Archive for September, 2011
Bathtubs, Terrorists, and Overreaction
I dislike our national obsession with anniversaries and tendency to convert solemn occasions into maudlin ones; to fetishize perceived collective victimization rather than simply recognizing real victims. That kept me from joining in the outpouring of September 11 reflection, now mercifully receding. But I have reflections on the reflections.
The anniversary commentary has, happily, included widespread consideration of the notion that we overreacted to the attacks and did al Qaeda a favor by overestimating their power and making it easier for them to terrorize. Even the Wall Street Journal allowed some of the bigwigs they invited to answer their question of whether we overreacted to the attacks to say, “yes, sort of.”
Unsurprisingly, however, the Journal’s contributors, like almost every other commentator out there, did not define overreaction. It’s easy and correct to say we’ve wasted dollars and lives in response to September 11 but harder to answer the question of how much counterterrorism is too much. So this post explains how to do that, and then considers common objections to the answer.
That answer has to start with cost-benefit analysis. As I put it in my essay in Terrorizing Ourselves, a government overreaction to danger is a policy that fails cost-benefit analysis and thus does more harm than good. But when we speak of harm and good, we have to leave room for goods, like our sense of justice, that are harder to quantify.
Cost-benefit analysis of counterterrorism policies requires first knowing what a policy costs, then estimating how many people terrorists would kill absent that policy, which can involve historical and cross-national comparisons, and finally converting those costs and benefits into a common metric, usually money. Having done that analysis, you have a cost-per-life-saved-per-policy, which can be thought of as the value a policy assigns to a statistical life—the price we have decided to pay to save a life from the harm the policy aims to prevent.
Then you need to know if that price is too high. One way to do so, preferred by economists, is to compare the policy’s life value to the value that the target population uses in their life choices (insurance purchases, salary for hazardous work, and so on). These days, in the United States, a standard range for the value of a statistical life is four to eleven million dollars. If a policy costs more per life saved than that, the market value of a statistical life, then the government could probably produce more longevity by changing or ending the policy. A related concept is risk-risk or health-health analysis, which says that at some cost, a policy will cost more lives than it saves by destroying wealth used for health care and other welfare-enhancing activities. One calculation of that cost, from 2000, is $15 million.
In a new book, Terror, Security, and Money: Balancing the Risks, Benefits, and Costs of Homeland Security,* John Mueller and Mark Stewart use this approach to analyze U.S. counterterrorism’s cost-effectiveness, generating a range of estimates for lives saved for various counterterrorism activities. I haven’t yet read the published book, but in articles that form its basis, they found that most counterterrorism policies, and overall homeland security spending, spend exponentially more per-life saved than what regulatory scholars consider cost-effective.
That is a strong indication that we are overreacting to terrorism. It is not the end of the necessary analysis however, since it leaves open the possibility that counterterrorism has benefits beyond safety that justify its costs. More on that below.
Dramatic Increase in Poverty Rate: One Small Step for Obama, One Giant Step for the So-Called War on Poverty
The Census Bureau has just released the 2010 poverty numbers, and the new data is terrible.
There are now a record number of poor people in America, and the poverty rate has jumped to 15.1 percent.
But I don’t really blame President Obama for these grim numbers. Yes, he’s increased the burden of government, which doubtlessly has hindered the economy’s performance and made things worse, but the White House crowd legitimately can argue that they inherited a crummy situation.
What’s really striking, if we look at the chart, is that the poverty rate in America was steadily declining. But then, once President Lyndon Johnson started a “War on Poverty,” that progress came to a halt.
As I’ve explained before, the so-called War on Poverty has undermined economic progress by trapping people in lives of dependency. And this certainly is consistent with the data in the chart, which show that the poverty rate no longer is falling and instead bumps around between 12 percent and 15 percent.
This is bad news for poor people, of course, but it’s also bad news for taxpayers. The federal government, which shouldn’t have any role in the field of income redistribution, has squandered trillions of dollars on dozens of means-tested programs. And they’ve arguably made matters worse.
By the way, just in case you think I’m being too easy on Obama, read this post about how the Administration is considering a terrible plan to re-define poverty in order to justify ever-larger amounts of redistribution.
I fully agree that the president’s policies definitely have made—and will continue to make—matters worse. But the fundamental problem is 40-plus years of a misguided “War on Poverty” by the federal government.
