Cato Op-Eds

Individual Liberty, Free Markets, and Peace
Subscribe to Cato Op-Eds feed

KUWAIT CITY, KUWAIT—Seventy-eight nations plus 40 non-governmental organizations recently gathered to raise money for the relief of Syrian refugees. Kuwait’s Emir opened the Third International Humanitarian Pledging Conference for Syria with a plea for funds.

The small Gulf nation has carved out an international humanitarian role. “This is our baby,” one Kuwaiti official told me.

Kuwait opened the proceedings with a promise of $500 million, matching last year’s donation. The U.S. won the number one position with an offer $507 million, but many participants offered little more than good will. Overall the conference generated $3.8 billion of the $8.4 billion which aid agencies were seeking.

Antonio Guterres, UN High Commissioner for Refugees, warned that “We are at a dangerous tipping point.” The vulnerability of those caught in the conflict’s crossfire was highlighted by the Islamic State’s advance to the Yarmouk camp for Palestinian refugees on the outskirts of Damascus.

Alas, virtually no one in Syria has escaped the impact of four years of civil war. More than 200,000 Syrians are thought to have died; another million have been injured. The economy has imploded. UN Secretary General Ban Ki-moon added: “Four out of five Syrians live in poverty, misery and deprivation.”

Some 12.2 million people, more than half of the population, are estimated to need humanitarian assistance. A similar number have been displaced—between 6.5 million and 7.8 million within Syria and three to four million on to neighboring states.

Surrounding countries are ill-equipped to handle the exodus. Jordan has around 1.2 million refugees and Turkey some 1.8 million. Fragile, divided Lebanon hosts more than 600,000. A quarter million Syrians have fled to Iraq, another country ravaged by civil strife and war.

Among the Gulf States only Kuwait has given generously and fulfilled its promises. Kuwait’s ambassador to America explained that “The message from Kuwait to our friends in the Gulf and the region is: We need to do something, and quickly.”

One of the best ways to help those suffering from the Syrian conflict is through private relief groups. Indeed, the crisis has spawned a variety of relief efforts by NGOs around the world, many of which were represented in Kuwait.

Private organizations obviously face challenges as well, including, paradoxically, some being heavily reliant on public support. But they tend to be more diverse and flexible than public agencies.

Many groups have a religious orientation. For instance, I have met dedicated staffers with the International Orthodox Christian Charities, respected by Muslims and Christians alike. The IOCC works with Syrians in Syria as well as those who have fled to Iraq, Jordan, and Lebanon. Many other NGOs provide welcome relief throughout the region.

Governments around the world also should relax immigration rules to allow vulnerable people, especially those targeted by either the Assad regime or radical insurgents, to resettle, including in America.  Between October 2011 and December 2014 the U.S. accepted just 284 Syrian refugees, a pitiful total. The U.S. should be generous, especially to religious minorities who are being wiped out and have nowhere else to go in the Middle East.

Of course, “there is no strictly humanitarian solution to this problem,” noted Guterres. However, with war still raging there is much to do to assist the Syrian people. The latest international aid conference in Kuwait has helped highlight the great need.

As I noted in Forbes online:  “Americans can’t be expected to make Syrians’ war their own. But they are an ever generous people who should do what they can to help other peoples in desperate need. There’s no reason for them to wait for politicians to act.”

On Earth Day the op-ed pages remind me of “Groundhog Day.”  Environmentalists argue we need stricter environmental regulation.  Business interests argue such regulations reduce economic growth and cost the economy jobs.  Each also invokes “sound science” as an adjudicator of the conflict.  Environmentalists invoke “science” in the case of CO2 emissions and effects while business interests invoke “science” in the case of traditional pollution emissions.  Each year we wake up and the same movie plays out.

The scientific validity of people’s preferences plays no role in the market’s delivery of private goods.  Markets can and do supply organic lettuce regardless of whether it is really “better” for your health.  The scientific validity of people’s preferences is irrelevant.

Air- and water-quality environmental disputes are more challenging to analyze than the supply of organic lettuce for two reasons.  First, while property rights exist for lettuce, they often do not exist for air and water.   Thus, environmental politics involves continuous struggle over implicit property rights and the wealth effects that flow from such rights.  Second, both conventional air and water quality are “local” public goods (club goods) rather than private goods, thus individual differences in consumption, the primary method of reducing conflict associated with private goods, are not possible.  Instead, everyone’s varied preferences for environmental goods can only result in one jointly consumed outcome.

One possible impediment to the implementation of market-like solutions to air and water quality is that the initial ownership of property rights to air or water emissions not only has wealth but also efficiency effects.  That is those particular property rights (the right to a pristine environment) are so valuable relative to other assets that their initial allocation alters the willingness of people to pay for them and thus affects how much pollution exists.  In such cases the initial distribution is the whole ballgame because it determines the resulting air- and water- quality levels.

Under many circumstances the initial allocation of property rights does not affect the evolution of trades and thus does not affect efficiency.  For example, analog cellular phone licenses were given away by the FCC in a lottery.   The licenses that were won by non-telecom companies were quickly sold to telecom companies that then built cellular phone networks.  The wealth distribution rather than the efficiency of the cellular phone market was affected by the arbitrary initial allocation of property rights.

But air quality may be different from the cellular-phone example.  Initial ownership by environmentalists of air and water quality rights might reduce activity in industrial society significantly because the environmentalists would not accept money in return for allowing Los Angeles to exist (or at least L.A. with its current air quality) because the Sierra Club members value environmental quality much more than other people and much more than the other assets that they possess.

Conversely, if polluters had unlimited rights to pollute, pollution levels might remain much larger than they would in the Sierra Club scenario because the willingness of environmentalists to pay polluters to restrict emissions could be much less than the compensation they would demand if they owned the initial rights.  Thus the initial allocation of air- and water-quality rights may have large consequences on the resulting level of air and water quality.

Although scientific studies and cost-benefit analyses do not resolve environmental policy disputes, they do serve an important function.  They demonstrate the possibility of large gains to trade.  For example, let us consider studies that demonstrate that cleaning up Superfund sites or arsenic contamination of water supplies is very expensive relative to the number of lives saved (valued at the conventional estimate of a statistical life) and not worth the benefits.

The conclusion that one should draw from such studies is not that the preferences of environmentalists (who want contaminated abandoned industrial sites to be cleaned up or arsenic removed from water supplies) should be different.  Instead one should conclude that the implicit property rights given to environmentalists by Superfund and arsenic regulation have created the possibility of large gains to trade.  Because compliance with Superfund or arsenic regulations is so expensive relative to the benefits, those who bear the costs of the regulation would pay a large amount to avoid cleanup, and the alleged “victims” of pollution may well accept such a payment rather than accept the regulated status quo in which litigation is much more common than clean up.

The initial allocation of cellular phone rights also was “irrational” because rights were given away to people who did not know how to build a cellular phone system, but the irrationality only affected the wealth distribution rather than the development of cell phones because the rights were easily traded to phone companies.  No scientific studies were commissioned to demonstrate that the allocation of cellular phone rights wasn’t “sound science” because trading eliminated the irrationality of the initial allocation.

Thus the main impediment to the resolution of environmental policy disputes may be the unwillingness of the participants to accept any definition of initial property rights.  Instead they prefer to use the political system to engage in continuous wealth and property rights disputes.  The difficult task is to channel the energies of environmentalists and polluters into creating and then trading emission rights rather than publishing pamphlets and lobbying.

A driver with the ridesharing company Uber put a stop to a potential mass shooting in Chicago over the weekend.

According to the Chicago Tribune:

A group of people had been walking in front of the driver around 11:50 p.m. in the 2900 block of North Milwaukee Avenue when Everardo Custodio, 22, began firing into the crowd, Quinn said.

The driver pulled out a handgun and fired six shots at Custodio, hitting him several times, according to court records.  Responding officers found Custodio lying on the ground, bleeding, Quinn said.  No other injuries were reported.

The driver will not be charged:

The driver had a concealed-carry permit and acted in the defense of himself and others, Assistant State’s Attorney Barry Quinn said in court Sunday.

Chicago was home to some of the most draconian gun laws in America until a 2010 Supreme Court ruling, McDonald v. Chicago, found Chicago’s gun regulation regime unconstitutional. That ruling applied the Court’s previous landmark 2nd Amendment ruling, District of Columbia v. Heller, to state governments. While those rulings dealt with the right to bear arms for self-defense in the home, some circuit courts (including the 7th Circuit, which governs in Chicago) have extended the Heller/McDonald logic to certain public places as well as the home.

Under the previous regime in Chicago, the driver would have had  to choose between saving lives and avoiding a lengthy, potentially life-ruining prison sentence.  It’s safe to assume that both the hero in this case and the potential victims of Everardo Custodio are thankful that unconstitutional burden has been erased.

That is, of course, not to say that the struggle for gun rights is over.  Some circuits maintain a more limited view of Heller and McDonald, granting the government far more discretion in denying the right to bear arms outside the home.

For every hero Uber driver there are still far too many Shaneen Allens and Brian Aitkens: law-abiding, peaceful citizens who have their livelihoods and even their lives threatened for exercising their Constitutional rights.

We can only hope that stories like this, of which there are many, receive the attention they deserve and bolster the case for individual liberty and the right to bear arms.

Discussions of economic inequality are common nowadays thanks to Thomas Piketty’s new book Capital in the Twenty-First Century.  There are several good critiques of Piketty’s book and at least one wonderful podcast.  I’m not convinced that economic inequality in a (mostly) free-market economy matters one way or the other for economic growth, social stability, or political stability (ceteris paribus), so this blog is a response to those concerned that liberalized immigration could exacerbate wealth inequality.   

Papers on how immigrants affect the wages of Americans almost uniformly present the results as relative gains or losses compared to the wages of other workers.  While that work is valuable, below I will only discuss papers that focus exclusively on economic inequality caused by immigration. 

Borjas et. al. found that immigration (along with trade) only modestly affects earnings inequality – a role not substantial enough to account for more than a small percentage of the change.  Instead, he attributes the growth in income inequality to the acceleration of skills-biased technological change (SBTC) and other institutional changes in the labor market. 

David Card failed to find a substantially causal relationship between increased immigration and growth in wage inequality.  He discovered that immigration explains about 5 percent of the rise in overall wage inequality between 1980 and 2000.  An important distinction is between the wage inequality effects of immigration on natives and the effects on wage inequality for immigrants and natives.  While 5 percent of the growth in overall wage inequality can be attributed to immigration, immigration’s effect on native wage inequality is negligible.  Immigrants tend to have either very high or very low wages compared to natives, meaning that immigrants have a naturally higher residual level of income inequality than natives do.  Thus, immigration causes the economy-wide level of wage inequality to increase without changing native wage inequality.  Immigration has little, if any, effect on native wage inequality according to Card.

A colloquium of experts held at the Federal Reserve Bank of New York, as reported in the 1997 Economic Report of the President, attributed almost half of the increased income inequality in the 1980s and 1990s to SBTC but only assigned between 5 and 10 percent of the blame to immigration.

