Archive for October, 2010
Do We Have a Problem of Too Much Spending or Too Little Revenue?
Here’s a chart from Veronique de Rugy’s new article on federal revenues vs. spending in The American. Amazing how the problem becomes obvious when you look at real numbers and don’t get trapped into using “baseline” math (as I explain in my latest video).
By the way, find out when John Stossel’s program on Fox Business News airs in your area. Veronique is a guest this week talking about these issues.
Pelosi Had to Pass ObamaCare So She Could Find out What’s In It
Bloomberg’s Caroline Baum has a great column on ObamaCare. It leads off with House Speaker Nancy Pelosi’s oft-repeated remark, “We have to pass the bill so that you can find out what is in it.”
Truer words were never spoken. Heck, ObamaCare gives HHS Secretary Kathleen Sebelius so much arbitrary power to reshape the health care sector that Congress had to pass the law so that Pelosi could find out what is in it.
Baum explains why such discretionary power is dangerous:
Discretion may be the better part of valor, but it’s not something businesses can rely on for planning purposes. Corporations are already hunkered down because of (take your pick) weak demand, hurt feelings as a result of presidential persecution, or uncertainty over future health-care costs and tax rates. It won’t help business confidence to learn the HHS secretary can make and break rules on a case-by-case basis.
“The secretary can decide what you have to purchase, but if you are in a presidential swing state, the secretary has the authority to undo everything she just did,” Cannon says.
Wait, how’d that last sentence get in there? Anyway, read the whole thing.
The Politics of Mario Vargas Llosa
Marie Arana, the Peruvian-born former editor of the Washington Post’s Book World, writes a thoughtful and moving analysis of Mario Vargas Llosa’s work that has just been awarded a Nobel Prize. She explores at some length Vargas Llosa’s political views and whether they might have prevented him from winning the prize much earlier. But there’s one word that curiously doesn’t appear in her article. Curious, because it’s a very common word, the word that describes his political philosophy, a word that he himself uses frequently. You may want to read the article and see if you can find the missing word before reading further here.
Arana writes:
When asked by an editor several years ago why the prize had eluded him, he replied with a wry smile that he was hardly the politically correct choice.…
According to the Nobel committee, he has won the award “for his cartography of structures of power and his trenchant images of the individual’s resistance, revolt, and defeat.”
For years, the gossip was that Stockholm would never recognize him because his politics were conservative, though many of his positions — on gay rights, for example — have been to the left of center.…
For all his bracing work decrying totalitarian strongmen, Vargas Llosa is no radical revolutionary. He has been described as an intransigent neoliberal, a man with unshakable convictions that his country and people need strict economic discipline, membership in the world market and tough austerity measures at home.
What’s the missing word? Give the article one more read.
Cutting the Fuse
I’m thrilled to be participating in a day-long conference on Capitol Hill next week to coincide with the release of a new book from the University of Chicago, Cutting the Fuse: The Explosion of Suicide Terrorism and How to Stop It. Co-authored by Robert Pape and James Feldman, the book builds on Pape’s earlier pioneering work, including here and here, into the causes of terrorism. Drawing on data compiled by the Chicago Project on Suicide Terrorism (CPOST), the book includes chapters on Iraq, Afghanistan, Pakistan, Lebanon, Israel and Palestine, Chechnya and Sri Lanka.
The authors’ concluding observations offer some hope for those of us who have been calling for a new narrative pertaining to counterterrorism, one that begins with the presumption that fear is the terrorists’ true weapon. A strong, resilient society retains the ability to kill or capture those who would harm innocents to make a political point, as the United States has done since 9/11. But a country of more than 300 million people shouldn’t cower before a few hundred individuals with delusions of world domination, but who are too frightened and weak to show their faces for years.
I think that the book’s conclusions might be a bit too optimistic as far as the politics of counterterrorism goes. There are still ample incentives for people to hype the threat of terrorism, and not enough competing pressures to dial back the most extreme claims of impending doom. But perhaps we are approaching a “period of understanding” as Pape and Feldman claim?
I certainly hope so.
Obama’s Job-Killing Policies: A Picture Says a Thousand Words
The new unemployment data have been released and they don’t paint a pretty picture — literally and figuratively.
The figure below is all we need to know about the success of President Obama’s big-government policies. The lower, solid line is from a White House report in early 2009 and it shows the level of unemployment the Administration said we would experience if the so-called stimulus was adopted. The darker dots show the actual monthly unemployment rate. At what point will the beltway politicians concede that making government bigger is not a recipe for prosperity?
They say the definition of insanity is doing the same thing over and over again while expecting a different result. The Obama White House imposed an $800-billion plus faux stimulus on the economy (actually more than $1 trillion if additional interest costs are included). They’ve also passed all sorts of additional legislation, most of which have been referred to as jobs bills. Yet the unemployment situation is stagnant and the economy is far weaker than is normally the case when pulling out of a downturn.
But don’t worry, Nancy Pelosi said that unemployment benefits are stimulative!
