Archive for July, 2010
Big Money Speaks
Several groups came together to raise $15 million that they are now spending to promote the Fair Elections Now Act, the current public financing bill before Congress. I think this is a good thing. That is, I think it’s a good thing they can raise and spend several million dollars making their case on a public matter. It is an especially good thing compared to an alternative world in which Congress prohibited these groups from raising and spending millions of dollars for political advocacy.
Still, we might keep in mind a recent report by the United States Government Accountability Office that examined public financing in Maine and Arizona:
While there was some evidence of statistically significant changes in one of the five goals of Maine’s and Arizona’s public financing programs, we could not directly attribute these changes to the programs, nor did we find significant changes in the remaining four goals after program implementation. Specifically, there were statistically significant decreases in one measure of electoral competition—the winner’s margin of victory—in legislative races in both states. However, GAO could not directly attribute these decreases to the programs due to other factors, such as the popularity of candidates, which affect electoral outcomes. We found no change in two other measures of competition, and there were no observed changes in voter choice—the average number of legislative candidates per district race. In Maine, decreases in average candidate spending in House races were statistically significant, but a state official said this was likely due to reductions in the amounts given to participating candidates in 2008, while average spending in Maine Senate races did not change. In Arizona, average spending has increased in the five elections under the program. There is no indication the programs decreased perceived interest group influence, although some candidates and interest group officials GAO interviewed said campaign tactics changed, such as the timing of campaign spending.
In other words, nothing changed except that taxpayers paid for campaigns.
Paul Krugman and Regime Uncertainty
Paul Krugman dismisses concerns that the Obama administration’s fiscal and regulatory policies are fostering uncertainty in the business community, and thus inhibiting job growth and an economic recovery.
My Cato colleagues and I have been citing this “regime uncertainty” for a while now, and it is gaining mainstream acceptance as evidenced by a recent Washington Post editorial.
I have pointed to surveys of small businesses conducted by the National Federation of Independent Business. The businesses surveyed continually cite the combination of government taxes and regulations as their “single most important problem.”
However, Krugman looks at the NFIB’s most recent survey and comes away with a different conclusion:
Or read through the latest survey of small business trends by the National Federation for Independent Business, an advocacy group. The commentary at the front of the report is largely a diatribe against government — “Washington is applying leeches and performing blood-letting as a cure” — and you might naïvely imagine that this diatribe reflects what the surveyed businesses said. But while a few businesses declared that the political climate was deterring expansion, they were vastly outnumbered by those citing a poor economy.
This is the chart from the survey that Krugman is referencing:
A Lame Duck, a National/Voter ID, and the Pun That Makes it All Worthwhile
In a Wall Street Journal opinion piece this morning, John Fund speculates about a post-election, lame-duck strategy in which Democrats move a variety of controversial proposals before giving up power to November’s presumed victors. Among these proposals is “a federally mandated universal voter registration system to override state laws.”
The answer to that idea is No.
Part of the reason is because this proposal hasn’t seen any discussion or debate. Its benefits, costs, and consequences have had no public vetting.
Likely, a national voter ID system would also be a national ID system. Its utility in addressing whatever voter fraud there is would be matched or outstripped by its utility for controlling our access to health care, travel, guns, financial services, and every other thing that the federal government might like to regulate more thoroughly. That’s also part of why the answer is No.
I’m not too worried. Fund is interested in voter and election fraud, so he may be overweighting the likelihood of legislation to address it. And, as I said this morning in a broader WashingtonWatch.com blog post worth reading only for the pun, “Chances are that Fund is using the lame-duck speculation to goose (yuk yuk) his generally conservative readership, and that the Democratic leadership in the House and Senate aren’t thinking that far ahead yet.”
Consumer Watchdog Gets Creepy
When I know I’m going to write something more technical and detailed, I generally switch over to writing on the TechLiberationFront blog, which has a lovable propeller-head audience (and authors).
If you don’t mind wading through semi-technical talk of radio waves and encryption, you might enjoy the TLF post, “Consumer Watchdog Gets Creepy With Congress Trying to Make its ‘WiSpying’ Case.”
In its misleading and over-the-top effort to highlight corporate wrongdoing, Consumer Watchdog—a California corporation that reported over $3 million in 2008 revenue—arguably did more to invade privacy than the object of its attack.
Lindsay Lohan Gets 90 Day Jail Sentence
Yesterday, actress Lindsay Lohan received a 90 day jail sentence after a judge determined Lohan had violated her probation by missing some scheduled classes. Lohan had been previously arrested on a DUI charge. Today, Lohan quotes from a Cato article that critiques the American criminal justice system for its rigid and mechanical sentencing rules. (Here are her Cato-quoting Tweets: 1, 2, 3, 4.) I have received letters from prisoners around the country who have read a Cato publication, or seen a Cato event on C-SPAN, but this is our first celebrity tweet. The Institute is now abuzz!