Source: Federal Reserve Bank of New York

Economists Brian Hibbs and Gihoon Hong found that immigration is responsible for about 24 percent of the increase in income inequality among U.S. metropolitan areas between 1990 and 2000 – the biggest impact in my reading of the academic literature.  They used the Gini index as their measure of inequality.  A 1 percent increase in immigrants relative to the population of a metropolitan area increased the Gini coefficient by 0.66 points. 

A 1999 paper by Deborah Reed focused on explaining the exceptional rise in household income inequality in California.  She found that SBTC and immigration accounted for about half of the increase in income inequality from the late 1960s to 1997.  She attributed between 17 percent and 40 percent of the increase in income inequality during that time period to immigration, depending on the assumptions in different models.  If immigrants were spread evenly throughout the income distribution, they would have no effect on income inequality in California.  However, since many of the immigrants were concentrated in lower-income brackets, the income of the state’s workforce became more unequal. 

To introduce another wrinkle, economist Robert I. Lerman attempted to account for rapid immigrant wage gains into any measurement of immigration induced inequality.  He undertook this by two means.  First, he excluded recent immigrants, who have the lowest wages, from the base and end years of his analysis so he could track the wage inequality of the same group of people over time while ignoring additional workers added to the labor market.  Second, he included the immigrant wages in their home countries prior to immigration in his measure of income inequality.  This second method takes their massive economic gains into account.  Lerman’s first method of excluding the recent immigrants eliminated 20 percent to 25 percent of the standard estimates of the growth in wage inequality.  Lerman’s second method eliminated most of the estimated rise in income inequality.

The resulting increase in wage, income, and wealth inequality from immigration appears to be small inside of the United States – if it even exists.  Globally, rapid economic growth in Asia has probably reduced income inequality.  No doubt immigration affects inequality but it is likely not the primary driver. 

Inequality itself does not matter.  What matters is how the inequality is produced.  If inequality increases because highly skilled workers earn a pay premium due to SBTC, then inequality is a beneficial result of complementary capital investments that will increase economic growth.  On the other hand, if inequality increases because the government has decided to expropriate all of the property owned by one group and turn ownership over to another group, then political instability and other perverse economic incentives will emerge that will diminish economic growth.  The source of inequality, not the inequality itself, determines whether economic inequality is a problem.  In the United States, inequality is only a problem in so far as it is caused by government redistribution.  Immigration, as the voluntary movement of people to the United States for economic opportunity, fits into the former positive-sum economic arrangement rather than the latter negative-sum expropriation. 

Thanks to Kristina Pepe for her excellent research assistance on this piece.

A Wall Street Journal story today looks at government spending through the lens of the national income and product accounts (NIPA). The article says that as government spending rises, it is “no longer dragging on growth.” Unlike recent years when spending was supposedly cut, the government today “has ceased to be a drag on growth.” But that is an unwarranted conclusion from the NIPA data, which are produced by the Bureau of Economic Analysis (BEA).

The BEA includes government output within overall gross domestic product (GDP). The first thing to note is that measuring government output is guesswork because most of it is not sold in the marketplace. The BEA solution “is to value government output in terms of the input costs incurred in production.” So if the government hires a worker for $80,000 to administer food stamps or impose new regulations, government “output” would rise by $80,000. That seems rather optimistic.

More importantly, NIPA data does not tell us the overall effect of government spending on growth. Let’s say defense spending rises $10 billion from added weapons purchases. NIPA would show government output rising $10 billion. The Wall Street Journal would have you believe that overall GDP would rise as well, but that ignores the effect of the spending on private output. Higher defense spending ultimately requires higher taxes, which are resources sucked out of the private sector. Also, Pentagon contractors would hire engineers and other skilled workers to produce the new weapons, drawing those people away from private goods production. As government output rose, the output of private goods would fall.

In the long run, private GDP would probably shrink more than $10 billion, and thus overall GDP would also shrink. One reason is that extracting taxes to fund federal spending generates “deadweight losses” as people reduced their working, investing, and other productive efforts. Another reason is that added government output is likely to be worth less than the private output replaced. That’s because government spending decisions are based on guesswork, whereas private spending decisions are guided by the price system, which helps direct resources to the highest-value uses.

So in the Wall Street Journal chart reproduced here, the reporter implies that when the blue line (government output) rises, the red line (overall output) is pushed upwards. But that ignores the negative relationship between the blue line and the yellow line (private output). The reality is that as the blue line rises, the yellow line would be dragged down, and that in turn would tend to drag down the red line over time.

For more on measuring the government in GDP, see here.

Why can’t America have great trains?” asks East Coast writer Simon Van Zuylen-Wood in the National Journal. The simple answer is, “Because we don’t want them.” The slightly longer answer is, “because the fastest trains are slower than flying; the most frequent trains are less convenient than driving; and trains are almost always more expensive than either flying or driving.”

Van Zuylen-Wood’s article contains familiar pro-passenger-train hype: praise for European and Asian trains; selective statistics about Amtrak ridership; and a search for villains in the federal government who are trying to kill the trains. The other side of the story is quite different.

For example, he notes that Amtrak “ridership has increased by roughly 50 percent in the past 15 years.” But he fails to note that the biggest driver of Amtrak ridership is gasoline prices, which 15 years ago were at an all-time low (after adjusting for inflation). Now that prices are falling, so is Amtrak’s ridership.

He also ignores the fact that Amtrak’s ridership is minuscule compared with flying or driving. Whereas highways moved around 87 percent of passenger travel and airlines around 12 percent in 2012, Amtrak’s share was just 0.14 percent. While that is an increase from 0.11 percent in 1999, it is a decrease from 0.15 to 0.16 percent in most of the years from 1975 through 1993, when gas prices were high.

Trains are great for moving large volumes of goods from point A to point B. America’s freight railroads are the envy of the world, but they make most of their money moving coal from mine to power plant; grain from elevator to port; and containers from port to inland distribution center. The railroads conceded less-than-carload shipments, the freight equivalent of passengers, to trucks and air freight back in 1975 when the Railway Express Agency went out of business.

Passenger train proponents argue that, over certain distances such as New York to Washington, trains can compete with airlines because trains have shorter downtown-to-downtown travel times. But the reality is that only 8 percent of Americans work downtown while less than 1 percent live downtown; in most urban areas, more people live or work within a few minutes of an airport than a train station.

One reason Amtrak’s share of travel is so low is that it is so expensive. While airfares averaged 13.8 cents per passenger mile in 2012, Amtrak fares averaged 33.9 cents. Amtrak is more expensive than driving, too, as Americans spend about 25 cents a passenger mile on auto travel (calculated by multiplying average auto occupancies by miles of driving divided by personal expenditures on driving).

Amtrak fares are high despite the subsidies it receives from federal and state governments. Rail proponents argue that all modes of transportation are subsidized, but they neglect to mention that Amtrak subsidies per passenger mile are close to twenty times greater than subsidies to highways or airlines. Comparing government revenues and expenditures by mode with passenger miles of travel over the past decade reveals that subsidies to driving and flying have each averaged a bit more than a penny per passenger mile, while subsidies to Amtrak are nearly 24 cents per passenger mile.  Counting user costs and subsidies, Amtrak is four times more expensive than flying and more than twice as expensive as driving.

Van Zuylen-Wood takes it for granted that Amtrak subsidies should be massively increased to bring America’s passenger rail system up to the standards found in Europe and Japan. Americans who visit Europe are often impressed by the region’s trains, but what they don’t see is that, despite the heavy subsidies to European passenger trains, European travel habits are not much different from our own. According to the European Union’s Panorama of Transport, residents of the EU-27 used intercity trains for just 6 percent of their travel while they drove for 74 percent in 2006, when Americans drove for 85 percent of travel. France has built lots of high-speed trains, yet 79 percent of travel there is by car.

Moreover, the countries that have built high-speed rail lines have succeeded mainly in capturing passengers away from low-speed trains, not cars or planes. Rail’s share of European travel was 8 percent before they began building high-speed rail lines; now it is just 6 percent.

Japan’s example is even more stark: when it built the world’s first high-speed rail line in 1964, only 12 percent of travel was by car and 70 percent was by train. Today, Japan has numerous high-speed trains, but trains carry little more than 25 percent of travel while cars carry 60 percent. The reality is that passenger trains are as obsolete in Europe and Japan as they are here, but local politicians keep throwing money at them.

Van Zuylen-Wood is so eager for his rail subsidies that he never mentions the clear alternative: intercity buses. In the last decade, and with virtually no subsidies, Megabus has revolutionized the intercity bus industry with low fares, mostly non-stop schedules, and free WiFi and power ports at each seat. While Van Zuylen-Wood repeats Amtrak’s claims that it carries more passengers in the New York-Washington corridor than the airlines, he neglects to mention that intercity buses carry even more than Amtrak (and automobiles carry many times more than all public conveyances combined).

Buses are more energy-efficient than rail, and between numerous city pairs offer more frequent and faster service than Amtrak at lower fares. For those who would turn up their noses at riding a bus, a number of companies offer luxury bus service between major cities with fewer seats, on-board food service, entertainment centers, and other amenities.

Amtrak supporters such as former Federal Railroad Administration director Joseph Szabo argue that passenger “rail deserves a predictable and reliable federal funding stream.” But it has one: fares. If fares won’t support passenger trains, there is no reason why the 99 percent of Americans who rarely if ever ride trains should be required to subsidize them. Let’s end all subsidies to all forms of transportation and let passenger trains operate where they can compete on a level playing field. That way people like Van Zuylen-Wood and myself can enjoy the trains we are willing to pay for and not expect others to subsidize our hobbies.

After months of internal wrangling, a trade promotion authority bill has finally been introduced in the Senate.  If passed, TPA could prompt conclusion of the Trans-Pacific Partnership negotiations and facilitate the deal’s eventual ratification by Congress.  The basic function of TPA is to affirm that future trade agreements will receive a timely up-or-down vote in Congress while setting negotiating objectives and procedures for congressional oversight.

Politically, the debate over TPA (and the TPP) has pitted the Obama administration and Republicans against congressional Democrats.  The reason the current bill took so long to devise is that proponents needed the support of Senate Finance Committee ranking member Ron Wyden (D–OR) in order to get at least a handful of other Democrats on board.

So, any differences between this bill and one that was introduced but scuttled by Harry Reid last year is due to Wyden’s influence.  His main concerns are not related to specific trade policy issues but to the role of congressional oversight and transparency in the negotiations.  Wyden has given the current bill his seal of approval, as have the White House and Republican leaders.

The first thing we should keep in mind when talking about TPA is that while its basic function is beneficial in facilitating the passage of trade agreements, the bill is 113 pages long because it’s full of caveats and reservations.

The bill lays out negotiating objectives that focus on keeping U.S. protectionism in place and breaking down foreign barriers.  There are objectives regarding textiles, antidumping, and agriculture that explicitly limit the president’s authority to liberalize trade. 

Other negotiating objectives are more beneficial.  TPA calls for provisions that limit restrictions on cross-border data flows and that remove special privileges for state-owned enterprises.  These are good goals in and of themselves but it’s worth remembering that accomplishing them shouldn’t be a requirement for completing a trade agreement that lowers tariffs.

We should always keep that in mind when politicians claim that TPA is “ambitious” or “updated for the 21st Century.”  Much of that updating is merely kowtowing to current protectionist sensibilities.  

