WEBVTT

NOTE On the Need to Raise Taxes in Alabama

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I want to welcome everybody to the first meeting of the new Brown Bag Seminar here at the Mises

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Institute.

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I guess I know everybody here, but I'm Mark Thornton at the Mises Institute.

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The Brown Bag Seminar is something that we had in operation a number of years ago.

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I think it was November of 1996, Governor Bob James made a presentation at the Brown

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The Brown Bag Seminar, when we had it in the College of Business, on the merits of the gold standard, a very nice presentation, and one thing led to another, and he hired me to work for the governor's office in Montgomery, so the brown bag shut down.

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It was a little better than that.

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It's a long story.

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I'm back, have been for a while, and we thought it would be a good idea to restart the Brown

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and to once again grow it into an event as good or better than it was back in the 1990s.

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So the Governor is coming next week?

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Yeah, that's the Governor in his house.

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Well, you never know.

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You hear about smoking?

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Yeah and actually our next speaker is going to be Richard Alt next week on what the government

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doesn't want you to know about tobacco and then the last seminar in January is going

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to be given by Henry Thompson on Croatia in transition, the economy in transition over

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over there, along with a little photo tour hopefully of his travels over there.

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One thing I'd like you to do is to think about making a presentation yourself here at this

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seminar or to suggest others and to invite other people from around Auburn and Lee County

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and as well as of course the university students and faculty who you think might be interested

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I have a feeling it's going to be a great seminar.

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My talk today is going to be on the subject of do we need higher taxes in the state of

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Alabama?

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When we planned this out, this wasn't really an issue in the state of Alabama, but fortunately

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the State Legislature makes my job a lot easier. In the paper last week, House Speaker says

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new taxes needed. And I thought, you know, this is a godsend for me as far as giving

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my talk. It's actually quite a threat to the people of Alabama. But then I started

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looking at the page in general and I thought to myself, well, here's, right here we have

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The Salvation Army is collecting more money than ever in Alabama, primarily to help the

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and the victims of the hurricane in southern Alabama.

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As a matter of fact, they were even using, they didn't have enough people to go around

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collecting all the money, so they came up with cardboard cutouts of people in Salvation

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Army uniforms, and they apparently were collecting just tons of money.

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And then, again, in this corner, the government needs more taxes.

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is going to do less and require more, whereas the private sector and the charity sector

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is doing more with less.

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So I think it was sort of a good sort of window on society right on that one page of the newspaper.

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Now there are two views of taxes in my many travels and discussions with people.

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The first view is that taxes are too low, and the other view is that taxes are too high.

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These are just people's opinions, but the group that thinks taxes are too low are generally

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people who consume taxes.

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These are people who work for government, who are bureaucrats, who are on some form

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of government welfare, or on the public dole in some form or another.

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The people who think taxes are too high are basically the people who are the people who

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are paying the taxes, the employees, the entrepreneurs, the savers, the investors and so forth.

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And so you have these basic two groups.

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In Alabama, the group calling for higher taxes has been beating the drum for higher taxes

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loud and often for many, many years, at least the 20 years that I've been in this state.

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We've had several efforts at what's called tax reform. We've had constitutional reform,

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which was another way of saying more taxes. We've had the effort to establish a state

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lottery that would bring in essentially more revenue, more layers of tax reform, and most

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Most recently, Amendment 2 to the Constitution, which ultimately went down to defeat, which

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was really an underhanded way of providing leverage so that lawsuits could be brought

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against public education in Alabama, which essentially allowed judges to force the state

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to raise taxes in order to provide more money to education.

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And I know the person who wrote the bill was somebody I worked with in the governor's office.

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And the basic bill that he wrote would essentially have removed all of the racist language as

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well as a lot of things that have become redundant in the Constitution.

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So it would have made it smaller, the Constitution, and it would have taken out all the racist

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Language, and two legislators at the last minute did a little editing on the document

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in order to, again, provide that way of, that backhanded way of the state race.

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There was one in the Senate and one in the House, a little after the meeting, editing

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to the document.

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The claim of the Advocates for Higher Taxes in Alabama is that Alabama does not provide

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enough government services. In particular, that it doesn't fund public education enough.

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That's really one of the main emphasis of the state. I was talking earlier that if we

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eliminated public education and we eliminated all federal programs that the state runs that

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One of the particular emphasis of this group is that Alabama has the lowest property taxes

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in the nation and is the result of these low property taxes overall tax revenues are too

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low and thus government services like public schools are underfunded and that this is a

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tragedy for the people of Alabama.

