Archive for January, 2010
Technology Clarifies Debate About Whole-Body Imaging Technology
I was dismayed today to listen to a recorded radio program in which James Carafano of the Heritage Foundation debated Michael German of the ACLU about the whole-body imaging systems being considered for airports after the Christmas attempt to light a bomb on a flight into Detroit.
Carafano, who I like personally, is a careless debater. He misstated the law, insulted a caller to the radio program, and misstated people’s names as he mischaracterized their views—in particular, my name and my views.
The segment was recorded, so we can capture exactly what Carafano said:
When the Transportation Security Administration rolled out this technology, they went through a very long and detailed consultation period with privacy and civil liberties groups including Jim Lindsey at Cato. I remember Jim Lindsey, when we had a session on privacy and civil liberties, stood up and complimented Secretary Chertoff, and said, “Look, this is something that you’ve actually done right. You’ve gone out to the stakeholder community, and you’ve gone over the procedures with us and we’ve come up with procedures that we’re very, very comfortable with.” So I think the privacy issue is really a non-issue.
At a Heritage event in June, 2008, I rose to rebut how Secretary Chertoff dismissed privacy advocates. He said privacy advocates prefer “no-security” airlines and that they want people to use fraudulent documents. As I gently chastised him for that, I did compliment the work of one TSA official to minimize privacy consequences of millimeter wave, which does provide a margin of security.
The event was recorded, so we can capture exactly what I said: “Frankly, I think millimeter wave is not a bad technology. Peter Pietra at TSA has done a good job, I think, of getting the agency to design the system well.”
That’s it. I made no reference to a ”long and detailed consultation period,” and I don’t know of any such thing happening. I didn’t compliment Secretary Chertoff, but a deputy who—despite Chertoff, most likely—managed to instill some privacy protections in TSA’s use of whole-body imaging systems. As to my comfort, I’ll take “less uncomfortable than I would have been” over “very, very comfortable,” which is inaccurate.
As I’ve written elsewhere, ”I think [TSA privacy officer Peter Pietra has] done a creditable job of trying to build privacy protections into this system. . . . But maybe it’s not enough. We’re talking about trying to maintain privacy with a technology that’s fundamentally intrusive.”
Perhaps I’ve taken too subtle a position on millimeter wave: It provides a small margin of security at a high cost to privacy. With that, I’ll let the country make its decision, while I seek to moot this as a public policy issue: Airline security should be provided by airlines and airports, not the government.
I don’t think it’s appropriate to speak of me—by any name—as an endorser of this technology or the process of its adoption. Thanks to sound and video recording technology, the record can be clear.
Credit Card Dementia and Boundary Cases
The most interesting libertarian-related conversation I’ve read today comes from Rortybomb, by way of Andrew Sullivan, with commentary by Megan McArdle. Here’s a challenge to libertarians from Rortybomb, aka Mike Konczal:
I want to pitch to the credit card and financial industry a new innovative online survey. It is targeted for older, more mature long-time users of our services. We’ll give a $10 credit for anyone who completes it. Here is a sense of what the questions will look like:
- 1) What is your age?
- 2) What day of the week are you taking this survey?
- 3) Many rewards offered are for people with more active lifestyles: vacations, flights, hotels, rental cars. Do you find that your rewards programs aren’t well suited for your lifestyle?
- 4) What is the current season where you live? Are any seasons harder for you in getting to a branch or ATM machine?
- 5) Would rewards that could be given as gifts to others, especially younger people, be helpful for what you’d like to do with your benefits?
- 6) Would replacing your rewards program with a savings account redeemable for education for your grandchildren be something you’d be interested in?
- 7) Write a sentence you’d like us to hear about anything, good or bad!
- 8 ) How worried are you you’ll leave legal and financial problems for your next-of-kin after your passing?Did you catch it? Questions 1,2,4,7 are taken from the ‘Mini-mental State Examination’ which is a quick test given by medical professionals to see if a patient is suffering from dementia. (It’s a little blunt, but we can always hire some psychologist and marketers for the final version. They’re cheap to hire.) We can use this test to subtly increase limits, and break out the best automated tricks and traps mechanisms, on those whose dementia lights up in our surveys. Anyone who flags all four can get a giant increase in balance and get their due dates moved to holidays where the Post Office is slowest! We’d have to be very subtle about it, because there are many nanny-staters out there who’d want to coddle citizens here. . .
I smell money — it’s like walking down a sidewalk and turning a corner and then there is suddenly money all over the sidewalk. One problem with hitting up sick people, single mothers, college kids who didn’t plan well and the cash-constrained poor with fees and traps is that they’re poor. Hitting up people with a lifetime of savings suffering from dementia is some real, serious money we can tap as a revenue source.
