Archive for June, 2011
Peru’s Election
The last 10 years have probably been the best decade in Peruvian history in terms of economic growth and social progress. As I’ve described before, Peru has become an increasingly successful market democracy. Growth averaged a yearly 5.5 percent since 2001 and the poverty rate fell from 54 to 30 percent in the same period. And yet, Peruvians elected leftist Ollanta Humala as president on Sunday in a contentious, polarizing and very tight race.
Humala narrowly beat Keiko Fujimori, daughter of former President Alberto Fujimori, now serving a 25-year prison term for corruption and human rights abuses conducted during 10 years in power (1990-2000) that also saw the defeat of the Shining Path guerrillas and the liberalization of the Peruvian economy. Fujimori had trouble condemning violations committed under her father’s rule. Humala is a nationalist, former army officer and coup leader who for years advocated populist, anti-market policies of the kind practiced by Venezuela’s Hugo Chavez or Bolivia’s Evo Morales.
Though the election pitted two aspirants with questionable democratic credentials against each other, it would be a mistake to interpret it as a rejection of Peru’s market-liberal path. The two candidates got to the second round of elections because the various other presidential contenders broadly supportive of democratic capitalism carved up almost half the popular vote among themselves in the first round of elections. Humala’s initial vote was still high (32 percent), but it is doubtful he could have been elected president had only one market democrat run.
Compared to other Latin American countries, Peruvians’ support for a liberal society should not be surprising. The country set itself apart by introducing perhaps the most far-reaching market reforms of the early 1990s, sticking to those reforms, deepening some of them after the return of democracy last decade, and avoiding major public policy mistakes that led to economic crises in other countries. The result has been a transformation of large parts of the economy and society. Non-traditional exports and industries have flourished; wages have increased; economic growth has spread throughout the coast and much of the interior traditionally little affected by economic progress; successful Peruvian multinational corporations have emerged from humble roots; and poverty reduction has meant both the rise of a middle class and a narrowing gap between the rich and the poor.
Trade Agreements Promote U.S. Manufacturing Exports
Do trade agreements promote trade? The answer appears to be yes. In a new Cato Free Trade Bulletin released today, I examine the record of trade agreements the United States has signed with 14 other nations during the past decade.
The impact of those agreements on U.S. trade is a timely subject because Congress may soon consider pending free-trade agreements (FTAs) with South Korea, Colombia, and Panama. Opponents of such deals often argue that they open the U.S. economy to unfair competition from low-wage countries, displacing U.S. manufacturing. Advocates argue the agreements do open the U.S. market further to imports, but they open markets abroad even wider for U.S. exports.
Based on actual post-agreement trade flows, I found that both total imports and exports with the 14 countries grew faster than overall U.S. trade since each agreement went into effect. For politicians obsessed with manufacturing exports, the study should be especially encouraging. Here is a key finding:
Politically sensitive manufacturing trade with the 14 FTA partners has expanded more rapidly than overall U.S. manufacturing trade, especially on the export side. U.S. manufacturing exports to the recent FTA partners were 10.5 percent higher in 2010 compared to our overall export growth since each agreement was signed. That represents an additional $8 billion in manufacturing exports.
I’ll be discussing the three pending trade agreements alongside William Lane of Caterpillar Inc. at a Cato Hill Briefing on Wednesday of this week. Along with the new study on the past FTAs, I’ll be talking about our recent studies on the Columbia and Korea agreements.
Don’t Tread on My Plate
Last week First Lady Michelle Obama and the U.S. Department of Agriculture unveiled “ChooseMyPlate.gov,” an updating of the federal government’s ongoing efforts to lecture us on how to eat. While the idea of nutrition recommendations from Washington, D.C. isn’t itself new, the past couple of years have seen a lurch toward a more coercive approach, especially under the Obama administration, under pressure from a burgeoning “food policy” movement, as I explain in a new Daily Caller op-ed:
All sorts of nannyish and coercive ideas are emerging from that [movement] nowadays: proposals at the FDA to limit salt content in processed foods; mandatory calorie labeling, which poses a significant burden on many smaller food vendors and restaurants; new mandates on food served in local schools; advertising bans; and on a local level efforts to ban things like Happy Meals at McDonald’s. No wonder many parents, local officials and skeptics in Congress are beginning to say: Back off, guv. It’s my plate.
