Friday, February 18, 2011

All Earthly Rule is Overshadowed by Heaven

"Christian capitulation to secular politics--more the rule than the exception in the modern church--is nothing less than apostasy, a denial of the gospel that announces Jesus as Lord. Solomon's residence in the temple complex [described in I Kings 6 and 7] stands as a scriptural figure indicating that all earthly rule, not only Israel's, is overshadowed by heaven and a reminder that the gospel we preach is good news about a king of all kings." Peter Leithart, 1 & 2 Kings, p. 64


CWIP and Economic Justice

On Tuesday, February 15, the Utilities committee of the Missouri House of Representatives conducted a hearing on Representative Jeanie Riddle’s HB 124, a bill to allow an electrical corporation to recover from ratepayers the costs associated with early site development for certain electrical generation facilities. This is a good bill but it does not go far enough. It is a pared down version of what has been introduced in the Missouri Legislature during the past two years, a bill that would permit an electrical corporation to recover the cost of “construction work in progress,” or “CWIP,” in rates prior to the commercial operation of the an electric plant. It is a good idea to permit electric companies to recover CWIP in their rates. HB 124 should be amended to permit the recovery of CWIP and passed into law.

Perhaps a little history is in order. In 1976, the voters of Missouri passed an initiative petition that prohibited the Missouri Public Service Commission from permitting electrical companies to recover CWIP in rates. Ameren Missouri, previously Union Electric Company, proceeded to construct its Callaway I plant by borrowing the funds necessary to construct the plant. The construction of the plant took approximately a decade.

Whatever the motivations in 1976 to passing the so called anti-CWIP law, circumstances have clearly changed. During the hearing on Tuesday, all parties recognized the need for the development of nuclear power. They recognized the need for new generation facilities to provide the necessary expansion to an aging fleet of generating facilities. Concern for the devastation that cap and trade regulations will bring on the state clearly also encourages Ameren Missouri to investigate a return to nuclear power.

The primary arguments for passage of the bill were the need for new generation and the economic development the construction of a new nuclear plant will bring to the state of Missouri. HB 124 would eliminate a disincentive for an electrical corporation to build a nuclear plant. The primary argument against passage of the bill was a consumer protection concern. Permitting an electrical corporation to put costs in rates would permit the utility to obtain recovery before it had proven the project was prudent in concept and execution and prior to a point in time when completion was assured.

None of these arguments has a bearing on whether the Missouri Legislature should pass HB 124. All agree that there is a need for new electric generation. All agree that there is a need to explore nuclear generation as an option. However, electrical corporations have an obligation to construct adequate generation facilities to provide for the requirements of their customers. HB 124 would not significantly add to this incentive. Economic development claims are also of little impact on the debate. What drives the economy is the exchange of money for goods and services desired by customers. If I spend a hundred dollars on a new television or on a new camera, the transaction drives the economy to a greater or lesser extent, but both drive the economy. Ameren may spend billions on a nuclear plant or some other form of generation. Either of these expenditures will impact the economy of Missouri. An incentive toward one particular form of spending does not necessarily increase economic development. It simply dictates the winners and losers in any such economic development. About the only expenditure that does not expand the economy is a tax payment to a government, for a government does not produce goods and services. The consumer protection concern is likewise of very little consequence to this discussion. The state of Missouri already has a structure in place in the form of the Public Service Commission which is designed to guard against the consequences of a utility’s imprudence and abuse of its customers. The Public Service Commission is fully capable of disallowing imprudent costs as it did in setting rates after Ameren put its Callaway I unit in service. Finally, all of these arguments fail in that they are mercantile in their most basic philosophy. The focus on the government and what the government’s interest is misses the point entirely. Rather, the question should be how the state should execute justice in the marketplace in Missouri.

Electric companies were and are what have been referred to as natural monopolies. No one wants a dozen sets of wires running down the street to permit a dozen different companies to compete to provide electric service. Since the electric utility infrastructure is so capital intensive, common wisdom suggests that competition be limited. This common wisdom has lead over the last century to what has become known as the “regulatory compact.” Utilities submit to regulation of their service by the state in exchange for a defined exclusive service territory and the right to a regulated return on their investments. With the regulatory compact comes a subsidiary theory that regulation should be designed to take the place of competition. It is the regulation’s substitution for competition that should drive the conclusion on HB 124 and CWIP.

