• A few things you might not know about the Chrysler bankruptcy.

• Why you should not blame Obama for Bush’s 2009 deficit.

• Standing against the storm: Nien Chang, 1915-2009.

• Podcast: Think the Federal Reserve is independent? Think again.

• How delayed economic reform in India killed 14.5 million children. More details, here.

• It always starts with “good intentions:” How urban planners destroyed the small-town atmosphere in Portland, Oregon and made congestion even worse.

• Lots of talk but little action from the Obama administration on education.

• Podcast: If the Obama administration was serious about job creation in the stimulus plan, why weren’t dollars targeted at states with higher unemployment?

The Department of Homeland Security has started a program called the “I E-Verify” campaign for businesses that use the federal background check system on its employees. If you see businesses with “I E-Verify” decorations or insignia, they at least indirectly support a national ID system in the United States. This can help you decide whether or not you want to spend your dollars with them.

• If the health care overhaul bill were a medical product it would have to come with a warning label, which could read something like this: Warning: This product will increase your health insurance premiums, make your children poorer and won’t make you healthier. That’s not all. There’s more.

• Unintended Consequences: Could government efforts to redesign cities to make them more pedestrian friendly, concentrate jobs in selected areas, and increase mass transit actually raise C02 emission levels?

• What does it say about politicians who think Americans who don’t buy health insurance should be subject to a $250,000 fine and/or five years in jail?

• The president is on his first official trip to Asia. Here’s an outline as to how the United States should engage the region.

• Podcast: “Obama’s Credibility on the Dollar“

In “Bending the Productivity Curve: Why America Leads the World in Medical Innovation,” economist Glen Whitman and physician Raymond Raad conclude that the United States far and away outperforms other nations on medical innovation, but that the legislation moving through Congress threatens America’s ability to innovate.  From the executive summary:

To date…none of the most influential international comparisons have examined the contributions of various countries to the many advances that have improved the productivity of medicine over time…

In three of the four general categories of innovation examined in this paper — basic science, diagnostics, and therapeutics — the United States has contributed more than any other country…In the last category, business models, we lack the data to say whether the United States has been more or less innovative than other nations; innovation in this area appears weak across nations.

In general, Americans tend to receive more new treatments and pay more for them — a fact that is usually regarded as a fault of the American system. That interpretation, if not entirely wrong, is at least incomplete. Rapid adoption and extensive use of new treatments and technologies create an incentive to develop those techniques in the first place. When the United States subsidizes medical innovation, the whole world benefits. That is a virtue of the American system that is not reflected in comparative life expectancy and mortality statistics.

Policymakers should consider the impact of reform proposals on innovation. For example, proposals that increase spending on diagnostics and therapeutics could encourage such innovation. Expanding price controls, government health care programs, and health insurance regulation, on the other hand, could hinder America’s ability to innovate.

Raad will discuss the study this Friday at noon at a policy forum at the Cato Institute.

• The politics behind the health care overhaul.

• Mass corruption in Afghanistan. Malou Innocent: “Washington has already surged into Afghanistan once this year. The United States should not spend more American blood and more of its ever-diminishing financial resources to prop up Karzai’s ineffectual regime.”

• A government takeover of health care is not pro-choice — for anyone: “Whatever your views on abortion, the fight over abortion in the Obama health plan illustrates perfectly why government should stay out of health care. When the government subsidizes health care, anything you do with that money becomes the voters’ business. And rather than allow for choice between different ways of doing things, the government typically imposes the preferences of the majority — or sometimes, a vocal minority — on everybody.”

• Podcast: “A Proposed Beat Down for Banks“

If you’re a progressive like me, and you’re upset by the Stupak amendment, which bars federally subsidized insurance from covering abortions, consider this: What if we had a single-payer health-care system and someone like Jeb Bush or Sarah Palin were running the country?