Al Qaeda: Never an ‘Existential Threat’
My Washington Examiner column this week celebrates 10 years without a major follow-up attack on American soil, and argues that the main reason the United States has been terror-free for a decade isn’t the unparalleled competence of the federal government’s terror warriors—it’s the fact that al Qaeda was never an “existential threat.”
I’ve written a number of columns and blogposts making the same point over the years, and yet, every time I write something that says “al Qaeda’s not so terrifying,” I feel compelled to knock wood, genuflecting to the superstition that merely saying ”we’re pretty safe” out loud will jinx us, and the moment a piece is published, the terrorists will morph into villains worthy of TV’s 24, moving from ineffectual gas-can bombs to nukes.
So far, though, it seems there wasn’t much reason to worry.
Last week, the Washington Post ran a piece entitled, “Who got 9/11 right, and who got it wrong? A pundit score card.” The Post erred badly by not including the distinguished political scientist and friend of Cato, John Mueller, who started making the case that the al Qaeda threat was overblown back when duct tape alerts were the “new normal.” I can’t think of any other prominent figure who got it right as early and as often as Mueller did.
As long as we’re giving credit for prescience, though, I’d like to toot my own horn (sure, it’s graceless, but nobody else is volunteering for the job).
As a larval pundit pecking away in obscurity through the early aughties, I suspected, before I’d ever read Mueller, that the al Qaeda threat was overblown—and I made that case wherever I could.
In September 2002, I reviewed Peter Bergen’s Holy War, Inc. for Liberty magazine: “Osama bin Laden: Not as Scary as You Think” (.pdf ). In it, I asked whether al Qaeda was “as dangerous as federal powergrabbers have led us to believe.”
After recounting what Bergen reported about Mohamed Odeh, an al Qaeda operative involved in the 1998 bombing of the U.S. embassy in Tanzania—who botched his own escape by trying to convince Pakistani immigration officials that terrorism was “the right thing to do for Islam,”—I ventured that “a lot of these folks don’t sound all that bright.” (Since then, I’ve become even more convinced that these guys were never the sharpest scimitars in the shed.)
In December 2002, when my now-defunct blog was young and DC was waiting for the other shoe to drop after 9/11, I wondered “What if There Isn’t Another Shoe?”: “If the American Jihad/mullahs under the bed/the-country-is-riddled-with-sleeper-cells theory is correct, then why so quiet?” I suggested: “maybe there aren’t that many of them,” which turned out to be true. (Here’s a reference, and you can find the original if you go here and scroll down.)
Ten years later, it’s heartening to know that what was once a fringe position—and a marker of being “unserious” about terrorism—is fast becoming the conventional wisdom.
Jobs Bill Only Makes Political Sense
I can’t look into President Obama’s heart, so I can’t tell you what motives are driving the American Jobs Act. I can, though, tell you this: One look at the facts about American education, and his proposal only makes sense if the goals are to energize union support, and perhaps use spending as some easy shorthand to tell voters that the President cares about kids.
The basic reality is that over the last several decades governments at all levels have conducted ever-bigger education money bombings with no positive academic impact. According to the Digest of Education Statistics, real per-pupil expenditures rose from $5,671 in 1970-71 to $12,922 in 2007-08 (the latest year with available data). On the federal level, between 1970 and 2010 per-pupil spending rose an astonishing 375 percent. Meanwhile, National Assessment of Educational Progress scores for 17-year-olds – essentially, our schools’ “final products” – were almost completely flat. More money did not buy better results.
What did it buy? Exactly what President Obama seems to want to protect: staffing bloat. Between 1969 and 2008 American schools went from having 22.6 students per teacher to 15.3. District administrative staff went from 697.7 students per employee to just 363.3. In total, students per employee dropped from 13.6 to 7.8, all while academic outcomes froze. We got lots of jobs – many unionized – but nothing of educational value.
There is simply no way to look at the data and believe that $30 billion for school staffing will improve education. So it must only be about jobs, and ineffectual jobs at that.
That “ineffectual” part is the economic key. Stimulus supporters argue that paying for any job is good because employed people spend their dollars. But they ignore that the money must come from somewhere, and that somewhere is ultimately taxpayers who would either spend it themselves – including investing in new or existing companies – or put it in banks that would lend it. So the money would be spent one way or another, only taxpayers have huge incentives to employ it much more efficiently than do public schools, if for no other reason than they did the hard work of earning it. In the aggregate, that means we’d be better off just letting taxpayers keep their ducats.
