The MC: The Mackinac Center Blog

Labor Reform Wins Big on Election Day

Mackinac experts discuss results in Wall Street Journal, others

While all eyes were on who would win the presidency on Election Day, something interesting and perhaps unexpected was happening down-ballot: union members were defying union leadership and voting for candidates and measures likely to increase employee freedom in the future.

Mackinac Center’s F. Vincent Vernuccio, Chantal Lovell and Jarrett Skorup wrote about the opportunity for pro-worker reform in a series of op-eds published by national news outlets following the election. In The Wall Street Journal,Vernuccio and Lovell explained that shifts in the party makeup of legislatures and executive branches could result in right-to-work legislation passing in Missouri, New Hampshire and Kentucky.

The fight is far from over, but the country is moving away from union dominance. Since 2012, four states have enacted right to work, and more may be on the way. Those who support workers’ freedom have reason for optimism—and vigilance.

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Reform could spread beyond those states when the existing Supreme Court vacancy is filled, as the pair wrote in an op-ed for the Washington Examiner.

With one seat on the Supreme Court already vacant and more expected to open up in the next few years as aging justices retire, President-elect Trump — already dubbed the "Nominator-in-Chief" — has great power to shape the future of public sector unionization. If Trump nominates one of the roughly two dozen people he pledged to consider to replace the late Justice Antonin Scalia, it's likely public employees nationwide would earn freedom from being forced to support politics they disagree with.

All this momentum suggests a widening rift between union members and leadership. In this election, members rejected the preferred candidates and positions of their unions, Vernuccio and Skorup detailed in The Washington Times.

Unfortunately union leadership, through their political giving, endorsements and support, have discounted members who disagree with them. Right-to-work can provide a remedy. If union leadership does not listen to their members, their membership can simply stop paying. Instead of going “all in” on one political party, union leaders should focus on what they are supposed to do in the first place: represent the interests of their members.

Read the full op-ed in The Wall Street Journal.

Read the full op-ed in the Washington Examiner.

Read the full op-ed in The Washington Times.

Read an article about labor reform and the election at Inside Sources.

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Michigan Employers Create Thousands of Jobs without the Aid of Politicians

Economic development programs just transfer money to a lucky handful

The public expects politicians at all levels to create jobs. But this is a tough thing to demonstrate. The decisions made by business owners to add jobs tend to be done without asking for permission from politicians.

The same goes for closing down a business or shedding jobs. And the jobs created by taxpayer-funded economic development programs — those that politicians take credit for — have a negligible impact on the large and permissionless job creation that drives Michigan’s economy.

For example, in the first three months of 2016, according to the Bureau of Labor Statistics, Michigan private sector businesses added 196,117 jobs and eliminated 179,106. That equates to adding about one job for every 18 in the state and losing one out of every 20. A similar amount of “job churn” happens each quarter.

Nevertheless, job-promising politicians are under pressure to show that they are, in fact, creating jobs, and they often don’t get credit for the job creation that happens without their help. That’s one reason why every state has an economic development apparatus, such as the Michigan Economic Development Corporation, that awards favors to a handful of select businesses.

The efforts of these economic development programs only amount to a blip when considering the total amount of job creation that happens statewide. Over the same three-month period in which Michigan companies added nearly 200,000 jobs, the MEDC announced that it had awarded support to companies to create just 425 jobs.

Not only is this less than 1 percent of all the jobs created, but these job pledges rarely materialize.

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On top of that, these special deals cost taxpayers millions of dollars — dollars that might have had larger economic impacts if spent on something else or just left in the hands of taxpayers to spend or invest themselves.

Despite this reality, some business groups are asking state lawmakers to spend even more taxpayer dollars on targeted business subsidies. But as these data show, if lawmakers want to improve the state economy, they need to look at broad-based improvements to the state’s business climate — taxes and regulations which affect a large portion of the state’s private sector, not just a lucky few.

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Voters Reject Transit Tax Proposal in Wayne County

Mackinac commentary featured in Detroit media

Voters in Wayne County rejected a ballot measure last week that would have increased their property taxes to fund an antiquated regional transit system.

