With All Due Respect, Rep. Cole, My Arguments Against Race-Based Government Are Quite Principled
While campaigning for former Hawaii governor Linda Lingle, who is now running for U.S. Senate, Rep. Tom Cole (R-OK), the only Native American in Congress, said that opposition to the Akaka Bill is “arrogant” meddling in local affairs. (The Akaka Bill, which I’ve covered extensively, would create a race-based governing entity that would negotiate with the federal and state governments over all sorts of issues—effectively carving out an unconstitutional system of racial spoils.)
As quoted in the Honolulu Star-Advertiser ($):
“Hawaii has told us again and again, on a bipartisan basis, this is what we want to do,” Cole said. “I’d have to tell you, I think it’s incredibly arrogant, whether it’s a Republican or a Democrat that opposes tribal sovereignty — in this case sovereignty for Native Hawaiians—when the people of Hawaii have told us we’d like it. Who are we to impose our opinions?”
Cole’s attack is not only a calumny on those who oppose the Akaka Bill in good faith—including all but six of his House Republicans who voted against it in 2010 after years of deliberation, public vetting, and a 2006 Department of Justice conclusion that the bill was unwise as a policy matter and presented serious constitutional difficulties—but itself displays a dangerous misunderstanding of the issues involved.
It’s easy to think of the Akaka Bill as being “merely” another request for self-governance by native peoples as was extended to Aleuts upon Alaskan statehood, but that’s simply not what’s going on in Hawaii. Hawaiians, “Native” and otherwise, have a different history and political sociology from the tribes that are accommodated in our (dubious and counterproductive) Indian law, which itself is a unique compromise with pre-constitutional reality. Congress can’t simply define Hawaiians as an “Indian tribe” because that term has a fixed meaning, limited to preexisting North American tribes that were “dependent nations” at the time of the Founding. Such tribes, to benefit from the protections of Indian law, must have an independent existence and “community” apart from the rest of American society, and their separate government structure must have a continuous history for at least the past century. By these standards, Hawaiians don’t qualify.
The Value of Books
At MasterResource, a free-market energy blog, Alex Epstein posts a glowing tribute to the 1996 Cato book Oil, Gas, and Government by Robert L. Bradley, Jr. (who happens to be a co-blogger at MasterResource). Oil, Gas, and Government is surely the longest book Cato ever published, and nobody knows better than I do—well, Rob Bradley does—how much work went into researching, writing, editing, and publishing it.
In these days of blogs and tweets, we’re used to consuming information in very small bites. But one of the fundamental roles of think tanks is to produce long-form research, not just talking points and congressional briefings. And Oil, Gas, and Government is very long form—1,997 pages in two volumes. (We told him nobody wanted to read a 2,000-page book, so he stopped at 1997.) It’s a tremendous and comprehensive achievement, as Epstein explains:
While recently researching energy history for a writing project, I was reminded of how valuable—and underrated—Robert Bradley’s Oil, Gas, and Government: The U.S. Experience is. While there are countless books covering the history of energy from one angle or another, very few, in my experience, can be counted on for precision and accuracy.
The majority of books I read that reference early petroleum history, for example, tell a radically oversimplified narrative of petroleum replacing whale oil. However, if one reads Harold Williamson and Arnold Daum’s definitive two-volume The American Petroleum Industry, one learns about a far more intricate and interesting progress, including the one-time dominance of camphene, a turnpentine-based illuminant that preceded petroleum–or the story of “coal oil,” which was once believed to be the illuminant of the future. (I discuss this history in my essay Energy at the Speed of Thought: The Original Alternative Energy Market.)
What distinguishes Williamson and Daum—and Oil, Gas, and Government—is the systematic use of primary sources. For a researcher, this certainly makes life more difficult as it is far easier to use popular accounts as a jumping off points.
New Study from UK Think Tank Shows How Big Government Undermines Prosperity
It seems I was put on the planet to educate people about the negative economic impact of excessive government. I must be doing a bad job, because the burden of the public sector keeps rising.
