Tuesday Links
- Dear members of Congress: If you’re not going to read the bills you pass, at least read the Constitution. Don’t fret; it’s short and written in plain English.
- Richard Rahn: Pay members of Congress more. (Or less, depending on their performance.)
- NYC: “The city that never smokes.” A proposal to ban lighting up in New York’s parks has exposed the puritanical agenda behind the crusade against smoking.
- Tyler Cowen: With health care costs high and rising, government mandates to buy insurance would make many people worse off.
- Podcast: “Pay Czar Cuts Checks“
The Improving State of New York City, circa 1800-2007
Two figures that say it all.
Death Rates (deaths per 1,000 population), New York City, c. 1800-2007. Source: NYC Department of Health & Mental Hygiene. Summary of Vital Statistics (2008). H/T to William Briggs for making me aware of this figure.
Infant Mortality Rate (deaths per 1,000 live births), New York City, 1898-2007. In 1898 IMR was estimated to be 140.9 Because of incomplete reporting of early neonatal deaths, this is almost certainly an underestimate. In 2007 IMR was 5.4 deaths per 1,000 live births. Source: NYC Department of Health & Mental Hygiene. Summary of Vital Statistics (2008)
Revenge of the Laffer Curve, Part II
An earlier post revealed that higher tax rates in Maryland were backfiring, leading to less revenue from upper-income taxpayers. It seems New York politicians are running into a similar problem. According to an AP report, the state’s 100 richest taxpayers have paid $1 billion less than expected following a big tax hike. The story notes that several rich people have left the state, and all three examples are about people who have redomiciled in Florida, which has no state income tax. For more background information on why higher taxes on the rich do not necessarily raise revenue, see this three-part Laffer Curve video series (here, here, and here):
Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth.
…[New York Governor David] Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20 percent less than anticipated.
…So far this year, half of about $1 billion in expected revenue from New York’s 100 richest taxpayers is missing.
…State officials say they don’t know how much of the missing revenue is because any wealthy New Yorkers simply left. But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh.
…Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.
Learning from Trade Wars Past
David Rockefeller, the former chairman and CEO of Chase Manhattan Bank, makes a compelling historical case in today’s New York Times for pursing free trade policies. Rockefeller has been around long enough to remember the Smoot-Hawley tariff bill of 1930 and the Great Depression that followed. In an op-ed piece titled, “Present at the Trade Wars,” he writes:
I lived through the stock market crash of 1929 and the Great Depression that followed it, and I saw that there was no direct cause and effect relationship. Rather, there were specific governmental actions and equally important failures to act, often driven by political expediency, that brought on the Depression and determined its severity and longevity.
One critical mistake was America’s retreat from international trade. This not only helped to turn the 1929 stock market decline into a depression, it also chipped away at trust between nations, paving the way for World War II.
On the eve of the G-20 summit in Pittsburgh this week, Rockefeller offers a timely warning to President Obama not to repeat the mistakes of the past.
New York Mayor Opposes Closing Schools for Muslim Holidays
I have been trying for years to make people understand that a single system of government schools is fundamentally at odds with American values, especially individual liberty and equal treatment under the law. New York City Mayor Michael Bloomberg, in opposing a move to let city public schools close for Muslim holidays as they do for Christian and Jewish holidays, recently made my point in one, simple sentence:
One of the problems you have with a diverse city is that if you close the schools for every single holiday, there won’t be any school.
Exactly. So which religions, and which people, will get to be more equal than others, Mr. Mayor?
With universal school choice, we wouldn’t have to grapple with such terrible questions.
Thomas Friedman’s New Math of Democracy
Thomas Friedman’s New York Times column today would be astonishing in its incoherence if only Friedman hadn’t long ago sapped us of our ability to be astonished by his incoherence. Like many capital-’d’ Democrats, Friedman has soured on democracy for failing to deliver on his policy wish list.
