Policy Institutes

There are many good reasons to oppose a federal school voucher program, but a supposed lack of evidence that school choice improves student outcomes isn’t one of them. Sadly, Sen. Patty Murray (D-WA), the ranking minority member of the U.S. Senate’s education committee, repeated this canard during the debates over a proposed amendment that would have added a federal school voucher program to the No Child Left Behind replacement bill:

What’s more, studies of voucher programs in Milwaukee and the District of Columbia have shown that they do not improve students’ academic achievements, she said. “Study after study has shown that vouchers do not pay off for students or taxpayers,” Murray said. 

That’s simply not true. According to Dr. Patrick Wolf, coauthor of the only longitudinal study of the effect of Milwaukee’s voucher program, “school choice in Milwaukee has had a modest but clearly positive effect on student outcomes.”

First, students participating in the Milwaukee Parental Choice (“voucher”) Program graduated from high school and both enrolled and persisted in four-year colleges at rates that were four to seven percentage points higher than a carefully matched set of students in Milwaukee Public Schools. Using the most conservative 4% voucher advantage from our study, that means that the 801 students in ninth grade in the voucher program in 2006 included 32 extra graduates who wouldn’t have completed high school and gone to college if they had instead been required to attend MPS.

Second, the addition of a high-stakes accountability testing requirement to the voucher program in 2010 resulted in a solid increase in voucher student test scores, leaving the voucher students with significantly higher achievement gains in reading than their matched MPS peers.

In the final year of the study, Milwaukee voucher students in grades 3-9 performed about 15 percent of a standard deviation higher on standardized reading tests, “a modest but meaningful educational difference.” Moreover, the study concluded that Milwaukee district-school students were “performing at somewhat higher levels as a result of competitive pressure from the school voucher program.” And contrary to Sen. Murray’s assertion that “vouchers do not pay off for taxpayers,” the study found that the voucher program saved the state nearly $52 million in fiscal year 2011 because the vouchers were worth about half of the cost per-pupil at the district schools.

Wolf also studied the effects of Washington, D.C.’s voucher program under the auspices of the U.S. Department of Education. The study found that students offered vouchers graduated high school at a rate 12 percentage points higher than the control group, 82 percent to 70 percent respectively. In a follow-up study, Wolf and his team determined that the voucher program was a boon to taxpayers as well:

The District of Columbia Opportunity Scholarship Program (OSP) produced $2.62 in benefits for every dollar spent on it. In other words, the return on public investment for the private-school voucher program during its early years was 162 percent. 

In total, there have been a dozen random-assignment studies–the gold standard of social science research–by researchers at Harvard, Princeton, the University of Chicago, the Brookings Institution, and elsewhere examining the impact of private school choice programs. Of those, 11 found modest but statistically significant positive impacts on student performance, including improved test scores and higher rates of high school graduation and college enrollment. One found no statistically discernable difference and none found any harm. For Sen. Murray’s benefit, here is a sampling:

• Joshua M. Cowen, “School Choice as a Latent Variable: Estimating ‘Complier Average Causal Effect’ of Vouchers in Charlotte,” Policy Studies Journal, May 2008. – After one year, voucher students had reading scores 8 percentile points higher than the control group and math scores 7 points higher.

• William G. Howell and Paul E. Peterson, The Education Gap: Vouchers and Urban Schools, Brookings Institution, 2002, revised 2006. – After two years, African-American voucher students had combined reading and math scores 6.5 percentile points higher than the control group.

• Jay P. Greene, “Vouchers in Charlotte,” Education Next, Summer 2001. – After one year, voucher students had combined reading and math scores 6 percentile points higher than the control group.

• Cecilia E. Rouse, “Private School Vouchers and Student Achievement: An Evaluation of the Milwaukee Parental Choice Program,” Quarterly Journal of Economics, May 1998. – After four years, voucher students had math scores 8 NCE points higher than the control group. NCE points are similar to percentile points.

In recent years, left-wing politicians and organizations have repeatedly closed their eyes and plugged their ears with regard to the copious evidence that school choice works. But ignoring the evidence doesn’t make it go away.

Yesterday, the Department of Housing and Urban Development (HUD) approved a new fair housing rule called Affirmatively Furthering Fair Housing. This follows the Supreme Court’s recent ruling allowing HUD to use disparate impact as a criterion for determining whether a community is guilty of unfair housing practices.

 Wikimedia photo by Bernard Gagnon.

In one form of disparate impact analyses, HUD compares the racial makeup of a city or suburb with the makeup of the urban area as a whole. If the city doesn’t have enough minorities, it is presumed guilty and must take steps to attract more. Under the Affirmatively Furthering Fair Housing rule, that could mean subsidizing low-income housing or rezoning land for high-density housing.

While I have no doubt that prejudice is still a factor in housing in America, there are many other factors that influence the distribution of people across an urban area. These include religion, education, and personal tastes in food, recreation, and other activities. For example, low-income families with children will be more likely to live near a Walmart Supercenter while high-income families with no children will be more likely to live near a Whole Foods. To expect every suburb, most of whose borders are based on little more than historical accidents, to have a perfect mix of races is absurd.

For this and other reasons, looking at individual cities and suburbs is the wrong level of analysis. What’s more, HUD’s high-density housing remedy is completely wrong.

This remedy is based on two fallacies. First, it assumes that high-density housing is more affordable than single-family housing, when in fact it costs more per square foot and only saves money if people are willing to sacrifice space and privacy. Second, the rule assumes that it is somehow “fair” to pack low-income minorities in apartments while higher-income whites get to live in single-family homes so long as the apartments and single-family homes are in the same municipalities. This is far more racist than the current situation.

The real problem with housing affordability is not at the community level but at the regional level. In a region that has few land-use restrictions, a community that has attracted wealthy people is not going to have much of an effect on the affordability of the region as a whole because builders can always construct more affordable housing elsewhere. The problem is in regions with urban-growth boundaries and other restrictions that limit the construction of affordable housing over the entire region.

If HUD were to apply disparate-impact criteria to regions, it might look at the change in African-American populations between 2000 and 2010. Nationwide, the black population grew by 11 percent in that time period, which was about 1.3 percent faster than the population as a whole. Regions whose black populations grew less than 1.3 percent faster than their whole populations could be considered guilty of housing discrimination.

Based on this, the most racist major (more than a million people) urban area in America is San Francisco-Oakland. Though that region’s population grew by 285,000 people between 2000 and 2010, or 9.5 percent, the region’s black population actually shrank by nearly 49,000, or 14.2 percent, for a difference in growth rates of minus 23.7 percent. 

That decline was entirely due to strict land-use policies that prevent development outside of the 17 percent of the region that has already been urbanized, making the Bay Area one of the least affordable housing markets in the nation. Moreover, a recent plan to improve affordability by following HUD’s prescription of building more high-density housing was found to actually reduce affordability.