The fact is that the federal government’s dietary advice has changed often through the years—the Washington Post had a great feature on past federal dietary guidelines, under which sweets and even butter held their place as food groups—and that government’s recommendations have regularly proved wrong and even damaging, a point that Steve Malanga elaborates on in this City Journal piece (“Following the government’s nutritional advice can make you fat and sick.”)
Yesterday, C-SPAN’s Washington Journal had me on opposite Maya Rockeymoore of the group Leadership for Healthy Communities to discuss issues that ranged from the school lunch program to whether Washington should serve as an “arbiter” of contending dietary claims, an idea I didn’t much care for. You can watch here.
A Debate About Troops
The United States will begin drawing down troops in Afghanistan this July. The White House is desperately trying to seize the narrative of the withdrawal claiming that the cuts will be “real” even as Defense Secretary Robert Gates is arguing for the opposite.
This week, the New York Times revealed that some in President Obama’s national security team are seeking steeper reductions, particularly after the death of Osama bin Laden and the increasing costs of the war.
Steeper reductions are certainly warranted. A limited counterrorism mission must be on the table.
The president will try to claim credit for keeping his pledge to reduce the U.S. troop presence, but when we consider that there are three times as many troops in Afghanistan today compared to when Obama took office, a reduction of 3,000-5,000 (out of the roughly 100,000 U.S. troops there) won’t mean much.
Another fold in the Times story is that Secretary Gates and top military commanders in the field are arguing for gradual cuts—not steep reductions. Let’s remember last summer’s Rolling Stone article that profiled the now retired four-star U.S. Army Gen. Stanley McChrystal. He was asked to leave because he made comments that undermined civilian control of the military. Today, albeit in a far less severe manner, military commanders are walking the line of advocating a direction in policy that is at odds with civilians officials.
This underscores a far deeper problem with military policymaking: who controls what exactly?
What Obama decides on for reduction in groundtroops—a token withdrawal or steeper cuts—will partly reflect how confused the Constitutional roles and chain of command has become in the conduct of war.
Cross-posted from The National Interest.
What Do Peter Diamond and Paul Pate Have in Common?
You might have heard of Peter Diamond, he recently won the Nobel Prize in Economics and earlier this week withdrew his nomination to the Federal Reserve Board. But maybe you have not heard of Paul Pate.
Mr. Pate, former Republican mayor of Cedar Rapids, Iowa was nominated by President Bush in 2003 to fill a seat on the board of the National Institute of Building Sciences. I remember it well, as I handled that nomination as staff for the Senate Banking Committee.
So what exactly do Mr. Diamond and Mr. Pate have in common? They were both nominated for positions they could not legally hold. I’ve written elsewhere about Mr. Diamond’s situation. Mr. Pate was barred from serving on the NIBS board due to an ownership interest he had in an asphalt company.
Bush’s Office of Presidential Personnel didn’t catch that problem because they, like Obama’s same Office, don’t appear to actually read the statutory qualifications for nominations. I will admit, I didn’t catch this problem either. It was brought to my attention by the staff of former senator Paul Sarbanes (D-MD). When I verified Sarbanes’s objection, we immediately told Mr. Pate and the Bush White House that then Committee Chair Richard Shelby would not move Mr. Pate’s nomination (despite Mr. Pate’s personal friendship with Sen. Grassley (R-IA)).
Both Mr. Diamond and Mr. Pate were, in part, the victim of circumstances beyond their control. They had done nothing wrong. Yet the law was the law. While I don’t equate NIBS with the Fed, that shouldn’t matter. We should respect the law regardless of the viewed relative importance of the position. In fact, I believe the more important the position, the greater need for respecting the law.