She worries that if Republicans were in charge of government-run health care, they might not stop with abortion. They might try to limit government-paid access to birth control, fertility treatments, or end-of-life care. They might even (gasp) try to require co-pays to get people to take some responsibility for their health-care decisions. She goes on:

I strongly support increasing our government’s involvement in the health-care system by including a public option in the reform package. I believe that if Congress passes legislation that includes a public option, that option will be stronger than many pundits suggest. Such a plan could help lower costs while lifting the quality of care, and would provide serious competition to private insurers.

But I’m also wary that in four or eight years, someone else — someone less sympathetic to my views — may be in the White House. And conservatives could once again control Congress. So I am relieved that we don’t seem to be headed toward a single-payer system. We simply cannot count on “good government” overseeing our health care. One never knows who the American people will choose to elect. As a progressive, I have been stunned by the people’s pick more than once in the past 30 years. Democracy offers choices but makes no promises.

So I want to hedge my bets. I want alternative insurance options, especially from nonprofits such as Kaiser Permanente. And I don’t want to find myself locked into an insurance plan run by conservatives — or Democrats — who feel they have a right to impose their religious beliefs on my access to care.

It’s a good point. I made the same point a week ago in the Philadelphia Inquirer:

If you still have warm feelings toward Obama and his good intentions, ask yourself this: Will you feel comfortable one day when the appointees of President Romney or President Palin are exercising unconstitutional, unauthorized, unreviewable authority to restructure the economy the way they see fit?

And Bob Levy made the same point to Republicans when they were in power:

advocates of expanded executive power remind civil libertarians that President Bush is an honorable man who understands that the Constitution is made of more than tissue paper. That argument is simply not persuasive – even to those who fervently share its underlying premise. The policies that are put in place by this administration are precedent-setting. Bush supporters need to reflect on the same powers in the hands of his predecessor or his successors.

Indeed, because Republicans are often known as the Stupid Party, and not without reason, I tried to warn them about giving more power to the government while President Clinton was in office:

Let’s not forget that if, say, Coats’s Maternity Shelter Act were implemented next year, Donna Shalala, the secretary of health and human services, would be charged with implementing it. She might appoint HUD assistant secretary Andrew Cuomo to run it, or maybe unemployed ex-congressman Mel Reynolds, or maybe just some Harvard professor who thinks single motherhood is a viable lifestyle option for poor young women. One reason conservatives shouldn’t set up well-intentioned government programs is that they won’t always be in power to run them.

But they never listen. When the Republicans were in power, they brushed aside reminders that some day a Democratic president would be exercising the vast powers that Bush was accumulating in the White House. And when Democrats are in power, they ignore the risks of giving more power to a federal government that will one day be run by conservatives. And then both sides are appalled by the uses that are made of those powers when that day comes.

I guess that’s why the first section of The Libertarian Reader is titled “Skepticism about Power.”

• Fairness Doctrine 2.0: How the government is finding new ways to regulate media.

• Don’t miss Cato’s 27th annual Monetary Conference Thursday, November 19th.

• New Hampshire state government guaranteeing loans to help bail out a local newspaper.

• Podcast: “Atomic Obsession:” When threats are exaggerated, what’s the cost? John Mueller, author of Overblown: How Politicians and the Terrorism Industry Inflate National Security Threats, and Why We Believe Them, comments.

Reactions generally consist of pundits pouring their preconceptions over what is known of the facts. These are the least worthy of our time, and rejoinders like this one from Stephen M. Walt of Harvard University in the Fort Hood section of The Politico’s Arena blog dispense with them well:

Of course [Fort Hood] is being politicized; there is no issue that is immune to exploitation by politicians and media commentators. The problem is that there are an infinite number of “lessons” one can draw from a tragic event like this — the strain on our troops from a foolish war, the impact of hateful ideas from the fringe of a great religion (and most religions have them), the individual demons that drove one individual to a violent and senseless act, etc., — and so no limits to the ways it can be used by irresponsible politicians (is that redundant?) and pundits.