Detroiters already pay the highest effective property taxes in the country, and the Regional Transit Authority millage would have raised taxes by $4.6 billion. Mackinac Center for Public Policy’s Vice President for Marketing and Communications surmised in a recent Crain’s Detroit Business article that voters said “no” to the measure because it would have focused on transportation technology of the past that wouldn’t have helped public-transit users in the future.

“If our region's voters had been presented with an incremental and thoughtful plan that focused on meeting the requirements of those people who truly need help getting around on a daily basis, it likely would have been successful,” he said.

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In pre-election coverage of the tax proposal, Mozena argued in Deadline Detroit that the measure would have added “another layer of bureaucracy” and would have done more harm than good. He said voters, “should question whether the benefits justify adding to the tax burdens of all homeowners and business owners, especially those whose burdens are already more than they can bear.”

Read the full article in Crain’s Detroit Business.

Read a letter to the editor on the subject in Crain’s Detroit Business.

Read the full article in Deadline Detroit.

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Friday, November 11, 2016 MichiganVotes Weekly Roll Call Report

Increase windmill mandates, authorize driverless vehicles, empower airport police

Senate Bill 437, Centrally plan statewide power grid, require more wind turbines: Passed 26 to 11 in the Senate
To re-write the state law regulating electric utility monopolies. The bill is premised on Obama EPA regulations forcing closure of existing coal-fired generating plants and ordering states to re-organize their electric power grid systems (which President-elect Trump has promised to repeal). It would essentially replace a market-driven process for new power plant capacity and site decisions with a centralized state process. On its face the bill retains current provisions that allow other power generators to compete with monopoly utilities for a 10 percent slice of the commercial market, but current choice customers contend that details would end competition. The bill would also increase a mandate that utilities get more power from so-called renewable sources, which could mean hundreds of additional industrial wind turbine towers in many rural communities.

Who Voted “Yes” and Who Voted “No”


Senate Bill 1084, Revise emergency vehicle flashing lights requirement: Passed 37 to 0 in the Senate
To eliminate a requirement that flashing lights be mounted on the roof of an authorized emergency vehicle. These vehicles would still have to have flashing emergency lights; they just wouldn’t have to be on the roof.

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Who Voted “Yes” and Who Voted “No”


House Bill 5181, Give full police authority to airport security force members: Passed 36 to 0 in the Senate
To permit airport security personnel who have the same license as regular police, to exercise full “peace officer” (police officer) powers outside the airport’s grounds, including cases of “hot pursuit” of an individual suspected of violating the law, or in cooperation with regular police officers.

Who Voted “Yes” and Who Voted “No”


Senate Bill 995, Authorize (restricted) driverless vehicles on Michigan highways: Passed 105 to 2 in the House
To expand a law that permits operating automated driverless vehicles on Michigan roads, subject to detailed restrictions and conditions. The bill is part of a package comprised of Senate Bills 995 to 998 that among other things would potentially repeal the requirement that a human operator be present to monitor performance and intervene if necessary, permit “platoons” of driverless trucks traveling together on highways, and create regulations for these and related autonomous vehicle activities. Local governments would be preempted from imposing more restrictive regulations.

Who Voted “Yes” and Who Voted “No”


SOURCE: MichiganVotes.org, a free, non-partisan website created by the Mackinac Center for Public Policy, providing concise, non-partisan, plain-English descriptions of every bill and vote in the Michigan House and Senate. Please visit http://www.MichiganVotes.org.

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Some Proposals for Criminal Justice Reform in the Legislature

Making Michigan safer, freer and more prosperous

Reeling from a long, noisy election cycle? Step back for a moment to consider the following reforms. These bipartisan proposals would reduce both crime and corrections spending in Michigan, helping our state become safer, freer and more prosperous.

