Archive for November, 2009
U.S. “the Most Open Market”? Not Even Close
Accompanying the president on his trip to China this week, U.S. Trade Representative Ron Kirk couldn’t resist repeating the old line that the United States is “the most open market in the world.” The chief U.S. trade negotiator was trying to rebut criticism from Chinese officials that the Obama administration, with its 35 percent tariff on Chinese tire imports and all that, has retreated from a commitment to free trade.
The administration’s “more open than thou” rebuttal is a weak one. As I write in Chapter 9 of my new Cato book, Mad about Trade:
If an Olympics were held for the most open economy, the United States would be out of medal contention. According to the most recent annual Economic Freedom of the World Report, people living in 26 other countries enjoy greater “freedom to trade internationally” than do Americans. The report considers not only tariffs on imports but regulatory barriers, exchange rate and capital controls, and actual levels of trade. Bragging rights for the most open economies belong to, in descending order, Hong Kong, Singapore, the United Arab Emirates, Chile, the Netherlands, Ireland, Hungary, Switzerland, the Slovak Republic, and Estonia. The United States lies back in the pack, in 27th place among the 140 ranked nations.
Despite the claims of openness, our government imposes significant barriers against imported clothing, footwear, leather products, glassware, watches, clocks, table and kitchenware, costume jewelry, pens, mechanical pencils, musical instruments, cutlery, hand tools, ball and roller bearings, ceramic wall and floor tile, railway cars, processed fruits and vegetables, rice, cotton, sugar, milk, cheese, butter and canned tuna.
Since the book was printed, a new Economic Freedom of the World Report has been published. The United States has slipped to the 28th “most open market in the world.”
John Yoo on Civilian Trials for Terrorism Cases
Yesterday, the Wall Street Journal published an article by John Yoo that criticized the Obama administration’s decision to prosecute Khalid Sheik Mohammed (KSM) and several of his fellow Guantanamo prisoners in civilian court. Yoo makes too many claims for me to respond to in a blog post, but let me address a few.
According to Yoo, “The treatment of the 9/11 attacks as a criminal matter rather than an act of war will cripple American efforts to fight terrorism. It is in effect a declaration that this nation is no longer at war.” That is an odd thing to say for several reasons. First, it is all over the news: We are still very much at war. Second, even if Obama pulled U.S. troops out of Afghanistan and Iraq, would the United States really be “crippled” in the fight against bin Laden? ”Crippled” suggests the U.S. is on the verge of joining Costa Rica or Belize in terms of our military strength. Farfetched. Third, the Bush administration also treated the 9/11 attacks as a criminal matter when it indicted and prosecuted Zacarias Moussaoui in civilian court. Yoo seems to think that that call was mistaken, but did it ”cripple” the U.S.? Did the Bush administration, in effect, declare that the U.S. was “no longer at war”? Of course not. So why does Yoo make that claim now? Odd.
Next, Yoo complains that by bringing KSM to New York for a civilian trial, the prisoner will get to “enjoy the benefits and rights that the Constitution accords to citizens and resident aliens.” This is another odd statement because the benefits of a civilian trial (public trial, jury trial, calling witnesses, confronting adverse witnesses, etc) are not limited to citizens and resident aliens. After all, Asian tourists and illegal immigrants from Mexico, to take two examples, are not “citizens” or “resident aliens.” If a federal prosecutor were to accuse them of a crime, they would get a trial in civilian court. A claim that the government could deny, say, a nonresident alien from China a civilian trial would be totally at odds with American constitutional law. Yoo may disagree with that law, but if he does, he should have made that clear because he left a misleading impression.
Third, Yoo calls the Moussaoui trial a “circus” because it provided Moussaoui with a “platform to air his anti-American tirades.” Well, to start, just because Yoo calls a trial a “circus” does not make it so. The federal judge in the Moussaoui case did what we would expect a good American judge to do–that is, give the person who is accused of the crime a fair opportunity to speak and to offer a defense. At the same time, the judge must maintain order in the courtroom and anyone who becomes disruptive (including the accused) can be removed. The potential problem of a “tirade” is nothing new and is not, of course, limited to persons who share bin Laden’s twisted worldview. Some recent examples include the Unabomber and the shooter at the Holocaust museum. In short, it is a weak argument to critique our system of civilian trials because the defendant may want to insist on saying something that is unpopular, unpleasant, or incoherent. And, at the time of sentencing, a trial judge can respond, as Judge William Young did when he sentenced Richard Reid to life behind bars.