What we’ve tried already supports this. Contrary to what Dan Domenech writes, public schools have gotten oodles of bailout money. The original stimulus included roughly $100 billion for education, the bulk of which went to public K-12 schooling, and in 2010 the President signed legislation giving states another $10 billion to keep school employment rolls engorged. And did unemployment plateau at about 8 percent, as the Obama team projected? You know the answer.
How about fixing dilapidated school buildings? Again, money is not the answer, unless the question is how do you win union friends and influence voters.
As I testified in 2008, for years school districts had been spending more on maintenance and construction than it was estimated they needed to bring all schools into “good overall condition.” Yet conditions seemed to keep getting worse.
What’s the problem? First, districts often put off maintenance so that small problems become bigger. And second, they often spend lavishly on School Mahals, a tendency embodied by L.A. Unified’s $578 million Robert F. Kennedy Community Schools complex.
Of course, building something brand new, equipped with more superfluous lights and whistles than the original starship Enterprise, doesn’t make practical sense if you could keep the old buildings fully functional at a fraction of the cost. But practical and political are totally different animals. Keeping the boiler in good repair simply doesn’t make for politician-aggrandizing, ribbon-cutting photo-ops. But undertaking a big addition or renovation, which Obama’s bill would pay for, absolutely does.
And let’s not forget: All the labor would likely have to be hired at union rates, in keeping with standard federal requirements. So jobs yes, but not more jobs in exchange for market wages.
Ultimately, the President’s bill would do nothing for education and would hurt the economy, because government spending more almost by definition means a nation wasting money.
C/P from the National Journal’s “Education Experts” blog.
Social Security Demagoguery from Mitt Romney and Michele Bachmann: Economically Wrong, Politically Wrong
Governor Rick Perry of Texas is being attacked by two rivals in the GOP presidential race. His sin, if you can believe it, is that he told the truth (as acknowledged by everyone from Paul Krugman to Milton Friedman) about Social Security being a Ponzi scheme.
Here’s an excerpt from Philip Klein’s column in the Examiner, looking at how Mitt Romney is criticizing Perry.
Mitt Romney doubled down on his attack against Texas Gov. Rick Perry this afternoon, warning in an interview with Sean Hannity that his critique of Social Security amounted to “terrible politics” that would cost Republicans the election. Romney’s decision to pile on suggests that he’s willing to play the “granny card” against Perry if it will help him get elected, a tactic more becoming of the likes of DNC chairwoman Debbie Wasserman Schultz than a potential Republican nominee.
And here’s a Byron York column from the Examiner looking at how Michele Bachmann is taking the same approach.
…another Republican rival, Michele Bachmann, is preparing to hit Perry on the same issue. “Bernie Madoff deals with Ponzi schemes, not the grandparents of America,” says a Bachmann adviser. “Clearly she feels differently about the value of Social Security than Gov. Perry does. She believes Social Security needs to be saved, that it’s an important safety net for Americans who have paid into it all their lives.” … “She strongly disagrees with his position on that…”
Shame on Romney and Bachmann. With an inflation-adjusted long-run shortfall of about $28 trillion, Social Security is a Ponzi scheme on steroids.
But as I explain in this video, that’s just part of the problem. The program also is a terrible deal for workers, particularly young people and minorities.
Here’s what’s so frustrating. Romney and Bachmann almost certainly understand that Social Security is actuarially bankrupt. And they probably realize that personal retirement accounts are the only long-run answer.
But they’re letting political ambition lure them into saying things that they know are not true. Why? Because they think Perry will lose votes and they can improve their respective chances of getting the GOP nomination.
Sounds like a smart approach, assuming truth and morality don’t matter.
But here’s what’s so ironic. The Romney and Bachmann strategy is only astute if Social Security is sacrosanct and personal accounts are political poison.
But as I noted last year, the American public supports personal accounts by a hefty margin. And former President Bush won two elections while supporting Social Security reform. And election-day polls confirmed that voters supported personal accounts.
I’m not a political scientist, so maybe something has changed, but I wouldn’t be surprised if Perry benefited from the left-wing demagoguery being utilized by Romney and Bachmann.
P.S. This does not mean Perry has the right answer. As far as I know, he hasn’t endorsed personal accounts. But at least he’s telling the truth about Social Security being unsustainable.