Other major urban areas that would be found racist include Austin (-21.5% difference between black and overall population growth), Riverside-San Bernardino (-17.5%), Honolulu (-15.4%), San Diego (-14.6%), Los Angeles (-14.5%), Bakersfield (-13.6%), and San Jose (-11.1%). All of these regions except Austin have some form of growth-management policy, while Austin has become the least affordable housing market in Texas due to local housing policies.

By comparison, the least racist major urban area is Salt Lake City, whose black population grew 57 percent faster than its total population. Other non-racist areas include Minneapolis-St. Paul (42%), Phoenix (34%), Providence (25%), Boston (19%), Las Vegas (17%), Columbus (14%), Orlando (14%), Atlanta (13%), Tampa (13%), and Miami (10%). Of these, only Providence and Boston are surprises since both have serious housing affordability problems.

If HUD is serious about fair housing, and not just jumping on the density bandwagon to please special interest groups, it should consider ordering urban areas in California, Hawai’i, and other states to relax their land-use laws and allow more home construction on the urban fringe. This will have the effect of restoring property rights to landowners whose uses have been restricted by land-use regulations. Otherwise, the Supreme Court’s ruling will only result in making housing even more unfair than it was before.

Readers who follow the battles over forfeiture law may recall the recent case in which a North Carolina convenience store owner from whom the government had seized $107,000 without any showing of wrongdoing decided to fight the case in the press as well as in court, backed by the Institute for Justice. Lyndon McLellan’s decision to go public with the dispute drew a menacing letter from a federal prosecutor about the publicity the case had been getting:

“Your client needs to resolve this or litigate it,” Mr. West wrote. “But publicity about it doesn’t help. It just ratchets up feelings in the agency.” He concluded with a settlement offer in which the government would keep half the money.

That case ended happily, but the problem is much broader: many individuals and businesses fear that if they seek out favorable media coverage about their battle with the government, the government will find a way to retaliate, either informally in settlement negotiations or by finding new charges to throw against them.

That such fears might not be without foundation is illustrated by last week’s widely publicized Oregon cake ruling, in which a Gresham, Oregon couple was ordered to pay $135,000 in emotional-distress damages for having refused to bake a cake for a lesbian couple’s commitment ceremony. Aside from the ruling’s other objectionable elements, the state labor commissioner ruled it “unlawful” for the couple to have given national media interviews in which they expressed sentiments like “we can see this becoming an issue and we have to stand firm.” Taking advantage of an exception in free speech law in which courts have found that the First Amendment does not protect declarations of future intent to engage in unlawful discrimination, the state argued – and its commissioner agreed – that the “stand firm” remark along with several similarly general comments rallying supporters were together “unlawful.”

That ought to bother anyone who cares about free speech. I’ve got a piece up at Ricochet.com, my first there, exploring the question in more detail. Check it out.  

 

For a few years, I have been posting an evolving list of empirical studies that have found that federal student aid programs help fuel rampant college price inflation. Why? Because I continually encounter people, often who work for or in higher education, who insist that there is no meaningful empirical evidence of big subsidies enabling big price increases, even if the possibility makes mammoth intuitive and theoretical sense.

A few days ago a new entry arrived for the list, a paper from the Federal Reserve Bank of New York. It finds that student loans have big inflationary effects, especially at four-year private schools not focused on top academic performers, and that Pell Grants have smaller direct effects, but also likely lead to reductions in aid funded by institutions. It is yet one more study that shows that, contrary to the hopes of the American Council on Education–the premiere higher ed advocacy group–the inflationary effect of student aid is absolutely a subject that should “play a major role” in discussions about college affordability.

And now, the updated list:

David O. Lucca, Taylor Nadauld, and Karne Shen, “Credit Supply and the Rise in College Tuition: Evidence from the Expansion in Federal Student Aid Programs,” Staff Report No. 733, July 2015.

Dennis Epple, Richard Romano, Sinan Sarpça, and Holger Stieg, “The U.S. Market for Higher Education: A General Equilibrium Analysis of State and Private Colleges and Public Funding Policies,” NBER Working Paper No. 19298, August 2013.

Lesley J. Turner, “The Incidence of Student Financial Aid: Evidence from the Pell Grant Program,” Columbia University, April 2012.

Stephanie Riegg Cellini and Claudia Goldin, “Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges,” NBER Working Paper No. 17827, February 2012.

Nicholas Turner, “Who Benefits from Student Aid? The Economic Incidence of Tax-Based Federal Student Aid,Economics of Education Review 31, no. 4 (2012): 463-81.

Bradley A. Curs and Luciana Dar, “Do Institutions Respond Asymmetrically to Changes in State Need- and Merit-Based Aid? ” Working Paper, November 1, 2010.

John D. Singell, Jr., and Joe A. Stone, “For Whom the Pell Tolls: The Response of University Tuition to Federal Grants-in-Aid,” Economics of Education Review 26, no. 3 (2006): 285-95.

Michael Rizzo and Ronald G. Ehrenberg, “Resident and Nonresident Tuition and Enrollment at Flagship State Universities,” in College Choices: The Economics of Where to Go, When to Go, and How to Pay for It, edited by Caroline M. Hoxby, (Chicago, IL: University of Chicago Press, 2004).

Bridget Terry Long, “How Do Financial Aid Policies Affect Colleges? The Institutional Impact of Georgia Hope Scholarships,” Journal of Human Resources 30, no. 4 (2004): 1045-66.

Rebecca J. Acosta, “How Do Colleges Respond to Changes in Federal Student Aid,” Working Paper, October 2001.

The U.S. Women’s World Cup team is back from Canada with victory in its players’ pockets, but not much else, to judge from media reports now unfolding. The question just above led a CBS Evening News story tonight about the gross income inequality between male and female professional soccer players—and in today’s battle between the sexes, few issues are more demagogued or more inflame the adversarial passions than inequality between the sexes. Indeed, we’re told that star goalie Hope Solo took a picture of one fan’s sign calling for equal pay for women athletes. Say no more.

But more was said, and the facts speak volumes. It seems that the women’s team will split $2 million for their victory whereas the winner of last year’s Men’s World Cup team, Germany, was awarded $35 million. The prizes, however, are based on revenue, says FIFA, which runs the World Cups, and the facts here are stark:

This year’s figures have not been released, but four years ago the Women’s World Cup brought in almost $73 million. The 2010 Men’s World Cup in South Africa made almost $4 billion. Those players got $348 million, or 9 percent of the total revenue. The women’s team got a higher percentage with 13 percent, but the bottom line was still much less, $10 million.

But don’t let those facts get in the way of sound egalitarian reasoning. We get that from Deborah Slaner Larkin with the National Women’s Sports Foundation:

We shouldn’t keep deciding who’s more important, our sons or our daughters, our husbands or our wives. People should be treated equally. We need to have some more male allies who will say this is not acceptable.

Not acceptable? If so, then what’s to be done? It’s unclear since we learn here that two women’s soccer leagues have already failed in the U.S. and the current one, the National Women’s Soccer League, averages only about 4,400 spectators a game. If you think this a tempest in a teapot, think again. It’s a microcosm, with a thousand and one more complex variations, of the debate that lies ahead in the political season that’s already under way.

