Archive for August, 2010
Explaining Mr. Market
A banner Washington Post headline (page 11, print edition; slightly different online) reads:
Stocks plunge as trade deficit widens
Of course, they could have gone with
Stocks plunge as Linda McMahon wins Senate nomination
Or my favorite:
Stocks plunge as Cardinals sweep Reds
Since national trade deficits are not much more meaningful than baseball scores, it’s unlikely that this month’s report drove stocks down.
Libertarian Politics in the Media
Peter Wallsten of the Wall Street Journal writes, “Libertarianism is enjoying a recent renaissance in the Republican Party.” He cites Ron Paul’s winning the presidential straw poll earlier this year at the Conservative Political Action Conference, Rand Paul’s upset victory in the Kentucky senatorial primary, and former governor Gary Johnson’s evident interest in a libertarian-leaning presidential campaign. Johnson tells Wallsten in an interview that he’ll campaign on spending cuts — including military spending, on entitlements reform, and on a rational approach to drug policy.
Meanwhile, on the same day, Rand Paul had a major op-ed in USA Today discussing whether he’s a libertarian. Not quite, he says. But sort of:
In my mind, the word “libertarian” has become an emotionally charged, and often misunderstood, word in our current political climate. But, I would argue very strongly that the vast coalition of Americans — including independents, moderates, Republicans, conservatives and “Tea Party” activists — share many libertarian points of view, as do I.
I choose to use a different phrase to describe my beliefs — I consider myself a constitutional conservative, which I take to mean a conservative who actually believes in smaller government and more individual freedom. The libertarian principles of limited government, self-reliance and respect for the Constitution are embedded within my constitutional conservatism, and in the views of countless Americans from across the political spectrum.
Our Founding Fathers were clearly libertarians, and constructed a Republic with strict limits on government power designed to protect the rights and freedom of the citizens above all else.
And he appeals to the authority of Ronald Reagan:
Liberty is our heritage; it’s the thing constitutional conservatives like myself wish to preserve, which is why Ronald Reagan declared in 1975, “I believe the very heart and soul of conservatism is libertarianism.”
Reagan said that several times, including in a Reason magazine interview and in a 1975 speech at Vanderbilt University that I attended. A lot of libertarians complained that he should stop confusing libertarianism and conservatism. And once he began his presidential campaign that fall, he doesn’t seem to have used the term any more.
You can see in both the Paul op-ed and the Johnson interview that major-party politicians are nervous about being tagged with a label that seems to imply a rigorous and radical platform covering a wide range of issues. But if you can call yourself a conservative without necessarily endorsing everything that William F. Buckley Jr. and the Heritage Foundation — or Jerry Falwell and Mike Huckabee — believe, then a politician should be able to be a moderate libertarian or a libertarian-leaning candidate. I wrote a book outlining the full libertarian perspective. But I’ve also coauthored studies on libertarian voters, in which I assume that you’re a libertarian voter if you favor free enterprise and social tolerance, even if you don’t embrace the full libertarian philosophy. At any rate, it’s good to see major officials, candidates, and newspapers talking about libertarian ideas and their relevance to our current problems.
If We Never Leave, We’ll Never Lose!
Quick show of hands, who’s surprised to see this?
GPS Tracking and a ‘Mosaic Theory’ of Government Searches
The Electronic Frontier Foundation trumpets a surprising privacy win last week in the U.S. Court of Appeals for the D.C. Circuit. In U.S. v. Maynard (PDF), the court held that the use of a GPS tracking device to monitor the public movements of a vehicle—something the Supreme Court had held not to constitute a Fourth Amendment search in U.S. v Knotts—could nevertheless become a search when conducted over an extended period. The Court in Knotts had considered only tracking that encompassed a single journey on a particular day, reasoning that the target of surveillance could have no “reasonable expectation of privacy” in the fact of a trip that any member of the public might easily observe. But the Knotts Court explicitly reserved judgment on potential uses of the technology with broader scope, recognizing that “dragnet” tracking that subjected large numbers of people to “continuous 24-hour surveillance.” Here, the DC court determined that continuous tracking for a period of over a month did violate a reasonable expectation of privacy—and therefore constituted a Fourth Amendment search requiring a judicial warrant—because such intensive secretive tracking by means of public observation is so costly and risky that no reasonable person expects to be subject to such comprehensive surveillance.
