I was struck recently by a small article in the Wall Street Journal by Russell Gold highlighting a turning point in the underlying structure of the Texas economy. Gold reports that, based on current modeling by the Comptroller of Public Accounts, for the first time since the Spindletop gusher over one hundred years ago, higher oil prices are not only not a positive for the economic prospects for the State, they represent a negative. The positives that flow from the energy producers are now outweighed by the drag on consumer and business spending and investment and the higher cost of the refinery feedstocks that produce value-added in manufacturing, so that, according to the Comptroller, high energy prices are now the main threat to Texas’s economic growth . We wanted economic diversification to cushion the devastation of the energy-driven bust of the 1980’s and we now have it, to the extent that the State’s economy is no longer counter-cyclical with the nation as a whole. In fact, according to the Federal Reserve Bank of Dallas, the energy extraction industry now accounts for only 6% of gross state product, compared to 20% in 1981, and has been overtaken by the trade and transportation sector in terms of total employment.

We’ve talked about what this hinge point would mean for Texas for over twenty years, and now the critical implications of this dialogue should be in full view—we must restructure our public education system so that all our children have an opportunity to be competitive in a knowledge-based economy and we must realign our government spending and revenue streams to conform to the new economic realities. Both of these outdated systems still reflect the commodity/natural resource-based and capital-intensive structures of the old Texas, and both are continually defended from structural reform by the vested interests of the status quo and the perennial fight over who “wins” and who “loses” as a result of change. This battle is currently on stage in Austin in the debates over legislation proposing significant new reform in public education as well as major changes in education finance and taxation. The outcome will have huge implications for the economic viability of Texas for many years to come, not to mention the welfare of our children.

In the tragedy that has played out over the past month in the Terri Schiavo case, one has to look very hard to find any redeeming legacy. However, there is one possible legacy that may assure that this woman will not have died in vain, and that is a heightened sense that there is something truly amiss in the constitutional confusion between the legislative and judicial branches at the state and federal level and the process by which we resolve questions of life and death as well as other moral issues. Let’s set aside the true facts of this case, which are known only to a few (possibly excluding even the trial judge in the case), and focus instead on the seat of responsibility for its resolution. In the absence of specific written instructions from the victim, to the extent that government has any role at all in personal judgments on moral values, it is the legislative branch, Florida’s in this case, expressing the consent and will of the citizens, that is the proper venue. In the scheme of our founding principles, no court should have the jurisdiction or authority to substitute its values for this consensus. Therefore, aside from the trial judge’s complete reliance on the representations of a “husband” with glaring conflicts of interest, the biggest mistake here was the ruling of the Florida Supreme Court that the will of the people in the form of “Terri’s Law” authorizing the replacement of her feeding tube is unconstitutional.

This case provides clear evidence of the point to which the advent of the “procedural republic”, so well described by Michael Sandel in his book, Democracy’s Discontent, has brought us over the past half century—process trumps civic virtue in almost complete contravention of the civic republic we once were. We have so contorted our legal system that it has become almost impossible to overrule the will of the judiciary in the absence of egregious procedural errors or legal malpractice. Common sense, as exercised by the norms of the civic republic expressed through its elected representatives and executive, is more often than not set aside in favor of “due process” and the value judgments it produces. Ask yourself, what kind of regime denies a mother the right to give her starving child food and water? It is true that we are a nation of laws, not of men, but “erring on the side of life”, as the Bush brothers have so pointedly and rightly preferred in this case, requires moral judgments that are outside the purview of legal procedure and belong in the political arena. And I can’t help noting the unusual political configurations and strange bedfellows this case has produced, or wondering when was the last time I found myself on the same side of an issue with Ralph Nader and Jesse Jackson!

We are a society increasingly possessed with power struggles over the issues of life and death, intensely personal issues that also have enormous implications for the health of our polity. Make no mistake: we know the definitions at stake here—our science knows when human life begins and when it ends. The question is whether or not the Schiavo debacle will awaken us to the damage that has already been done by the procedural republic and the quest for unfettered personal autonomy unencumbered by a moral order and a duty to life.

You might want to mark March 17, 2005 as the end of an era, the day that the spirit of the Contract With America finally died. On that day, the Senate balked at the lightest touching of entitlements by rejecting President Bush’s modest cuts in the runaway growth of Medicaid increases over the next five years. This is a body with 55-45 control by Republicans, supposedly empowered for fiscal discipline and entitlement rollback by four additional seats in the last election. If there is no courage for restraint of the most out of control entitlement, how can there be hope for tackling the mother of all entitlements, Social Security and Medicare? How can there be a transformation from the “entitlement” society to President Bush’s “ownership” society if the party of the Revolution isn’t totally committed to the concept? Who speaks now for the Reagan themes, “government is too big and spends too much” and “government is not the solution to our problems, government is the problem”? In a new essay collection from the Cato Institute, The Republican Revolution, the pluses and minuses of the past ten years are spelled out. It’s a mixed bag, with welfare reform the highlight, but the recent trends are not positive—a 34% increase in non-defense discretionary spending during Bush’s first term, complete abandonment of the term limit movement, no changes to the spending bias in the budget process, and the largest new entitlement since the Great Society in the prescription drug benefit for seniors. Clearly, the comforts and prerogatives of entrenched incumbency have come to the Republican majority, but, in reviewing the collection, John Fund wonders whether the next revolution against big government might come only after Hillary Clinton’s first term as President. 

If you think health care costs are out of control, check out their comparison with college tuition–over the past twenty years, according to the Bureau of Labor Statistics, price growth of 191% for medical care and 289% for college tuition! With the growing trend in deregulation of tuition and costs among the nation’s top state-supported institutions, many blame this explosion, at least recently, on what they call this “student tax” as a way of shifting costs from stingy governments to the education consumers. Patricia Kilday Hart of Texas Monthly magazine shares this view, and feels that worthy students from moderate income families are being squeezed out of an opportunity for an excellent education at the top tier schools. Not so, says Richard Vedder in The American Enterprise, who writes that colleges and universities are increasingly like hospitals and doctors—they depend largely, directly or indirectly, on third parties for payment of their bills. So when government subsidizes low-interest student loans, it increases the demand for higher education at existing tuition levels, leading to higher prices as well as more kids going to college. This third party payment system makes the customer less sensitive to price, allowing the schools to raise prices dramatically without adverse enrollment effects.

I have previously (August 2003) suggested that we should be making bold moves toward marketizing the system, with market-based tuition as a good start, but also by spinning off entire departments and/or colleges of university systems as stand-alone schools, with certain services provided by the “parent” institution on a contract basis. Vedder has an even better idea: states should provide their support in the form of vouchers or scholarships to the students directly, which could be made both progressive and performance-based. Progressive in that the vouchers would vary inversely with family income, more to the needy than the affluent, and performance-based in that the voucher amount could be tied to student performance, more to the high achiever than the laggard. Over time, these changes would produce cost efficiencies and a much better allocation of resources based on customer preferences. (As a useful by-product, I wonder if the likes of Ward Churchill would be able to keep their jobs in such a system.)