Archive for December, 2009
Death Panels? Sarah Palin Was Right
PolitiFact.com gave Sarah Palin their “Lie of the Year” award for warning on August 7 that the Democrat’s idea of “cost containment” implied rationing by “death panels.”
The self-described fact-checking web site of the St. Petersburg Times claimed Palin was criticizing a provision in the House bill under which “Medicare would pay for doctors’ appointments for patients to discuss living wills, health care directives and other end-of-life issues.”
The claim that Governor Palin confused one-on-one counseling between doctors and patients with any sort of “panel” was always ridiculous on its face. Indeed, that claim should itself have been a leading candidate for “Lie of the Year.” Yet Palin’s critics kept on equating death panels with counseling throughout the year, as though they could not even begin to understand plain English.
The Politicization of the Law
Are law and politics separate realms? That’s the ideal. But Adam Liptak, Supreme Court reporter for The New York Times, raises questions today about whether it’s any longer the case. Drawing on a study published last month in The Vanderbilt Law Review and summarized in the autumn issue of The Green Bag, which collected data from 1882 through 2006, he notes that, beginning around 1990, Supreme Court clerks “started to take jobs that reflect the ideologies of the justices for whom they worked.” That’s “cause for concern,” says one of the study’s authors, NYU law professor William E. Nelson, “because it’s a further piece of evidence of the polarization of the court.”
In particular:
Clerks from conservative chambers are now less likely to teach. If they do, they are more likely to join the faculties of conservative and religious law schools. Republican administrations are now much more likely to hire clerks from conservative chambers, and Democratic administrations from liberal ones….
The Clinton administration hired 96 former clerks, but only 16 percent of them came from the chambers of the four most conservative justices…. Of the 89 former clerks hired by the administration of George W. Bush, on the other hand, 68 percent came from those four chambers.
More striking still is what the study shows about the legal academy. From about 1940 to 1990, “about a third of all clerks became law professors,” with little correlation to the justices ideological leanings. (N.B.: “conservative” justices were few and far between until late in that stretch.) But more recently “only 19 percent of clerks from the four most conservative justices … joined the legal academy and only 7 percent went to one of the top 10 law schools” as ranked by U.S. News & World Report. And “a significant minority joined the faculties of religious or conservative law schools.” (“Conservative law schools,” I should note, may be close to an oxymoron.) By contrast, “clerks for the other five justices followed the historical pattern, with 34 percent joining the legal academy, about half of them at the elite schools.”
All of which, the study says, reinforces the idea that the court is “a superlegislature responding to ideological arguments rather than a legal institution responding to concerns grounded in the rule of law.” And that, Liptak concludes, “is not easy to reconcile with the view that that law and politics are, or at least ought to be, different realms.”
It’s good to have all of this drawn together, but it’s hardly surprising to anyone who’s been watching the law schools, the courts, and the law over the years. Liptak points to an important source of this change: “The rise of the organized conservative legal movement, including notably the Federalist Society,” which resulted in turn from “the sense among conservatives that law school faculties are overwhelmingly liberal.”
It’s no accident, therefore, that the change became noticeable around 1990. The Federalist Society came into being only in 1982. Over the next several years it would slowly influence the legal debate — in the law schools, and later among lawyer practice groups — and influence future clerks along the way. And it was only during the Reagan administration that Republicans began to approach nominations to the Court more seriously and systematically, from an ideological perspective.
But those efforts were not the root cause of today’s politicization of the courts and the law. They came about because the law schools, the courts, and the law were already long politicized – albeit in only one direction, which gave a deceptive picture. When all three institutions were marching only one way, toward the modern administrative state, it seemed that there was little dissension, and hence little politicization. But in truth, the politicization of the law — politics replacing law — had begun much earlier, with the Progressives; it was institutionalized by the New Deal Court; and it continued until the late 1960s and into the 1970s, when conservative and libertarian legal scholars began to call for separating politics and law. See here for a more detailed treatment of those developments, and here for the roots of our politicized law in the Progressive Era.