Perhaps ironically, the court’s logic here rests on the so-called “mosaic theory” of privacy, which the government has relied on when resisting Freedom of Information Act requests. The theory holds that pieces of information that are not in themselves sensitive or potentially injurious to national security can nevertheless be withheld, because in combination (with each other or with other public facts) permit the inference of facts that are sensitive or secret. The “mosaic,” in other words, may be far more than the sum of the individual tiles that constitute it. Leaving aside for the moment the validity of the government’s invocation of this idea in FOIA cases, there’s an obvious intuitive appeal to the idea, and indeed, we see that it fits our real world expectations about privacy much better than the cruder theory that assumes the sum of “public” facts must always be itself a public fact.
Consider an illustrative hypothetical. Alice and Bob are having a romantic affair that, for whatever reason, they prefer to keep secret. One evening before a planned date, Bob stops by the corner pharmacy and—in full view of a shop full of strangers—buys some condoms. He then drives to a restaurant where, again in full view of the other patrons, they have dinner together. They later drive in separate cars back to Alice’s house, where the neighbors (if they care to take note) can observe from the presence of the car in the driveway that Alice has an evening guest for several hours. It being a weeknight, Bob then returns home, again by public roads. Now, the point of this little story is not, of course, that a judicial warrant should be required before an investigator can physically trail Bob or Alice for an evening. It’s simply that in ordinary life, we often reasonably suppose the privacy or secrecy of certain facts—that Bob and Alice are having an affair—that could in principle be inferred from the combination of other facts that are (severally) clearly public, because it would be highly unusual for all of them to be observed by the same public. Even more so when, as in Maynard, we’re talking not about the “public” events of a single evening, but comprehensive observation over a period of weeks or months. One must reasonably expect that “anyone” might witness any of such a series of events; it does not follow that one cannot reasonably expect that no particular person or group would be privy to all of them. Sometimes, of course, even our reasonable expectations are frustrated without anyone’s rights being violated: A neighbor of Alice’s might by chance have been at the pharmacy and then at the restaurant. But as the Supreme Court held in Kyllo v US, even when some information might in principle be possible to obtain public observation, the use of technological means not in general public use to learn the same facts may nevertheless qualify as a Fourth Amendment search, especially when the effect of technology is to render easy a degree of monitoring that would otherwise be so laborious and costly as to normally be infeasible.
Now, as Orin Kerr argues at the Volokh Conspiracy, significant as the particular result in this case might be, it’s the approach to Fourth Amendment privacy embedded here that’s the really big story. Orin, however, thinks it a hopelessly misguided one—and the objections he offers are all quite forceful. Still, I think on net—especially as technology makes such aggregative monitoring more of a live concern—some kind of shift to a “mosaic” view of privacy is going to be necessary to preserve the practical guarantees of the Fourth Amendment, just as in the 20th century a shift from a wholly property-centric to a more expectations-based theory was needed to prevent remote sensing technologies from gutting its protections. But let’s look more closely at Orin’s objections.
First, there’s the question of novelty. Under the mosaic theory, he writes:
[W]hether government conduct is a search is measured not by whether a particular individual act is a search, but rather whether an entire course of conduct, viewed collectively, amounts to a search. That is, individual acts that on their own are not searches, when committed in some particular combinations, become searches. Thus in Maynard, the court does not look at individual recordings of data from the GPS device and ask whether they are searches. Instead, the court looks at the entirety of surveillance over a one-month period and views it as one single “thing.” Off the top of my head, I don’t think I have ever seen that approach adopted in any Fourth Amendment case.
When Keynesians Attack, Part II
I’m still dealing with the statist echo chamber, having been hit with two additional attacks for the supposed sin of endorsing Reaganomics over Obamanomics (my responses to the other attacks can be found here and here). Some guy at the Atlantic Monthly named Steve Benen issued a critique focusing on the timing of the recession and recovery in Reagan’s first term. He reproduces a Krugman chart (see below) and also adds his own commentary.
Reagan’s first big tax cut was signed in August 1981. Over the next year or so, unemployment went from just over 7% to just under 11%. In September 1982, Reagan raised taxes, and unemployment fell soon after. We’re all aware, of course, of the correlation/causation dynamic, but as Krugman noted in January, “[U]nemployment, which had been stable until Reagan cut taxes, soared during the 15 months that followed the tax cut; it didn’t start falling until Reagan backtracked and raised taxes.”
This argument is absurd since the recession in the early 1980s was largely the inevitable result of the Federal Reserve’s misguided monetary policy. And I would be stunned if this view wasn’t shared by 90 percent-plus of economists. So it is rather silly to say the recession was caused by tax cuts and the recovery was triggered by tax increases.
