Archive for November, 2011
Federal Energy Failures
In the Washington Post, Steven Mufson does a nice job describing how Solyndra is just one of many energy subsidy failures of recent decades.
I covered some of the same topics as Mufson–including the Clinch River Breeder Reactor and the Synthetic Fuels Corporation–in this study at Downsizing Government. However, I presented the politics of these two projects a bit differently than Mufson. He sort of suggests that the Reagan administration was gunning to kill the Clinch River project, and that only the Carter administration was to blame for Synthetic Fuels.
Regarding Clinch River, President Carter should be credited with trying hard to kill it, but Congress blocked him. The Reagan administration initially supported the project, but that changed as the bad news mounted over time. I noted: “The combination of bad economics, environmental problems, and cost overruns gave the upper hand to project opponents in Congress, and funding was cut off by a fairly narrow vote in the Senate.”
Regarding Synthetic Fuels, the Reagan administration was once again initially supportive, and it only later changed course due to falling oil prices and numerous scandals in the program. When it became clear that the political winds were changing, I noted that ”there was a mad dash to hand out subsidies before Congress shut the project down.”
That sounds familiar doesn’t it?
This Week in Government Failure
Over at Downsizing the Federal Government, we focused on the following issues this past week:
- The “government efficiency” snake-oil salesmanship from politicians has become tiresome, especially when it comes from high-profile Republicans like Mitt Romney.
- An establishment commission is planning to “reform the nation’s housing policy by crafting a package of realistic and actionable policy recommendations” for the Beltway establishment’s consideration. Hold onto your wallets, taxpayers.
- Certain people saw the “Christmas Tree Tax” as an opportunity to further partisan aims rather than provoke a discussion and debate on the proper role of the federal government.
- On so-called shallow loss proposals to provide subsidies for farms in cases when farm revenues fall slightly below the record high levels of the past few years.
- Politicians who fixate on “government efficiency” probably aren’t truly interested in reducing the size and scope of government.
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Higher Taxes Don’t Improve Education; Lower Ones Do
Coloradans resoundingly rejected a tax hike for education spending last week. In a new op-ed, I note how wise that decision was, and explain how lowering taxes actually does improve education—while saving taxpayers millions of dollars along the way.
Per Dollar Spent, OECD Subsidies May Be the Most Destructively Wasteful Part of the Federal Budget
I’m not a fan of international bureaucracies.
I’ve criticized the United Nations for wanting global taxes. I’ve condemned the International Monetary Fund for promoting bigger government. I’ve even excoriated the largely unknown Basel Committee on Banking Supervision for misguided regulations that contributed to the financial crisis.
But the worse international bureaucracy, at least when measured on a per-dollar-spent basis, has to be the Paris-based Organization for Economic Cooperation and Development.
OECD Headquarters: Living the good life at US expense
American taxpayers finance nearly one-fourth of the OECD’s budget, at a cost of more than $100 million per year, and in exchange we get a never-ending stream of bad policy recommendations.
This Center for Freedom and Prosperity study has all the gory details. The OECD bureaucrats (who get tax-free salaries, by the way) endorsed Obamacare, supported the failed stimulus, and are big advocates of a value-added tax for America.
What’s especially frustrating is that the OECD initially was designed to be a relatively innocuous bureaucracy that focused on statistics. Indeed, it was even viewed as a free-market counterpart to the Soviet Bloc’s Council for Mutual Economic Assistance.
My, how things change.
Perhaps the most odious example of bad OECD policy is the campaign against tax competition. Beginning during the 1990s, the OECD has attacked low-tax jurisdiction for the supposed crime of having good tax laws that attract jobs and capital from high-tax nations such as France and Greece.
So why did the OECD launch this project to prop up Europe’s welfare states? The answer can be found in an excellent new study from Professor Andrew Morriss at the University of Alabama Law School and Lotta Moberg, a Ph.D student in economics at George Mason University.
North Dakota Rejects ObamaCare ‘Exchange’
Here’s the story, from the Bismarck Tribune:
Angered by a federal health care law that most of them despise, North Dakota House Republicans defeated legislation Thursday to give state officials authority over a health insurance marketing agency that the law requires states to establish.
(Correction: ObamaCare does not require states to create an Exchange.)
They said endorsing state administration of the agency, which is called a health insurance exchange, would be tantamount to approving the federal health reform law itself.