Aside from negotiating objectives, the rest of TPA deals with notification and oversight by Congress.  There has been significant controversy from the Left over how much access members of Congress or civil society groups have to review negotiating proposals and drafts and to have their concerns heard by U.S. negotiators.  These rules can be useful in promoting good governance and keeping the process open and, therefore, less susceptible to capture by narrow interests.  But some oversight requirements exist merely to gum up the process and pressure negotiators to water down deals to appease protectionist constituencies.

As Congress prepares to debate the bill there will be a lot of statements made about its contents and their consequences.  Let’s take an early look at some of the claims being made now and see how they match up with reality.

Transparency

According to Senator Wyden:

This time, Trade Promotion Authority does much more than before. We have long questioned why, if somebody believes in trade and wants more of it, they would insist on keeping agreements secret. This time, TPA will require information about U.S. positions on future treaties to be publicized as they are made. There is more to be done, but we’re finally bringing sunlight into the trade process.

This is a genuinely new addition to TPA and to the trade agreement negotiating process.  The current bill would require the administration to provide public summaries of its negotiating positions.  This will give the public something concrete to debate without having to resort to conspiracy claims or wild theories.  It will also help everyone see more clearly how negotiators intend to implement the negotiating objectives of TPA.

It will also require that every member of Congress has access to the full text of the negotiations from beginning to end.

This mirrors the current policy of the administration, which was written into the 2014 TPA bill in an effort to make it official.  The current bill addresses an obvious complaint by additionally ensuring that not only members of Congress but some members of their staff can see the drafts as well.  The fact that members of the President’s own party are clamoring for this privilege shows how much distrust there is between the White House and Congressional Democrats on this issue.

For the treaty currently under negotiation, the Trans-Pacific Partnership, as well as all future agreements, TPA will require that the entire text be made public for 60 days before the president signs it. That means a deal will be public for at least four months before Congress votes on whether to approve it.

This too is something brand new in the current bill.  In the past, TPA has required various act be done prior to signing an agreement.  These are still in place in the new bill. The President has to notify Congress of his intent to sign the agreement 90 days before doing so and has to provide Congress with a list of required changes to U.S. law more than 60 days before signing.  There are also mandated delays between signing the treaty and introducing the implementing legislation in Congress. 

All in all, the fast track process is not especially fast, and this additional requirement of publishing the text 60 days before signing won’t slow it down any.  However, it will mean that the text is publicly available for longer before Congress votes.

Another new thing in this year’s TPA bill is the creation of a “Chief Transparency Officer” within the Office of the U.S. Trade Representative to “coordinate transparency in trade negotiations.”  It will be very interesting to see whether and how this official impacts the negotiating process.

Human Rights

Senator Wyden and the White House are trumpeting the fact that this new TPA bill “makes human rights a negotiating objective of trade treaties for the first time in history.”  The current TPA bill does indeed use the phrase “human rights” in one paragraph in a list of broad “overall” negotiating objectives:

(11) to ensure implementation of trade commitments and obligations by strengthening good governance, transparency, the effective operation of legal regimes and the rule of law of trading partners of the United States through capacity building and other appropriate means, which are important parts of the broader effort to create more open democratic societies and to promote respect for internationally recognized human rights

The italicized portion was added in the current bill but the rest was in the 2014 bill as well.  This objective is sufficiently vague as to be completely meaningless.  Various provisions in trade agreements could be considered as strengthening good governance.  And it’s not clear what exactly any of that has to do with “internationally recognized human rights,” so this objective is really nothing more than political fluff. 

That’s probably for the best.  Trade agreements improve people’s lives on their own by reducing impediments to mutually beneficial exchange.  The benefits of economic growth in improving justice and well-being around the world eclipse any accomplishments derived from the promotion of “human rights” through international treaties.

Labor and Environment

The new TPA bill has negotiating objectives on labor and environment regulation.  According to Senator Wyden:

[TPA] directs our trading partners to adopt and maintain core international labor standards, rather than just assuming that countries’ existing labor laws are enough, as some past deals have done. It directs trade negotiators to obtain some of the strongest environmental protections to date across 40 percent of the global economy.  For the first time, our trade policy will help raise the bar for core labor, environmental and human rights standards around the world, instead of letting our competitors race to the bottom.

Wyden correctly characterizes the U.S. negotiating position on labor and environment rules in trade agreements, but the claim that this is new is completely false.  The current bill’s labor and environment objectives formalize U.S. policy that has been in place since Democrats forced it on President Bush in 2007.  The last four trade agreements the United States negotiated (with Peru, Panama, Colombia, and Korea) all have labor and environment provisions in line with the current TPA bill’s negotiating objectives.

There is, however, no “race to the bottom” on these issues among U.S. trading partners.  On the contrary, increased trade and investment that comes from reducing trade barriers leads directly to economic development, which leads to better working conditions and environmental quality.  Nevertheless, the claim that trade will impoverish everyone if we don’t tax products made by poor foreigners remains a staple argument of trade skeptics.

It’s worth noting the Obama administration has been pushing for even more restrictive labor and environment regulations in the TPP than are called for under the current TPA bill.

For example, another claim by Senator Wyden 

We fought hard for these provisions not only because it was the right thing to do, but also because we have so much to gain. Illegal logging alone costs the U.S. timber industry $1 billion every year.

We know from leaked drafts that the TPP will likely require the criminalization of trade in lumber harvested without permission from foreign governments—similar to current law in the United States after amendments to the Lacey Act in 2008.  Wyden’s mention of the U.S. timber industry aptly demonstrates the Baptists-and-bootleggers nature of this “conservation” law.  In any event, while logging is being addressed in the TPP, doing so is not mandated by the new TPA bill, a fact which Wyden glosses over.

Internet Freedom

How trade agreements might impact the internet, and data flows more generally, has been an interesting new issue for trade policy.  According to Wyden, the current TPA bill calls for the liberalization of cross border data flows:

Defending and expanding a free and open Internet is at the very core of this legislation, which is why this bill sets new priorities to ensure information can flow freely across national borders.

Most of the substance of TPA’s objective regarding data flows was in the 2002 TPA under an objective titled “Electronic Commerce.”  The current TPA bill renames that objective “Digital Trade in Goods and Cross-Border Data Flows” and adds a specific demand that governments not “require local storage or processing of data.” 

This is a laudable objective that seeks to prevent protectionist policies that could balkanize the global internet.  It will be interesting to see how this objective translates into specific obligations under the TPP or a potential U.S.-EU trade agreement.  Of course, one way that the United States could help prevent data-localization policies is by not spying on the communications of foreign nationals whose data travels through U.S. based servers.

Thankfully, Senator Wyden also addresses the issue of internet freedom and intellectual property enforcement:

That is far from the only digital issue at stake in upcoming trade deals. We worked with the Internet community to ensure that the United States will never ask for or accept a trade agreement that contains provisions like those in PIPA and SOPA, which would have broken the Internet to enforce copyright provisions. We successfully pushed U.S. trade negotiators to seek new provisions on limitations and exceptions on copyright in the Trans-Pacific Partnership negotiation, and we’re glad the administration has moved in a new direction on these policies. These are provisions that are consistent with what is known as “fair use,” and are vital for researchers, journalists, and an informed public.

As far as TPA goes, this bill includes only one divergence from the 2002 law by insisting that trade agreements promote strong IP enforcement “in a manner that facilitates legitimate digital trade.”  It will be very interesting to see how the TPP ultimately deals with site-blocking and liability for internet service providers—key issues in the SOPA debate. 

On fair use, this statement from R Street on TPA’s IP objectives is informative:

“Although R Street supports TPA legislation in principle, we’re strongly concerned about how it may affect digital copyright in practice, and whether it will affect how ordinary citizens lawfully use copyrighted works,” said Mike Godwin, general counsel and director of innovation policy at R Street. “Current TPA language stresses ‘strong’ enforcement measures, but doesn’t mention important exceptions and limitations that apply under our copyright laws.”

Such exceptions could include access for the blind and disabled, fair use or temporary copies as required by computers, cloud services and other lawful digital uses.

The main complaint about U.S. trade policy regarding intellectual property is that U.S. negotiators push a one-sided agenda driven by rights holders to the detriment of users.  Wyden seems to believe that the TPP will strike a good balance, but this TPA bill does nothing to challenge the current bias.

Sovereignty

This package for the first time states unequivocally that trade agreements cannot change U.S. law without congressional action.

This is new to TPA but not at all new to U.S. trade policy.  U.S. trade agreements have always contained assurances that the treaty’s implementing legislation does not create private rights of action.  You cannot sue the U.S. government in U.S. court for violating its trade obligations.  There is no political movement to change this.  Making the practice a formal demand of TPA will change nothing, but it might soothe the fears of some people who don’t understand the history of trade agreements in U.S. law.

ISDS

Senator Wyden jumps into the debate over investor-state arbitration:

And it ensures that foreign companies have no more rights in international tribunals than they do in the U.S. court system.

This is also nothing new.  The same statement is made in the 2002 TPA law. 

Revoking Fast Track

Here’s what the White House is saying about the option under the new TPA bill for revoking fast track if Congress doesn’t think the agreement adheres to TPA’s objectives:

It gives Congress new ability to revoke trade authority procedures from trade agreements if the Executive Branch has failed or refused to notify or consult with the Congress and the public in accordance with congressional guidelines.

The new TPA bill does lay out the procedures, in the Senate at least, that would govern a motion to revoke fast track privileges for a trade agreement.  Specifically, the motion would need to be supported by a majority vote in the Senate Finance Committee and 60 Senators in a floor vote.

It makes sense to have some mechanism to check whether TPA’s negotiating objectives have been met.  This scheme appears to provide that without unduly burdening the fast track process with obstructionist maneuvers.  But it’s worth noting that TPA has never actually bound Congress to use fast-track procedures because each house of Congress maintains the power to change its procedures in violation of TPA.  House Democrats did this in 2007 to prevent the U.S.–Colombia FTA from getting a vote. 

Despite claims that the current TPA bill establishes a new procedure for revoking fast-track consideration, it would more accurately be described as merely recognizing that normal rules-setting procedures can be used to do derail a trade agreement if Congress wants to do that.

Currency

The White House also claims that the TPA bill “addresses currency matters as part of a broader effort to level the playing field for American workers and businesses.”  Thankfully, this TPA bill, like the 2014 bill, does  not actually require negotiators to push for disciplines on currency manipulation.  It merely demands that currency manipulation be addressed somehow in the agreement.

Unfortunately, currency manipulation is the menace du jour of American protectionists, who claim incredulously that the ability to impose tariffs on countries with low currency values is essential for our economic wellbeing.  Our trading partners in the TPP have vociferously resisted the inclusion of exchange rate or monetary policies in any trade agreement.

Some members of Congress are already planning to introduce an amendment to TPA that would strengthen the currency negotiating objective, potentially delaying or even scuttling the TPP. 

For 25 years the campaign against “deadbeat dads” has nestled at that political sweet spot where conservatives, women’s advocates and budget hawks could all join in one accord. But what happens when the dads don’t have the money? Following the shooting death of Walter Scott in South Carolina, whose reasons for fleeing police at a traffic stop may have included an outstanding warrant for $18,000 in child support, interest and penalties, the New York Times investigates:

“Every job he has had, he has gotten fired from because he went to jail because he was locked up for child support,” said Mr. [Rodney] Scott, whose brother was working as a forklift operator when he died. “He got to the point where he felt like it defeated the purpose.”