But hope springs eternal. To help make the case, I’ve cited research from international bureaucracies such as the Organization for Economic Cooperation and Development, International Monetary Fund, World Bank, and European Central Bank. Since most of those organizations lean to the left, these results should be particularly persuasive.
I’ve also cited the work of academic scholars from all over the world, including the United States, Australia, and Sweden. The evidence is very persuasive that big government is associated with weaker economic performance.
Now we have some new research from the United Kingdom. The Centre for Policy Studies has released a new study, authored by Ryan Bourne and Thomas Oechsle, examining the relationship between economic growth and the size of the public sector.
The chart above compares growth rates for nations with big governments and small governments over the past two decades. The difference is significant, but that’s just the tip of the iceberg. The most important findings of the report are the estimates showing how more spending and more taxes are associated with weaker performance.
Here are some key passages from the study.
Using tax to GDP and spending to GDP ratios as a proxy for size of government, regression analysis can be used to estimate the effect of government size on GDP growth in a set of countries defined as advanced by the IMF between 1965 and 2010. …As supply-side economists would expect, the coefficients on the tax revenue to GDP and government spending to GDP ratios are negative and statistically significant. This suggests that, ceteris paribus, a larger tax burden results in a slower annual growth of real GDP per capita. Though it is unlikely that this effect would be linear (we might expect the effect to be larger for countries with huge tax burdens), the regressions suggest that an increase in the tax revenue to GDP ratio by 10 percentage points will, if the other variables do not change, lead to a decrease in the rate of economic growth per capita by 1.2 percentage points. The result is very similar for government outlays to GDP, where an increase by 10 percentage points is associated with a fall in the economic growth rate of 1.1 percentage points. This is in line with other findings in the academic literature. …The two small government economies with the lowest marginal tax rates, Singapore and Hong Kong, were also those which experienced the fastest average real GDP growth.
White House Cronyism Is Disturbing, But Not New
The Obama campaign is trying to hang so-called “vulture” capitalism around Mitt Romney’s neck, but as two excellent opinion pieces explain, it’s the administration’s crony capitalism that’s the really disturbing story.
The first piece, written by the Wall Street Journal’s Kim Strassel, explains the difference:
Like Mr. Romney, Mr. Obama has presided over bankruptcies, layoffs, lost pensions, run-ups in debt. Yet unlike Mr. Romney, Mr. Obama’s C-suite required billions in taxpayer dollars and subsidies, as well as mandates, regulations, union payoffs and moral hazard.
Strassel singles out the Solyndra debacle and the administration’s bailout of the unions General Motors. She notes that the alternative to profit-driven free enterprise, which the president is critical of, “is an Obama capitalism that is driven by political favoritism, government subsidies, mandates, and billions in taxpayer underwriting.”
In the second piece, Washington Post columnist Marc Thiessen says that “if Romney’s record in private equity is fair game, then so is Obama’s record in public equity—and that record is not pretty.” Thiessen lists numerous examples of companies that the administration gambled on with taxpayer money and lost. But what’s really disturbing is the administration’s cronyism:
Amazingly, Obama has declared that all the projects received funding “based solely on their merits.” But as Hoover Institution scholar Peter Schweizer reported in his book, “Throw Them All Out,” fully 71 percent of the Obama Energy Department’s grants and loans went to “individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” Collectively, these Obama cronies raised $457,834 for his campaign, and they were in turn approved for grants or loans of nearly $11.35 billion. Obama said this week it’s not the president’s job “to make a lot of money for investors.” Well, he sure seems to have made a lot of (taxpayer) money for investors in his political machine.
Romney, Kerry Miss the Point on Threats: Size Matters
Senator John Kerry (D-MA) is the latest person to mock Mitt Romney’s declaration that the Russian Federation “is, without question, our number one geopolitical foe.” It was a pretty silly statement, particularly given the fact that Russia is a demographic basket case and a very humble economic power. But there’s all sorts of weirdness going on in Romney’s assertions and those of his critics.