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Now property taxes are indeed low in the state of Alabama, with some calculations placing

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Alabama as number one in terms of low property taxes. However, this does not mean that taxes

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are too low or that state government is too small. And so I did a study originally for

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I'm not sure of the governor, but I've got some updated figures here today about taxes, spending and the size of government.

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And basically what I did was I compared Alabama to its neighbors, Tennessee, Georgia, Florida and Mississippi.

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And I thought that this was a better comparison because these are states with similar economies,

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We have similar demographic groupings with the same basic problems and the same basic resources, and we're also competing for things like new industries and new jobs and so forth, so that by comparing our neighbors rather than the whole nation, where you have a lot of different states with different problems, different resources, different economic climates, I thought that this was a much better comparison.

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The State of Alabama to California or Rhode Island just didn't make any sense to me.

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If we look at state taxes, this is the first slide I'll show you.

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Basically what we have here on this chart is the State of Alabama from 92 to 96.

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The figure is $1144.10.

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in the State of Alabama to the state government per person.

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And then if we look at the state average of the surrounding states, we see that our neighboring states raised more taxes than in Alabama.

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So that Alabamians only pay 95 cents compared to every dollar that our neighbors are paying.

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and then when I looked at some updated figures 97 to 99 of course taxes are

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going up quite a bit so it's not like we're receiving less revenue but taxes

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are also going up for our neighbors so that actually Alabama is becoming an

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even lower tax state and tax revenues to the state of Alabama in 2002 were fourteen

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How does the Education Trust Fund fit into that? Do the other states have something similar?

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Some of that isn't even subject to tax increases, right, because of what was set up from royalties from offshore gas, all that sort of stuff?

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It's not included in that?

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Does that explain part of the difference?

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Tax State, State Revenues. Same basic comparison, you see that the figure increases for Alabama

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to $1,659, whereas our neighbors now are $1,509. So this is including additional revenue streams

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that Alabama gets. This is a good measure of revenue in the sense that this is the measure

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of money that the state has that it can really manipulate, that it really determines itself.

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It includes things like user fees and revenues from other state operations. So these are

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are basically sorts of business operations that the state is conducting, such as ABC,

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the Alabama Alcohol Beverage Control Group, and you can also see that revenues are increasing

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at a pretty good pace, we're still above the four state average and in 2002 revenues per

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Our capital were $2,168. So again, that flow of funds is increasing in excess of inflation

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as measured by CPI over this time period. It doesn't stop there. There's other ways

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of measuring what they do down in Montgomery. This is general revenues. Again, the figures

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Here's our jumping into higher levels, Alabama receiving 7% more than the region here in

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1999, 5% more.

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In 2002, Alabama's general revenues were $3569.

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So there's a big jump in the amount of general revenue.

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And this category adds things like intergovernmental transfers, so money from the federal, local,

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county levels, however that flows, the state is getting a net benefit from that and their

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general revenues as a result are substantial, they're increasing and they're greater than

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Total Revenues, Government Accounting, Broadest Measure of Government,

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and also revenues from public utility and insurance trust funds. So this is money that is siphoned off from public utilities and the insurance trust fund.

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Once again Alabama is above the regional average. Alabama is second highest in terms of total revenues only to Mississippi.

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The Federal Reserve has the benefit of getting huge amounts of money from the federal government, and it hasn't seemed to help over the last 50 years, but they get that money nonetheless.

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And then finally, I'll keep all this correct here, total expenditures per capita.

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This is the spending side of government.

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Alabama is above the regional average in terms of spending by 8%.

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Again, that's pretty significant.

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In 2002, total spending per capita by the state was $4,017. For every man, woman and child in the state of Alabama, the state government is spending over $4,000. That was 2002, so you can estimate in your head that it's going to be probably somewhere between 5% and 10% greater than that figure today.

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So basically what I found is that when you go through all the facts and figures, that

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we compare ourselves to the states that surround us, the states that are most like us in terms

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of economy and population and all the other factors that I looked at, that Alabama state

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Government is larger than the regional average, that in many categories it's the largest

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spender or the largest government as measured by these different categories.

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And the only time they're ever actually beat out is when Mississippi is brought into the

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picture and we look at the money that is coming in from the Federal Government into the state

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of Mississippi.

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So, you know, that's the one thing in which Alabama is not the actual largest state government

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in the region.