In a free market, the forces of supply and demand prompt the setting of prices. As supply decreases or demand increases, the value of a commodity and its uses increases. As the price increases, the price sends a signal to potential suppliers inducing them to risk additional investment in producing the commodity. The Federal Energy Regulatory Commission has recognized this principle in recent orders directing operators of wholesale electric markets to increase the caps on what suppliers can charge in the wholesale market to permit the price signals of electricity to incent additional construction.

The Missouri Public Service Commission should be permitted to take these same issues into consideration when determining the rates for an electrical utility that sells at retail. It should not be foreclosed from considering how competitive forces would impact rates. All interested parties recognize that there is a growing need for electric generation. As a result, prices should go up. In a free market place, the forces of supply and demand would permit a seller to increase its prices in order to expand its business so as to increase its production. How rates should be set to reflect the change in the market place should be left to the Public Service Commission. The Commission may do this in one of several ways, including allowing the recovery of CWIP or increasing the rate of return granted to the electrical corporation to reflect the increasing supply demand risk in the market place.

To arbitrarily deny the recovery of CWIP produces a distortion in the attempt to mirror a free marketplace. Denying an electrical corporation the option of recovering CWIP in rates forces the company to borrow the money necessary to construct the facility, causing a “pay me later” consequence. The electrical corporation is forced to incur a significant amount of debt to accomplish the construction. Not only is there a significant amount of debt, the debt is expensive due to the fact that it is extended over a significant period of time. This makes the investment more costly. The Missouri Public Service Commission, the agency designed to function as a surrogate for competition, should not be arbitrarily denied the ability to function in its proper role in setting prices as the free marketplace would do.

The comments contained in this editorial are the views of David Linton and do not necessarily reflect the views of his clients.

Monday, February 14, 2011

SJR No. 15: Removing the Shadows

State Senator Brian Nieves introduced SJR No. 15 on February 8, 2011. Representative Curtman has filed a similar bill in the Missouri House. SJR No. 15, simply stated, relates to state sovereignty. If passed by the legislature, it would set before the voters of the state of Missouri a constitutional amendment to the state constitution that would declare that Missouri would enforce its constitutional authority.

One particular provision of the resolution declares that the State of Missouri shall:

(3) Interpret the Constitution of the United States of America based on its language and the intent of the signers of the Constitution at the time of its passage. The several amendments shall be interpreted by their language and the intent of the congressional sponsor and co-sponsors of the amendment. Any interpretation of the Constitution based on an emerging awareness, penumbras or shadows of the Constitution, a theory of the Constitution being a "living, breathing document", or any interpretation that expands federal authority beyond the limited powers enumerated and delegated to the federal government, without an amendment to the Constitution, shall be deemed to exceed the limited powers enumerated and delegated to the federal government.
This provision highlights the problem with the condition of our present Constitutional jurisprudence in almost comical terms. Why should the Constitution of the state of Missouri refer to “penumbras” and “shadows?” Why should it refer to “living, breathing documents?” These terms are necessary because these are the terms used by the highest court in our land to characterize their authority.

The “penumbras” terminology comes from Justice William O. Douglas in his majority opinion in Griswold v. Connecticut, in which the court found the right of “privacy” within a penumbra of rights contained in the Bill of Rights. It was upon this right of “privacy” that the Supreme Court eventually precluded states from prohibiting abortions in the case of Roe v. Wade. The “penumbra” language in Griswold is ironic for at least two reasons. First, the finding of new rights within a penumbra of other rights is in complete contradiction to the very character of the Constitution. The authors of the Constitution repeatedly referred to the federal government as a government of limited powers. They memorialized this understanding in the Tenth Amendment by providing therein that powers not delegated were reserved to the states. Second, the Bill of Rights itself was intended as an expression of the inherent liberties of the states and of the people. With adoption of the penumbra language, the Supreme Court took the language of liberty and used it as a weapon against a state’s legitimate liberty in protecting the life of the unborn child.