  • The Parole Sanction Certainty Act would build on successes of an existing program for probationers. It would hold paroled prisoners immediately accountable when they don’t meet the terms of their parole, reinforcing an attitude of discipline and a commitment to productive re-entry.
  • The Data Collection and Management Act would pull together information on offenders and corrections practices to help taxpayers and policymakers evaluate what actually works to reduce recidivism.
  • A proposal removing the successor judge veto would prevent judges who had nothing to do with an offender’s case from being able to stop the parole board from granting his release on parole. They would still be able to weigh in with an opinion.

These and other proposals by Michigan’s House and Senate are currently under consideration. In a chaotic political atmosphere, these reforms offer clear benefits and the opportunity for Michiganders to come together to do something positive.

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The Mackinac Center for Public Policy is pleased to announce that it’s adding two new members to its Board of Scholars. This group of academics and business leaders supports and contributes to the Center’s mission of improving the quality of life in Michigan through high-quality, public policy research that promotes the benefits of free markets, limited government and the rule of law.

Both of the new members, Tawni Ferrarini and Hugo Eyzaguirre, hail from the Upper Peninsula and teach economics at Northern Michigan University. They will be joining 26 other Board of Scholar members with current teaching positions at institutes of higher education, including Western Michigan University, Michigan State University, Hillsdale College, Northwood University, the University of Michigan Law School, Central Michigan University, and others.

Tawni Ferrarini currently serves as the Sam M. Cohodas Professor of Private Enterprise and the associate director of the Center for Economic Education and Entrepreneurship at NMU. She consults worldwide with organizations on matters related to economic growth and development through private enterprise, with a focus on K-16 economic education and financial literacy.

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She was president of the National Association of Economic Educators in 2015 and has received numerous awards, including the 2012 Council on Economic Education’s Albert Beekhuis Center Award, the 2010 Michigan Council on Economic Education Educator’s Award, and the 2009 National Association of Economic Educator's Abbejean Kehler Technology Award. She was named a distinguished faculty member at Northern Michigan University in 2009. Among other work, she is a co-author of “Common Sense Economics: What Everyone Should Know About Wealth and Prosperity” and “Focus: Understanding Economics in U.S. History.”

Hugo Eyzaguirre is an associate professor of economics and director of the Center for Economic Education and Entrepreneurship at NMU. On campus, he is a member of the NMU Academic Senate, Committee on Internationalization, and the Educational Technological Resources and Policies Committee. Off campus, he chairs the International Committee, National Association of Economic Educators and is a member of the Association of Private Enterprise Education. He started the first center for economic education in Peru at the Universidad Peruana de Ciencias Aplicadas in Lima, Peru, where he taught and researched. He has also worked as a consultant and researcher, focusing on institutional economics and competition and regulatory issues, and has numerous publications on these topics.

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Recommended Reading: A New Look at “The Bet”

Human well-being has increased dramatically over the last few decades

In 1980, a famous bet was made that has fascinated economists and environmentalists alike ever since. Paul Ehrlich is a biologist who became famous with a 1968 book called “The Population Bomb.” In it, he predicted imminent megadeath due to the world not having enough resources to meet human needs.

Julian Simon was a University of Illinois economist who went on to associate himself with the Cato Institute. He said, in essence, “Nonsense — people will figure out new ways to obtain needed resources.” Simon challenged Ehrlich to put his money where his mouth was in the form of a bet.

That bet is the starting point of a new essay by Michael Cox and Richard Alm. Called, “Onward and Upward! Bet on Capitalism — It Works,” the essay revisits the bet and adds a new wrinkle.

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As Cox and Alm describe it, Simon believed that the world would enjoy “a future of abundance and higher living standards for more and more people, thanks to almost limitless potential of human ingenuity operating in a capitalist system.”

For evidence, he turned to the academic field of economics and challenged Ehrlich to put up or shut up by predicting the inflation-adjusted price of five industrial commodities over the following decade. To his credit, Ehrlich agreed.

The logic of the bet was simple: If Ehrlich were right, then commodities would become scarcer and more expensive in 10 years. But if Simon were right, they would become more abundant and cheaper. Simon even offered to let Ehrlich and his supporters choose the particular commodities. Ehrlich chose tungsten, chromium, nickel, copper and tin.