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And, of course, Mississippi, they get all that federal money and they also have what

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economists view as the fixed cost of government.

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It's a smaller state, a smaller population, and so you have, you know, every state has

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a governor, for example.

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The governor's salary as a percentage of Mississippi's GDP is going to be much larger than the governor's salary in New York as a percentage of GDP.

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So what we have is a situation that the facts point out that Alabama does not have too small of a government.

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And that interestingly it seems like the more government a state has, the poorer it is.

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Because the states with the lowest government per capita, Tennessee, Georgia and Florida, are actually some of the leading economies in the southeastern region.

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Now our brand of economics here, Austrian economics, would argue that more government does actually hurt the economy and that less government helps the economy.

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Therefore, it should not be surprising that these results have been found.

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Additionally, one of the main issues in state governments, especially in Alabama, is education.

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Alabama spends the largest percentage of its budget on education compared to any state in the region.

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One other thing that I found in doing this little research for the governor's office was a particular area of problem,

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and that was that the state spends a lot of its resources, and I guess I don't have this transparency here with me,

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a lot of its resources on labor and very little of it on capital.

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As a matter of fact, when you look at the national statistics, Alabama state government is one of the highest spenders in terms of its labor bill, wages and benefits versus its expenditure on capital goods, building roads, building bridges, buying trucks, buying computers.

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And economics in general shows that when labor has a small amount of capital to work with, it has poor machinery, it has poor technology, it has poor infrastructure that you're going to get very low productivity.

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And that's basically what we have in the state is we're spending a lot of money on labor, very little on capital, and so the capital labor ratio is very small.

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To point this out in terms of public education, over the last 30 years in Alabama, enrollment

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in public schools, in terms of the number of students, has fallen by 15%.

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Over 30 years, we've had a 15% decrease in the number of students. Now, if you live in Auburn, you think, well, we're building schools, we have more students and so forth, but over the entire state, total enrollment has fallen by 15% in public schools.

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And the ratio between public and private hasn't changed that much.

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The homeschool is increasing, but if you add homeschooling and private schools, their growth relative to public schools doesn't really change that much, just a couple percentage points.

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Although I did find that surprising.

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What's even more surprising is that labor in public schools, the number of people we have working for public schools over that same 30 year period has increased 40 percent.

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So you have 15% fewer students, 40% more teachers, administrators and bureaucrats, and the percentage

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of those in administration, non-teaching positions, has accounted for the vast bulk of that 40%

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increase.

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Pay is also up, Alabama is now above the regional average for teacher pay, and almost

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at the National Average.

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The net result is that if we look at the cost of educating a child in the state of Alabama

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adjusted for inflation, the cost has increased over that 30-year period by 150 percent.

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How about the returns to this massive increase in expenditures?

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Well, there's a lot of debate over whether or not students are receiving a better or

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worse education now than 30 years ago.

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There's a lot of statistics, there's a lot of test scores, there's a lot of opinions

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on all that.

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In my own experience as a college instructor at Auburn and elsewhere, I found that there

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There was a rather significant decline in the quality and training and ability of students

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in terms of basic things like writing, spelling, basic math skills like adding, dividing, ratios,

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percentages, and in basic conceptual thinking.

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And I've asked colleagues, former colleagues about all this to see if it wasn't just me,

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If it wasn't just my own frustrations or if it was a more general problem.

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They noted that, for example, history, the student's understanding and knowledge of

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history has declined significantly.

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American history, European history, things of that nature, although almost all students

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know everything they need to know about dinosaurs and any other extinct species. Most students

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will know, for example, that Thomas Jefferson was a slaveholder, but very few will know

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that he was the author of the Declaration of Independence.

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So and also there's been a noted trend for college textbooks to continually be dumbed

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down addition after addition.

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This is again something in Austrian economics that we shouldn't find surprising.

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The public sector versus the private sector.

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The basic reason for the failure of public schools is that private schools are consumer

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driven or public schools are not.

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They are insulated from the consumer, they are insulated from competition.

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One of our students here, Barry Simpson, in his dissertation pointed out, he looked at

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compulsory education laws in the United States, laws that were passed in the previous century

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to mandate that everybody should attend schools, whether it's public or private, and he noted

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that long before the public school movement got started and compulsory attendance laws

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were enforced, that in, for example, the state of Massachusetts in 1850, that literacy was

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already at 98% and that today it is barely above 92%. Schools also spend a lot of time

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Brainwashing Children about the benefits of public schools, government programs, and environmentalism.

