Archive for August, 2009
Hillary: The Movie
The Supreme Court is soon to hear a case that may drastically roll back campaign finance regulation in the United States:
The case involves “Hillary: The Movie,” a mix of advocacy journalism and political commentary that is a relentlessly negative look at Mrs. Clinton’s character and career. The documentary was made by a conservative advocacy group called Citizens United, which lost a lawsuit against the Federal Election Commission seeking permission to distribute it on a video-on-demand service. The film is available on the Internet and on DVD. The issue was that the McCain-Feingold law bans corporate money being used for electioneering.
The right position for the Court is that McCain-Feingold, and all other campaign finance regulation, constitutes unconstitutional limitation on free speech. This means reversing the Court’s 1974 Buckley v. Valeo decision, which held that government limits on campaign spending were unconstitutional but limits on contributions were not.
This distinction is meaningless. If it is OK for a millionaire to spend his own money promoting his own campaign, why can he not give that money to someone else, who might be a more effective advocate for that millionaire’s views, so that this other person can run for office?
More broadly, campaign finance regulation is thought control: it takes a position on whether money should influence political outcomes. Whether or not one agrees, this is only one possible view, and freedom of speech is meant to prevent government from promoting or discouraging particular points of view.
It would be a brave step for Court to reverse Buckley, but it is the right thing to do.
For more background on the case, watch this:
Britain’s Brown Bounces Betting Businesses
A further chapter in Britain’s economic suicide comes from Tax Notes International today (subscription only):
In a move apparently aimed at lowering their tax bills, major U.K. sports bookmakers William Hill and Ladbrokes plan to relocate their sports betting operations to Gibraltar, according to media reports.
The move by William Hill was announced on August 4 and was subsequently followed by Ladbrokes’ announcement on August 6. The moves are projected to cost the U.K. Treasury millions of pounds in tax revenue, according to an August 6 report on www.guardian.co.uk.
The departure of these sports betting firms, particularly if other sports bookmakers follow, could put the U.K.’s entire online gambling market (the largest legal betting market in the world) beyond the reach of either the Gambling Commission or the Treasury, according to media reports.
Ladbrokes CEO Christopher Bell cited “intense competitive pressure” as the main spur pushing his company offshore. “Our award winning sportsbook Ladbrokes.com is the biggest in the U.K. market but faces aggressive competition from offshore operators who hold a very significant cost advantage by operating from low tax jurisdictions. Operating from the U.K. has become unsustainable and we will relocate by the year end,” he was quoted as saying in an August 6 statement on the Ladbrokes Web site.”
The 15 percent tax on online gambling (the industry had lobbied for a 2 percent or 3 percent tax), one of Gordon Brown’s last acts as chancellor of the Exchequer, has been generally seen as an embarrassment for London, which had sought to position the U.K. regulatory approach as world leading. Instead of applying for licenses with the Gambling Commission as the laws’ drafters had hoped, members of the online gambling industry have boycotted the U.K. and headed offshore.
“The U.K. has effectively turned its back on the industry. It will now be almost impossible for a U.K.-based operator to compete with offshore business,” John Coates, chair of the Remote Gambling Association, said in a March 2007 statement. Sports betting became the last gambling subindustry to remain onshore.
Currently, the total tax faced by U.K.-based sports bookmakers includes the 15 percent profits tax, a 15 percent VAT, corporate tax, and a special 10 percent tax for horse racing betting profits. Tax rates in offshore locations such as Gibraltar, Malta, or the Isle of Man are only about 1 percent to 2 percent, according to the statement on the Ladbrokes Web site, and there is no special horse racing profits tax.”
A Warning for President Obama
Last November’s rejection of the failed GOP didn’t mean voters were ready to embrace a massive increase in the size of the federal government, says Scott Keeter, director of survey research at Pew Research Center:
Obama campaigned for strong government action on the economy and health care, and most of his voters agreed with this direction. But Obama’s efforts to expand the role of government have alienated many of those who did not vote for him but nonetheless gave him high marks when first he took office.