“I certainly am not going to legitimize Obamacare with my vote,” said Rep. Wes Belter, R-Fargo. “We, as a state of North Dakota, need to follow some of the other states who have said no… It is the law, but the fight should not be over.”
Supporters … said Thursday’s vote was the state’s last realistic chance for running its own exchange, since deadlines are looming and the Legislature does not meet again until January 2013…
After a debate that lasted almost two hours, representatives voted 64-30 late Thursday to reject the legislation. All but 10 of the House’s 69 Republicans voted against the bill, while 20 of its 25 Democrats supported it…
Opponents of the bill said they resented the pressure, which they said was caused by unrealistic deadlines in the federal health care law.
Rep. Keith Kempenich, R-Bowman, compared the situation to high-pressure sales tactics in a used car lot.
“If the federal government was really sincere on trying to reform health care, they wouldn’t have put these artificial dates in,” Kempenich said. “Whenever I’ve seen things that get rushed like this, or they get where you’re pressured like this, usually, they’re full of it, and that’s what this is starting to look like.”
Kudos to the North Dakota Policy Council‘s Brett Narloch.
This Week at Libertarianism.org
Libertarianism.org’s first week was a terrific success. If you haven’t visited yet, I encourage you to do so. The site’s an excellent place to learn about and explore the theory and history of liberty.
This week Libertarianism.org added
- A new video in our Libertarian View series. Blogger and GMU professor Don Boudreaux tells how his working-class upbringing and economics training led him to libertarianism.
- George H. Smith published a new essay in his Excursions series. Smith examines colonial reaction to the Declaration of Independence’s list of grievances as well as the political principles informing its drafting.
- Jason Kuznicki wrote a long blog post on the difference between “ideal acts morality” and “common sense ethics”—and how these two approaches play out in politics and real life.
- Miles Pope began a series of posts on Jan Narveson’s classic book, The Libertarian Idea.
- I blogged about Elizabeth Warren’s popular argument for paying higher taxes and how it relates to the intriguing subset of political philosophy dealing with political obligation.
- Finally, Libertarianism.org expanded its social networking reach to Google+. So if you’re a Google+ user, be sure to circle Libertarianism.org. And while you’re at it, we’re also on Facebook and Twitter.
Legalize Drugs? Greenwald v. Walters
Best-selling author Glenn Greenwald debated former drug czar John Walters at Brown University last night before 300 students and faculty. Glenn authored Cato’s landmark study on the decriminalization of drugs in Portugal and he will be speaking at our drug conference next week.
The Foreign Corrupt Practices Act: Clarification Is Not Enough
The Foreign Corrupt Practices Act, enacted in 1977 and the subject of a high-profile federal enforcement campaign in recent years, is a feel-good piece of overcriminalization that oversteps the proper bounds of federal lawmaking in at least four distinct ways, any of which should have prevented its passage. It is extraterritorial, purporting to punish overseas misdeeds which deprive no Americans of liberty or property and whose punishment is better left in the hands of authorities elsewhere. It is vicarious, inflicting massive liability on businesses and unknowing higher-ups over the actions of rogue local subsidiaries, salespeople and facilitators. It is punitive, menacing its targets with twenty-year prison terms and inflicting huge penalties over less-than-huge misbehavior. And finally, it is vague, leaving companies to guess at the proper line between tolerated payments (e.g., gratuities to speed up visa and license issuance in developing countries) and improper “bribes,” and even such basic questions as who counts as an “official.” In the face of a mounting outcry from the business community, the Obama administration has now finally conceded that there is some validity to this last point, and Criminal Division chief Lanny Breuer says the Department of Justice will develop guidelines to provide greater clarity as to what it believes the law does and does not forbid. Better than nothing, but why not consider the case for wider reform or even repeal?
To begin with, it’s hardly as if the law has succeeded in cleaning up the climate of official corruption that afflicts so many ill-governed countries around the globe. It does, however, confer a huge competitive advantage on companies not within the reach of the U.S. Department of Justice, above all those of China, which does not even pretend to apply similar rules to its overseas enterprises, and also including Europe, which has mostly chosen to address the problem in less adversarial ways. (See, for example, this Economist editorial on Britain’s FCPA-equivalent.)