Nearly twenty years ago, John J. Miller of the Center for Equal Opportunity and Stephen Moore, then the director of fiscal policy studies at the Cato Institute, published a study responding to the rising demand for immigration law enforcement.

A National ID System: Big Brother’s Solution to Illegal Immigration” was the name of their Cato Institute policy analysis. They highlighted costs to the liberty of native-born Americans from systems that seek to root out illegal immigrants with identity cards and tracking. I reprised their study in a way and expanded on it seven years ago in “Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration.”

When I saw Alex Nowrasteh’s research into the results of mandates to use the Department of Homeland Security’s E-Verify program, I was delighted to see what experience makes available to backers of “internal enforcement” who don’t have our nation’s freedoms in mind. E-Verify simply does not work. That’s the upshot of our new study, “Checking E-Verify: The Costs and Consequences of a National Worker Screening Mandate.”

The theory behind checking workers’ data against federal databases when they are hired is that this would exclude illegal immigrants from employment. Doing so would turn off the “jobs magnet” that brings illegal immigrants into the country, and illegal immigration would fall.

But the results from states where E-Verify has been mandated show a remarkable failure to change the incentives of migrants, as E-Verify is supposed to do. The wage gains that a Mexican laborer experiences by coming to the United States in the absence of E-Verify is 253 percent. In Arizona, E-Verify lowered that wage gain to 240 percent.

The migrant’s calculation is unchanged by E-Verify: Continue to seek the benefits of working in the United States.

The reasons for E-Verify’s failure are several. Implementation, for example, has been weak. As noted in a Washington Examiner article on our study, in Mississippi, only 49 percent of new hires were run past E-Verify despite a universal mandate in that state. Arizona saw 59 percent of new hires put through the system, the highest compliance rate of any state.

Where employers are using E-Verify, workers can avoid it by using names and Social Security numbers that match up, easily defeating the system so as to get the benefits of working.

For all its wonders, technology is not something policymakers can sprinkle on deep-seated economic and social problems to make them go away. E-Verify illustrates this. The promise of technology-charged identity and background checks at state or national scale does not survive contact with the real world.

Given its meager immigration-control benefits, the costs of E-Verify—in dollars and in freedom for employers, workers, and Americans generally—are too high. Here’s hoping that the advocates of “internal enforcement” of immigration law are willing to reap the benefits of experience.

The path forward for immigration law reform is not heavier, more intrusive, and more costly “internal enforcement.” It is creating broader avenues for workers to enter the country and contribute their labor to the American experiment.

A number of Republican Senators have written a letter to President Obama raising the issue of human rights abuses in Vietnam.  They have a laundry list of good reforms they want to see in Vietnam before that country is included in the Trans-Pacific Partnership trade agreement currently under negotiation.

The letter includes this broad claim about the purpose of the TPP:

The Trans-Pacific Partnership should not serve as simply another trade agreement. As the collective name suggests, TPP should send a message to the international community that its member nations consider one another as trusted partners. As such, all nations in the TPP agreement should have a common commitment to religious freedoms and human values.

The Republican senators’ concerns match up well with those expressed by John Sifton of Human Rights Watch, who worries that the TPP will not do enough to improve human rights in Vietnam or other TPP countries.

The Obama administration needs to be more realistic in describing what can be accomplished by the TPP. It’s already bad enough to forego human rights protections for the sake of free trade. It’s even worse to attempt to sell the agreement by invoking supposed rights protections when they don’t exist.

The Obama administration needs to press harder on TPP members to improve their rights records—for real. The United States shouldn’t move ahead with the TPP until it can demonstrate more serious commitments to creating truly enforceable provisions on labor rights protections and better addressing human rights concerns generally.

If the purpose of the TPP were indeed to send a message about the members’ human rights records, then the senators would have a point.  If the purpose of the TPP were to impose new human rights obligations on TPP members, then Human Rights Watch would have a point.  But the purpose of the TPP is to reduce tariffs and other barriers that restrict trade.  At least, it should be, because that’s what it will actually do.

In a way, the Obama administration has invited the criticism it’s getting over human rights in the TPP.  The President has sold the TPP to Congress and the public as a way to spread “American values.”  It’s only natural then that people would debate what those values are and whether the TPP is spreading them effectively. 

And the critics are right.  Trade agreements are not a very direct way to reform oppressive regimes or enforce human rights norms.  They are, however, the most politically viable mechanism for reducing protectionism. 

Protectionism makes people’s lives worse by diverting economic gains toward politically favored interests at the expense of growth and quality of life, especially for the poor who are stuck paying higher prices for basic necessities like food and clothing.

So rather than linking the TPP with human rights, let’s ask about the impact of tariffs on human rights.  Does it help people in Vietnam that their own government imposes trade barriers to keep prices high and insulate state-owned businesses from competitive markets?  Does it help them when the United States imposes tariffs on the products they make? 

I challenge anyone who opposes the TPP due to Vietnam’s human rights record to explain the value of tariffs in fighting human rights abuses.

Take a typical 30-year-old and 64-year-old, earning identical amounts of money, living in the same place, and choosing the same health plan. Who will pay more for that health care plan under Obamacare?

No one would dispute that 30-year-olds have much lower health care costs than 64-year-olds, on average. A compelling illustration comes from a highly cited article using the National Medical Expenditure Survey; the authors show that health care costs for 64-year-old women and men are approximately 2 to 4 times that their 30-year-old counterparts (Cutler and Gruber, 1996, p. 429). A natural implication is that groups with higher expected medical costs (such as older individuals), will tend to face higher health care premiums than those with lower expected medical costs (such as younger individuals).

A quick quiz:

  • First, take a 30-year-old and 64-year-old living in Florence, Wisconsin, each of whom is purchasing health insurance on the federal exchange. If they have the same income of $41,000, are non-smokers, and choose the exact same plan, which one faces higher premiums ignoring subsidies?
  • Second, who pays more out of their own pocket, once Obamacare subsidies are included?

The answer to the first question is easy. The 64-year-old faces higher premiums. For example, if the 64-year-old purchased the Molina Marketplace Bronze Plan, he or she would face nearly $7,400 in premiums without subsidies. A 30-year-old would pay around $2,800 for the same plan.

The second question’s answer may surprise you. Obamacare gives large subsidies for people with incomes between 100% and 400% of the federal poverty line. The more you make, the more you pay for a given plan. But Obamacare gives subsidies that are pegged to a generous benchmark plan (the second lowest cost silver plan). Costs, premiums and subsidies will all be higher for the generous benchmark plan for an older individual than a younger one. However, the subsidy amount can be applied to less generous plans, and this can lead to the surprising result that an older person actually pays less out of their own pocket.

