Archive for February, 2010
Keeping Pandora’s Box Sealed
The moment everyone was waiting for has arrived: The article Josh Blackman and I wrote, “Keeping Pandora’s Box Sealed: Privileges or Immunities, The Constitution in 2020, and Properly Extending the Right to Keep and Bear Arms to the States,” has officially come out in the Georgetown Journal of Law & Public Policy. (I previously blogged about this article here, among other places, and here‘s a recent reference on Reason’s blog.) The journal thought enough of our work to publish it on page 1 of issue 1 of this year’s volume.
We’re also grateful to the journal editors for expediting the editing and publication process generally so that the article would come out in time for the McDonald v. Chicago argument. Indeed, that strategy is already paying off, with “Keeping Pandora’s Box Sealed” having been cited in the petitioners’ reply brief — not to mention Cato’s amicus brief. The Georgetown JLPP has been cited in Supreme Court opinions the past two terms, so we’re cautiously optimistic about our chance to continue this trend.
In addition to reading the article (also available on SSRN), you can also attend various presentations I’m giving in the next two weeks about McDonald v. Chicago and properly extending the right to keep and bear arms to the states:
- Feb. 23 at lunch – University of New Mexico Law School (sponsored by the Federalist Society) – “McDonald v. City of Chicago and Properly Extending the Right to Keep and Bear Arms”
- Feb. 25 at 1:30pm EST/10:30 PST – ABA Continuing Legal Education Teleconference – “Beyond Gun Control: McDonald v. City of Chicago and Incorporation of Bill of Rights” (registration fee, 1.5 hours of CLE credit)
- Mar. 1 at 4pm – Cato Institute Policy Forum – “McDonald v. Chicago: Will the Right to Keep and Bear Arms Apply to the States?“
- [Mar. 2 at 10am - Supreme Court argument in McDonald - I will be giving a statement to the media scrum on the marble steps afterward]
- Mar. 2 at 3:30pm – Georgetown University Law School – Post-Argument Discussion of McDonald and “Keeping Pandora’s Box Sealed” (sponsored by the GJLPP and the Federalist Society)
- Mar. 3 at 12pm – Cato Institute Hill Briefing in B-340 Rayburn House Office Building - “McDonald v. Chicago: The Fourteenth Amendment and the Future of Gun Rights“
You can also listen here to a half-hour podcast about “Keeping Pandora’s Box Sealed” that I recently recorded with the Independence Institute’s David Kopel (also a Cato associate policy analyst).
Great Moments in (Anti) Stimulus
There were many reasons to oppose last year’s so-called stimulus legislation. But perhaps one of the most compelling reasons is that politicians and bureaucrats inevitably do really stupid things because the federal budget is a racket designed to funnel the maximum amount of money to powerful interest groups. Here’s a great example from a story linked on Kausfiles.com. A city in New Hampshire wanted to stick its snout in the trough in order to subsidize a water treatment plant, but eventually decided to reject the money because the local government’s out-of-pocket costs would increase – primarily thanks to corrupt rules designed to line the pockets of union bosses, but also because of protectionist requirements and a mind-boggling $100,000 of paperwork expenses:
As stimulating as it might have sounded at the time, the city recently declined $2.5 million from the American Recovery and Reinvestment Act for its new water treatment plant because federal wage regulations would have forced the city to pay more for the project. …the low bidder — Penta Corporation — presented final cost of $21 million with the stimulus funds and $17.3 million without. So the city said thanks, but no thanks, to the stimulus funds. “It just didn’t make sense,” said Deputy Public Works Director David Allen. “It was going to cost us more money to take the money.” Stimulus funds mandate workers are paid using Davis-Bacon Wage Determination, which sets the pay scale for workers on federal projects and added $2.5 million to the bottom line. The “Buy American” provision would’ve added another $500,000 and Allen said there would have been significant administrative costs — upwards of $100,000 — for the city to track it the way the government requires over the course of the two-year project.
Punditry and Pakistan
Annie Lowrey of Foreign Policy and I discuss the recent capture of a top Taliban operative in Pakistan, India and Pakistan’s use of Afghanistan as a proxy battleground, the Winter Olympic games, and the fight over the conservative soul on bloggingheadstv. Enjoy!
Doubling Down on Failed Policies
Today in Las Vegas, President Obama will take another $1.5 billion in taxpayer money and let it ride another spin on the roulette wheel otherwise known as foreclosure assistance. This time, however, he’s not even bothering to send the money to homeowners; its all going to state governments.
That’s correct, he’s sending a huge check to select state governments to use in almost any manner they choose, as long as it offers some pretense at propping up the housing market.