One problem is that many of the techniques used to pressure fathers to pay support – including seizing bank accounts, “suspending driver’s licenses and professional licenses,” and jail terms even when brief – is that they tend to make it harder for the targets to resume earning wages in the aboveground economy. Lockups are themselves common: “in 2009, a survey in South Carolina found that one in eight inmates had been jailed for failure to pay child support. In Georgia, 3,500 parents were jailed in 2010.”

Whatever the pluses and minuses of such methods when aimed at the sorts of dads who have lawyers on retainer and access to offshore accounts, much of the laws’ punitive edge falls on those whose ability to pay is often notional at best:  

A 2007 Urban Institute study of child support debt in nine large states found that 70 percent of the arrears were owed by people who reported less than $10,000 a year in income. They were expected to pay, on average, 83 percent of their income in child support — a percentage that declined precipitously in higher income brackets.

In welcome if belated coverage, the Times and other press outlets have lately been documenting some of the ways in which low-level law-enforcement can snowball into life-changing consequences for those caught up in the system; last week, the paper documented how drivers’ license suspensions push many people who owe court debts further under water. Inevitably, some reformers on the legal Left wish to address these problems by adding new layers of government endeavor, such as new squadrons of tax-paid civil defense lawyers to fight child support and court-fine cases on behalf of debtors. Libertarians tend to ask more radical questions about whether government already tries to do too much – whether, for example, it makes sense to cross-criminalize between debt offenses and licensing, and whether an 83 percent marginal “tax” rate is likely to work out any better for low earners than it does for high ones. Isn’t it time the political class began catching up with these debates? 

California has had several years of record low rainfall, resulting in a severe water shortage. Gov. Jerry Brown (D) has responded by ordering a 25 percent reduction in urban water system use.

Are there any solutions to the state’s water shortage other than government mandates? Gary Libecap, professor of environmental management at the University of California, Santa Barbara, argues in a recent issue of Regulation that the restoration of clear water ownership rights and the cultural and political acceptance of water markets is an easier solution.

Conventional accounts of water problems in the West often blame farmers and their excessive use of water in places like the vegetable-farming Central Valley. But according to Libecap, “farmers are not the source of the problem. … Most would be pleased to sell or lease water that could earn more than is generated in agricultural production.”

But farmers haven’t traded away some of their water rights because of the “public trust doctrine,” as first described in a 1970 Michigan Law Review article by Joseph Sax. Libecap explains:

According to Sax, the judiciary could direct public policy for protecting diffuse public uses from narrow private ones. The article energized legal scholars and advocacy groups to expand the doctrine and to weaken private property rights.

The most celebrated incorporation of the public trust doctrine came in 1983 when the California Supreme Court in National Audubon Society v. Superior Court ruled that the “core of the public trust doctrine is the state’s authority as sovereign to exercise a continuous supervision and control over” the waters of the state to protect ecological and recreational values. The ruling expanded the role of the state in reallocation of water as public values changed; asserted that existing rights were non-vested and therefore could be reallocated without compensation; and affirmed broad, open standing to citizens to raise a claim of harm under the public trust against private water users.

As a result of that court decision, the practice of restricting water trades in California is widespread. Some 22 counties have enacted ordinances that block groundwater transfers. When communities are granted a veto over proposed water transfers, “water rights are so diffused and uncertain that no party (except farmers) bears the opportunity costs of failed exchanges,” according to Libecap. “The solution is to define water rights more precisely” and allow exchanges.

Some fear that environmental concerns such as stream flows adequate to support fish habitats would be given short shrift without the public trust doctrine. But, writes Libecap,

private water rights are traded for augmenting stream flows routinely by Oregon’s Freshwater Trust… Environmentalists pay for the water desired for streams. Hence, state environmental mandates are not necessary to protect aquatic and riparian habitats.

In an ideal world, there would be no federal water projects that benefit California farmers. But that policy reform is a long way from happening. In the meantime, facilitating water trades from those farmers to urban consumers would allow water to be priced correctly to reflect its scarcity and eliminate the need for arbitrary regulatory restrictions on water use.

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.

This week, as Pope Francis announced the Vatican will host a climate change summit later this month focusing on “sustainable development,” the conventional wisdom of “sustainability” came under fire.

For example, New York Times’ report Eduardo Porter penned an article “A Call to Look Past Sustainable Development” with this provocative introduction:

The average citizen of Nepal consumes about 100 kilowatt-hours of electricity in a year. Cambodians make do with 160. Bangladeshis are better off, consuming, on average, 260.

Then there is the fridge in your kitchen. A typical 20-cubic-foot refrigerator—Energy Star-certified, to fit our environmentally conscious times—runs through 300 to 600 kilowatt-hours a year.

American diplomats are upset that dozens of countries—including Nepal, Cambodia and Bangladesh—have flocked to join China’s new infrastructure investment bank, a potential rival to the World Bank and other financial institutions backed by the United States.

The reason for the defiance is not hard to find: The West’s environmental priorities are blocking their access to energy.

Porter’s article announced the release of “An Ecomodernist Manifesto”—a work by a collection of “scholars, scientists, campaigners, and citizens” who “write with the conviction that knowledge and technology, applied with wisdom, might allow for a good, or even great, Anthropocene.”

Sounds interesting.

The main concept behind the Ecomodernist Manifesto is that “sustainability” is the wrong approach. Porter describes it this way in his article:

The “eco-modernists” propose economic development as an indispensable precondition to preserving the environment. Achieving it requires dropping the goal of “sustainable development,” supposedly in harmonious interaction with nature, and replacing it with a strategy to shrink humanity’s footprint by using nature more intensively.

Aware of the pitfalls of gross generalities, we’ll offer that the Ecomodernists see technology as humankind’s greatest tool and our way forward rather than inevitably leading to our downfall.

While we think the Ecomodernists are a bit overly optimistic in the pace of development/deployment of new energy technologies, overplay the climate change-related urgency of such development, and see too much involvement of the state, their general take on the issue of humanity’s association with the earth’s environment resonates well. Consider this:

Modernization has liberated ever more people from lives of poverty and hard agricultural labor, women from chattel status, children and ethnic minorities from oppression, and societies from capricious and arbitrary governance. Greater resource productivity associated with modern socio-technological systems has allowed human societies to meet human needs with fewer resource inputs and less impact on the environment. More-productive economies are wealthier economies, capable of better meeting human needs while committing more of their economic surplus to non-economic amenities, including better human health, greater human freedom and opportunity, arts, culture, and the conservation of nature.

The Ecomodernists recognize that the “modernization process is far from complete” but emphasize that it requires decoupling, rather than re-coupling, with the environment (the latter being the goal of many “sustainable” ideals).

We’re only brushing the surface here, so to really get into the philosophy that they are laying out, you ought to have a look at the whole Manifesto. If nothing else, it’ll be the start of an interesting conversation. For us, it seems to lay out a much better course, although imperfect in some details, for “environmentalism” to follow—one in which the current feeling of pessimism is replaced by optimism (born from history).

Also expressing a disdain for the “sustainability” craze this week is George Will. In his Washington Post column, “’Sustainability’ Gone Mad on College Campuses,” he likens the dedication to sustainability to that of religious fundamentalism (perhaps foreshadowing the pope’s announcement). He writes

Like many religions’ premises, the sustainability movement’s premises are more assumed than demonstrated. Second, weighing the costs of obedience to sustainability’s commandments is considered unworthy. Third, the sustainability crusade supplies acolytes with a worldview that infuses their lives with purpose and meaning. Fourth, the sustainability movement uses apocalyptic rhetoric to express its eschatology. Fifth, the church of sustainability seeks converts, encourages conformity to orthodoxy and regards rival interpretations of reality as heretical impediments to salvation.

Will’s contempt bubbled over as his column discussed a green-backed push for colleges to rid fossil fuel holdings from their endowments. He astutely points out:

The effect of these decisions on the consumption of fossil fuels will be nil; the effect on the growth of institutions’ endowments will be negative. The effect on alumni giving should be substantial because divesting institutions are proclaiming that the goal of expanding educational resources is less important than the striking of righteous poses—if there can be anything righteous about flamboyant futility.

Not only will their effect on the consumption of fossil fuels be “nil” but so too will their effect on the course of future global warming, as we pointed out in this tweet (in response to Bill McKibben’s attempt to shame Harvard into divesting from fossil fuels):

 

Will ultimately offers up this modest proposal:

College tuitions are soaring in tandem with thickening layers of administrative bloat. So here is a proposal: Hundreds of millions could be saved, with no cost to any institution’s core educational mission, by eliminating every position whose title contains the word “sustainability”—and, while we are at it, “diversity,” “multicultural” or “inclusivity.” The result would be higher education higher than the propaganda-saturated version we have, and more sustainable.

Be sure the check out his whole column, here.

And finally, on a lighter note, we came across an–uh–interesting article in FirstPost.com, an India-based news site.

Apparently a team of British researchers (with little else to do?) dug through popular song lyrics to determine how our moods were influenced by the weather (through song) and how climate change may alter this in the future. According to FirstPost.com, here’s what they found:

Climate change is predicted to intrude into almost every area of life—from where we live, to what we eat and whom we war with. Now music can be added to the list.

That’s the unusual idea put forward by British researchers on Tuesday, who say the weather has powerfully but discreetly influenced the soundtrack to our lives. And tastes in songs are likely to change as the climate shifts.

Fancy listening to the Beatles’ “Here Comes The Sun” when you are grinding out yet another long, sweaty heatwave? “These assumptions we have about certain weather being good and certain weather being bad, like sun being good—that might change,” researcher Karen Aplin of the University of Oxford said at a European Geosciences Union meeting in Vienna.

The article was headlined “Wonder Why Our Songs Are Getting Worse? It Might Be because of Global Warming.”

That, perhaps, may explain why certain preferences for “oldies” don’t often include disco—after all, the ’70s were a relatively cold period!

Plenty of writers have claimed that the Federal Reserve fueled last decade’s subprime boom by holding interest rates too low for too long after the dot-com crash. But hardly anyone has tried to explain why the Fed did so.

Yours truly has taken a stab at it, together with my former student (and now eminent Market Monetarist) David Beckworth and my former University of Georgia colleague (and current Özyeğin University faculty member) Berrak Bahadir. Here is our just-published article in the Journal of Policy Modeling.

Our argument, in brief, is that the Fed blew it by not treating the exceptionally high post-2001 productivity growth rate as warranting an upward revision of the Fed’s interest-rate target (as neoclassical theory would suggest). Instead, Fed officials believed they could maintain a below-natural interest rate target without risking a corresponding increase in inflation.

We supply lots of evidence supporting our interpretation and, thereby, supporting the view that excessively easy Fed policy did indeed contribute substantially to the subprime boom. We also show how nominal gross domestic product targeting would have prevented this outcome, and that it would have done so to an even greater extent than strict adherence to a Taylor Rule.

Readers familiar with my arguments favoring a “productivity norm,” as presented in Less Than Zero and elsewhere, will understand the claims made in our paper as a specific application of those more general arguments.

