Archive for October, 2010
How Herbert Hoover Didn’t End the Depression
Joshua Green writes in the Atlantic, after discussing the Austrian economists’ views in 1929 on what to do about the not-yet-great depression:
Herbert Hoover’s Treasury secretary, Andrew Mellon, offered similar counsel, famously urging Hoover to “liquidate” and “purge the rottenness out of the system.” But this failed to stop the catastrophe.
That’s true. And you know, here’s a general rule: Absolutely nothing that a treasury secretary says to a president will affect the real economy if the president ignores his advice and does something else.
Hoover didn’t cut federal spending, he doubled it. He established the Reconstruction Finance Corporation. He propped up wages and prices. Indeed, he launched the New Deal. And Green is right: In the face of these policies, Mellon’s memos to Hoover failed to stop the catastrophe.
The rest of the article, about Ron Paul as “The Tea Party’s Brain,” is pretty interesting.
More Discipline for SEAL in Afghanistan than SWAT Officer in Fairfax?
You’ve probably heard that Linda Norgrove, the kidnapped British aid worker in Afghanistan who died in a rescue attempt, appears to have been killed by a grenade thrown by one of the Navy SEALs coming to her aid, not a suicide bomb vest as initially reported.
Two things come to mind here.
First, the fact that it was a grenade and not a suicide vest that killed her only came to light because of the video cameras capturing the event. The unit performing the rescue had cameras mounted on the helicopters and the helmets of the SEALs on the ground. As I said in this video and this blog post, cameras provide an honest witness in these dangerous situations.
Second, compare the accountability the SEAL will face with what would happen to a SWAT team member. It appears that the SEAL who threw the grenade will face disciplinary action. If I had to guess, this will be a memorandum of reprimand from a general officer. That would go into the SEAL’s permanent personnel file, and cause a “slow death” of his career. Unable to get promoted in an up-or-out personnel system, the SEAL could be forced out of the service before he is eligible for retirement.
This is an elite Navy SEAL performing a hostage rescue mission in an armed camp in the Korengal Valley, arguably one of the most dangerous places in the world. The SEALs didn’t know where the hostage was, and the last Taliban kidnapper alive on the objective was firing at other SEALs with an automatic weapon. Yet the SEAL who threw the grenade, in a situation that justifies the use of a dynamic raid, may face the end of his career.
Compare this with the discipline that Fairfax County Police Officer Deval J. Bullock faced for killing optometrist Sal Culosi. Culosi ran a sports betting operation, and an undercover officer had placed bets with him in the prelude to a prosecution. Fairfax officers served the arrest warrant with a SWAT team, and Officer Bullock had an accidental discharge with his handgun at point blank range into Culosi’s chest, killing him almost instantly. Bullock was suspended for three weeks and kicked off the SWAT team. Commonwealth’s Attorney Robert Horan didn’t take Bullock’s case to a grand jury, declaring that when someone fires a gun without malice and accidentally kills someone, “they do not commit a crime.” Sorry, that’s negligent homicide. And, according to police union officials, the three-week suspension was still too stiff a punishment.
So, an elite military hostage-rescue team member may face more consequences for a judgment error – when a kidnapper is threatening the lives of everyone on the objective with an automatic weapon at the tail end of a 30-minute gunfight necessitated by the imminent threat that the hostage will be moved to a more hostile location across the Pakistan border – than a suburban police officer who negligently murders a non-violent offender in a situation that didn’t warrant the use of a SWAT team to begin with.
In some instances, to call this “police militarization” is to slander the military. Here are some parallel thoughts from Radley Balko, and a whole lot more on paramilitary police raids in Radley’s Overkill and at the Raidmap.
Signs of Rebellion
There have been a lot of claims about racist signs at tea parties over the past 18 months. And clearly there have been some. I used to go to antiwar rallies, and they would have people carrying giant 10-foot banners for various communist parties, which the media would politely ignore.
Emily Ekins, a graduate student in political science who has been interning at the Cato Institute, wondered just how many such signs there might be. So, as the Washington Post reports, she decided to find out:
A new analysis of political signs displayed at a tea party rally in Washington last month reveals that the vast majority of activists expressed narrow concerns about the government’s economic and spending policies and steered clear of the racially charged anti-Obama messages that have helped define some media coverage of such events.
Emily Ekins, a graduate student at UCLA, conducted the survey at the 9/12 Taxpayer March on Washington last month by scouring the crowd, row by row and hour by hour, and taking a picture of every sign she passed.
