Archive for the ‘General’ Category
Too Big to Manage
Yesterday I asked: If JPMorgan Chase’s loss of $2 billion shows the need for more bank regulation, what should the federal government’s $1.3 trillion deficit tell us? And Michael Cannon pointed out that in the private sector, people who make big mistakes tend to lose their jobs, unlike the public sector.
Today another theme is being heard, at the Wall Street Journal, on NPR, and many more places including even here at Cato@Liberty: banks like JPMorgan, which has annual revenue of $100 billion, are just “too big to manage.”
And again I have to wonder: if large banks are too big to manage, what should we think about the federal government? The federal government is the largest landowner, the largest insurer, the largest employer, the largest banker in the country. It operates everything from a judiciary to the most complex armed force in history to numerous health insurance programs to a retirement system to a highway system to a peanut subsidy program.
If JPMorgan is too big to manage, can we possibly expect competent management of such a massive operation that doesn’t even face the feedback of profit and loss?
NCLB Is ‘Voluntary,’ Too
Why the big concern about the Common Core? For many it’s about the quality of the standards, which is a topic well worth delving into. But the real problem is that — continued protestations of supporters notwithstanding — adopting the standards has been anything but truly voluntary, and they are very likely to lead to complete federal control of education.
First, the sham voluntarism of today. Did your state want federal Race to the Top money? It had to adopt the Common Core to be fully competitive. Did it want out of the irrational, failed, No Child Left Behind Act? It had to have signed on to the Common Core to have a decent chance. Oh, and the tests that will go with the Common Core? The consortia creating them were selected by the federal government, which is also paying the bills.
And here’s something interesting: States didn’t technically have to sign on to NCLB, either. They “volunteered” to take federal dough and got NCLB with it. So why don’t you hear many people crowing that adopting NCLB was voluntary?
Because they know that it’s almost impossible for state policymakers to turn down hundreds-of-millions of federal dollars. It looks like a whole lot of money to state citizens, and those citizens had no choice about paying the federal taxes from which the money came. So neither signing on to NCLB nor the Common Core were truly voluntary, and the only reason the nation has fallen slightly short of Common Core unanimity is that, unlike NCLB, neither Race to the Top money nor NCLB waivers were guaranteed for every state. Nonetheless, most found it impossible not to take a gamble.
That said, the biggest threat is down the line. With almost all states having adopted the Core, there’s a huge chance that when Congress reauthorizes NCLB the Common Core — and the federal tests to go with it — will become the backbone of federal accountability, with schools rewarded or punished based on how they score on the tests. The rationale many policymakers will offer is easy to anticipate: “States have already signed on to shared standards, so it makes little sense not to base accountability on them.” Classic slippery slope.
From the vantage point of Common Core supporters, that is actually the only outcome that makes sense. As Fordham Institute folks have complained on numerous occasions, the vast majority of states will not on their own raise standards and maintain strict accountability. But if states won’t do it, the federal government – their boss — must.
But even if Common Core supporters achieve that which is the logical end of national standards and testing — federal control — it almost certainly won’t give them the educational outcomes they want.
Ultimately, the groups that have the most influence over any government policy are those most directly affected by it — they are the most motivated to be politically involved — and in education that’s the teachers and administrators whose very livelihoods come from the system. And because they are normal human brings — no better nor worse than the rest of us — what they ideally want, and fight for, is as little accountability to others as possible. That’s why so few states have ever had much success with standards and testing, and why it’s irrational to think that Washington will do any better. Indeed, at least to a limited extent states compete with each other for residents and businesses — Washington doesn’t face even that minimal upward pressure.
So what will the Common Core most likely get us? Red-tape driven federal control without rigorous standards and testing. It will also move us farther from the reform that actually makes sense: School choice for all, which would overcome disproportionate political power by forcing educators to respond to parents. And that’s not all it would do. It would also give educators new freedom to employ different pedagogies and curricula; enable children with diverse interests and needs to link up with teachers specializing in them; and unleash crucial competition and innovation. It would, basically, stop ignoring the fundamental realities that all children are different, and no one actually knows what are the ultimate, “best” curricula.