The publishers have kindly allowed us to make the article available here without a pay wall for a brief period only, so consider saving it if you might want to have it for longer.

[Cross posted from Alt-M.org]

Ian Millhiser has responded to both my defense of Herbert Spencer and one from Reason’s Damon Root. Unwavering in his belief that Spencer was a monster, Millhiser has doubled down on his claim that Spencer advanced a kind of “genocidal libertarianism.” Millhiser has rightly retreated, however, from boldly claiming, without evidence, that Rand Paul is a fan of Herbert Spencer. I thank him for his response, and I offer a few more thoughts on Spencer here.

First, it’s clear that Millhiser is an active and vehement opponent of libertarianism. He seems to believe–although I don’t want to put words in his mouth–that libertarianism is inherently “genocidal,” regardless of whether it’s advocated by Spencer, Ayn Rand, Friedrich Hayek, or Milton Friedman. So, on one level, Millhiser’s reaction to Spencer is simply a reiteration of his distaste for libertarianism and, insofar as that is the source of Millhiser’s discontent, I’m not going to try to argue with him that libertarianism isn’t inherently a cold, heartless philosophy. The possibility of that debate being productive is long passed.

But is there something particularly odious about Spencer’s brand of libertarianism, as Millhiser seems to think? Spencer writes with the peculiar verve of a 19th-century British intellectual, coming from the same milieu as anthropologists who would blithely discuss the “savage and uncivilized mongoloid and negroid races.” Similarly, Spencer would insouciantly attack the lazy, shiftless, and incompetent.

Post-modern relativism makes us balk at these absolute terms. In modern politics we tend to think more about the conditions into which people are born rather than their personal responsibility. Discussions of the “deserving poor” and “undeserving poor” are now largely uncouth.

But to Spencer, as to most 19th-century political and social theorists, the distinction mattered. Like many modern libertarians and conservatives, Spencer was very concerned that profligate and indiscriminate assistance for the poor would incentivize bad behavior. Although many on the left loathe the idea that welfare can create bad behavior, most people understand that concern. To anyone who’s ever had to cut off ne’er-do-well friends or family from further charity in order to help them out, those concerns make sense.

Viewing society as something like an organism, Spencer thought broadly about how laws and policies could either encourage or discourage certain behaviors. As a Lamarckian–someone who believes acquired traits are heritable–he was concerned that those bad behaviors would be transmitted down through the generations. His end goal was an affluent society based on voluntary interaction in which sympathy for fellow men thrived. If the government did too much to encourage certain types of harmful behavior, then Spencer feared that, in the long run, the pain and suffering would be greater.

What types of harmful behavior? Spencer was surely against the cronyistic businessman who prefers to use government to extract from taxpayers rather than building an honest business that adds to the sum total of wealth in society. In a system that cultivated such people, the doctrine of “survival of the fittest” would mean that “the fittest” were cronies rather than honest businessmen. Under his view of social evolution, the cumulative effect of such crony-supporting policies would be a society in which innovative entrepreneurs are replaced by cronies who lack creativity and pluck and do business with an army of lobbyists. Laws that perpetuate such cronyism would be “acts of parliament to save silly people,” to use a Spencer quote cited by Millhiser.  

Similarly, Spencer would also oppose the person who resides on the dole without working, the kind of person the British press, in particular, loves to highlight. Spencer believed, not irrationally, that facilitating such behavior will only breed more of it. Most importantly, in the long run there will be great suffering in societies that massively facilitate such behavior, whether it is cronyism or welfare dependency.

Does this mean that Spencer wrote seemingly hard-hearted things like “widows and orphans should be left to struggle for life and death?” Yes. To Spencer, the laws that categorically try to prevent such suffering would only result in long-term suffering. For those who refuse to help themselves, and for those who persist in patterns of bad, self-destructive behavior, it is true that he thought many should be allowed to die. Again, however, this belief is not as radical as it sounds. Both law and charity can only do so much, and human beneficence can only be stretched so far for those who are unwilling to change their behavior. Ask a social worker how much patience he has for the clients who don’t even seem to be trying, whether they are heroin users or morbidly obese diabetic smokers. “I can only do so much,” the social worker would probably say. But for those willing to change their behavior, or at least to try, Spencer had great sympathy.

He also believed that laws that try to solve suffering merely reorganize the goods of society without solving the underlying problem, namely, the conditions that produce and exacerbate poverty. As he wrote, “If it gives enough to some who else would not have enough, it must inevitably reduce certain others to the condition of not having enough. And thus, to the extent that a poor-law mitigates distress in one place, it unavoidably produces distress in another.”

But Spencer didn’t oppose charity; he simply opposed the type of charity that produces bad behaviors, which gives “pity-inspiring babes the market value of 9d. per day.” Again, here he certainly has a point, and similar concerns led to the Welfare Reform Act of 1996. Spencer was “only against injudicious charity.” In contrast, “to that charity which may be described as helping men help themselves,” he had no objection.

This too is not an uncommon attitude, and one that is certainly not original to Spencer. I imagine Millhiser finds such beliefs abhorrent, but, again, that is merely a disagreement over some aspects of conservatism and libertarianism, not a specific beef with Herbert Spencer. Nor is it strange for Spencer to argue, as Millhiser points out, that profligate and indiscriminate charity can actually increase suffering. Again, you need only to think of those people you have known who were clearly facilitated into self-destructive behavior by indiscriminate charity.

Finally, given that it was recently tax day, Spencer had poignant things to say about how government-provided charity actually diminishes the feelings of sympathy he thought necessary to an advanced society. He was also concerned that voluntary contributions to large, anonymous charitable organizations would also diminish beneficence, although he prefered such organizations to “poor laws.” The best charity, he thought, should be done face to face and not in situations where the “beneficiary is not brought in direct relation with the benefactor.” Millhiser quotes this portion as if it were self-refuting, but the extended passage is actually quite moving and is obviously not the musings of a “genocidal” monster:

In deciding how misery is best alleviated we have to consider, not only what is done for the afflicted, but what is the reactive effect upon those who do it. The relationship that springs up between benefactor and beneficiary is, for the present state of the world, a refining one. Having power to muzzle awhile those propensities of the savage which yet linger in us–corrective as it is of that cold, hard state of feeling in which the every-day business of life is pursued–and drawing closer as it does those links of mutual dependence which keep society together–charity is in its nature essentially civilizing. The emotion accompanying every generous act adds an atom to the fabric of the ideal man. As no cruel thing can be done without character being thrust a degree back toward barbarism, so no kind thing can be done without character being moved a degree forward toward perfection.

But government-enforced charity, wrote Spencer, has the opposite effect:

Watch a rate-payer [tax-payer] when the collector’s name is announced. You shall observe no kindling of the eye at some thought of happiness to be conferred–no relaxing of the mouth as though selfish cares had for the moment been forgotten–no softening of the voice to tell of compassionate emotion: no, none of these; but rather shall you see contracted features, a clouded brow, a sudden disappearance of what habitual kindliness of expression there may be: the tax-paper is glanced over half in fear and half in vexation; there are grumblings about the short time that has elapsed since the last rate; the purse comes slowly from the pocket; every coin is grudgingly parted with; and after the collector (who is treated with bare civility) has made his exit, some little time passes before the usual equanimity is regained. Is there any thing in this to remind us of the virtue which is “twice blessed”? Note again how this act-of-parliament charity perpetually supersedes men’s better sentiments.

After contributing taxes, the “benevolent” taxpayer can walk away with a clean conscience. He might walk past a pauper on the street, Spencer writes, telling him, “I have nothing for you my good man; you must go to your parish.” “Thus does the consciousness that there exists a legal provision for the indigent, act as an opiate to the yearnings of sympathy,” Spencer writes.

He continues:

Had there been no ready-made excuse, the behaviour would probably have been different. Commiseration, pleading for at least an inquiry into the case, would most likely have prevailed; and, in place of an application to the board of guardians, ending in a pittance coldly handed across the pay-table to be thanklessly received, might have commenced a relationship good for both parties–a generosity humanizing to the one, and a succour made doubly valuable to the other by a few words of consolation and encouragement, followed, it may be, by a lift into some self-supporting position.

In truth there could hardly be found a more efficient device for estranging men from each other, and decreasing their fellow-feeling, than this system of state-almsgiving. Being kind by proxy!–could any thing be more blighting to the finer instincts? Here is an institution through which, for a few shillings periodically paid, the citizen may compound for all kindness owing from him to his poorer brothers. Is he troubled with twinges of conscience? Here is an anodyne for him, to be had by subscribing so much in the pound on his rental. Is he indifferent as to the welfare of others? Why then in return for punctual payment of rates he shall have absolution for hardness of heart. Look; here is the advertisement. “Gentlemen’s benevolence done for them, in the most business-like manner, and on the lowest terms. Charity doled out by a patent apparatus, warranted to save all soiling of fingers and offence to the nose. Good works undertaken by contract. Infallible remedies for self-reproach always on hand. Tender feelings kept easy at per annum.”

And thus we have the gentle, softening, elevating intercourse that should be habitually taking place between rich and poor superseded by a cold, hard, lifeless mechanism bound together by dry parchment acts and regulations, managed by commissioners, boards, clerks, and collectors, who perform their respective functions as tasks, and kept a-going by money forcibly taken from all classes indiscriminately. In place of the music breathed by feeling attuned to kind deeds, we have the harsh creaking and jarring of a thing that cannot stir without creating discord–a thing whose every act, from the gathering of its funds to their final distribution, is prolific of grumblings, discontent, anger–a thing that breeds squabbles about authority, disputes as to claims, browbeatings, jealousies, litigations, corruption, trickery, lying, ingratitude–a thing that supplants, and therefore makes dormant, men’s nobler feelings, while it stimulates their baser ones.

Herbert Spencer was a lot of things, but he was not a monster.

It’s hard to prove or disprove statements of broad social sweep, but we do know one thing: Nicholas Nassim Taleb will not defend his assertion that big corporations are “vastly more dangerous” than big governments.

With notable frequency, people assume that I’m a reader of Taleb’s books. Evidently my thinking and his align in important ways. It’s made me mildly interested in reading him, though time constraints (or time mismanagement) have not yet allowed it.

My minor affinity with Taleb caused me to focus just a little more than I otherwise would have on a tweet of his the other day.

Big corporations are vastly more dangerous to the citizenry than big government, but with good news: corps end up committing suicide.

— Nassim NicholنTaleb (@nntaleb) April 15, 2015

That premise really caught my eye. What is the relative danger posed by governments and corporations? Are corporations “vastly more dangerous”?

I’d thought that the jury was pretty much in on that question. With hundreds of millions killed outright by government action in the 20th century alone, the quantum of death and destruction wrought by governments is almost certainly greater than corporations’ destructive work.

Like any tool, corporations are dangerous. Death and injury is a byproduct of their delivery of food, shelter, transportation, entertainment, and every other want and need of consumers, because they often miscalculate risk or just make stupid mistakes.

(I should note that corporations are just a way of organizing people. Their existence isn’t demanded by any principle, and they arguably violate libertarian principle by acting as government transfer of risk from owners to consumers. But by historical accident they do exist, and they are an organizational conduit through which much productive human action passes.)

