jumped into the anti-Bain Capital fray.

What made these critiques so remarkable wasn’t that they were untrue, but rather their source. If there is any myth that Republicans like to ascribe to themselves, it is that they are the unwavering advocates of the free market. But here were leaders of the GOP ripping into Romney for — horrors! — being a capitalist. Karl Marx himself would have been proud.

How could this have happened? Part of the answer is that the GOP has never been as pro-capitalist as it might like to think. It was Richard Nixon, remember, who instituted national wage controls, a move as deeply anti-free-market as one could ever imagine. It’s probably more correct to think of Republicans as pro-business, which often just means supporting the status quo. Capitalists, particularly the brand typified by private-equity firms such as Bain Capital, make their living out of upending that status quo.

Moreover, most of the current Republican presidential field has no real understanding of what capitalism means. Except for Romney and (arguably) Huntsman, none has a business background. To them free markets are more a talking point, and one imagines their vision of capitalism to be some hardy entrepreneur up at 4 a.m. selling fresh-baked bread from a cheery store in a quaint small town.

Shopkeepers are an important part of the economic firmament, but the real stuff of capitalism is the “creative destruction’’ of unceasing competition and constant innovation. The “destruction’’ part of that oft-used term - meaning failing industries and companies - is something politicians of any stripe are, understandably, loath to embrace.

Did Romney actually end up creating jobs while at Bain Capital? He says it’s a net 100,000, and he may be right. By other measures, though, the numbers could be entirely different. Consider Staples, a well-known Bain Capital investment that is a key part of Romney’s claim to boosting employment. But Staples in turn bankrupted small stationery shops and office supply stores across the country. Livelihoods were lost; employees were fired. Its success came at a high cost to those against whom it competed.

So would we be better off if Staples had never been created? Not at all. Staples succeeded because it was able to deliver wanted products to consumers more cheaply and more effectively. At the macroeconomic level, it improved productivity, a very good thing which in the long-run that should create more wealth and more jobs. Still, try explaining that to the owners of shuttered stationery stores.

In fact, “jobs created’’ is probably the wrong measure of Romney’s success at Bain Capital. In the economic scheme of things, Bain Capital’s purpose was to allocate capital efficiently. Romney’s experience there may have given him insight into how government can best create the conditions necessary to promote a strong national economy. But it’s incorrect to think of him in the narrowest sense as a “job creator.’’

There’s been much pushback to the attacks on Bain Capital and the rumor is that Gingrich and others are now backing off. That’s not necessarily good for Romney. As the nominee, he would undoubtedly face exactly the same hits from Democrats. The current onslaught made for a good dress rehearsal.

Then too, the questions raised about Bain Capital suggest that a healthy discussion about capitalism might well be a valuable thing for the country itself to have. As much benefit as unfettered capitalism can bring, it also causes tremendous pain. There is a tension between keeping markets free and providing individuals with protection and a safety net. It’s worth debating how we can achieve both.

Originally published in the Boston Globe on January 14, 2012.

 

Mishandling the Murray mess

It’s not ‘time to move on’ — it’s time to investigate

LAST SUMMER, the think tank MassINC released a poll revealing that almost 40 percent of Massachusetts voters consider corruption in politics to be widespread. To that substantial, cynical minority, nearly all politicians are venal, unprincipled, and in it for themselves. It’s a worrisome attitude, speaking to a lack of faith in government. Sure, a majority polled still thought those who populate the State House are, with notable exceptions, basically well-meaning and honest. But this week, their confidence was likely shaken.

The reason for that is the bizarre saga of Lieutenant Governor Tim Murray’s auto accident on Nov. 2.

When it first occurred, Murray’s accident seemed a simple thing. He had, he said, woken up before sunrise and decided to take a drive, both to pick up coffee and survey damage from the Halloween snowstorm that had swept through the region. Although traveling at a safe speed, at one point his car skidded on black ice and went tumbling off Route 190. He had been wearing a seat belt, the airbags had deployed, and while the state-owned vehicle was totaled, he was fine - not even needing a trip to the hospital. He immediately asked for a sobriety test from the state troopers who showed up. And to bolster his account of things, one investigating trooper slipped on some black ice while down the road another car went careening after hitting some ice.