Take, for example, Wolf Blitzer’s follow up to the Romney assertion:
BLITZER: But you think Russia is a bigger foe right now than, let’s say, Iran or China or North Korea? Is that—is that what you’re suggesting, Governor?
ROMNEY: Well, I’m saying in terms of a geopolitical opponent, the nation that lines up with the world’s worst actors. Of course, the greatest threat that the world faces is a nuclear Iran. A nuclear North Korea is already troubling enough.
But when these—these terrible actors pursue their course in the world and we go to the United Nations looking for ways to stop them, when—when Assad, for instance, is murdering his own people, we go—we go to the United Nations, and who is it that always stands up for the world’s worst actors?
It is always Russia, typically with China alongside.
And—and so in terms of a geopolitical foe, a nation that’s on the Security Council, that has the heft of the Security Council and is, of course, a—a massive nuclear power, Russia is the—the geopolitical foe and—and the—and they’re—the idea that our president is—is planning on doing something with them that he’s not willing to tell the American people before the election is something I find very, very alarming.
U.S.-Pakistan Relations: The Afridi Affair and Its Aftermath
Yet again, U.S.-Pakistan relations have hit a new low. Days after a deal to reopen NATO supply routes into Afghanistan fell through, and two back-to-back U.S. drone strikes rocked northwest Pakistan in a 24-hour period, tensions flared again after a tribal court sentenced Dr. Shakil Afridi—a Pakistani citizen who helped the United States track-down Osama bin Laden with a fake vaccination program—to 33 years in prison.
Republicans and Democrats on Capitol Hill were appalled, and Secretary of State Hillary Clinton called the move “unjust and unwarranted.” Apparently, U.S. officials and lawmakers are surprised that the chasm separating Washington and Islamabad is growing wider after years of papering over their differences.
Yesterday, in response to Dr. Afridi’s 33-year sentence under the Frontier Crimes Regulation, the Senate Appropriations Committee voted to cut aid to Pakistan by a symbolic $33 million. That’s not enough—it represents just 58% of the amount the president requested for Pakistan. Washington should go further and phase out assistance entirely.
Today in the New Jersey Star-Ledger, my coauthor Aimen Khan and I argue that ending aid to Pakistan is the right course for both countries:
The U.S. must carefully calibrate a policy with Pakistan that continues diplomatic relations absent large sums of aid. While cutting aid to Pakistan might be temporarily destabilizing, Pakistan’s support for militant Islamists is arguably more harmful to regional stability. Moreover, while emergency-type humanitarian aid can be beneficial to the Pakistani people, economic development aid intended to promote growth has been detrimental, allowing Islamabad to avoid confronting its rampant corruption and budgetary problems with the necessary urgency.
The Pakistani government and people stand united in their belief that Pakistan does not need the U.S. Phasing out U.S. aid to Pakistan benefits both parties and better reflects strategic realities.
As is common with U.S. military and foreign aid to unstable governments, it typically serves to entrench the prerogatives of military and civilian elites. Quite perversely, in return for the tens of billions of dollars that American taxpayers forked over to Islamabad, many in Pakistan have come to blame Washington for their deteriorating situation. Even well-intentioned assistance under the much-lauded Kerry-Lugar aid package was viewed within Pakistan as an infringement on sovereignty, mainly because it came with intrusive strings attached. Furthermore, U.S. aid and arm-twisting have failed to pressure or persuade Pakistan to go after militants we deem to be a threat to our interests, including the Afghan/Quetta Shura/Karachi Taliban, Hekmatyar, and the Haqqanis.
From the 30,000-foot view, from Islamabad to New Delhi, it appears that Washington is slowly making a long-term pivot in South Asia. But as this author argued years ago, reconciling this pivot in the context of Afghanistan has been nothing short of a failure. The United States and Pakistan do not trust one another, NATO slouches toward an exit, and Pakistan has become more radicalized, destabilized, and encircled by India and militants.