A second irony is the use of the phrase “living, breathing document.” Written documents are intended to have a fixed meaning. Written documents are forms of communication and therefore instruments of relationship. For that reason, written documents are unlike human beings, in that when they become “living” and “breathing,” i.e. subject to every whim of interpretation, they simultaneously mean everything and nothing. They cease to fulfill their primary function and die. And if the written document is destroyed, the relationship is destroyed. Hence, if the U.S. Constitution becomes a living, breathing document, the nation is destroyed. To treat the Constitution as a dead letter is the only way to make the Constitution truly live and fulfill its purpose.

This concept of a living, breathing Constitution has resulted in a vessel of justice which is so overgrown with barnacles and crust that it is incapable of being maneuvered. Over the course of two hundred years, the Supreme Court has subjected the U.S. Constitution to numerous tests and qualifications. Congressional preemption of law under the Supremacy Clause of the Constitution can be implied in two types, each with its own test. The Supreme Court has identified three broad categories of activity that Congress may regulate under the Commerce Clause of the Constitution. One such category, those activities which “substantially affect” interstate commerce, has a four part consideration. The tediousness of these tests has gotten so bad that the recent opinion of Judge Roger Vinson in State of Florida v. United States Department of Health required several pages of discussion devoted to whether a person’s refusal to purchase health insurance was “activity.” The Commerce Clause of the Constitution simply allows Congress the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Does such a simple provision require a system of elaborate tests and conditions? No. The tests and conditions work to obfuscate the purpose of the Constitution. What typically happens is the various tests and conditions create the parameters under which the Congress must construct an elaborate maze of laws simply to satisfy the tests and conditions. It is time to scrape off the crust of all of these tests and conditions and start again. It is time for the Court to inquire again into the purpose of the Constitution.

Judge Vinson has highlighted and challenged our Supreme Court to reconsider one aspect of its Constitutional Jurisprudence.
I appreciate the difficult situation in which the states find themselves. It is a matter of historical fact that at the time the Constitution was drafted and ratified, the Founders did not expect that the federal government would be able to provide sizeable funding to the states and, consequently, be able to exert power over the states to the extent that it currently does. To the contrary, it was expected that the federal government would have limited sources of tax and tariff revenue, and might have to be supported by the states. This reversal of roles makes any state-federal partnership somewhat precarious given the federal government’s enormous economic advantage. Some have suggested that, in the interest of federalism, the Supreme Court should revisit and reconsider its Spending Clause cases. [Citation omitted] However, unless and until that happens, the states have little recourse to remaining the very junior partner in this partnership.
In this passage, Judge Vinson has challenged the Supreme Court to scrape off the crust from the Spending Clause and return to the clause’s original intent. I applaud the Judge.

I also applaud Senator Nieves and Representative Curtman for their initiative in introducing these bills. We saw last year that the citizens of Missouri are inclined to question and challenge the federal government’s usurpation of power in passing the Missouri Healthcare Freedom Act. Senator Nieves has heard the voice of the people and is taking the next step. If we want a strong and healthy Constitution and a strong and healthy nation, we must eliminate all of the shadows and penumbras, and we must return to the original meaning of the Constitution as the founders intended.

Monday, February 7, 2011

Education Plunder: Send the Money Back

A proposed email to our state Representatives and Senators:

Dear Senator or Representative:

I respectfully request that you support Senators Lembke, Nieves and Crowell in their efforts to return the 189 million dollars in federal education money to the federal government.

Our federal government, created to execute justice among the states and provide liberty to the people, has become the very antithesis of what it was created to be. It takes from some to give to others. This is the very definition of injustice and tyranny. What is injustice has been redefined as justice. This corruption knows no bounds. My children’s children are in debt for the lust of the federal tyrant for power and control. Their seeking after control likewise knows no bounds. There is not one scintilla of authority in the U.S. Constitution for the federal government to become involved in education. Education is the role of the family and the church. If it must fall to the state, so be it, but it is never the role of the fed. Send the tax revenue usurped for unauthorized purposes back to where it belongs and instruct the federal tyrant to reduce the crushing burden of debt on this nation. Thank you.

