Archive for October, 2010
The Court Tackles a Hard Case: Implications for ObamaCare?
The Supreme Court hears oral argument today in an important pre-emption case, Bruesewitz v. Wyeth, which asks whether the National Vaccine Injury Compensation Act of 1986 pre-empts state law “design defect” suits brought against vaccine manufacturers. I’ve discussed this complex case more fully in an op-ed at the Daily Caller, but in a nutshell, Congress passed the Act to address the risks inherent in vaccinations through a federal no-fault ”Vaccine Court” rather than through the vagaries of state tort law. It did so because the inability to make vaccines entirely safe, plus uncertainty surrounding causation, coupled with the penchant of state juries to discount those issues in favor of sympathetic plaintiffs, had rendered most manufacturers unwilling to produce needed vaccines at reasonable costs.
In drafting the statute, however, Congress left things unclear, to put it charitably. Thus, the Court will have to make sense of this language:
No vaccine manufacturer shall be liable in a civil action for damages arising from a vaccine-related injury or death associated with the administration of a vaccine… if the injury or death resulted from side effects that were unavoidable even though the vaccine was properly prepared and was accompanied by proper directions and warnings.
Although the Act allows victims to sue over manufacturing defects, conduct that would subject a manufacturer to punitive damages, and a manufacturer’s failure to exercise due care, nowhere does it define “unavoidable”—and there’s the nub of the matter. In the case before the Court, a three-judge Third Circuit panel decided unanimously for Wyeth, as did the district court. But in another case five months earlier, a nine-member Georgia Supreme Court, facing similar facts, decided unanimously for the plaintiff.
And behind it all is the question whether Congress should have pre-empted state law in the first place. It probably should have here, but that’s a close call. And the implications for ObamaCare are not absent in this case, which could be a portent of the complex and uncertain litigation that lies ahead if the scheme is not repealed. As I say at the outset of my post, hard cases make bad law, but bad law too makes hard cases, and this is one. Does anyone think that ObamaCare is anything but bad law? We’ll know once we figure out “what’s in it,” as the lady said.
The ‘Communitarian’ Defense of Strip-Search Machines
What’s most interesting about Amitai Etzioni’s defense of airport strip-search machines is how rootless his approach to privacy problems is.
[O]ur public-policy decisions must balance two core values: Our commitment to individual rights and our commitment to the common good. Neither is a priori privileged. Thus, when threatened by the lethal SARS virus, we demanded that contagious people stay home—even though this limited their freedom to assemble and travel—because the contribution to the common good was high and the intrusion limited. Yet we banned the trading of medical records because these trades constituted a severe intrusion, but had no socially redeeming merit.
I disagree with this formulation, and I don’t know that he has accurately depicted the law on ”trade” in medical records or the merits on that question. But more important here: these value-balancing precedents don’t guide his analysis of strip-search machines. Rather, he just concludes in favor of them using his own assessment of “the common good.”
At least Etzioni is consistent. I wrote in my 2005 Privacilla.org review of his book, The Limits of Privacy: “[T]he book amounts to little more than bare assertion—one man’s argument—that privacy is not as important as other things. The argument appears unrooted in anything more than Etzioni’s opinions. ”
We have a long tradition of protecting individual rights. And we have processes for discovering the common good, such as markets, in which individual preferences agglomerate to sort it out for us. On the rare occassions when markets fail, political legislation and regulation may be a necessary substitute for natural processes. Somewhere quite a bit further down the list falls the technique “ask Amitai Etzioni.”
How to Profit by Expanding Freedom
That’s the title of this week’s column by Steve Chapman:
Here’s an excerpt:
Spending huge sums of money and getting no results to justify the expense: That’s the relentless, and accurate, Republican critique of President Barack Obama’s efforts to revive the U.S. economy. But it also describes a policy staunchly supported by Republicans as well as Democrats decade after decade: the war on drugs …
None of the [data is] new, but it has fresh relevance because of budgetary pressures that have forced citizens to ask what on earth the drug war is accomplishing. Californians, whose state government is in a bottomless fiscal hole, will vote next month on an initiative to legalize cannabis. One big selling point is that it could yield a $1.4 billion windfall to state coffers.
What is true for the Golden State is true for the other 49. In a new study for the libertarian Cato Institute in Washington, Harvard economist Jeffrey Miron and research associate Katherine Waldock estimate that, nationally, legalizing and taxing marijuana would save $8.7 billion in enforcement costs and harvest $8.7 billion in revenue.