Let’s see this in action. If the 64-year-old, non-smoker, making $41,000, purchases a bronze health care plan, he or she pays zero premiums out-of-pocket, after subsidies:

Single Individual, Age 64, Earning $41,000, Florence, WI Pays $0 per year for premiums for health plan

The subsidies – as noted here– are very generous; this individual, who makes $41,000, pays nothing for premiums. Obamacare pays 100% of the premium cost. Now let’s examine a 30-year-old in an identical situation:

Single Individual, Age 30, Earning $41,000, Florence, WI Pays $2,424 per year for premiums for health plan

To repeat, everything is identical. Yet, because of the way in which the Obamacare subsidy is pegged to the benchmark plan, the 30-year-old pays thousands of dollars more for the same bronze health plan. Obamacare pays 15% of the premium cost.

This surprising finding won’t be true for all examples, but does illustrate something perverse. In some instances, the subsidies not only lower out of pocket costs for premiums, but completely reverse the logical ordering of who pays higher amounts for a given plan. However, there’s a straightforward fix, one that many private companies and even public institutions practice for their workers: they peg the premium voucher to the most efficient/lowest-cost plan with respect to premiums, and allow workers to apply that voucher to more generous plans.

Alex Kozinski, a federal appellate judge on the Ninth Circuit, has just published a powerful critique of the American criminal justice system in the Georgetown Law Journal (titled “Criminal Law 2.0”).  He begins, “much of the so-called wisdom that has been handed down to us about the workings of the legal system, and the criminal process in particular, has been undermined by experience, legal scholarship, and common sense.” 

Here are the common myths that he goes on to persuasively debunk:

1. Eyewitnesses are highly reliable

2. Fingerprint evidence is foolproof

3. Other types of forensic evidence are scientifically proven and therefore infallible

4. DNA evidence is infallible

5. Human memories are reliable

6. Confessions are infallible because innocent people never confess

7. Juries follow instructions

8. Prosecutors play fair

9. The prosecution is at a substantial disadvantage because it must prove its case beyond a reasonable doubt

10. Police are objective in their investigations

11. Guilty pleas are conclusive proof of guilt

12. Long sentences deter crime

Judge Kozinski continues: Because the items listed above are untrue, there are “reasons to doubt that our criminal justice system is fundamentally just….I think it’s fair to assume–though there is no way of knowing–that the number of exculpations in recent years understates the actual number of innocent prisoners by an order, and probably two orders, of magnitude.”

He skillfully pulls back the curtain on our criminal system and spares no one – the police, the prosecutors, and the judges (when wrongful convictions are exposed, “the trial judge is usually given a pass, as if he were merely a bystander who watched helplessly while an innocent man had his life ripped away from him.  I don’t buy it.”)  

The article is not just a recitation of problems.  He offers many excellent suggestions for improving our legal system.  Read the whole thing

Check out Judge Kozinski’s remarks here last summer at a book forum on prosecutorial abuse.  And if you want still more, check out the article he co-authored for my book In the Name of Justice, titled “You’re (Probably) a Federal Criminal.”

This weekend’s news was dominated by the sorry tale of Greece, where a referendum on whether to accept the terms of a new European Union bailout failed by a landslide. Now Greece’s Eurozone creditors face the uneasy choice between offering a more generous bailout plan, or accepting a Greek departure from the Euro.

Sunday’s referendum was just the latest debacle in the five-year tug-of-war between Greece and other Eurozone members. The ruling Syriza party has been openly hostile to the austerity-focused conditions of EU bailout loans – which run counter to their left-leaning economic agenda – as well as to the EU negotiation process itself. The spur-of-the-moment referendum was itself largely a surreal PR stunt: the deal voters were evaluating had in fact been withdrawn by the EU prior to Sunday’s vote.

Unfortunately, the situation in Greece is untenable. Banks remain shut, and ATM users can withdraw only 60 euros a day. The country defaulted on its IMF loans last week, the first advanced industrialized economy to ever do so. An emergency summit of Eurozone leaders is convening on Tuesday to hear new Greek proposals, but it is unclear whether German leaders in particular can be convinced to accept a more generous bailout deal. Failing that, Greece will begin its Eurozone exit, creating turmoil in international markets.

But as I wrote over at CNN.com, “Grexit” would result in more than just financial problems. Greece’s exit from the Eurozone is likely to draw it closer to Russia, with security implications for other EU and NATO member states.

Ties have been growing between Athens and Moscow in recent months:

“During his visit last month at the St. Petersburg International Economic Forum, for example, Greek Prime Minister Alexis Tsipras spoke of the Greek and Russian relationship, hinting that Greece was “ready to go to new seas to reach new safe ports… the Russian energy minister just recently announced a $2.77 billion pipeline project in Greece, and Moscow followed this with an informal invitation to Greece to join the BRICs’ New Development Bank.”

Given its current economic problems, Russia cannot afford to bail Greece out entirely. But it could certainly provide funding for sizable infrastructure projects.  

In the short-term, Grexit would certainly be a boon to Russian propagandists:

“allowing anchors on Russian state TV to highlight further evidence of the decline of the European Union and of Western civilization more broadly.” 

And in the longer-term, a Russia-friendly Greek government could even act as a spoiler within the EU and within NATO, including a veto over any extension of sanctions on Russia.

Until this point, the White House has largely avoided commenting on the Greek crisis, other than reassurances that U.S. banks are largely insulated. But as Eurozone leaders make the final choice on Greece’s future, U.S. leaders would do well to consider how a Grexit could impact U.S. security aims in Europe.

You can read the whole piece on the security implications of the Greek crisis here.

The South Carolina Senate has voted to remove the Confederate battle flag from the grounds of the state capitol. The House still has to vote, and Gov. Nikki Haley has already urged that the flag be moved. The flag was moved from its position atop the capitol dome back in 2000. Now it’s time to move it entirely off the capitol grounds.

In 2001, 64 percent of Mississippi voters chose to keep the Confederate battle cross in their official state flag. At the time I wrote:

It seems that I have every reason to side with the defenders of the flag: I grew up in the South during the centennial of the Civil War—or, as we called it, the War Between the States, or in particularly defiant moments, the War of Northern Aggression. My great-grandfather was a Confederate sympathizer whose movements were limited by the occupying Union army. I’ve campaigned against political correctness and the federal leviathan. I think there’s a good case for secession in the government of a free people. I even wrote a college paper on the ways in which the Confederate Constitution was superior to the U.S. Constitution.

Much as I’d like to join this latest crusade for Southern heritage and defiance of the federal government, though, I keep coming back to one question: What does the flag mean?

I noted that defenders of the 1894 flag and other public displays of Confederate flags

say that the Civil War was about states’ rights, or taxes, or tariffs or the meaning of the Constitution. Indeed, it was about all those things. But at bottom the South seceded, not over some abstract notion of states’ rights, but over the right of the Southern states to practice human slavery. As Gov. James S. Gilmore III of Virginia put it in his proclamation commemorating the Civil War, “Had there been no slavery, there would have been no war.” Mississippi didn’t go to war for lower tariffs or for constitutional theory; it went to war to protect white Mississippians’ right to buy and sell black Mississippians.

We still hear those claims: the Confederate flag stands for history, states’ rights, resistance to an overbearing federal government, Southern pride. For some people it probably does. But those who seceded from the United States and formed the Confederate States of America were pretty clear about what they were seeking.