Cato 2.0
There are a number of ways for you to stay connected to the Cato Institute on the web, outside of our main website (Cato.org), this blog (Cato@Liberty), our Spanish language site (El Cato), our political theorists’ digital round table (Cato | Unbound), or our hub for high school and college students (Cato on Campus). As we have grown since our founding in 1977, so have we grown online in recent years, in an effort to provide more opportunities to interact with our research and experts.
We appreciate your interest in our work and we encourage you to leverage any and all of our information resources–both at our main website, on this blog, and across the reaches of new media space. We have recently made many of our multimedia resources available for embed to bloggers, and we are looking continuously at ways to try to connect you to our projects. After the fold, check out a sampling of ways you can connect to Cato online and for ways you can use our multimedia resources.
Cutting Government the Canadian Way
I blogged about how Canadian government spending cuts since the mid-1990s coincided with strong economic growth.
Let’s take a closer look at the spending cuts. The chart shows Canadian federal spending from 1984 to 2009 in actual, or nominal, dollars. Spending includes all “discretionary” and “entitlement” programs, as we would call them, but excludes interest payments. (Data are here).
Spending peaked in the early 1990s, and it relied on massive deficit finance. As a result, interest costs were spiralling out of control. The prime minister and his finance minister–members of the center-left Liberal Party–decided to reverse course and start cutting.
They cut spending from $123 billion in in 1995 to $111 billion in 1997, a 10 percent reduction. Then they held spending at roughly the lower level for another three years. With the Canadian economy growing–due to pro-market reforms such as free trade with the United States–this amount of restraint was enough to start a virtuous cycle of falling interest costs and a shrinking government as a share of GDP.
Cutting total non-interest spending by 10 percent would be like cutting President Obama’s 2011 annual budget by $360 billion. Cato analysts could do that pretty easily, but for some reason American politicians–even of the conservative variety–so far seem to be alot more spineless than the politicians elected by Celine Dion and Anne Murray.
Canadian spending did grow during the past decade, but much less than U.S. government spending. Between 2000 and 2009, total Canadian federal spending increased 47 percent, but total U.S. federal spending rose 97 percent.
From a libertarian point of view, Canada’s spending cuts were modest. But the Canadian experience illustrates that a lot of progress can made if even modest cuts are made and then spending is constrained to grow at a slower rate than the overall economy.
For more on the Canadian fiscal reforms, see The Canadian Century by Brian Lee Crowley, Jason Clemens, and Niels Veldhuis.
Michigan Court Wrong on Obamacare, Even Exceeds Its Own Powers
The passage of Obamacare heralded an important discussion on whether the Constitution places any effective limits on federal power and, in particular, where Congress gets the constitutional warrant to require every person to enter the private marketplace and buy a particular good or service. This is a healthy discussion to have, including in the courts.
Today’s ruling in Michigan, dismissing the Thomas More Law Center’s challenge to the individual mandate, while disappointing to those of us who believe that the government lacks the power to commandeer people to engage in transactions — “economic mandates,” as it were — is but one of many legal decisions we can expect on the way to the Supreme Court’s ultimate resolution of this important issue. Indeed, this summer we saw a ruling by a federal judge in Virginia allowing that state’s legal challenge to the individual mandate and other aspects of the health care legislation to proceed. And last month, a federal judge in Florida heard arguments in a similar lawsuit brought by 20 other states — a decision on which we can expect later this fall. Other serious cases continue in Arizona, Missouri, Ohio, the District of Columbia, and elsewhere.
Perhaps most notable about the Michigan opinion, however, is the scant space spent on the serious Commerce Clause arguments on which hundreds of pages have been filed in these cases by top lawyers, legal experts, and academics (including Cato – yes, I’m heavily vested in this litigation). After granting that the plaintiffs had standing and that the case was ripe for adjudication, and rejecting the government’s odd Anti-Injunction Act defense, Judge Steeh takes only seven and a half pages to reject the plaintiffs’ arguments — half of which is spent reciting existing doctrine. It is as if the court merely issued a “placeholder” opinion, pending a “real” resolution on appeal.
And the novel conclusion we gain from this curt disposition is that Congress can now regulate people’s “economic decisions,” as well as do anything that is part of a “broader regulatory scheme.” If the Supreme Court eventually upholds the kind of reasoning Judge Steeh used here, nobody would ever be able to claim plausibly that the Constitution limits federal power. Finding the individual mandate constitutional would be the first interpretation of the Commerce Clause to permit the regulation of inactivity — requiring an individual to engage in economic activity.
The federal government would then have wide authority to require Americans engage in activities of its choosing, from eating spinach and joining gyms (in the health care realm) to buying GM cars. Or, under Judge Steeh’s “economic decisions” theory, Congress could tell people what to study in school or what job to take. That may be the unfortunate state of the law in a few years — once the Supreme Court has weighed in, and I doubt it would ever go so far in any event — but it is not up to district courts to extend constitutional doctrine on their own.
Is Obama the Education President?