But I digress. Please click here to read the full op-ed. Enjoy!
Tax Credit Policy Design for School Choice: A Response to John Kirtley
There are few people with whom I am so much in agreement on the goals of education policy as John Kirtley. To the extent that we differ, it’s chiefly about the best ways of achieving those shared goals. With that in mind, here are my thoughts on his recent post on Education RedefinEd.
Regulation of Private Schools under Education Tax Credit Programs
I’ve no reason to think that the customary financial reporting requirements imposed on scholarship-granting organizations (SGOs) are problematic, but the same cannot be said about regulations imposed on the private schools themselves. In response to an earlier post by Adam Schaeffer, John writes that “Adam is absolutely correct that you can only drive so much excellence through top-down accountability.” But Adam actually goes further, arguing that there is no evidence you can drive any excellence through “top-down accountability” (read: “government regulations”) on private schools. The purpose of noting the corruption in state schools (e.g., in Florida and Atlanta) is to show that even the vast array of government regulations imposed on public schools fails to curtail such defects. And, as I found in reviewing the worldwide literature comparing different types of government, pseudo-market, and market education systems, it is the least regulated, most market-like systems that consistently do the best job of serving families across all measured outcomes.
If there were compelling evidence that government regulations on schools could reduce corruption or boost academic achievement, there might be a case for such regulations being added to tax credit programs. But no such evidence exists to the best of my knowledge. In addition to failing to achieve its intended goals, regulation inhibits the educational freedom and diversity that are responsible for the market’s efficiency and responsiveness to families—undermining the whole purpose of a choice program.
The one and only empirically defensible argument in favor of regulations of schools under tax credit programs is political: in some states, it may not be possible to enact tax credit programs without such regulations. In that case, a judgment call has to be made on whether the regulations are so bad as to compromise the program and make it unworthy of passage, because it would fail to produce positive results and give the movement a black eye that would mistakenly be carried over to better, freer programs.
But that argument does not apply to states that have already enacted relatively free school choice programs, by definition: the bills have already passed, so the regs weren’t politically necessary.
Mirror, Mirror, on the Wall, Which President Is the Biggest Spender of All?
A financial columnist named Rex Nutting recently triggered a firestorm of controversy by claiming that Barack Obama is not a big spender.
Here’s the chart he prepared, which certainly seems to indicate that Obama is a fiscal conservative. Not only that, it shows that Republicans generally are the big spenders, while Democrats are frugal with other people’s money.
In some ways, these numbers don’t surprise me. I’ve explained before that Bush bears a lot of blame for the big expansion in the burden of government this century, and I’ve specifically pointed out that he deserves the blame for most of the higher spending from the 2009 fiscal year (which began October 1, 2008).
That being said, Nutting’s numbers seemed a bit nutty. Sorry, couldn’t resist. Nutting’s numbers actually seem accurate, including the fact that he decided that Obama should be responsible for $140 billion of the spending in Bush’s last fiscal year (a number he may have taken from one of my posts).
But sometimes accurate can be misleading, so I decided to dig into the data.
I went to the Historical Tables of the Budget from the Office of Management and Budget, and I calculated all the numbers for every President since LBJ (with the exception of Gerald Ford, whose 2-year reign didn’t seem worth including).
But I corrected a big mistake in Nutting’s analysis. I adjusted the numbers for inflation, using OMB’s GDP deflator.
As you can see, this changes the results. My chart isn’t as pretty, but based on the inflation-adjusted average annual growth of outlays, it shows that Clinton was the most frugal president, followed by the first President Bush and Obama.
With his guns-n-butter Keynesianism, it’s no big surprise that LBJ ranks last. And “W” also gets a very low grade.
But then I figured we should take interest payments out of the budget and focus on inflation-adjusted “primary spending.” After all, Presidents shouldn’t be held responsible for the national debt that existed before they took office.
Looking at these numbers, it turns out that Obama does win the prize for being the most fiscally conservative president in recent memory. Reagan jumps to second place. Clinton is in third place, which won’t surprise people who watched this video, while W and LBJ again are in last place.
