Weekend Links
- Cato v. Heritage on the Patriot Act, Round II. Today’s topic: “Where are the demonstrated examples of abuses of liberties because of the Patriot Act? Are there any provisions of the law that civil libertarians would find acceptable?”
- Comparing the Great Depression to the current recession: Did we not learn anything?
- Re-examining the U.S. alliance with Japan: “The current relationship remains trapped in a world that no longer exists.”
- The human cost of delayed economic reform in India: “With earlier reform, 14.5 million more children would have survived, 261 million more Indians would have become literate, and 109 million more people would have risen above the poverty line.”
- Podcast: What we should have learned from our experience in Somalia. Background reading: Somalia, Redux: A More Hands-Off Approach
Pakistan: More Aid, More Waste, More Fraud?
Pakistan long has tottered on the edge of being a failed state: created amidst a bloody partition from India, suffered under ineffective democratic rule and disastrous military rule, destabilized through military suppression of East Pakistan (now Bangladesh) by dominant West Pakistan, dismembered in a losing war with India, misgoverned by a corrupt and wastrel government, linked to the most extremist Afghan factions during the Soviet occupation, allied with the later Taliban regime, and now destabilized by the war in Afghanistan. Along the way the regime built nuclear weapons, turned a blind eye to A.Q. Khan’s proliferation market, suppressed democracy, tolerated religious persecution, elected Asif Ali “Mr. Ten Percent” Zardari as president, and wasted billions of dollars in foreign (and especially American) aid.
Still the aid continues to flow. But even the Obama administration has some concerns about ensuring that history does not repeat itself. Reports the New York Times:
As the United States prepares to triple its aid package to Pakistan — to a proposed $1.5 billion over the next year — Obama administration officials are debating how much of the assistance should go directly to a government that has been widely accused of corruption, American and Pakistani officials say. A procession of Obama administration economic experts have visited Islamabad, the capital, in recent weeks to try to ensure both that the money will not be wasted by the government and that it will be more effective in winning the good will of a public increasingly hostile to the United States, according to officials involved with the project.
…The overhaul of American assistance, led by the State Department, comes amid increased urgency about an economic crisis that is intensifying social unrest in Pakistan, and about the willingness of the government there to sustain its fight against a raging insurgency in the northwest. It follows an assessment within the Obama administration that the amount of nonmilitary aid to the country in the past few years was inadequate and favored American contractors rather than Pakistani recipients, according to several of the American officials involved.
Rather than pouring more good money after bad, the U.S. should lift tariff barriers on Pakistani goods. What the Pakistani people need is not more misnamed “foreign aid” funneled through corrupt and inefficient bureaucracies, but jobs. Trade, not aid, will help create real, productive work, rather than political patronage positions.
Why Chile Is More Economically Free Than the United States
In the 2009 Economic Freedom of the World Report, Chile is now #5, one place ahead of the United States.
In 1975, of 72 countries, Chile was No 71. How did this happen? The explanation lies in what I call the “Chilean Revolution,” because it was as important and transformative to my country as the celebrated American Revolution that gave birth to the United States.
The exceptional political circumstances of this period have obscured the fact that from 1975 to 1989 a true revolution took place in Chile, involving a radical, comprehensive, and sustained move toward economic and political freedom (from a starting point where there was neither one nor the other). This revolution not only doubled Chile’s historic rate of economic growth (to an average of 7% a year, 84-98), drastically reduced poverty (from 45% to 15%), and introduced several radical libertarian reforms that set the country on a path toward rapid development; but it also brought democracy, restored limited government, and established the rule of law.
In 1998, The Los Angeles Times described the importance of the Chilean Revolution to the world:
In a sense, it all began in Chile. In the early 1970s, Chile was one of the first economies in the developing world to test such concepts as deregulation of industries, privatization of state companies, freeing of prices from government control, and opening of the home market to imports. In 1981, Chile privatized its social-security system. Many of those ideas ultimately spread throughout Latin America and to the rest of the world. They are behind the reformation of Eastern Europe and the states of the former Soviet Union today… which demonstrates, once again, the awesome power of ideas.
