Archive for June, 2011
Heckuva Job on that Stimulus!
Based on this morning’s numbers, I’ve updated my chart showing what the Obama Administration said would happen with the so-called stimulus compared to what actually has happened. As you can see, the unemployment rate is about 2.5 percentage points higher than the White House claimed it would be at this point.
Since I just did an I-told-you-so post about Greece, I may as well pat myself on the back again (albeit for another completely obvious prediction). Here’s the video I narrated a couple of years ago on the Obama faux stimulus.
That’s Not Healthy: Poverty Is a Salve for ObamaCare’s Individual Mandate?
Some tidbits from the health care policy world:
- Philip Klein is perhaps too kind to the Obama administration’s latest defense of ObamaCare in “Obama solicitor general: If you don’t like mandate, earn less money.”
- The Obama administration launches a hospital payment reform effort that, rather than promote high-quality, low-cost medical care, will demonstrate once again why Medicare is incapable of such.
- The physicians lobby, having thrown its support behind ObamaCare with the expectation that Congress would jack up Medicare’s physician price controls, is still begging Congress to do so.
- The Obama administration launches a lame effort to reduce medical errors in Medicaid, decades after markets devised far more powerful deterrents.
Cyberphobia
The Wall Street Journal reports that the Pentagon will soon release a policy document explaining what cyberattacks it will consider acts of war meriting military response. Christoper Preble and I warn against this policy in an op-ed up at Reuters.com:
The policy threatens to repeat the overreaction and needless conflict that plagued American foreign policy in the past decade. It builds on national hysteria about threats to cybersecurity, the latest bogeyman to justify our bloated national security state. A wiser approach would put the threat in context to calm public fears and avoid threats that diminish future flexibility.
Reuters headlined our piece: “A military response to cyberattacks is preposterous.” Actually, our claim is not that we should never use military means to respond to cyberattacks. Our point instead is that the vast majority of events given that name have nothing to do with national security. Most “cyberattackers” are criminals: thieves looking to steal credit card numbers or corporate data, extortionists threatening denial of service attacks, or vandals altering websites to grind personal or political axes. These acts require police, not aircraft carriers.
Even the cyberattacks that have affected our national security do not justify war, we argue. There is little evidence that online spying has ever done grievous harm to national security, thinly sourced reports to the contrary notwithstanding. In any case, we do not threaten war in response to traditional espionage and should not do so merely because it occurs online.
Moreover, despite panicked reports claiming that hackers are poised to sabotage our “critical infrastructure” — downing planes, flooding dams, crippling Wall Street — hackers have accomplished nothing of the sort. We prevent these nightmares by decoupling the infrastructure management system from the public internet. But even these higher-end cyberattacks are only likely to damage commerce, not kill, so threatening to bomb in response to them seems belligerent.
The Stuxnet worm shows that cyberattacks may indeed do considerable harm, perhaps someday killing on a scale akin to small arms. Attacks like that might indeed merit military response. But they remain hypothetical here.
Vague terms like “cyberattack” and the alarmist rhetoric that surrounds them confuse common nuisance attacks with theoretical tragic ones. The danger is militarized responses to criminal acts, foolish regulation, wasteful spending, or even needless war.
To learn about the exaggeration of cyberthreats, read these two articles from the Mercatus Center. For a good discussion of the policy options for dealing with the various cyberharms, see this 2009 congressional testimony from Jim Harper.
The Flawed Logic of Trade Adjustment Assistance
A recently posted article from Reuters contains quotes that are worth sharing, because they perfectly encapsulate what I think is the flawed logic behind trade adjustment assistance, the program that extends enhanced benefits to workers who lose their jobs because of import competition. There are many reasons to oppose this program, as I have outlined before. And the fact the Obama administration is choosing to hold trade agreements hostage unless a stimulus-enhanced version of TAA is renewed is a strong indication that the grand bargain of trade policy — special benefits in exchance for trade liberalization — has broken down.
But one of the most important reasons to oppose TAA is that its very existence implies that “damage” is done when trade is liberalized:
“In large part, workers who lose jobs because of trade do so because of a policy decision by government. The government decided to allow imports, the government decided to allow a liberal investment policy,” [lobbyist Greg] Mastel said.