Overregulation, Swing States and D.C. Cynicism
Today’s Wall Street Journal carries a news report on how the Obama administration, after more than two years of pursuing damn-the-costs government control over the private sector, is finally developing more internal debate about whether and when zealous regulations are worth the cost. In particular, Office of Information and Regulatory Affairs chief Cass Sunstein, known as skeptical about some costly rules, has now acquired an important sometime ally in White House Chief of Staff Bill Daley, who played a role in getting EPA to table some very expensive new air-quality standards the other day.
All well and good, but I was stopped short by a paragraph that shouldn’t pass without comment:
The same day, Mr. Daley met with industry groups, who gave the White House a map showing counties that would be out of compliance with the Clean Air Act if the stricter standards were put in place. The map showed that the rule would affect areas in the politically important 2012 election states of Florida, Pennsylvania, Virginia, and Ohio.
Even by Washington standards, isn’t it appallingly cynical to evaluate environmental rules that could (critics have argued) cripple wide sectors of the economy according to whether the worst damage falls on politically vital states like Florida and Ohio, or just ho-hum non-swing states like Oklahoma, North Dakota and Tennessee? True, the article doesn’t say who was cynical enough to draw the connection here — the business groups giving the presentation? The White House listeners? Some third party whose viewpoint this is all being filtered through? But whoever’s being the cynic here, one of the costs is to feed the alienation of citizens of Texas in particular, whose officials and businesses have been complaining for more than a year of being singled out for hostile attention by the Obama EPA. For everyone’s good, I hope someone in the White House at this moment is writing a sharp letter disclaiming any special intent to help Pennsylvania, Virginia et al. And I hope after drafting that letter they will be cleared to send it off for publication in the Journal, not just keep it in the desk to show outraged delegations of Texans.
Ackermann and Dimon 1; Bernanke and Geithner 0
My last blog on bank capital requirements concluded that the push to implement Basel III, which mandates increases in bank capital-asset ratios, is a deadly cocktail to ingest in the middle of an economic slump.
Shortly after, the Chairman of Deutsche Bank Josef Ackermann weighed in during a Frankfurt speech with a blistering attack on raising capital-asset ratios in the middle of a slump. He was armed with heavy artillery – namely, “The Cumulative Impact on the Global Economy of Changes in the Financial Regulatory Framework,” a 123 page Institute of International Finance report that was hot off the press.
Today, the Financial Times reports that Jamie Dimon, Chief Executive of JPMorgan, has gone even further than Ackermann. Indeed, Dimon suggests that the new Basel III capital requirements are “anti-American” and that the U.S. should consider pulling out of the Bank for International Settlements in Basel, Switzerland.
Both Ackermann and Dimon are right. The cheerleaders for the imposition of higher bank capital requirements in the middle of a slump – like U.S. Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke – are wrong.
We can demonstrate the validity of this conclusion with ease. Higher capital-asset ratios are “deflationary.” If we hold the level of a bank’s capital constant, an increase in its capital-asset ratio requires that the level of its assets must fall. This, in turn, implies that the banking system’s liabilities – demand deposits – must contract. Since the money supply consists of demand deposits, among other things, the money supply must, therefore, contract.
Alternatively, if we hold assets constant, an increase in the capital-asset ratio requires an increase in capital. This destroys money. When an investor purchases newly-issued bank shares, for example, the investor exchanges funds from a bank deposit for the new shares. This reduces deposit liabilities in the banking system and wipes out money.
It’s no surprise that Sir John Hicks – a high priest of economic theory and 1972 Nobelist – thought there was nothing more important than a balance sheet.
If Geithner, Bernanke and other members of the official chattering classes insist on higher bank capital-asset ratios, the U.S. might, unfortunately, revisit 1937. It’s time to listen to Ackermann and Dimon.
Cooling out the Marks in Uncle Sam’s Ponzi Schemes
The flap over whether Social Security is a Ponzi scheme reminds me of two passages about Social Security’s sister program, Medicare, from Cato adjunct scholar David Hyman.