Thursday Links
- A new T-shirt for Senator Baucus: I worked for six months with half a dozen members of the Senate Finance Committee, and all I got was this lousy 223-page summary of what I hope the new health care bill will look like.
- Why should evidence even matter in education policy? I mean, we’re doing this for the children.
- Videos reveal tax-funded organization being used to help those who want to open a brothel and illegally bring underage girls into the United States as “sex workers.” Meet the two 20-somethings who exposed it.
- It’s time to narrowly define the mission in Afghanistan. “The United States does not have the patience, cultural knowledge or legitimacy to transform what is a deeply divided, poverty stricken, tribal-based society into a self-sufficient, non-corrupt, and stable electoral democracy.”
- Podcast: The future of health insurance: You buy it, or else.
From MSNBC to Cato — America’s Top Models
Next Sunday, MSNBC will feature a sort of townhall meeting on how great schools can pull kids out of poverty. Though headlined by Bill Cosby, perhaps the most electrifying panelist will be charter school principal Ben Chavis. On October 2nd at noon, you can come to Cato to see Ben live, and ask him how we can replicate his stunning success. Also joining us will be Washington Post columnist Jay Mathews, who’ll talk about the growing KIPP network of (now 82!) charter schools. Other than perhaps KIPP’s founders, nobody knows more about them than Jay. I’ll be simultaneously acting as cheerleader (I love these schools) and devil’s advocate (I’m skeptical that they can be brought to the masses within the charter sector).
To register, just visit the event page here: “America’s Top Models: Can the Nation’s Best Charter Schools Be Brought to Scale?”
Incidentally, Ben has been called the most politically incorrect man in America, so Cato disavows all responsibility for any heads that explode during the course of his presentation.
Borlaug the Great
Norman Borlaug, the father of the Green Revolution, has died at 95. Ron Bailey calls him “the man who saved more human lives than anyone else in history.” In an as-yet-unpublished letter to the New York Times, Don Boudreaux reflects:
By saving millions of people from starvation, green-revolution father Norman Borlaug arguably has done more for humanity than has any other human being of the past century (”Norman Borlaug, 95, Dies; Led Green Revolution,” Sept. 13). Yet unlike Sen. Kennedy’s, his death will go relatively unnoticed. He’ll certainly not be canonized in the popular mind.
Alas, in our world, melodramatic loud-mouths thunder to and fro in the foreground, doing little of any value while stealing most of the credit for civilization. Meanwhile, in the background, millions upon millions of decent, creative people work diligently at their specialties – welding, waiting tables, performing orthopedic surgery, designing shopping malls, researching plant genetics – each contributing to the prosperity of the rest. Some contributions are larger than others (as Dr. Borlaug’s certainly was), but even a contribution as colossal as his is quickly taken for granted, any notice of it submerged beneath the self-congratulation, swagger, and bellicosity of the politicians who pretend to be prosperity’s source. How wrong.
In 1992 the late Senator Kennedy said, “The ballot box is the place where all change begins in America.” I wrote a few years later that he was “conveniently forgetting the market process that has brought us such changes as the train, the skyscraper, the automobile, the personal computer, and charitable or self-help endeavors from settlement houses to Alcoholics Anonymous to Comic Relief.”
Some day a history book will describe Bill Clinton as “a scandal-ridden president in the age of Bill Gates.” Or maybe “in the age of the Green Revolution.” Either way, the biggest changes in our lives — certainly the biggest improvements — will have come from scientists, inventors, and businesses, not from politicians.
But that’s not the way journalists and historians see it. Just think of the people who have gone down in history as “the Great“: Alexander the Great, Catherine the Great, Charles the Great (Charlemagne), Frederick the Great, Peter the Great — despots and warmongers. Just once it would be nice to see the actual benefactors of humanity designated as “the Great”: Galileo the Great, Gutenberg the Great, Samuel Morse the Great, Alan Turing the Great.