The assistance will be targeted at those states that have seen at least a 20% decline in home prices. Subsidizing states because their housing markets are getting more affordable almost makes one yearn for the days when we subsidized states because their housing markets were too expensive. What we are really subsidizing is those states whose destructive land-use policies contributed to the magnitude of the housing bubble. Basic economics tells us that as supply becomes more inelastic (think growth boundaries), prices become more volatile. It’s bad enough that most of our housing subsidies, both homeowner and renter, have ended up going to states that have crippled their housing markets, but now we are sending them a big check to reward such behavior.
Washington needs to end its constant attempts to prop up the housing market. The only viable solution to an over-supply of housing is a further decline in prices. Most of the worst-hit areas, such as California, do not lack for families wanting to buy homes. They lack a supply of homes at affordable prices, which would be solved by letting prices fall.
This Week in Government Failure
Over at Downsizing Government, we focused on the following issues this week:
- The food stamp price tag is rising.
- Will the government remove the crutches supporting the housing market?
- HUD wants to bring Portland’s “smart growth” planning to the rest of the country.
- The decennial census may have a constitutional basis, but it’s still a costly, wasteful government activity.
Tax Havens Are Not Money Laundering Centers
Demagogues such as Sen. Carl Levin (D-MI), as well as many other politicians and journalists, often assert that low-tax jurisdictions are havens for dirty money and terrorist financing. From a theoretical perspective, this does not make sense. So-called tax havens have a big incentive to avoid scandal since they are much more vulnerable to reputational risk. Just imagine what would have happened, after all, if the 9-11 terrorists had used a bank in the Bahamas instead of a bank in Florida. Critics of low-tax jurisdictions automatically would have assumed that the bank was complicit and the entire financial services industry in the Bahamas would have been crippled — or even destroyed. But because the terrorists used American banks (as well as banks in high-tax European nations and the Middle East), there was no knee-jerk reaction. People understood that the bank tellers and managers had no way of knowing that the flight school students were actually lunatics.
But this does not stop the anti-tax haven smear campaign. Low-tax jurisdictions are viewed as a threat by politicians since it is much harder to impose bad tax policy in a world where tax competition is allowed to flourish. This is why tax havens are attacked whenever something bad happens. If there is a terrorist attack, blame tax havens. If there is a financial crisis, blame tax havens.
With this in mind, a new report from the University of Basel’s Institute of Governance did some real research and came up with a list of nations where there actually is a high risk of money laundering and terrorist financing. As the map below indicates, only one so-called tax haven is among the 28 countries listed, and that nation was in the lowest-risk category.
Krugman Don’t Know Health Insurance
When I debated Nobel Prize-winning economist Paul Krugman on health care reform, I asked him if he was familiar with the work of University of Pennsylvania economist Mark Pauly. Pauly is a leader in the economics of health insurance. He and his coauthors have shown that health insurance markets are way ahead of politicians — and way ahead of economists — in solving the problems that bedevil health insurance markets. I already knew the answer: only someone completely oblivious of Pauly’s work could have debated as Krugman did. (As Krugman himself demonstrated in that debate, you never want to ask a question to which you don’t already know the answer.)
Krugman’s column in today’s New York Times tells me that he still has not read Pauly.
Krugman addresses the 39-percent premium increases that insurer Wellpoint planned to impose on its California customers:
WellPoint claims … that it has been forced to raise premiums because of “challenging economic times”: cash-strapped Californians have been dropping their policies or shifting into less-comprehensive plans. Those retaining coverage tend to be people with high current medical expenses. And the result, says the company, is a drastically worsening risk pool: in effect, a death spiral.
Krugman then argues that if Wellpoint’s explanation is accurate, then that demonstrates that free-market reforms would cause private insurance markets to collapse, and demonstrates further the need for government to impose price controls on health insurance and to force healthy people to purchase it.
Yet there are at least two major problems with Wellpoint’s story.
- Healthy people dropping coverage would not lead to across-the-board premium increases in California, because California allows markets to set premiums. Only when the government imposes the kind of price controls that Krugman wants does an “adverse selection death spiral” follow.
- Krugman may be thinking, “Even with market prices, once the healthy people drop out, insurers must raise premiums to cover the future costs of the sick people who remain.” Yet Pauly and his colleagues show that insurers collect the money they need to cover those costs in advance by “front-loading” premiums.
Conservatism and Gay Rights
We had a spirited forum at Cato on Wednesday on the question “Is There a Place for Gay People in Conservatism and Conservative Politics?” Nick Herbert, who is likely to be part of the British Cabinet in another 100 days, gave a powerful and pathbreaking speech on the Tory Party’s new inclusiveness. In the video below you can find his remarks beginning at about the 3:00 mark, where he says, “I’m delighted to be here at Cato, the guardian of true liberalism.”
Andrew Sullivan (24:00) gave a moving and eloquent defense of a conservatism that has a place for gay people, declaring himself “to the right of Nick, a Thatcherite rather than a ‘One Nation’ Tory.” And Maggie Gallagher (39:15) did an admirable job of presenting her own views to an audience she knew was very skeptical.