Watching both the health care and climate/energy debates in Congress, it is hard not to draw the following conclusion: There is only one thing worse than one-party autocracy, and that is one-party democracy, which is what we have in America today.
Why does Friedman say the United States has one-party democracy? Because the Republican Party is effectively opposing the Democratic Party’s agenda! Not even kidding. Get this:
The fact is, on both the energy/climate legislation and health care legislation, only the Democrats are really playing. With a few notable exceptions, the Republican Party is standing, arms folded and saying “no.” Many of them just want President Obama to fail. Such a waste. Mr. Obama is not a socialist; he’s a centrist. But if he’s forced to depend entirely on his own party to pass legislation, he will be whipsawed by its different factions.
Only the Democrats are really playing! You might think that would mean they can do whatever they darn well please. But no! The Democrats can’t do anything! Because the other party’s opposition is so effective! So it’s exactly as if there’s just one party: nothing gets done!
My hunch is that the Times’ editors see Friedman aiming the gun at his foot, but watching a man stupid enough to actually pull the trigger is so fun they hate to intervene. That or they’re trying to explode the myth of American meritocracy.
So where were we? Oh, yes: one-party democracy is aggravating because sometimes one party can’t do what it wants because the other party gets in the way. Sooo frustrating!!! Why have democracy at all when all you end up with is a single party stymied by the other one! And so it is that Friedman comes to wax romantic about communist central planning:
One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century. It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power.
Nikita Kruschev, the enlightened leader of a now-defunct one-party autocracy, was also committed to overtaking the United States in technology and so much more. “We will bury you” is how he put it. At the time, more than a few left-leaning American opinionmakers suspected he was right. After all, how can inefficiently squabbling democracies possibly keep pace with undivided regimes wholly devoted to scientifically centrally planning their way into the brighter, better future? And that, children, is why we speak Russian today.
Filed under: Government and Politics; Political Philosophy
I Would Rather You Just Said “Thank You, Private Schools,” and Went on Your Way…
Some well-known bloggers are being terrible bullies, beating up on private schools.
Felix Salmon kicks things off by hoping the government tightens the definition of a “charitable” organization and begins taxing private schools who don’t “do a bit more to earn it.” Matt Yglesias agrees that private schools are mooching deadbeats and ups the ante, calling them actively harmful as well. Finally, Conor Clarke at The Atlantic agrees, but makes the other two look like panty-waists by proposing the government radically narrow what is considered a charity in the first place.
Yglesias even has the temerity to indict private schools for the failure of NYC public schools:
And as best one can tell, their main impact on the common weal is negative, drawing parents with resources and social capital out of the public school system and contributing to its neglect. You’d have to believe that New York City’s public schools would be both better funded and free of this kind of nonsense if a larger portion of the city’s elite were sending their kids to them.
Really? Would we have to believe what Yglesias says? No, it’s not “the best one can tell.” According to the evidence, Yglesias’ breezy, offhand accusation is demonstrably wrong. Increased competition from private schools actually improves public school performance.
And the more kids who leave public to go private, the more money the schools have for the kids who remain.
What ingrates. They complain about the lost tax revenue while dismissing out of hand the billions of dollars that parents and donors spend every year to educate children outside the government system. They dismiss the fact that these parents and donors are saving taxpayers in the neighborhood of $60 Billion a year based on current-dollar public school spending and the number of kids in private schools.
Finally, if this is all about rich people getting a free ride, why aren’t these guys screaming about means-testing public schools? Why shouldn’t we charge rich parents tuition to attend public schools? If a charitable deduction for private schools is so bad, why isn’t a free public education even worse?
The Zero Percent Doctrine
I was never a fan of Dick Cheney’s one percent doctrine.
According to Ron Suskind, after 9/11 Cheney explained to law enforcement and intelligence officials that they should treat even the one percent chance of a terrorist attack as a mathematical certainty. The particular case was of a Pakistani nuclear scientist helping al-Qaeda to acquire a nuclear bomb, but the standard became a shorthand for U.S. counterterror efforts generally. No scale of effort would be too great. Better to chase down 100 leads, 99 of which turn out to be bogus, because finding just that one nugget would have been worth the level of effort.