Wednesday, February 2, 2011

Public Education and the Public

Frederic Bastiat, in his treatise The Law, brilliantly outlined how socialism corrupts all things, including the judgments of the culture that embraces it. According to Bastiat, socialism, the imposition of law to take from some to give to others is “legal plunder.” Bastiat advises that you discover legal plunder by seeing “if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” Bastiat warns:

The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. . . . The present day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it.
This system becomes a delusion and a perversion of justice, causing a culture to confuse injustice with justice.

Bastiat brings this judgment to bear on public education:

You say: “There are persons who lack education” and you turn to the law. But the law is not, in itself, a torch of learning which shines its light abroad. The law extends over a society where some persons have knowledge and others do not; where some citizens need to learn, and others can teach. In this matter of education, the law has only two alternatives: It can permit this transaction of teaching-and-learning to operate freely and without the use of force, or it can force human wills in this matter by taking from some of them enough to pay the teachers who are appointed by government to instruct others, without charge. But in this second case, the law commits legal plunder by violating liberty and property.
It is not my purpose in this editorial to champion the elimination of the legal plunder of public education. The system is so engrained in our public consciousness that to do so would truly be quixotic. Indeed, it is engrained in the very Constitution of the state of Missouri. While it would be a worthy goal to change this system, it is a goal beyond my simple effort here. Rather, my purpose is to show how the system of legal plunder that is public education has caused a situation in which injustice is declared justice.

The Article IX, Section 1(a) of the Constitution of Missouri declares,

A general diffusion of knowledge and intelligence being essential to the preservation of the rights and liberties of the people, the general assembly shall establish and maintain free public schools for the gratuitous instruction of all persons in this state within ages not in excess of twenty-one years as prescribed by law.
Every taxpaying citizen pays for these “free public schools” through their taxes. I, as a land owner and producer of income, pay for the “gratuitous institution.” However, since I have home schooled and privately educated all three of my daughters, my children never directly benefitted from these “gratuitous institutions.” I have simply benefitted from the “general diffusion of knowledge and intelligence” within the culture. But do I not have a right to directly benefit from these “free public schools?” Should my decision to home school my children prevent my children from directly benefiting from such a “gratuitous institution?” The answer should be obvious on its face. The answer is no.

However, the actual practice is otherwise in Missouri. Extracurricular activities, such as sports, are a significant part of the free public school education, and we see home schooled and privately schooled children in Missouri systematically denied access to these programs. Why is that? Why is it you must be a student registered at the school to take part in the sports programs? Is it because, in order to access part of the “gratuitous institution,” you must take the whole of the “gratuitous institution?” Is this justice or is this discrimination? Is there something in home schooling or the private schooling that disqualifies a child from the “free” education of the state that I pay for but do not completely engage? If the system is truly “gratuitous” should it not be gratuitous to those who seek to take a part but not the whole? It appears that what was originally designed as a “gratuitous institution” has become an exclusive club to which others may not apply.

We have seen in the last decade that the state of Florida has provided some justice within this system of legal plunder. Tim Tebow, the 2007 Heisman Trophy winner from the University of Florida and NFL quarterback of the Denver Broncos, was home schooled during high school. Tebow had the opportunity to play football, at least in part, because Florida permitted him to participate in the public school football program at Nease High School in Ponte Vedra Beach, Florida. Tebow has become a spokesman and an excellent example of the value of home schooling and the justice provided in the state of Florida.

Other states have undertaken to rectify injustice within their states. Wikipedia reports that both Alabama and Kentucky have bills, referred to as the “Tim Tebow Bill” which would grant access now denied to home school athletes to play for their local high school teams just as Tebow did in Florida. Missouri has a similar bill that has been introduced by state Senator Jim Lembke. SB 37 is known as the “Students First Interscholastic Athletics Act.” SB 37 would provide equal access to public school sports programs to all children of high school age that meet certain health and academic qualifications, whether in public, private or home school.

This is now the third year that Senator Lembke has introduced his bill. There is no reason not to pass this bill into law. Justice requires that these “free” “gratuitous” institutions grant access to their programs to all citizens of the state without regard to the source of their other academic education.