Unfortunately there is a lot Mr. Diamond and Mr. Pate do not have in common. Rather than accept his bad luck, Mr. Diamond offers in the New York Times the rant of a spoiled brat. Mr. Pate, in contrast, accepted his bad luck with integrity and grace.
New Cato Study: Philanthropists Are Replicating Charter Schools…at Random
In December of 1993, Bill Clinton remarked that figuring out how to consistently replicate great schools was the central education policy problem of our age. A generation later, it still is.
As someone obsessed with solving that problem, I wanted to know how well our current strategies for achieving it are working. One strategy in particular has attracted the bulk of the funding and attention over the past decade: philanthropists teaming up with what they consider to be the best networks of charter schools, and funding their growth. To find out how well they’ve been picking the winners, I compared the total amount of grant funding received by each of 68 California charter school networks over the past 8 years to the academic performance of those networks. The study is available here.
The correlation between grant funding and performance on the California Standards Tests turns out to be negligible (0.1). In fact, it’s half the size of the correlation between performance and the length of the networks’ names. As a check on those findings, I also ran the numbers on AP test performance. Those results are slightly worse: though the correlations are also negligible in magnitude, they’re actually negative in sign—more grant funding is associated with minutely worse AP performance.
In a nutshell, it’s as if philanthropists have been doling out funding to charter school networks by the same random lottery process by which oversubscribed charters are obliged to accept new students. While this will of course be viewed as a great disappointment by a great many people, it is better to have this information than to continue to labor in ignorance. There are places where excellence in education does routinely scale-up, and documenting them is the subject of my next project….
June 2011 Cato Unbound: Targeted Killing and the Rule of Law
When can the executive lawfully kill?
The rule of law itself depends on getting the answer right. Clearly that answer can’t be “never,” because then even defensive wars would be impossible. And it can’t be “whenever,” because that would be the very antithesis of lawful government. As F. A. Hayek wrote, “if a law gave the government unlimited power to act as it pleased, all its actions would be legal, but it would certainly not be under the rule of law” (p. 205).
The answer must be “sometimes”—but which times are those? In wartime? In peacetime? Against aliens? What about citizens? What role do the courts play? And what about the legislature?
In answer to these questions, Cato Unbound lead essayist Ryan Alford draws on the Anglo-American constitutional tradition, arguing that the killing of a citizen or subject without judicial authorization was so far opposed to our traditional legal safeguards that the American Founders didn’t even bother to prohibit it in the Constitution. And yet, he argues, the case of Anwar al-Awlaqi shows that our government now claims this power anyway. The themes of his essay are explored in much more detail in his forthcoming article in the Utah Law Review.
To discuss with him this month, we’ve lined up a panel of legal and historical experts: John C. Dehn of the U.S. Military Academy at West Point, Gregory McNeal of Pepperdine University, and Carlton Larson of the University of California at Davis. Each will offer a commentary on Alford’s essay, followed by a discussion among the four on this timely and important subject. Be sure to stop by often, or just subscribe to Cato Unbound‘s RSS feed.
As always, Cato Unbound readers are encouraged to take up our themes, and enter into the conversation on their own websites and blogs, or at other venues. Trackbacks are enabled. We also welcome your letters and may publish them at our option. Send them to jkuznicki at cato.org
The War on Cameras Continues
High drama in Miami. Carlos Miller provides a good summary (H/T Radley):
Miami Beach police did their best to destroy a citizen video that shows them shooting a man to death in a hail of bullets Memorial Day.
First, police pointed their guns at the man who shot the video, according to a Miami Herald interview with the videographer.
Then they ordered the man and his girlfriend out the car and threw them down to the ground, yelling “you want to be fucking paparazzi?”