“I happen to agree with those policies, but you can’t deny they sometimes disadvantage groups of workers,” he said.
Howard Rosen, a visiting fellow at the Peterson Institute for International Economics and executive director of the TAA Coalition, argued the roughly $1 billion annual cost for the program is tiny compared to large benefits the U.S. economy gets each year from trade liberalization.
Workers displaced by foreign competition have a harder time adjusting than other laid-off workers because they tend to be older and less educated and have higher earnings, Rosen said. [emphasis added]
A few things. First, a “policy decision” is made when government decides to respond to special pleading from domestic industry and protect the market by raising taxes on imports. The innocent consumers foot the bill for this, and the fact the tax is hidden and diffuse does not make it morally acceptable. Second, trade liberalization policies may “disadvantage groups of workers” but so do many other policy decisions — the decision to allow the growth of, say, e-commerce, for example. I happen to agree with those policies, too, but I don’t see Mr. Mastel lobbying for special benefits for bricks-and-mortar retail workers (actually, I shouldn’t give him any ideas). Governments make policy decisions every day about which industries die or survive, sometimes by policy commission, and sometimes by letting certain policies expire. There is nothing special about trade policy in that sense.
Similarly, Mr. Rosen’s objection can be countered by pointing out that perhaps the “higher earnings” trade-displaced workers received were artificially inflated by granting their industry a false, consumer-funded monopoly (in fact, by definition they almost certainly are). Why do we have to compensate them when that monopoly finally expires?
I was speaking to a trade policy wonk friend last week at a lunch about TAA, and he pointed out that “plenty of innocent people are harmed by trade liberalization.” I said to him, and I will repeat here, that plenty of innocent consumers have had their pockets picked for decades so that certain groups can collect rents. So you’ll excuse me if my sympathies are, to say the least, conflicted.
Obama/West Relationship Status Update: ‘It’s Complicated’
Cornel West feels jilted. In an article on him at Truthdig, Princeton’s Professor of African-American Studies and Religion criticizes President Obama for being ungrateful for West’s service to his campaign.
Much of the article reads like post-breakup grumblings. West describes how Obama never calls him back, “but then a month and half later I would run into other people on the campaign and he’s calling them all the time. I said, wow, this is kind of strange. He doesn’t have time, even two seconds, to say thank you or I’m glad you’re pulling for me and praying for me, but he’s calling these other people.”
Most interesting are West’s criticisms of Obama’s presidency. Like many former supporters, Professor West feels betrayed by Obama’s “same as the old boss” policies. In order to explain this, West engages in the quixotic pursuit of pathologizing President Obama. As Ilya Somin and Jonah Goldberg point out, this is oddly reminiscent of Dinesh D’Souza’s recent book, The Roots of Obama’s Rage, and equally confusing. Run-of-the-mill liberal policies from a liberal president don’t need extensive and convoluted explanations.
Pathologizing political opponents is a difficult and largely self-serving task. Although there are many reasons we believe what we do, it does healthy intellectual discourse a disservice to classify opponents rather than try to refute them. Honest disagreements should not be relegated to the pages of the DSM-IV. Usually, this strategy only helps you feel better about your beliefs. While you have reason and arguments supporting your beliefs, all your opponent has is a long line of racial confusion and societal pressures.
According to West, President Obama (“my brother Barack Obama”) “has a certain fear of free black men” caused by his mixed-race background that has made him always “fear being a white man with black skin.” Obama comes from “Kansas influence, white, loving grandparents, coming out of Hawaii and Indonesia, when he meets these independent black folk who have a history of slavery, Jim Crow, Jane Crow and so on, he is very apprehensive.” Thus, “he has a certain rootlessness, a deracination.”
As Gene Healy has consistently pointed out, President Obama needs no explanation. In the era of the imperial presidency we have presidents who become imperious. Big surprise. What does need an explanation, however, is why Cornel West, an unquestionably intelligent man, still finds this surprising.
Or perhaps he doesn’t. The most striking thing said by West in the article is this: “The tea party folk are right when they say the government is corrupt. It is corrupt. Big business and banks have taken over government and corrupted it in deep ways.” Now, I don’t expect to see Professor West at Glenn Beck rallies, but maybe his disappointment in Obama will lead him to stop believing that the problems with government are personal rather than institutional—that is, that government can be fixed if we just put the right people in office.