My favorite response—by “response,” I mean careful, productive analysis—was written last year as a general admonition about events like this (which at least has terrorist connotations):

Above all else is the imperative to think beyond the passions of those who are hurt, frightened or angry. Policymakers who become caught up in the short-term goals and spectacle of terrorist attacks relinquish the broader historical perspective and phlegmatic approach that is crucial to the reassertion of state power. Their goal must be to think strategically and avoid falling into the trap of reacting narrowly and directly to the violent initiatives taken by these groups.

That’s Audrey Kurth Cronin, Professor of Strategy at the U.S. National War College in her monograph, Ending Terrorism: Lessons for Defeating al-Qaeda.

But I want to turn to a critique leveled against my recent post, ”The Search for Answers in Fort Hood,” which discussed how little Fort Hood positions us to prevent similar incidents in the future. (I hope it was response and not reaction, but readers can judge for themselves.)

A thoughtful Cato colleague emailed me suggesting that there may have been enough indication in Nidal Hasan’s behavior—in particular, correspondence with Anwar al-Awlaki—to stop him before his shooting spree.

There may have been. Current reporting has it that his communications with al-Awlaki were picked up and examined, but because they were about a research paper that he was in fact writing, he was deemed not to merit any further investigation.

This can only be called error with the benefit of hindsight. And it tells us nothing about what might prevent a future attack, which was my subject.

If humans were inert objects, investigators could simply tweak the filter that caused this false negative to occur. They could not only investigate the people who contact known terrorists as they did Nidal Hassan, they could know to disregard claimed academic interests. Poof! The next Nidal Hassan would be thwarted at a small cost to actual researchers.

But future attacks are not like past attacks. Tweaking the filter to eliminate this source of false negatives would simply increase false positives without homing in on the next attacker. Terrorists and terrorist wannabes will change their behavior based on known and imagined measures to thwart them. Nobody’s going to be emailing this al-Awlaki guy for a while.

In “Effective Counterterrorism and the Limited Role of Predictive Data Mining,” IBM distinguished engineer Jeff Jonas and I used examples from medicine to illustrate the problem of false positives when searching for terrorism in large data sets, concluding:

The question is not simply one of medical ethics or Fourth Amendment law but one of resources. The expenditure of resources needed to investigate 3,000,000, 15,000,000, or 30,000,000 fellow citizens is not practical from a budgetary point of view, to say nothing of the risk that millions of innocent people would likely be under the microscope of progressively more invasive surveillance as they were added to suspect lists by successive data-mining operations.

The same problems exist here, where tens of thousands of leads may present themselves to investigators each year. They must balance the likelihood of harm coming to U.S. interests against the rights of U.S. citizens and the costs of investigating all these potential suspects.

Armchair terror warriors may criticize these conclusions a variety of ways, believing that post hoc outrage or limitless grants of money and power to government can produce investigative perfection. (n.b. Getting victim states to dissipate their own money and power is how terrorism does its work.) But none can accurately say based on currently available facts that anyone made an error. Much less can anyone say that we know any better how to prevent essentially random violent incidents like this in the future.

This issue includes Greek economists Michael Mitsopoulos and Theodore Pelagidis on “Vikings in Greece: Kleptocratic Interest Groups in a Closed, Rent-Seeking Economy” as well as Peter Leeson, author of The Invisible Hook: The Hidden Economics of Pirates, writing (with David Skarbek) on the effects of foreign aid. As for taxes, well, editor Jim Dorn has assembled a number of useful papers:

• Andrew T. Young on taxing, spending, and “fiscal illusion”
• Michael J. New on the “starve the beast” hypothesis
• Alan Reynolds on Paul Krugman’s misunderstanding of the monetary and fiscal lessons of the Great Depression and Japan’s lost decade

And on the general rapaciousness of the state, don’t miss Jason Kuznicki’s careful review of government racial discrimination from the end of Reconstruction until the civil rights movement.

• The case for dropping out of NATO.