I wish more celebrities would take an interest in our legal system because there is so much injustice to be found there. Alas, when celebs speak out after they have been personally caught up in the system, their calls for reform come across as self-serving — even when they are sincere. I wish more Hollywood writers would work criminal justice issues into their scripts. For example, why not write a popular character out of a show because of an arrest and a mandatory minimum sentence? In any event, we wish Ms. Lohan well and hope this is her final encounter with the criminal system.
For more Cato work on sentencing, go here. For more on criminal justice generally, go here.
‘Perfect Citizen’: Congress’ Perfect Failure
Reliable national security reporter Siobhan Gorman at the Wall Street Journal has broken a story about an Internet surveillance program called “Perfect Citizen” to be managed by the National Security Agency.
Reading about it is frustrating, and for me blame quickly settles on Congress. Our legislature is utterly supine before the national security bureaucracy, which exaggerates cybersecurity threats and consistently uses the secrecy trump card to defy oversight.
If there is to be a federal government role in securing the Internet from cyberattacks, there is no good reason why its main components should not be publicly known and openly debated. Small parts, like threat signatures and such—the unique characteristics of new attacks—might be appropriately kept secret, but no favor is done to any potential attackers by revealing that there is a system for detecting their activities.
A cybersecurity effort that is not tested by public oversight will be weaker than ones that are scrutinized by private-sector experts, academics, security vendors, and watchdog groups.
Benign intentions do not control future results, and governmental surveillance of the Internet for “cybersecurity” purposes may warp over time to surveillance for ideological and political purposes.
These abstract criticisms of “Project Citizen” are all that publicly available information allows. Far better would come from me and others more qualified if Congress were to do its job.
Congress owes it to us, the United States’ true citizens, to have public hearings on “Perfect Citizen.” Congress should reject broad assertions of secrecy so that the whole body politic can participate in securing our country from all threats.
Congressional and public oversight—searching oversight that tests assumptions and asks hard questions—would strengthen any government cybersecurity effort we find warranted. It would also ameliorate the threat of such programs to our civil liberties, democratic processes, and privacy.
Why Limits On Banker Bonuses Are Meaningless
The European parliament has just approved a measure that would limit bonus payments and other aspects of compensation for bankers. National finance ministers are expected to approve the measure next week, and it will take effect Jan. 1. The goal of the legislation is to limit banker incentives to take risk, since this was allegedly a major cause of the recent financial crisis.
The key question about compensation limits is why shareholders and creditors have not imposed these on bank executives already. If the possibility of large bonuses indeed generates excessive risk-taking, then bank stakeholders have ample incentive to adopt such limits without government coercion.
The answer is that bank risk-taking was not necessarily excessive from the perspective of the bank stakeholders, since banks were living in a world with private gains but public losses. Stakeholders stood to earn large returns when times were good, and they knew taxpayers would cushion the losses — via deposit insurance or accomodative monetary policy — when times went bad.
Since events of the past two years have done nothing but reinforce the view that major banks are too big to fail, the incentive to pile on risk is stronger than ever.
So limits on bank compensation are fighting an uphill battle, and bankers will find ways around them via creative accounting and clever compensation packages. The limits are therefore just political pandering to populist outrage over banker excesses. That outrage is understandable, but limiting compensation will not prevent the next blow up.
C/P at Forbes.com
The Calorie Police
What can I say about San Francisco’s ban on vending machines for sugared soft drinks on city property?
I could say that a twelve ounce can of Coca-Cola has fewer calories than twelve ounces of whole milk, because it does — 140 to 216.
I could say that you’ll be even fatter if you substitute whole milk for Coke, ounce for ounce, because you will be.
I could say that the extra nutrients in milk don’t do anything to make it less fattening, because they don’t.
I could say that 12 ounces of soy milk has 198 calories, which is still well above Coke’s 140.
I could even say that switching to skim milk doesn’t help you all that much — if you do the math, you’ll find that there are 124.5 calories in 12oz of skim milk, compared, again, to 140 for Coke.
I could also point out that a tall Starbucks Frappuccino — also 12 ounces, and not covered by the ban — has 190 calories, largely from sugar and fat.
I could ask: Does anyone ever order a plain Frappuccino? A tall mocha Frappuccino has 220 calories.
Finally, I could point out that banning vending-machine drinks while leaving Starbucks untouched is a pretty rank example of class privilege at work — my indulgences are sophisticated and upper-class, while yours are vulgar and prole.
And, I imagine I hardly need to make the case that this ban is the thin end of a wedge, and that comprehensive regulation of sugar, fat, and salt is on the way.
But really, it’s a lot simpler than that. What I should say is that your body is yours. Liberals themselves would tell you just the same in many other contexts. It’s yours to do with as you see fit. It’s yours to use, and it’s yours to use up, as Dan Savage once put it. (Can bans on risky sex be far behind?)