Historian James Loewen points out:

Yet when each state left the Union, its leaders made clear that they were seceding because they were for slavery and against states’ rights. In its “Declaration of the Causes Which Impel the State of Texas to Secede From the Federal Union,” for example, the secession convention of Texas listed the states that had offended the delegates: “Maine, Vermont, New Hampshire, Connecticut, Rhode Island, Massachusetts, New York, Pennsylvania, Ohio, Wisconsin, Michigan and Iowa.” Governments there had exercised states’ rights by passing laws that interfered with the federal government’s attempts to enforce the Fugitive Slave Act. Some no longer let slave owners “transit” across their territory with slaves. “States’ rights” were what Texas was seceding against. Texas also made clear what it was seceding for — white supremacy:

We hold as undeniable truths that the governments of the various States, and of the confederacy itself, were established exclusively by the white race, for themselves and their posterity; that the African race had no agency in their establishment; that they were rightfully held and regarded as an inferior and dependent race, and in that condition only could their existence in this country be rendered beneficial or tolerable.

And thus, as I wrote back in 2001,

The political philosopher Jacob T. Levy [now the author of Rationalism, Pluralism, and Freedom] points out that official state symbols are very different from privately displayed symbols. The First Amendment protects the right of individuals to display Confederate battle flags, Che Guevara posters and vulgar bumper stickers. But official symbols – flags, license plates, national parks – are a different matter. As Levy writes: “When the state speaks … it claims to speak on behalf of all its members…. Democratic states, especially, claim that their words and actions in some sense issue from the people as a whole.”

The current Mississippi flag – three bars of red, white and blue along with the Confederate cross – cannot be thought to represent the values of all the people of the state. Indeed, it doesn’t just misrepresent the values of Mississippi’s one million black citizens; it is actively offensive to many of them. As Levy writes, “Citizens ought not to be insulted or degraded by an agency that professes to represent them and to speak in their name.” Can we doubt that black Mississippians feel insulted and degraded by their state flag?

As long as the violence and cruelty of slavery remain a living memory to millions of Americans, symbols of slavery should not be displayed by American governments. 

Note this point, one that many readers seemed to overlook, “The First Amendment protects the right of individuals to display Confederate battle flags.” I still believe that. The First Amendment, of course, also allows private businesses to refuse to sell Confederate flags or even to repaint the car from the TV show “Dukes of Hazzard.” The public-private distinction is crucial here: Private individuals, clubs, and businesses have First Amendment rights. Governments speak in the name of all their citizens.

I urge the government of South Carolina to cease speaking in a way that inevitably offends many thousands of its citizens.

By the way, I know there are some who say, “oh yeah, what about the U.S. flag? It flew over slave states too.” Yes, it did, and that’s a blemish on American history. But it was the flag of “a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal,” however imperfectly it has lived up to those aspirations. Slavery wasn’t just a blemish on the Confederacy, alas. The Confederacy was a new nation, conceived in the defense of slavery, and dedicated to the proposition that all men are not created equal. That’s the difference.

I’m generally a fan of the efforts by WikiLeaks to publish secret government documents.  There may be times where particular documents are too sensitive to put out there, but for the most part I think the government is being unnecessarily secretive.

However, in terms of commentary on the documents it publishes, WikiLeaks doesn’t always know what it is talking about.  Here is what it said recently about a draft text of an international negotation on freeing up trade in services (the Trade in Services Agreement, or TiSA):

Today, 1500 CEST Wednesday, 1 July 2015, WikiLeaks releases a modern journalistic holy grail: the secret Core Text for the largest ‘trade deal’ in history, the TiSA (Trade In Services Agreement), whose 52 nations together comprise two-thirds of global GDP. The negotiating parties are the United States, the 28 members of the European Union and 23 other countries, including Turkey, Mexico, Canada, Australia, Pakistan, Taiwan and Israel.

While the proposed Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Pact (TTIP) have become well known in recent months, the TiSA is the largest component of the United States’ strategic neoliberal ‘trade’ treaty triumvirate. Together, the three treaties form not only a new legal order shaped for transnational corporations, but a new economic “grand enclosure”, which excludes China and all other BRICS countries.

Wow, “a new legal order shaped for transnational corporations”! That sounds scary! We better avoid that!

It also sounds like a massive exaggeration of what’s in the legal text. WikiLeaks seems to be taking the view of one trade critic as fact. There are certainly arguments that, in their efforts to promote free international trade in services, the governments working on this treaty haven’t gotten the balance between economic efficiency and national autonomy exactly right. But I think the right approach for WikiLeaks, instead of assuming a massive corporate conspiracy, is to publish the documents it finds and then offer to host a discussion among various experts about what the text actually says and what its impact will be.

Over at Cato’s Police Misconduct web site, we have identified the worst case for June.  It goes to the police department in Carrollton, Kentucky.

Adam Horine was a homeless person who was arrested for some petty offense. Horine then appeared before Judge Elizabeth Chandler to determine whether he wanted to go to trial, or plead guilty to the charges. Horine said he wanted to represent himself in the case and he gave the judge some rambling answers to her questions. Horine indicated that he had problems and did not seem angry when the judge ordered that he be sent to a hospital for a mental health evaluation.

This is when things took a bizzare turn. Instead of following the judge’s order, the local police chief, Michael Willhoite, had one of his deputies put Horine, against his wishes, on a 28 hour bus ride to Florida. No one accompanied Horine on the bus and no one was expected to meet him when the bus trip ended in Florida. The idea seemed to be to push their problem prisoner on someone else. (One wonders whether that was the first time that this “police technique” was used.)

Adding insult to injury, the police would later charge Horine with a new crime, “escape from custody” – even though the police themselves purchased the bus ticket and placed the mentally distressed Horine on the bus.

The King v. Burwell decision last month highlighted the role of the premium tax credit (i.e. “subsidies”) in Obamacare. I have examined the structure of the subsidies quite carefully, and was shocked by their size. I’ll try to educate you about this, state-by-state. Today, I’m starting with Wisconsin, which has some of the largest giveaways on the federal exchange.

Among all individuals aged 55 to 64 in Wisconsin, approximately 70% – or 522,000 people – rely on employer coverage, where the odds are high that they’re paying something out of their own pocket for monthly premiums.

Consider either a single person earning $41,000, or a married couple earning $62,500. Each is 64-years-old, a non-smoker, and lives in Florence, Wisconsin (ZIP code 54121).  The structure of Obamacare subsidies means that many individuals who are not poor can find health plans with such large subsidies that they pay absolutely nothing for premiums out of their own pocket. In this case, the married couple or single person would qualify for the Molina Marketplace Bronze Plan with zero monthly premium.

See the graphic below for a married couple:

Married Couple, Earn $62,500, Florence, WI
Pay $0 per year for premiums

Although plenty of other plans exist – with higher premiums but less cost sharing– this plan is essentially a giveaway for those who didn’t want to purchase coverage, but were mandated to do so by the government. And if a near-elderly person (in the age range of 55 to 64) happens to get sick, they could always move into a plan with generous cost sharing provisions in future years, a problem that economist Martin Feldstein calls Obamacare’s fatal flaw.