Now we have evidence that the federal government is chasing down far more than 99 blind alleys for just one lead. From today’s front-page story in the New York Times, Eric Schmitt explains how the FBI has adapted and evolved since 9/11:
The bureau now ranks fighting terrorism as its No. 1 priority. It has doubled the number of agents assigned to counterterrorism duties to roughly 5,000 people, and has created new squads across the country that focus more on deterring and disrupting terrorism than on solving crimes.
But the manpower costs of this focus are steep, and the benefits not always clear. Of the 5,500 leads that the squad has pursued since it was formed five years ago, only 5 percent have been found credible enough to be sent to permanent F.B.I. squads for longer-term investigations, said Supervisory Special Agent Kristen von KleinSmid, head of the squad. Only a handful of those cases have resulted in criminal prosecutions or other law enforcement action, and none have foiled a specific terrorist plot, the authorities acknowledge. (Emphasis mine.)
So, just to review:
- 5,500 leads over 5 years
- 5 percent deemed credible
- “A handful” technically would mean five or less, but charitably might total a few dozen. Still, that translates to far less than 1 percent of leads investigated resulting in a criminal prosecution.
But, and here’s the kicker,
- None – zero, zip, nada – foiled a specific terrorist plot.
On the face of it, this seems like a waste of time and resources that should be spent elsewhere.
How to Encourage Terrorists
The news yesterday that a Guantanamo detainee has been moved to New York to stand trial struck me with bemusement.
The Obama administration has apparently determined that it can roll over opposition to bringing detainees into the country for trial and imprisonment. Arguments against doing so are fear-based pap, and political losers.
House Minority Leader John Boehner has not failed to provide. He said in a statement:
This is the first step in the Democrats’ plan to import terrorists into America. . . . . There are more than 200 of the world’s most dangerous men held at the Guantanamo Bay prison. Does the Administration plan to transfer all of them into our nation in this way?
Boehner’s apparent aim was to make political gains by appealing to the fears of a domestic U.S. audience, suggesting that President Obama is not safeguarding the country. He – and most U.S. politicians today – are “on tilt” about terrorism, playing to a “base” of caterwauling Islamophobes while the bulk of the American public looks on bewildered and disappointed.
But put aside domestic audiences. Think of what Boehner’s comment signals to international audiences, particularly, say, disaffected men in the Middle East: Americans are scared to death of terrorists. Just sitting in Guantanamo can make you “one of the world’s most dangerous men” to U.S. political leaders. Swathe yourself with the Al Qaeda brand and you can become a global menace. Boehner’s fear of terrorists encourages opponents of the U.S. to adopt terrorism as a tool against us.
Over the long haul, exhibiting bravery in the face of terrorism will tend to discourage it. Being brave is desirable and politically popular. Minority Leader Boehner has Republicans looking weak and scared in the face of terrorism and – having been ignored by Obama – politically weak too.
The Danger of Charter Schooling
It’s an interesting problem for charter-school afficianados: many want charters to have all the freedom of private schools, but go to pains to let people know that charters are public schools whenever the schools are under fire (or want money). Well I’ve just learned — perhaps before reporters have even been able to write their stories, because I haven’t yet found a news link to it — that New York’s Public Employee Relations Board will force the KIPP AMP charter school in New York City to let its teachers unionize.
This will be a tough pill for KIPP AMP to swallow, especially since an integral part of the famous KIPP model is requiring employees to be available far beyond the normal working hours of traditional public school teachers — not something the United Federation of Teachers is known for loving. But this is the chance you take when you run a charter school: No matter how much you want to act like a private school, sooner or later the public-schooling powers will remind you of what you really are.