So just for tonight, drink a toast to one of the great benefactors of the poorest people in the world, Borlaug the Great.
Filed under: Energy and Environment; Government and Politics; Political Philosophy
Monday Links
- Seven ideas for dealing with North Korea.
- Paging the Fifth Amendment: Florida high court rules that the state can seize your private property without giving you a dime.
- How to cut the deficit by spending less. It sounds crazy, but it just might work.
- Why stop at “Cash for Clunkers”? Why not have a “Cash for Everything” program? Because it was a dumb idea to begin with, that’s why.
- Podcast: When Germany enacted their own “Cash for Clunkers” scheme, some of the old vehicles were illegally exported and sold out of the country before being destroyed. Could it happen here? Would that be so bad?
Filed under: Government and Politics; Tax and Budget Policy
Tell Me How This Ends
Yesterday, President Obama defended his new approach to the war in Afghanistan. According to the president, our strategy is to disrupt, dismantle, and defeat al Qaeda and its extremist allies. In order to accomplish this goal, Obama’s strategy indicates we must create a functioning national state there.
Why?
Beltway orthodoxy tells us it’s because extremists will emerge in ungoverned parts of the world and attack the United States. As my colleagues Justin Logan and Chris Preble point out here, there’s reason to doubt whether state failure or poor governance in itself poses a threat.
But responsible leaders would be upfront about the expected costs of our policy: to transform what is a deeply divided, poverty stricken, tribal-based society into a self-sufficient, non-corrupt, stable democracy would require a multi-decade commitment—and even then there’d be no assurance of success.
Why Afghanistan’s form of governance directly implicates America’s security, or why it demands the deployment of tens of thousands of U.S. troops to police it are questions rarely asked let alone addressed.
Kennedy’s Health Bill: A First Look
A draft of Sen. Ted Kennedy’s health care reform bill is finally available, and it is difficult to overstate how far he would move us to a government-run health care system. An initial read-through reveals among the key provisions:
- An individual mandate, requiring that every American purchase a “qualified” insurance plan. (Sec. 161(a)) The mandate will be enforced through the tax code with Americans required to pay a penalty if they fail to comply. In an extraordinary delegation of congressional authority, the Kennedy bill would give the Secretaries of Treasury and Health and Human Services the power to determine what this penalty should be. Individuals would be required to submit information on their insurance status over the previous year to the Secretary of HHS, along with “any such other information as the Secretary may require.” (Sec. 6055(b)(2) and (3)). Individuals who already have insurance could keep it. However, if they changed plans (or presumably changed jobs), their new insurance would have to meet the definition of “qualified.”
- A “pay or play” employer mandate requiring employers to provide all workers with health insurance and pay a minimum amount of the premium, or pay a tax (Sec 162). Again, the amount of the new tax is left to the discretion of the Secretaries of HHS and Treasury. Some small employers would be exempt from the mandate, but the size of those firms remains TBA. (Sec. 3113(g)) Companies with fewer than 250 workers would be forbidden to self-ensure. (Sec. 2720)
- A new federal bureaucracy, the Medical Advisory Council, which would determine what benefits will be required to be part of your “qualified” insurance plan. (Sec. 3103(h) and (i)). Lest anyone think Congress won’t get involved. The Council’s decisions can be disapproved by Congress if, say, they don’t mandate inclusion by a favored provider group or disease constituency. (Sec 3103(g)).
- Massive new federal subsidies. Medicaid would be expanded to individuals earning 150 percent of the poverty level, and the federal government would pay all incremental costs of the increased enrollment. (Sec 152.) Single, childless adults would become eligible for Medicaid. Even more egregious, individuals and families with incomes between 150-500 percent of the poverty level ($110,250 for a family of four) would be eligible for subsidies on a sliding scale-basis.(Sec. 3111(b)(1)(A-G)).