It’s hard to find anything written or spoken about Greece that doesn’t contain a great deal of hand wringing about the alleged austerity – brutal fiscal austerity – that the Greek government has been forced to endure at the hands of the so-called troika. This is Alice in Wonderland economics. It supports my 95% rule: 95% of what you read about economics and finance is either wrong or irrelevant.

The following chart contains the facts courtesy of Eurostat. Social security spending as a percentage of GDP in Greece is clearly bloated relative to the average European Union country—even more so if you only consider the 16 countries that joined the EU after the Maastricht Treaty was signed in 1993. To bring the government in Athens into line with Europe, a serious diet would be necessary – much more serious than anything prescribed by the troika.

On Monday, I highlighted the fiscal crisis in Puerto Rico. The island’s governor announced that it cannot fully pay back its $70 billion in outstanding debt. Much of the attention this week has focused on how Puerto Rico has mismanaged its finances. San Juan has delayed necessary reforms. But missing in most news articles is the role that Washington, D.C. has played in creating the mess.

Over at Fox News, I have a new piece describing how the federal government has contributed to the island’s problems.

For instance, the federal minimum wage contributes to Puerto Rico’s challenges:

The federal minimum wage of $7.25 an hour applies on the island. The minimum wage’s effects are well-known, but it has disproportionate influence in Puerto Rico. The island’s median income is only 40 percent of the mainland. Twenty-eight percent of Puerto Rico residents earn $8.50 an hour or less, compared to 3 percent on the mainland. So the minimum wage has greater impact in Puerto Rico. It would be like if the mainland had a $19 an hour minimum wage. The high minimum wage raises the cost of employment and prices many employers out of the market, causing unemployment to rise and thus tax revenue to dry up.  The minimum wage is a partly why the island’s unemployment rate is almost three times that of the mainland.

Similarly, the 1920 Jones Act limits Puerto Rico’s ability to import and export goods efficiently:

Islands have higher-than-normal transportation costs due to their remote locations, but a pre-New Deal era law drives up the cost even more for Puerto Rico. The Jones Act decrees that goods being shipped between U.S. ports must be on U.S. chartered ships with a U.S. crew. That means goods coming from the mainland can’t come on the most cost-competitive vessel. They must go with one of four U.S. shippers operating that route. The limited competition increases costs. Puerto Rico’s shipping costs are twice those of its island neighbors, making items more expensive to purchase on the island. It also limits Puerto Rico’s ability to export its products to the mainland.

The piece also discusses how poor tax policy and lavish entitlement benefits are contributing to the debt crisis.

Puerto Rico is suffering from decades of poor fiscal management, but it’s not the only government who contributed to the crisis. Washington has also played a staring role.

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

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This week, as our title suggests, we have a somewhat eclectic mix of articles worthy of your attention (and some that are not). Let’s get started.

In handing down its decision on Monday in Michigan v. EPA, the Supreme Court ruled that the U.S. Environmental Protection Agency (EPA) was remiss for not considering costs when deciding to (expensively) regulate mercury emissions from coal-fired power plants. This ruling was urged in Cato’s amicus brief, and hailed as a victory for “liberty and sound science.”

But the direct impact on the ruling as it pertains to mercury emissions is likely to be slight as most coal-fired power plants have already been modified (or shut down) in an effort to reduce mercury emissions under the EPA’s 2012 regulation. Rather, what is being debated in the ruling’s aftermath is what the implication may be on future EPA actions.

Some have argued the ruling in Michigan v. EPA was “pointless,” while other have argued that it “may be the beginning of the end of the Obama Administration’s climate agenda.” Perhaps the biggest thing that could result would be for the Supreme Court to re-evaluate its decision in the Chevron v. Natural Resources Defense Council case.  This possibility was raised by Clarence Thomas in his concurring opinion on the case.  The Wall Street Journal editors picked up on this in their review of the Michigan v. EPA decision and highlight its importance:

Which is why Justice Clarence Thomas’s concurring opinion deserves a larger audience. He makes a provocative case that the Court’s 1984 decision in Chevron v. Natural Resources Defense Council is unconstitutional. Under what has become known as “Chevron deference,” the Court defers to executive interpretations when laws are ambiguous. Justice Thomas writes that this has become a license for the executive to usurp legislative powers that are supposed to be vested in Congress.

“Perhaps there is some unique historical justification for deferring to federal agencies, but these cases reveal how paltry an effort we have made to understand it or to confine ourselves to its boundaries,” Justice Thomas writes. “Although we hold today that EPA exceeded even the extremely permissive limits on agency power set by our precedents, we should be alarmed that it felt sufficiently emboldened by those precedents to make the bid for deference that it did here.”

That’s an especially apt point coming in a year when the Supreme Court seemed to abdicate much of its obligation to police the Constitution’s separation between the executive and legislative power. A future Court ought to revisit Chevron deference in what has become an era of presidential law-making.

Here’s hoping!

And here’s how it can happen. At Cato, your obedient servants have, through the years, purposefully compiled a massive record of public comments on global warming regulation that we have filed as official responses to requests for them in the Federal Register. These include our Addendum to the Government’s second “National Assessment” of climate change. It was designed to have a look similar to the federal document, with the cover the exact same material paragraph-by-paragraph, if possible, to make comparison as simple as possible. 

Now, suppose someone files in DC District court over the next EPA insult with regard to global warming, claiming authority because of its “endangerment finding” from carbon dioxide, which, they claim, compels them to regulate it under the Clean Air Act. Turns out that 2009 Finding is largely based upon the second Assessment.

In our fantasy world, the plaintiff enters both the Assessment and our Addendum into the record, and, our dream goes, the judge holds them side-by-side and notes the massive amount of science that is missing from the federal report. Perhaps, thanks to Clarence Thomas, he or she might think that the EPA’s purported “science” is clearly an attempt to mislead, and seeing as this is such an egregious insult, upholds the plaintiff based upon an abrogation of Chevron Deference.

Another interesting post this week came courtesy of Blair King who runs the blogsite “A Chemist in Langley.” King is an avowed lukewarmer and has interesting things to say on a variety of climate-related topics. In a recent post, he takes on the term “Business-as-Usual” which has been co-opted by the climate activists to replace “worst case.” While “worst case” sounds like something which can be dismissed as being very unlikely, “Business-as-Usual” (BAU) sounds like something that is imminent unless things change. But, what is conveniently ignored by the activists using the term is that things do change. Which means things changing is really what BAU represents. BAU is not a static technology, frozen actions case. Instead it is a highly dynamic future filled with new technologies, adaptations, etc.

King points out that BAU and the high end emissions scenarios (RCP8.5) described by the U.N.’s Intergovernmental Panel on Climate Change (IPCC) in its most recent Assessment Report are not synonymous despite increasing usage as such by those pushing climate catastrophe and regulations to avert it.