Ekins photographed about 250 signs, and more than half of those she saw reflected a “limited government ethos,” she found — touching on such topics as the role of government, liberty, taxes, spending, deficit and concern about socialism. Examples ranged from the simple message “$top the $pending” scrawled in black-marker block letters to more elaborate drawings of bar charts, stop signs and one poster with the slogan “Socialism is Legal Theft” and a stick-figure socialist pointing a gun at the head of a taxpayer.
There were uglier messages, too — including “Obama Bin Lyin’ – Impeach Now” and “Somewhere in Kenya a Village is Missing its Idiot.” But Ekins’s analysis showed that only about a quarter of all signs reflected direct anger with Obama. Only 5 percent of the total mentioned the president’s race or religion, and slightly more than 1 percent questioned his American citizenship.
Ekins’s conclusion is not that the racially charged messages are unimportant but that media coverage of tea party rallies over the past year have focused so heavily on the more controversial signs that it has contributed to the perception that such content dominates the tea party movement more than it actually does.
See the Post article for a slide show of some of the signs Emily photographed.
Why Won’t This Pig Fly? I’ve Tried Everything . . .
It’s fascinating to read Progressives as they think through a difficult policy problem. Kevin Drum writes (at Mother Jones!) that we can’t improve education or mitigate poverty:
“I continue to think that the biggest problem here is simply that no one has any really compelling answers. . . You can go down the list of every ed reform ever touted, and they either can’t scale up, turn out to have ambiguous results when proper studies are done, or simply wash out over time. . .
So is the answer to address concentrated poverty? Sure. Except that, if anything, attempts to address poverty have a worse track record than attempts to improve education.
I would really, really like someone to tell me I’m wrong. So far, though, no one has. At least, not to my satisfaction. But I’m willing to be schooled if anyone thinks I’m missing the big picture here.”
Wow, Progressives really are depressed this year. Ezra Klein, mostly agrees, Matt Yglesias and Kevin Carey seem more optimistic. But I doubt any of them have compelling answers for Drum’s concerns.
So Kevin, Ezra, I’m here to tell you . . . you’re wrong. Let me rephrase that. You are right that all your Progressive solutions to these problems are perpetual and necessary failures. But there is a solution.
We know what improves education, allows success to scale quickly, and saves money as well; a real market in education, aka private school choice, the freer and broader the better. The education problem is intractable only if the government continues to monopolize education services.
As I noted just the other day in response to Rhee’s resignation, the government school system is unreformable.
Meanwhile, the evidence is consistent and clear that private school choice, markets in education, work. And private school choice even helps the kids who remain in government schools. Ah, and it saves a lot of money.
I really can’t say it any better than Andrew Coulson, our director here at CEF, slightly edited; “Given that quality and productivity in every other sector of human activity have been maximized through the operation of minimally regulated markets, and that the same pattern can be seen in the field of education, it seems to me that we should emphasize the need to ensure the broadest possible access to the freest possible education marketplace.”
I can feel it . . . Drum and company are just this close to being mugged by reality.
Glory-of-Government Religiosity Finds Bailout Skeptics “Willfully Stupid”
When you believe in things that you don’t understand,
Then you suffer,
Superstition ain’t the way
- Stevie Wonder
David Ignatius is entitled to this opinion:
We have just lived through one of the more notable successes of government intervention in modern times – the auto and bank rescues that almost surely saved the country from another Great Depression.
But if his intention is to convince skeptics—and not just to rally the deflated spirits of those who came to Washington with high hopes of teaching Americans how to love their government—he does a lousy job. A bold assertion like his requires supporting evidence more rigorous than hearsay, superstition, and the opinions of his friend, and former “Car Czar,” Steven Rattner.
Ignatius considers the bailouts successful because GM is still in business and the banking sector didn’t collapse. According to Ignatius (often channeling Rattner):
Private companies made bad decisions that put the U.S. economy at risk; government made good (if politically unpopular) decisions to keep these mismanaged companies afloat, fearing that a collapse would mean much worse trouble…Private actors made bad decisions, but public officials generally made good ones…Washington is such an easy target that we forget the real villains of this story are the bankers and auto executives who steered their companies toward disaster.
Well.
Where is the credible evidence that without the interventions we were headed for another Great Depression? Where is support for the argument that it’s smart to keep “mismanaged companies afloat”? Where are the convincing facts (not the figures produced by the Big Three’s PR machine in November 2008) that the auto industry would have shed 2 to 3 million jobs had the government not intervened to save GM and Chrysler on the administration’s terms? Where are the soothing facts that the incentives to avoid failure in the banking and auto sectors have not been weakened by the interventions? Where is the compelling defense against the charge that government policies that subsidized chosen firms in the mortgage industry created the incentives for risk-taking—that Ignatius pegs as the root cause of the problem—in the first place?