Or maybe he’ll just support the next candidate who returns his phone calls.
Cash Rewards For Failing Schools, the Lawsuit Way
I see the editorialists of the New York Times have rhapsodically hailed last week’s 3-2 New Jersey Supreme Court opinion striking down the budget-trimming plans of Gov. Chris Christie. As the press reported, the court ordered instead that an extra $500 million in state funds be allocated to some of the state’s poorest-performing school districts — the so-called Abbott districts, named after the three-decade-running New Jersey school finance litigation, Abbott v. Burke.
It’s too bad the editorial said nothing about the report five years ago in which one leading newspaper surveyed the wreckage done by the then-25-year-old litigation, which it called an “ambitious court-ordered social experiment.” (At that point, $35 billion in state tax money had already been lavished on the Abbott districts.) The paper’s reporting made a convincing case that the orders had squandered billions on mismanaged districts that were already far outspending most others in the state and region, as with Asbury Park, which was spending 70 percent more than the typical New Jersey district. Indeed, “the highest-spending districts were making the fewest gains” in student performance. It’s especially unfortunate because the newspaper that reported all this was the New York Times itself.
As I argue at greater length in my new book, school reform lawsuits like Abbott are much more than just vehicles for inefficiency and waste of tax dollars: they’re examples of an alternative method of governance, accomplished through what is sometimes called institutional reform litigation, and quite remote from the channels of lawmaking and appropriations familiar from civics books. Typically, successful litigation of this sort transfers control over an important issue like school funding from branches of government that are accountable to taxpayers and voters to a cluster of private litigators, expert witnesses, special masters, consultants, law professors, backers in liberal foundations, and so forth. The legal basis for the power grab is often flimsy in the extreme; in the Garden State, for example, the state constitution vaguely mandates that there be a “thorough and efficient” system of public education, and “educational equity” lawyers have prevailed on the courts to erect the whole thirty-year edifice of Abbott orders on a filling in of those mysterious blanks, a process that Gov. Christie has accurately described as “legislating from the bench”. (Our friend Hans Bader at CEI has more here and here.) In New Jersey, as in many other states and cities subject to these suits, governors and legislators may come and go, but the permanent government of court orders and negotiated consent decrees grinds on and on, conferring a curiously unaccountable power on the lawyers who manage and advance the litigation and their circle of allies.
It’s worth noting that since the U.S. Supreme Court’s 1973 decision in San Antonio v. Rodriguez, the federal courts have stayed out of most school finance litigation, leaving it to state courts. For decades, outspoken voices in the law schools have been calling for Rodriguez to be overturned or at least end-run so as to confer an Abbott-like charter for social experimentation on the federal courts, which could then proceed to issue orders equalizing school finance, ordering “Robin Hood” aid to underperforming districts, and so forth. The most prominent advocate of this view in recent years has been a Berkeley law professor named Goodwin Liu — his views are summarized by admirers here and here — which may explain in part why Liu’s recent Ninth Circuit nomination raised such strong feelings.
Due Process Stops at the Campus Gates?
People in the D.C. area maye be familiar with the tragic tale of Fairfax teacher Sean Lanigan, who was falsely accused of sexual molestation, resulting in termination and a destroyed reputation. As pointed out by friend of Cato and Cato Supreme Court Review contributor Hans Bader, however, the Department of Education is pushing a policy that would allow for more Sean Lanigans, even in cases not involving anything close to rape or molestation:
If the U.S. Department of Education’s Office for Civil Rights has its way, more teachers like him will end up being fired even if they are acquitted by a jury of any wrongdoing. It sent a letter to school officials on April 4 ordering them to lower the burden of proof they use when determining whether students or staff are guilty of sexual harassment or sexual assault. According to the Department of Education’s demands, schools must find people guilty if there is a mere 51% chance that they are guilty – a so-called preponderance of the evidence standard. So if an accused is found not guilty under a higher burden of proof – like the “beyond a reasonable doubt” standard that applies in criminal cases – the accused will still be subject to disciplinary action under the lower burden of proof dictated by the Education Department.