There are few folks who call the activists out on this. But the numbers are increasing. Besides ourselves, several recent pieces have appeared (see here and here for example), and King’s piece another welcomed example.

King sets the stage:

As I describe in my post “Does the climate change debate need a reset? - on name calling in the climate change debate” one of the critical battles in any debate is control over the labelling of the actors. If you can apply the best possible label to yourself and the least agreeable label to your opponent you immediately gain the upper hand. In the climate change debate, the “Business as Usual” label has been used more times that I can count with activists from the folks at Skeptical Science to the Suzuki Foundation, and from the Pembina Institute to 350.org  all finding some way to slip that phrase into their calls demanding immediate action (and of course donations to their cause). As this post will demonstrate, however, the “Business as Usual” descriptor used by the activists in the climate debate is nothing of the sort. Rather it is an artifact from earlier versions of the IPCC reports and was conspicuous by its absence in the most recent (Fifth Assessment) report.

After taking us through the list of reasons why BAU is really not BAU, King concludes:

Looking at what the activists have labelled the “Business as Usual” scenario we see a slew of assumptions that are anything but business as usual… Similarly when an activist talks about “business as usual” in their sales pitch, it is time to put your wallet back in your pocket.

You really ought to have a look at King’s entire piece.

 

And this week, we introduce a new concept in our You Ought to Have a Look series—Look Away, items that are most definitely not worth your time.

Two notable items fall into our Look Away category this week.

The first is a piece titled “Potent Poison Ivy” that appears on the ClimateCentral.org website—a website that spends an undue amount of time spreading worries about climate change. Their poison ivy piece is a good example of this tendency (and a classic example of our Good for Bad; Bad for Good theory).  Of the literally 1000s of article in the scientific literature that highlight the benefits that an atmosphere enriched with carbon dioxide has on plants, Climate Central decides to highlight the growth enhancement of poison ivy. No doubt, poison ivy does grow better, healthier, stronger, and more productive under conditions of elevated carbon dioxide, but so do virtually all plants—including food crops.

To be better and more fully informed about the impacts of elevated carbon dioxide on plant health, you should visit the wealth of data contained in the website CO2science.org that is run by Cato Adjunct Scholar Dr. Craig Idso. For example, in a recent paper, Craig reviewed the impact of elevated CO2 on the world’s top 45 food crops and found that the yield enhancement to date to be about 10 to 15 percent—a sizeable and significant benefit. Craig expects the crop yield increases to continue to grow as the atmospheric carbon dioxide concentration continues to increase as a result of emissions from human activity. We don’t expect finding like these to appear anytime soon at Climate Central.

Another article to look away from comes from the NationalGeographic.org and links shark attacks to global warming. In their post “North Carolina’s ‘Perfect Storm’ for Shark Attacks” National Geographic includes this gem:

“Clearly global climate change is a reality and it has resulted in warmer temperatures in certain places at certain times,” says Burgess.

As warming is expected to increase, it will likely bring more sharks farther north and entice more people to get into the water, which will lead to more bites.

This is exactly how we scripted it many moons ago, when we wrote a tongue-in-cheek  journalist’s guide to linking shark attacks to global warming. We dummied up an article that went like this:

Shark Attacks on Humans Related to Global Warming!

How best to explain the relationship? “Well, Katie [Couric], we suspect (and our preliminary research bears this out) that higher temperatures make sharks more active. We already know those same high temperatures send more people to the beach in an effort to cool off. It just stands to reason that the more people there are in the water, the more opportunities there are for shark attack. As global temperatures continue to rise due to fossil fuel emissions, so too will incidents of shark attack. In fact, that drive to the beach is contributing to the problem. People really ought to stay home.”

The similarity to the National Geographic piece is scary! But of course, we weren’t being serious. So, if you really insist on looking into global warming and shark attacks, our article will prove much more entertaining (and pertinent) than the one from National Geographic—so that’s where you really ought to have a look!

Americans are preparing for the Fourth of July holiday. I hope we take a few minutes during the long weekend to remember what the Fourth of July is: America’s Independence Day, celebrating our Declaration of Independence, in which we declared ourselves, in Lincoln’s words, “a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.”

The holiday weekend would start today if John Adams had his way. It was on July 2, 1776, that the Continental Congress voted to declare independence from Great Britain. On July 4 Congress approved the final text of the Declaration. As Adams predicted in a letter to his wife Abigail:

The second day of July, 1776, will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance, by solemn acts of devotion to God Almighty. It ought to be solemnized with pomp and parade, with shows, games, sports, guns, bells, bonfires, and illuminations, from one end of this continent to the other, from this time forward forever more.

The Declaration of Independence, written by Thomas Jefferson, is the most eloquent libertarian essay in history, especially its philosophical core:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Jefferson moved smoothly from our natural rights to the right of revolution:

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

The ideas of the Declaration, given legal form in the Constitution, took the United States of America from a small frontier outpost on the edge of the developed world to the richest country in the world in scarcely a century. The country failed in many ways to live up to the vision of the Declaration, notably in the institution of chattel slavery. But over the next two centuries that vision inspired Americans to extend the promises of the Declaration — life, liberty, and the pursuit of happiness — to more and more people. That process continues to the present day, as with the Supreme Court’s ruling for equal marriage freedom just last week.

At the very least this weekend, if you’ve never seen the wonderful film 1776, watch it Saturday at 3:00 p.m. on TCM.

At Reason, Scott Shackford has a valuable piece on where libertarians’ interests are likely to coincide with those of organized gay rights advocates and where they are likely to diverge, following the Supreme Court’s ruling on marriage. One flashpoint of controversy is likely to be the role of conservative religious agencies in areas of adoption that are commonly assisted with public funds (as with the adoption of older kids from foster care). 

…It is now legal all across America for gay people to adopt children, and now with same-sex marriage, they can adopt their partner’s child as well. This fight is largely over, and was actually pretty much won even before gay marriage recognition.

But there is another side, and it ties back into the treatment of religious people. Some adoption agencies are tied to religious groups who do not want to serve same-sex couples or place children in same-sex homes. They are also typically recipients of state funding for placing children, and are therefore subject to state regulation. Should they be required to serve gay couples?

Some states, such as Illinois, attempted to force them. As a result, Catholic Charities, which helped the state find adoptive and foster home services for four decades, stopped providing their services in 2011. At the time, a gay activist declared this a victory, saying “Finding a loving home for the thousands in the foster/adoption system should be the priority, not trying to exclude people based on religious dogma.”…

Some libertarians I admire have taken the view that where any public dollars are involved, private social service agencies must be held to rigorous anti-discrimination standards. While I respect this view, I don’t share it. Programs that are explicitly voucherized (such as G.I. Bill college tuition benefits, which can be used for seminary study) often go to institutions that I might find discriminatory, and the same logic can apply even with some less explicitly voucherized benefits. If a state depot is dispensing gasoline to rescuers’ boats after Katrina, and Catholic Charities-operated boats spare the need for government boats to reach some rescue targets, the “subsidy” might in fact save the taxpayers money.