University of Michigan Study Confirms Link between Financial Bailout and Corruption
Since Senators engaged in open extortion and bribery to enact Reid’s government-run health care plan, it is hardly newsworthy that Washington is riddled with corruption. But the magnitude of sleaze is probably far greater than most people realize. There is a new study from a couple of academics at the University of Michigan, who found significant relationships between lobbying and bailout money, as well as a greater chance of getting bailouts depending on a bank’s ties with either the Federal Reserve or key members of Congress. Hopefully, people across America will draw the obvious conclusion and realize that big government is inherently corrupting, as discussed in this video. Reuters has the details on this latest example of big government and malfeasance:
U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday. Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan’s Ross School of Business. Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds. Political influence was most helpful for poorly performing banks, the study found. “Political connections play an important role in a firm’s access to capital,” Sosyura, a University of Michigan assistant professor of finance, said in a statement. Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP’s Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds.
Do Bring a Phonecam to a Snowball Fight
By now, you’ve probably heard the story—and seen the video. During the weekend’s Snowpocalypse™ in DC, a gaggle of young urbanites, using Twitter and other social media, announced a big group snowball fight at the corner of 14th and U Streets. For a while, it was all good fun, with the participants periodically stopping the skirmish to help dislodge a motorist for a snowdrift, amid collective cheers. But an off-duty plainclothes cop whose Hummer had been hit by a few snowballs lost his cool—and advanced on the crowd to berate them with his gun drawn. You’d think an angry, out-of-uniform guy brandishing a gun might set off a dangerous stampede in the snow, but true to form, the DC crowd responded with chanting: “You don’t bring a gun to a snowball fight!”
Initially, the Metropolitan Police Department “reviewed the evidence” and concluded that the officer had only been holding a cell phone after all—folks who’d said it was a gun must have just imagined it, what with all that snow. But it turns out there were a whole lot of video cameras and phonecams there, and still shots and recordings began to circulate on the Internet, making it impossible to deny what had happened. By Monday, the chief of police had issued a statement calling the officer’s behavior “totally inappropriate” and announcing that he’d be relegated to desk duty pending further inquiry.
As anyone who follows the excellent work of my colleague Radley Balko will be well aware, things often play out quite differently—with departments circling the wagons, and no serious accountability for far more egregious abuses of authority. But video—increasingly ubiquitous and portable—can make a difference. And it strikes me that, in one sense, it helps remedy other kinds of social inequality. Reviewing that video of the snowball scene, you might point out that the crowd is full of white 20-somethings, many of whom (given the city’s demographics) are almost certainly college-educated professionals, while police misconduct toward less privileged groups is far more likely to be ignored.
What is privilege, though? In cases like these, it consists largely in the ability to be seen and heard—to attract media attention, to articulate your story in a clear and compelling way, to be considered credible by press and the community. All of these, unfortunately, depend enormously on class, status, race, and education. Unless there’s video. And video is democratic these days. You’d have to poke around a bit to find even a bottom-of-the-line cheapo cell phone that didn’t come with at least a still camera, and likely video capture to boot. So while there’s been some attention paid to the potential of this kind of “Little Brother” surveillance to increase accountability—the to lessen disparity in power between citizen and cop—it’s also worth stressing the way it can lessen certain kinds of disparities between citizens.
That said, and just going by memory, it seems like most of the stories I encounter in this vein still involve white, middle-class, college-educated young people. One possibility is that this shows I’m wrong, and that other aspects of privilege still play into their videos circulating while others languish. Another, though, is just that they’re both accustomed to this kind of routine use of technology and sharing of data, and that they take their social power for granted. That is, it occurs more naturally to them that the right response to this kind of misbehavior is to record and circulate it. If it’s mostly the latter, we’re on an interesting precipice, where the main remaining precondition for the leveling effect to kick in is just awareness that the other preconditions are in place. If that’s right, the next few years should be interesting.