- Insurers would be required to accept all applicants regardless of their health (guaranteed issue) and forbid insurers from basing insurance premiums on risk factors (Community rating). There does not appear to be any exception for lifestyle factors, such as smoking, alcohol or drug use, diet, exercise, etc. Thus, not only will the young and healthy be forced to pay higher premiums to subsidize the old and unhealthy, but the responsible will be forced to pay more to subsidize the irresponsible.
- A “public option” operating in competition with private insurance (Section 31__). How this plan would be funded, the level of premiums, etc. is left mostly TBA. In response to criticism, the Kennedy bill does require that the public plan pay providers 10 percent above Medicare reimbursement rates. (Sec 31__(B)). That would still allow for a considerable degree of cost-shifting to private insurance. And, we should recall that such promises are ephemeral. When Medicare began, proponents promised it would reimburse at the same rate as insurance. That promise didn’t last long.
- States would be prodded to set up “gateways,” similar to Massachusetts’ “connector.” (Sec 3104(a)) If a state fails to do so, the federal government will set one up for them. (Sec. 3104(d)) The federal government would provide grants to states to help them set up these gateways. The amount of the grants is, you guessed it, left to the discretion of the Secretary of HHS. Gateways may also fund their operations by assessing a surcharge on insurers. Sec. 3101(b)(5)(A)/
- A new federal long-term care program (Sec 171).
Kennedy does not include any estimate of how much his plan would cost, nor any proposal for how to pay for it.
More details will undoubtedly emerge, but it is very clear that the Kennedy plan would put one-sixth of the US economy and some of our most important, personal, and private decisions firmly under the thumb of the federal government.
Cry Poverty…
…and let slip the dollars of stimulus!
As has been the case from almost the first day of major federal involvement in education, public schools have gamed the system to get as much money — and as little accountability — as possible. As this article from Florida makes clear, that tradition is still going strong!
Week in Review: Tax Day, Pirates and Cuba
Tax Day: The Nightmare from Which There’s No Waking Up
Cato scholars were busy exposing the burden of the American tax system on Wednesday, the deadline to file 2008 tax returns.
At CNSNews.com, tax analyst Chris Edwards argued that policymakers should give Americans the simple and low-rate tax code they deserve:
The outlook for American taxpayers is pretty grim. The federal tax code is getting more complex, the president is proposing tax hikes on high-earners, businesses, and energy consumers; and huge deficits may create pressure for further increases down the road…
The solution to all these problems is to rip out the income tax and replace it with a low-rate flat tax, as two dozen other nations have done.
At Townhall, Dan Mitchell excoriated the complexity of the current tax code:
Beginning as a simple two-page form in 1913, the Internal Revenue Code has morphed into a complex nightmare that simultaneously hinders compliance by honest people and rewards cheating by Washington insiders and other dishonest people.
But that is just the tip of the iceberg. The tax code also penalizes economic growth, distorts taxpayer behavior, undermines American competitiveness, invites corruption and promotes inefficiency.
Mitchell appeared on MSNBC, arguing that every American will soon see massive tax hikes, despite Washington rhetoric.
Don’t miss the new Cato video that highlights just how troubling the American tax code really is.
U.S. Navy Rescues Captain Held Hostage by Somali Pirates
USA Today reports that the captain of a merchant vessel that was attacked by Somali pirates was freed Monday when Navy SEAL sharpshooters killed the pirates. The episode raises a larger question: How should the United States respond to the growing threat of piracy in the region?
Writing shortly after Capt. Richard Phillips was freed, foreign policy expert Benjamin Friedman explained the reasons behind the increase in piracy:
It’s worth noting the current level of American concern about piracy is overblown. As Peter Van Doren pointed out to me the other day, the right way to think about this problem is that pirates are imposing a tax on shipping in their area. They are a bit like a pseudo-government, as Alexander the Great apparently learned. The tax amounts to $20-40 million a year, which is, as Ken Menkhaus put it in this Washington Post online forum, a “nuisance tax for global shipping.”
