Archive for January, 2009
Responsibilities
President Obama delivered an interesting inaugural speech yesterday. His theme was responsibility, a theme that provides a useful frame for his administration.
The individual versus the collective: Americans generally affirm individual or personal responsibility for one’s life. To be an adult – to put aside childish things – means taking responsibility for one’s actions and outcomes. Yet language permits another possibility. “We” can take responsibility for this outcome or that injustice. Putting aside childish things means taking collective responsibility through government action. In this view, emphasizing the individual suggests a childish selfishness that should be overcome. Obama seems to be about both kinds of responsibility right now. But extending state control over society vitiates personal responsibility. The new president will have to choose between the two.
The rule of law versus charisma: In a free society, individuals associate together through consent within a set of impersonal rules enforced by an impartial judiciary. Societies may also be ruled by charismatic leaders who are thought to have special powers granted by divine favor or by other means. Charismatic authority undermines both individual and collective responsibility. No one need do anything: the special man will say the magic words and everything will change for the better. Moreover, charismatic men with special powers should not be restrained by mere laws. They are above such restraints and must be so to do their work.
Consequences versus absolute ends: In an ethic of responsibility, leaders and followers look to consequences in acting politically. President Obama alluded to an ethic of responsibility yesterday. We want a government that works; programs that do not work will be ended. The thought is admirable, the reality unpromising. Ronald Reagan eliminated two federal programs, one of which was a training program that worsened the lot of its clients. Reagan was thought to have a mandate to cut back government. Obama was elected for many reasons, none of which were constraining the federal government. More than a few of his followers expect he will, as he put it yesterday, “remake the world.” Those who set out to remake the world rarely notice the immediate consequences of their crusade. After all, the benefits of bringing heaven to earth will more than overcome the costs of the crusade.
Obama’s modest demeanor suggests an understanding of his own limitations. If that is true, he may turn out to be more a politician and less a priest, a president content to live within the laws and achieve marginal changes in public policy.
But I wonder. Living in Washington, DC, I have recently had reason to recall Samuel Johnson’s remark about Shakespeare: “In his plays, there are no heroes, only men.” Obama seems to be telling a different story, a tale about charismatic heroes and utopian aspirations. When the talking stops and the doing begins, one question will be answered: Do Americans really want to live out a play where there are no men, only heroes?
A Government That “Works,” but for Whom?
In his inaugural address yesterday, President Obama tried to step around the central question of whether the federal government has grown too big and powerful:
The question we ask today is not whether our government is too big or too small, but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified. Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.
Even in skirting the question, President Obama has in effect come down on the side of bigger government. His statement assumes that government programs will be central to creating jobs and providing health care and retirement security. For every problem confronting American families, it is just a question of finding the right program that “works.” He leaves off the table the very real possibility that government intervention has made each of those problems more difficult for Americans to solve, and that the answer really is a smaller role for government.
The other open question is who decides if a government program “works.” President Obama has wrapped himself in the mantle of change, yet as a candidate he endorsed the 2008 farm bill. The existing U.S. policy of production subsidies and import tariffs, a policy that has remained essentially unchanged for 75 years, arguably “works” for a small number of relatively well-off sugar, dairy, corn, rice, and cotton farmers. But for the vast majority of Americans, the farm bill delivers higher and more volatile prices at the store, billions of dollars a year in additional government spending, higher cost for U.S. businesses, a degraded environment, and a harder slog out of poverty for millions of farmers in less developed countries. [You can go here to find Cato research on how farm programs have failed to work in our national interest.]
If Senator and candidate Obama could not see the need to end our failed farm policies, it is hard to imagine many if any other programs that will come to an end under his administration.