Simon won the bet outright. The real price of all five metals fell more than 50 percent during the term of the bet — even as the planet’s human population grew by 800 million souls.

But what if the terms of the wager had been different? What if different start and end dates had been used, for example? What if a different measure had been used to gauge changes in the value of the commodities? And what would have happened had 20 different metals, not just five, been included?

These are some of the questions Cox and Alm explore, starting with the unit of measurement. They converted the commodity cost data into units of human labor. That is, how many hours did the average worker have to work to earn enough to buy some of this stuff?

Then the authors looked at different time periods and more substances. On the original 10-year, five-metal bet, Simon won outright. They note, however, if the original bet were extended, Ehrlich would have won in 2007 and 2011 as prices leapt. Even then, however, the increase would have been only measured in inflation-adjusted dollars. If measured in the number of hours worked to buy a unit of metal, the five-metal basket was always priced lower than it was in the first year of the bet.

Cox and Alm also investigated the full period from 1980 to 2015. It turns out that Simon wouldn’t have won just the original 10-year bet — he would have won the five-metals bet in every year from 1980 to 2015. That is, in any given year, the average worker would have had to work fewer hours to get the same amount of stuff.

Next, the authors expanded the review to a basket of 20 metals. They found that the “work-hour prices of the 20 metals fell nearly 50 percent from 1980 to 2015.”

Of course, people don’t generally shop for a pound of aluminum or a ton of steel. What happened to prices of other goods over this period?

When Cox and Alm looked at the work-hour prices of 15 foods and other popular items, such as housing, clothing and transportation, they found one item that had not gone down in price since 1980 — apples. The rest all saw real work-hour prices drop by 50 percent or more.

Other consumer products, such as cellphones and home entertainment systems, not only saw work-hour price declines but dramatic increases in quality, too.

The lesson is that there are good reasons to be optimistic. Human well-being has reached heights unimagined just 30 years ago (except by Julian Simon). It’s an inspiring story, and the “Onward and Upward” report does a good job of communicating that.

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Back to the Drawing Board on Energy Policy

The election could mean a different future for electricity

While most of the world was following election results, another key issue that will heavily affect Michiganders was moving in the state Legislature. Regulations covering energy and electricity choice have been ramping up there, but national events should put a halt to Michigan Republicans fast-tracking this issue.

The election of Donald Trump as the next president of the United States and the GOP maintaining control of the U.S. House and Senate means the key reason for pushing forward with Senate Bill 437, a bill that will revise utility regulations in Michigan, has effectively gone away.

One primary reason supporters of SB 437 give for it is “system reliability.” They explain that the need to address alleged shortfalls in Michigan’s electricity supply effectively forces their hands. However, that argument is based largely on the existence of federal regulations, such as the Clean Power Plan and the Mercury and Air Toxics Standard, which have mandated an artificial timeline for closing existing coal plants.

With the presidential election now decided, the regulatory mandates to close those plants will likely die, or at the very least significantly change. Given these changes, we should recognize there is now no pressing need to impose bills like SB 437 onto the population of Michigan.

Simply put, it’s time for people who are pushing for their passage to stop.

President-elect Trump spoke on these federal regulations at the Economic Club of New York in September:

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One of the keys to unlocking growth is scaling back years of disastrous regulations, unilaterally imposed by out-of-control bureaucrats. Regulations have grown into a massive job-killing industry. And the regulation industry is one business that I will absolutely put to an end, day one. … I propose a moratorium on new federal regulations that are not compelled by Congress or public safety, and I will eliminate all needless and job-killing regulations now on the books — and there are plenty of them. This includes eliminating some of our most intrusive regulations, like the Waters of the U.S. rule. It also means scrapping the EPA’s so-called Clean Power Plan, which the government itself estimates will cost $7.2 billion a year. This Obama-Clinton directive will shut down most, if not all, coal-powered electricity plants — all over the country, they’re shutting down.