It could have happened to anyone, I thought, and when people began raising doubts, I was dismissive. Granted, the tale about surveying storm damage when it’s dark outside did have an odd ring to it, but Murray’s larger point - he liked to go driving alone just to clear his head - struck home. (I, too, enjoy being by myself when in the car; I always win every argument.) The demands by the Globe and the Herald for the release of information from the vehicle’s “black box’’ data recorder seemed overreaching, as did the Herald’s further appeal for the information when the public records request was rebuffed. I remember thinking how awful it was that trust had eroded to such a degree that the first reaction of some was to instantly assume that, if a politician had been involved, then something untoward was going on.

Except, of course, that the doubters were right. When the black box was finally released, it turned out Murray hadn’t skidded on black ice. Instead of traveling at the speed limit, he’d gone as fast as 108 mph. He hadn’t even been wearing a seat belt, and State Police suggested the cause of the accident was he’d fallen asleep. Murray now says that’s the real story, but this time the questions from posters on blogs and comments sections seem more credible. What was Murray really doing out on the road so early? Was he surveying damage or was he coming home from somewhere else? Were others involved? Was he texting? Did he really pass a sobriety test? Were the State Police - so very hesitant to release the black box - covering for him? And also, does he make it a habit not to wear a seat belt?

Shortly after the black box data was released, Governor Deval Patrick said, “I know this man. I care about him.’’ Then, he added, “Now it is time to move on.’’

One can admire the human concern. But politically, Patrick’s attitude is tin-eared, feeding into the worldview of those who believe politicians protect their own. Three years ago, the state watched aghast as legislators voted Sal DiMasi speaker of the House, even as they knew he was about to be indicted. Last week’s events felt like déjà vu, with politicians unaware of how their actions undermine the confidence of ordinary citizens. Apologies, governor, but it is, decidedly, not “time to move on.’’ It is time to investigate, not avoid. Rather than continuing a slow, reluctant drip of information, it is time to kick off a process that is bold, transparent, and independent. Someone, somewhere - a legislative committee, the attorney general, perhaps the feds - needs to stand up and take on this task. Otherwise, the ranks of the cynics will only grow.

Originally published in the Boston Globe on January 8, 2012.

Nancy Brennan’s work on Greenway really started paying off

At times “teetering,” the park project hits a spectacular a tipping point.

WHEN SHE WAS HIRED IN 2005 as executive director of the Rose Fitzgerald Kennedy Greenway, Nancy Brennan was charged not just with making a park out of the mile-and-a-half ribbon of bald urban land left by the dismantling of the Central Artery. She was also asked to create an artery for the city, one that would energize Boston’s waterfront and downtown neighborhoods and tie the two together. Extravagant plans – for a YMCA, an indoor arboretum, an arts and culture center – were weighed but all collapsed. Brennan had been tasked by the nonprofit Greenway Conservancy – which would in 2009 inherit management of the land from the Turnpike Authority – to raise $20 million to kick off the park and to establish relationships with private donors, which she did in less than two years. But then financial markets collapsed and the country sank into recession. At times, it seemed the project was “teetering,” Brennan recalls. Some argued that the wall of the Central Artery had been replaced with a pointless, empty, grassy moat.

Suddenly and quite spectacularly, however, the park hit a tipping point last summer. The number of people using the Greenway jumped 70 percent from 2010, and even the most casual visitor could sense the heightened energy. Instead of focusing on anything grandiose, Brennan oversaw the planning and implementation of myriad small improvements: free Wi-Fi, food trucks and carts, a carousel, tables and chairs, farmers’ markets, outdoor art, extensive plantings. The individual parcels that make up the park were shaped into destinations of their own, each with a unique character, ranging from contemplative to active. It was a winning formula.

Brennan had worked in museums for most of her career (she came to the Conservancy from the top spot at Plimoth Plantation, and before that ran museums in Bermuda and Baltimore); the Greenway was a different kind of challenge, a part of a living city, a place that’s always in flux. At the moment she’s enthusing over a new carousel coming in 2013 (designed for the Greenway after long consultations with a critical constituency: children) and a just-begun planning process for adding more public art. Soon, Brennan believes, the Greenway will be as beloved as the Common, Esplanade, or Public Garden. And last year, it became clear that the space has a pulse: from pleasure to protest, from children dancing in its fountains to campers occupying Dewey Square.