For more on how scrapping farm subsidies would be a good first step toward removing failed government programs, watch this video:
Bush’s Gift to Obama: A More Powerful State
Friends of freedom, the Constitution, and limited government have plenty of reasons to deplore the past eight years. But in case you thought we might get some relief now, this Washington Post article from inauguration morning will change your mind. One of the points it makes — as some of us warned during the past few years — is that powers claimed by one president are left in the hands of the next, even though the first president’s supporters might have less confidence in his successor’s integrity and wisdom. So here’s the government that President Bush and the Republicans have turned over to President Obama and the Democrats:
Barack Obama takes office today with a realistic prospect of joining the ranks of history’s most powerful presidents….
Historians, recent White House officials and senior members of the incoming team expressed broad agreement that Obama begins his term in command of an office that is at or near its historic zenith….
The federal government itself is a far more potent instrument, in its breadth and depth of command over national life, than it has ever been before. Largely in response to the threat of terrorism, the Bush years and President Bill Clinton’s two terms saw “an incredible period of state-building that’s unrivaled in American history except by the creation of the national security state in the 1940s and ’50s,” said Jack Balkin, a professor of constitutional law at Yale whose blog, Balkinization, is often cited by members of the Obama team.
By necessity or design, and most often by passive acquiescence, Congress and the courts have let presidents do most of the steering of the new and expanded institutions that govern finance, commerce, communications, travel, energy production and especially intelligence gathering. When there were struggles for dominance among the three branches, most of them ended with lopsided victories for the executive.
The legislative power to declare war and ratify treaties, for example, has been deeply eroded by the practice of presidents to launch military operations on their own and to make major international commitments — such as December’s “status of forces” pact with Iraq — by “executive agreement” rather than by treaty requiring a two-thirds Senate vote. After lengthy controversy over warrantless domestic surveillance in the Bush administration, Congress authorized the program without obtaining any details about what, exactly, is collected and how it is used.
“Really, in the last 80 years we’ve seen a gradual, and at times not gradual, concentration of power in the executive office,” said William P. Marshall, who served as deputy White House counsel under Clinton….
Even in its first iteration, the government’s $700 billion expenditure to shore up U.S. financial systems will rival the roughly $1 trillion a year in “discretionary” federal spending — the portion of the budget, not including interest on loans and mandatory benefits such as Social Security, that is negotiated each year between the White House and Congress. Obama, who told The Post last week that he must “go big” in response to “the biggest emergency since World War II,” has spoken elliptically of the prospect that the cost could double.
Congress, the principal power of which is thought to be control of the national purse, has made little pretense of managing these vast expenditures. It will fall to Obama and his subordinates to decide winners and losers in the banking, financial services, automobile and other major industries, a span of control that dwarfs President Harry S. Truman’s attempt to seize control of steel production.
We don’t know yet whether President Obama will prove to be FDR or Jimmy Carter. But it’s clear that the freedom movement faces challenges that aren’t going away.
Terrorism References in Obama’s Inaugural Address: Two Outta Three Ain’t Bad
With the Cato counterterrorism strategy conference recently concluded, I listened to President Obama’s speech with a keen ear for his treatment of terrorism. My early conclusion was that he communicated well two out of three times, which ain’t bad.
Communications about terrorism are important. Done badly, they can inspire fear and overreaction on the part of the U.S. populace and government – doing terrorists’ work for them. They can also aid in recruitment and support for terrorists by exalting terrorism and terrorist leaders to audiences that are physically and ideologically nearby to terrorists.
Done well, communications about terrorism can suppress fear and overreaction and render terrorism less attractive to potential supporters, would-be’s, and wannabe’s. Ultimately, smart communications and disciplined responses can dissipate the value of terrorism as a tool to use against us.
I was disappointed by a line very early in the speech: “Our nation is at war, against a far-reaching network of violence and hatred.”
I don’t think there is any sensible way to interpret this other than as references to the “War on Terror” and Al-Qaeda. It’s a handy recruitment aid for Al-Qaeda to have the new U.S. President signal that it Al-Qaeda is in his head. People who don’t like the United States were drawn to Al-Qaeda by that line.
Humble Hegemony?
Obama’s inaugural address had a sprinkling of foreign policy realism:
[Earlier generations] knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.