Then they snatched the cell phone from his hand and slammed it to the ground before stomping on it. Then they placed the smashed phone in the videographer’s back pocket as he was laying down on the ground.
And finally, they took him to a mobile command center where they snapped his photo and demanded the phone again, then took him to police headquarters where they conducted a recorded interview with him before releasing him.
But what they didn’t know was that Narces Benoit had removed the SIM card and hid it in his mouth, which means the video survived.
Here is the video:
There’s more at the Miami Herald. For more on this trend, check out Reason’s coverage of the war on cameras and this Cato forum with the Maryland prosecutor who tried to prosecute a motorcyclist for recording a state police officer that performed a traffic stop at gunpoint. Cato’s video Cops on Camera discusses the accountability that citizen journalism can bring to law enforcement.
Extinguish Federal Grants to Firefighters
Last week, the House passed a $40.6 billion Homeland Security appropriations bill for fiscal 2012. The Constitutional Authority Statement for the bill cited Congress’s authority to appropriate money and the General Welfare Clause. Citing the General Welfare Clause might be appropriate for activities associated with the common defense of the nation. However, it is not an appropriate justification for something like the Federal Emergency Management Agency’s Assistance to Firefighters Grant program, which distributes federal taxpayer money to local fire departments.
Firefighting is a purely local concern and should be funded by those who benefit from a local fire department’s services. Why in the world am I paying federal taxes in Pennsylvania to a bureaucracy in Washington so that it can turn around and send a check (minus a cut for the bureaucracy) back to my local fire department as well as to thousands of other fire departments across the country?
A look through the Assistance to Firefighters Grant program’s current list of grant recipients shows that the small town I currently reside in received almost $750,000 this year. Shouldn’t I be happy? Well, no, because fire departments from Snowflake, AZ, to Dummerston, VT, also received handouts. Okay, but isn’t the federal program helping to make me safer? Well, the website for my local fire department says that it has been “protecting our community for over 150 years.” Hmm, somehow it managed to protect the community for 140 years prior to the AFG program’s creation in 2001.
As for the federal bureaucracy’s cut, FEMA’s website indicates that highlighting “success stories” is an important part of the agency’s job. Not only is there a webpage devoted to success stories, FEMA kindly provides a handy template to make it easier for grant recipients to share their stories. FEMA administrators like photographs, but “action shots” are apparently the key to winning their hearts:
Submitting photographs that help illustrate your story are encouraged and recommended. Action shots showing people who benefited from the success and photographs of the equipment and emergency response effort are highly effective. High resolution photos are desirable. If possible, please submit your photos as an attachment in .jpeg, .gif, .tif or .bmp format. Please provide descriptions for your photographs if possible so reviewers can understand what is occurring in the photograph.
The webpage then lists contact information for 10 different officials who are tasked with receiving submissions from a particular grouping of states. I’d be curious to know how many FEMA officials it takes to screw in a light bulb.
Sadly, 147 House Republicans joined all Democrats to restore $320 million for the firefighter grants during floor deliberation of the Homeland Security bill. Only 87 Republicans were okay with cutting the program’s funding from $800 million to $350 million. It was bad enough that the GOP wanted to give the program a dime. That they justified the expenditure under the Constitution’s General Welfare Clause adds insult to injury.
In a Cato essay on constitutional basics, Roger Pilon explains that the clause was not intended to provide cover for Congress to spend money on whatever it wanted:
[The General Welfare Clause] is followed by a detailed listing or enumeration of activities that Congress is allowed to engage in. Were this passage to be read simply as authorizing Congress to tax and spend for the general welfare, as many read it today, Congress would have been granted all but unlimited power and the enumeration of particular powers immediately thereafter would have been to no purpose. Thus, the passage must be read as permitting taxing only for those enumerated ends; and the clause restricts such funding to the general welfare only, not to the welfare of particular parties.
Remember back in January when the fresh Republican majority in the House made a show of starting the new session of Congress with a reading of the Constitution? It was a nice gesture, but with Republicans voting almost 2 to 1 to restore funding for a parochial grant program, it remains an empty one.
