Archive for September, 2010
‘New Food Safety Bill Could Make Things Worse’
That’s not just my view; that’s the view of writer Barry Estabrook, an ardent critic of the food industry (“Politics of the Plate“), writing at The Atlantic. You needn’t go along completely with Estabrook’s dim view of industrialized agriculture to realize he’s right in one of his central contentions: “the proposed rules would disproportionately impose costs upon” small producers, including traditional, low-tech and organic farmers and foodmakers selling to neighbors and local markets. Even those with flawless safety records or selling low-risk types of foodstuff could be capsized by new paperwork and regulatory burdens that larger operations will be able to absorb as a cost of doing business. (Earlier here and here.)
Things could reach a showdown any day now. The food safety bill had stalled in the Senate under criticism from small farmer advocates, as the New York Times acknowledged the other day in an absurdly slanted editorial that somehow got printed as a news article. Now Harry Reid is talking about forcing the bill through before the midterms. Significantly — as advocates of the bill trumpet — large foodmakers and agribusiness concerns have signed off on the bill as acceptable to them. Well, yes, they would, wouldn’t they?
I was on TV the other week (Hearst news service) trying to make a few of these points. I borrowed my closing line from an excellent Steve Chapman column, which I was unable to credit on air, but can credit here.
Is ObamaCare Pushing Rope?
Regarding ObamaCare’s first adverse-selection death spiral, Julie Rovner posts this over at Shots, the NPR health blog:
The advocacy group Health Care for America Now was the first to bring the action to widespread attention. “Even for the insurance industry this behavior is surprisingly brazen,” HCAN Executive Director Ethan Rome wrote in a blog entry for the Huffington Post. “They don’t like the rules, so they’re going to take their ball and go home.”
But the insurance industry trade group America’s Health Insurance Plans rejected HCAN’s contention that the companies’ refusal to sell to all comers is somehow a violation of a promise made earlier this year by AHIP CEO Karen Ignagni that insurance companies would comply with regulations regarding children and pre-existing conditions.
In an interview, AHIP spokesman Robert Zirkelbach said Ignagni was responding only to promises that children wouldn’t be excluded from their parents’ plans and that if the kids are covered, the policies would include treatment of their pre-existing condition.
What emerged in the regulations, however, Zirkelbach said, was, in effect, a requirement that insurance companies accept children even if they are already sick. That, he said, would be tantamount to exactly what companies want to avoid with the adult population — letting people wait until they are sick to sign up for insurance. Which is exactly why the insurance industry is so insistent on a coverage mandate: It needs premiums of healthy people to help cover the costs of those who are not.
In effect, ObamaCare supporters said to the public, “Give the government more power over insurance companies and the government will make health insurance more accessible and secure.” These few paragraphs capture how that strategy has turned into a cat-and-mouse game with insurers, and is turning ObamaCare’s most attractive selling point — guaranteed coverage for kids with pre-existing conditions — into an empty promise.
In stark contrast stands the individual insurance market. Yes, insurers there generally (but not always) charge premiums that correspond to risk, and sometimes turn people down — but that market has also been remarkably innovative when it comes to protecting sick people from higher premiums. RAND Health economist Susan Marquis and her colleagues write, “a large number of people with health problems do obtain coverage” in the individual market: “Our analysis confirms earlier studies’ findings that there is considerable risk pooling in the individual market and that high risks are not charged premiums that fully reflect their higher risk.” Even as Congress debated ObamaCare, UnitedHealthcare introduced an innovative new product that protects people with employer-sponsored coverage from facing sky-high premiums when they leave their company plan. Economist John Cochrane predicts that further innovations can make health insurance more secure and improve the quality of medical care.
Which process seems more likely to improve quality and reduce costs? The political process, where politicians and regulators try to force insurance companies to act against their financial self-interest? Or the market process, where self-interest forces insurers to find innovative ways to give consumers more of what they want?
Rising Welfare Costs
The Government Accountability Office released Congressional testimony this week looking at Temporary Assistance for Needy Families. TANF, which replaced unrestricted welfare in 1996, has reduced welfare rolls and encouraged recipients to obtain work. Unfortunately, TANF’s goals have been undermined.
The GAO notes that “work participation rates … do not appear to be achieving the intended purpose of encouraging states to engage specified proportions of TANF adults in work activities.”
States are required to have at least 50 percent of eligible TANF recipients from single parent families participating in work activities. However, states are given various credits and exemptions that significantly reduce the number of recipients required to work. As a result, only about 30 percent of TANF recipients engage in “work activities,” which is often liberally defined. (This has been the case before and during the recession.)
