Ohio Issue 1 assesment, short version.
So last night I put together a lengthy critique of Ohio Issue 1, which voters will pass judgment on this Tuesday. But I finished it at 4 in the morning while my new little son was keeping me awake, and I'm sure if I read it now it won't make half as much sense as it seemed to at the time. So here's the short form of it, and if I have time I'll edit the longer one and post it tomorrow for anyone who's interested in a closer analysis of it. Or maybe I'll forget about it till Wednesday, at which point it will be moot. Check back and see! Anyhow:

Short Short Version.
Issue 1 is bad. Bad bad bad bad bad.

Now for the details. You've probably seen the really vague TV spots with the Miller High Life guy doing the voiceover and promising up to 30,000 new jobs in exchange for whatever Issue 1 would do to us, which the ad doesn't exactly specify. So, naturally curious, I looked up the Issue language at the Lucas County Board of Elections Issues page. As I read it there are three good reasons to vote no on Issue 1:

1. It's a Constitutional Amendment;
2. It increases spending in a particularly dangerous way;
3. Contrary to what the ads say, it will result in higher taxes.

1. The constitutional amendment worries me. The constitution, whether Federal or State, is the source from which all other government authority is deduced. It's my contention that the government already has far too much in the way of authority, and I'm instinctively resistant to constitutional amendments which give it any more. And I'm forced to wonder, exactly what presently unconstitutional actions is the government contemplating? Read on and see.

2. Read the second point in the Issue, and note particularly the part which talks about authorizing state government to issue funds for "capital formation." What exactly is that?

Capital is a company's funding base--money it has and doesn't have to pay back, and can use for investing in equipment and new product lines and so forth. It fundamentally is company ownership--common stock, for example. Or non-voting stock, or a material ownership in a limited partnership. But what this means is that the State is asking permission to act as a venture capitalist, which results in--quite literally, and without overstating it--state-owned businesses. Certain formerly existing national acronyms who now go by the name "Russians" used to do that all the time, and I don't recall it working really well for them.

Now, as a practical matter, the State of Ohio isn't going to go nationalizing any companies, or any silly things like that. But as a part owner the state could have some say in how the company is managed. And, even with non-voting ownership, the state could cause stock prices and company valuations to fluctuate at their mere whim simply by buying or selling huge stakes in any company they wished to reward or punish. It's a horrible idea.

Suppose a really deserving company had some state funds showered on them in return for partial ownership, and that company's valuation went up. Suppose further that some governor or state senator's sister-in-law owned part of that stock themselves, and then benefitted from the increased valuation the state ownership resulted in. Even if it was innocent, there's a tremendous appearance of conflict of interest, and the charges and countercharges of this sort of thing would be perpetual--and some would likely be correct. The amount of oversight required to attempt to mitigate this threat would be prohibitive, and ultimately not effective anyway.

Allowing the government to buy stakes in companies allows too much scope for mischief. Remember: the system itself has to be the solution, and we cannot rely on the skills and integrity of whomever happens to hold office at a given point.

3. Finally, this is a bond issue. The state issues Ohio notes, gets the cash for them, and buys things with that cash now. The Federal government does this all the time via a process you're probably familiar with: the notes are called Treasuries, and the amounts financed in this manner are referred to collectively as the Federal Deficit. And as with the Federal Deficit, the Ohio Deficit will ultimately have to be paid back to the lenders, either through higher taxes or cuts to future services. Cutting spending is hard for the government, for a variety of reasons; most of which are fundamentally the fault of the citizenry, who have convinced ourselves that we have some kind of entitlement to government money, and vote accordingly. How will the interest and principal be repaid on these bonds? Do you really believe the government will cut spending to make room in the budget for repayment of the bonds, or will we ultimately have to have a tax increase to pay for them?

This seems as good a place as any to trot out my biweekly reference to Alexander Tyler, an 18th-century Scottish historian. He very aptly commented on this exact phenomenon, in the following well-known quote:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

In this country, State government collapses result not in dictatorship but in Federal bailouts. I really don't want the Federales running my fine state either.

Vote no on Ohio Issue 1, and slap down this silly nonsense before our Republican (?) state government does something really permanently damaging to us.

JKS.