Apparently, Ignatius doesn’t swell with desire for limited constitutional government. He writes, “It’s one thing to denounce government when it fails to achieve its goals. But to ignore government’s achievements in times of crisis is willfully stupid.”
It’s clear that Ignatius column is more of an ideologically-driven rant doubling as a pitch for Rattner’s new book about the heroic role of the Auto Task Force in saving the auto industry. As I wrote a few months ago in response to Rattner’s chest-puffing:
Rattner’s verdict rests on the singular consideration that “a year after the government-sponsored bankruptcies of GM and Chrysler, both patients are alive and progressing well toward recovery.” But that’s like hailing the stable medical condition of a drunk driver after an accident, while ignoring the injuries to the family in the vehicle he struck.
The impact of the auto intervention on its victims doesn’t factor into Rattner’s analysis.
Rattner’s claim of auto “rescue” success is the product of a straw-man set-up. The most compelling objections to the bailout were not rooted in the belief that the government couldn’t use its assumed power to help GM and Chrysler. On the contrary, the most compelling objections were over concerns that the government would do just that. It is the consequences of that intervention—the undermining of the rule of law, the confiscations, the politically-driven decisions, and the distortion of market signals—that animated the most serious objections.
Thus, any verdict on the outcome of the auto industry intervention must take into account, among other things, the billions of dollars in property confiscated from the auto companies’ debt-holders; the higher risk premium built into U.S. corporate debt, as a result; the costs of denying Ford and the other more successful auto producers the spoils of competition (including additional market share and access to the resources misallocated at GM and Chrysler); the costs of rewarding irresponsible actors, like the United Autoworkers union, by insulating them from the outcomes of what should have been an apolitical bankruptcy proceeding; the effects of GM’s nationalization on production, investment, and public policy decisions; the diminution of U.S. moral authority to counsel foreign governments against market interventions that can adversely affect U.S. businesses competing abroad, and; the corrosive impact on America’s institutions of the illegal diversion of TARP funds under two presidential administrations.
It is willfully deceptive to direct the public’s attention away from these less discernible, but very consquential costs of the bailout.
White House Right to Oppose Moratorium
With the recent discovery of “robo-signers” and other paperwork problems in the mortgage foreclosure process, several prominent congressional Democrats have called for a national moratorium on mortgage foreclosures. At least one large lender has already started to implement one. A moratorium, however, would be irresponsible and harmful. And the White House is correct to oppose it.
Whatever mistakes might have been made by lenders do not change the basic fact: most foreclosures are happening because the borrower is not paying the mortgage. I recently talked to one large lender who said of their delinquent mortgages that over a fourth have not made a payment in over two years. How exactly is someone who has been getting two years of free rent a victim?
Of course, in the small number of cases where a real mistake has been made and a foreclosure is moving forward against a borrower who is current on their mortgage, the courts have the ability to stop that from proceeding. In judicial foreclosure states the easiest solution to this problem is for the judge to ask the borrower, “When was the last payment you made?” If it has been awhile, say over six months, then the foreclosure should proceed, and proceed quickly.
Its been four years since the housing market peaked. Government policy has continued to delay the needed correction in our housing market. A moratorium on foreclosures only puts off a turnaround in the housing market. And if we ever expect or hope to see private capital come back into the mortgage market, then government needs to stop threatening to steal away that capital once it’s invested. The current efforts by states to use technical mistakes by lenders to allow borrowers to remain in homes without paying could ultimately undermine the very concept of a mortgage: that it is a loan secured by property. Instead, we risk seeing mortgages turned into another form of unsecured lending, which would raise interest rates for everyone.
Earmarkers Work to Penalize Earmark Opponents
Political gamesmanship has never seen a clearer illustration than in this CQ Politics article, “Locals Split on DeMint’s Earmark War.”
South Carolina Republican senator Jim DeMint opposes earmarks. Fellow South Carolina Republican Lindsey Graham supports earmarks and regularly requests them. (See a list of all 136 of his earmark requests for FY 2010 here.)
Senator Graham’s request for a $400,000 earmark for the Port of Charleston hasn’t been awarded—perhaps because of DeMint’s opposition to earmarks.
Refusing to go along has a price. And in the article it’s a Republican operative who sinks the first shiv, suggesting that DeMint’s failure to earmark hurts South Carolina.