Pew Research’s political values survey this spring showed no surge in public demand for more government. Indeed, anti-government sentiment, which had been building for years, was heightened by the financial bailout and stimulus program.
Anti-Sex School for Johns?
In a novel approach to punishing men who attempt to hire prostitutes, Nashville and other cities are sending first-time offenders to a one-day class where they learn from former prostitutes, health experts, psychologists and law enforcement officers about “the risks of hiring a prostitute.”
This is a waste of time.
Prostitution is “the oldest profession” for a reason: sex is a biological imperative. A day of anti-sex school will have no effect on the demand for prostitution.
The better approach is to legalize.
Under legalization, the vast majority of men would patronize legal establishments. This would also allow quality control, since competition would encourage prostitution services to certify their employees as free from STDs and above the age of consent. Legalization would help the women who serve as prostitutes by reducing the violence they suffer from johns and pimps. In particular, legalization would mainly eliminate forced prostitution.
The claim that prostitution encourages sexual assault does not pass the sniff test. Many countries, plus Nevada and Rhode Island, allow legal prostitution to varying degrees, but no evidence suggests they have a higher incidence of violence toward women.
Union-Funded Study Says Private Schools Expensive!
I know, it’s a bit of a dog-bites-man headline, but bear with me. A new study by a Rutgers University ed. professor purports to tell us about “Private Schooling in the U.S.: Expenditures, Supply, and Policy Implications.” The trouble is, the study presents no data that are representative of private schooling in the U.S.
Author and ed school professor Bruce Baker analyzed per pupil expenditures of private schools that had registered with Guidestar.org. Based on its mission statement, Guidestar is a service brings together charities seeking donations with would-be donors, in an effort to encourage philanthropy. Only a fraction of the nation’s private schools participate, and they are self-selected into that group. It is reasonable to think that the schools that self-select into Guidestar are the ones most avidly seeking donations. According to a PowerPoint presentation on Guidestar’s site, its top five types of users are:
- Non-Profit Development Directors
- Non-Profit Fundraising Directors
- Grant Writers
- Foundation Grants Administrators and Donor Services Managers
- Corporate Foundation Giving Program Managers
Quite possibly, the private schools most actively seeking non-tuition revenue are the ones… receiving the most non-tuition revenue. So not only is the Guidestar population of private schools not randomly selected, and non-representative of private schools nationally, there is reason to believe it is biased in the direction that its author and funders favor.
This would be bad enough, but it gets worse. The author makes no serious attempt to determine the extent of the bias, or to control for it. In fact, he consciously makes it worse: he choses to eliminate from consideration any private schools reporting revenues or expenditures under $500,000, thereby excluding smaller, less expensive schools.
I have literally NEVER seen a serious academic study that starts from a sample that is known to be biased in the direction favored by its funders and then consciously makes matters worse by actively skewing it even further!
An example of the kind of analysis that is supposed to accompany the presentation of a non-random sample to ascertain extent and direction of bias appears in my own 2006 study of Arizona private schools, available here. I dedicate five pages (beginning on page 14) to an assessment of whether and to what extent my survey respondents differed from the universe of all Arizona private schools. Significant effort was expended on that section of the study, because it is both necessary and expected. I was disappointed, though not surprised, by the absence of such a section in the Baker study.
Not only can the Baker study not tell you how much U.S. private schools really spend, it seems to have a little difficulty getting the public school spending figures right, too. For instance, there is a line on page 42 implying that DC public schools were spending $14,000 in 2007. Federally-reported data show that DC was already spending over $18,000 per pupil in 2005-06. And I’ve shown that it spent $28,000/pupil in 2008-09.
Finally, did I mention that Baker’s study was funded by the NEA-bankrolled “Great Lakes Center for Education Research and Practice”? As Ed Sector pointed out a couple of years ago: “The Great Lakes Center and the NEA’s Michigan affiliate are also linked on a personal level: [the Center's director] Teri Battaglieri is married to Michigan Education Association Executive Director Lou Battaglieri.”