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How wonderful they are.

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We're entrepreneurs on the other hand, corporations and the wealthy are inherently evil.

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This they seem to be doing a good job with.

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They actually seem to be doing a very good job at that.

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On the other hand, if we look at private schools and in particular homeschoolers, we see that

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They are the hottest thing in education today. Home school children beat private school children

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in testing scores and they leave public school children basically in the dust as far as all

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that is concerned. One of the most important things I think that Austrian Economics points

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out as well as the statistics is that money cannot really solve this problem. I would

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I'd like to think that we could go back to a system of private schools, but the first

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point of defense on all this is that more money does not solve this problem.

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The U.S. spends $500 billion a year on public education.

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That's a lot of money.

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Internationally, the U.S. is second only to Switzerland, and the amount of money spent

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Switzerland pays the most for public education, the United States is a close second, and yet

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our students in international testing rank only 18th out of 21 nations participating.

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On our own test, the National Assessment of Educational Progress, less than one quarter

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of our twelfth graders are proficient in both math and science, so only 25 percent are rated

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as proficient at graduation.

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What can we do about public schools besides just eliminating them?

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Well, the best thing to do would be to remove all federal and state involvement in public

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education.

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One of our big problems in the state of Alabama is that every dollar goes to Montgomery and

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then comes back to the local districts and a lot of that gets siphoned off and regulated

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away.

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If we eliminated both the federal and state government and all money was raised for public

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Public schools at the local level and spent at the local level and decided at the local

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level public schools would perform better.

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The current trend is for school districts to become larger, school boards to become

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smaller and classrooms to become smaller.

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I think that smaller classrooms somehow result in higher education or better education.

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The trend should be almost reversed, where school districts become smaller, education

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boards become larger so that more people can have a say so, and that classrooms can actually

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become larger.

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Teachers are the most expensive part of education and if you have more students in a classroom

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You can do it more cost effectively.

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These type of local public schools I think would drive the following reforms.

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Increase the percentage of classroom teachers in the school workforce from its current level

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at 50%.

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So only 50% of school employees are teachers to 90%.

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That's the way it used to be. If you go back 50 or 75 years, you'll find that under those

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circumstances, 90% of school employees were teachers.

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What was it like to be a teacher in Afghanistan as opposed to today?

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Yeah, that's a big increase. Alabama actually has one of the highest credentialed teaching

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I told Roger about a high school I was a good teacher, you know, high school economics classes, they had to pay me something, pay me a dollar. Nope, they couldn't do it. So I mean, I drive to Greenville to teach high school students, and it's a private school, they don't care. So imagine if you could allow thousand people into the classrooms that are being boxed out, and how many of those graduate degrees are degrees in education?

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Entirely. I mean, I think the figure is 99% are all graduate degrees in education.

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We'd also want to see an increase in the percentage of instruction time during the day and a reduction in extracurricular activities.

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We'd also like to see an increase in grading standards for students, the removal of non-performing students,

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Institute, effective performance review of teachers, restore tenure to its original conception,

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and provide competitive salaries for teachers.

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Note that all of these types of reforms have been found when used to increase student achievement.

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In other words, these things have actually worked.

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The other nice part about all those types of reforms is that they don't require any

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new resources to achieve that kind of thing, and that's very important.

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Not only does money not work, as I think I've shown, but also raising taxes has a detrimental

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effect on the economy.

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Every time we raise a dollar in taxes, we put a much larger cost onto the economy.

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Not only does that dollar come out of the private sector, but you also discourage the

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economy by putting those taxes on the economy, and as a result, we have fewer resources for

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addressing all of our state's needs, both public and private.

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One of the most shocking things that I think that I found when doing this research is what's

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behind all this? Who's at fault here? One of the things that I was most shocked about

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is the views of economists on all of these issues about taxes and spending and government

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Involvement in the Economy, I would have thought that they would have been sympathetic to things like deregulation and things like privatization and would not be sympathetic towards greater taxes, but what I found from surveys is that this is not the case and I guess I shouldn't have been that surprised because most government, excuse me, most economists work for government.

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In the survey of economists and the general public, for example, when asked are taxes too high, economists said no, the general public overwhelmingly said yes.

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When asked are big deficits a problem, the general public thought it was a major problem, economists only considered it a minor problem.

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Is government spending on things like foreign aid, war, foreign expenditures a big problem?