The first is from his book Medicare Meets Mephistopheles, which remains the best (and only) satire ever written about Medicare:
Consider what happened when I presented some considerably less pointed remarks at the conference at Washington and Lee University School of Law. One of Medicare’s most enthusiastic supporters responded by making an impassioned speech that it was improper to describe Medicare as a “Ponzi scheme,” and the program should not be judged by the standards that would apply to a private pension because it was actually a “sacred bond” between the generations. (Leave aside the fact that I never used the word “Ponzi” in my remarks. I did note that the Medicare program bore certain similarities to an inter-generational pyramid scheme, which is something quite different. Of course, it is possible that the use of this term by the commentator was a Freudian slip.) His words brought enthusiastic applause from those members of the audience who had heard enough bad news of the sort found in this book and were more than ready to ignore Medicare’s problems on the basis of empty political sloganeering.
The second is from Hyman’s response to a critic of Medicare Meets Mephistopheles:
Finally, my reply is titled “Cooling Out the Marks, Medicare Style.” This is a reference to a well-known article by a famous sociologist, on con games and the social process of adaptation to failure:
“Sometimes, however, a mark is not quite prepared to accept his loss as a gain in experience and to say and do nothing about his venture. He may feel moved to complain to the police or to chase after the operators. In the terminology of the trade, the mark may squawk, beef, or come through. From the operators’ point of view, this kind of behavior is bad for business. It gives the members of the mob a bad reputation with such police as have not yet been fixed and with marks who have not yet been taken. In order to avoid this adverse publicity, an additional phase is sometimes added at the end of the play. It is called cooling the mark out. After the blowoff has occurred, one of the operators stays with the mark and makes an effort to keep the anger of the mark within manageable and sensible proportions. The operator stays behind his team-mates in the capacity of what might be called a cooler and exercises upon the mark the art of consolation. An attempt is made to define the situation for the mark in a way that makes it easy for him to accept the inevitable and quietly go home. The mark is given instruction in the philosophy of taking a loss.” Erving Goffman, “On Cooling the Mark Out: Some Aspects of Adaptation to Failure,” 15 Psychiatry 451, 451-52 (1952).
The occupational hazard for Medicare’s defenders is the tendency to become coolers on the program’s behalf. Professor Horwitz largely avoids this temptation, although she is not (yet) willing to concede how hot things actually are in the place in which we find ourselves. The same cannot be said for Medicare’s more ardent defenders, who routinely justify and excuse Medicare’s pathologies on the grounds that it is a “sacred inter-generational trust,” and not just another mediocre government program. Yet, even these ardent defenders may eventually find themselves wondering, in the dark of night, how it came to pass that they became coolers, giving instruction to the poor and working classes on the philosophy of taking a loss at the hands of a program that was supposed to help them, but ended up treating them as marks. With friends like that, who needs enemies?
Capital Gains Taxes: Washington Post Omissions
Washington Post reporters write a few thousand words on capital gains taxes today, and they somehow forget to mention the key economic factors in favor of a lower rate.
One factor is that the double taxation of corporate equity under an income tax system creates a serious economic distortion. Corporate profits are taxed at the business level and then again at the individual level by taxes on dividends and capital gains. Providing a lower rate for dividends and gains at the individual level is one way to partly alleviate the distortion.
Another factor is that inflation causes investment returns to be overtaxed in an income tax system without special rules to compensate. If someone buys a stock for $10 and sells it a few years later for $15, some portion of the tax paid will be tax on inflation. The effect of taxing people on inflationary gains is to reduce real returns and distort the tax code against investment.
These problems have led virtually every industrial nation to adopt special rules for taxing long-term capital gains. Most countries have either a reduced individual rate or a partial exclusion. About a dozen advanced economies — for example, the Netherlands and New Zealand — have long-term capital gains tax rates of zero. The Post managed to miss this international reality in its reporting.
The following chart from Global Tax Revolution shows capital gains tax rates in the high-income nations of the OECD. The chart is a little dated now, but it makes the point that our federal capital gains tax rate of 15 percent is pretty average — it is not some sort of unique right-wing giveaway to rich people, as the Post story implies.
Adam Gopnik Fails the Ideological Turing Test
Can people on one side of a political debate understand why others disagree with them? Sometimes it doesn’t seem so. Take Adam Gopnik’s article about “declinism” in the September 12 New Yorker. (Online for subscribers only, alas.) It’s an interesting review of new books about the decline of America and/or the West by Ian Morris, Niall Ferguson, and Thomas Friedman and Michael Mandelbaum. In the course of it Gopnik explains that there is “another side” in American politics from the good and decent side of President Obama and such people as Friedman and Mandelbaum. And that side is “inexorably opposed to these apparently good things.”