Governments are dangerous, too, to the point where it sometimes appears that unpleasant byproducts are the intended product. According to liberal theory, we enter into political society for protection from each other and outsiders. The day-to-day operation of government in the United States is pretty good relative to other countries and other historical eras. But Americans today are caged in droves and killed with regularity as a byproduct of the war on drugs, for example. People around the world are episodically slaughtered in the millions by literal wars entered into by governments.

Is there any comparable danger produced by corporations?

There are ways of attributing the acts of governments to corporations. The lamentable military-industrial complex is responsible for a vastly greater war-making machine than our society needs, I think. That’s just an extreme example of crony capitalism. But an essential condition of such violent potential and actual violence is government. Corporations cannot and do not tax, conscript, and kill under claim of legal authority to do so. Only governments do that. That’s somewhat definitional, and in practice I think it’s nearly beyond dispute that governments are the more dangerous for it.

It could be that Taleb is thinking in terms of a stylized sense of “danger” rather than literal risk of mortality and morbidity. So I was being genuine when I tweeted:

Can’t fathom how @nntaleb concludes “Big corporations are vastly more dangerous to the citizenry than big government.”

— Jim Harper (@Jim_Harper) April 15, 2015

Taleb responded by calling me a lover of big corporations, dishonest, and a lobbyist/prostitute. I have personal foibles, though I think they’re different from the ones in Taleb’s catalog, but my character issues reveal nothing about the relative danger posed by corporations and governments. The question is important because it implies which institution we should more urgently seek to fetter for purposes of public protection.

The good evidence about the danger of governments is not an argument that they don’t supply some benefits. The utter absence of evidence that corporations are more dangerous leaves as an ineluctable conclusion, I think, that governments are the more dangerous of the two social institutions.

In light of “libertarianish” Sen. Rand Paul’s recently announced candidacy for president, the New York Times’ Paul Krugman veered into public opinion to make a bold claim that most Americans are either liberal or conservative and little else.

He explains that in theory there could be more than simply liberals and conservatives. For instance, if political attitudes were structured along multiple dimensions like along economics and social issues, that would produce at least four different ideological groups:

  • Liberals (economically and socially liberal)
  • Conservatives (economically and socially conservative)
  • Libertarians (socially liberal and economically conservative)
  • “Hard hats” or communitarians (socially conservative and economically liberal)

Yet, without referencing data, he asserts that in practice few people exist in the libertarian or “hard hat” (or communitarian) boxes. His graphic is pasted below:

Is Krugman’s estimate accurate? A growing body of literature overwhelmingly suggests that it isn’t. (For instance see here, here, here, here, here, also see here, among others.)

For this reason, it’s not surprising that statisticians and academics used survey data in response to Krugman to demonstrate that Americans are more complicated than just red and blue. For instance, Nate Silver at FiveThirtyEight cross-tabs support for wealth redistribution and same-sex marriage to show about a quarter of Americans fit in the libertarian box: oppose income redistribution and support marriage equality.

However, one could argue that by this definition, based on only these two questions, Paul (who indirectly instigated this debate) may not even be categorized in the “libertarian” box.

Perhaps a more precise way to measure this is to use multiple issue questions to derive a measure of each person’s ideology on economic issues, and multiple questions to estimate their ideology on social issues, and then use their scores as coordinates to map them across the four quadrants.

Figure 1 uses survey data from the American National Election Study Evaluations of Government and Society Survey 2 (EGSS 2). I average responses to several questions about economics to create an “economic issues scale” scaled from liberal to conservative. Similarly, I use questions about immigration and religion for a “social issues scale” scaled from liberal to conservative. (All question wording is found in the footnotes below.) Thus, each respondent is assigned an “economics” and “social” ideology score used to map their ideological coordinates and placement in one of the four boxes.

Figure 1 reveals a complicated electorate with 19 percent in the libertarian bucket (economically conservative and socially liberal) and 20 percent in the “hard hat” box (economically liberal and social conservative). This is a far cry from Krugman’s estimate of “basically empty” boxes.

Where Do The People Live, Politically Speaking?

Figure 1

Note: ANES 2012 EGSS 2, each dot represents an individual respondent. The Social Issues Scale is coded left to right, liberal to conservative. The Economics Issue Scale is coded bottom to top, liberal to conservative.

These measures also find that 31 percent conform to traditional conservative and 30 percent to traditional liberal issues positions on both economic and social issues respectively.

What’s helpful about these graphs is that we can map out spatially where Americans are politically relative to each other. We can notice that Americans are not grouped together as pundits may believe and politicians may desire.

Results are not limited to just these particular questions. I replicate these general findings by plotting ideology on criminal justice reform issues versus economic ideology and then again with race issues versus economic ideology, using data from the Reason-Rupe/Princeton October 2014 national survey.

Notably, the share of libertarians and “hard-hats” is contingent upon the questions asked.

Figure 2 plots the ideological coordinates for individual survey respondents based on their answers to economic issues questions (y-axis) and criminal justice reform issues (x-axis). In fact, the criminal justice questions map onto issues differentiating Paul from other Republican presidential contenders. These variables include support for allowing nonviolent offenders to petition to have their court records sealed, perception of racial bias in the criminal justice system, and support/opposition to racial profiling. (Question wordings found in footnotes.)

Once again, the libertarian and “hard hat” buckets are quite full. Some 24 percent are in the libertarian bucket because respondents give “liberal” responses to criminal justice reform questions and conservative responses to economic questions. Another 15 percent are in the “hard hat” bucket because they expressed more conservative opinions on criminal justice issues and liberal views on fiscal issues. Another 33 percent were in the traditional liberal and 28 percent in the conservative buckets.

Criminal Justice Reform by Economic Issues

Figure 2

Note: Reason/Princeton October 2014, each dot represents an individual respondent.

Figure 3 maps ideology using answers to questions on economics and racial issues. The results: liberal, 33%; conservative, 33%; libertarian, 19%; communitarian, 15%. (Question wordings in footnote.)

Racial Issues by Economic Issues

Figure 3

Note: Reason/Princeton October 2014, each dot represents an individual respondent.

So what about traditional partisan groups? Where do they “live” in the political map? I map this in Figure 4. As expected, Republicans are more likely to cluster in the upper right, traditionally conservative quadrant, and Democrats in the lower left, traditionally liberal quadrant. Independents are fairly evenly distributed but slightly more represented in the hard hat and libertarian boxes.

Where Do the Republicans and Democrats Live?

Figure 4

Note: ANES EGSS 2 2012 Survey, Red dots indicate Republican respondents (LEFT), Blue dotes indicate Democratic respondents (RIGHT).

Like partisans, organized groups tend to come from the traditional liberal and conservative quadrants. For instance, labor unionists and members of environmental, women’s and LGBT rights groups and antiwar activists disproportionately come from the traditional liberal quadrant. Born-again Christians are disproportionately found in the traditional conservative and hard-hat buckets. Gun owners are found primarily in the conservative quadrant. Tea Partiers are found mostly in the conservative quadrant but also in the libertarian box.

This offers some insight as to why pundits tend to overlook the libertarian and hard hat boxes. Few groups seem to mobilize the libertarian and hard hat voters. Moreover, these Americans are somewhat less likely to vote and engage politically. Nearly equal shares of traditional liberals (72%) and conservatives (73%) said they were 100% likely to vote in the 2012 election, compared to 67 percent of libertarians and only 48 percent of hard hats.

When examining these groups’ other political activity, traditional liberals; (42%) were the most likely to have engaged in the 2012 election by calling an elected official, donating money or time to a campaign or cause, etc. However, only 22 percent of hard-hats did the same. Conservatives and libertarians were in the middle with about 3 in 10 engaging politically in 2012.

As some have said, “the world is run by those who show up.” Similarly, government goes to those who show up, and we pay attention to those who mobilize and engage. At the moment, hard hats and libertarians are often less likely to engage, mobilize, and vote, and thus perhaps more easily overlooked.

One will notice that the non-traditional Republican candidate Paul does the best (as does Jeb Bush) compared to their traditional Republican rivals in hypothetical matchups with Democratic frontrunner Hillary Clinton. Is Paul cutting into Clinton’s base? Or is he demonstrating an ability to mobilize new voters to his advantage? What about Bush? We’ll need more data to answer those questions.

Thinking beyond 2016, it stands to reason that candidates who choose to ignore hardhats and libertarians are at a disadvantage. Instead, candidates who seek to build larger coalitions outside of the traditional Democratic and Republican bases by appealing to libertarian and hardhat voters may find additional success.

Footnotes:

American National Election Study Evaluations of Government and Society Survey 2, 2012

Economics

Do you think that the government should provide more services than it does now, fewer services than it does now, or about the same number of services as it does now? How important is it to reduce the deficit? (Extremely important, very important, moderately important, a little important, or not important at all.) Different ways of handling the deficit have been considered. Which one of these do you prefer? (Do not reduce, tax increases only, spending cuts only, spending cuts & tax increases.) With the deficit in mind, do you favor raising, lowering, or keeping the same taxes for people who make more than $250,000 per year? Households with the highest 20% of incomes earn an average of 14.9 times as much money as households in the bottom 20%. Should this difference be larger, smaller, or about the same as it is now? Some people feel that the government in Washington should see to it that every person has a job and a good standard of living; Others think the government should just let each person get ahead on their own. Where would you place yourself on this scale? Do you think estates should not be taxed at all, only estates worth more than $5 million should be taxed, only estimates worth more than $1 million should be taxed, all estates should be taxed

Social

Which comes closest to your view about what government policy should be toward unauthorized immigrants now living in the United States? Should the government (1) make all unauthorized immigrants felons and send them back to their home country? (2) have a guest worker program that allows unauthorized immigrants to remain in the United States in order to work, but only for a limited amount of time? (3) allow unauthorized immigrants to remain in the United States and eventually qualify for U.S. citizenship, but only if they meet certain requirements like paying back taxes and fines, learning English, and passing background checks, or (4) allow unauthorized immigrants to remain in the United States and eventually qualify for U. S. citizenship, without penalties?

Which of these statements comes closest to your feelings about the (Bible/Torah/Holy Scripture)? (1) The (Bible/Torah/Holy Scripture) is the actual word of God and is to be taken literally, word for word. (2) The (Bible/Torah/Holy Scripture) is the word of God but not everything in it should be taken literally, word for word. (3) The (Bible/Torah/Holy Scripture) is a book written by people and is not the word of God.

Reason Foundation-Rupe Foundation/Princeton 2014

Race Issues

It has been reported that some police officers stop motorists or pedestrians of certain racial or ethnic groups because the officers believe that these groups are more likely than others to commit certain types of crimes. Do you approve or disapprove of this practice by the police? In recent years, do you think too much has been made of the problems facing black people, too little has been made, or is it about right? Just your impression: do you think the criminal justice system in the United States (1) treats white Americans more fairly than black and Hispanic Americans, (2) treats black and Hispanic Americans more fairly than white Americans, or (3) are they treated about the same?

Criminal Justice and Racial Equality

It has been reported that some police officers stop motorists or pedestrians of certain racial or ethnic groups because the officers believe that these groups are more likely than others to commit certain types of crimes. Do you approve or disapprove of this practice by the police? Do you favor or oppose allowing nonviolent drug offenders who have served their sentences to petition a court to have their court records sealed, making them inaccessible to the public without a court order? Just your impression: do you think the criminal justice system in the United States (1) treats white Americans more fairly than black and Hispanic Americans) (2) treats black and Hispanic Americans more fairly than white Americans, or (3) are they treated about the same?