Read the whole thing. The Cato study can be found here.
Obama and Infrastructure
The President is continuing his push for the federal government to go deeper into debt in order to fund infrastructure projects. While nobody disputes that the country has infrastructure needs, the precarious nature of federal and state finances indicate that policymakers need to starting thinking outside the box. Specifically, policymakers should be looking to make it easier for the private sector to fund and operate infrastructure projects.
As my colleagues Chris Edwards and Peter Van Doren have explained, the main problem with government infrastructure spending is the lack of efficiency:
More roads and transit capacity may or may not make sense depending on whether the benefits exceed the costs. One sure way to find out is to have private provision and user charges. If users are not willing to pay the costs of extra or newer capacity, then calls for taxpayer involvement probably imply subsidy of some at the expense of others rather than efficiency.
A lot of what the the president wishes to spend taxpayer money on — for example, high-speed rail — is of questionable economic value. Unfortunately, policymakers all too often allocate resources on the basis of politics rather than economics.
For more on this topic, interested readers should check out our essays on the Department of Transportation. Also, an essay on privatization argues that “The benefits to the federal budget of privatization would be modest, but the benefits to the economy would be large as newly private businesses would innovate and improve their performance.”
iCato: Liberty on the Go
We are very proud and excited to announce today the release of the official Cato Institute iPhone application, available for FREE download in the iTunes Store.
The application will be your way of staying absolutely up to date, from wherever you are, with everything that’s happening at Cato Institute. From being able to access the Cato@Liberty blog, or op-eds penned in major publications by our experts, to gaining instant access to the latest Cato Daily Podcast or cable TV news clips, you can now have Cato Institute information resources in the palm of your hand or on your iPad.
Here are some screen shots from the application:
We are currently still working to develop applications for other devices, and we will announce them as soon as they become available. For the time being, head on over to the Apple Store to download your copy of the official Cato Institute iPhone application, or search for “Cato Institute” in the iTunes store.
Additionally, in case you missed it, check out our brief catalog of new media offerings – how connected are you to the Cato Institute?
Remember to use the #Cato20 hashtag on Twitter to send us feedback on our new media efforts, or to let us know what you think about the new iPhone application!
President Obama and Education Politics As Usual
President Obama has seemingly made an entire mountain range out of his Race-to-the-Top reform molehill, while he’s gotten more or less a free pass on all he’s done to enrich the status quo. And now, with big midterm losses looming for his party, he appears to be resorting to one of the easiest political ploys in the book: Claim the GOP will cut funding to education and, in so doing, hurt innocent children and cripple the nation’s economic future. As the President opined in his weekly address:
[I]f Republicans in Congress had their way….We’d have a harder time offering our kids the best education possible. Because they’d have us cut education by 20 percent — cuts that would reduce financial aid for eight million students; cuts that would leave our great and undervalued community colleges without the resources they need to prepare our graduates for the jobs of the future.
Now, it is true that when it comes to our budget, we have real challenges to meet. And if we’re serious about getting our fiscal house in order, we’ll need to make some tough choices. I’m prepared to make those choices. But what I’m not prepared to do is shortchange our children’s education. What I’m not prepared to do is undercut their economic future, your economic future, or the economic future of the United States of America.
Where did the President get the 20 percent number? It most likely stems from the promise in the House Republican’s “Pledge to America” to return federal spending unrelated to defense or senior citizens to pre-stimulus levels. Presumably, that means education spending would be reduced to the level it was at before passage of the stimulus. Considering that the stimulus was supposed to be a one-shot thing, that hardly seems like a draconian move.
That said, the much more important consideration is that based on decades of evidence – not to mention the strictures of the Constitution — federal education spending should not only be reduced, it should be phased out completely. Looking at the evidence since the feds started delving deeply into education in the mid-1960s, it’s clear that we’ve gotten very little for our money.
Start with K-12 education, where we have results from the National Assessment of Educational Progress, a consistent measure of performance since the early 1970s :
As you can see, Washington has spent steeply increasing amounts of money and not moved the needle at all for the 17-year-olds that constitute the “final products” of our elementary and secondary schools.
How about higher education?