Moreover, while TANF has successfully reduced the budgetary cost of cash-welfare, overall federal spending on anti-poverty programs has increased dramatically. According to a chart from Brian Riedl, anti-poverty spending has increased an inflation-adjusted 89 percent over the present decade:
I previously discussed how TANF enrollment has dropped since its passage in 1996 while food stamp enrollment has greatly increased. A food stamp user interviewed by the New York Times indicates one reason for the trend:
‘It used to be easier to go on cash assistance,’ she said as she left a food stamp office in Brooklyn this month. ‘You didn’t have to go to work, you didn’t have to report every day to an office and sign in and sign out. Now, if you don’t go to those group job meetings in the mornings, they shut down your whole welfare case. So that’s why I just get food stamps.’
Not surprisingly, the cost of the food stamps program has gone through the roof:
The desirability of federal anti-poverty programs in the midst of difficult economic times is a sensitive topic. However, with so many Americans currently in need of assistance, now is actually a good time to discuss the role of government in taking care of the less fortunate. As a Cato essay on welfare and Temporary Assistance for Needy Families argues, the federal government isn’t the best option.
Speech, Privacy, and Government Infiltration
Yesterday, I mentioned a recent report from the Justice Department’s Office of the Inspector General on some potentially improper instances of FBI monitoring of domestic anti-war groups. It occurs to me that it also provides a useful data point that’s relevant to last week’s post about the pitfalls of thinking about the proper limits of government information gathering exclusively in terms of “privacy.”
As the report details, an agent in the FBI’s Pittsburgh office sent a confidential source to report on organizing meetings for anti-war marches held by the anarchist Pittsburgh Organizing Group (POG). The agent admitted to OIG that his motive was a general desire to cultivate an informant rather than any particular factually grounded investigative purpose. Unsurprisingly, reports generated by the source contained “no information remotely relevant to actual or potential criminal activity,” and at least one report was “limited to identifying information about the participants in a political discussion together with characterizations of the contents of the speech of the participants.” The agent dutifully recorded that at one such gathering “Meeting and discussion was primarily anti anything supported by the main stream [sic] American.”
Now, in fact, the OIG suggests that the retention in FBI records of personally identifiable information about citizens’ political speech, unrelated to any legitimate investigation into suspected violations of federal law, may well have violated the Privacy Act. But if we wanted to pick semantic nits, we could surely make the argument that this is not really an invasion of “privacy” as traditionally conceived—and certainly not as conceived by our courts. The gatherings don’t appear to have been very large—the source was able to get the names and ages of all present—but they were, in principle, announced on the Web and open to the public.
Fortunately, the top lawyer at the Pittsburgh office appears to have been duly appalled when he discovered what had been done, and made sure the agents in the office got a refresher training on the proper and improper uses of informants. But as a thought experiment, suppose this sort of thing were routine. Suppose that any “public” political meeting, at least for political views regarded as out of the mainstream, stood a good chance of being attended by a clandestine government informant, who would record the names of the participants and what each of them said, to be filed away in a database indefinitely. Would you think twice before attending? If so, it suggests that the limits on state surveillance of the population appropriate to a free and democratic society are not exhausted by those aimed at protecting “privacy” in the familiar sense.
Spain’s Former Drug Czarina Endorses Legalization
Quoting great classical liberal minds such as Milton Friedman, Gary Becker and Mario Vargas Llosa, Spain’s former drug Czarina Araceli Manjón-Cabeza endorsed drug legalization today in a compelling op-ed [in Spanish] published in El País, Spain’s leading newspaper. Just a week earlier, Felipe González, Spain’s former Primer Minister, also came out in support of drug legalization.
Manjón-Cabeza takes particular aim at the UN International Narcotics Control Board for its criticisms of the different decriminalization and harm-reduction policies implemented in recent years in Argentina, Mexico, Brazil, and Spain, among other countries. She calls the INCB’s views “inadmissible.”
She concluded by calling prohibition a “savage and inefficient instrument that is not the ‘solution’ but instead a big part of the problem.” Manjón-Cabeza says that insisting on prohibitionist policies amounts to “insanity.” Finally, some common sense talk from a former drug czar.
How ObamaCare Threw Gays, Immigrants under the Bus
In the wake of Senate Democrats’ inability to break a GOP filibuster of the defense appropriations bill, to which Democrats hoped to attach the pro-immigration Dream Act and a repeal of the military’s “don’t ask, don’t tell” policy, the Reason Foundation’s Shikha Dalmia writes in Forbes:
But if Harry Reid was the proximate cause of this bill’s demise, ObamaCare was the fundamental cause. The ugly, hardball tactics that Democrats deployed to shove this unpopular legislation down everyone’s throat have so poisoned the well on Capitol Hill that Democrats have no good will left to make strategic alliances on even reasonable legislation anymore. When a party has such huge majorities, even small gestures of reconciliation are enough to splinter the ranks of opponents and obtain cooperation. But Democrats played the game of our way or the highway with ObamaCare, ignoring warnings that this would render them completely impotent for the rest of President Obama’s term. Indeed, Republican Senator Lindsey Graham of South Carolina,who had been working with Senator Chuck Schumer of New York to craft comprehensive immigration reform, gave up in disgust in the wake of ObamaCare.