Originally published in the Boston Globe Magazine on January 1, 2012, as part of the Magazine's "Bostonians of the Year" issue.

Shopping all the way (ha! ha! ha!)

TODAY IS Holiday Eve, and you know what that means: Just a few hours until Holiday itself!

Maybe tonight you’ll wander around the neighborhood singing Holiday carols, then you’ll put the kids to bed so Holiday Claus (“Santa’’ being too close to “Saint’’ for comfort) can take his time strewing all sorts of gifts around the Holiday Tree.

And then tomorrow, as you sit around in the aftermath of the unwrapping, trying to read indecipherable instructions and wondering why even stuffed toys now require AAA batteries, take a moment to pause and reflect on the true meaning of Holiday itself: It’s our best chance yet of knocking down this recession. And you, the American consumer, deserve much of the credit.

Yes, indeed, it’s been a bang-up shopping season. It kicked off just over four weeks ago with an abbreviated Thanksgiving (“Thanks for the turkey, folks - time to go to the mall!’’) and has been running pell-mell since. In October, the National Retailers Association had predicted Holiday retail sales would climb by 2.8 percent over 2010. Now it says, with relish, that they’ll grow by 3.8 percent. Meanwhile, online shopping is seeing unprecedented gains; research firm ComScore says sales are running 15 percent ahead of last year. Even better, consumers are doing all of this shopping despite fewer big discounts being available this year. That’s right: More of you are paying full price and, while that may not be so great for your pocketbooks, it’s certainly fattening up the profits of everyone from Macy’s to Amazon.

All the numbers aren’t yet in, of course. We still have the mad rush of today and then the Monday after Holiday, when we all flock back to the stores to return the dumb things people gave us. But so far the data look good.

The entire Thanksgiving to Holiday shopping frenzy is, of course, crazy. The origins of Holiday may be lost in time (something to do with a birth, I think) but buying stuff was probably not part of it. The focus on gift-giving itself is irrational. In theory, trading gifts back and forth gives you less satisfaction than simply spending money on yourself - after all, you know your own needs better than do others. And some of the purchases we make are downright bizarre, especially gift cards, which altogether abandon the pretense of buying for others, instead handing over to them the burden of picking their own gift. (Why we don’t just give cash instead is beyond me. A $50 gift card is apparently OK, but for some reason we think cash is crass.)

Still, as foolish as shopping season may be, we all should be happy it occurs. Consumer spending is two-thirds of the US economy. When consumers become more free-handed with their dollars, we end up with what economists call a virtuous circle. Your dollars spent at a store mean the retailer can hire a clerk, who in turn can spend money at a store, and so on. Things accelerate upwards until we are all awash in jobs and money. But when disaster strikes, virtue turns vicious. That’s what happened after the 2008 crash, when we all retrenched.

No more.

Remember in the summer, when economists were predicting a double-dip recession? That fear is dissipating, and it’s because of us - consumers. Granted, these are trying times: gyrating stock markets, a possible collapse of the euro zone, gridlocked politicians, high unemployment, falling average incomes, natural disasters, and global upheavals from the Middle East to North Korea. But despite it all, Americans seem to have returned to the basic optimism that has for the most part characterized this country. (The Conference Board, for example, reports that consumer confidence jumped an impressive 15.1 points in November, even as corporate CEOs are turning pessimistic. ) As silly as it may sound, going shopping is ultimately a sign of faith. Not “faith’’ as in the religion-related events rumored to have given rise to Holiday, but rather faith in the nation as a whole to persevere and thrive. In 2012, that faith - seen now in the crowded parking lots of area malls - may translate into reality.

Holy Christmas! Wouldn’t that be great?

Originally published in the Boston Globe on December 24, 2011.

Occupy Boston: So, what was the point?

THE NEIGHBORS were complaining, it was getting late, and even those at the party were looking at their watches, thinking it really had gone on longer than they expected and wondering how they could best make their excuses and leave.