• Gene Healy on the “arrogance of power” involved in running for president these days: “What sort of person wants the job badly enough to spend years living out of a suitcase, begging for cash, glad-handing through primary states, and saying things that no intelligent person could possibly believe?”

• Doug Bandow: “The fall of the Wall, and the evil system behind it, deserves to be celebrated. Not just on Nov. 9. But every day.”

• Podcast: “A Looming Decision on Afghanistan“

Find it also on the Cato site here. And a partial transcript (pdf) was printed in Cato’s Letter. (Get a free subscription to Cato’s Letter here.) And to hear speeches like this live, watch for details on the next Cato University, July 25-30, 2010, in San Diego.

• The House health care bill: “One of the most expensive pieces of legislation in history.”

• How quickly we forget: “In spite of its monumental failure to bring social peace and material abundance, socialism is enjoying something of a renaissance.“

• Good question: Why would Congress compel young adults to buy health insurance they don’t need?

• Podcast: The Cost of the Health Care Bill

The economic crisis of 2008-9 will no doubt spawn dozens of books. Here are two good early ones….

Norberg, a knowledgeable Swede, provides a much more detailed account of the broader events of 2007-9, from the useful perspective of a non-American. He finds plenty of blame with all the major players in the U.S. financial system: politicians, who thoughtlessly pushed homeownership on thousands who could not afford it; mortgage loan originators, who relaxed credit standards; securitizers, who packaged poor-quality mortgage loans as though these were conventional loans; the Securities and Exchange Commission, which endowed the leading rating agencies with oligopoly powers; the rating agencies, which knowingly overrated securitized mortgages and their derivatives; and investors, who let the ratings substitute for due diligence. Senior management in large parts of the financial community lacked an attribute essential to any well-functioning financial market: integrity. But solutions, Norberg warns, do not lie in greater regulation or public ownership. Politicians and bureaucrats are not immune from the “short-termism” that plagues private firms.

The other book he praises, by the way, is Paul Krugman’s The Return of Depression Economics. And oddly, his list of Norberg’s villains doesn’t include one implied in the title: the Federal Reserve Bank, which issued the “easy money” that allowed the boom to happen. Purchase Financial Fiasco here or on Kindle.

• The heroes who helped bring down the Wall.

• One size does not fit all: How the federal health care overhaul will disrupt progress in states that are already addressing problems at home.

• Move over Fox News: The Obama administration takes aim at climate scientists.

• Podcast: “ObamaCare: A Bad Deal for Young Adults“

• The health care legislation moving through Congress could increase young adults’ premiums by 100 percent.

• Why raising taxes won’t fix the deficit. Just look at California. And Rhode Island. And New York.

• “What profiteth a political party if it gains congressional seats but loseth its soul?” —Michael D. Tanner (Yes, he’s referring to Republicans.)

• Here we go again: The No Child Left Behind Act is up for renewal.

• Podcast: “Ayn Rand’s Affinities and Animosities“

• John Samples on the national impact of this week’s elections: “The evidence suggests the Obama administration might be on the same path that led the Clinton presidency to the election of 1994. But there is an important difference: In 1994, the public had some faith in the alternative to Clinton and the Democrats in Congress.”

• Afghan election analysis.

• A few things you might not know about Bhutan.
  

• Podcast: “Independents and the GOP Victories“

“[I]t is simply not possible to validate (evaluate) predictive models of rare events that have not occurred, and unvalidated models cannot be relied upon,” says the report.

In December 2006, Jeff Jonas and I published a paper making the case that predictive modeling won’t discover rare events like terrorism. The paper, Effective Counterterrorism and the Limited Role of Predictive Data Mining, was featured prominently in a Senate Judiciary Committee hearing early the next year.

Privacy gives way to appropriate security measures, as the Fourth Amendment suggests where it approves “reasonable” searches and seizures. Given the incapacity of data mining to catch terrorism and the massive data collection required to “mine” for terrorism, data mining for terrorism is a wrongful invasion of Americans’ privacy—and a waste of time.