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The general public considered it a major problem. Economists didn't consider it a problem at

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all. In terms of welfare spending, the general public thought it was a bad thing. Economists

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thought we didn't spend enough. And of course, this is just a general survey of a sample

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National of Economists, but Nationwide, yeah.

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And in terms of government regulation, the general public thought it was a major problem.

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The economists thought it was a minor problem with specific difficulties.

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When asked about tax cuts, the general public thought in general that it was a good thing,

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But economists were basically indifferent on that issue.

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It didn't make much of a difference.

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Asked about bureaucratic trade agreements like NAFTA and GATT, all that kind of thing.

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The general public said that yes, this did have some problems where economists thought

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it was unambiguously a good thing.

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So in terms of advocating policy change and policy reform, I'm afraid that the economics

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profession in general really doesn't provide much support for some of the arguments that

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I've made here today, which are that Alabama is not a low tax state, that the state of

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Alabama's government is actually quite large compared to the rest of the region, and that

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The problems in state government in Alabama can be fairly easily identified and that is

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that we spend way too much on labor and that in terms of education that problem is very

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well identified and that there are some readily available, readily adaptable solutions to

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And the problems of public education in the state of Alabama, which would basically mean

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removing state control from public education and allowing local districts, local groupings

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to decide public education taxes, expenditures, policies for themselves.

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Okay, and that's about it.

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So at this point, usually the seminar, you know, you're supposed to talk about 30 minutes roughly speaking, and then we have some time for questions and discussion, debate, confrontation, brawling, and eating your lunch, and all that kind of stuff.

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I think I remember seeing that. Thomas, you know about education in Switzerland? My general impression is that it's pretty good.

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I would think that spending has better results here.

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But you know, that's the thing about Switzerland is that most of the functions of government in Switzerland are much more controlled at the local level.

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And, you know, they have those local governing units that are very independent.

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As a matter of fact, they can decide, I think they can even decide to join other countries.

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So if they didn't like what Switzerland was imposing on them, they could join France,

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although that might be a little dangerous too, or Germany or Italy or Austria or whatever.

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So in terms of the solutions that I was looking at in public education,

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where a big majority of our money is spent here in Alabama,

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They tend to do exactly the types of things that make the public sector maybe not perform

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efficiently or optimally or fairly or anything like that, but a whole lot better than when

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it is centrally controlled at the state level and then the federal level on top of that.

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They're very decentralized, they have a lot of public input into their governmental decision-making

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Allocation Process and their public resource allocation process.

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And so I would not be surprised that they're spending those greater resources.

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Of course it's a fairly wealthy country too.

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The more economic growth, one of the things that I found in literature is the more economic

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growth you have, the more education is both demanded and supplied.

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The wealthier you become, the more you want education for your children, and so a free

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market economy is very important for that.

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You have more economic growth, you have people wanting more education, and in a free market

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economy when you have opportunities, you also have, you know, from the student side of it,

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you have them thinking, well, there's all these opportunities out there.

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If I become highly educated, if I get some good degrees behind me, then I have a lot

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of opportunity and a lot of in the economy.

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So I don't know a lot of the specifics, but that's my general impression of what I have

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seen.

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Jeff.

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Most of your figures run from 1999. Since that time, at the federal level, in case you've seen the remarkable collapse in the federal system, the first time in the last 50 years, there has been a very dramatic decline in the revenues collected by the federal government.

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Well I do have figures up to 2002 and those figures indicate that state revenues of all sorts are growing pretty much along the same path that they were growing during the boom years.

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The federal government's revenue structure is, of course, a little different than the

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state's.

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We rely on sales tax, the income tax, property taxes, and of course in Alabama, lots of fees

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and excises and things of that nature, and there really hasn't been much slowdown in

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revenues in the state of Alabama.

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I think my impression is that Alabama is somewhat unique compared to other states and different than the federal government.

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For example, we don't get a lot of revenue from capital gains taxes and things of that nature compared to other states.

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We're separated from Wall Street, so to speak.

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We're also a resource-based economy. Forestry is very important, agricultural products is very important, that's what Auburn is about, basically, is forestry, agriculture, all those kind of things, as well as coal and oil and various other things, and those industries should be experiencing gains.

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So if you're a forest owner and the price of wood is up, you should be getting more money, the state's going to be getting more money as a result of that.

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If you're growing cotton and the price of cotton is up, you're making more money, the state makes more money.