For more on the subject of military commissions, go here and here. For more on John Yoo, go here and here.
Fort Hood: That No Such Attack Ever Occurs Again
Colleagues and correspondents have kindly shared their understandable discomfort with my conclusion in recent posts that the Fort Hood shooting was nearly impossible to discover in advance, and thus prevent.
The one ray of hope I can offer is that the shooting itself makes such things more foreseeable, putting the military community and investigators on notice prospectively that this kind of thing can happen. No formal policy change can do more than the Fort Hood shooting itself to ferret out inchoate incidents like it in the future. Belief that the Fort Hood shooting was easily preventable, though, is 20/20 hindsight.
I first read How We Know What Just Isn’t So: The Fallibility of Human Reason in Everyday Life to get a handle on how it became so plausible after the September 11, 2001 attacks that terrorists might next use chemical, biological, and nuclear weapons. Recall that their weapons of choice for the World Trade Center and Pentagon attacks were box cutters. How did we proceed to the assumption that nuclear terrorism was next?
One explanation is the “representativeness heuristic,” a mental shortcut people use to organize the world around them. “According to this overarching belief, effects should resemble their causes, instances should resemble the categories of which they are members, and, more generally, like belongs with like.” (page 133)
Big causes have big effects, so big effects come from big causes. … Right?
K-12 Education Tax Credits Save Millions
The latest fiscal impact review of Arizona’s scholarship tax credit programs estimates that they saved between $44 million and $186 million last year. The programs offer individuals and businesses dollar-for-dollar tax credits if they make donations to non-profit K-12 scholarship-granting organizations. Those organizations, in turn, provide private school tuition assistance.
This is much higher than the savings estimate offered by the Arizona Republic last month, as the AZ Republic story linked above is quick to point out. I deal with the reasons for the discrepancy below, but first, here’s the crucial fact that the Republic has missed yet again: if the tax credit programs were significantly expanded, such as by raising the donation caps, the state would undeniably save many hundreds of millions of dollars annually. In fact, if the share of AZ schoolchildren participating in the program rose to just 40 percent, taxpayers would save billions of dollars a year – even if the size of the individual scholarships had to triple to achieve that result.
The Republic’s failure to report that inescapable and rather important fact does it no credit.
Now, on to the reason for the discrepancy in savings numbers. The body of the story hints at it: the Republic’s estimate assumed that private school enrollment would have been flat or increasing without the tax credit program, while the latest estimate does not.
As I pointed out at the time, the Republic’s assumption is demonstrably mistaken. Official AZ statistics show that enrollment in private schools peaked before the tax credit program had gotten under way, and had begun to decline as a result of rapid growth in the (tuition-free) charter school sector. So the Republic’s savings estimate was almost certainly too low.
As the author of the latest study admits, his assumptions about the true number of students who have migrated to private schools as a result of the program are speculative, but at least they are reasonable and not obviously erroneous, as the Republic’s were. In any event, the savings from a much larger migration to the private sector are not in doubt.
In Defense of Error-Laden Reporting
Tempted though I am to join the pile-on over the many inaccuracies in the data on the Recovery.gov stimulus reporting site—including claims of jobs created in non-existent congressional districts—I think the White House actually makes a good point here: You can get something out fast, or you can get it out bug-free, but you usually can’t do both. And in fact, concerns about “data quality” at government agencies have often been a great enemy of transparency. It is, after all, embarrassing when your department puts out information that’s poorly formatted or riddled with typos or just plain wrong. But in practice, that means agencies sit on the data until someone gets around to fixing it, which is seldom a high priority. The insight behind open source is that the best debugger is a release: Ten-thousand coders actually using software are going to find and patch problems faster and better than any in-house team. And the same holds here: Get the data out, and dumb mistakes get spotted.
