Archive for March, 2010
Lessons from the Greek Budget Debacle
Fiscal crises have a predictable pattern.
Step 1 occurs when the economy is prospering and tax revenues are growing faster than forecast.
Step 2 is when politicians use the additional money to increase government spending.
Step 3 is that politicians do not treat the extra tax revenue like a temporary windfall and budget accordingly.Instead, they adopt policies – more entitlements, more bureaucrats – that permanently expand the burden of the public sector.
Step 4 occurs when the economy stumbles (in part because more resources are being diverted from the productive sector to the government) and tax revenues stagnate. If the resulting fiscal gap is large enough, as it is in places such as Greece and California, a crisis atmosphere is created.
Step 5 takes place when politicians solemnly proclaim that “tough measures” are necessary, but very rarely does that mean a reversal of the policies that caused the mess. Instead, the result in higher taxes.
Greece is now at this stage. I’ve already argued that perhaps bankruptcy is the best option for Greece, and I showed the data proving that Greece has a too-much-spending crisis rather than a too-little-revenue crisis. I’ve also commented elsewhere about the feckless behavior of Greek politicians. Sadly, it looks like things are getting even worse. The government has announced a huge increase in the value-added tax, pushing this European version of a national sales tax up to 21 percent. On the spending side of the ledger, though, the government is only proposing to reduce bonuses that are automatically given to bureaucrats three times per year. Here’s an excerpt from the Associated Press report, including a typically hysterical responses from a Greek interest group:
Government officials said the measures would include cuts in civil servant’s annual pay through reducing their Easter, Christmas and vacation bonuses by 30 percent each, and a 2 percentage point increase in sales tax to bring it to 21 percent from the current 19 percent. …One government official, speaking on condition of anonymity ahead of the official announcement, said…that “we have exhausted our limits.” …”It is a very difficult day for us … These cuts will take us to the brink,” said Panayiotis Vavouyious, the head of the retired civil servants’ association.
Now, time for some predictions. It is unlikely that higher taxes and cosmetic spending restraint will solve Greece’s fiscal problem. Strong global growth would make a difference, but that also seems doubtful. So Greece will probably move to Step 6, which is a bailout, though it is unclear whether the money will come from other European nations, the European Commission, and/or the European Central Bank.
Step 7 is when politicians in nations such as Spain and Italy decide that financing spending (i.e., buying votes) with money from German and Dutch taxpayers is a swell idea, so they continue their profligate fiscal policies in order to become eligible for bailouts. Step 8 is when there is no more bailout money in Europe and the IMF (i.e., American taxpayers) ride to the rescue. Step 9 occurs when the United States faces a fiscal criss because of too much spending.
For Step 10, read Atlas Shrugged.
Marriage, Private and Public
Wouldn’t it be great if we could just get the state out of the marriage business? Perhaps. Marriage is fundamentally private, after all. It’s a matter for families, churches, and couples to decide for themselves.
Yet state recognition of marriage often acts to keep the government out of private life, to ensure family stability, and to give regular, orderly rules for all those times when, despite our best efforts, family and state still collide. Here are just a few of the things that the civil side of marriage does:
- If you’re happily married and you have children, you don’t have to worry for a moment about child custody law. Your children are yours to raise jointly, whether they are biological or adoptive.
- If you’re married and you die without a will, your spouse typically gets at least a share of your estate. You don’t have to do anything special for this to happen. It’s automatic, and I think this probably strikes most people as fair.
- If you’re married, you don’t need to do anything special to be able to make medical decisions for an incapacitated spouse. It’s presumed that you are competent to do this.
- You can sponsor your foreign spouse for U.S. citizenship.
- You can sue for wrongful death of a spouse.
- You can collect a spouse’s Social Security benefits.
- You can often keep joint personal finances without worrying that your spouse will bankrupt you.
Depending on where you live, some of these protections can be won outside of marriage, if you’re willing to go to a lawyer and spend a few hundred bucks. Others, like the last four, can’t be had without either a marriage or a blood relationship.
State recognition of marriage protects families, often from the state itself. If the state got out of the marriage business, the state would be a lot more in all of our private lives, judging, inspecting, regulating, forbidding, taxing, redistributing, and all the rest. Much of the state part of marriage is really a protection against the state.
All of this is a lead-up to saying congratulations to the same-sex couples who will now be able to marry in Washington, DC. Perhaps even more than other types of marriages, same-sex marriages need these protections. (Some, like sponsoring an immigrant or collecting Social Security, may have to wait for federal law to catch up.)
On the whole, same-sex marriage means that gays’ and lesbians’ private lives can stay private. It gives them a protection against the government, which has too often been used against them. It means that gays and lesbians can be treated the same as any other group of citizens. And it means that their basic right to be left alone is finally being honored.