Unfortunately, not only are we moving away from what we need, we’re stuck fighting over what really isn’t even a question: Adopting the Common Core hasn’t been truly voluntary at all.
C/P from the National Journal’s “Education Experts” blog.
J.P. Morgan and Yahoo: Market Successes
Investment giant J.P. Morgan made a bad trade that cost its owners $2 billion. The responsible parties are losing their jobs. Yahoo’s CEO evidently misled people about his qualifications. As a result, he lost his job.
If you want to know why these are market successes, consider: Medicare and Medicaid lose at least 35 times as much per year to fraud and other improper payments, and Medicare wastes even more on medical care that does nothing to make patients healthier or happier. This happens year after year after year.
Now ask yourself: when was the last time someone got fired over those losses? And yet the politicians’ first reaction to the J.P. Morgan trade was greater oversight by the political system, which tolerates much greater losses than the market system that is currently disciplining J.P. Morgan.
Here’s hoping the Yahoo incident inspires some politician to crack down on people who embellish their resumes.
Filed under: General; Government and Politics; Health Care; Political Philosophy
Will Smith: Socialists Just Don’t Understand
My French is rusty, but I’m pretty sure the Fresh Prince just flipped out at the idea of a 75-percent marginal tax rate like that advocated by France’s new socialist president.
Gov. Christie Vetoes ObamaCare Exchange — ‘At This Time’
Today, New Jersey Gov. Chris Christie (R) became the latest governor to throw sand in the gears of ObamaCare, issuing an eleventh-hour veto of a bill to create an ObamaCare Exchange in New Jersey. An excerpt from his veto message:
While I am unwilling to approve the establishment of a statewide health insurance exchange at this time, I am mindful that the requirements of the Affordable Care Act still stand today and I intend to fully oversee New Jersey’s compliance in a responsible and cost-effective manner should its constitutionality ultimately be upheld by the Supreme Court… My Administration will continue this work and stands ready to implement the Affordable Care Act if its provisions are ultimately upheld.
Christie suggests he isn’t yet convinced that Exchanges are per se harmful. He also seems to suggest that if the Supreme Court upholds the law, creating an Exchange might be the best course for the state and that refusing to do so would put the state out of compliance with federal law–neither of which is true. But the veto message contains enough wiggle room for Christie to come out hard against any future ObamaCare Exchange.
Here’s hoping the Supreme Court renders all of this moot.
Washington Post Defines Worst Fears Down
“Al-Qaeda bombmaker represents CIA’s worst fears.”
That’s the headline of a Washington Post story on Yemeni terrorists’ attempt to down a U.S. bound flight by placing a bomb on the body of an operative that turned out to be a CIA and Saudi agent. By straining to alarm readers about the bomb-maker, Ibrahim Hassan al-Asiri, the story makes three errors.
First, by defining the CIA’s “worst fears” as “a highly skilled terrorist determined to attack the United States,” the Post underestimates the imaginative capacity of intelligence officials and overrates Asiri’s prowess. The article uncritically quotes House Homeland Security Committee chairman Peter King’s claim that “Asiri is an evil genius. He is constantly expanding, he is constantly adjusting.” Whatever King means by “expanding,” “failing” would have been a better choice of words. In just one of the four Asiri plots mentioned in article did his bomb detonate properly. That one killed only its bearer, al-Asiri’s brother. The nearby target, Saudi’s Prince Nayef, suffered only minor wounds.
Second, the article dubiously claims that two of those plots nearly wreaked great damage:
If it were not for a technical problem (Abdulmutallab’s device failed to detonate) or solid intelligence tips (Saudi counterterrorism officials alerted authorities in Dubai and Britain to intercept the cargo planes), Asiri would have succeeded in staging a catastrophic disaster in American skies.