There are, to be sure, ways some of these errors could have been avoided. As David Freddoso points out, it would have been trivial to design the backend to only permit legitimate congressional districts to be entered. But again, getting the site up quickly means they can count on critics to point out those sorts of possibilities for improvement. That said, Freddoso surely has a point when he argues that there’s no sane reason this kludgy beast of a site should have cost $18 million. Far better would have been to take the open-source logic to its conclusion and simply dump the raw data on a server in XML format, then let outside groups—maybe the Sunlight Foundation or Americans for Tax reform or just some clever lone hacker—figure out how best to mash it up and present it.
Talkin’ Libertarianism
In response to a question today, I found a C-SPAN appearance from 2006 on their website. Host Steve Scully was teaching a class on “Issues in Media and Public Policy” with students at the Cable Center’s Distance Learning Studio in Denver. He asked me to join him for a discussion of libertarianism and public policy. For about an hour and 20 minutes I answered questions posed by both Scully and the students. Video of the event can be found on C-SPAN’s website.
Tuesday Links
- In the past eight months, the unemployment rate has jumped from 7.2 percent to 10.2 percent. Here’s why.
- Three trillion reasons to hope the Senate is not as fiscally reckless as their counterparts in the House on health care reform.
- Obama a federalist? Not quite: “Not yet a year into his administration, Obama’s record on 10th Amendment issues is already clear: He’ll let the states have their way when their policies please blue team sensibilities and he’ll call in the feds when they don’t.” More here.
- It’s time to get immigration reform right: “Republican leaders need to liberate themselves from the Lou Dobbs minority within their own ranks that will oppose any legalization. Democratic leaders need to face down their labor-union constituency that opposes any workable temporary-visa program. Working together, President Obama and a bipartisan majority in Congress can seize the current opportunity to reform the immigration system and finally fix the problem of illegal immigration.”
- Podcast: “Preventing the Next Fort Hood Shooting“
The Negative Feedback Loop Begins
I wrote on the Tech Liberation Front blog a couple of months ago about the shady practice among a few Internet retailers of handing off customers who accept a “special offer” to a company that charges people a monthly fee for some kind of credit monitoring service. And I argued hopefully that maybe technologists and the Internet community could generate a response to this problem:
Being a smart, informed, and aggressive consumer is each person’s responsibility if a free market is to operate well. The alternative is a negative feedback loop in which government authorities protect us, we rely on that protection and stop policing retailers. Thereby we abandon the field of consumer protection to government authorities, who—try as they might—can never do as good a job for us as we can for ourselves.
The Senate Commerce Committee is having a hearing today on “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers.”
Government Electric
The recession has given the government an excuse for major interventions into markets, and the word “bailout” is found in business section almost daily. While there are justified concerns over government bailouts of large corporations, big businesses cashing in on the economic stimulus plan have flown below the radar.
In an essay for Cato Unbound on the issue of corporations and markets, libertarian theorist Roderick Long states: “Corporate power depends crucially on government intervention in the marketplace.” This dependency is on full display in an insightful Wall Street Journal story on General Electric’s overt efforts to hitch its future to billions of stimulus dollars.
The article is worth reading from start to finish, but here are some snippets:
The government has taken on a giant role in the U.S. economy over the past year, penetrating further into the private sector than anytime since the 1930s. Some companies are treating the government’s growing reach — and ample purse — as a giant opportunity, and are tailoring their strategies accordingly. For GE, once a symbol of boom-time capitalism, the changed landscape has left it trawling for government dollars on four continents.
‘The government has moved in next door, and it ain’t leaving,’ Mr. [GE CEO Jeffrey] Immelt said at the International Economic Forum of the Americas in Montreal in June. “You could fight it if you want, but society wants change. And government is not going away.’
A close look at GE’s campaign to harvest stimulus money shows Mr. Immelt to be its driving force… Inside GE, he pushed his managers hard to devise plans for capturing government money.
By January, Mr. Immelt had become a leading corporate voice in favor of the $787 billion stimulus bill, supporting it in op-ed pieces and speeches. Reporters who called the Obama administration for information on renewable-energy provisions in the legislation were directed to GE.