But I don’t want my Republican friends to get too angry with me, so let’s expand our analysis. Just as we don’t want to blame Presidents for net interest payments on debt that was accrued before their tenure, perhaps we should make sure they don’t get credit or blame for defense outlays that often are dictated by external events.
There’s obviously room for disagreement, but most people will agree that the Cold War and 9/11 meant higher defense spending, regardless of which party controlled the White House. Similarly, the collapse of the Soviet Empire inevitably meant lower military expenditures, regardless of whether Republicans or Democrats were in charge.
So let’s now look at primary spending after subtracting defense outlays (still adjusting for inflation, of course). All of a sudden, Reagan jumps to the top of the list by a comfortable margin. LBJ and W continue to score poorly, but Nixon takes over last place.
But it’s also worth noting that Obama still scores relatively well, beating Clinton for second place. Inflation-adjusted domestic spending (which is mostly what we’re measuring) has grown by 2.0 percent annually during his three years in office.
So does that mean Obama deserves re-election? Well, before you answer, I want to make one final calculation. Just as there are good reasons to exclude interest payments because they’re not something a president can control, we also should take a look at what spending would be if we don’t count the cost of bailouts.
To be sure, these types of expenditures can be controlled, but if we go with the assumption that the federal government was going to re-capitalize the banking system (whether using the good FDIC-resolution approach or the corrupt TARP approach), then it seems that Presidents shouldn’t get arbitrary blame or credit simply because some financial institutions failed during their tenure.
So let’s take the preceding set of numbers and subtract out the long-run numbers for deposit insurance, as well as the TARP outlays since 2009. And keep in mind that repayments of TARP monies (as well as deposit insurance premiums) show up in the budget as “negative spending.”
As you can see, this produces a remarkable result. All of a sudden, Obama drops from second to second-to-last.
This is because there was a lot of TARP spending in Bush’s last fiscal year (FY2009), which created an artificially high benchmark. And then repayments by banks during Obama’s fiscal years counted as negative spending.
When you subtract out the big TARP spending surge, as well as the repayments, then Bush 43 doesn’t look quite as bad (though still worse than Carter and Clinton), while Obama takes a big fall.
In other words, Obama’s track record does show that he favors an expanding social welfare state. Outlays on those programs have jumped by 7.0 percent annually. And that’s after adjusting for inflation! Not as bad as Nixon, but that’s not saying much since he was one of America’s most statist presidents.
Allow me to conclude with some caveats. None of the tables perfectly captures what any president’s fiscal record. Even my first table may be wrong if you want to blame or credit presidents for the inflation that occurs on their watch. And there certainly are strong arguments that bailout spending and defense spending are affected by presidential policies rather than external events.
And keep in mind that presidents don’t have full power over fiscal policy. The folks on Capitol Hill are the ones who actually enact the bills and appropriate the money.
Moreover, the federal government is akin to a big rusty cargo ship that is traveling in a certain direction, and presidents are like tugboats trying to nudge the boat one way or the other.
But enough equivocating. The four different tables at least show more clearly which presidents presided over faster-growing government or slower-growing government. More importantly, the various tables provide a good idea of where most of the new spending was taking place.
We can presumably say Reagan and Clinton were comparatively frugal, and we can also say that Nixon, LBJ, and Bush 43 were relatively profligate. As for Obama, I think his tugboat is pushing in the wrong direction, but it’s only apparent when you strip out the distorting budgetary impact of TARP.
Mass Surveillance: No Need for Debate?
It’s been almost four years since the FISA Amendments Act of 2008 put President Bush’s warrantless wiretap program on legal footing by authorizing broad, programmatic surveillance of Americans’ international communications. The only thing the public really knows about it so far is that it was almost immediately misused, resulting in “significant and systemic” overcollection of Americans’ purely domestic communications. Subsequent reporting revealed that the improperly “overcollected” communications could number in the millions, and included former president Clinton’s private e-mails. So naturally, the Senate is charging ahead toward the renewal of these sweeping powers without hearings or debate.