Chicago-Kent law professor Andy Spalding has argued that the FCPA in fact amounts to a form of unintended economic sanctions against developing countries, sometimes with “tragic” and anti-humanitarian results. Guest-posting at PrawfsBlawg, Spalding offered the example of India, where a poor rural population stands in desperate need of roads:
India lacks the financial and administrative (or authoritarian?) capacity to build the needed roads, so it has aggressively solicited outside investors. Nonetheless, of all public requests for road construction proposals in India, almost half receive absolutely no bids. No one is willing to build these roads, at any price. Why aren’t more U.S. construction companies seizing this profit opportunity? Answer: corruption. The infrastructure sector is notoriously corrupt; the FCPA risks are far too high.
Query: if the criminal penalties now associated with FCPA enforcement have made the costs of building roads in developing countries prohibitive, such that roads aren’t built, farmers can’t sell, and kids can’t eat, have we done the right thing?
More on FCPA at Overlawyered and at my former website Point of Law.
Broadcast Media Deserve Better Than Second-Class First Amendment Protection
Who controls the content of TV and radio broadcasts, parents or the FCC? In the 1978 case of FCC v. Pacifica Foundation, the Supreme Court held that, because over-the-air broadcast media is like an “unwanted intruder” in the home that is uniquely accessible to children, the FCC has a role in maintaining the cleanliness of the transmissions. Because of these unique characteristics, the regulation of broadcast media was held to a lesser constitutional standard than other types of media. That ruling was largely based on the technology of the time: three channels, little cable, and no VCRs, much less Internet, DVDs, and satellite TV.
Since that time, the FCC has regulated broadcasts under that lower constitutional standard, including fining stations for so-called “fleeting expletives” uttered by celebrities on live awards shows, the infraction from which this case springs (it was Bono, then Cher, then Paris Hilton and Nicole Richie). This case is visiting the Supreme Court for the second time. In 2009, the Court ruled that an FCC rule against “fleeting expletives” was not an unlawful under administrative law, the law governing executive agencies’ power. On remand, the Second Circuit struck down the rule on First Amendment grounds, largely on the reasoning that Pacifica had been obviated by technological change.
Cato has joined forces on an amicus brief with a wide range of groups advocating freedom in technology policy — the Electronic Frontier Foundation, the Center for Democracy & Technology, Public Knowledge, and TechFreedom — to underscore for the Court just how different the world is today from 1978. While the groups joining the brief do not necessarily agree with each other all the time, we agree on this fundamental truth: broadcast media (the most prominent way we become informed) should not receive watered-down First Amendment protection. We point out how the existence of Video-On-Demand services like Netflix, DVRs, Internet sites like Hulu, as well as massive access to DVDs, has radically transformed how we consume media. Broadcast media is no longer an “unwanted intruder,” but more like an invited guest. Moreover, with the existence of parental control mechanisms like the V-Chip, parental locks included in cable and satellite boxes, and even services like “TV Guardian” — which filters live TV based on the closed-captioning signal — parents have all the tools at their disposal to ensure that children aren’t exposed to fleeting expletives or anything else unwanted. So why does the FCC need a vague and overbroad rule that could not pass heightened scrutiny and can only survive under a watered-down First Amendment standard? We live in a world that few could have imagined in 1978. It’s time for a new rule that gives broadcast media the same level of speech protection as any other kind.
The Court is expected to hear argument in FCC v. Fox Television Stations in January.
Obama Demonstrates Why ‘Government Efficiency’ Is a Joke
By the time I stopped working for Sen. Tom Coburn (R-OK), I had concluded that the pursuance of so-called “government efficiency” was largely a misguided waste of time for a politician who was interested in achieving smaller government. (I’ve been pleased to see my old boss spend more time trying to cut and eliminate programs since my departure.)
By the time I stopped working for Gov. Mitch Daniels, I had concluded that most politicians probably just pursue “government efficiency” for cheap p.r. purposes: take care of the special interests first, buy votes, and tell the suckers taxpayers that you care deeply about how their money is being spent. And as I’ve discussed in the past, to the degree that the governor’s office was really interested in saving money, it was because they wanted to free up funds to spend on Mitch’s “priorities.”
Put President Obama in the Daniels category. From the New York Times:
Cutting wasteful government spending is one of those exercises that even the most ardent political opponents agree is a good thing. But what one does with those savings is quite another matter.
On Wednesday, President Obama signed an executive order cutting federal spending on things like promotional plaques and mugs, cellphones and iPads, official travel, and chauffeured cars for senior officials.