Week in Review: Successful Voucher Programs, Immigration Debates and a New Path for Africa
Federal Study Supports School Vouchers
Last week, a U.S. Department of Education study revealed that students participating in a Washington D.C. voucher pilot program outperformed peers attending public schools.
According to The Washington Post, the study found that “students who used the vouchers received reading scores that placed them nearly four months ahead of peers who remained in public school.” In a statement, education secretary Arne Duncan said that the Obama administration “does not want to pull participating students out of the program but does not support its continuation.”
Why then did the Obama administration “let Congress slash the jugular of DC’s school voucher program despite almost certainly having an evaluation in hand showing that students in the program did better than those who tried to get vouchers and failed?”
The answer, says Cato scholar Neal McCluskey, lies in special interests and an unwillingness to embrace change after decades of maintaining the status quo:
It is not just the awesome political power of special interests, however, that keeps the monopoly in place. As Terry Moe has found, many Americans have a deep, emotional attachment to public schooling, one likely rooted in a conviction that public schooling is essential to American unity and success. It is an inaccurate conviction — public schooling is all-too-often divisive where homogeneity does not already exist, and Americans successfully educated themselves long before “public schooling” became widespread or mandatory — but the conviction nonetheless is there. Indeed, most people acknowledge that public schooling is broken, but feel they still must love it.
Susan L. Aud and Leon Michos found the program saved the city nearly $8 million in education costs in a 2006 Cato study that examined the fiscal impact of the voucher program.
To learn more about the positive effect of school choice on poor communities around the world, join the Cato Institute on April 15 to discuss James Tooley’s new book, The Beautiful Tree: A Personal Journey Into How the World’s Poorest People Are Educating Themselves.
Obama Announces New Direction on Immigration
The New York Times reports, “President Obama plans to begin addressing the country’s immigration system this year, including looking for a path for illegal immigrants to become legal, a senior administration official said on Wednesday.”
In the immigration chapter of the Cato Handbook for Policymakers, Cato trade analyst Daniel T. Griswold offered suggestions on immigration policy, which include:
- Expanding current legal immigration quotas, especially for employment-based visas.
- Creating a temporary worker program for lower-skilled workers to meet long-term labor demand and reduce incentives for illegal immigration.
- Refocusing border-control resources to keep criminals and terrorists out of the country.
In a 2002 Cato Policy Analysis, Griswold made the case for allowing Mexican laborers into the United States to work.
For more on the argument for open borders, watch Jason L. Riley of The Wall Street Journal editorial board speak about his book, Let Them In: The Case for Open Borders.
In Case You Couldn’t Join Us
Cato hosted a number of fascinating guests recently to speak about new books, reports and projects.
- Salon writer Glenn Greenwald discussed a new Cato study that exa
mines the successful drug decriminalization program in Portugal.
- Patri Friedman of the Seasteading Institute explained his project to build self-sufficient deep-sea platforms that would empower individuals to break free of national governments and start their own societies on the ocean.
- Dambisa Moyo, author of the book Dead Aid, spoke about her research that shows how government-to-government aid fails. She proposed an “aid-free solution” to development, based on the experience of successful African countries.
Find full-length videos to all Cato events on Cato’s events archive page.
Also, don’t miss Friday’s Cato Daily Podcast with legal policy analyst David Rittgers on Obama’s surge strategy in Afghanistan.
Filed under: Education and Child Policy; Foreign Policy and National Security; General; Government and Politics
Week in Review: ‘Saving’ the World, Government Control and Drug Decriminalization
G-20 Summit Agrees to International Spending Plan
The Washington Post reports, “Leaders from more than 20 major nations including the United States decided Thursday to make available an additional $1 trillion for the world economy through the International Monetary Fund and other institutions as part of a broad package of measures to overcome the global financial crisis.”
Cato scholars Richard W. Rahn, Daniel J. Ikenson and Ian Vásquez commented on the London-based meeting:
Rahn: “President Obama of the U.S. and Prime Minister Brown of the U.K. will be pressing for more so-called stimulus spending by other nations, despite the fact that the historical evidence shows that big increases in government spending are more likely to be damaging and slow down recovery than they are to promote vigorous economic expansion and job creation.”