Part of being free is being free to make bad choices, to take risks, and to bear the consequences. Part of being free is that you, personally, may decide what you eat or drink. It’s a liberty so elementary that our founders never even imagined that it would need protection, but today, it does. (These same founders also rioted when the British taxed their tea. Which I’m sure Parliament only did for their own good anyway.)
To be sure, there are many costs associated with socialized health care, and some of the choices we make will certainly raise those costs. That’s one big reason why the nanny state is suddenly in the food business. But if we absolutely must have socialized health care — a point I don’t for a moment concede — then I’d prefer to pay a little bit extra and keep all my other liberties, thanks.
Feds Challenge Arizona Immigration Law
Yesterday, the Obama administration filed a lawsuit challenging the constitutionality of Arizona’s recently enacted law that is designed to curb illegal immigration. The Arizona law has not yet taken effect — that will occur on July 29. To generate more discussion and debate, Cato will be hosting a policy forum on the legal challenge and related issues on July 21. If the weather in DC continues to cooperate, it will feel like we are actually in Arizona.
Go here for Cato work related to immigration policy.
Busting the Myth that Web Sites ‘Sell Your Data’
On TLF, Berin Szoka comes up just shy of ranting, but it’s a good rant against the myth that Web sites like Facebook sell or give your data to advertisers.
In targeted online advertising, the business model is generally to sell advertisers access to people based on their demographics. It is not to sell individuals’ personal and contact info. Doing the latter would undercut the advertising business model and the profitability of the web sites carrying the advertising.
I did some myth-busting of my own last year when the Wall Street Journal published erroneous information about a health-interest site called RealAge.com, which does not give or sell visitors’ data to drug companies.
Understanding how technologies and business models work is job one for crafting good public policies, but as I noted yesterday…
At Least They Spelled Our Name Right. Oops.
The folks at the Center for American Progress, in their daily anti-right email, wrongly call the Cato Institute conservative and wrongly spell our name CATO.
But what I find more amusing is that the email, prompted by Michael Steele’s confused remarks about Afghanistan and the reaction against him, is titled “The Right Wing’s Addiction to War.” They have a point. But who’s running the Iraq and Afghanistan wars now? Isn’t it the man who once said
I opposed this war in 2002. I will bring this war to an end in 2009. It is time to bring our troops home.
and
I was opposed to this war in 2002….I have been against it in 2002, 2003, 2004, 5, 6, 7, 8 and I will bring this war to an end in 2009. So don’t be confused.
The right wing may be addicted to war, but it seems to be a left-wing president who’s on the sauce now. I look forward to seeing the Center for American Progress start asking President Obama when it will be 2009.
U.S. Mail Monopoly Wants Rate Hike
The long-term prospects for the U.S. Postal Service monopoly are bleak. To help stem the flow of red ink, the USPS intends to seek a rate increase. Only a government monopoly would try to raise prices when the demand for its services is plummeting. The rate increase will only push its already declining customer base to use cheaper, more efficient electronic alternatives.
The USPS is in need of drastic reform, but instead of looking at big picture, Congress is hung up on the USPS’s request to eliminate Saturday mail delivery service. In contrast, countries around the world are continuing to liberalize their postal markets by embracing competition and private sector involvement.
Britain is a good example.
In 1969, the British Post Office transformed from a government agency into a corporation, which would come to be known as Royal Mail. However, the company’s shares are owned by the government. In 2006, Royal Mail’s regulator removed its monopoly and opened British mail delivery to full competition, which the postal unions opposed.
Like their counterparts in the U.S., the British postal unions are a hindrance to effective and efficient postal management. With email and other technologies undermining traditional mail, neutering the inflexibility caused by unions is paramount for mail operations here and abroad.
According to the Daily Mail, the British government is now prepared to take the next step: privatization. In doing so, the government is considering transferring a portion of Royal Mail’s shares to its employees. Giving the employees ownership stakes would inhibit the unions’ ability to extract concessions that would negatively affect the company’s bottom line.
A popular argument against mail privatization in the U.S. is that an important service can’t be entrusted to self-interested capitalists concerned only with making a profit. But public officials are just as motivated by self-interest. The difference is that public officials aren’t subject to market forces, which compel private businesses to adapt and economize to survive.
For example, the third-ranking official at the USPS stepped down in May after it came to light that he awarded six-figure, no-bid contracts to former colleagues at various companies.
A 64-page report by the Postal Service Office of Inspector General found that [Robert F.] Bernstock clashed with Postal Service lawyers over whether he could conduct outside business by using agency computers, e-mail and staff… Bernstock also used office telephones to conduct teleconferences and other meetings related to his private business holdings and also instructed staffers to conduct private work for him, investigators found.
The report details how Bernstock awarded non competitive contracts to five former business associates and a $1.5 million consultant deal with Goldman Sachs. He also violated company policy by negotiating a holiday bulk stamp sale agreement with Costco while owning $30,000 in company stock. The Postal Service requires officials owning more than $15,000 in a company’s stock to recuse themselves from any official dealings with the company.
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