• Well here’s an idea: Only pay for health care that works.

• The case against tort reform in health care.

• Video: The authors of two new Ayn Rand biographies discuss their work and research.

• Podcast: “Ayn Rand and the World She Made“

• Reason.tv held an event to launch “Radicals for Capitalism,” a new series of videos celebrating Ayn Rand’s continuing influence.
• The Future of Freedom Foundation and the George Mason University Economics Society sponsored a lecture by Lawrence W. Reed, president of the Foundation for Economic Education, at GMU.
• And here at the Cato Institute, an overflow crowd gathered to watch a new film, The Soviet Story, which the Economist called “the most powerful antidote yet to the sanitisation of the past.”

It’s got to be a sign of growth and health if the libertarian movement is offering three excellent programs on one Monday night in one area. But what’s an overscheduled libertarian to do?

• Did it work? Cato’s Jeffrey Miron debates the effectiveness of Obama’s stimulus plan.

• The Democrats’ internal battle: Why they can’t agree on how to overhaul the health care system.

• The limits of American power in Afghanistan.

• “Peter Bauer and the Economics of Prosperity“

Economy Snaps Long Slump

But buried on page C10 is a more skeptical view:

If the Obama administration were managing a company, it might have hoped the latest gross-domestic-product numbers would be greeted with cries of “great quarter, guys!”

At least the stock-market obliged, rising on the back of better-than-expected GDP data Thursday morning. But then bulls have become used to looking to Washington for inspiration. Zero rates and stimulus programs boost economic data as well as nudge money toward riskier assets.

Fully 2.2 percentage points of the third quarter’s 3.5% growth figure related to vehicle purchases and residential construction, both juiced by government support. Federal spending added 0.6%.

If these GDP data were company earnings, they would be what analysts euphemistically call “low quality.” Investors buying into the market off the back of them are ignoring weekly unemployment-claims data that came in above 500,000 again on the same day.

The danger is that all these short-term fixes leave the economy dangerously addicted to taxpayer-funded steroids. The circularity in the housing market, whereby Washington provides tax breaks to first-time buyers, guarantees most of the mortgages written, and then buys most of those, beggars belief, and suggests a worrying case of amnesia following the bursting of the housing bubble. (emphasis added)

Johan Norberg warned about the dangers of repeating the very mistakes that created the bubble and bust in the first place in Financial Fiasco: How America’s Infatuation with Homeownership and Easy Money Created the Economic Crisis (available in hardcover, e-book, or Kindle).

Within 10 years, it seems a reasonable guess that Americans will travel freely to Cuba, that all states will recognize gay unions, and that few will retain criminal penalties for marijuana use by individuals. Whether or not Democrats retain control of Congress, whether or not Obama is re-elected, and whether they happen sooner or later than expected, these reforms are inevitable—not because politics has changed but because society has.

For good measure, he adds that we’re not going to prohibit either abortion or gun ownership. “Conservatives would be wise to give up on the one, liberals on the other. In each of these cases, popular demand for an individual right is simply too powerful to overcome.”

Sounds like libertarian heaven:

The chief reason these prohibitions are falling away is the evolving definition of the pursuit of happiness….

Republicans face a risk in resisting these new realities. Freedom is part of their brand; if the GOP remains the party of prohibition, it will increasingly alienate libertarian-leaners and the young. But the party as presently constituted has very little capacity to accept social change. Democrats face a danger in embracing cultural transformations too eagerly. Nearly four decades after George McGovern became known as the candidate of amnesty, abortion, and acid, cultural issues are still treacherous territory for them. Why get in front of change when you can follow from a safe distance and end up with the same result?

Of course, if the Democrats raise taxes and the deficit high enough, and do what they’re threatening to do to health care, marijuana may be the only medicine you don’t have to get on a waiting list for, but you won’t be able to afford it. And the marriage penalty may make everyone decide they can’t afford to get married. And flights to Cuba may be too expensive on our dwindling after-tax incomes.