Both reason (the human faculty) and Reason.TV (the Web network) say no:
Unclear on Internet Security and Surveillance
The Washington Post has a poorly thought through editorial today on the Justice Department’s “CALEA for the Cloud” initiative. That’s the formative proposal to require all Internet services to open back doors to their systems for court-ordered government surveillance.
“Some privacy advocates and technology experts have sounded alarms,” says the Post, “arguing that such changes would make programs more vulnerable to hackers.”
Those advocates—of privacy and security both—are right. Julian Sanchez recently described here how unknown hackers exploited surveillance software to eavesdrop on high government officials in Greece.
“Some argue that because the vast majority of users are law-abiding citizens, the government must accept the risk that a few criminals or terrorists may rely on the same secure networks.”
That view is also correct. The many benefits of giving the vast majority of law-abiding people secure communications outstrips the cost of allowing law-breakers also to have secure communications.
But the Post editorial goes on, sounding in certainty but exhibiting befuddlement.
The policy question is not difficult: The FBI should be able to quickly obtain court-approved information, particularly data related to a national security probe. Companies should work with the FBI to determine whether there are safe ways to provide access without inviting unwanted intrusions. In the end, there may not be a way to perfectly protect both interests — and the current state of technology may prove an impenetrable obstacle.
The policy question, which the Post piece begs, is actually very difficult. Would we be better off overall if most or all of the information that traverses the Internet were partially insecure so that the FBI could obtain court-approved information? What about protocols and communications that aren’t owned or controlled by the business sector—indeed, not controlled by anyone?
The Tahoe-LAFS secure online storage project, for example—an open-source project, not controlled by anyone—recently announced its intention not to compromise the security of the system by opening back doors.
The government could require the signatories to the statement to change the code they’re working on, but thousands of others would continue to work with versions of the code that are secure. As long as people are free to write their own code—and that will not change—there is no way to achieve selective government access that is also secure.
The current state of technology, thankfully, is an impenetrable obstacle to compromised security in the interest of government surveillance. The only conclusion here, which happily increases our security and liberty overall, is that everyone should have access to fully secure communications.
Power Corrupts (Now With Science!)
The humor site Cracked rounds up some serious social science on the psychological effects of power and authority. The results are sobering—if not entirely surprising. When people in experimental environments were made to feel as though they were powerful—either by recalling actual instances for their lives or by being placed in simulated positions of power for a few hours—researchers found that they became less compassionate, less prone to take the perspective of others, more able to lie without feeling guilty about it, and more prone to consider themselves exempt from the rules and standards they righteously insist apply to others. What’s striking is how quickly and easily the experimenters elicited dramatic behavioral differences given that (unlike people who actively seek power) their “powerful” and control groups were randomly chosen.
It’s useful to keep this in mind because, while the overwhelming lesson of the last half century of social psychology is that situational influences can easily swamp the effect of individual differences in character, our political rhetoric takes scant account of this. Political campaigns focus heavily on questions of “character”—which especially in the case of “outsider” campaigns should be of limited predictive value. Republican candidates and officials try to portray Democrats as arrogant and out of touch, while Democrats cast Republicans as callous and greedy. In each case, the message is that these are bad people, and their character flaws are somehow related to their specific ideologies. The remedy is, invariably, to replace them in positions of power with better people from the other team. These social science results suggest that this is unlikely to work: The problem is power itself.
Hot Heads and Government Failure
The left-wing blogosphere and left-leaning newspapers have spent the past few days joyously incensed over the story of a Tennessee city fire department that allowed a home to burn because the homeowner hadn’t paid his annual fire fee.
AlterNet’s Jonathan Holland titled-and-teased his post on the fire:
Ayn Rand Conservatism at Work — Firefighters Let Family’s House Burn Down Because Owner Didn’t Pay $75 Fee
Talk of limited government is appealing until you see what it actually means in practice: a society in which it’s every man for himself.
ThinkProgress’s Zaid Jilani thundered that the fire demonstrates that there are two competing visions of American society:
One, the conservative vision, believes in the on-your-own society, and informs a policy agenda that primarily serves the well off and privileged sectors of the country. The other vision, the progressive one, believes in an American Dream that works for all people, regardless of their racial, religious, or economic background. The conservative vision was on full display last week in Obion County, Tennessee.
(An aside: ThinkProgress loves to throw in partisan barbs, so Jilani claims that “every seat” of the Obion County Commission is “filled by a Republican,” a claim that Holland echoes. Nope. But then, ThinkProgress recently harangued Michael Cannon for an opinion that isn’t his, so ya’ know…)
Finally, today the New York Times editorial page chimes in:
In any case, the founding fathers left no message that government can make an object lesson of a neglectful citizen by letting his house burn down. The [homeowners] deserve an apology, even if it won’t come from the candidates peddling dreams of constricted government.
It’s unfortunate that these writers didn’t pause from their fervor to consider the facts. In a nutshell: The firefighters involved were from a city government fire department following a city government policy concerning people who didn’t pay a city government fee for a 20-year-old city government program that was adopted in response to a county government decision.
John Galt in Nomex this ain’t.
Beyond the facts, these writers are confused about basic political theory.
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