Clearly, only an evil person (or a libertarian!) would allow a scam like this one. Megan responds, I think rightly:
I’m not sure why this is supposed to be a hard question for libertarians. I mean, I might argue that preventing people from ripping off the marginally mentally impaired would, in practice, be too difficult. Crafting a rule that prevented companies from identifying people who are marginally impaired might well be impossible — I’m pretty sure that if I wanted to, I could devise subtler tests than “What day of the week is it?” And while the seniors lobby is probably in favor of not ripping off seniors, they’re resolutely against making it harder for seniors to do things like drive or get credit, which is the result that any sufficiently strong rule would probably have.
But it’s pretty much standard libertarian theory that you shouldn’t take advantage of people who do not have the cognitive ability to make contracts. Marginal cases are hard not because we think it’s okay, but because there is disagreement over what constitutes impairment, and the more forcefully you act to protect marginal cases, the more you start treating perfectly able-minded adults like children.
The elderly are a challenge precisely because there’s no obvious point at which you can say: now this previously able adult should be treated like a child. Either you let some people get ripped off, or you infringe the liberty, and the dignity, of people who are still capable of making their own decisions.
I’d add two responses of my own.
First, I can’t believe there’s all that much money to be had here. Anyone who wanders into Tiffany’s and back out again without remembering what they bought is, generally speaking, a bad credit risk. Mildly irresponsible people — those who slightly overspend, then have to make it up later — those are probably great for creditors. Lesson learned: If you’re not demented, don’t be irresponsible. (If you are demented, you’re not going to follow my advice anyway.)
Second, I am always amazed at how border cases are dragged out, again and again, as if they proved something against libertarianism. Border cases — How old before you can vote? How demented before a contract doesn’t bind? — are a problem in all political systems, because all systems start with a presumed community of citizens and/or subjects. We always have to draw boundaries between the in-group and the outliers before we have a polity in the first place.
What makes the classical liberal/libertarian approach so valuable is in fact that it draws so few boundaries. Where other systems depend on class boundaries, race boundaries, religious boundaries, and so forth — with annoying boundary issues at every stop along the way — libertarians make it as simple as I think it can be. We presume that all mentally competent adults are worthy of liberty until they prove themselves otherwise.
The boundary cases are still there, but they are fewer and more tractable. Konczal just wandered into one of them. It proves much less than he thinks.
Global Markets Keep U.S. Economy Afloat
Three items in the news this week remind us why we should be glad we live in a more global economy. While American consumers remain cautious, American companies and workers are finding increasing opportunities in markets abroad:
- Sales of General Motors vehicles continue to slump in the United States, but they are surging in China. The company announced this week that sales in China of GM-branded cars and trucks were up 67 percent in 2009, to 1.8 million vehicles. If current trends continue, within a year or two GM will be selling more vehicles in China than in the United States.
- James Cameron’s 3-D movie spectacular “Avatar” just surpassed $1 billion in global box-office sales. Two-thirds of its revenue has come from abroad, with France, Germany, and Russia the leading markets. This has been a growing pattern for U.S. films. Hollywood—which loves to skewer business and capitalism—is thriving in a global market.
- Since 2003, the middle class in Brazil has grown by 32 million. As the Washington Post reports, “Once hobbled with high inflation and perennially susceptible to worldwide crises, Brazil now has a vibrant consumer market …” Brazil’s overall economy is bigger than either India or Russia, and its per-capita GDP is nearly double that of China.
As I note in my Cato book Mad about Trade, American companies and workers will find their best opportunities in the future by selling to the emerging global middle class in Brazil, China, India and elsewhere. Without access to more robust markets abroad, the Great Recession of 2008-09 would have been more like the Great Depression.
Has HHS Buried Reports on ‘Head Start’?
According to sources within HHS cited by Heritages’ Dan Lips, a congressionally mandated report on the persistence of academic effects from the federal Head Start program was completed in draft form in 2008, but, nearly two years later, has not seen the light of day. A further follow-up report, to have been released in 2009 and covering persistence of effects through the 3rd grade, has also failed to materialized. Lips’ sources say the draft they saw in ’08 showed no lasting effects.
This timeline meshes with what I was told in a July, 2008 e-mail exchange with a researcher familiar with the studies. The 1st grade report was indeed expected to be completed that summer — one and a half years ago. So where is it?
Could it be, as Lips’ sources seem to imply, that its results were not flattering to the very expensive federal preschool program and that this is not something HHS officials want the public to know? There’s one way to find out: HHS, release the studies.
This is all rather important, what with the Obama administration seeking to lavish many additional billions on large-scale government pre-K, despite the paucity of results we’ve seen from such programs to date.
ObamaCare Threatens Innovation
That’s the conclusion of economist Glen Whitman and physician Raymond Raad, who write in Forbes:
Unfortunately, the health care bills moving through Congress could curtail medical innovation. Imposing price controls on drugs and treatments–or indirectly forcing their prices down by means of a “public option” or expanded public insurance programs–would reduce the incentive for innovators to develop new treatments.