How ironic that a president who got elected on the promise of bipartisan comity has produced nothing but partisan rancor. And his signature legislation that was supposed to save America’s most vulnerable has begun by throwing them under the bus.
Dalmia assigns Republicans their (ample) share of the blame, too. Read the whole thing.
Why is Waiting for “Superman” Pushing Kryptonite?
You’ve probably heard it already, but if not, you should know that on Friday the documentary Waiting for “Superman” — from An Inconvenient Truth director Davis Guggenheim — will be opening in select theaters around the country. The film, about how hard it is to access good education in America thanks to adults putting their interests first, follows several children as they hope beyond hope to get into oversubscribed charter schools. It is said by those who’ve seen it to be a tear-jerker and call to arms to substantially reform American education.
Unfortunately, the film doesn’t promote real, essential reform: Taking money away from special-interest dominated government schools and letting parents control it.
The movie does flirt — from what I know, that is, without having yet seen it — with school choice, lionizing charter schools. But let’s not forget that while many charter schools and their founders have tremendous vision and drive, charters are still public schools, and as such are easily smothered by politically potent special interests like teacher unions. Moreover, while charter schools are chosen, charter schooling still keeps money — and therefore power – out of the hands of parents. Together, these things explain why there are so many heartbreaking charter lotteries to film: there is almost no ability or incentive to scale up good schooling models to meet all the desperate demand.
But isn’t the goal for no child to have to wait for Superman? If so, then why not give parents the power to choose good schools (and leave bad ones) right now by instituting widespread school choice? Indeed, we’re quickly losing room in good institutions because parochial schools – which have to charge tuition to stay in business — simply can’t compete with “free” alternatives. If we were to let parents control education funds immediately, however, they could get their kids into those disappearing seats while the seats are still around, and we would finally have the freedom and consumer-driven demand necessary to see good schools widely replicated.
Unfortunately, Waiting for “Superman” doesn’t just seem to want to make people wait for good schools by promoting charter schools and not full choice. On its “take action” website, it prominently promotes the very opposite of parent empowerment: Uniform, government-imposed, national standards for every public school in America.
Rather than let parents access the best curriculum for their unique children, the Waiting for “Superman” folks want to give the federal government power. Of course, the website doesn’t say that Washington will control “common” standards, but make no mistake: Federal money has been driving the national standards train, and what Washington funds, it ultimately controls. And there is no better way to complete the public schooling monopoly — to let the teacher unions, administrator associations, and other adult interests do one-stop shopping for domination — than to centralize power in one place.
The people behind Waiting for “Superman” are no doubt well intentioned, and their film worth seeing. But pushing kryptonite is pushing kryptonite, and it has to be stopped.
Sorry I’m Late
It’s Car Free Day in Washington, and the traffic on I-66 was the worst in memory.
Update: Link fixed.
Trade Can Help the Poor Escape Poverty
Professor William Easterly, the economic development expert from New York University, has written an excellent comment for the Financial Times online. He writes, “The Millennium Development Goals [summit that wraps up in NY today] tragically misused the world’s goodwill to support failed official aid approaches to global poverty and gave virtually no support to proven approaches. … But current experience and history both speak loudly that the only real engine of growth out of poverty is private business, and there is no evidence that aid fuels such growth.”
At the Center for Global Liberty and Prosperity, we have continuously emphasized the power of trade to help the poor escape poverty. Unfortunately, politicians in rich countries find it easier to waste billions of taxpayers’ dollars in the form of foreign aid than to take on special interests that thrive on trade protectionism; hence European and American agricultural tariffs and subsidies.
However, the impact of rich countries’ protectionism should not be exaggerated. African countries are typically more protectionist than rich countries. In fact, they are more protectionist against one another than against rich countries. The sad truth is that poor countries are perfectly able to shoot themselves in the foot by following growth-killing economic policies – irrespective of what the rich countries do.
Foreign aid, incidentally, has been ineffective at promoting liberalization.
It’s Simple to Balance the Budget without Higher Taxes
John Podesta of the Center for American Progress had a column in Politico yesterday asserting that “closing the budget gap entirely on the spending side would require draconian programmatic cuts.” He went on to complain that there are some people who “refuse to look at the revenue side of the ledger – while insisting that we dig the hole $830 billion deeper over the next decade by extending the Bush tax cuts.”