The Big Government-Big Business Health Care Plan
Ross Douthat at the New York Times, with help from Reihan Salam and Tim Carney, explains how the Senate health care bill can be both a government takeover and a huge subsidy to the insurance industry:
We’ve achieved an unusual left-right convergence in the health care debate: Both conservatives and liberals are attacking the current version of reform as an egregious giveaway to the insurance industry. (Both sides sound an awful lot like Tim Carney, in other words.) Suddenly, it’s hard to tell the difference between the right’s Yuval Levin (“The bill is basically a massive subsidy to the insurers — it is not a reform of the system”) and the left’s Markos “Daily Kos” Moulitsas (“it’s unconscionable to force people to buy a product from a private insurer that enjoys sanctioned monopoly status”).
Ed Kilgore argues that the two sides’s concerns, while superficially similar, are actually contradictory:
… on a widening range of issues, Obama’s critics to the right say he’s engineering a government takeover of the private sector, while his critics to the left accuse him of promoting a corporate takeover of the public sector. They can’t both be right, of course, and these critics would take the country in completely different directions if given a chance.
He’s right about the gulf between the critics’ prescriptions, but I think he’s wrong about the incompability of their critiques. Here’s Reihan, explaining why:
Actually, it is entirely possible for both sets of critics to be correct. The concern from the right isn’t that the Obama approach will literally nationalize for-profit health insurers. Rather, it is that for-profit health insurers will continue evolving into heavily subsidized firms that function as public utilities, and that seek advantage by gaming the political process. Profits, including profits governed by medical loss ratios, can and will then be cycled into political action, which leads to the anxiety concerning a “corporate takeover of the public sector.” Again, progressives don’t literally believe that such a takeover is happening. Instead, they believe, rightly, that subsidies without effective cost containment represent a massive windfall for the private insurance sector, including non-profit insurers that generate salaries for large numbers of politically active middle and upper middle class professionals.
So yes, Obama does not intend to nationalize the private insurance industry and then turn around and auction off the new nationalized health agency to Rupert Murdoch or Monsanto. But the anxieties of critics on the left and right are, to italicize for a moment, perfectly compatible.
The point is that the more intertwined industry and government become, the harder it is to discern who’s “taking over” whom — and the less it matters, because the taxpayer is taking it on the chin either way. Or to put it another way: The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which …
Tim Carney will discuss his book, Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses, at a Cato Book Forum on January 12.
Glen Whitman Discusses Cato Study on Medical Innovation
Reason.tv has put together a great video interview where economist Glen Whitman discusses his recent Cato Institute study, “Bending the Productivity Curve: Why America Leads the World in Medical Innovation.”
How would the health care legislation before Congress affect medical innovation? See Reason.tv’s related video: “Would ObamaCare Kill Medical Innovation?“
Duncan Dunked in WSJ
Last week, U.S. Secretary of Education Arne Duncan had an op-ed in the Wall Street Journal declaring that it’s time to end the Federal Family Education Loan program (FFEL) which subsidizes banks and insulates them against almost all lending risk. Duncan wants to eliminate the “middle man” and have the vast majority of student loans come directly from Uncle Sam, a goal central to the Student Aid and Fiscal Responsibility Act (SAFRA).
Incongruously, after ripping the poor middle people, Duncan explains that they should actually stay firmly attached to federal funds as loan servicers. He then goes on to applaud as an incredible money-saver going to all direct lending.
Fortunately, several astute readers — as well as yours truly — saw right through Duncan’s heap of contradictions and dissembling, and the WSJ has printed numerous letters speaking the truth about student lending and SAFRA.
The Pope Center’s George Leef — who has done great higher-education work with Cato — leads things off with a letter pointing out all the perverse incentives and painful unintended consequences emanating from federal student aid. I bookend that by attacking the most aggravating of all SAFRA-related lies: that the bill would provide $10 billion for deficit reduction. Read any CBO estimate for SAFRA and you’ll see that that is just a bald-faced lie.
Of course, if they didn’t have lies, our student-lending overlords wouldn’t have much to say at all. Which is one of many reasons that the feds should get out of education — including student aid — altogether.
Unequal Robbery Under Legislation
If this health care bill passes, we will need to change the wording on the Supreme Court facade. Out with “Equal Justice Under Law” and in with “Unequal Robbery Under Legislation.”