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That's one thing I, you know, it always distracts me about this debate.

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Do we have enough taxes? Well, the state of Alabama's taxes are almost all in percentage terms.

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So if our income grows, if the economy grows, if we have more people earning more money, the state gets a percentage of everything we make.

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They're kind of like the mafia. They get their percentage off of everything that we get.

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And there's a lot of industries in Alabama which I would think, based on looking at the cotton price, oil prices, coal prices, forest product prices,

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which are double what they were a couple years ago that they should all be making more money and that the state, you know, should be having plenty of increased flow of revenues into their coffers.

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And I think there has been a couple of surprises where the finance director in Montgomery has said, well, things aren't really as bad as we thought they were going to be.

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I know absolutely nothing about the educational system of Japan and France, although I have

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Well, I've heard that both are good.

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You know, there's a cultural issue, just in general terms.

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I mean, there are these nations that have more centralized systems,

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but they also perhaps sell some better foundations.

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What would you say that this advocate of higher taxes and allocations

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could become like Japan or something?

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Well, there's a lot of arguments that you could raise,

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One of which I have done where more money has not resulted in improved performance and some people would say it's resulted in poorer performance.

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I'd also like to look at the French and Japanese systems. I mean they may be nationally controlled, but without a lot of the layers of control that we have in the United States.

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We have the federal layer and we have the state layer and the county and the local district and so we have multiple layers and what I would like to see is not only elimination of those layers but the local control.

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And these national programs may not have as much regulation that filters down simply because they have to apply to the whole country.

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So that they can't do all of the details of education at the national level precisely because they are controlling everything at the national level.

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and therefore they leave more room of operations at the local level.

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But that is just a guess.

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I can't say anything for France or Japan, but a lot of TVEK work is in Tanzania.

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And we've had many discussions about the differences in the education system.

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Tanzania has a completely centrally controlled German education system.

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But there's only one left, the Federal Reserve. They set the standards. They have the national test for all students is done at the same time.

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You know that on this day, at this hour, every student in the country is taking the same test with the same questions.

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And they're all graded at the Capitol by the same standard.

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The standard, and so one of the things they have going for them is that they have this standard meter stick.

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And so, you know, but because they don't all have all the extra levels, and they don't have the money to put into the system.

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And he said that quite often they had, they had teachers, because all the teachers are sent out from the central government.

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Gito told me that in France that most students actually attend private schools and that to

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get into higher education in France is very competitive so they have a very different

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System in the United States where I think he said the majority of students go to private

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schools and the number of slots to get into the public universities is very small so it's

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very competitive to get in.

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In contrast to our system where only a minority go to private schools and there's basically

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Plenty of spaces in higher education for virtually anybody who wants to go.

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The world has changed in education without the approval of the Alabama Education Association.

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That really is in the state government without their approval.

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And so even in countries where the firms were not state-owned, the countries that did practice labor management didn't do too well.

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and I think that, I look at the educational hierarchy and at times I think the whole purpose of education is to provide summer employment in places like Auburn for educational families because what they need to be certified is higher and higher degrees in education and so they come back here summer after summer to get more relevant training so that they qualify for it.

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for Higher and Higher Pay, and our teachers, you know, on the basis of the amount of years of education are amazingly competent,

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and they know very little about what they should be teaching.

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And I think that because they're so anti-immolation that we have nonsense that goes on in our educational system.

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I guess it was George Will who said that the old three R's of education reading, writing, and arithmetic have been replaced by the modern three R's, what race, reproduction, and recycling.

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My daughter knows a lot about recycling, she's in the third grade, and I'm afraid that she knows a lot about reproduction too, although we don't talk about things like that.

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How would you feel if we passed one law in this state and said, from this point on, state funded schools will not hire anyone with a degree in education?

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I'm sorry if I'm stepping on any toes here, but the education schools notoriously attract a week of students,

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And somehow we expect students who have never really been very interested in academics to create a curriculum environment where that type of thing is emphasized in supply.

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I think it's a symptom of the problem and I think what you said at the beginning is more of the problem and that is that state government is basically controlled by the teacher's union in the state of Alabama and that's not surprising given the fact that there's this huge amount of resources in higher education, two-year schools and K through 12

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Office was exactly how well the Teachers Union controlled state government. I usually wasn't

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allowed out of my office very often, but a couple times they brought me over to the legislature

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while it was in session. One time it was for, well I was over there several times, but one

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time in particular it was for a committee meeting and another time it was for an open

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session of the legislature and the fellow from the governor's office who was making

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sure I didn't get in any trouble pointed out in the committee meeting and in the legislature

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that Paul Hubbard was sitting, you know, he's sitting right down there and Paul Hubbard

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is the union boss for the teachers union and the committee chairman, you know, they would

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Paul Hubbard was basically directing this budget committee in one case, and then the legislature in general, with little nods of his head, just like a little puppeteer.

