Is Laffey vs. Chafee Really a Battle Between Visionary Principles & a Reactionary Establishment? Unfortunately Not.

There are numerous aspects of Steve Laffey's personal life history that many of us can relate to and all of us can respect. He is a living embodiment of the American Dream, achieving great things through the liberty found in America combined with getting a great education and then working hard.

If you read his announcement speech from last week, how can anyone not respond favorably to his working numerous jobs as a kid, earning a scholarship to a fine college like Bowdoin and becoming the first member of his family to go to college, attending a great business school at Harvard, and working his way up to be President of Morgan Keegan while still in his 30's? All in all, it is a wonderful human interest story.

No less impressive is what he has started to accomplish in Cranston. He took a city on the verge of bankruptcy and led a meaningful change effort by publicly telling the truth about numerous independently verifiable problems, such as the crossing guard fiasco. He did step on the toes of some powerful interest groups and helped elevate those issues to statewide visibility. He was bold and many of us have admired his actions.

Now, I previously wrote why I think so little of Senator Chafee and the state Republican party. As a Republican myself, it would be a kind understatement to say I find many of the party's leadership and their actions to be unimaginative and disappointing. I find it easy to respect a principled liberal, even if I thoroughly disagree with their policy preferences. What I don't respect is vacillation and that is Senator Chafee's trademark on a number of key issues.

That posting also stated that I thought it was a mistake - for different reasons than the Establishment has pushed - for Laffey to run against Chafee for the U.S. Senate seat. I thought it was a mistake for two reasons.

First, while he has started a turnaround in Cranston, the job is not complete. As a business executive myself who has led 6 successful turnarounds over the years, I believe the turnaround in Cranston will only be complete when there are significant and more permanent structural changes to Cranston's financial future. Laffey deserves huge credit for stabilizing a wildly unstable mess and saving the town from bankruptcy. But can anyone say the turnaround is truly complete? Are the public sector union contracts across all aspects of Cranston materially different from when he first took office - so the past cannot repeat itself when some spineless politicians take his place? Are those contracts sufficiently different now so that the initial property tax increases he imposed can be rolled back? I don't think so and that is why I thought one serious option he could have acted on was to stay and finish the turnaround. At the same time, I can also understand why his ambition might drive him to think bigger than Cranston.

Second, he could have thought bigger than Cranston by running for Treasurer. That would have played to his work experience and allowed him to focus on the brewing public pension financial disaster at both the state and national level. I lived in California when Jerry Brown became Secretary of State in the post-Watergate world of 1974 and turned what had been a sleepy position into one with national visibility. He was governor four years later in 1978 and a presidential candidate by 1980.

That being said, now that Laffey has opted for the U.S. Senate race, I read his announcement speech with great anticipation.

At first I was not disappointed. His speech hit a number of highly relevant and hot issues - such as outrageous public sector union demands, corporate welfare for the sugar industry, the excessive highway and energy bills, and a complete lack of spending restraint in general - that I have written about over the last year and are either linked together in a recent posting entitled Rancid Pork Leaves a Bad Taste in Your Mouth or contained in postings entitled Has the GOP Lost Its Soul? and Economics 101: Never Underestimate the Incentive Power of Marginal Tax Cuts.

We do need a more vigorous public debate about these issues, all of which center on the core question of what role government should play in our society - including how the size of government grows ever larger and, therefore, more subject to capture by special interests due to its fundamentally misguided structural incentives.

And I thought the Laffey campaign slogan of "The smallest state in the Union will have the strongest voice in Washington" was wonderfully clever.

But I found key portions of his speech to be troubling. Laffey's speech contains words that no informed or business savvy person would say - unless he was pandering for votes. That possibility is most disappointing because it suggests opportunism - not principled behavior - is driving the Laffey campaign.

[Full disclosure: I have worked in the healthcare industry since 1983, spending most of my time since 1985 working in venture capital-financed startup companies. I worked briefly in the energy industry during 1981-1983, with a 1981 summer job in Saudi Arabia working for Aramco and then worked for ARCO in the USA during the subsequent two years.]