The reason we don’t have beautiful new airports and efficient bullet trains is not that we have inadvertently stumbled upon stumbling blocks; it’s that there are considerable numbers of Americans for whom these things are simply symbols of a feared central government, and who would, when they travel, rather sweat in squalor than surrender the money to build a better terminal. They hate fast trains and efficient airports for the same reason that seventeenth-century Protestants hated the beautiful Baroque churches of Rome when they saw them: they were luxurious symbols of an earthly power they despised.
This is the sort of place where it’s a good idea for an author to stop and think: Is that really what advocates of smaller government think? They actually hate the very idea of fast trains and efficient air travel? They’d rather sweat in squalor than pay for better service?
He goes on:
We don’t have a better infrastructure or decent elementary education exactly because many people are willing to sacrifice faster movement between our great cities, or better-informed children, in support of their belief that the government should always be given as little money as possible.
Sure, he’s claiming, we small-government folks would like our kids to learn to read. But not if it means giving up one solitary dime to the predatory state. Gopnik might have added that we crotchety libertarians would rather a hundred guilty men go free than a single innocent be jailed. Or that we’d rather see the people of Iraq suffer under Saddam Hussein rather than send a single American to die in the desert. Except that those are “ideological convictions” that New Yorker writers share. In those cases they understand that there are trade-offs, that benefits come with costs, that the end does not always justify the means.
And having identified those concepts, I wonder if Mr. Gopnik might try again to understand why some Americans oppose an array of government spending programs. Is it really that they “simply” fear good schools and fast trains? Or is it possible that they — we — have actual arguments? That we have actually enunciated those arguments in blog posts, op-eds, essays, and even books? And that few of us have said we’d rather sit in traffic than “give too much pleasure” to liberals?
Let me suggest to Mr. Gopnik a few reasons that some us oppose the various spending programs that concern him:
- We know that vastly increased government expenditures often don’t achieve their intentions, such as the 190 percent increase in both inflation-adjusted federal education spending and school infrastructure spending that hasn’t budged test scores.
- We know that many wonderful things, perhaps including truly fast trains, could be created at massive cost, but that you always have to weigh costs and benefits. Children say, “I want it.” Adults say, “How much does it cost, and what would I have to give up to have it?”
- We believe that people spend their own money more prudently than they spend other people’s money. So goods and services produced in the competitive marketplace are likely to be produced more efficiently and with more regard for real consumer demand than goods produced by government, and thus we should try to keep as many aspects of life as possible outside the control of government.
- We believe that you’ll get better schools, trains, and planes if they’re produced privately than if they’re created by government. And thus, since we want good schools and good transportation, we want them produced by competitive enterprise.
- We believe that the burden of taxes, spending, debt, and regulation is already reducing economic growth, and that our society would have more wealth for more people and better technology if it had a government smaller in size, scope, and power. Try plotting government spending vs. the increase in the speed of human mobility; I think you’d find an inverse relationship, with very little increase in the past generation of massive government spending.
- Yes, we have a philosophical preference for freedom. Not freedom at all costs, not anarchy, but liberty and limited government as the natural condition for human flourishing. We believe that liberal society is resilient; it can withstand many burdens and continue to flourish; but it is not infinitely resilient. Those who claim to believe in liberal principles but advocate more and more confiscation of the wealth created by productive people, more and more restrictions on voluntary interaction, more and more exceptions to property rights and the rule of law, more and more transfer of power from society to state, are — perhaps unwittingly — engaged in the ultimately deadly undermining of civilization.
And you know, when I think about Mr. Gopnik’s point that my Scottish Protestant ancestors “hated the beautiful Baroque churches of Rome [because] they were luxurious symbols of an earthly power they despised,” it occurs to me: Those churches are beautiful. So are the pyramids. But if President Obama or Paul Krugman or the AFL-CIO proposed to tax productive working people to build beautiful churches and pyramids, I would oppose it. Even if I wanted more beautiful churches, I would not be willing to force my fellow citizens to contribute to my satisfaction. And the same principle applies to faster trains between Washington and New York, which I absolutely do want. And which I believe the market would deliver, if we had a market in transportation and if faster trains are in fact a good use of our economy’s scarce resources.