As Wendy Kaminer explains, the DoE would also like to strip the accused of their right to cross-examination:
Campus investigations and hearings involving harassment or rape charges are notoriously devoid of concern for the rights of students accused; “kangaroo courts” are common, and OCR ‘s letter seems unlikely to remedy them. Students accused of harassment should not be allowed to confront (or directly question) their accusers, according to OCR, because cross-examination of a complainant “may be traumatic or intimidating.” (Again, elevating the feelings of a complainant over the rights of an alleged perpetrator, who may have been falsely accused, reflects a presumption of guilt.) Students may be represented by counsel in disciplinary proceedings, at the discretion of the school, but counsel is not required, even when students risk being found guilty of sexual assaults (felonies pursuant to state penal laws) under permissive standards of proof used in civil cases, standards mandated by OCR.
Now, it is undoubtedly extraordinarily difficult for a rape victim to face her attacker, but lowering the standards under which someone is judged for that crime and not allowing the accused to question his accuser opens the door to using accusation as a weapon, just as in Lanigan’s case or that of the Duke lacrosse team. Justice (what lawyers call “due process”) demands, among other things, that both accuser and accused have their day in court, and that there be a presumption of innocence. It is no more just for an innocent person to be smeared and forever tarnished — if not convicted and imprisoned – than it is to let a guilty man go free. Indeed, as Blackstone famously said, “Better that ten guilty persons escape than that one innocent suffer.”
What’s more, as Foundation for Individual Rights in Education president Greg Lukianoff details, it’s not just accused rapists whose rights are prejudiced under the new OCR policy, but those who make bad jokes:
California State University–Monterey policies state that sexual harassment “may range from sexual innuendoes made at inappropriate times, perhaps in the guise of humor, to coerced sexual relations.” UC Berkeley lists “humor and jokes about sex in general that make someone feel uncomfortable” as harassment. Alabama State University lists “behavior that causes discomfort, embarrassment or emotional distress” in its harassment codes. Iowa State University states that harassment “can range from unwelcome sexual flirtations and inappropriate put-downs of individual persons or classes of people to serious physical abuses such as sexual assault.”
This disconnect between basic principles of free speech and due process creates what Lukianoff calls “a perfect storm for rights violations”:
By making it clear that OCR would be aggressively pursuing harassment claims, by mandating extensive changes to many universities’ due process protections, but not requiring universities to adopt a uniform standard for harassment, OCR has supercharged the power of existing campus speech codes. OCR could have done our nation’s colleges a favor if it required universities to adopt a uniform definition of harassment in the same breath as it required them to aggressively police it.
FIRE has done heroic work in protecting student rights, so you should really read all of Lukianoff’s indictment of the new policy.
The Department of Education needs to rescind/clarify this mess. Speech is not a crime, but even the rights of those accused of crimes should not be subordinated to misplaced compassion or political correctness.
Thank You, America!
The Washington metropolitan area is the only major U.S. housing market where prices increased on an annual basis in the first quarter, according to a 20-city S&P/Case Shiller home-price index released Tuesday. The region was helped by relatively stable employment, fewer foreclosures and an abundant supply of house hunters.
Other surveys indicate sales in the area are approaching boom-time levels.
Get Out of Libya, Get Out of NATO
As Justin Logan puts it, we borrow money from China to make precision-guided munitions which we then give to the Europeans so they can drop them on Libya. This is a product of U.S. involvement in NATO.
In this new video, Christopher A. Preble, Benjamin H. Friedman and Justin Logan provide analysis about our involvement in NATO with specific respect to the Libya campaign.
Read more of Cato’s work on NATO.
Romney Can Run, but He Can’t Hide from Romneycare
Massachusetts Governor Mitt Romney announces today that he will be a candidate for president. His announcement is expected to tout his business experience and to portray him as the candidate best able to deal with the country’s economic problems. But one thing you are not likely to hear him talk about is his Massachusetts health plan, Romneycare.
Of course, Romney has already tried to put this issue away with a speech in Detroit last month, and he would probably be happy to never talk about it again. But if Romney really believes he can hide from the Romneycare fallout, he is badly mistaken.
Cato scholars have issued several reports detailing the many failings of Romneycare. Those studies can be found here , here , here and here for instance.