“Made in …” Where, Exactly?
Whenever you shop for clothes or furniture or any other consumer item, you can always find the “Made in Such a Place” label. It’s actually a requirement of U.S. law. Vital consumer information, of course. How can we make an intelligent choice on what suit or computer or grapes to buy if we don’t know where they were made or grown?
Quite easily, as a matter of fact. Consumers in the otherwise more regulated European Union do it all the time. Unlike the United States, the EU has no requirement that goods contain a label of where they were made. According to a story in today’s Wall Street Journal,
It is odd that the heavily regulated EU doesn’t already have country-of-origin labeling. Similar tags are mandated around the world, including in Japan and China, as a way to help domestic producers compete against foreign manufacturers. The U.S. has had origin labeling since the 1930s. Roughly a quarter of consumers make choices based on where a product was made, according to EU surveys.
The EU is currently reconsidering imposing such labels, prompted by domestic textile firms and other producers looking for an edge over their foreign rivals. Country of origin labels allow them to play on anti-import biases even though imported products, in the EU as in the United States, must meet all domestic safety and quality requirements.
Country of origin labeling raises costs to consumers—up to $3 per item, according to an EU study cited in the story. The Swedish furniture company IKEA must employ 70 people just to handle all international labeling requirements, a cost of doing business that can only drive up final prices for consumers.
Those requirements also raise perplexing questions of determining just where an item was actually made. As my Cato colleague Dan Ikenson has examined in a paper entitled, “Made on Earth,” the growing complexity of global supply chains means that a single imported product can in fact be “made” in lots of different countries.
If companies want to voluntarily tell consumers where their products are made, including all component parts, they are always free to do so, but the government should not force them to include information that is increasingly irrelevant in our more complex and interconnected world.
Robert Gates Is Overrated
That’s the argument Ben Friedman and I made in our “Think Again” piece for Foreign Policy magazine. Our point there was that someone reading newspapers and watching television would think that Secretary Gates was some sort of transformational figure who took hold of a boneheaded grand strategy, two failing wars, and one broken bureaucracy and made them into successes. We argued that this description, which one finds almost everywhere one finds the secretary’s name, is wrong. (For responses to some of the critiques of our piece, Ben has a post up at The Skeptics.)
Dana Milbank, Defense Analyst
Over the weekend Dana Milbank authored a column demonstrating the tendency to represent Gates as something of a messiah. He does so by juxtaposing…Sarah Palin’s and Robert Gates’s current tours, which show a stark contrast in “hubris and humility,” respectively:
The week’s dueling tours of Gates and Palin show the best and worst in American public life. Both call themselves Republicans, but he comes from the best tradition of service while she is a study in selfishness. He’s self-effacing; she’s self-aggrandizing. He harmonized American foreign policy; she put bull’s-eyes on Democratic congressional districts and then howled about “blood libel.”
Milbank then offers the usual laundry list of Gates’s accomplishments. He
set a new standard for honesty when, at his confirmation hearing in 2006, he admitted that the United States was not winning in Iraq. At the Pentagon, he brought new openness: He ended the gag order banning coverage of flag-draped caskets at Dover Air Force Base. He hired a journalist, Geoff Morrell, to repair press relations. He penned personal notes to families of fallen soldiers and attended funerals.
Gates brought new accountability, firing top officials over the outrages at Walter Reed Army Medical Center and the mishandling of nuclear weapons. He fought with Congress and the military bureaucracy to redirect funds toward troop protection. His championing of mine-resistant vehicles saved countless lives, and his push for better Medevac in Afghanistan cut the average time-to-hospital for wounded soldiers to 40 minutes from 100.
His unusual frankness continued right into his farewell tour. During his trip, he affirmed that “everything is on the table” for defense spending cuts, spoke in detail about disputes with China, discussed shortcomings in Afghanistan and acknowledged his disagreement with Obama’s decision to attack Libya.