It is, however, questionable whether Abdulmutallab’s bomb, had it properly detonated, was powerful enough to cause his plane to crash. Even if it opened a hole, the plane might not have crashed.
In the second case, where bombs were hidden in printer cartridges on cargo planes, authorities tell us the detonators probably would have worked and could have downed the planes. But there remains a decent chance that detonation would have occurred while the planes were on the ground. Also, one reason that the devices made it on to cargo planes without detection is that they contain few people and thus justify less security. The death of a crew would have been tragic, of course, but “catastrophic disaster” is a stretch.
The likely success of terrorist plots can’t be assessed simply by looking at the stage of the plot that caused its failure. As Jim Harper argues, plots require success in a series of tasks, each of which drives down the odds of overall success. Bombs that are both difficult to detect and easy to detonate are tough to make, and competent bombers are hard to find. Borders have guards. Intelligence services employ double agents.
The article’s third error is its assertion that the Yemeni branch of al Qaeda has “taken advantage of Yemen’s political turmoil and seized large swaths of territory in the south.” That language conflates the terrorist group with a broader insurgency, confuses their goals, and overstates the group’s potency. The misperception invites a broad U.S. campaign against Yemen’s southern Islamists, which could heighten their enthusiasm for attacking Americans, creating the menace we feared.
Let’s review the record of the bombmaker who is labeled our “worst fear.” His organization has made no discernible progress towards its murky political objectives—though its Islamist protectors have gained territory amid a power vacuum. He has never produced mass violence nor apparently come close, and his most successful act of terrorism was to help his brother blow himself up. His next best effort resulted in a severe crotch burn for the bomber, who survived, talked to U.S. authorities for months, and is serving a life sentence.
That is “success” only under an exceedingly capacious definition. Bin Laden and his acolytes are being grandiose when they talk about bankrupting us. But their boasts show that “terrorism” remains a good label for their misbegotten efforts. They sustain their endeavors by imagining that violence, by generating fear and cost, will cause their enemy to fold and to accommodate their goals. By hyping their menace, we help them cling to that fantasy.
President Obama Gets His Groove Back
On hearing of the death of the great French diplomat Talleyrand, his Austrian rival Metternich is reputed to have said: “What did he mean by that?” Perhaps we can be too cynical in assessing politicians’ motives. And so maybe we should just give President Obama credit for doing the right thing in endorsing marriage equality, and leave it at that.
But everything a president running for reelection does is subject to political analysis. President Obama certainly hasn’t jumped on a wildly popular position. Support for gay marriage has been rising fast, from about 30 percent in 2004 to 50 percent today, but the country is at best split right now. It will be interesting to see how much the president’s support moves popular opinion; polls have shown every group in society moving in a more approving direction except Republicans and conservatives, and Obama’s support may accelerate that division.
Obama’s new position isn’t likely to make much difference with the gay vote. Exit polls gave him 70 percent in 2008. Republicans captured 31 percent of the gay vote in 2010, a big Republican year, and only 23 percent in 2004 after President Bush endorsed a constitutional amendment to ban gay marriage. But that’s not a lot of difference in a small voting bloc. Obama may well have encouraged a bigger turnout among gay voters, however. And already, an incredible one-sixth of his big-money bundlers are openly gay, so this shift is likely to mean more money from those networks.
I see three constituencies with whom Obama’s new position should help him big-time:
- Hollywood. This move re-establishes Obama’s cool. Hope and change are back. Movie stars will be falling over themselves to be photographed with the president. That means money, excitement, and publicity. (This corroboration just in.)
- Silicon Valley. Creative and successful people are getting tired of being targets of antitrust and other regulators, and surely Obama’s constant demonization of the “one percent” is galling to people who have made big money by being creative and hard-working. And they had to fight with Hollywood for Obama’s support on SOPA and related bills. But the young, socially liberal tech community will join their Hollywood neighbors in new excitement for the president.