Bryan Caplan recently challenged Paul Krugman and other intellectuals to an “ideological Turing test” — a test to see who could state an opposing view as clearly and persuasively as its proponents could. I think Gopnik would fail that test. Assuming that he has in this article stated as fairly as possible what he actually believes his opponents believe, then he seems far off the mark. Would he like to try again, to explain and then criticize the views laid out above or in books by Hayek, Nozick, Friedman, and Epstein?
In the meantime, I found much of his article interesting, and I agreed with many of his conclusions about the achievements of Western liberalism. But as he wrote, after taking issue with some of Niall Ferguson’s analyses of the French Enlightenment, Darwinianism, and the sixties, “when someone gets the sixties Beatles this wrong you have to wonder how well he really is doing with the sixth-century barbarians.” And when somebody gets the argument for limited government this wrong, you have to wonder whether he’s accurately described the books under review.
You Can’t Patent Thoughts
Doctors and researchers regularly perform blood tests to determine the effectiveness of various drugs. The resulting correlations between the test results and patient health have recently become the subject of numerous “process” patents. That these patents have been upheld by the U.S. Court of Appeals for the Federal Circuit represents a dangerous expansion of traditional patent law.
This expansion threatens to stifle free markets and infringe on individual liberty. In Mayo v. Prometheus, the Court will address the important question of whether someone can patent the process of observing correlations between blood test results and patient health. The primary legal issue here is whether naturally occurring correlations are patentable as “process” patents simply because the methods used to administer prescription drugs and test blood may involve “transformations” of body chemistry.
On Friday, Cato filed an amicus brief, joined by the Reason Foundation and the Competitive Enterprise Institute, arguing that these patents are not “processes” as the term was originally understood in the Patent Act of 1952. We liken medical-diagnostic patents to other abstract-process patents—such as software and business-method patents—that have resulted in financial losses for firms and discouraged innovation, and argue that enforcing these patents “will only serve to further slow the economy, retard technological innovation, distort the free market, and place human health at risk.”
Moreover, upholding the patents at issue will impermissibly restrict public-domain activity because the final step in a medical-diagnostic patent is an entirely mental one that will be violated whenever a doctor performs a previously public-domain medical test after learning about the patented correlation. Our brief thus closes by arguing that the Court should also consider the profound First Amendment implications in allowing processes whose final step is entirely mental to be patented.* “The Court has repeatedly recognized that the First Amendment protects freedom of thought as well as freedom of speech.” Unlike copyrights, patents lack traditional free-speech safeguards (such as exceptions for “fair use”) and, therefore, the Court should reject medical-diagnostic patents as impermissibly restricting the freedom of thought.
Mayo v. Prometheus will be argued late this year or in early 2012. Here again is Cato’s brief.
*Recall Judge Gladys Kessler of the D.C. federal district court, who found Obamacare’s individual mandate constitutional under the Commerce Clause because it regulates “mental activity.” Combining this theory with the theory of patentability at issue here, federal courts could sustain lawsuits based on a defendant’s making the same “patented” decision (or non-decision) as a plaintiff.
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Max Boot Grades Own Work, Gives Self ‘A’
Posted by Justin Logan
Max Boot photo via UPI
Sunday’s Washington Post ran a piece about 9/11 called the “pundit scorecard,” and gave Max Boot the “wishful thinking award” for his “Case for American Empire” piece. As the Post article described:
Suffice it to say that Boot, a fellow at the Council on Foreign Relations, isn’t happy. In fact, he looks back at the piece and feels pretty good about it. He points out that he had called on Washington to “feed the hungry, tend the sick, and impose the rule of law” in those benighted foreign locales, to at least “allow the people to get back on their feet until a responsible, humane, preferably democratic, government takes over.”
But let’s also recall that in May of 2003 Boot was still pooh-poohing Gen. Eric Shinseki’s admonition that “several hundred thousand” troops would be needed for such an endeavor. Instead, Boot thought that our to-do list in Iraq should include “purging the Baathists, providing humanitarian relief, starting to rebuild, and then setting up a process to produce a representative local government,” and that
Just think about that for a second. In 2003, Max Boot was arguing that 60-75,000 U.S. troops could provide security all across Iraq, while simultaneously “purging the Baathists, providing humanitarian relief, starting to rebuild, and then setting up a process to produce a representative local government.”
Grade inflation seems to have gotten out of hand at the Council on Foreign Relations.
Filed under: Foreign Policy and National Security
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