Ben and I examine almost every one of those plaudits in our article, and even granting that many of them were indeed successes, we argue that Gates’s legacy far outstrips his actual accomplishments.
For our take on Gates’ tenure as secretary of defense, go here. Also, Chris Preble had an op-ed in today’s Defense News on Gates’s record, available here.
Economic Development Administration Reauthorization
The Senate is set to take up legislation reauthorizing the Department of Commerce’s Economic Development Administration. A relic of the Great Society, the EDA was created to help economically depressed areas of the country. Today it’s just another example of an unnecessary, unconstitutional program that lingers around because politicians like to demonstrate to the public that they’re “doing something.”
Politicians also like to present oversized U.S. Treasury checks to constituents.
The EDA’s forerunner was the Area Redevelopment Administration created by Congress in 1961. Sen. John McClellan (D-AK) presciently warned at the time: “if we ever begin permitting the government to enter into one area, one community, and foot the entire cost of a project, then we shall have every community in the country appealing to the federal government for the same treatment.”
Sure enough, when the EDA replaced the ARA in 1965, its scope expanded. Eligibility expanded as members of Congress fought to secure a piece of the pie for their constituents. Originally intended for depressed areas, over 80 percent of the nation eventually became eligible for EDA assistance. According to the Congressional Research Service (no link available), “An estimated 90% of counties in the United States qualify for EDA’s economic distress designation based on the per capita income criterion alone.”
The federal government now operates a small army of economic development programs. From a new Government Accountability Office report:
Our work involving 80 economic development programs at four agencies—Commerce, HUD, SBA, and USDA—indicates that the design of each of these programs appears to overlap with that of at least one other program in terms of the economic development activities that they are authorized to fund. For example, as shown in table 1, the four agencies administer a total of 54 programs that can fund “entrepreneurial efforts,” which include helping businesses to develop business plans and identify funding sources.
Comically, the Senate report to S.782 (the EDA reauthorization bill) notes that the legislation requires the GAO to report on duplication in economic development programs:
Section 21 requires the Government Accountability Office to report to the Environment and Public Works Committee of the Senate within 90 days after enactment with a list of programs or portions of programs from other federal agencies, including the Department of Housing and Urban Development, Department of Agriculture, and the Small Business Administration, that are duplicative of programs administered by EDA.
I guess the Senate EPW Committee isn’t aware of the 2006 GAO report that identified 86 federal programs in 10 federal agencies and various commissions that provide economic development funding.
Of course, the response from the EDA is that its programs are unique, special, etc. Government administrators are sort of like parents who swear to family and friends that their special Little Johnny is one day going to be president despite the fact he’s been repeatedly suspended from school for setting things on fire. Indeed, the new GAO report cites the EDA for continuing to do a poor job of collecting information on grant recipients:
Commerce’s Economic Development Administration (EDA), which administers eight of the programs we reviewed, continues to rely on a potentially incomplete set of variables and self-reported data to assess the effectiveness of its grants. This incomplete set of variables may lead to inaccurate claims about program results, such as the number of jobs created.
The EDA’s effectiveness is somewhat beside the point. The federal government has no businesses trying to direct economic activity through politicized subsidy vehicles like the EDA. As the current failure of massive deficit spending to get the economy humming shows, economic development is not a task suited for “do something” politicians and well-intentioned, but knowledge deficient, central planners.
With a budget of $500 million a year, which is the level of funding that the bill would authorize, the EDA would remain a tiny blip on the radar screen in a $14 trillion economy. (Thank goodness.) And getting rid of it obviously wouldn’t put much of a dent in the massive deficits the government continues to run up. But if we are ever to get our budgetary house in order by limiting the size and scope of government, central planning bureaucracies like the EDA have to (finally) go.
See this Cato essay on the Economic Development Administration for a more detailed argument for its abolition. Also see these blog posts (here and here) on the EDA.
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