• This is what happens to health care when you are not the customer.

• An update on the EU Lisbon Treaty.

• Why Fannie and Freddie mustn’t be left out of reform efforts.

• Skepticism over nuclear diplomacy with Iran. (PDF) Subscribe to the Nuclear Proliferation Update here.

• Podcast: “Obama: Kinder Bud to Federalism?” featuring Aaron Houston of the Marijuana Policy Project.

Now the invaluable Liberty Fund has made available a collection of anti-federalist writings, The Anti-Federalist Writings of the Melancton Smith Circle. The publisher says:

The Anti-Federalist Writings of the Melancton Smith Circle makes available for the first time a one-volume collection of Anti-Federalist writings that are commensurate in scope, significance, political brilliance, and depth with those in The Federalist. Included in this volume as an appendix is a computational and contextual analysis that addresses the question of the authorship of two of the most well-known pseudonymous Anti-Federalist writings, namely, Essays of a Federal Farmer and Essays of Brutus. Also included are the records of Smith’s important speeches at the New York Ratifying Convention, some shorter writings of Smith’s from the ratification debate, and a set of private letters Smith wrote on constitutional subjects at the time of the ratification struggle.

One reason it’s important to study the ideas of the Anti-Federalists was offered by Jeffrey Rogers Hummel in The Encyclopedia of Libertarianism:

Most of the Amendments comprising the Bill of Rights restricted the national government’s direct authority over its citizens. Only one section dealt with the relationship between the state and central governments; the 10th Amendment “reserved” to the states or the people all powers not “delegated to the United States by the Constitution.” Nothing better illustrates that, whereas the Anti-Federalists had lost on the ratification issue, they had won on the question of how the Constitution would operate. The Constitution had not established a consolidated national system of government as most Federalists had at first intended, but a truly federal system, which is what the Anti-Federalists had wanted. In simpler terms, the Federalists got their Constitution, but the Anti-Federalists determined how it would be interpreted.

In a world where it’s easy to find a “Dirty Dozen” of Supreme Court decisions that have expanded government and eroded freedom, that may be hard to believe. But it’s important to read both halves of early American debate over the Constitution in order to understand the foundations of our system.

Alas, I’m selectively quoting. What they actually said, snidely, was that Cato is a “hired voice of reason during political debates, because of its pseudo-academic affiliations.” (I don’t know why they italicized “voice of reason” – I always thought Reason was the voice of reason.)

But my selective quotation is as accurate as the selective research that VOIP News did for this fluffy hit piece. You see, Cato recently published a lengthy paper that articulates the benefits of net neutrality (referred to as the end-to-end principle).

Where do you find that in the paper? Here’s the first paragraph of the executive summary:

An important reason for the Internet’s remarkable growth over the last quarter century is the “end-to-end” principle that networks should confine themselves to transmitting generic packets without worrying about their contents. Not only has this made deployment of internet infrastructure cheap and efficient, but it has created fertile ground for entrepreneurship. On a network that respects the end-to-end principle, prior approval from network owners is not needed to launch new applications, services, or content.

The paper expresses well-founded concerns about net neutrality regulation—taking a good engineering practice and making a mandate of it for lawyers and bureaucrats to implement. From the executive summary’s third paragraph:

New regulations inevitably come with unintended consequences. Indeed, today’s network neutrality debate is strikingly similar to the debate that produced the first modern regulatory agency, the Interstate Commerce Commission. Unfortunately, rather than protecting consumers from the railroads, the ICC protected the railroads from competition by erecting new barriers to entry in the surface transportation marketplace. Other 20th-century regulatory agencies also limited competition in the industries they regulated. Like these older regulatory regimes, network neutrality regulations are likely not to achieve their intended aims.

It’s tough sledding, working through most of a one-page executive summary. But many publications go that far in researching the pieces they publish.

I do sincerely appreciate the nod to our prominence in this debate. I hope VOIP News does a better job of portraying where we stand and why in the future.