In his Detroit speech, Romney trotted out three defenses. First, he says that his plan, unlike Obamacare, did not increase taxes. That is technically true — if you consider only the legislation as Romney signed it. However, it is also true that the legislation relied heavily on federal subsidies — more than $300 million — and was still underfunded. Romney’s successor was forced both to cut back on some benefits that the plan originally offered and to raise the state’s cigarette tax by $1 per pack ($154 million annually) to help pay for the program. The state also imposed approximately $89 million in fees and assessments on health-care providers and insurers.
Similarly, Romney claims that his plan only costs about one percent of the Massachusetts budget and is, therefore, not a budget-busting, big government program. In making this claim, however, Romney fails to note that that accounting does not take into account more than $300 million annually in federal funds. Nor does it count the costs that were pushed off onto Massachusetts businesses and taxpayers through the individual and employer mandates, or the costs of increased insurance premiums.
And, finally, Romney criticizes Obamacare as a “one size fits all” federal plan, whereas his plan was implemented in only one state. That’s true. Governor Romney only messed up the health-care system in Massachusetts, while President Obama has messed up health care for the entire country. Of course, as governor, Romney didn’t have the power to impose his model outside of his state. He now says that he opposes any national plan, calling for states to experiment with different approaches as the “laboratories of democracy.” That would certainly be an improvement over Obamacare. On the other hand, he has repeatedly said that he sees the Massachusetts plan as a model for the nation and has urged other states to copy his approach.
Governor Romney faces many challenges in convincing voters that he really does want to reduce the size, cost, and intrusiveness of government. For example, Romney has recently been pandering to Iowa voters by renewing his support for ethanol subsidies. On other issues, he has been a big supporter of federal involvement in education. He backed No Child Left Behind and once called for the federal government to buy a laptop computer for every child born in America. His record as Massachusetts governor was decidedly mixed. In the Cato Institute’s biannual ranking of governors on fiscal issues, Romney received a grade of only “C.” His philosophy of governing can be seen from his comment, “I’d be embarrassed if I didn’t always ask for federal money whenever I got the chance.”
But the biggest single obstacle to his candidacy remains Romneycare. Unless and until he finds a way to deal with this albatross, he will be a weak and wounded frontrunner.
From This Morning’s Health Care News
Indiana learns just how much flexibility states have when administering federal health care programs.
A Medicare pilot program bearing a striking resemblance to ObamaCare‘s “accountable care organization” program turns out to be a flop.
Newsflash: Medicare’s Soviet-style price controls get the prices wrong.
Filed under: Cato Publications; General; Government and Politics; Health Care
Report: ‘The Global War on Drugs Has Failed’
“The global war on drugs has failed, with devastating consequences for individuals and societies around the world.” That is the opening sentence of a report released today by the Global Commission on Drug Policy, a nineteen-member panel that includes, among others, world figures such as former United Nations Secretary General Kofi Annan, former Brazilian President Fernando Henrique Cardoso and former NATO Secretary General Javier Solana. The report is also signed by the current Prime Minister of Greece, George Papandreou, making him the only sitting head of government to openly denounce global drug prohibition.
The 20-page report says all the right things: prohibition has failed in tackling global consumption of drugs, and has instead led to the creation of black markets and criminal networks that resort to violence and corruption in order to carry out their business. This drug-related violence now threatens the institutional stability of entire nations, particularly in the developing world. Also, prohibition has caused the stigmatization and marginalization of people who use illegal drugs, making it more difficult to help people who are addicted to drugs. The report also denounces what it properly calls “drug control imperialism,” that is, how the United States has “worked strenuously over the last 50 years to ensure that all countries adopt the same rigid approach to drug policy.”
In the recommendations section, the report praises the experience of Portugal with drug decriminalization, mentioning Cato’s study on the subject. But perhaps more importantly, it states that drug legalization “is a policy option that should be explored with the same rigor as any other.” Until now, similar reports have denounced the war on drugs and perhaps called for the decriminalization of marijuana and other soft drugs, but they also have stopped short of mentioning drug legalization as a policy alternative.
This report is certainly going to receive a lot of media coverage in the upcoming days. It is, until now, the highest profile endorsement of drug policy reform that we have seen at a global level. And, by having Prime Minister Papandreou as one of the signatories, it offers the hope that other top office holders will also call for an end to the failed war on drugs.
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