Proposed reforms could also retard business model innovation–an area where innovation is weak. Congress has already used its control of Medicare to limit the growth of specialty hospitals. A nationally mandated insurance package would severely curtail innovation in payment methods and insurance products, which have the potential to improve the coordination and delivery of health care services.
The health care debate should address more than just covering the uninsured and controlling costs. When the U.S. generates medical innovations, the whole world benefits. That is a virtue of the American system that is not reflected in comparative life expectancy and mortality statistics.
The op-ed is based on the authors’ Cato Institute policy analysis, “Bending the Productivity Curve: Why America Leads the World in Medical Innovation.”
Popping Bubbles
David Leonhardt’s column today in the New York Times, in reaction to Ben Bernanke’s recent speech at the American Economic Association meetings, asks an important question:
If the Federal Reserve failed to detect the housing bubble when it occurred, why should we entrust it with that role in the future?
But he doesn’t follow the logic of his question far enough and instead embraces a financial equivalent of the National Transportation Safety Board, as if technical solutions exist and could be implemented if politics got out of the way.
In our recent Policy Analysis, Jagadeesh Gokhale and I examine a more complete list of technical and political problems that stand in the way of asset bubble management. Can bubbles be detected using scientific techniques (econometric models) with little controversy? We argue no.
Would stopping bubbles involve the simple implementation of a technical solution such as raising interest rates, or would they instead involve trade-offs with other policy goals? We argue the latter.
Even if bubbles could be detected easily with no controversy and policy solutions involved no tradeoffs, could the Fed maintain political support by stopping booms if the benefits of such a policy (preventing busts after financial bubbles burst) were never observed? We argue no.
And finally, even if all the previous problems were solved, how would raising interest rates reduce the supply of capital to housing markets given that a rate increase would increase the supply of capital to the United States and interest rates for both long-term and short-term housing loans have become decoupled from federal funds rates?
Our reasoning, like Bernanke’s, suggests that the events of 2008 were not the result of “bad” monetary policy. However, we believe that granting additional regulatory authority to the Fed will not prevent similar episodes because of the technical and political difficulties we describe in our paper.
Mainstream Media’s Trade Gap
In a post at the Enterprise Blog two days ago, economist Mark Perry deftly parodies a typical mainstream media account of trade protectionism by editing the story in redline to contrast its original presentation with its true significance. I recommend reading the whole thing, but here’s the first paragraph:
WASHINGTON POST (Reuters) – A U.S. trade panel gave final approval on Wednesday to duties taxes ranging from 10 to 16 percent on cost-conscious firms in the U.S. who purchase low-priced Chinese-made steel pipe rather than high-price domestic pipe, in the biggest U.S. trade case to date against China American companies (and their shareholders, employees, and customers) who shop globally for their inputs and find the best value in China.
Perry’s point—and I share his frustration—is that the mainstream media typically fail to convey even a sense of the costs of U.S. protectionism to U.S. interests even though Americans (and non-Americans living in the U.S.) bear the greatest burden of that protectionism. When the U.S. government imposes duties on Chinese steel, it is imposing taxes on U.S. consuming industries, their employees, their shareholders, and their customers.
Speaking of Transparency . . .
A thing I really like about Sunlight Before Signing is that it’s a clear promise President Obama made on the campaign trail.
An equally clear promise, highlighted by Michael Cannon earlier this week, was to broadcast negotiations about health care reform on C-SPAN.
C-SPAN is ready. As reported by the RealClearPolitics blog on Time.com, C-SPAN public service icon Brian Lamb wrote a letter to House and Senate leadership offering to cover health care negotiations:
President Obama, Senate and House leaders, many of your rank-and-file members, and the nation’s editorial pages have all talked about the value of transparent discussions on reforming the nation’s health care system. Now that the process moves to the critical stage of reconciliation between Chambers, we respectfully request that you allow the public full access, through television, to legislation that will affect the lives of every single American.
Many others could be, but Brian Lamb isn’t pulling a partisan stunt or trying to affect the health care debate one way or another. He’s trying to fulfill the promise of open democracy that had audiences roaring when President Obama extolled these virtues on the campaign trail:
“[W]hen I’m president, meetings where laws are written will be more open to the public. No more secrecy. That’s a commitment I make to you as president. No more secrecy.”
Wednesday Links
- Nat Hentoff reports on racism in Cuba.
- Federal judge dismisses charges against Blackwater guards over the killing of 17 in Baghdad. David Isenberg: “The fact that the Blackwater contractors are not getting a trial will only serve to further increase suspicion of and hostility towards security contractors. It is going to be even more difficult for them to gain the trust of local populations or government officials in the countries they work in.”