Here are the healthcare-related words from Laffey's speech that bothered me:

The senior citizens of Rhode Island are paying twice the price for prescription drugs that seniors pay in Canada for the exact same prescriptions. And yet, our seniors are banned from buying cheaper medicine in Canada and Medicare is prohibited from negotiating for cheaper drugs through group buying. Why? Because the big drug companies have a financial strangehold on the politicians in Washington keeping prices high...while 2/3 of our seniors, like my parents, cannot afford their medicine because they depend on social security checks as their primary source of income...

In 2006, we need to set our own concrete goals for progressive ideas to come to fruition...ideas like offering Americans lower prices on prescription drugs as low as those offered to the rest of the world...

Someone needs to stand up and fight when the drug companies won't let our seniors buy their prescriptions from Canada at a discount price...

Those words are nothing less than pure demagoguery. See this separate posting for specific counter arguments.

Here are the energy-related comments from Laffey's speech that bothered me:

Look at what's happening with gas prices and energy policy. The car companies have the technology today to make cars with double the gas mileage, but they won't do it. So America stays dependent on Saudi Arabian oil, with tragic consequences when we don't have to. We have the technology to design alternative energy solutions today. What we lack is the political will to do it...

Our lack of an energy policy today is a crisis on par with these challeges America has faced over the last seven decades...

Someone needs to stand up and fight when the oil companies get huge subsidies while we do nothing to reduce our dependence on foreign oil and we're stuck paying more than $3.00 for a gallon of gasoline...

See this separate posting for specific comments on energy issues.

Laffey's comments fail to address the complete set of issues that matter to working people in Rhode Island in a balanced, factual manner.

Here is my point of view:

Corporate welfare programs lobbied for by Big Business are nothing more than a hidden tax on working people that benefits only the few and powerful. Such taxes are unfair and unjust. But, as bad as they are, it would be unreasonable to focus just on the corporate welfare programs.

The ever-increasing regulatory burdens imposed by Big Government are at least as big a problem as they perpetuate the power of unelected and unaccountable bureaucrats who impose unilateral costs on companies. Such burdens then show up as some combination of higher product prices to consumers or lost jobs due to the stifling of private sector innovation - both of which represent additional hidden taxes paid for by working people. Such taxes are also unfair and unjust.

The Establishment, consisting of Big Business and Big Government, has an incentive to propagate the growth of government. Why? Because such growth leads to more assets to tap into or control for their benefit. It provides the Big Business lobby with an incentive to pursue more corporate welfare programs and the Big Government lobby with an incentive to pursue more government regulation of both our economic and personal lives. All of which leaves the working people of America with less freedom: less financial freedom due to higher taxes and higher prices plus fewer opportunities to live the American Dream due to lower economic growth.

Unfortunately, Laffey's words have confirmed that the Laffey vs. Chafee race is not a battle between Principles and the Establishment. With little use for the philosophically unmoored Establishment and its utilitarian focus on maintaining power, my greatest wish continues to be for a leader who, driven by empirically-based principles, stands up and tells the truth. Laffey's comments, particularly about the drug industry, don't tell the truth and amount to nothing more than an unprincipled pandering for votes. He is a smart enough man to know better and that means his ego is not under control. His words, if implemented, would lead to nothing less than a long-term policy fiasco.

But, even more importantly, this isn't just about Laffey and his individual candidacy. My larger concern is that the failing status quo of the Establishment will become even more entrenched should they successfully swat down his candidacy - and his words have given them further ammunition to do just that. That further entrenchment will only magnify over time the hidden costs paid for solely by the working people of Rhode Island, adversely impacting the ability of many to realize the American Dream.

So all of us are still waiting for the first U.S. Senate candidate - from either party - to show the will to stand up for the hard-working taxpayers across the state by truly challenging the status quo of the Establishment.