Sounds like John Quincy Adams or Reinhold Niebuhr. You’d almost think the President supports a strategy of restraint.
Unfortunately, that sentence came just after this:
And so to all other peoples and governments who are watching today, from the grandest capitals to the small village where my father was born: know that America is a friend of each nation and every man, woman, and child who seeks a future of peace and dignity, and that we are ready to lead once more.
A nation tempered by humility and restraint would not presume to lead every person in the world.
Government’s Broken Promise
I don’t make it a habit of reading New York Times editorials, but I gave in to temptation when I saw the title of today’s words of wisdom from the Times: “Government’s Promise.”
The editorial leads off:
When he accepted his party’s nomination last year, Barack Obama repudiated the “you’re on your own” ethos that had come to define the government’s relationship to the people.
With total federal, state, and local government spending as a percentage of GDP trending toward 40%, up from 30% at the beginning of the decade, how can the Times possibly suggest that a “you’re on your own” ethos has defined the government’s relationship to the people? Americans can’t even go to the bathroom without the government interfering with that most intimate of human activities.
The Times continues:
He [Obama] said government cannot do everything, but he promised one that would do what individuals cannot do for themselves: “protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools and new roads and new science and technology.”
I’ll leave it to Cato’s national security experts to decide whether the government does a good job of protecting us from harm, but as an individual I’d be much more capable of protecting myself and my family were it not for government gun restrictions.
Provide every child a decent education? Utopian dreaming is fine until reality forces one to recognize that every child will never receive a decent education so long as federal and state bureaucrats, in conjunction with government-protected unions, rule the education roost. See Cato’s education experts for more.
Clean water? A 2005 Government Accountability Office (GAO) counted 27 different federal agencies providing financial support for domestic freshwater activities. Twenty-seven.
Safe toys? Once again, sounds nice. But parents who entrust the nanny-state with the protection of their children do so at their own risk. China, not exactly an example of a minimalist state, offers a good lesson. Poor Zheng Xiaoyu — if only you had been an American bureaucrat you’d probably now be making six-figures as a K-street lobbyist.
Individuals can’t invest in new roads and new science and technology without the guiding hand — and bottomless pockets — of Uncle Sam? A couple weeks ago I provided an example of how politicians allocate capital (taxes, i.e., confiscated capital) when building roads. And if it were not for the government I wouldn’t be able to create this post on a computer and broadcast it over the internet while listening to music on my iPod? I will admit that one Donna Gamble probably wouldn’t have gotten a cool Waverunner and big-screen television were it not for the National Science Foundation.
OECD Admits High Personal and Corporate Tax Rates Hurt Prosperity
There’s additional evidence that the OECD is a two-headed entity. While the Committee on Fiscal Affairs persecutes low-tax jurisdictions as part of its anti-tax competition jihad, the economists at the Paris-based bureaucracy have published a new study showing that high tax rates on personal and corporate income reduce productivity and entrepreneurship:
Taxes can have an effect on countries’ material living standards by affecting the determinants of GDP per capita – labour, capital and productivity. For instance, by distorting factor prices and returns to market activities, they can alter households’ labour supply decisions and incentives to enrol in higher education, as well as firms’ incentives to invest and to hire employees, and thus, lead to an inefficient allocation of factor inputs and lower productivity. …The findings of this paper suggest that taxes have an adverse effect on industry-level investment. In particular, corporate taxes reduce investment by increasing the user cost of capital. …The paper finds new evidence that both personal and corporate income taxes have a negative effect on productivity. …High top marginal personal income tax rates are found to impede long-run productivity working through the channel of entrepreneurial activity and this effect is estimated to be stronger the higher the entrepreneurial activity is in an industry. …The results also support the assumption that social security contributions have a negative influence on TFP and that this effect is more pronounced in industries that are characterised by high labour intensity.