The legislative process is certainly ugly, but the health care bill would also impose pain and shower taxpayer-funded benefits in unequal ways in an ongoing manner. Senator Nelson, for example, apparently carved out special tax benefits for Nebraska insurance companies while effectively foisting Nebraska Medicaid costs on other states.
It’s one thing for members of Congress to support provisions that are good for their states as long as those things are also good for the nation. But today’s legislators are intent are screwing the other 49 states for selfish political advantage.
How else are we to read Nelson’s hesitation at supporting the health bill until he was apparently bought off? He seems to have been thinking, “I know this bill is bad for the broader nation, but that’s not important as long as they throw in special goodies for my state.”
Nelson and other politicians who want to use government to try and help their states should run for their state legislatures. Congress should be reserved for people willing to put aside their parochial interests and at least try to legislate with the general and common interests of 300 million Americans in mind.
SBA Is Not Small Business Solution
There is a lot of talk in the press about the difficulty small businesses are having obtaining credit. President Obama recently admonished bankers for not lending enough to small businesses. However, it seems obvious that lenders would have a more difficult time finding creditworthy borrowers during a recession. So we don’t need a politician who has demonstrated zero accountability to taxpayers second-guessing lenders, who are accountable to shareholders and markets.
Is a lack of credit a major problem facing small businesses? According to the most recent survey of small businesses by the National Federation of Independent Business, 10 percent reported problems obtaining financing and a net 15 percent reported more difficultly compared to their last attempt. But when asked what is “the single most important problem” facing their business, 32 percent of respondents cited “poor sales,” followed by taxes (24 percent), then government regulations and red tape (11 percent). “Finance and interest rates” came in at 4 percent.
In other words, the NFIB survey indicates that government — not credit availability — is the biggest problem facing small businesses right now.
Regardless, President Obama and members of Congress see the Small Business Administration’s lending subsidies as a solution to the supposed credit problem. The “stimulus” bill passed in February gave the SBA an extra $730 million to make more credit available to small businesses. The government guarantee on SBA’s flagship 7(a) loans was increased to 90 percent and fees intended to help offset losses were eliminated. (The legislation also created a separate program with an anticipated 60 percent default rate that has since become an embarrassment to its patron, Sen. Olympia Snowe, although politicians are rarely embarrassed by their failures.)
Not apt to pass up a practically free lunch, SBA lenders blew through the money and have been pressing Congress for more. The just passed defense appropriations bill gave the 7(a) program another $125 million to extend the higher guarantee and reduced fees. The House’s latest “jobs” bill would spend another $350 million extending the provisions through September. What’s going on is that the extra money is needed to fund the losses that will result from the loosened requirements.
According to Cato adjunct scholar, Veronique de Rugy, the SBA’s default record was already poor:
The Small Business Administration, according to its own inspector general’s Office, has a long-term default rate of roughly 17 percent. This compares to 4.3 percent for credit cards and 1.5 percent for bank loans guaranteed by the Federal Deposit Insurance Corporation.
And a recent report by the SBA’s inspector general concluded that the agency’s improper payment rate was 27 percent, not the 0.53 percent of FY 2008 program outlays it reported.
Adding insult to taxpayer injury, the SBA is largely irrelevant in the credit markets. As Veronique points out, no more than 1 percent of all small business loans are backed by the SBA. Moreover she finds that 75 percent of 7(a) loan guarantees go to about 1 percent of all small businesses in the service, retail, and wholesale sectors — Subway franchises, for example.
In sum, the economy doesn’t need a president pressing banks to make uneconomic loans simply so that he can pretend to be doing something. Nor does it need a government agency like the SBA fostering the same sort of moral hazard that helped sparked the housing bust and recession. The small business community is telling the administration that it would like to see lower taxes and less government red tape. Unfortunately, the administration is promoting higher taxes, costly mandates, more labor regulations, and further government meddling.
Surveillance State More Popular than iPhone
A new Pew poll reveals that most of us think this decade’s been a bit of a bust—little enough surprise there. But when pollsters dug into people’s attitudes toward particular technological and social changes, I was a little taken aback by the incredible popularity of “increasing surveillance and security measures.” They’re not quite as popular as, say, the Internet—but folks love Big Brother better than iPhones, online retail, blogs, or reality TV. That may seem especially odd because even someone who regards those changes as necessary and appropriate cannot be glad that we now find them necessary—and you might expect the association to pull the numbers down.