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Update: Note that the reason Guidestar only has financial information for a small fraction of the nation’s private schools is that the vast majority of U.S. private schools are religious, and religious schools are not required to file IRS Form 990 (from which Guidestar gets its financial data). The religious private schools that do file Form 990 are thus a small self-selected group that is presumably seeking to maximize its revenue from charitable donations, and hence very likely biased toward higher spending schools.
Monday Links
- Seven ideas for dealing with North Korea.
- Paging the Fifth Amendment: Florida high court rules that the state can seize your private property without giving you a dime.
- How to cut the deficit by spending less. It sounds crazy, but it just might work.
- Why stop at “Cash for Clunkers”? Why not have a “Cash for Everything” program? Because it was a dumb idea to begin with, that’s why.
- Podcast: When Germany enacted their own “Cash for Clunkers” scheme, some of the old vehicles were illegally exported and sold out of the country before being destroyed. Could it happen here? Would that be so bad?
Lighting for People, not Politics
Unfortunately, there are many good (and sad) examples of Uncle Sam’s insatiable desire to regulate the smallest aspects of our lives. Legislators can’t even let us decide which light bulbs to buy. Government believes that it knows best, and is banning the venerable incandescent bulb.
Lighting consultant Howard Brandston makes a plaintive plea for lighting that serves people rather than politics:
The Energy Independence and Security Act of 2007 will effectively phase out incandescent light bulbs by 2012-2014 in favor of compact fluorescent lamps, or CFLs. Other countries around the world have passed similar legislation to ban most incandescents.
Will some energy be saved? Probably. The problem is this benefit will be more than offset by rampant dissatisfaction with lighting. We are not talking about giving up a small luxury for the greater good. We are talking about compromising light. Light is fundamental. And light is obviously for people, not buildings. The primary objective in the design of any space is to make it comfortable and habitable. This is most critical in homes, where this law will impact our lives the most. And yet while energy conservation, a worthy cause, has strong advocacy in public policy, good lighting has very little.
He hopes for a congressional reversal of the ill-considered prohibition. If that doesn’t work, people do have one more option: stock-piling bulbs for future use. Of course, that probably would lead to the creation of a federal light bulb police, tasked with wiping out the black market in incandescent bulbs. “Use a bulb, go to jail” may become the newest law enforcement slogan!
Wall Street, Big Oil, and Federal Workers
What do workers in finance, energy, and the federal government have in common? Very generous compensation packages, according to data from the Bureau of Economic Analysis.
When I posted federal compensation data last week, I received a flood of comments that disputed my contention that federal workers are overpaid. A common retort was that “federal workers are not burger flippers.” That’s true, but workers in the computer systems design, computer manufacturing, and chemicals industries are not burger flippers either, yet those folks also earn less than federal workers, on average.
The Bureau of Economic Analysis presents compensation data for 72 industries that span the U.S. economy (Table 6.2D). Figure 1 shows the 20 industries with the highest levels of average compensation, including wages and benefits. It also shows the average for all U.S. private industries and the average for the industry with the lowest compensation, which, indeed, includes burger flipping. (I’ve simplified the names of the industries in some cases).
Federal civilian workers have the seventh highest average compensation of 72 industries. Compensation in the federal civilian workforce is topped only by compensation in three finance-related and three energy-related industries.
Should federal compensation be so high? We are always told that the 1.9 million federal civilian workers are “public servants,” implying that they are selflessly sacrificing for the good of the nation. I’m sure that most federal workers are dedicated employees, but looking at these compensation levels, I don’t see much sacrificing going on.
It is true that there are some elite agencies in the government that need to have high compensation levels. But the bulk of the federal workforce is in sprawling bureaucracies such as the U.S. Department of Agriculture, which has a huge army of about 100,000 workers. The main job of USDA workers is to administer farm aid, food stamps, and other subsidy programs. That sort of paper-pushing work is not rocket science.
The other point I made last week is that the BEA data makes clear that federal compensation has skyrocketed this decade. Figure 2 provides more support for that claim.
Federal civilian workers had the fifth highest average compensation increase among 72 industries between 2000 and 2008. Average federal civilian compensation increased 57 percent, which compared to the overall average increase in the private sector of 31 percent.