Most of the country had been operating on the notion that, if she were elected, Hillary Clinton would continue, or even ramp up, the actions of President Barack Obama in the realm of environmental regulation. A Clinton administration was expected to encourage the EPA to double down on the Clean Power Plan.

A Clinton administration was also expected to nominate — at a minimum — one Supreme Court justice. That nomination would have fundamentally shifted the balance of the court, with significant policy implications. For example, in February, the high court instituted a stay on the Clean Power Plan on a 5-4 vote and then sent the case back to the U.S. Court of Appeals for the D.C. Circuit for reconsideration.

It was expected, then, that when the Supreme Court took up the Clean Power Plan again, the regulation would find a far more friendly reception than it had before. This provided a boost to the legislative changes being considered in Michigan. But the election of Donald Trump changes the expectations for the makeup of the Supreme Court, and with it, the court’s expected response to the Clean Power Plan.

In Michigan, there are eight coal-fueled power plants, representing approximately 2.2 gigawatts of installed capacity, that have been targeted for closure by 2025. Energy industry experts, operating under pre-2016 election assumptions, had predicted that parts of the state would experience an electricity shortage in the coming years.

But, in a post-2016 election world, those eight plants could be maintained and upgraded to meet that need, while giving us much needed time to add new capacity for generating electricity.

Supporters of the Senate-passed bill as it has evolved have argued that doing nothing is not an option. There has also been a great deal of work done and a great deal of money spent on this legislation. But the voters of Michigan and the country made a clear statement on Nov. 8, and new policies will govern the development and use of energy.

Things are very different in this post-election world. It’s time to go back to the drawing board with a new plan that uses Michigan’s variety of energy sources to the benefit of citizens.

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Amid everything else that happened last night, one result was an unexpected victory for public policy prudence and humility with the defeat of the 20-year millage proposal to fund mass transit expansion in Wayne, Oakland, Macomb and Washtenaw counties.

The plan put forth by the RTA of Southeastern Michigan was deeply flawed. Among other problems, it included incredible assumptions about state and federal funding levels that neither state nor federal transportation authorities would endorse. Oakland County’s deputy executive did the math and found that the plan got its tax revenue assumptions wrong by more than $500 million, while adding to the highest property tax burdens in the nation (Detroit) and state (Wayne County). Additionally, it was promoted in part through untruthful advertising that referenced nonexistent cuts to services for people with disabilities.

The entire mess was sold, as so much bad policy is, through promises of economic development. The plan’s advocates played their traditional game of “but for,” imagining companies that would have created jobs in Detroit, but for a lack of reliable transit options. Left unanswered was the question of which companies would have subjected themselves to what is arguably the worst tax and regulatory structure in terms of burden and complexity of any city in the nation … if only the buses were better.

Whether the voters’ message was received was unclear last night as the vote unfolded. “We’ll have to understand where the problems were, if it does fail, and do some reassessment and I’ll need to speak to my board and talk to our operatives to see why if it does go down where the problems were and what will we need to do differently,” RTA CEO Michael Ford told The Detroit News. “I’m not really prepared to get to that level until I know for sure. I thought it would be close, so I’m not totally surprised.”

At least one pro-RTA regional leader seems to have accepted the implications of yesterday’s vote. In an email to his members this morning, Detroit Regional Chamber CEO Sandy Baruah said, “To say we’re disappointed is an understatement. However, we respect the will of the voters and will continue to seek solutions to connect our region and provide mobility to those without access to personal vehicles.”

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This is an appropriate starting point for discussions about the future of transit in the region. With the grand transit master plan dead on the side of the road and with a two-year waiting period before any future millage could be placed in front of voters, Metro Detroit’s leaders should focus on incremental and achievable improvements to transit services for the people who depend on them.

Improved coordination between the suburban SMART and city DDOT bus systems — rolled out to showcase the RTA’s value in advance of the vote — is a good starting point. Another might be to redirect the tens of millions of dollars that the Michigan Economic Development Corporation is planning to spend on subsidizing automaker R&D toward encouragement of advanced alternatives to fixed-route public transit. While it would be better if the state weren’t to spend that money at all, it’s at least an plausible purpose of government to help create solutions to a societal need such as transportation for people dependent on public services.