It’s not just the public that’s in the dark about the use of the FAA mind you. Sen. Ron Wyden has been clamoring for more information—and, to the extent possible, public deliberation—for months now. Yet the Director of National Intelligence has told Wyden that “it is not possible to identify the number of people located in the United States whose communications may have been reviewed under the authority of the FAA,” though he did refer to classified reports indicating the “number of collection targets that were later determined to be located in the United States.” Meanwhile, work continues on a multibillion dollar NSA decryption and data storage facility capable of storing all that information indefinitely. The only real check on this is activity is congressional oversight, which as intelligence scholar Amy Zegart demonstrates in her important recent book Eyes on Spies: Congress and the United States Intelligence Community, is largely chimerical.
Meanwhile, there are serious questions about whether the FAA is even constitutional. But the government doesn’t want any court to even consider those questions: It has petitioned the Supreme Court to shoot down a challenge to the law before it even begins, in a case to be heard in the coming term.
This is a truly incredible state of affairs. We have a vast apparatus for intercepting—and retaining indefinitely—American communications on a mass scale. We are being asked to take it as an article of faith that this is absolutely necessary to the security of the United States, even though similar claims about the original warrantless wiretap program could not be substantiated by later internal audits. The government doesn’t want to have to even defend the constitutionality of this program in front of a judge. And Congress doesn’t seem interested in so much as discussing the question, or making the public privy to so much as the raw numbers involved, before giving the NSA four more years of carte blanche. But hey, look over there, someone tangentially related to a presidential campaign said something dumb on cable television! Clearly there’s no time to discuss trivia like this “vast government database of intercepted communications.”
Protectionism in a Can of Tuna
In an op-ed posted yesterday on Forbes, I praised a decision by the World Trade Organization’s Appellate Body for recognizing the true nature of federal regulations that define what kind of tuna can be called dolphin-safe. In one part of the ocean where the Mexican fishing fleet operates the rules are very strict, but everywhere else, including the parts of the ocean where the U.S. fishing fleet operates, tuna can be called dolphin safe without regard to whether dolphins were actually killed in the fishing process.
Rather than providing consumers with accurate information, as the government and other advocates contend, the consequence of the dolphin-safe labeling requirement is to provide discriminatory protection for the U.S. tuna industry by misleading those consumers.
The case highlights the reality that government is not a reliable guardian of consumer welfare, and that you invariably get more (or in this case less) than you bargained for when you put your faith in government mandated standards. As I wrote in the op-ed:
Without this law, consumers would be free to demand tuna caught without setting on dolphins, or they might prefer to buy only tuna whose capture was certified as dolphin safe by an independent observer. Under the current regime, tuna producers are completely prohibited from providing that information on product labels. A policy designed to protect dolphins by harnessing the power of consumers depends on having informed consumers with access to all relevant information. Consumers who want to protect dolphins from tuna fishers are not served by a law that actually protects U.S. tuna fishers from Mexican competition.
Abiding by international rules that promote free trade across borders is easily accomplished by adhering to the principles of free enterprise here at home.
CNN Video: How Government Blocks Health Care Access for the Poor
Remote Area Medical‘s Stan Brock, who spoke at the Cato Institute’s 2012 State Health Policy Summit, explains:
The culprit is state medical licensing laws. For more, read Cato adjunct scholar Shirley Svorny.
Filed under: General; Government and Politics; Health Care; Regulatory Studies
Judge: Flashing Headlights To Warn of Speed Trap Is Protected Speech
Florida cops have made a practice of ticketing drivers who warn others about speed traps by flashing their lights, despite uncertainty as to whether state law actually does prohibit such flashing. Now a judge in Sanford, Fla. has ruled that Ryan Kintner of Lake Mary not only was within his rights under state law when he flashed his headlights, but was engaging in speech protected by the First Amendment. [Orlando Sentinel; cross-posted from Overlawyered]
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