And then along came Boston Mayor Tom Menino telling them it was time to go and so dutifully - and probably relieved that he gave them an out - most did. The big, communal tents have been packed up. As I write this, only about 35 tents remain and even those are being disassembled. City sanitation workers are loading up the trash. A few protesters will doubtless resist, eager to get arrested (as those from the ‘60s have found, it’s a great story to tell the grandchildren), but for all intents and purposes, Occupy Boston is over.

Thursday’s decision by Judge Frances McIntyre allowing the city to evict was plainly correct. There’s no question that what the Occupiers were engaged in was, in fact, speech. Moreover, the methods of that speech - the encampment as well as the communal lifestyle of the protesters - were expressive, making them exactly the kind of stuff the First Amendment was designed to protect. (The fact that the living conditions ultimately seemed more akin to “The Lord of the Flies’’ didn’t make the speech less worthy of protection.)

On the other hand, Dewey Square is a city park. The Occupation precluded anyone else from using that space - making it, in effect, the privatization of a public space. At some point the interests of everyone else hold sway and, after more than two months, that time had come. Add to that worries about the city’s potential liability (if there was a fire and folks died, would the city be liable for not enforcing building and sanitation codes?) and the right of Boston to uphold its rules about no overnight sleeping in city parks seemed clear. Indeed, Menino deserves a lot of credit for letting things go on as long as they did - although an alternative view is that, by waiting and watching mayors in other cities make their own mistakes, he learned how to do it right.

But now that it’s over, the question to be debated is, what did it accomplish? This was, in truth, far from a mass movement. It’s likely more people showed up outside shopping malls on Thanksgiving than ever stayed in Dewey Square. And while one might admire the fortitude of the Occupiers for their long-term commitment, it was, for many, better than paying for rent and meals.

The Occupiers, and many in the media, will argue that at a minimum they provoked discussion about the concentration of wealth in the hands of a few and the decline of the middle class. I’m not sure that’s correct. The debate was already under way. Democrats have been harping on tax cuts for the wealthy over the last couple of years. Occupy was more a consequence of that discussion than its provocateur.

But whether one gives the Occupiers credit for the conversation or not, it’s hard to see how they’ve played any role in figuring out a solution. The principal impact of the Occupiers’ leaderless, agenda-free movement was pretty much to persuade everyone else that leaderless, agenda-free movements don’t work. The Tea Party activists, with whom the Occupiers are often compared, turned their anger into political action. But much of the rhetoric from the Occupiers specifically rejected participation in voting and politics, leaving one puzzled as to how anything meaningful was to be accomplished.

Meanwhile, there are many out there who have been trying constructively to address the underlying concerns that gave rise to the Occupy movement. One-time Senate candidate Alan Khazei, for instance, has put together an organization, Opportunity Nation (www.opportunitynation.org), that brings together folks from all over the political spectrum (including left-wing think tanks, major corporations, and the religious right) to create a plan for how the United States can restore the once-proud notion of the American dream.

Opportunity Nation’s efforts have been largely drowned out by the media focus on the protesters, but Khazei and others like him will likely do far more to advance the Occupiers’ cause than did their tents.

Originally published in the Boston Globe on December 10, 2011.

The Boston bike-share success story

THE HUBWAY — Boston’s bicycle share program — at first blush seemed one of those off-the-wall, goofy larks you’d find in cities like Portland, Ore., or San Francisco. The notion that meat-and-potatoes Tom Menino was behind it made me wonder whether those 18 years as Boston mayor had finally exacted their toll, especially when he started prattling on about this being the beginning of a new, green urban transportation system.

But now the bikes are heading inside for the winter and, taking stock of the last four months, the Hubway is starting to look less hare-brained and more like one of Menino’s best ideas ever.

A bike share program is, at its most basic, just what it sounds like: City-owned bikes are scattered around downtown, available for folks to use as they wish. But the implementation of that simple idea is remarkably sophisticated. Since the program started July 28, bikes have been available at 60 (solar powered!) stations. Members of the program carry around a small fob which unlocks the bike. They then ride where they wish, docking it at a nearby station when done. Apps available on smartphones tell users where stations are and - in real time - how many bikes are available. Rides under 30 minutes are free to members. Anything longer carries a small charge.

The program’s unveiling was accompanied by the usually litany of naysaying. No one would use it. Riders would get hurt. Traffic would be a mess. It was a waste of taxpayers’ money. Bikes - as happened in Paris - would be vandalized and stolen.