- The youth vote. With the wars slogging on, the economy not producing jobs, the president mocking the idea of drug legalization, young people were becoming less enamored of Obama. He won 66 percent of the 18-29 vote in 2008. Republicans still aren’t doing well with young voters, but the thrill was gone from their view of Obama. Pollster John Zogby pointed to young voters’ libertarian leanings as a problem for the president. But now Obama is cool again. The wars may continue, and there may be no jobs, but at least the president is now leading on this generation’s civil rights issue. Even a year ago, support for marriage equality was at 70 percent among young people. I suspect the president has reestablished his position as the overwhelming favorite of young voters, which will serve the Democrats well for years to come. Mitt Romney will help them by lining up with the minority of voters who oppose not just marriage but civil unions.
Obama’s campaign seems to believe that his new position is a political winner, judging by the look of his campaign website today and a new video titled ““Mitt Romney: Backwards on Equality.” Further deterioration in Democratic support among the white working class may be a good trade for money from gays, Hollywood, and Silicon Valley and renewed enthusiasm from young voters.
Democratic Tax Policy, Then and Now
My new piece at Daily Caller looks at how the Democratic Party’s approach to tax policy has changed over the decades.
The piece was prompted by a recent article from Norm Ornstein and Tom Mann claiming that needed bipartisan reforms are being blocked by the new “ideologically extreme” Republican Party.
Baloney. It’s the Democrats who have changed. The party’s leaders have moved far to the left on economic issues.
As evidence, I point to this Cato Journal article from 1985 by Democrat Richard Gephardt, who was a leader on tax reform. As a free-market guy, I agree with the great majority of what Gephardt said, yet I agree with virtually nothing that modern Democratic leaders say about tax policy.
Regarding ridding the tax code of special breaks, Gephardt says, “I confess that I am not qualified to act as a central planner and I do not know anybody on either committee who is.” Amen!
And Gephardt says, “We in Congress take pride in the free market system.” When was the last time you heard a Democratic leader say something like that?
The Institute for Justice Exposes the Plague of Occupational Licensing
Today, the Institute for Justice released a 200-page, comprehensive study on occupational licensing in the United States. The report details the plague of occupational licensing that has swept the country over the past 60+ years. According to the study, “In the 1950s, only one in 20 U.S. workers needed the government’s permission to pursue their chosen occupation. Today, that figure stands at almost one in three.”
Fifty years ago, in Capitalism and Freedom, Milton Friedman warned against the dangers of professional licensing. At that time, Friedman quoted a previous study on licensure by Walter Gellhorn:
By 1952 more than 80 separate occupations exclusive of ‘owner-businesses,’ like restaurants and taxicab companies, had been licensed by state law; and in addition to the state laws there are municipal ordinances in abundance, not to mention the federal statutes that require the licensing of such diverse occupations as radio operators and stockyard commission agents. As long ago as 1938 a single state,North Carolina, had extended its law to 60 occupations. One may not be surprised to learn that pharmacists, accountants, and dentists have been reached by state law as have sanitarians and psychologists, assayers and architects, veterinarians and librarians. But with what joy of discovery does one learn about the licensing of threshing machine operators and dealers in scrap tobacco? What of egg graders and guide dog trainers, pest controllers and yacht salesmen, tree surgeons and well diggers, tile layers and potato growers? And what of the hypertrichologists who are licensed in Connecticut, where they remove excessive and unsightly hair with the solemnity appropriate to their high sounding title?
The Institute for Justice’s study found that licensing has only become more wide-spread and more absurd. But an increase in licensure is expected when interest groups are allowed to capture government and violate our economic liberties. Public choice theory predicts a growth in licensing if the anti-competitive interests of trades are not checked by constitutional rights. As Friedman observed,
In the absence of any general arrangements to offset the pressure of special interests, producer groups will invariably have a much stronger influence on legislative action and the power that be than will the diverse, widely spread consumer interest. Indeed from this point of view, the puzzle is not why we have so many silly licensure laws, but why we don’t have far more.