OECD Study Acknowledges Laffer Curve, Admits Progressivity Bad for Growth
The Paris-based Organization for Economic Cooperation and Development is a schizophrenic organization. Its Committee on Fiscal Affairs pushed to thwart tax competition in order to enable high tax rates, yet the bureaucracy’s professional economists publish studies noting that high tax rates are damaging. The latest example is a fiscal survey of Japan, which explicitly notes that lower corporate tax rates lead to a Laffer Curve effect, while also warning that progressivity (penalizing people who contribute most to society with higher tax rates) is bad for growth:
…additional government revenue should be balanced against the risk that high corporate tax rates will reduce economic activity and Japan’s potential growth rate, in the context of growing international tax competition. Given the serious fiscal situation, the government has thus far resisted pressure from domestic business groups, such as Nippon Keidanren (2006), to reduce statutory corporate tax rates. However, the impact of lower tax rates on government revenues is likely to be limited by positive supply-side effects. Indeed, in some OECD countries, revenue was boosted by lower tax rates, thanks to higher profitability and the increased size of the corporate sector (2007 OECD Economic Survey of the United Kingdom). Indeed, the amount of taxable income in the corporate sector tends to be higher in countries with low corporate tax rates (Figure 12). Consequently, corporate income tax receipts show less variation across countries as the impact of higher tax rates is negated by the lower level of taxable income. As a result, there is almost no correlation between the statutory corporate tax rate and corporate tax receipts as a share of GDP (Panel B). …The weak degree of progressivity in the personal income tax system thus has a positive impact on both labour inputs and on human capital and labour productivity. Maintaining the relatively low degree of progressivity, or even reducing it further subject to the fiscal constraints, would be beneficial for Japan’s growth potential.
Dissident Notes on the Obama Coronation
It’s wall-to-wall Obama in the newspapers and on the airwaves, and I keep wondering, Was it quite so overwhelming in the run-up to previous inaugurations? I think not. Presumably the gushing media response is generated by some combination of Barack Obama’s being our first African-American president, his being the antidote to an epidemic of Bush Derangement Syndrome, and our growing cult of the presidency. I complained once about people who see the president as “a combination of Superman, Santa Claus, and Mother Teresa,” and this month journalists are leading the way. Even New York Times reporter Helene Cooper, writing the “pool report” for other journalists on Obama’s visit to the Washington Post, noted that “around 100 people–Post reporters perhaps?–awaited PEOTUS’s arrival, cheering and bobbing their coffee cups.” Post reporter Howard Kurtz assured readers that his fellow journalists did gawk, but they did not cheer or applaud.
The Washington Post banners Obama’s “centrist approach.” Even Blue Dog Democrat Jim Cooper says he’s showing “great centrism.” He’s promising to spend a trillion dollars more than the most spendthrift president in history. If he promised to spend two trillion dollars more, would the Post see his program as left-liberal?
For politicians everything is politics: “It has been more than three months since he sat through a Sunday church service and at least five years since he attended regularly, but during the transition, Obama has spoken to religious leaders almost daily. They said Obama calls to seek advice, but rarely is it spiritual. Instead, he asks how to mobilize faith-based communities behind his administration.”
“Nation’s Hopes High for Obama,” says the Washington Post-ABC News poll. Those polled say that they have high expectations for his administration, they think he has a mandate for major new programs, and they like his promise to give virtually everyone some money. Indeed, according to a graphic in the paper but apparently not online, 79 percent of respondents have a favorable impression of Barack Obama, much higher than the numbers for Reagan, Bush I, Clinton, or Bush II as they prepared to take office. In fact, the only modern president whose favorable ratings on the eve of inauguration matched Obama’s was Jimmy Carter. Hmmmmm.