‘It doesn’t replace the importance of the work that Congress needs to do in coming up with a balanced, bold plan to reduce our deficit,’ Mr. Obama said in a ceremony in the Oval Office, ‘but it indicates once again that there are things we can do right now that will actually deliver better government more efficiently.’
In fact, the administration said, only a small portion of the $4 billion in annual savings will go toward reducing the deficit. Rather, the money will be spent on other programs, like helping veterans re-enter the work force or improving the nation’s infrastructure, which the White House contends are more worthwhile.
As Forrest Gump might have put it, “Republicans and Democrats goes together like peas and carrots.”
Is This What PA Taxpayers Shelled out $279 Million For?
Though I could probably pull something out of the Penn State scandal to illustrate the excesses of college sports, that’s not the real story as far as I can tell. This strikes me as first and foremost a sad legal matter, not a higher education policy story, so I haven’t had anything to say about it. Until last night.
As you probably know by now, following the announcement of Joe Paterno’s firing throngs of Penn State students took to the streets, either in anger or just to go out and be rowdy. Parts of the coeducational mob ripped down street signs, toppled over a TV news van, and hurled rocks and fireworks at police.
Now, this was absolutely not the Arab Spring, with decades of brutal dictatorship finally overthrown. This was over the firing of a football coach who, while no doubt beloved, did not ensure that the proper authorities were notified when children were victimized by one of his staff members. Yes, he passed the information up channels so he did the minimum, but it’s not like he is being fired for protecting the children. One might disagree with the PSU trustees’ actions, but they certainly didn’t do anything outrageous.
But students all too often don’t need anything even close to grave injustice to fuel rampaging and property destruction. Usually all they require is a sports win or loss. At the University of Maryland they take to the streets and burn things over big basketball games, win or lose. At West Virginia University, they seemingly have couch conflagrations at the drop of a hat. And they are not alone.
Is this what taxpayers are shelling out hundreds of billions of dollars for every year? (Pennsylvania taxpayers handed $279 million to PSU this year.) Is this what higher education is supposed to be?
Of course not, but rioting is just the most glaring part of the unstudious college iceberg. The mass of it includes infamous partying that has largely replaced tedious stuff like studying. Indeed, Richard Arum and Josipa Roksa report that the average time per week spent studying for a full-time student has gone from twenty-five hours in 1961, to twenty in 1981, to an anemic thirteen in 2003. Then there are the atrocious college completion rates — from what federal data show, maybe 60 percent of all students finish their programs – and the numerous majors of highly dubious value. In other words, as taxpayers have poured more and more money into the ivory tower, it seems to have just added more bars, jacuzzis, and hangouts.
Taxpayers have to subsidize higher education, we’re told, because doing so promotes the “public good.” Well, as you watch Happy Valley turn decidedly unhappy, contemplate all the rot and waste that runs throughout the ivory tower. Then tell those people who talk up the public good that, clearly, it would be best served by letting taxpayers keep their higher ed bucks.
U.S. Still ‘On Track’ to Double Exports by 2014
In his State of the Union address in January 2010, President Obama launched his National Export Initiative with the explicit goal of doubling U.S. exports by 2014. The Commerce Department’s monthly trade report released this morning confirms that U.S. exporters remain “on track” to meet that goal—to my pleasant surprise. (See the chart below.)
I went on record earlier this year with skepticism that the goal was realistic. And to my defense, we are still less than two years into the journey. Doubling exports in five years requires an annual growth rate of almost 15 percent, about double the average rate of export growth during the past 30 years. The current annualized growth of 16.3 percent since 2009 will be increasingly difficult to sustain as the rebound from the previous global recession wears off and storm clouds gather over the Eurozone.
We’ve long argued at the Herbert A. Stiefel Center for Trade Policy Studies that exports are only part of the trade equation. American producers and consumers benefit from competitively priced imports as well as foreign investment in the United States. But the NEI has served a useful political function of providing a framework for the administration to pursue trade liberalization.
In the name of promoting exports, the Obama administration managed to work with Republicans in Congress last month to pass trade agreements with South Korea, Colombia, and Panama. It has also resolved the cross-border trucking dispute with Mexico satisfactorily enough to remove Mexican sanctions against another $2.4 billion in U.S. exports. And it will soon be working with Congress to establish permanent normal trade relations with Russia, ushering the world’s 11th largest economy into the World Trade Organization and opening its market further to U.S. exports.
Even if U.S. exports fall short of doubling by 2014, expanding our freedom to trade is always a goal worth pursuing.
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