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And so, you know, so they get laws passed that require, you know, greater degrees for

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greater salaries and, you know, and protect jobs against competition from people who are

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good teachers but don't meet certain qualifications, don't have certain pieces of paper, people

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People who would be willing to work for less. That's a big point is that there's a lot

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of labor out there that's available. They talk about not having enough money for this

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type of teacher or that type of teacher. A lot of schools don't even need those type

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of teachers. They might need just a part-time person who comes in once a week or in the

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The Union rules don't allow that kind of thing. They need full-time, fully paid, permanent, tenured people in there that aren't really subject to controls, constraints, pressures, competition, review, and all that kind of stuff.

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So, I think it's the union and the money that is the cause in education programs like

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we have, are the symptom or the end result.

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I think Texas has made some steps in that direction to eliminate the power of the teachers'

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union.

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I don't know that they made money. They don't need a teaching certificate, at least for a few years or something.

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They probably need a provisional certification badge. They'll give you a provisional certification that's good for, I'm assuming, here.

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There are never as strong expectancies as they are here in Alabama. For many years they've had the option to.

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I think in Texas, the exemption to get that preliminary status, they give you a long enough

403
00:55:34.020 --> 00:55:40.420
time so that if you did get the job, you had several years to take the courses on a part-time

404
00:55:40.420 --> 00:55:48.380
to get certified, whereas in Alabama, they allow it, but they don't really permit you

405
00:55:48.380 --> 00:55:58.620
enough time to get those qualifications, and of course you would think that you get a provisional

406
00:55:58.620 --> 00:56:04.980
status, you go into the classroom, you teach, you perform well, you wouldn't need any other

407
00:56:04.980 --> 00:56:11.380
sort of certification or any other sort of credential or degree or whatever, but all

408
00:56:11.380 --> 00:56:16.700
of those provisions in most states require, it's just in Alabama, they're very strict

409
00:56:16.700 --> 00:56:23.340
and they are also, they just don't give you enough time, so school districts aren't really

410
00:56:23.340 --> 00:56:28.340
looking to hire people that way, they only use that for a stop gap measure.

411
00:56:28.340 --> 00:56:51.340
Because of the union control, Hayek is facing, I think, entirely on the basis of seniority and educational change, and that's a standard union position.

412
00:56:51.340 --> 00:57:01.340
and I think it has, you know, obvious effects, I mean, you get ahead by getting advanced degrees in education,

413
00:57:01.340 --> 00:57:07.340
it could be getting advanced degrees in education, and doing a good job in the classroom is not that easy,

414
00:57:07.340 --> 00:57:11.340
and I'm surprised people respond in centers.

415
00:57:11.340 --> 00:57:20.580
Well, you know, I think that this issue that we dealt with here today is really the most

416
00:57:20.580 --> 00:57:26.100
important issue in the state of Alabama as far as government is concerned. And I think

417
00:57:26.100 --> 00:57:31.500
that we have a great solution. I think that, you know, if we could really have private

418
00:57:31.500 --> 00:57:36.420
schooling and eliminate taxes in the state of Alabama, that this could be an economic

419
00:57:36.420 --> 00:57:44.420
is a miracle of unprecedented proportions given Alabama's resources.

420
00:57:44.420 --> 00:57:51.420
But another problem is people's ideology and people's thought processes in this state.

421
00:57:51.420 --> 00:57:57.420
A fellow traveler of the Austrian School Investment Advisor, Jimmy Rogers,

422
00:57:57.420 --> 00:58:03.420
who's from the state of Alabama and went to Auburn and has come back and spoke at Auburn several times,

423
00:58:03.420 --> 00:58:10.540
was an editorial a couple of years ago where he suggested very simply outlining a lot of

424
00:58:10.540 --> 00:58:15.540
the problems that we discussed in here. He said, well one thing we could do that would

425
00:58:15.540 --> 00:58:25.980
immediately and dramatically have a tremendous impact on Alabama and its ability to get foreign