Then the fireworks began (51:50). Andrew denounced my question — reflecting many complaints I’d received before the reform — about whether he can really be considered a conservative at this point. “Preposterous,” he declared. There followed sharp exchanges on hate crimes, marriage, adoption, religious liberty, and the state of conservatism today.
Watch it all here:
Or listen to a podcast of Nick Herbert’s speech. Subscribe to Cato’s podcasts on iTunes here.
The Census: Constitutional but Very Costly
Most activities undertaken by the federal government have no constitutional basis. One exception is the Census carried out every 10 years to determine the allocation of seats in the House of Representatives. Alas, it appears that even this core federal function is subject to cost overruns and waste, as a new report from the Department of Commerce’s inspector general illustrates.
Quarterly updates of progress on the census by the inspector general were required by legislation in 2008, which gave the Census Bureau an additional $210 million “to help cover spiraling 2010 decennial costs stemming from the bureau’s problematic efforts to automate major field operations, major flaws in its cost-estimating methods, and other issues.”
So how are things going?
The Census has been forced to rush the creation of a paper-based processing system for its field staff because its original plan to equip workers with hand-held computers was a boondoggle. In the world of government, “rush” means that Census told Congress in April 2008 that it was scrapping the computers.
From a NextGov.com article at the time:
In 2006, the Census Bureau awarded a $595 million contract to Harris Corp. to develop more than 525,000 handheld computers that enumerators would use to collect data from Americans who did not send in their census forms… Since awarding the contract, the project has experienced constant setbacks, including changing system requirements that led to increased costs and missed deadlines. Reports by the Government Accountability Office, the department’s inspector general and Mitre Corp. all issued warnings that the handhelds were at risk of not being ready by 2010 and may not work as planned.
Do You Still Think DC Spends Only $15,000/Pupil?
The District of Columbia spent over $28,000 per pupil in the 2008-09 school year. This year is probably similar. So why does (almost) everyone still claim the figure is around half that much? John Stossel has a good summary here.
If you’d like all the gory details, drawn from the official DC budget documents and the District’s own audited enrollment figures, then have a look at this Excel spreadsheet file.
I’m happy to go over the calculation with any DC or DCPS official — or journalist — who would care to dispute it. (It’s only been challenged once before, and the official in question fell silent after seeing the spreadsheet.)
Isn’t it about time that the local media start telling it like it is, and acknowledge that the District of Columbia spends four times as much per pupil as local voucher-receiving private schools charge in tuition ($6,620), while still getting worse academic results?
Putting “Holds” on Hold
Recent weeks have witnessed considerable media attention on a fairly obscure Senate practice: that of Senators placing a “hold” on a nomination. Holds are essentially a method for Senators to tell the Majority Leader that if the Leader were to try to move a nomination by unanimous consent, that Senator would object on the Senate floor.
Much of the attention has unsurprisingly come from Democrats, who see the use of holds as obstructing President Obama’s ability to get in place his preferred personnel. Perhaps getting the most attention was Senator Richard Shelby’s placing a hold on 70 some nominations (full disclosure: I spent seven years working for Shelby).
What is missed in the debate over holds is whether the Senate should be moving nominations by unanimous consent in the first place. President Obama’s supporters contend that his nominees deserve an up or down vote. Yet that is exactly what is required by a hold: an up or down vote. Holds do not have to be honored by the Majority Leader (else why doesn’t someone just place a hold on health care?). In fact, nominations are privileged motions, meaning the Majority Leader can bring up a nomination for debate and vote at any time.
Moving a nomination (or even legislation) by unanimous consent all but guarantees that the nomination in question will receive zero deliberation or debate by the full Senate. Whether a particular position is subject to Senate confirmation is almost completely up to Congress. So if Congress decides that a position is important enough to demand the “advice and consent” of the Senate, then one would assume that such a position would also merit deliberation and debate by the Senate. In passing so many nominations (and legislation) by unanimous consent, the Senate fails in its responsibilities.
Congress finds itself in this bind because of its own doing. In desiring to have government intrude in some many aspects of our lives, Congress has decided that thousands of political appointees are needed to run those intrusions. But with so many appointees subject to confirmation, the Senate has no choice by to move nominations without debate for deliberation, for there is not enough time in the day to do so, especially when the Senate prefers to sending its time on grand policies, rather than the business of simply governing.
The solution is not to get rid of holds. The solution is to reduce the involvement of government in our lives, so that the Senate does not have to process thousands of nominations every year.
Correcting Klein on Competitive Insurance Regulation
Washington Post blogger Ezra Klein critiques the idea of allowing individuals and employers to purchase health insurance regulated by states other than their own.
I preemptively correct his post in this Cato paper, published four months prior.
For more, see this Regulation article by Henry Butler and Larry Ribstein.
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