Let’s slow this freight train down. Federal pay ought to be frozen for a period of years, at least until the economy recovers and private sector pay starts catching up.
The Government Can!
I don’t sing in my videos (much to the relief of every living creature). I don’t dance either (there is a limit to self-deprecation). But Tim Hawkins does sing and dance, and he uses those skills to great effect in this video. Enjoy.
Why Is Marijuana Still Illegal?
According to Rasmussen Reports, a majority of Americans believe that alcohol is more dangerous than marijuana:
Pot or not, that is the question.
Fifty-one percent (51%) of American adults say alcohol is more dangerous than marijuana, according to a new Rasmussen Reports national telephone survey. Just 19% disagree and say pot is worse.
But 25% say both are equally dangerous. Just two percent (2%) say neither is dangerous.
Younger adults are more likely than their elders to view alcohol as the more dangerous of the two.
Fifty-three percent (53%) of women say alcohol is more dangerous than marijuana, compared to 48% of men. Men by a two-to-one margin over women say pot is riskier, but women are more inclined to say both are dangerous.
Unmarried adults are more critical of alcohol than those who are married. Those with children at home think alcohol is more dangerous than those without kids living with them.
So why are pot users still being tossed into jail?
There are lots of good reasons why people shouldn’t use drugs. But making drug use illegal only compounds the social consequences, turning a moral and health problem into a legal and criminal problem. The result is the worst of both worlds: all of the problems of drug use plus all of the problems of prohibition. Unfortunately, those consequences flow overseas, further undermining fragile societies such as Afghanistan, Colombia, and Mexico and ultimately American security objectives as well.
It’s time to call off the Drug War.
Costa Rican President Calls for New Constitution
President Oscar Arias of Costa Rica has joined the trend in Latin America of calling for a new constitution that would expand executive powers and get rid of “unnecessary checks” on the president’s authority. Although Arias has less than 9 months left in office and can’t run for reelection, his brother and current minister of the presidency — a primer minister of sorts — has openly said he’s interested in running for president in 2014. A new constitution with expanded executive powers would fit him just fine.
Arias’ call has been received with broad skepticism. La Nación, Costa Rica’s leading newspaper, said that trying to make the government more efficient through a constitutional convention was like “killing a mouse with cannon fire.” The newspaper also said that the idea of dismantling the checks and balances on executive power sounds like an effort to create an “imperial presidency.” Maybe we should send our colleague Gene Healy to study the case.
However, the most disturbing aspect of Arias’ call was his harsh criticism of the media. Borrowing from the script of Rafael Correa in Ecuador and Hugo Chávez in Venezuela, Arias described news outlets as “corporations interested in making a profit” that don’t necessarily pursue the “public good.” He asked the media to “tone down” its criticism of government officials, and said that journalists “should understand their role within a higher framework.” He complained that news outlets claim to represent the public interest, without any control or accountability.
That a politician with a thin skin complains about media criticism is hardly news. However, the fact that Arias did it while calling for a new constitution that would change the institutional and legal framework of Costa Rica (including the role of the media) should be interpreted as a threat to freedom of the press.
Most people outside Costa Rica see Arias as an accomplished democrat who won the Nobel Peace Prize for his efforts to bring peace to Central America during the 1980s. Most recently he attempted to mediate the conflict in Honduras after Manuel Zelaya was (legally) removed from office. However, many people in Costa Rica fret about what they perceive as an increasingly controlling style of governing by Arias and his brother, intimidating the media, bullying the opposition, crowding key government posts with allies and cronies, and now hoping for a dynastical succession in 2014.
Friday Links
- Nearly 30 European countries have agreed to end their government mail monopolies in the next five years. The U.S. Postal Service has estimated losses of $7 billion this year. It’s time to privatize.
- If you are curious about how President Barack Obama’s health plan would affect your health care, look no further than Massachusetts. You might not like what you find.
- How the outcome of the health care debate will affect our greatest liberty — life.
- Keep an eye on the troubling voting procedures in Europe.
- Podcast: The Age of Reagan
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