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Worker freedom continues to be a winning issue at the state level. Candidates who supported right-to-work were widely successful, and this creates promise for more gains for labor reform in upcoming months and years.

Three states — Missouri, Kentucky and New Hampshire — will have legislatures and governors who support passing right-to-work legislation and possibly other related labor reforms.

Opponents of right-to-work in West Virginia failed to make any gains in that state’s Legislature that would be necessary to repeal their new worker freedom laws. While an effort to provide constitutional protections for existing right-to-work statutes failed in Virginia, similar protections passed in Alabama by a more than a two-to-one margin. A ballot measure in South Dakota that would have effectively repealed right-to-work went down to a massive defeat, with 80 percent opposed.

Additionally, the victory of Donald Trump and retention of the U.S. Senate by a Republican majority will have implications for labor reform at the federal level, especially when it comes to a future U.S. Supreme Court. A constitutionalist appointment could break the existing deadlock on the question raised in Friedrichs v. California Teachers Association of whether forced unionism of public sector workers violates their free speech rights.

Here’s a breakdown of the results we were watching Tuesday night:

Missouri
Right-to-work passed in the Legislature in 2015 but was vetoed by term-limited Gov. Jay Nixon. Republican Eric Greiten won the gubernatorial election last night, meaning right-to-work is likely and other labor reforms are possible.

Kentucky
Republicans took control of the Kentucky House, so right-to-work and other labor reforms are likely.

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New Hampshire
New Hampshire has attempted to pass right-to-work several times. In 2011, the Legislature passed the bill but it was vetoed by the governor. Republican gubernatorial candidate Chis Sununu won the election last night, and since he is a public supporter of right-to-work, labor reform is likely.

West Virginia
West Virginia became the 26th right-to-work state earlier this year. Bill Cole, a main supporter of the bill, failed to advance from the Senate to the governor’s office, losing to Jim Justice. But another backer of right-to-work, Senate Majority Leader Mitch Carmichael, was re-elected to the Senate. Republicans maintained a majority in the House but their margin dropped by a seat, to 63-38. They gained four seats in the Senate, giving the party a 22-12 advantage. Right-to-work is protected and other reforms are possible.

Virginia
An amendment on the ballot to enshrine right-to-work rights in the state constitution failed, gaining only 47 percent of the vote. The status quo of workers having statutory right-to-work freedoms will be maintained.

Alabama
Alabamians also voted on a constitutional amendment. The amendment won 70 percent of the vote and workers’ rights are now protected by the Alabama Constitution.

South Dakota
Measure 23 was pushed by unions as a way to overturn right-to-work. It lost in a big way, with only 20 percent of voters in favor, and right-to-work was protected.

Oregon:
Measure 97, heavily funded by unions, would have imposed a 2.5 percent gross receipts tax on certain businesses, killing jobs. It lost, with 59 percent of voters opposed.

Washington
I-1501 was an initiative pushed by unions to keep groups like the Freedom Foundation from contacting home health care workers to inform them of their rights to leave the SEIU. The measure succeeded  by a vote of 72 percent to 28 percent, which will mean that it will be harder for home health care workers to learn about their rights.

U.S. Supreme Court
The election of Donald Trump as president and retention of control of the U.S. Senate by Republicans means there may be justices appointed who will uphold workers’ rights. Specifically, a new case similar to Friedrichs vs. California Teachers Association may be heard in the next few years to break the tie that resulted from the death of Justice Antonin Scalia.

The Illinois case of Janus vs. AFSCME brought by the Liberty Justice Center is similar to Friedrichs in that it argues that virtually everything done by public sector unions involves political speech, therefore public employees have a First Amendment right not to be forced to support that speech. If president-elect Trump appoints a justice who will uphold the First Amendment and this case reaches the high court, right-to-work may come to public employees in every state across the country.

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