Bob Woodward offers 10 lessons Obama could learn from the mistakes of the Bush administration. One of them is “Righteous motives are not enough for effective policy.” Woodward directs all his lessons at foreign and defense policy, but that’s a good rule for domestic policy too. The fact that a policy sounds right-minded — create jobs, raise the minimum wage, ban sweatshop products, mandate energy efficiency — doesn’t mean that it will work. Economic processes are dynamic, not static. Benefits have costs. Another of Woodward’s rules is “A president must do the homework to master the fundamental ideas and concepts behind his policies.” Again, that applies to economic as well as to foreign policy. Has Obama read any thoughtful criticisms of Keynesian economics or of “job creation” schemes or of renewable-energy mandates? He met with conservative pundits, but has he sat down and listened to any of the many economists who oppose his stimulus plans?
On a lighter note, former “Saturday Night Live” writer and Will Ferrell collaborator Adam McKay discussed Ferrell’s Broadway show, “You’re Welcome America: A Final Night with George W. Bush” with the Washington Post. Asked how he might make Obama-related comedy, McKay said it would be tough because “Obama’s an actual adult who knows how to work.” Let’s see . . . four years ago Obama was voting “present” in the state senate, and now he’s going to be president. His supporters range from journalists who compared him to “the New Testament” to actual voters who exult, “I won’t have to worry about putting gas in my car. I won’t have to worry about paying my mortgage. You know. If I help [Obama], he’s gonna help me.” He himself said that his capture of the Democratic nomination “was the moment when the rise of the oceans began to slow.” If humorists can’t find some humor there, we need better humorists.
And maybe it’s appropriate that a singer known as “The Boss” headlined the inaugural concert for a candidate whose wife promised, “Barack Obama will require you to work. . . . Barack will never allow you to go back to your lives as usual, uninvolved, uninformed.”
Bush’s Chutzpah Institute
The president who launched our longest war, arrogated more power to the executive than ever before, increased federal spending by a trillion dollars, pushed for the biggest expansion of entitlements since Lyndon Johnson, further nationalized education, tried to nationalize marriage, and held Americans in jail without access to a lawyer or a judge has found a theme for his presidential library: freedom.
The George W. Bush Presidential Center will include a “Freedom Institute” focused on a broad portfolio of topics, including the expansion of democracy abroad and education reforms of the kind Bush implemented during his presidency, according to organizers.
Coming next: The Clinton Center for Honesty and the Paris Hilton Center for Modesty.
Schneier Interviewed by Reason
Reason has a great interview with security guru Bruce Schneier.
Two particular quotes on the Transporation Security Administration stand out:
“If I were in charge of the TSA’s budget, I’d give most of it back.”
“Oh, and stop the ID checking—the notion that there is this master list of terrorists that we can check people off against is just plain silly.”
Schneier was a participant in our recent conference on counterterrorism strategy. In early 2005, I argued in the pages of Reason for doing away with the TSA entirely. Radley Balko recently suggested that Schneier, yours truly, or John Mueller should head the TSA.
How to Break the Grip of Lobbyists
James Q. Wilson, reviewing Robert Kaiser’s new book So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government, explains how we could — but won’t — break the power of lobbyists:
Or one could do what would make the greatest difference: reduce federal spending programs of the sort that create incentives for lobbyists to expand them. The central reason earmarks developed in the 1970s is that by then Washington was trying to solve so many problems that it appropriated money for virtually everything.
Kaiser acknowledges that this is the problem. He notes that politicians, both liberal and conservative, have produced “a more intrusive government, more important to the well-being of more Americans.” The more groups saw “their own fate at stake in Washington’s debates on public policy, the better the market for lobbyists,” he writes.
But reducing the extent of government activity is only slightly more likely than amending the Constitution. It may be better to step back and ask, “Do American voters dislike Washington because it is corrupt, or do they dislike it because it is ineffective in solving the problems (some real, some only imagined) that it has embraced?”
When the federal agenda did not include agriculture, the environment, drug abuse, gun control, academic research, mortgages, homelessness and school quality — and that was during Kaiser’s lifetime and mine — it was hard to have an earmark because there were few programs to which they could be attached. And that was also the time when the great majority of Americans thought national officials were doing a good job.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