426
00:58:25.980 --> 00:58:32.860
German investment into the state, specifically German investment into the state, would be

427
00:58:32.860 --> 00:58:39.860
to eliminate high school football and mandate that every student in the state of Alabama

428
00:58:43.220 --> 00:58:50.220
learn German. I'm assuming that other languages were possible, but he thought German was the

429
00:58:50.220 --> 00:58:55.860
is the one that everybody should learn and of course you know everybody recognizes immediately

430
00:58:55.860 --> 00:59:02.100
that well if we did that yeah I mean students if we got rid of all the extracurricular activities

431
00:59:02.100 --> 00:59:06.860
and started saying you must have a foreign language that the students of Alabama would

432
00:59:06.860 --> 00:59:15.260
be get much better results would be much more it would be a tremendous draw but the majority

433
00:59:15.260 --> 00:59:20.140
Many people that were surveyed said, no, we don't, that may work, but we don't want that

434
00:59:20.140 --> 00:59:23.140
kind of solution because football is too important.

435
00:59:23.140 --> 00:59:24.140
Yes, John.

436
00:59:24.140 --> 00:59:26.140
I can't work, can you?

437
00:59:26.140 --> 00:59:30.140
I'm very confident about the students who are illiterate, just two on it.

438
00:59:34.140 --> 00:59:36.140
Yes, John?

439
00:59:36.140 --> 00:59:42.140
You know the audience kind of way, when you get your answer, you'll have to go through the lab worker.

440
00:59:42.140 --> 00:59:50.140
Taking the lab worker as a gift, and whenever I would be approached by these Alabama RIS folks and Republicans,

441
00:59:50.140 --> 00:59:57.260
all these advocates of big government, they say that they want higher taxes.

442
00:59:57.260 --> 01:00:02.500
The terrible Alabama would be an even more progressive tax system than Alabama.

443
01:00:02.500 --> 01:00:05.300
And I would throw out the usual reply to that.

444
01:00:05.300 --> 01:00:12.700
The top 50% income owners in the state pay 96% of the taxes.

445
01:00:12.700 --> 01:00:15.480
How much more progressive do you want?

446
01:00:15.480 --> 01:00:17.480
and of course, then the Alabama-Rise Post,

447
01:00:17.480 --> 01:00:19.480
and then the St. Patrick's Post,

448
01:00:19.480 --> 01:00:21.480
and then the Roosevelt Post,

449
01:00:21.480 --> 01:00:23.480
and the Roosevelt, and the Roosevelt Post.

450
01:00:23.480 --> 01:00:25.480
Isn't that pretty progressive?

451
01:00:25.480 --> 01:00:28.480
Well, they knew it was going to be on map in the first place.

452
01:00:28.480 --> 01:00:30.480
So, give it a laugh for her,

453
01:00:30.480 --> 01:00:32.480
but here's a specific question to you.

454
01:00:32.480 --> 01:00:34.480
Can you make the argument,

455
01:00:34.480 --> 01:00:36.480
especially given the day that you're given,

456
01:00:36.480 --> 01:00:39.480
that taxes were too high simply in the sense that

457
01:00:39.480 --> 01:00:43.480
if you made the taxes more uniform and less restrictive,

458
01:00:43.480 --> 01:01:12.980
Well, they care about every dollar of revenue, believe me, you know. That's a, I think that's a tough one. It would be a tough sell.

459
01:01:12.980 --> 01:01:20.900
Well, the one thing that you can note about this fairness issue in the income tax is that

460
01:01:20.900 --> 01:01:24.680
in Alabama, they set up the income tax during the Great Depression.

461
01:01:24.680 --> 01:01:31.120
It was meant to hit just the wealthy, but they never indexed the tax code.

462
01:01:31.120 --> 01:01:39.380
If we index the tax code to inflation over time, only about 15% of Alabamians will be

463
01:01:39.380 --> 01:01:49.420
Paying the Income Tax and just about everybody who's got a job. So you better go back and

464
01:01:49.420 --> 01:01:58.300
do your taxes, Joe. We are, unfortunately we are out of time and we do close right at

465
01:01:58.300 --> 01:02:02.740
one o'clock but we can, you know, you feel free to hang around and discuss this further

466
01:02:02.740 --> 01:02:09.100
and we do need to let probably a few people get back to jobs and classes and things like

467
01:02:09.100 --> 01:02:14.100
We will be meeting again next week on Thursday and I hope to see everybody here and bring a friend.