I won’t get too depressed about this just yet, because I generally think it’s an error to take polls either too seriously—if you ask people for an opinion they don’t have, they’ll formulate one on the spot, but it’ll be about a millimeter thick—or too literally. If you read “How are you? / Fine thanks.” as a sincere inquiry into and report on someone’s welfare, you’re missing something rather elementary about our social world. Ditto, I think, if you assume that the large numbers of people who purport to be unsure whether Barack Obama is perhaps a secret foreigner literally believe in an insane conspiracy theory. It has a propositional form, but it’s more about signaling an attitude than a factual belief. When “confidence” in government spiked right after 9/11, should we suppose people had really revised their assessment of the government’s competence upward? Of course not, it was more like a vote of confidence. It’s like whispering “there’s no such thing as ghosts!” to yourself—something you do precisely when you don’t feel so certain anymore. (I’ve elsewhere referred to these as “symbolic beliefs.”)
So what are people doing when they say increased surveillance and security measures are a “change for the better.” Some people, of course, are really expressing a considered political opinion about the PATRIOT Act or other reforms. The phrase “security measures” may suggest to others just those measures which make us more secure—in the same way “Terrorist Surveillance Program” implies a program that surveils only terrorists, even if the rationale for the program is precisely the lack of sufficient evidence that its targets are terrorists. But I expect there’s also an element of “there’s no such thing as ghosts” at work. Given that our intelligence efforts fell spectacularly short at the decade’s start, we have to hope there’s been a net change for the better. And the downsides to expanded surveillance are largely invisible, slow, and structural: You have to go out of your way to think about them or they’re not especially evident. The rest of the survey items, though, prime people to think about “better” in terms of concrete differences in our daily experience. They may think of the inconveniences of lines at the airport, but there’s nothing in the rest of the context that seems likely to activate longer-term political concerns. The same question in a survey about other explicitly political trends might trigger a different response.
This is, incidentally, one reason I think privacy advocates make an understandable error when we put too much emphasis on the personal effects of expanded surveillance: “Do you want the government reading your e-mail?” For a lot of people, this will just spotlight how little direct harm they seem to individually experience as a result of surveillance. It’s less dramatic an appeal, but you really do need to ask people to focus on what the explosion of surveillance means for the structure of a free society, not just gauge immediate consumer satisfaction.
Last Minute Christmas Shopping?
This is the last week to buy presents, so for those of you who can’t find zhu zhu pets, here are a couple of options sure to bring a smile. The first option is a long-sleeved t-shirt honoring the Secretary of the Treasury.
If t-shirts are not high on the list for your friends and family, here’s something everyone can use. There are more than 70,000 pages of tax law and IRS regulation, and although there are not that many squares in this roll, all taxpayers will enjoy creating their own “performance art” with this gift (sadly, does not include a grant from the NEA).
Two Admirable Leaders in the Workers’ Lib Movement
Here’s a picture symbolic of our times. It features our colleague José Piñera and Lech Walesa, both of whom have done so much to increase human freedom: Walesa for leading a workers’ movement that played a key role in the collapse of Soviet communism; and José Piñera for leading a revolution in private pensions that is turning workers into capitalists around the world.
The picture and the caption below appeared in El Diario Financiero (Chile) on Friday.
Former Chilean Minister of Labor and Social Security, José Piñera, appears alongside legendary Polish union leader Lech Walesa (right) and Robin Harris (left), adviser and biographer of former British Prime Minister Margaret Thatcher. Former Polish President Walesa holds the Polish version of “El cascabel al gato,” the best-seller written by the father of Chile’s private pension system. This notable gathering took place in the Croatian capital, Zagreb last week at an international conference about the 20th anniversary of the fall of the Berlin Wall. The three individuals spoke on a panel on “Lessons for the Future of Europe.” The conference was organized by Damian von Stauffenberg, member of the famed aristocratic family that opposed Hitler, and president of the Educational Initiative for Central and Eastern Europe (EICEE).
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