When the stimulus package was rolled out, Mr. Immelt instructed executives leading the company’s major business units “to put together swat teams to get stimulus money, and [identify] who to fire if they don’t get the money,” says a person who heard him issue the instructions.
In February, a few days after President Obama signed the stimulus plan, GE lawyers, lobbyists and executives crowded into a conference room at GE’s Washington office to figure out how to parlay billions of dollars in spending provisions into GE contracts. Staffers from coal, renewable-energy, health-care and other business units broke into small groups to figure out “how to help companies” — its customers, in particular — “get those funds,” according to one person who attended.
It speaks poorly for American capitalism when one of the nation’s biggest economic engines is assembling “swat teams” to go after taxpayer money. Instead of corporate America trying to figure out what products and services to bring to the marketplace, big business is taking its cue from politicians and bureaucrats in Washington. This isn’t socialism; it’s state corporatism and it bodes ill for long-term economic growth.
See this essay for more on the problems with special-interest spending. Also see this essay on why the excuses for government interventions in energy markets fall short.
A Rarity: Newspaper Argues Against Techno-panic, Cites Constitution
Progress & Freedom Foundation president and Cato alumnus Adam Thierer has done yeoman’s work for years pointing out, and arguing against, the phenomenon of techno-panic as it relates to children. That’s not the only area in which techno-panic can tighten its grip on the neck of common sense and the constitution, of course.
But here’s a delight I ran across this morning: the Los Angeles Times arguing against techno-panic despite the use of Web sites to research and case potential burglary victims (by the “bling ring,” soon to be the subject of a major motion picture).
The Times editorializes:
[T]hieves [did not] have to wait for the invention of Google maps to reconnoiter neighborhoods in search of easily accessible homes. That’s worth remembering if, as we fear, some legislator decides that a law should be passed to prevent Internet surfers from looking at houses they easily could scope out from the sidewalk. . . . . A law against photographing a home or what occurs outside it in plain sight — or disseminating the images to others — would be overreaching, not to mention unconstitutional.
What a delight—a major newspaper arguing to keep a hot issue in perspective and citing the constitution as a limit on government power! Thank you, L.A. Times.
Education Tax Credits the Choice for Independents in Virginia
My last post focused on the general results of a school choice poll in Virginia. Contra conventional wisdom, education tax credits are significantly more popular and less opposed than are charter schools.
Even more interesting is the stability of support for donation tax credits across party identification. A stunning 64 percent of Democrats support credits, with only 21 percent opposed. Independents support credits 65 percent to 22 percent.
Charters are supposed to be the poster child for policies targeting Independent voters. And yet charters draw 59 percent of support from independents and 23 percent opposition.
That’s a swing from a 43 percent margin of support for credits to a 36 percent margin for charters. And vouchers run even further behind with a 22 percent margin of support from Independent voters.
Smart politicians looking for cost-saving and effective education reform would do well to take note of these numbers.
More to come . . .
What’s the Most Popular Choice Reform in Virginia?
Pop Quiz: What’s the best education policy a moderate politician in Virginia can pursue?
- Vouchers
- Charter Schools
- Education Tax Credits
Conventional wisdom says go with charter schools, because they are a bipartisan, moderate compromise reform that will get you the largest number of Independents and the least opposition. Vouchers are too hot to touch. And what’s an education tax credit . . . oh, right, they’re too controversial as well
Conventional wisdom is WRONG.
The Friedman Foundation has released another in their invaluable series of state education polls, this time for once-purple Virginia. Their findings are consistent with other polls, and the pattern is worth highlighting.
Charter schools draw 59 percent in support and 26 percent in opposition. Vouchers find 57 percent in support and 35 percent in opposition. Personal-use credits get the support of 59 percent and are opposed by 32 percent.
Donation tax credits are supported by 65 percent of voters and opposed by 23 percent.
Charters, vouchers, and personal-use credits, in other words, are equally popular, with credits and vouchers drawing a bit more fire. And donation credits are wildly popular with only a rump of opposition.
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