In Olson’s experience, the more agencies out there serving the needs of the children looking for homes, the better. … Much as with the controversies over bakers and florists, being denied service by one agency does not actually impact a gay couple’s ability to find and adopt children at all. But eliminating Catholic Charities from the pool reduces the number of people able to help place these children. It’s the children who are punished by the politicization of adoption, not Catholic Charities. This is especially important when dealing with older children or children with special medical needs. …  Allowing both sides (and others as well) to play their role as they see fit benefits all children in the system.

As for the concern that some adoption agencies take taxpayer money and then discriminate, Olson points out that it’s much more expensive to the taxpayers to leave children to be raised by the state, not to mention terribly cruel. “If you don’t care about the kids or the families, at least care about the taxpayers,” Olson says. But you should probably care about the kids, too.

I’ve written about the same set of issues (in the foster care context) before. The new Reason piece is here.

Daniel Costa of the Economic Policy Institute (EPI) criticized a piece I wrote for The Hill in which I called for the U.S. to accept more refugees.  Costa took issue for my argument to limit their access to welfare once they arrive, which I wrote in the eighteenth paragraph of my piece.  Conservatives criticized me for not mentioning welfare reform sooner in my piece.  I wrote about allowing more refugees in for the first seventeen paragraphs of my piece because that is more important than denying them welfare.

Costa, however, stooped pretty low when he wrote: “[H]opefully refugees in America will never be forced to suffer their libertarian version of humanitarian relief.”  Emphasis added.

The humanitarian relief that refugees need isn’t food stamps once they arrive to the United States – it’s an escape from violence and oppression.  Refugees aren’t fleeing Syria because their Syrian equivalent of TANF benefits expired, they are fleeing because they are being murdered.        

Costa assumes my opposition to welfare means that I oppose all support for refugees.  That is untrue.  As I mention in my original piece, civil society, private charities, churches, previous immigrants, and other groups that do aid refugees are performing a valuable service.  That aid is important in helping some, but not all, people who flee war, oppression, and dictatorship to thrive in their new country.  That voluntary aid and support should continue and the generous people who donate their own money to such causes are to be commended.  But welfare is not charity and it does not alleviate the real scarcity that affects these refugees: a lack of visas for them to come here in the first place. 

Welfare or Refugees: Choose One

Welfare is one reason why America admits so few refugees.  It’s an open secret on Capitol Hill that President Obama didn’t raise the refugee cap as a part of his executive actions specifically because of the welfare cost.  Limiting welfare for refugees is a key element of convincing the American public and policymakers to accept more immigrants of every kind – including refugees.  It’s no coincidence that support for immigration increased after the 1996 welfare reform.  Costa’s insistence that refugees receive welfare benefits once they arrive is tantamount to him insisting that fewer of them come in the first place – an outcome with far worse humanitarian consequences than the current situation. 

The public choice reality is that more handouts to non-citizens will lead to less public support for liberalizing humanitarian immigration.  Here I document many of the polls that reveal how worried Americans are about immigrant welfare use.  Those welfare fears are vastly overblown but they do affect public opinion and policy making. 

Since the political limitation on allowing more refugees is welfare, the only humane thing to do is to deny welfare benefits and thus allow more of them to come. Can anybody seriously suggest that Syrian refugees would be worse off than they currently are if more of them arrived in the United States but didn’t have access to means-tested welfare?  Of course not.

Let’s allow the refugees to choose for themselves.  We should allow more refugees to come beyond what the current quota allows but deny them access to means-tested welfare until they naturalize.  Hundreds of thousands or millions of refugees would take advantage of that deal in the near future and they would all be better off than they currently are. 

Welfare Doesn’t Aid Assimilation

Costa argues that welfare benefits help immigrants succeed in the United States.  Refugees don’t need welfare to succeed once they are here.  Refugees outperform many classes of economic immigrants who are ineligible for means-tested welfare.  Costa believes this is because those refugees received some welfare (I’m inferring this from his piece). 

However, the peer-reviewed version of the paper he cites by Kalena Cortes doesn’t even mention welfare as a contributing factor to their labor market success.  She attributes the growth of income to refugee willingness to work more hours and their higher rate of human capital accumulation due to their longer time horizons – they can’t return to their home countries.  It’s a testament to the perseverance of refugees that their willingness to work was not constrained much by welfare benefits.  Refugees are responsible for their own economic successes, not the welfare agencies.    

There is some evidence that access to welfare can slow down English acquisition – an important part of labor market integration.  Soviet refugees in New York State were less likely to work than their counter-parts in Maryland.  Those in New York also had more access to welfare than those in Maryland.  Those in Maryland were also more comfortable with the English language.  Welfare decreases the incentive to work, on the margin, due to high effective marginal tax rates.  Working was an important part of increasing English skills.  To the extent that welfare decreased the likeliness of refugees to work, it slowed their accumulation of language skills and success in the labor markets.    

Some Vietnamese refugees did have access to means-tested welfare and they assimilated fine.  But as David Haines points out in his book Safe Haven: A History of Refugees in America, refugees entered the labor force more rapidly in cities like Richmond, Virginia where public assistance was more limited than in places where it was more abundant.     

More important than public assistance is that many Vietnamese refugees came when the U.S. economy was growing or was on the verge of a major job expansion.  The papers I cite above all point to economic and job growth as a better predictor of refugee assimilation and success than anything else.  For instance, Haines points to the strong manufacturing job base in Richmond as helping refugees to that city do well. 

If welfare matters so much for refugee integration, then why was there no economic effect on refugees after it was decreased?  As Bollinger and Hagstrom write:

“Second, the 1996 welfare reforms appear to have no effect on the probability of poverty for any group, regardless of the measure used.  Nor is there much evidence for any substantial difference in the post reform between immigrants, refugees, and native born.  Indeed, even when differences are measured in how well the programs moved these groups out of poverty, there appears to be no substantial differential impact of welfare reform.” 

The booming economy post-1996 certainly helped refugees enter the job market.  Perhaps welfare reform aided that period of job growth, perhaps it didn’t, but it doesn’t seem to have mattered much either way.  From 1994 to 1999 welfare use by refugees collapsed so that by 1999 refugee-headed households had similar welfare use rates as U.S. citizens.  Refugees are still clamoring to come here. Sweden gives high welfare benefits to refugees that combine with their rigid labor market regulations to lock many into segregated poverty for decades.  Fortunately the United States government does not provide nearly so much welfare nor does it have such a rigid labor market.  Attempting to be humanitarian by providing welfare backfired in Sweden. 

At best, Costa can claim that welfare does not delay integration into the labor market at the current low levels in the United States, but welfare doesn’t seem to speed up integration either.  Refugee time-horizons, inability to return to their home countries, their resources upon arrival, and acquisition of human capital aided by those realities seem to explain their relative success – not government welfare offices dispersing taxpayer dollars.  Assuming for argument’s sake that welfare doesn’t delay labor market integration (it does), removing it does no harm to the refugees and could influence public opinion to allow more of them to enter the United States while saving taxpayers some money.  Sounds like a win for everybody.

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