All wrong. The program signed up 3,620 annual members (I’m one) and attracted another 30,000 or so casual users - tourists and locals who try it for a day or two. Nicole Freedman, who heads up Boston’s bicycle efforts, says that since inception there have been about 138,000 bike rides, well above initial projections. There have been no serious injuries (Freedman speculates Hubway users tend to be more cautious riders and the bikes are themselves sturdily built, including flashing lights both fore and aft.) Automobile traffic still flows as well - or as badly - as ever.

Taxpayer money? Actually, none from the city. The total bill is $5.7 million, including the bikes and stations (which Boston now owns) as well as three years of operations. That was funded entirely by a combination of almost $4 million in state and federal grants, a large donation from New Balance, and other sponsors and advertisers. Given ridership levels, future operations likely can be paid from user fees and sponsorships.

Despite the sorry experience Parisians had with their own bike share program, fears of mischief never materialized. For one, the Hubway requires riders use a credit card, making it pretty easy to track down would-be thieves. And aside from petty problems such as stickers defacing stations and bikes, there has been no real vandalism. Maybe we’re just more civil than the French.

Still, Boston’s small program is a far cry from Menino’s grandiose vision of a full-blown transportation system. Right now the stations are mostly downtown. The critical need, the city acknowledges, is to roll out stations all over Boston as well as in neighboring Brookline, Cambridge, and Somerville. Boston still needs more and better bike lanes to accommodate the hordes it someday hopes to see on two wheels. There are operational kinks to work out too; more than once, I’ve found stations empty of bikes (or full - making it impossible to dock).

Even so, there are intriguing signs of what the Hubway might become. Commuters coming into North and South Stations now routinely hop on bikes to get to their offices. Tourists use it as a way to better see the sights without the wear of walking. And I personally have found that it changes things: I now readily go places I didn’t. Cars are expensive to park; subways take too long. The bike is quick and easy.

The only flaw to all of this is the weather. Not surprisingly, the Hubway closes for the winter, shutting down at the end of this month and reopening mid-March. That’s yet another reason to yearn for spring.

Originally published in the Boston Globe on November 26, 2011.

An economics lesson for Warren

THE VIDEO in which Elizabeth Warren, de facto Democratic nominee for the US Senate, rebuts GOP claims that taxing the rich is “class warfare,’’ continues to be a sensation. “There is nobody in this country who got rich on his own,’’ Warren tells supporters. “Nobody!’’

Her claim is that it is not entrepreneurs who create wealth. They play a role, she acknowledges, but the credit really belongs to all of us. And that becomes the rationale for why they deserve to pay a premium in taxes: We deserve a share of their wealth because we helped create it.

It’s a beguiling idea, but Warren is wrong. My taxes may have helped pay for the roads on which Steve Jobs shipped his iPads, but without Steve Jobs - no matter how many roads my taxes might have paid for - there never would have been an iPad. Indeed, the only reason I have a job that enables me to pay taxes is because of past entrepreneurs, who created the companies and the technologies that in turn created a wealthier society that in turn could provide me with a job. If Steve Jobs owed his wealth to anyone else, it was to those past entrepreneurs.

Economics got named the “dismal science’’ because some of its earliest, greatest thinkers - Thomas Robert Malthus, David Ricardo, Karl Marx - concluded that society was doomed to a stagnant existence. Although each had far different world views, each concluded there was, essentially, a finite amount of wealth. There might be bubbles up or down, but in the end, each generation would be no better off than the last. It was a gloomy prognosis, with seemingly the only battle left being who got what.

Those airtight academic arguments were confounded by the real world, however. During the Industrial Revolution, per capita wealth was plainly growing. It took economists such as Alfred Marshall and Joseph Schumpeter to explain why. The way out of the stagnation was productivity. If more could be accomplished with the same resources (or, if the same could be accomplished with fewer resources), then wealth would grow. And who made that happen? Schumpeter said it was entrepreneurs.