“What you’re hearing [in the state] is: the ideology of the tea party and catering to that movement will come at the expense of jobs in South Carolina,” said Chris Drummond, a South Carolina GOP strategist who formerly worked for Gov. Mark Sanford.
(Think a Republican wouldn’t criticize another Republican? Think again.)
The tax money used for earmarking is paid into the federal kitty by South Carolinians, of course. Getting some of the taxes they pay returned to the state is not the benefit it appears. If their money were left with them in the first place, they would spend it as they see fit, benefitting South Carolinians and their state much more than politically directed spending.
Next, Senate appropriation subcommittee chairman Byron Dorgan (D-ND) exploits the tension among members of his opposite party, clinical analysis masking his glee: ”‘In cases where you have a state where one asks for an earmark, the other opposes all earmarks, that makes it a more difficult project to fund,’ he said.”
Then comes payback time. Senator Robert Bennett (R-UT) was ousted during the primary by a Tea Party/DeMint-favored candidate, so:
The office of subcommittee ranking member Robert F. Bennett (R-Utah) also told the Greenville News that the port was denied funding in part because “there was no request at all from Sen. DeMint.”
The article recites a number of other viewpoints on earmarking and earmarks in South Carolina, but the highlight is the parade of assailants on DeMint. Politics ain’t patty-cake, and earmark politics are no exception.
Great Job if You Can Get It
The British Telegraph reports that 250 Members of the European Parliament, along with 80 assistants and 70 bureaucrats who work for the center-right European People’s Party in the European Parliament, took a “three-day study break” at the holiday resort on the Portuguese island of Madeira. The taxpayer will pay $500,000 for the trip that included a stay in five-star hotels. The formal program included “a debate on controversial plans by the MEPs to increase the EU budget for 2011.”
The Primary Purpose of McCain-Feingold Revealed
Kenneth Vogel offers an unexpected insight into the nature of campaign finance regulation:
“[Wisconsin Senator Russell] Feingold faces an uphill battle against a novice opponent, who, perhaps ironically, has been the beneficiary of hundreds of thousands of dollars in ads attacking Feingold that would have been prohibited had McCain-Feingold remained intact.”
In other words, if Feingold’s campaign finance law had not proven to be contrary to the U.S. Constitution, he might well not be facing “an uphill battle” to serve a fourth term in Washington. The political speech that is causing Feingold problems would have been prohibited in that situation. But the First Amendment favors speech and not the re-election needs of senators.
Oddly, Vogel writes as if the freed political speech (“ads attacking Feingold”) is a bug rather than a feature of current law.
GAO: HHS Imposed an “Unusual” Prior Restraint on Speech during ObamaCare Debate
During the debate over ObamaCare, the Centers for Medicare & Medicaid Services took issue with some of the things that some of the insurers participating in the Medicare Advantage program were telling their enrollees about the legislation. The Government Accountability Office has just released a review of CMS’s conduct in that episode:
Although CMS’s actions generally conformed to its policies and procedures, the September 21, 2009, memorandum instructing all MA organizations to discontinue communications on pending legislation while CMS conducted its investigation was unusual. Officials from the MA organizations and CMS regional offices that we interviewed told us they were unaware of CMS ever directing all MA organizations to immediately stop an activity before CMS had determined whether that activity violated federal laws, regulations, or MA program guidance. When asked about this directive, officials from CMS’s central office stated that, given the degree of potential harm to beneficiaries, the action was appropriate for the circumstances….
HHS expressed concern that our description of the September 21, 2009, memorandum as “unusual” makes it appear as though their suspension of all MA organizations’ communications on pending health reform legislation was inappropriate. It noted that directing an MA organization to immediately stop an activity while the agency determined whether violations had occurred was infrequent but not unprecedented…. We believe that the example provided—wherein CMS put its data collection activities on hold until the agency resolved concerns with interpretation of its own regulations—is not comparable to CMS instructing all MA organizations to stop sending information about health reform proposals to beneficiaries while it investigated potential violations. Moreover, our characterization of CMS’s action as unusual is based on discussions with MA organizations and CMS staff. They told us that they could not recall a previous example where CMS told all plans to stop an activity after a potential violation was discovered and prior to the completion of an agency investigation.
For the record, CMS lacked (and still lacks) a Senate-confirmed administrator. It’s worth asking whether this prior restraint placed on speech critical of the administration came from Secretary of Health and Human Services Kathleen Sebelius, who is making quite a name for herself as an enemy of free speech.