The reason ships are being hijacked along the Somali coast is because there are still ships sailing down the Somali coast. Piracy is evidently not a big enough problem to encourage many shippers to use alternative shipping routes. In addition, shippers apparently find it cheaper to pay ransom than to pay insurance for armed guards and deal with the added legal hassle in port. The provision of naval vessels to the region is an attempted subsidy to the shippers, and ultimately consumers of their goods, albeit one governments have traditionally paid. Whether or not that subsidy is cheaper than letting the market actors sort it out remains unclear to me.
Appearing on Russia Today, Friedman discussed the implications of the increased threat and what ships can do to avoid future incidents with Somali pirates.
Since the problems at sea are related to problems on Somali land, what can Western nations do to decrease poverty and lawlessness on the African continent? Dambisa Moyo, author of Dead Aid, argued at a Cato Policy Forum last week that the best way to combat these issues is to halt government-to-government aid, and proposed an “aid-free solution” to development based on the experience of successful African countries.
Obama Lifts Some Travel Bans on Cuba
The Washington Post reports:
President Obama is lifting some restrictions on Cuban Americans’ contact with Cuba and allowing U.S. telecom companies to operate there, opening up the communist island nation to more cellular and satellite service… The decision does not lift the trade embargo on Cuba but eases the prohibitions that have restricted Cuban Americans from visiting their relatives and has limited what they can send back home.
In the new Cato Handbook for Policymakers, Juan Carlos Hidalgo and Ian Vasquez recommend a number of policy initiatives for future relations with Cuba, including ending all trade sanctions on Cuba and allowing U.S. citizens and companies to visit and establish businesses as they see fit; and moving toward the normalization of diplomatic relations with the island nation.
While Obama’s plan is a small step in the right direction, Hidalgo argues in a Cato Daily Podcast that Obama should take further steps to lift the travel ban and open Cuba to all Americans.
Poor Choices Lead to Better Education
What would you do if you earned about a dollar a day and wanted a better life for your kids?
And what if your local public schools just weren’t working — with teachers often cutting classes or showing up only to sip tea and read the paper, ignoring their students. If you’re like the majority of poor Ghanians, Kenyans, Nigerians, Indians, and Chinese that professor James Tooley has studied over the past decade, you’d pay for private schooling at tuition around $2/month.
From impoverished fishing villages to blighted ghettos like those featured in Slumdog Millionaire, from the largest shanty-town in Africa to the remote farming communities of inland China, the poorest people on Earth are not waiting for educational handouts. They are taking matters into their own hands and sending their children to private schools in their own neighborhoods and villages.
Next Wednesday at noon, James Tooley will be at Cato’s DC headquarters to launch his book The Beautiful Tree: A Personal Journey into how the World’s Poorest People Are Educating Themselves.
His stories are compelling — his discovery of private schools serving slum children in Hyderabad, his thoughts while being interrogated by one of Mugabe’s goons in a basement cell in Zimbabwe, his reaction to the party functionary in Gansu, China who told him that the private schools he had just visited did not exist. In addition to James’ stories, you’ll also hear those of Reshma Lohia, who runs Lohia’s Little Angels — a school serving 500 poor children in Hyderabad, India.
When I report my findings that parent-driven education markets outperform state-run school monopolies, one of the most common objections I hear is that many parents — especially poor, marginally-educated ones — couldn’t make wise choices for their kids. If you’ve ever pondered that concern, you owe it to yourself to stop by the Cato Institute next Wednesday at noon. Because James has not only chronicled the existence of private schools serving vast numbers of the poor, he has documented in peer-reviewed studies how their performance compares to that of nearby public schools spending many times as much per pupil.
You can register for the event here and help spread the word on Facebook. We look forward to seeing you.
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