Before Administering the Lethal Injection, Dr. Obama Offers to Sterilize the Needle
In a letter to congressional leaders, President Obama wrote of his openness to including Republican proposals in his health care legislation.
Dropping a few Republican ideas into a government takeover of health care is like sterilizing the needle before a lethal injection: a nice thought, but the ultimate outcome is the same.
- Two of the four Republican ideas – federal grants to states that adopt medical malpractice liability reforms, and ratcheting upward Medicare’s physician-price controls – would increase government spending.
- The president’s health savings accounts (HSAs) proposal would merely loosen the noose around consumer-directed health plans.
- Undercover investigations in Medicare and Medicaid are likely to be as unsuccessful as past efforts to combat fraud.
This is not bipartisanship. President Obama is creating the illusion of bipartisanship while taking the most partisan route possible: forcing his legislation through Congress via reconciliation.
(Cross-posted at National Journal‘s Health Care Arena.)
Tuesday Links
- Kids these days…New study shows that most Millennials think “the government should do more to solve problems.” But if you take a closer look at the data there’s also some good news.
- Al Gore’s latest global warming whopper.
- David Rittgers: Why both the Left and Right are wrong about using drones to counter terrorism worldwide.
- The case for reviving the “Privileges or Immunities” clause.
- Podcast: “Why McDonald Matters” featuring Timothy Sandefur.
UPDATE:
Cato Vice President for Legal Affairs Roger Pilon can scarcely believe it himself: The New York Times got it (mostly) right on the gun case argued today before the Supreme Court, while The Wall Street Journal missed the main point.
In a piece for National Review Online, Pilon discusses a subtle but critical point: Conservatives—including the ones on the Supreme Court—are right on guns, but they’re wrong on rights.
Cato VP for Legal Affairs Roger Pilon can scarcely believe it himself: the New York Times got it (mostly) right on the gun case argued today before the Supreme Court, while the Wall Street Journal missed it.
Roger explains why in a terrific post over at National Review Online [hyperlink—you’re right, NRO is down!].
Roger’s post is the best discussion we’ve seen yet of a subtle but critical point: conservatives—including the ones on the Supreme Court—are right on guns, but they’re wrong on rights.
Gift Horse Looked in Mouth, Teeth not so Good
Jay Greene heads up the Department of Education Reform at the University of Arkansas, which has gotten federal research grants in the past. Here’s why he’s now telling the feds to get out of the education research business entirely.
Earthquakes and Freedom: Chile vs. Haiti
Although some comparisons between Haiti’s 7.0 earthquake in January and Chile’s 8.8 quake this weekend have attributed the massive differences in devastation and lives lost (230,000 vs. some 700 respectively) to different enforcement of building codes and planning, the real reason for Chile’s superior ability to endure the disaster has everything to do with its vastly higher level of economic freedom, reliable rule of law, and the much higher level of prosperity that results. Here are three good articles that make those points:
Bret Stephens on “How Milton Friedman Saved Chile”
John Stossel on “A Tale of Two Quakes”
Anne Applebaum, “Chile and Haiti: A Look at Earthquakes and Politics”
And here’s a piece I wrote on Haiti explaining how economic freedom could have dramatically reduced death and destruction there.
A Tale of Two Editorials
It’s a rare day when the New York Times gets something right editorially while the Wall Street Journal gets it wrong — and on gun rights, no less. Yet that was the case today, when the Supreme Court heard oral arguments in McDonald v. Chicago, a challenge to Chicago’s draconian gun-control law.
Not surprisingly, the Times opens with a shot against the Court’s 2008 decision in Heller v. District of Columbia, which found for the first time that the Second Amendment protects an individual’s right to keep and bear arms, quite apart from whether he’s a member of a militia. The next step, at issue in McDonald, is whether that right was good not simply against the federal government (Heller decided that) but against states and municipalities as well. Both the Times and the Journal argue, correctly, that the Bill of Rights should apply against the states, and that’s how the Court will likely rule. The difference is on the grounds for so ruling, and it’s not a trivial matter.
The Times reviews very briefly the history that gives rise to that issue. In a nutshell, and filling in some blanks, the Bill of Rights applied originally only against the federal government. With the ratification of the Fourteenth Amendment in 1868, however, U.S. citizenship was defined and elevated over state citizenship, and states were prohibited from abridging the privileges or immunities of citizens of the United States, from depriving any person of life, liberty, or property without due process of law, and from denying any person within their jurisdiction of the equal protection of the laws. But five years later, in the infamous Slaughterhouse Cases, the Court eviscerated the Privileges or Immunities Clause, which was meant to be the principal font of substantive rights under the amendment. Thereafter the Court would gradually “incorporate” various provisions of the Bill of Rights under the less substantive Due Process Clause — an uneven and sometimes mischievous process, the Court finding “rights,” from time to time, nowhere to be found in the Constitution. That’s the “substantive due process” against which conservatives have often railed over the years, often rightly so, as part of their larger assault on “judicial activism.”