- New report shows state and local government workers have higher average compensation levels than private workers.
- Podcast: “Televising and Subsidizing the Big Game” featuring Neal McCluskey. “Everybody should watch the National College Football Championship because whether you’re interested or not, you are paying for it,” he says.
U.S. Best for Investing in Farmland, But…
According to AgWeb.com, “Midwestern U.S. farmland provides investors the best opportunity and risk to reward” in the world. Five factors were analyzed, including soil content, growing season, and infrastructure. But it was the last two, property rights and government support, which caught my attention.
On property rights:
In regions where the political climate is unstable, farmland owners face the risk of their land being seized. The land may be able to be acquired for a low price, but unless the owner is willing to guard their land, they face the risk of losing it. In today’s weak global economic environment, property rights will become a significant issue. Farmland in the U.S. allows its owners to sleep well at night knowing that they have solid ownership rights.
On government support:
The U.S. Government has many farming subsidy programs available for domestic farmers and agribusinesses. These programs help balance the supply and demand of many commodities, as well as promote a greener environment. U.S. Government subsidies have been around for more than 75 years. The Conservation Reserve Program (CRP) pays land owners not to farm their cropland…Other programs subsidize commodities for farmers.
Consider how those two advantages conflict: Government subsidies to farmers necessarily represent a violation of property rights. While farmland owners can “sleep well at night” knowing their land won’t be confiscated by the government (eminent domain abuses aside), taxpaying citizens aren’t quite so lucky. A portion of the incomes of millions of taxpayers is confiscated by the government annually and given to politically powerful farmers and landowners. If one’s income is not his or her property, then what is it?
The article says that although “farmland may be acquired at a cheaper price in other regions of the world,” Midwestern U.S. farmland is the best investment due to the aforementioned factors. But as a Cato essay on farm subsidies notes, the subsidies drive up the price of farmland:
Farm programs result in overproduction, overuse of marginal farmland, and land price inflation, which results from subsidies being capitalized into land values. Subsidy programs create less efficient planting, induce excess borrowing by farmers, cause insufficient attention to cost control, and result in less market innovation. And policies often work against the claimed goals of Congress. As an example, while members of Congress say that they support small farms, owners of large farms receive the largest subsidies, which has given them the financing they need to purchase smaller farms.
Given the natural advantages of U.S. farmland discussed in the article, it’s even harder to reconcile Congress’s continual abuse of property rights with confiscatory income taxes to pay for the subsidies. The reality is that politicians are generally more concerned with helping special interests than protecting taxpayers as this news item from National Journal’s CongressDaily demonstrates (subscription required):
House Agriculture Chairman Collin Peterson intends to start hearings on the 2012 farm bill as early as this spring, a committee spokeswoman confirmed Monday… Agricultural lobbyists have told CongressDaily that Peterson told them at fundraisers in December he will begin hearings this year, and he wants to avoid involving other committees in the farm bill process.
Sunlight Before Signing: Obama Racks Up the Wins!
I’ve covered President Obama’s “Sunlight Before Signing” campaign promise here many times before. And, as predicted when I last reported, Obama has turned the corner and begun giving bills some sunlight.
In December, five bills were posted on Whitehouse.gov for five days before the president signed them. (Technically, they were only linked to from Whitehouse.gov, but the link allowed citizens to find the text of bills awaiting his signature—the substance of the promise.)
Those five join the DTV Delay Act, Public Law 111-4, to make six out of 124. That’s a .048 batting average on Sunlight Before Signing, a huge rise from the .009 average he had after signing P.L. 111-118.
After the jump, you can see the latest SBS chart. I expect that President Obama’s average will continue to rise as more bills see the public airing he promised when he campaigned for the presidency.
Michigan Court Inexplicably Tosses Suit, Endorses Forcible Enlistment of Day-Care Workers into the State Government
When lawyers and other commentators say that a court did not properly explain its decision, it’s typically for hyperbolic effect. But, in a bizarre move, a court in the failed great state of Michigan has dismissed an economic liberty case brought by our friends at the Mackinac Center Legal Foundation for reasons the court quite literally did not explain. The court simply denied the plaintiffs’ complaint and that was that.
Home-based day care owners Sherry Loar, Michelle Berry, and Paulette Silverson have all been taxed by the Michigan Department of Human Services because, according to the state, they are somehow employees of the state and (further!) must pay union dues. because this baseless assertion comes directly from the state DHS, an executive department, among the significant constitutional objections to the case presents separation of power problems. (Ok, I haven’t studied the Michigan Constitution, but I assume they separate their powers there.) Enough ridiculous laws are passed by state legislatures — more than 40,000 last year alone – we don’t need state executive agencies getting into the act.
Yet, the Michigan Court of Appeals has nothing at all to say about the case.
Inexplicable — and unpardonable.
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