But even if we magically assume monetary policy was perfect, Benen’s argument is wrong. I don’t want to repeat myself, so I’ll just call attention to my previous blog post which explained that it is critically important to look at when tax cuts (and increases) are implemented, not when they are enacted. The data is hardly exact, because I haven’t seen good research on the annual impact of bracket creep, but there was not much net tax relief during Reagan’s first couple of years because the tax cuts were phased in over several years and other taxes were going up. So the recession actually began when taxes were flat (or perhaps even rising) and the recovery began when the economy was receiving a net tax cut. That being said, I’m not arguing that the Reagan tax cuts ended the recession. They probably helped, to be sure, but we should do good tax policy to improve long-run growth, not because of some misguided effort to fine-tune short-run growth.
Great New Blog in English by Cubans in Cuba
During the past several years, the growth of the Cuban dissident blogger movement has become a major irritant to the Cuban regime. Some bloggers, such as Yoani Sanchez, are becoming well known around the world. Her blog has even been available in English for a few years. I’ve written about her here and Cato published a recent paper by her.
The Cuban blogosphere is vibrant and diverse, but has been available almost exclusively in Spanish. Now, a new English blog site, Translating Cuba, is posting the thoughts of leading Cuban bloggers in Cuba, including Sanchez and recent hunger striker Guillermo Fariñas. Contributors to the site don’t share identical points of view, but they hope that “the voices on this site will mirror the free, open and plural society we all know that Cuba is ultimately destined to be.”
Live from the Fancy Farm Picnic
I went back home to Kentucky to attend the Fancy Farm Picnic last Saturday. It may be the biggest political event in the state; it takes place every August, 10 miles from where I grew up, and somehow I’d never attended before. It was time. I got there just in time to hear Senate candidates Jack Conway and Rand Paul give their 7-minute speeches. (There are lots of speakers, and timekeepers are strict.) There were plenty of advocates for both candidates among the 2000 or so people watching. It’s an old Democratic area, but they’re conservative Democrats who now mostly vote Republican in federal races.
It was well over 90 degrees and humid, so both candidates handed out fans:
As I listened to the candidates, my main impression was this: Conway accused Rand Paul of being an extremist, and Paul accused Conway of being a Democrat. The question for November is which charge will stick.
Gov. Steve Beshear, introducing Conway, warmed up the attack: “[Paul] is going to balance the federal budget on the backs of our school children. He’s going to balance the federal budget on the backs of our coal miners. On the backs of our farmers. On the backs of our law enforcement officials,” he shouted. “The entire commonwealth of Kentucky — Republicans, Democrats and independents — ought to be scared to death about Rand Paul!” Referring to last year’s controversy over Conway’s calling himself a “tough son of a bitch” — it’s a church picnic, after all — and the “seven words you can’t say on television,” Paul said, “There are six more words you won’t hear Jack Conway say [on the campaign trail]: President Obama, Nancy Pelosi and Harry Reid.”
So which do Kentucky voters dislike more: the national Democratic party’s big-government agenda or the prospect that Rand Paul might actually try to cut the size of government? In a world where everyone gets something from government, it’s not obvious. But so far Paul is holding on to a lead in the polls. In Fancy Farm, I noticed that all the Conway supporters had the campaign’s official signs and buttons, plus hand-lettered signs that had clearly been produced in campaign offices, such as this ”NeanderPaul” sign that I picked up after the shouting was over:
Paul’s supporters, on the other hand, brought a lot of their own homemade signs. Conway’s supporters were more disciplined. You didn’t see any Conway supporters showing up dressed as Abraham Lincoln or a colonial soldier (though news reports say there was a guy dressed as a “neanderthal” holding the above sign), or wearing T-shirts reading “Who is John Galt?” The greater grass-roots enthusiasm for Paul has both pluses and minuses. Clearly he’s appealing to stronger currents than mere partisan politics and generating more enthusiasm. But that means he’s more at risk of supporters doing things that might embarrass the campaign.
Both candidates accused the other of “flip-flopping.” Conway’s team erected a “Rand Paul’s Waffle House” in the familiar yellow-and-black design and claimed he was waffling and flip-flopping on a number of issues. (Are waffling and flip-flopping the same thing? Not really.) Paul’s campaign handed out flip-flops labeled “cap” and “trade” to draw attention to Conway’s alleged backing away from his previous support for the “cap and trade” energy legislation.
One thing you can say about the Fancy Farm Picnic, it’s the best $10 meal you’ll ever eat — Kentucky pork and mutton, fresh-picked tomatoes and corn, and homemade pies and cakes.