Not surprisingly, Mr. Podesta is totally wrong. It’s actually not that challenging to balance the budget. And it doesn’t even require any spending cuts, though it would be a very good idea to dramatically downsize the federal government. Here’s a chart showing this year’s spending and revenue totals. It then shows the Congressional Budget Office’s estimate of how much revenues will grow, assuming all the 2001 and 2003 tax cuts are made permanent and assuming that the alternative minimum tax is adjusted for inflation. As you can see, balancing the budget is a simple matter of limiting the annual growth of federal spending.
So how is it that Mr. Podesta can spout sky-is-falling rhetoric about “draconian” cuts when all that’s needed is fiscal restraint? The answer is that politicians in Washington have concocted a self-serving budget process that automatically assumes that all previously-planned spending increases should occur. So if the politicians put us on a path to make government 8 percent bigger next year and there is a proposal to instead limit spending growth to 3 percent, that 3 percent increase gets portrayed as a 5 percent cut.
This is a great scam, at least for the political class. They get to buy more votes by boosting the burden of government spending, but they get to tell voters that they’re being fiscally responsible. And they get to claim that they have no choice but to raise taxes because there’s no other way to balance the budget. In the real world, though, this translates into bigger government and puts us on a path to a Greek-style fiscal nightmare.
Read the rest of this post »
Woodward’s Narrative
The New York Times reports that the book, Obama’s Wars, by longtime Washington Post reporter Bob Woodward that is scheduled for publication next week, depicts an administration completely at odds over the war in Afghanistan.
According to Woodward, the president concluded from the start that “I have two years with the public on this.” He implored his advisers at one meeting, “I want an exit strategy,” and he set a withdrawal timetable because, “I can’t lose the whole Democratic Party.”
It’s unfortunate that the policy debate over Afghanistan will be further spun into a left-vs.-right issue. After all, there are growing, if nascent, signs that some on the political right have reservations about our continued military involvement in Afghanistan. Earlier this year, Congressman Tim Johnson (R-Ill.), who earned an 80 percent favorable rating from the American Conservative Union, was a GOP co-sponsor to Rep. Dennis Kucinich’s (D-Ohio) resolution to force the removal of U.S. forces from Afghanistan. In March, Congressman John Duncan (R-Tenn.) came to the Cato Institute and explained why “there is nothing conservative about the war in Afghanistan.”
And as Cato founder Ed Crane wrote last year in the pages of the LA Times:
Republicans should take this opportunity to return to their traditional non-interventionist roots, and throw their neoconservative wing under the bus and forcefully oppose the war in Afghanistan. The Republicans have a chance at this moment to reclaim the mantle of the party of non-intervention — in your health care, in your wallet, in your lifestyle, and in the affairs of other nations.
I am not a conservative, and neither are many of my Cato colleagues. But these comments are intended to highlight that leaving Afghanistan is far beyond Left vs. Right. In fact, many conservatives used to deride nation-building as a utopian venture that had little to do with the nation’s real interests. In the case of Afghanistan, troops are being deployed to prop up a regime Washington doesn’t trust, for goals our president can’t define. There is a principled case to be made that a prolonged nation-building occupation is weakening our country militarily and economically. It’s a question of scarce resources and limiting the power of government. The immense price tag for war in Afghanistan can no longer be swept under the carpet or dismissed as an issue owned by peaceniks and pacifists, much less “the Democratic Party.”
Libertarianism on NPR’s Planet Money
It must be the week for libertarian podcasts. Right after my UnitedLiberty interview on the 2010 elections, NPR’s Planet Money offers this podcast with Mark Calabria and me on libertarianism. (By the way, “under libertarianism, you would be better-looking, you would be taller” is a joke….)
When I did talk shows after the publication of Libertarianism: A Primer, I was always asked, “What is libertarianism?” I said then, “Libertarianism is the idea that adult individuals have the right and the responsibility to make the important decisions about their lives. And of course today government claims the power to make many of those decisions for us, from where to send our kids to school to what we can smoke to how we must save for retirement.”
Here’s another way to put it, which I believe I first saw in a high-school libertarian newsletter from Minnesota: Smokey the Bear’s rules for fire safety also apply to government: Keep it small, keep it in a confined area, and keep an eye on it.
For more on libertarianism, check out my entry at the Encyclopedia Britannica. For longer treatments, see Libertarianism: A Primer and The Libertarian Reader. For deeper thoughts, take a look at Realizing Freedom: Libertarian Theory, History, and Practice. Find an 80-minute interview on libertarianism here and a short talk here.
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