Well the Times editorialists recognize that history and recognize also that scholars have long criticized the Slaughterhouse decision. Accordingly, they call on the Court to rectify its mistake of 1873 and to base its decision in McDonald on the Privileges or Immunities Clause. If the Court did, that “would be truer to the intent of the [framers of the Fourteenth Amendment], and it could open the door to a more robust constitutional jurisprudence that would be more protective of individual rights.”
And that, precisely, is what concerns the editorialists at the Journal. They too review the history — more fully than does the Times — but argue that the Court should ground its decision on the Fourteenth Amendment’s Due Process Clause. What they fear is that reviving the Privileges or Immunities Clause might lead to more judicial activism. But they offer no reason to believe that — which is all the more surprising since those of us who have long urged the Court to reverse Slaughterhouse and revive the Privileges or Immunities Clause have done so precisely to check that abuse.
As the Times rightly implies, the Due Process Clause has been the wrong clause all along for deciding most Fourteenth Amendment cases. Those cases should have been decided under the more substantive Privileges or Immunities Clause, the history of which would have better informed the Court and, accordingly, better checked the Court’s occasional activism. It’s less than clear, however, whether the editorialists at the Times appreciate that final point. Indeed, when they write, as just noted, that respecting the intent of the Fourteenth Amendment’s framers “could open the door to a more robust constitutional jurisprudence that would be more protective of individual rights,” flags go up. But if the Court did correct its mistake, the issue would then turn on what those framers meant by “privileges or immunities of citizens of the United States.” And on that question there is a rich and fairly clear historical record, unlike with the much less definite idea of “substantive due process,” the ground recommended by the Journal’s editorialists.
It appears, in short, that the Journal’s understandable concern to check judicial activism has led it to ignore the better check and, ironically, to leave the Slaughterhouse decision, the source of the problem, uncorrected. The irony is that that decision was a paradigmatic example of judicial activism, of a Court ignoring the law. Were the Court today to perpetuate that mistake, in a case that is primed for correcting it, that would amount to one more activist decision. After all, the text is there, staring the Court in the face. Yet the Journal urges the Court to ignore it. That’s the very mark of judicial activism.
[Cross-posted at NRO's Bench Memos]
Global Internet Freedom via Government Regulation?
This morning’s Senate Judiciary Committee hearing on global Internet freedom opened with Sen. Dick Durbin (D-IL) announcing that he would “introduce legislation that would require Internet companies to take reasonable steps to protect human rights or face civil or criminal liability.” Durbin’s staff tell me they’re in the early phases of hammering out a draft, so exactly what that amounts to isn’t clear yet, but my first-pass gut reaction is that this has the potential to do as much harm as good.
The argument for establishing some such set of rules is pretty straightforward: You don’t want the perverse scenario where corporations worry they’re shirking their fiduciary responsibility to their shareholders if they fail to compete in the market to provide sophisticated technologies of control and repression to the world’s most authoritarian regimes. You don’t want despots exploiting the innovation that springs from the very freedom they deny their own people as a means to cement their own control. It’s possible to frame this as a collective action problem, with tech companies happy to “do the right thing” provided all their competitors do—but with each ultimately deciding to play ball for fear that if they don’t, someone else will. If that accurately captures the dynamic—and, crucially, if the field of competitors is heavily concentrated in the United States—the binding power of legislation could increase the pressure on foreign governments to abandon repressive Internet policies. In theory, anyway.
The Fiscal Equivalent of Defining Deviancy Down
Senator Jim Bunning of Kentucky may be the most unpopular man in Washington right now. And, as you may surmise, this means he is doing something admirable (envision Jimmy Stewart in Mr. Smith Goes to Washington and you’ll have the right context).
Republicans and Democrats want to rush through a bill to spend more money on everything from highways to healthcare to joblessness. Senator Bunning is simply saying that the new spending should be financed by reallocating some of the unspent money from the so-called stimulus. For this modest proposal, Bunning is being treated like a porcupine at a nudist camp, with both Republicans and Democrats expressing irritation that he is making it harder for them to buy votes with other people’s money.
I am delighted that Senator Bunning is putting some roadblocks in the path of bigger government, but this episode also illustrates how our hopes and expectations have been eroded. For all intents and purposes, Sen. Bunning is saying that if we want to waste money on A, B, and C, then we should not waste as much money on X, Y, and Z.