Vásquez: “The push by some countries for massive increases in spending to address the global financial crisis smacks of political and bureaucratic opportunism. A prime example is Washington’s call to substantially increase the resources of the International Financial Institutions… There is no reason to think that massive increases of the IFIs’ funds will not worsen, rather than improve, their record or the accountability of the aid agencies and borrower governments.”
Ikenson: “Certainly it is crucial to avoid protectionist policies that clog the arteries of economic recovery and help nobody but politicians. But it is also important to keep things in perspective: the world is not on the brink of a global trade war, as some have suggested.”
Ikenson appeared on CNBC this week to push for a reduction of trade barriers in international markets.
With fears mounting over a global shift toward protectionism, Cato senior fellow Tom Palmer and the Atlas Economic Research Foundation are circulating a petition against restrictive trade measures.
Obama Administration Forces Out GM CEO
President Obama took an unprecedented step toward greater control of a private corporation after forcing General Motors CEO Rick Wagoner to leave the company. The New York Post reports “the administration threatened to withhold bailout money from the company if he didn’t.”
Writing for the Washington Post, trade analyst Dan Ikenson explained why the government is responsible for any GM failure from now on:
President Obama’s newly discovered prudence with taxpayer money and his tough-love approach to GM and Chrysler would both have more credibility if he hadn’t demanded Rick Wagoner’s resignation, as well. By imposing operational conditions normally reserved for boards of directors, the administration is now bound to the infamous “Pottery Barn” rule: you break it, you buy it. If things go further south, the government is now complicit.
Wagoner’s replacement, Fritz Henderson, said Tuesday that after receiving billions of taxpayer dollars, the company is considering bankruptcy as an option. Cato scholars recommended bankruptcy months ago:
Dan Ikenson, November 21, 2008: “Bailing out Detroit is unnecessary. After all, this is why we have the bankruptcy process. If companies in Chapter 11 can be salvaged, a bankruptcy judge will help them find the way. In the case of the Big Three, a bankruptcy process would almost certainly require them to dissolve their current union contracts. Revamping their labor structures is the single most important change that GM, Ford, and Chrysler could make — and yet it is the one change that many pro-bailout Democrats wish to ignore.”
Daniel J. Mitchell, November 13, 2008: ”Advocates oftentimes admit that bailouts are not good policy, but they invariably argue that short-term considerations should trump long-term sensible policy. Their biggest assertion is that a bailout is necessary to prevent bankruptcy, and that avoiding this result is critical to prevent catastrophe. But Chapter 11 protection may be precisely what is needed to put American auto companies back on the path to profitability. Bankruptcy laws specifically are designed to give companies an opportunity — under court supervision — to reduce costs and streamline operations.”
Dan Ikenson, December 5, 2008: “The best solution is to allow the bankruptcy process to work. It will be needed. There are going to be jobs lost, but there is really nothing policymakers can do about that without exacerbating problems elsewhere. The numbers won’t be as dire as the Big Three have been projecting.”
Cato Links
- Is Portugal an example for the future of drug policy? Cato released a new case study this week by Salon writer Glenn Greenwald entitled, “Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Drug Policies.”
- As the North Atlantic Treaty Organization celebrates its 60th birthday, there are signs of mounting trouble within the alliance and increasing reasons to doubt the organization’s relevance regarding the foreign policy challenges of the 21st century. In a new study, Cato scholar Ted Galen Carpenter argues that NATO’s time is up.
- Should immigration agents target businesses knowingly hiring illegal immigrants? Cato scholar Jim Harper weighs in on a Fox News debate.
- Cato scholar Gene Healy warns, “Beware of the Cult of Obama,” in this week’s Washington Examiner column.