Here the main focus has been providing stduent financial aid to increase college access, and in defense of the feds we have seen big increases in college enrollment since the mid-1960s. Enrollment, however, had been increasing substantially for many decades prior to 1965 or the post-World War II G.I. Bill, suggesting that Washington might have just caught an enrollment wave that was coming in anyway. There is also strong evidence that federal student aid has helped fuel rampant tuition inflation, largely negating the aid’s value. And while we have no consistent, long-term measure of learning outputs, we can at a minimum see that literacy among holders of at least a bachelor’s degree dropped between 1992 and 2003. According to the National Assessment of Adult Literacy, forty percent of people whose highest educational attainment was a bachelor’s degree were proficient prose readers in 1992 . By 2003, only 31 percent were. For Americans with graduate degrees, 51 percent were proficient in 1992. Eleven years later, only 41 percent were.
Unfortunately, for decades federal politicians have expended taxpayer money either in goodhearted — but misguided — efforts to improve education, or more selfishly, to appear to “care about the children” and make political hay. Regardless of the motivation, at this point it must no longer be ignored: Washington ’s spending on education has gotten us little of demonstrable value. For President Obama to not even acknowledge the powerful evidence of this, but instead trot out the old canard that less spending is synonymous with worse education, signals that he’s more than willing to play bankrupting education politics as usual.
Obama’s Attack on the Chamber of Commerce: Perfectly Consistent
Today POLITICO Arena asks:
Will President Obama’s campaign finance attacks on the U.S. Chamber of Commerce and others resonate with voters over the next three weeks?
My response:
With so many senior advisors leaving the White House so early in the term, you have to wonder who’s left to advise the president except, well — the president. And judging from his attacks on corporate campaign spending generally and the U.S. Chamber of Commerce in particular, you’re inclined to believe that that’s the case. After all, the attacks are perfectly consistent with the president’s larger agenda.
As others here at the Arena have noted, not since the New Deal have we seen so sustained an anti-business political agenda as has come from this president. Under such an assault, is it any wonder that businesses have created so few jobs, or that they’re fighting back? Yet for that, the president is criticizing them — with campaign finance claims that not even the New York Times finds credible.
This campaign finance angle has an especially unseemly air about it, however – see the Wall Street Journal’s editorial this morning about Democrats unleashing the IRS and Justice on donors to their political opponents. The effort to restrict the speech that campaign finance represents — promoted by the political establishment, especially Democrats — has always been at bottom about incumbency protection, not “good government.” We didn’t hear complaints when Obama abandoned the public financing system in 2008, for example, as “unconscionable” amounts of private money poured into his campaign. Obama may be barking now that the shoe’s on the other foot, but his bark rings as hollow as his agenda, which is why it’s not resonating with the voters, and is not likely to in the three weeks ahead.
November Nail in Rail Coffin?
The New York Times offers an unintentionally hopeful story on Republican candidates running for governor who could become significant obstacles for the Obama administration’s high-speed rail agenda.
As I recently discussed, Wisconsin GOP gubernatorial candidate Scott Walker has taken the position that Washington can keep the $810 million it allocated for a “high-speed” rail line between Madison and Milwaukee that would operate at speeds achieved in the 1930s. The Times article shows that Walker isn’t alone:
Similar concerns are threatening to stall many of the nation’s biggest train projects. In Ohio, the Republican candidate for governor, John Kasich, is vowing to kill a $400 million federal stimulus project to link Cleveland, Columbus and Cincinnati by rail. In Florida, Rick Scott, the Republican candidate for governor, has questioned whether the state should invest in the planned rail line from Orlando to Tampa. The state got $1.25 billion in federal stimulus money for the project, but it will cost at least twice that much to complete.
And the nation’s most ambitious high-speed rail project, California’s $45 billion plan to link Los Angeles and San Francisco with trains that would go up to 220 miles per hour, could be delayed if Meg Whitman, a Republican, is elected governor. “In the face of the state’s current fiscal crisis, Meg doesn’t believe we can afford the costs associated with new high-speed rail at this time,” said Tucker Bounds, a campaign spokesman.
Whitman is right: California can’t afford high-speed rail, nor can the rest of the country. A Cato essay on high-speed rail notes that it would cost around $1 trillion to build a nationwide system of high-speed rail. That’s a lot of other people’s money to spend on a mode of transportation that “would not likely capture more than about 1 percent of the nation’s market for passenger travel.”