Schumpeter had a broad definition of entrepreneurs. They included the stereotypical lone inventors, but also were those who developed new products, processes, organizations, or ways of doing things - any sort of innovation. And, he stressed, those folks could be found not just in small start-ups, but also in the midst of large organizations. Absent entrepreneurs, he argued, economies couldn’t grow. We would be in a stationary equilibrium, where the wealth of no one would ever improve.

Of course, none of this means we shouldn’t tax wealthy entrepreneurs. But the reason we do so is not because, as Warren would claim, that they somehow owe us. Rather, we tax the rich for the same reason Willie Sutton robbed banks (“Because that’s where the money is,’’ Sutton allegedly explained). Nor does it mean that government can’t help create the conditions in which entrepreneurship flourishes. As Warren notes, those conditions include stable legal systems, safe streets, and an educated populace. But they also include flexible labor rules, open markets, a refusal to countenance protectionism, and a regulatory system that minimizes burdens on businesses - usually not high priorities for left-wing politicians.

Still, the key point is that it is not government or we the teeming masses that create wealth. It’s entrepreneurs. Warren says entrepreneurs should “pay forward’’ to the rest of us in gratitude for their success. If anything, the thanks should go the other way.

Originally published in the Boston Globe on November 12, 2011.

Swimming in lies

After mislabeling scandal, should seafood industry be regulated?

FISH TALES are supposedly the lies about the ones that got away. Actually, it turns out, they’re about the ones that end up on our plates.

A quick recap: Globe reporters bought fish from a variety of restaurants and retailers around the state. The seafood —183 samples in all - was sent out for DNA analysis. Of those, 48 percent were mislabeled. My reaction since the story first appeared this week has been a mix of nausea, outrage, and embarrassment — the last because I feel a fool for my gullibility, which made it so easy for the seafood industry to put one over on me.

And, with the exception of perhaps some innocent cases of miscommunication, lies they are. The reporters for the story were careful to use neutral words such as “mislabeling’’ since it was hard to pin down blame. But somewhere along the food chain, from catching through processing to shipping and then purchasing, someone consciously substituted one fish for another. And that substitution, in almost all cases, was of a cheaper, less desirable seafood: white bass for striped bass, haddock for cod, swai for flounder. It’s the classic retail rip-off: selling plastic beads as pearls.

Nor were the Globe’s findings some sort of statistical outlier. Oceana, an advocacy group, did its own sampling last spring and concluded seafood is mislabeled half the time. A new study by Consumer Reports found 22 percent of fish in three states mislabeled.

What was most compelling about the Globe story, however, were the familiar names behind the deceptions: Bertucci’s, Skipjack’s, Ken’s Steak House, and Kowloon. (Equally striking were the places telling the truth: Ninety Nine? Wendy’s? So much for our easy assumption that upscale is always better.)

In one case, the risks posed by mislabeling are significant. Escolar is almost always, apparently, substituted for white tuna at sushi restaurants. That’s a problem. Escolar is the ocean’s version of really bad baked beans, with the potential to cause gastro-intestinal distress, including diarrhea and cramping. In fact, the fish is banned in Japan, of all places, for its toxicity (this, remember, is the country that celebrates eating the occasionally fatal pufferfish). The US Food and Drug Administration also recommends it not be marketed, but has never mustered the gumption to simply ban it altogether. Hence it is sold — most of the time branded as tuna (which it isn’t) but sometimes also correctly labeled escolar — to consumers (such as me) who simply were unaware of its hazards.

But aside from escolar, the damage suffered by consumers may seem hard to pin down. As with the plastic beads labeled pearls, if no one is the wiser, who’s hurt? Haddock, for instance, is a perfectly decent fish, even when it’s called cod. Granted, I’m likely overpaying. But otherwise, shouldn’t I be OK?

Maybe not. Some of the substitutes — such as tilapia for red snapper - are nutritionally inferior. Moreover, the worrisome thing about the rampant mislabeling of seafood is it suggests that there may be other, far deeper problems. DNA analysis can only tell us so much. It can’t tell us, for instance, where the fish is from, how old it is, or how it’s been handled. Badly sourced or badly treated fish can easily subject one to all sorts of toxins and diseases.