There are significant real-world effects to these laws. In a world of nine percent unemployment, barriers to work should be the last thing we want, particularly if those barriers do not make us safer or better off. The study found that the average license forces would-be workers to pay an average of $209 in fees, take one exam, and complete nine months of training. In the four places in which they are licensed (three states and DC), interior designers have the highest barriers to entry, apparently to save us from shag carpeting and misuses of the Pottery Barn. In the face of such requirements, particularly the months of training, it’s easy to see how someone can be discouraged from even looking for a job.
In addition, out-of-control licensing has other, more human costs, such as the monks of Saint Joseph Abbey, who were prohibited from building caskets in their monastery unless they obtained a funeral director license. The Institute for Justice won that case. Here’s hoping the new study gives IJ’s attorneys the data they may need to defeat other unconstitutional licensing regimes.
Below is the video announcing the study:
Happy Birthday, F. A. Hayek
Today is the 113th anniversary of the birth of F. A. Hayek, perhaps the most subtle social thinker of the 20th century.
He was awarded the Nobel Prize in Economics in 1974. He met with President Reagan at the White House, and Margaret Thatcher banged The Constitution of Liberty on the table at Conservative headquarters and declared “This is what we believe.” Milton Friedman described him as “the most important social thinker of the 20th century,” and Lawrence H. Summers called him the author of “the single most important thing to learn from an economics course today.”
He is the hero of The Commanding Heights, the book and PBS series by Daniel Yergin and Joseph Stanislaw. His most popular book, The Road to Serfdom, has never gone out of print and sold 125,000 copies last year. John Cassidy wrote in the New Yorker that “on the biggest issue of all, the vitality of capitalism, he was vindicated to such an extent that it is hardly an exaggeration to refer to the 20th century as the Hayek century.”
Last year the Cato Institute invited Bruce Caldwell, Richard Epstein, and George Soros to discuss the new edition of The Constitution of Liberty, edited by Ronald Hamowy. In a report on that session, I concluded:
Hayek was not just an economist. He also published impressive works on political theory and psychology.
He’s like Marx, only right.
Cato published two original interviews with Hayek, in 1983 and 1984.
Find more on Hayek, including an original video lecture, at Libertarianism.org.
Nation Building Comes to Honduras
Sunday’s New York Times featured a front-page article by Thom Shanker on the U.S. military’s presence in Central America. In Honduras, American Special Forces operate out of three outposts—modeled on forward bases in Afghanistan and Iraq—providing support to Honduran Special forces. 600 U.S. troops operate across Central America and try to maintain a “discrete footprint” and do not, it seems, engage in many offensive operations. Nonetheless, the ease with which U.S. military personnel can be deployed practically anywhere is disturbing (though not surprising, given our recent experience). That some simply presume a need for having the U.S. military deploy to the jungles of Honduras is equally troubling.
Shanker explains that the U.S. military is implementing many of the lessons learned from counterinsurgency campaigns in Iraq and Afghanistan. Just as our presence in those countries was supposed to bring stability—along with democracy, economic development, human rights, and the rule of law— so it goes in Honduras:
“By countering transnational organized crime, we promote stability, which is necessary for external investment, economic growth and minimizing violence,” Colonel Brown said. “We also are disrupting and deterring the potential nexus between transnational organized criminals and terrorists who would do harm to our country.” (emphasis mine)
According to Colonel Brown, the U.S. military has deployed to Honduras to encourage foreign companies to invest there. It is hard to square this with the military’s core mission to “provide for the common defence.” Some in Washington still perceive a connection between economic development, drug eradication, and U.S. national security. But the most recent scholarship has largely debunked the belief that Americans must build/rebuild foreign countries in order to be secure here at home.
It isn’t enough to learn lessons from our recent experiences in Iraq and Afghanistan. It is equally important that we learn the right lessons. Until we do, it appears we are doomed to repeat our nation-building follies again and again.
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