Randal O’Toole nicely sums up why high-speed rail doesn’t make any sense:
The history of transportation shows that we adopt new technologies when they are faster, more convenient, and less expensive than the technologies they replace. High-speed rail is slower than flying, less convenient than driving, and far more expensive than either one. As a result, it will never serve more than a few marginal travelers.
In the meantime, Amtrak — the poster child for bad federal transportation ideas — recently unveiled a $117 billion, 30-year “vision” for high-speed rail in the Northeast Corridor.
From the Washington Post:
At a news conference at Philadelphia’s 30th Street Station on Tuesday, Amtrak President Joseph Boardman said the proposal is at the visionary stage, and there’s no funding plan in place. It aims for high-speed rail by 2040.
Of course Amtrak has no funding in place – it depends on taxpayer subsidies to remain in operation!
As a series of Cato essays on the Department of Transportation demonstrates, policymakers should be focusing on getting the private sector more involved in the financing and operation of transportation.
The Cognitive Dissonance of ObamaCare Supporters
“The Affordable Care Act offers new benefits like preventive care with no out-of-pocket cost and tools to help fight unreasonable premium increases that will save money for consumers.” — Jessica Santillo, a spokeswoman at the Department of Health and Human Services
Mirror, Mirror, on the Wall, Which Nation Has the Most Debt of All?
The Economist has a fascinating webpage that allows readers to look at all the world’s nations and compare them based on various measures of government debt (and for various years).
The most economically relevant measure is public debt as a share of GDP, and you can see that the United States is not in great shape, though many nations have more accumulated red ink (especially Japan, where debt is much higher than it is even in Greece). As faithful readers of this blog already understand, the real issue is the size of government, but this site is a good indicator of nations that finance their spending in a risky fashion.
By the way, keep in mind that these figures do not include unfunded liabilities. For those who worry about debt, those are the truly shocking numbers (at least for the United States and other nations with government-run pension and health schemes).
This Week in Government Failure
Over at Downsizing Government, we focused on the following issues this week:
- The variation in welfare enrollment among the states points to the desirability of handing off all responsibility for anti-poverty programs to the states.
- A recent stack of audits is a reminder of the bureaucratic bungling that comes with government programs, particularly at HUD.
- Instead of spreading transportation subsidies across every form of transportation, the federal government should cease with the seemingly endless interventions and allow free individuals to figure out what makes the most sense.
- We celebrate the beginning of hockey season with a look at fiscal policy north of the border. First, the Canadian economy boomed during the 1990s and 2000s as government spending was dramatically reduced. Second, the Canadian experience illustrates that a lot of progress can be made if even modest cuts are implemented and then spending is constrained so that it grows at a slower rate than the overall economy.
Mario Vargas Llosa’s Nobel Prize
The news that Peruvian novelist Mario Vargas Llosa won the Nobel Prize for literature has gratified me beyond words. The award is a huge boost for liberty in Latin America. Through his literary genius, prolific essays, and ceaseless activism, Vargas Llosa long established himself as perhaps Latin America’s most well-known public intellectual, and certainly its most well-known classical liberal. For decades, he has used his ability to reach a mass audience to promote the principles of the free society, becoming the region’s foremost advocate of democratic capitalism.
It was not always so. In the 1960s when his first novels appeared to wide acclaim, Vargas Llosa was representative of the Latin American intellectual establishment in his admiration of the Cuban revolution and his advocacy of radical leftist politics. Even then, however, anti-authoritarianism and a concern for the individual were prominent themes in his novels. In an example of independent thinking that characterizes Vargas Llosa’s commitment to the truth, he broke with the intellectual establishment in the early 1970s, strongly denouncing Fidel Castro’s revolution and turning away from statism in general. His increasingly forceful defense of individual liberty was strengthened by his discovery, by the 1970s, of the work of Nobel laureate Friedrich Hayek, whom Vargas Llosa cites as one of the three biggest intellectual influences on his thinking (the others being Karl Popper and Isaiah Berlin)
An extremely versatile communicator, Vargas Llosa has explored Latin America’s deepest social problems and has demystified the utopian vision of demagogic leaders so common in Latin American history. A major theme of his 1981 novel, The War of the End of the World, for example, was that collectivist promises of a better life, or happiness, can only end in fanaticism—especially if various brands of collectivism are pitted against each other—precisely because civilization depends on the primacy of the individual and a close regard to the real world as opposed to dogmatic reliance on abstract but erroneous ideas of how the world might work.
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