What War Does to Our Society
The Department of State recently released newly declassified documents covering U.S. policy toward Vietnam, Laos, and Cambodia from January 1973-July 1975. At a State Department conference commemorating the release of these documents, diplomat, strategist, and Nobel laureate Henry Kissinger bemoaned the torment that consumed a generation of Americans as the conflict wore on. The insight Kissinger provides–possibly unintentional–underscores why assessments of war should go beyond critiques of its political and geostrategic ramifications; they should also extend to the various ways that war affects our society and public more generally.
In Kissinger’s somber assessment of America’s involvement in Southeast Asia, he said he regrets that what should have been straightforward disagreements over the U.S. approach to Vietnam became “transmuted into a moral issue – first about the moral adequacy of American foreign policy altogether and then into the moral adequacy of America.”
He goes on to say, “To me, the tragedy of the Vietnam war was not that there were disagreements—that was inevitable, given the complexity of the (conflict)—but that the faith of Americans in each other became destroyed in the process.”
Kissinger called himself “absolutely unreconstructed” on that point.
“I believe that most of what went wrong in Vietnam we did to ourselves,” he said, adding, “I would have preferred another outcome—at least another outcome that was not so intimately related to the way that we tore ourselves apart.”
Disappointingly, much of what Mr. Kissinger said is true.
Certainly, much of the burdens associated with our foreign policies do not affect the average person; they are absorbed by America’s all-volunteer military. Still, wars and debates over wars have the power not only to tear our society apart, but also to destroy our faith in each other in the process. These factors are latent, ignored, and often misunderstood, but are detrimental to our country nonetheless.
In this respect, criticism of war should not end at an aversion to deficit spending. Certainly, increased public debt and diminished civil liberties are enduring, adverse effects of war. As writer Randolph Bourne famously declared during World War I, “War is the health of the state.”
But in addition to expanded government power, wars also become a template for regimentation in other areas of life. As we witnessed in the lead up to the war in Iraq, war can erode what should be the public’s normal propensity to question authority and lead to a herd mentality that demands blind obedience to state authority.
Over time, and through decades of continual foreign intervention, wars can radically alter our national character and transmogrify the spirit and moral temperament of our society. Sadly, such a perilous path could doom our nation to a fate that befell history’s other predominant great powers.
…
Check out the most recent volume of State Department reports on Vietnam. You won’t be disappointed.
If Only Hawaii’s Government Were as Beautiful as Its Beaches
Throughout history, people have fought over beaches, including in the legal arena. In the latest case in which Cato has filed an amicus brief, a state has once again redefined property rights to take possession of highly-valued beachfront property.
In 2003, Hawaii passed Act 73, which took past and future title to accretions (the slow build-up of sediment on beaches) from landowners and gave it to the State, changing a 120-year-old rule. While waterlines are unpredictable, the original rule — common to most waterfront jurisdictions — helped establish legal consistency. Indeed, without such a rule, beachfront property becomes beachview property in just a few years.
In response to Act 73, homeowners sued the state, claiming that the law violated the Takings Clause of the Fifth Amendment or, in the alternative, the Due Process Clauses of the Fifth and Fourteenth Amendments. The state appellate court held that compensation was owed only for the accretions that had accumulated before Act 73′s enactment because the right to subsequent accretions had not “vested” (the legal term for when an expectation becomes an actual property right). Hawaii’s Supreme Court declined to review that ruling, so the property owners asked the U.S. Supreme Court to do so.
Cato, joined by the Pacific Legal Foundation, filed a brief supporting that petition and argues that the appellate court’s decision was contrary to long-standing definitions of waterfront property rights. Our brief highlights the increasing need for the Court to establish and enforce a judicial takings doctrine.
More and more states are using backdoor tricks — like legislative “guidelines” and judicial creativity — to take property in violation of constitutional rights: This Hawaii case is distressingly similar to last term’s Stop the Beach (in which Cato also filed a brief). In that case, Florida took property by adding sand to the beach and then laying claim to the newly created land — in essence asserting that property that was defined by contact with the water (in technical terms, “littoral” or “riparian”) had no right to contact the water. The Court ruled that while Florida’s actions did not rise to the level of a judicial taking, a large enough departure from established common-law rules could constitute a constitutional violation.
In this latest brief, we highlight both the largeness of Hawaii’s departure from established law and the spate of such actions in recent years — which circumstance calls out for Supreme Court review. The case is Maunalua Bay Beach Ohana 28 v. Hawaii and the Court will decide later this fall whether to take it up.
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