- Sign up today for Cato University 2009: Economic Crisis, War, and the Rise of the State.
Democrats Agree on Health Plan Outline: Be Afraid, Be Very Afraid
The New York Times reports that key congressional Democrats have agreed on the basic provisions for a health care reform bill. And while many details remain to be negotiated, the broad outline provides a dog’s breakfast of bad ideas that will lead to higher taxes, fewer choices, and poorer quality care.
Among the items that are expected to be included in the final bill:
- An Individual Mandate. Every American will be required to buy an insurance policy that meets certain government requirements. Even individuals who are currently insured — and happy with their insurance — will have to switch to insurance that meets the government’s definition of acceptable insurance, even if that insurance is more expensive or contains benefits that they do not want or need. Get ready for the lobbying frenzy as every special interest group in Washington, both providers and disease constituencies, demand to be included.
- An Employer Mandate. At a time of rising unemployment, the government will raise the cost of hiring workers by requiring all employers to provide health insurance to their workers or pay a fee (tax) to subsidize government coverage.
- A Government-Run Plan, competing with private insurance. Because such a plan is subsidized by taxpayers, it will have an unfair advantage, allowing it to squeeze out private insurance. In addition, because government insurance plans traditionally under-reimburse providers, such costs are shifted to private insurance plans, driving up their premiums and making them even less competitive. The actuarial firm Lewin Associates estimates that, depending on how premiums, benefits, reimbursement rates, and subsidies were structured, as many as 118.5 million would shift from private to public coverage. That would mean a nearly 60 percent reduction in the number of Americans with private insurance. It is unlikely that any significant private insurance market could continue to exist under such circumstances, putting us on the road to a single-payer system.
- Massive New Subsidies. This includes not just subsidies to help low-income people buy insurance, but expansions of government programs such as Medicaid and Medicare.
- Government Playing Doctor. Democrats agree that one goal of their reform plan is to push for “less use of aggressive treatments that raise costs but do not result in better outcomes.” While no mechanism has yet been spelled out, it seems likely that the plan will use government-sponsored comparative effectiveness research to impose cost-effectiveness guidelines on medical care, initially in government programs, but eventually extending such restrictions to private insurance.
Given the problems facing our health care system-high costs, uneven quality, millions of Americans without health insurance–it seems that things couldn’t get any worse. But a bill based on these ideas, will almost certainly make things much, much worse.
Or maybe it’s all just a massive April Fool’s joke.
New York’s ‘Not Austere’ Budget
“Not Austere” is how the New York Times is describing the state’s $131.8 billion budget for 2009-2010. As a colleague pointed out to me, “how bad does a budget have to be for the New York Times to call it ‘not austere’?” Apparently, pretty bad.
In addition to an estimated $7 billion in tax and fee increases, total state spending would increase almost 9% when federal “stimulus” money is included. Supporters dismiss the inclusion of bailout money in the totals, but for those who think the “temporary” federal bailout money won’t foster otherwise higher state spending going forward, I’ve got a lot for sale in Poughkeepsie.
The Albany Times-Union reported that Gov. Paterson cited public employee labor contracts as a reason for the budget increase. Once again, the needs of the productive class (i.e., taxpayers) take a back seat to the bureaucratic class living at their expense. Of course, New York’s policymakers were also able to find money for critical expenditures on “gun clubs, churches, a yoga foundation and the Wantagh American Legion Pipe Band, among thousands of other projects.”
The biggest tax increase is a surcharge on personal income taxes paid by “the wealthy” that is supposed to net state coffers $4 billion. (Note to New York personal income tax payers: New Hampshire doesn’t have one.) But other tax increases will hit all walks of New York life including an increased assessment on utilities, a motor vehicle registration fee increase of 25 percent, an increase in driver’s license fees of 25 percent, increased taxes on beer and wine, a tax increase on auto rentals of 1 percent, and possibly the most insulting — a new $100 fee on tax preparers (guess who’s going to ultimately pay that one?).
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