And one final thought: They estimate that 15,000 people attend the picnic but that only 2,000 listen to the political speeches, which is a good reminder of reality for us political junkies. And that estimate would seem to be confirmed by my reflection after the weekend that, except for the drive from Mayfield to Fancy Farm, I drove about 500 miles in Kentucky this weekend and I’m not sure I ever saw a campaign sign or bumper sticker. The election is still almost three months away, and politics just isn’t life for most people.
‘Border Enforcement’ Bill Driven by Election-Year Politics
A $600-million bill to enhance border enforcement has hit a temporary snag in the Senate, but it is almost inevitable, with an election only a few months away, that Congress and the president will spend yet more money trying to enforce our unworkable immigration laws.
“Getting control of the border” is the buzz phrase of the day for politicians in both parties, from Sen. John McCain, R-Ariz., to Sen. Chuck Schumer, D-N.Y. Never mind that apprehensions are down sharply along our Southwest border with Mexico, mostly I suspect because of the lack of robust job creation in the unstimulated Obama economy.
Meanwhile, since the early 1990s, spending on border enforcement has increased more than 700 percent, and the number of agents along the border has increased five-fold, from 3,500 to more than 17.000. (See pages 3-4 of a January 2010 report from the Center for American Progress and the Immigration Policy Center.) Yet the population of illegal immigrants in America tripled during that period. If this were a federal education program, conservatives would rightly accuse the big spenders of merely throwing more money at a problem without result.
To pay for this politically driven expenditure, Congress plans to nearly double fees charged for H1-B and L visas used by foreign high-tech firms to staff their operations in the United States. The increased visa tax will fall especially hard on companies such as the Indian high-tech leaders Wipro, Infosys, and Tata.
This all has the ring of election-year populism. Congress pretends to move us closer to solving the problem of illegal immigrants entering from Latin America by raising barriers to skilled professionals coming to the United States from India and elsewhere to help us maintain our edge in competitive global technology markets.
Federal Government Is a Lucrative ‘Industry’
The Bureau of Economic Analysis latest release of industry compensation levels shows that the average federal worker ranks up at the top along with employees in the finance and energy industries. That’s not exactly popular company these days.
The BEA presents compensation data for 72 industries that span the U.S. economy. Figure 1 shows the 20 industries with the highest levels of average compensation, which includes wages and benefits. It also shows the average for all U.S. private industries and the average for the industry with the lowest compensation. (The names of the industries have been simplified in some cases).
Federal civilian workers have the sixth highest average compensation of the 72 industries:
As yesterday’s post showed, federal employee compensation has exploded over the course of the decade. Figure 2 shows that this federal employee compensation growth has been the fifth highest of the 72 industries measured by the BEA:
More Stephen Biddle on Afghanistan
In June I pointed to what I thought was an interesting article co-authored by CFR’s Stephen Biddle that took a rather dim view of the prospects of fighting a counterinsurgency war on Hamid Karzai’s behalf in Afghanistan.
CFR has posted a transcript of a media call from earlier today with Biddle, who’s just returned from Afghanistan, hosted by Gideon Rose, the new editor of Foreign Affairs. There are some interesting tidbits in there. Try this, where Biddle has been working to try to push out well into the future any prospective date by which we can judge progress or a lack thereof in the fight:
ROSE: So what I hear you saying is that you have a Potter-Stewart version of a definition of success, but not a Potter-Stewart definition of failure.
In other words, at some point if it’s working, you’ll see the levels of violence come down; you’ll see things start to stabilize and then you’ll know things are going well. But if that hasn’t happened yet, it’s hard to distinguish between “It may happen down the road”; and “It’s not going to happen.”
BIDDLE: Yeah. And eventually, there’s kind of a statute of limitations on this. I mean, you can’t reasonable expect after five or six years to keep saying, well, it’ll happen eventually.
So five or six more years would be too long. (I should note that Biddle also suggests later in the interview that we need somehow to extend the U.S. presence in Iraq beyond the 2011 deadline in the existing Status of Forces Agreement in that country to prevent a meltdown from happening there.) Next Biddle restates his argument that al Qaeda “safe havens” isn’t a particularly good argument for continuing the war, but the prospect, which he admits is very unlikely, of a Pakistani collapse and al Qaeda somehow acquiring a deliverable nuclear weapon is. Rose pushes back:
ROSE: See, that actually scares me more than if you had given the reverse answer, because however sort of relatively minor the Afghan danger would seem to be, the idea of fighting a nasty, ongoing, unsatisfying war simply for a domino theory aspect of what might happen in a neighboring state if the war doesn’t go well, strikes me as so tenuous a connection that it really is going to be hard to justify. And I think over time, you might get into a political dynamic in which the — if the war doesn’t get — the prospects don’t seem to get any better, that the public might not find that convincing. Do you worry about that?