Economics

Looking back now on the 2008 financial crisis… Do you think the government definitely did the right thing, probably did the right thing, probably did the wrong thing, or definitely did the wrong thing? As you may know, the U.S. has one of the highest corporate income tax rates among industrialized countries. Do you favor raising U.S. corporate tax rates, keeping U.S. corporate tax rates where they are now, lowering U.S. corporate tax rates to match those of other industrialized countries, or lowering U.S. corporate tax rates below those of other industrialized countries? If you had to choose, would you rather have a smaller government providing fewer services, or a larger government providing more services? As I read the following pairs of statements, please tell me which comes closer to your own opinion: we need a strong government to handle today’s complex economic problems; or, people would be better able to handle today’s problems within a free market with less government involvement.

The Government Accountability Office (GAO) releases an annual report on government duplication, fragmentation, and overlap. Since 2011 GAO has highlighted 440 different actions that Congress and the president could take to reduce this wasteful spending. This week, GAO released its updated report and included an additional 66 actions.

Here is a sample of items from this year’s report:

  • Consumer Product Safety Overlap. GAO found that more than 20 federal agencies are involved with the oversight of consumer products. For example, the Consumer Product Safety Commission is responsible for overseeing the safety of children’s toys, but the National Institute of Standards and Technologies oversees toy guns. GAO noted that the current structure does not “leverage each agency’s expertise and therefore may not be the most efficient use of scarce federal resources.”
  • Nonemergency Medical Transportation. GAO found 42 programs within the federal government that provide nonemergency medical transportation. These programs focus on enrollees who are unable to provide their own transportation because of age, income, or disability. GAO noted that many of these programs target “similar beneficiaries … and engage in similar activities.” It noted that a coordination council was created to eliminate some of these issues, but the council hasn’t met since 2008. “Without proper controls, cost or ride sharing with other non-Medicaid programs could allow for improper payments for individuals who do not qualify for Medicaid,” GAO reported.
  • Serious Mental Illness. Eight federal agencies, overseeing more than 100 programs, support individuals with serious mental illness, with 30 of those programs “specifically targeting individuals with serious mental illness.” GAO estimated that the 30 programs spent $6 billion in fiscal year 2013. While rules are in place requiring the programs to coordinate their activities, GAO said that coordination was “largely absent.”

Aside from wasting money, this “fragmentation can result in unclear roles,” reports the GAO:

Although it may be appropriate for multiple agencies or entities to be involved in the same programmatic or policy area due to the nature or magnitude of the federal effort, the instances of fragmentation, overlap, or duplication we describe … occur in areas where multiple programs and activities may be creating inefficiencies.

Even with GAO’s long-time spotlight on these issues, Congress and the president are slow to fix problems. Of the 440 previous recommendations highlighted by GAO, only 37 percent have been fully addressed, and a full 20 percent have not been addressed at all.

As Congress and the president seek to set spending levels for next year, the GAO recommendations offer straightforward ways to cut and reprioritize spending.

Jason Bedrick

Today, the left-wing Center for Tax and Budget Accountability (CTBA) released a misleading report on school choice programs in Indiana and elsewhere. Among its key findings include the following claims:

  • None of the independent studies performed of the most lauded and long standing voucher programs extant in the U.S.—Milwaukee, Wisconsin; Cleveland, Ohio; and Washington, D.C.—found any statistical evidence that children who utilized vouchers performed better than children who did not and remained in public schools.
  • According to the annual financial report of the Indiana Department of Education, Indiana spent $115 million on its voucher program in the 2014-2015 school year. In context, that means over $115 million of public, taxpayer money annually will be diverted from … the state’s public school system, and instead used to subsidize students attending private schools.

Both claims, while they contain elements of truth, are highly misleading.

Evidence for the Effectiveness of School Choice

To support its claim regarding the supposed lack of evidence for the success of school choice programs, CBTA points to a few studies of school voucher programs.

First, CTBA cites a longitudinal study of Milwaukee’s voucher program by researchers at the University of Arkansas, claiming that voucher students in grades 3-8 “performed statistically similar” to a matched group of district-school peers on standardized tests. Oddly, CTBA relies on the 2008-2009 findings, published in 2010, rather than the most recent 2012 report. In fact, as the study’s coauthor, Dr. Patrick Wolf, explains, the study found “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, 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.” The achievement growth in math was not statistically significant relative to the achievement growth of the matched district-school students, but the study concluded that Milkwaukee district-school students were “performing at somewhat higher levels as a result of competitive pressure from the school voucher program.” And because the vouchers were worth about half of the cost per-pupil at the district schools, the study found that the voucher program saved the state nearly $52 million in fiscal year 2011.

The CTBA report ignores entirely previous research from the Brookings Institution, a random-assignment study–the gold standard of social science research–that found voucher students in Milwaukee scored six Normal Curve Equivalent points higher than the control group in reading and 11 points higher in math.

CTBA also claims that the U.S. Department of Education’s study of Washington D.C.’s school voucher program “found no signfiicant difference between the performance of voucher and non-voucher students in reading and math.” That is technically true at the 95 percent confidence interval, though there were positive findings for reading scores at the 90 percent confidence interval. Moreover, students offered vouchers graduated at a rate 12 percentage points higher than the control group, 82 percent to 70 percent respectively.

To reach its conclusion, the CTBA report completely ignores numerous other gold standard studies from respected researchers at Harvard, Princeton, the University of Chicago, the Brookings Institution, and elsewhere. For CTBA’s benefit, here is a sampling:

  • 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.

As I noted recently, none of these findings are earth shattering, but each study found a statistically significant positive outcome overall or for certain subgroups, particularly low-income African-Americans who are currently the most choice-deprived.

Evidence of Savings from School Choice

By claiming that Indiana’s school voucher program cost the state $115 million in 2014-15, CTBA completely ignores the savings generated from reduced expenditures on district schools. The average cost per-pupil in Indiana’s district schools in north of $10,400, whereas the average voucher is worth less than $4,000. Indiana’s base per-pupil funding amount is about $4,600, and the state gives district schools more than $6,000 for low-income students, as well as additional funds for other categories of students (e.g. - students in special needs programs, academic honors programs, career and technical training programs, etc.), so the state saves money each time a student switches out of a district school to accept a voucher. CTBA does not even acknowledge this fact when discussing the fiscal impact to the state, let alone estimate the true fiscal impact.

Likewise, in its discussion of the fiscal impact of Indiana’s scholarship tax credit law, CTBA focuses solely on the reduction in revenue with nary a mention of the corresponding reduction in expenses. The average scholarship is worth barely $1,000, so every student who switches out of a district school to accept a scholarship saves the state a lot of money. In a forthcoming report for the Friedman Foundation for Educational Choice, using highly conservative assumptions, I calculated that the Indiana School Scholarship Tax Credit saved the state approximately $23.2 million in 2014-15.

However, CTBA does try to have its cake and eat it too. While the CTBA report never mentions the reduction in state allocations to district schools resulting from vouchers or scholarships in its discussion of the impact on state spending, it does include a section lamenting the loss of revenue to the district schools. Unsurprisingly, there is no discussion of the reduced costs associated with the reduction in student enrollment.

The CTBA report’s central claims are highly misleading. Policymakers should bury them under a truckload of New England road salt.

Neal McCluskey

There’s a lot of debate right now about whether conservatives (I don’t know if anyone thinks libertarians can be reached) should support current No Child Left Behind reauthorization efforts. The “support this” argument is that bills in the House and Senate are not ideal because they would keep a major federal role in education, but they would end many bad things in NCLB and conservatives should take what they can get politically. But we just got a terrific illustration of what happens when you cut off just a few jellyfish tentacles: they grow back.

Yesterday, an amendment was passed in the markup of the Senate bill that would restore the 21st Century Community Learning Centers program. What is the 21st CCLC? A Clinton Era program that furnishes funds – $1.2 billion in FY 2015 – for before- and after-school activities and summer programs. The problem: It appears to be a failure. As I discussed a few years ago, federal studies of the program found it not only largely ineffectual, but possibly even a negative influence. As a 2005 report summarized:

Conclusions: This study finds that elementary students who were randomly assigned to attend the 21st Century Community Learning Centers after-school program were more likely to feel safe after school, no more likely to have higher academic achievement, no less likely to be in self-care, more likely to engage in some negative behaviors, and experience mixed effects on developmental outcomes relative to students who were not randomly assigned to attend the centers.

It isn’t just Cato folk who’ve stumbled on the research. The Brookings Institutions’ Mark Dynarski just laid into the 21st CCLC last month, writing that evaluations “reported on how the program affected outcomes. In a series of reports released between 2003 and 2005…the answers emerged: the program didn’t affect student outcomes. Except for student behavior, which got worse.”

In light of the evidence, why has the 21st CCLC likely been spared in the Senate? Almost certainly because it sounds nice – who doesn’t like after-school enrichment? – and because the vast majority of voters don’t have time to research it and discover that the federal government’s own evaluations have found it wanting. And, of course, people getting money through the program likely lobbied hard to keep it. In other words, we’re almost certainly looking at classic concentrated benefits and diffuse costs: For voters and taxpayers, the 21st CCLC is but one among umpteen thousand government programs they could never keep track of and which, on an individual taxpayer basis, costs little. In contrast, for politicians sending an “I care” message, and for those getting money or services through the program, it means much more so they fight to keep it.

This is a major reason it is essential to keep the goal of removing Washington from education squarely in view at all times. Fail to eliminate it completely – to make going to Washington for education cash nearly impossible – and bad programs will be kept, many that seem gone will grow back, and new ones will emerge.

If you don’t want to get stung by the jellyfish, you can’t just cut a few tentacles.

K. William Watson

In Tuesday’s New York Times, law professor Margot Kaminski laid out a compelling case for increased transparency in the Trans-Pacific Partnership negotiations.  On Wednesday, John Murphy of the U.S. Chamber of Commerce offered a fairly convincing response in defense of confidentiality.  The problem is that—as is common in trade policy “debates”—they’re not talking about the same thing.  That’s frustrating to me because I think they’re both right.

Kaminski makes the point that the U.S. Trade Representative has been overbroad in what it deems classified material, that the current approach improperly privileges business lobbying over public interest groups, and that as negotiations cover more non-trade issues negotiators need more exposure and guidance from different people.

Murphy responds by noting that trade agreements are successfully increasing U.S. exports, that confidentiality in negotiations is both appropriate and helpful in achieving this outcome, and that systems are in place to ensure that all interested parties have input. 

Murphy’s concern is that “public disclosure of confidential negotiating texts would mean a weaker hand for U.S. officials at the negotiating table.”  For Kaminski, “it’s a question of whose input we’re getting on decisions that reach far beyond trade — into questions on the price of generic drugs or whether websites will have to monitor users online.”

Murphy is right about the value of confidentiality.  Trade negotiations are negotiations, which means the final agreement is the result of some necessary compromise.  Compromise is politically difficult, and negotiators need to know that they’ll be evaluated on the final product regardless of their initial positions.  In any event, we don’t know what’s in the agreement until it’s completed, and there will indeed be time after the negotiations conclude to debate the package.  Murphy’s also justified in being generally defensive about secrecy complaints, which often simply mask general antipathy toward trade liberalization.