Even in the unlikely event that he succeeds, all Bunning will have accomplished to keep a bloated federal government at its current size, which is about twice as big as it was when Bill Clinton left office about nine years ago.
Whatever happened to getting rid of the Department of Education and Department of Energy? Who has a proposal to get rid of the Department of Housing and Urban Development? Are any politicians even talking about getting rid of the Department of Transportation? Or Department of Commerce? I could go on, but I’m already getting suicidally depressed.
Three cheers for Senator Bunning, but it says a lot about the era of Bush-Obama profligacy that his very modest proposal is seen as a radical idea.
Gun Rights Secure, Liberty Less So
This morning the Court heard argument in McDonald v. Chicago, the case asking whether the right to keep and bear arms extends to protecting against actions by state and local governments. Just as importantly, it asked whether the best way to extend that right would be through the Due Process Clause of Privileges or Immunities Clause of the Fourteenth Amendment (because the Second Amendment doesn’t apply directly to the states).
From the initial questioning through the end, it was quite clear that those living in Chicago — and, by extension, New York, San Francisco, and other places with extreme gun restrictions — will soon be able to rest easy, knowing that they will be able to have guns with which to protect themselves. Unfortunately, the Court did not seem inclined to adopt the arguments propounded by petitioners’ counsel Alan Gura (and supported by Cato) that the Privileges or Immunities Clause was the way to go. Chief Justice Roberts expressed reluctance at having to overturn the 1873 Slaughterhouse Cases and other justices joined in concerns over how activist judges would use the Clause if the Court revived it — even if that were the path that hewed more closely to the constitution’s true meaning.
This turn of events is unfortunate because reviving the Privileges or Immunities Clause, far from giving judges free reign to impose their policy views, would actually tie them closer to the text, structure, and history of the Constitution. As it stands now — and as it seems will be the case after McDonald is decided — many of our most cherished rights are protected only to the extent that judges are willing to label them as sufficiently “fundamental” to warrant such protection. That is an unprincipled jurisprudence and one that hurts the rule of law.
In short, it is a shame that the Supreme Court seems to be wasting a perfect opportunity to bring constitutional law closer to the Constitution. It is an even greater shame that it is wasting this chance to use guns to protect liberty.
Civil Liberties Advocates, Not ‘Gun Advocates’
In this NPR story Nina Totenberg gives both sides their say. But twice she refers to the people advocating Second Amendment rights as “gun advocates” (and once as “gun rights advocates”). That’s not the language NPR uses in other such cases. In 415 NPR stories on abortion, I found only one reference to “abortion advocates,” in 2005. There are far more references, hundreds more, to “abortion rights,” “reproductive rights,” and “women’s rights.” And certainly abortion-rights advocates would insist that they are not “abortion advocates,” they are advocates for the right of women to choose whether or not to have an abortion. NPR grants them the respect of characterizing them the way they prefer.
Similarly, NPR has never used the phrase “pornography advocates,” though it has run a number of stories on the First Amendment and how it applies to pornography. The lawyers who fight restrictions on pornography are First Amendment advocates, not pornography advocates.
And the lawyers who seek to guarantee our rights under the Second Amendment to the U.S. Constitution should be called Second Amendment advocates, or advocates of the right to self-defense, or civil liberties advocates. Or even “gun rights advocates,” as they do advocate the right of individuals to choose whether or not to own a gun. But not “gun advocates.”
Postal Service Continues to Implode
Today, the U.S. Postal Service warned that it could lose $238 billion over the next ten years if it doesn’t receive greater managerial flexibility from Congress.
The European Union and other countries around the world have long been moving toward competition and privatization for mail delivery services. Yet the United States remains way behind the global trend. The rise of the internet and other advances in telecommunications have fostered an irreversible decline in the USPS’s mail volume. At the same time, it’s being weighed down by a predominantly unionized workforce whose compensation and benefits constitute 80 percent of USPS costs.
As President Obama himself said last August, “UPS and FedEx are doing just fine…It’s the Post Office that’s always having problems.”
In the short term, Congress should remove the USPS’s monopoly on the mail, and in the long term lay the foundation for its breakup and privatization. That is unlikely to happen, of course, because the politics of any issue will trump a sound business decision any day of the week.
One of the USPS’s requests is to eliminate Saturday service to cut back on costs. In a world where the government’s mail monopoly no longer existed, private mail delivery firms could compete to deliver mail on Saturday, or even Sunday. But no such competition exists because the government will not allow it. The federal government has wasted untold taxpayer dollars on anti-trust witch hunts against private companies like Microsoft, but apparently what’s good for the goose isn’t good for the gander.
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