BIDDLE: Well, I mean, people use domino theory as pejorative wording when they oppose a war. The idea that states worry about the stability of their neighbors because they worry about the stability of their own country is ubiquitous in international politics. One of the central reasons why the United States got involved in the Balkans back in the 1990s was the fear that chaos in the Balkans could spread to our NATO neighbors and trading partners. You know, the United — the Soviet Union was continuously worried about instability on its borders. This is a normal concern in international affairs. It’s not like an imaginary ghost dreamed up by people who want to do Vietnam War revisionism.
ROSE: Understood entirely, although –
BIDDLE: I don’t think that this is an absolute transcendent be-all and end-all threat to U.S. national security that we should be willing to pay any price and bear any burden in order to deal with. I’ve argued in the past — and I continue to believe — that Afghanistan is close call on the merits because the stakes, while important, are indirect and are not unlimited. And obviously the cost of waging this war is, you know, clearly high.
So what it boils down to, I think, is neither a slam dunk in favor of waging the war in which any reasonable person must surely think this is worth it, nor a slam dunk in which this war is obviously crazy and any reasonable person should think that we should get out tomorrow morning. I think what you end up with is a situation where the costs and the benefits are pretty close on the analytics and it boils down to a value judgment that reasonable people will make differently about how much cost should you be willing to bear to reduce how much of a threat.
Now, the threat here if the worst case scenario unfolds, is pretty serious. I mean, you may or may not have worried about nuclear weapons in Soviet hands during the Cold War. Bin Laden would probably use the things if he got them. And an American decision by a presidential administration that could reasonably have waged this war with some respectable prospect of success, but decided instead to withdraw — if that scenario played itself out and Pakistan collapsed, bin Laden got a nuclear weapon and used it in the United States — that would be regarded by generations of historians as the single biggest foreign policy blunder in the history of the nation.
Now, a variety of bad things have to happen in sequence for that worst case to play itself out. That’s why I think this is a close call, rather than an obvious “do it” or an obvious “don’t”. But I think especially with respect to the guy in the Oval Office who has to bear the responsibility for this that I suspect that worst case looms fairly large, but I think all indications are that the president is pretty ambivalent about this, in part because I suspect he sees the costs and benefits as being closer on the margin than one would in some ways like.
But what really struck me about the interview was the fog-machine answer Biddle gave to a question from James Kitfield involving Karzai. See if you do better with it than I did:
Not Just a ‘Special Interest,’ A Super Special Interest
In the gag-inducing tradition of National Education Association propaganda, President Obama’s “Organizing for America” has released the video below taking issue with House Minority Leader John Boehner (R-OH) calling teachers a “special interest.” Watch…and wince.
Now, certainly many teachers want nothing more than to teach and do a good job. Some might even do it as much “for the kids” as their own personal satisfaction. But teachers, at least as represented by the NEA and the American Federation of Teachers, sure as heck are a special interest. Indeed, they might be called a super-special interest, with unparalled sway over Democrats especially, and an incredible ability to get money out of taxpayers.
But what about teachers’ saintliness?
Certainly many teachers work hard and spend some money out of their own pockets for the kids. But no public-school teacher is so poor that, unlike the no doubt intentionally bedgraggled-looking Jeff in the video, he or she can’t afford anything other than an undershirt to wear. Indeed, as I made clear in my PA Unbearable Burden? Living and Paying Student Loans as a First-Year Teacher, even the lowest-paid public school teachers can afford nice apartments, good food, and much beyond life’s essentials. And the average teacher, on an hourly basis, earns more than the average accountant, nurse, or insurance unerwriter.
Ah, but teachers work “twelve, thirteen hours” a day, right? I mean, isn’t that what destitute Jeff said?
Again, maybe some do, but the vast majority do not. Indeed, according to time-diary research done a few years ago, during the months when teachers are actually working as teachers — so not including lengthy summer and other vacations — the average teacher only does about 7.3 hours of education work inside or outside the school on weekdays, and about two hours on weekends. That’s 18 minutes less per day than the average person in a comparable, full-time professional job. And again, that doesn’t account for teachers’ long, built-in vacations.
So get off it, teacher unionists and apologists. Teacher unions are a gigantic special interest, and all the super-earnest-sounding, unkempt video subjects in the world aren’t going to change that.
You Heard It Here First: Grasping Government
This week’s cover of the Economist warns of the state’s growing involvement in industries,
in countries from the United States to Europe to China.
You could have heard many of the same concerns — admittedly for a good bit more money — two weeks ago at this year’s Cato University summer seminar, “Confronting Grasping Government.”
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