But none of this really refutes Kaminski’s main argument.  To stretch the metaphor, she’s not calling for negotiators to show our playbook to the other team, she’s trying to make sure that the negotiators are actually on our team in the first place.

If trade agreements are simply about reducing protectionist policies like tariffs, quotas, and subsidies, then it makes perfect sense to give trade negotiators the leeway needed to reach the best deal.  The only policy question is whether free trade is good.  But today’s agreements, like the TPP, also cover other issues—issues where there is significant disagreement within the United States and where more isn’t always better. 

In particular, the TPP is going to set international intellectual property laws subject to enforcement through trade sanctions.  The TPP may also set international rules on minimum wage, maximum hours, and worker safety.  It may criminalize certain kinds of wildlife trade and fishing practices

U.S. trade negotiators are pushing these provisions without adequate input from domestic civil society.  The bias toward export-oriented business interests is making trade agreements economically less valuable and politically less viable.  In essence, the U.S. Trade Representative is using confidentiality to avoid engaging with the public on these issues, and that needs to change.

One way to do that, however, is through a legislative process that Kaminski specifically condemns—trade promotion authority.  Trade promotion authority gives Congress an opportunity to debate and establish the U.S. trade agenda through specific negotiating objectives.  Instead of opposing trade promotion authority, groups concerned about the goals of U.S. negotiators should work to set the right negotiating objectives.  They can even use trade promotion authority to impose specific demands for enhanced participation from public interest groups.

As long as trade agreements are being used to set regulatory policies, reasonable complaints about democratic legitimacy will be part of the debate.  So unless proponents are willing to accept a cleaner trade agenda focused more squarely on reducing protectionism, they will need to accept some form of increased scrutiny and broader participation in negotiations.

Daniel J. Ikenson

The eyes of the international trade community are fixed on Senators Orrin Hatch (R-UT) and Ron Wyden (D-OR), upon whom responsibility for crafting bipartisan Trade Promotion Authority (TPA) legislation has fallen. At last report, Senate Finance Committee Chairman Hatch and Ranking Member Wyden were at an impasse over some important components of the bill, passage of which is widely considered necessary to concluding the long-gestating, 12-nation Trans-Pacific Partnership (TPP) agreement. That agreement must be concluded before the Transatlantic Trade and Investment Partnership (TTIP) negotiations make any progress. Those negotiations will have far-reaching implications for the multilateral trading system, including China, India, Brazil and other countries not currently party to these mega-regional trade agreements. Hence, TPA’s outcome is of worldwide interest.

Trade Promotion Authority has been maligned as a congressional capitulation or executive power grab.  It is neither. The U.S. Constitution grants Congress the authority to “regulate commerce with foreign nations” and to “lay and collect taxes, duties, imposts, and excises” and grants the president power to make treaties with the advice and consent of the Senate. Accordingly, the formulation, negotiation, and implementation of trade agreements require the involvement and cooperation of both branches. TPA is a compact between the branches that obliges these respective constitutional authorities, while guaranteeing an up-or-down vote by Congress, on an expedited basis, of any trade agreement negotiated by the executive branch with foreign governments, provided that the agreements meet the objectives spelled-out by Congress in the legislation. This conditionality is often ignored or brushed over by news reporters, who either spend too much time with trade skeptics or who are looking to economize on words.

Without such a compact, trade agreements would be nearly impossible to conclude because foreign negotiators – knowing that any agreement reached would be subject to congressional revisions – would never put their best offers on the table.  The process of negotiating and renegotiating with 535 officials (instead of one agency, the Office of the U.S. Trade Representative) would make for an interminable process too cumbersome and costly to pursue.  For practical purposes, negotiations have to occur between small parties vested with the authority to speak on behalf of those whom they represent. Trade Promotion Authority is the solution.

But one important consideration that created the impasse between Hatch and Wyden concerned the process of holding the president to account.  The compact is intended to grant negotiating authority to the president – including expedited procedures that lead to an up-or-down vote within a certain number of calendar days – in exchange for the president’s commitment to negotiate on behalf of Congress by honoring a list of congressional objectives. The question is: how should Congress verify that the president satisfied his obligation to honor their objectives before proceeding with expedited congressional consideration?

Under previous TPA legislation, Congress was afforded opportunities to offer “Resolutions of Disapproval” over procedural concerns, including whether the trade deal advanced the objectives of Congress. Such resolutions were required to be reported to and approved by the respective trade committees in each chamber. That process would seem sufficient, given that most congressional action is funneled through committees with chairs and ranking members holding sway. Senator Wyden’s view, however, was that it should be easier to strip an agreement of “fast track” treatment, perhaps by allowing for more channels through which such “resolutions” could come to the floor for a vote and requiring 60, as opposed to 67, votes in the Senate to pass the resolution.  Wyden also seemed to favor affirmative “certification” that an agreement comports with congressional objectives, as opposed to requiring passage of a resolution that it doesn’t comport – an idea which Hatch equated to effectively requiring a second TPA vote.

Well, as of a few hours ago, various media were reporting that a deal had been struck and that Wyden agreed that the fast track “circuit breaker” would still require a resolution of disapproval to pass, but that the threshold number of votes would be 60, not 67.  That sounds like a reasonable compromise struck by senators who want TPA legislation to pass.

Of course, procedures for taking agreements off the fast track in the House will be different – presumably a resolution of disapproval channeled through Ways and Means Chairman Paul Ryan, which would require 218 votes.  But articulating those procedures and ensuring that the TPP and other trade agreements abide Congress’s wishes will square the constitutional circle with Trade Promotion Authority, and preserve the right of each member of Congress to vote “yea” or “nay” on the TPP.

Matthew Feeney

In David Brooks’ latest New York Times column he explains that he is now a proponent of police body cameras, but adds that he did not come to his position “happily.” According to Brooks, the debate over police body cameras has revealed that an increasing number of people have lost “the language of privacy” and “an understanding of why privacy is important.”

It’s refreshing to read that Brooks does have concerns related to privacy. After all, Brooks said last June that the NSA’s snooping isn’t “particularly intrusive.”  But the rise of police body cameras is prompting a sensible conversation about privacy and why it is important.

Given the nature of their work, police officers regularly witness members of the public experience tragic and embarrassing moments, many times on private property. Police officers are often among the first at the scene of auto accidents or other life-threatening emergencies. They also talk to informants as well as victims of sexual and domestic abuse. In addition to sometimes entering private homes, police officers also occasionally visit hospitals and schools.

Brooks discusses some of the legitimate privacy concerns these kind of situations raise towards the end of his column:

When a police officer comes into your home wearing a camera, he’s trampling on the privacy that makes a home a home. He’s recording people on what could be the worst day of their lives, and inhibiting their ability to lean on the officer for care and support.

Cop-cams insult individual dignity because the embarrassing things recorded by them will inevitably get swapped around. The videos of the naked crime victim, the berserk drunk, the screaming maniac will inevitably get posted online — as they are already. With each leak, culture gets a little coarser. The rules designed to keep the videos out of public view will inevitably be eroded and bent.

Even the most committed advocate of police transparency and accountability must concede that the unedited release of all police body camera footage could lead to devastating infringements on a citizens’ privacy and potentially compromise ongoing investigations. A sensible police body camera policy will exempt some footage from public release. If a police officer arrives at the scene of a fatal auto accident, interviews a young victim of sexual assault, or gives a presentation in an elementary school there are serious privacy concerns that police body camera policies ought to address.

But, as should not come as a surprise, civil liberty advocates, lawmakers, and policing research organizations have written about these privacy concerns and when a police officer with a body camera should turn the device on.

In a paper written by the Police Executive Research Forum (PERF), with support from the Department of Justice’s Office of Community Oriented Policing Services, the authors recommend that recordings of conversations with informants and undercover officers be prohibited. The paper also recommends that recordings be prohibited in areas such as bathrooms where there is an expectation of privacy and that police officers be required to inform members of the public if they are on camera. In addition, the paper recommends that officers be required, regardless of state law, to obtain consent from crime victims before interviews are recorded.

ACLU senior policy analyst Jay Stanley wrote a white paper on what policies ought to be included when crafting rules for police body cameras. In the paper, Stanley correctly writes that the public disclosure of police body camera footage pits “two important values against each other: the need for government oversight and openness, and privacy.” Stanley argues that videos subject to public record requests should be redacted in order to protect privacy. Stanley has also written on police body cameras in schools.

Stanley’s ACLU colleague Scott Greenwood is quoted in the PERF paper saying:

An officer might be allowed to go into the residence and record, but that does not mean that everything inside ought to be public record. The warrant is an exception to the Fourth Amendment, not a waiver. We do not want this to show up on YouTube. My next-door neighbor should never be able to view something that happened inside my house without my permission.

Greenwood is also quoted recommending that the ACLU and police executive work “to ensure that state disclosure laws contain adequate privacy protections for body-worn camera videos.”

Indeed, some state lawmakers have introduced legislation, such as Michigan’s HB 4234 and Florida’s SB 248, which seek to limit the releas of police body camera footage captured inside a citizen’s home. Florida’s SB 248 would also limit the release of footage captured within “health care, mental health care, or social services” facilities as well as “at the scene of a medical emergency involving a death or involving an injury that requires transport to a medical facility.”

State lawmakers, civil liberty advocates, as well as researchers with a focus on law enforcement have all contributed to the conversation that has naturally arisen amid the increased use of police body cameras. It seems to me that police body cameras have kept the “language of privacy” alive and well.

Of course, Brooks isn’t only concerned with the potential privacy violations that could occur when a police officer with a body camera enters a home. He is more broadly concerned that an increasing number of people don’t understand why privacy is important.

Brooks writes:

Putting a camera on someone is a sign that you don’t trust him, or he doesn’t trust you. When a police officer is wearing a camera, the contact between an officer and a civilian is less likely to be like intimate friendship and more likely to be oppositional and transactional.

I can’t speak for all readers, but I would be less likely to be antagonistic during an encounter with a police officer who was wearing a body camera. Indeed, there is some evidence to suggest that officers wearing body cameras can contribute to a reduction in police use-of-force incidents and complaints against police officers.

Brooks is right when he says the following:

Privacy is important to the development of full individuals because there has to be an interior zone within each person that other people don’t see. There has to be a zone where half-formed thoughts and delicate emotions can grow and evolve, without being exposed to the harsh glare of public judgment. There has to be a place where you can be free to develop ideas and convictions away from the pressure to conform. There has to be a spot where you are only yourself and can define yourself.

But it is Brooks’ not “particularly intrusive” NSA, rather than police body cameras, which risks compromising the zone in which citizens explore unpopular ideas and their “half-formed thoughts and delicate emotions.”

Police body cameras do raise a host of legitimate privacy concerns. But police body cameras are often used to record encounters that occur in public where, given the state of modern technology, none of use can reasonably expect the degree of privacy that, perhaps, we might otherwise like. The police encounters that take place inside private residences and inside hospitals and schools are being considered in ongoing conservations on body cameras, where the language of privacy is often heard.

Pages