The Globe’s exposé is reminiscent of Upton Sinclair’s 1906 novel, “The Jungle,’’ whose horrific description of the meatpacking industry ultimately led to the creation of the FDA. More than 100 years later, do we need the same kind of regulation of seafood? Free market advocates — and I am one — would like to think that the market could regulate itself. Legal Seafoods and Whole Foods, for instance, have long bragged about how carefully they source their products. Yet it turns out Legal mislabeled as well. And perhaps we could be smarter as consumers - although when cooked and presented in dim light, it gets difficult to tell one white fish from another.

The predictable calls have already begun for new regulations and in this case, rightly so. The political tenor of the times tries to find fault with any kind of government intervention. But the extraordinary degree of fraud involved suggests that there can be even greater harm when it is lacking.

Originally published in the Boston Globe on October 29, 2011.

What’s really at stake in council election

IT’S BEEN a busy few weeks for the Boston City Council. Members are trying to push Massport to pay employees a “living wage.’’ The body recently congratulated the Transgender Political Coalition on its 10th anniversary. The council is close to passing an ordinance limiting retail sales of knives, while it recently voted to raise the dropout age to 18. And a number of councilors are pushing to ban noisy nighttime trash pickups.

It’s easy to mock this stuff — small bore, penny ante, we pay 13 people $87,500 a year for this! — but an alternative view is that these are the core issues of public policy: economics, individual rights, public safety, education, and the balancing of the interests of people living and working in close quarters. Granted, it’s not as media-worthy as Occupy Boston, but for most residents, it’s far more important.

Elections for the council are just over three weeks away — on Nov. 8 — and, with three exceptions, they promise to be tepid affairs. Of the nine district seats, only two are truly contested. Long-time Dorchester councilor Maureen Feeney is retiring, and the two top vote-getters from last month’s preliminary - Frank Baker and John O’Toole - now square off. Meanwhile, Bill Linehan, in office for four years, faces a surprisingly strong challenge from Suzanne Lee. She’s from Chinatown; he’s from South Boston. Some read this as a referendum on Southie’s political strength; others as a referendum on the mayor (he’s with Tom Menino; she isn’t).

Meanwhile, Michael Flaherty - also from South Boston - seeks to return to the at-large seat he left two years ago to run for mayor. Flaherty’s run irks many. There are four incumbent at-large councilors, and for Flaherty to succeed, one of them needs to be knocked out. The speculation is that Ayanna Pressley, just elected in 2009 and not especially well known, is the most vulnerable. But the stakes are somewhat larger here than merely Pressley’s personal fortunes: the City Council has a problem when it comes to both race and sex.

Race first. Boston is what some call a majority-minority city. The council doesn’t reflect that at all. Two district members (representing largely African-American sections of the city) are black. One at-large member, Felix Arroyo, is Hispanic. Pressley is the sole at-large black member. Is she loses, the body is down to just three non-white councilors out of 13.

Even more striking is sex. With Feeney’s departure, Pressley remains the council’s sole woman. If Flaherty edges her out (and if Lee fails to best Linehan), the council will be all-male - understandable for a fraternity, not so understandable for a representative body. The puzzle is why and there’s no easy answer. Calling Boston voters more racist or sexist than voters elsewhere is an easy, but untrue, accusation. More likely, it’s a holdover from the days when politics was a family business, handed down from father to (usually) son. That combined with the personal nature of local politics - people vote for those they know or those they’ve heard of - make it hard for newcomers to break in.

Perhaps the Occupy Boston demonstrators might take up the challenge. This is not in jest. By my count, 60 of the 141 individuals arrested last week were Boston residents. Camping out and taking the occasional stroll around town may get you interviewed, but in the long run, change in a democracy only occurs when new people with new ideas run for and win office.

Stephen Murphy, the council’s president, observes that compared to other legislative bodies - i.e., Congress - the council has been a place of late where members have focused on results instead of personal battles. (This despite the conviction earlier this year of Chuck Turner, a councilor accused of taking a bribe.) And even as his police were arresting the Occupiers, Menino acknowledged that their issues - foreclosure, corporate responsibility - are the same ones that he regularly engages.

The Tea Party activists quickly figured out that for their anger to mean anything, they had to get elected, and they mobilized with stunning speed. They now occupy seats at all levels of government, making their voices far more effective than those who would simply occupy Dewey Square.

Originally published in the Boston Globe on October 15, 2011.