Since the 1960s, the Catalog of Federal Domestic Assistance (CFDA) has provided a list of all federal subsidy programs. That includes subsidies to individuals, businesses, nonprofit groups, and state and local governments. The CFDA includes subsidies for farmers, retirees, school lunches, rural utilities, the energy industry, rental housing, public broadcasting, job training, foreign aid, urban transit, and much more.
The chart below shows that the number of federal subsidy programs has almost doubled since 1990, reaching 2,282 today. The genesis of the CFDA was the explosion of hand-out programs under President Lyndon Johnson. Members of Congress needed a handy guide to inform their constituents about all the new freebies.
The growth in subsidies may be good for the politicians, but it is terribly corrosive for American society. Each subsidy program costs money and creates economic distortions. Each program generates a bureaucracy, spawns lobby groups, and encourages more people to demand further benefits from the government.
Individuals, businesses, and nonprofit groups that become hooked on subsidies essentially become tools of the state. They have less incentive to innovate, and they shy away from criticizing the hand that feeds them. Government subsidies are like an addictive drug, undermining American traditions of individual reliance, voluntary charity, and entrepreneurialism.
The rise in the size and scope of federal subsidies means that Americans are steadily losing their independence. That is something sobering to think about on July 4.
Which subsidies should we cut? We should start with these.
Today London’s transport regulator, Transport for London (TfL), said that Uber can legally operate in the U.K.’s capital. The news comes after drivers of London’s black cabs deliberately congested traffic last month in protest over how Uber, the San Francisco-based transportation technology company, was being regulated.
The Licensed Taxi Drivers Association (LTDA) said that it believed Uber was operating in violation of the Private Hire Vehicles (London) Act 1998, as I explained when writing about the protest last month:
The Licensed Taxi Drivers Association (LTDA) believes that Uber, the San Francisco-based transport technology company, is operating illegally in London. Thanks to the Private Hire Vehicles (London) Act 1998, it is illegal for a London vehicle with a private hire vehicle license to have a taximeter. Up until yesterday Uber’s website stated that anyone who wanted to be an Uber driver in London must have a private hire vehicle license. Today those requirements remain the same, however in response to the London protest Uber has opened to licensed black cabs.
TfL does not, unlike the LTDA, consider the smartphones used by drivers using Uber to be taximeters:
TfL’s view is that smart phones that transmit location information (based on GPS data) between vehicles and operators, have no operational or physical connection with the vehicles, and receive information about fares which are calculated remotely from the vehicle, are not taximeters within the meaning of the legislation.
TfL said it intended to have the High Court rule on the legality of Uber’s operation in London. However, TfL noted in its statement that the High Court would not consider the issue while separate criminal proceedings involving Uber drivers brought about by LTDA were being dealt with in the Westminster Magistrates’ Court, although it did say that the High Court would probably rule on the issue eventually:
… the LDTA (sic) has issued summonses in the Westminster Magistrates’ Court against a number of Uber drivers under s.11 of the 1998 Act. This now prevents TfL proceeding as we had intended as the High Court will not consider the issue whilst there are ongoing criminal proceedings on the same issues of law.
TfL is therefore now unable to seek early clarification from the High Court. In due course the LTDA summonses will be heard in the Magistrates’ court. The Magistrates’ decision is not binding, will almost certainly be appealed (by someone), which inevitably means the matter will end up, rather later than sooner, in the High Court.
It looks as if the LTDA has scored at least two own goals in its dealings with Uber. Firstly, the protest it supported was great free advertising for Uber, which reportedly enjoyed an 850% increase in sign-ups in the U.K. thanks to the demonstration. Secondly, LTDA’s actions against Uber drivers have prevented the High Court from considering Uber’s legality.
Should courts allow the federal government to ignore time deadlines for filing suit on the grounds that there’s a war on, even though it’s been 70 years since the end of the war on which such a delay was premised? On Tuesday the U.S. Supreme Court granted certiorari in a case raising that question, Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter. I wrote about the issue last year; an excerpt:
War is the health of the state,” wrote Randolph Bourne a century ago—from the special war taxes that can linger for a century, to the mohair subsidy program from Korean War days, to New York City’s wartime emergency rent controls, to the many incursions on civil liberties that don’t get rolled back afterward. War, it now turns out, can even give a boost to the lawyers who represent the federal government in civil litigation, magically transmuting losing cases into winners….
In 1942, not long after the Japanese attacked Pearl Harbor, Congress passed the Wartime Suspension of Limitations Act (WSLA), providing that the statute of limitations would be suspended (or “tolled”) on claims of defrauding the federal government until hostilities had ended. When the Japanese surrendered three years later, Congress left WSLA on the books, where nearly everyone forgot about it. …
A few years ago the U.S. Department of Justice decided that the old law entitled it to file various civil fraud lawsuits for which the ordinary statute of limitations had passed, because we were after all at war in Iraq and Afghanistan – even though the original statute applied on its face to criminal rather than civil cases, although the newer wars unlike World War II do not call for all-consuming national focus that might pre-empt the ordinary course of business, and although the subject matter of most of the cases has nothing whatever to do with national defense or war or Afghanistan or Iraq. A couple of appeals courts have agreed with DoJ’s excuse, which has emboldened the government to roll out the theory to many other cases. That leaves business lawyers to fret, as I wrote last year, about “when, if at all, they can safely advise clients that a potential dispute is too old to worry about. If truth is the first casualty of war, perhaps the fairness of dispute resolution is the next.”
The Supreme Court now offers them a ray of hope – and in a more sensible world Congress would do so as well, by agreeing to revisit WSLA.
Yesterday the Consumer Electronics Association (CEA) issued a news release praising the Virginia DMV and Gov. Terry McAuliffe for reversing the ban imposed on Uber and Lyft last month:
We are encouraged by reports that the Virginia Department of Motor Vehicles (DMV) is taking steps to allow innovative transportation network providers Uber and Lyft to operate in the Commonwealth.
CEA’s news release comes ahead of an official announcement, but if confirmed the news would mark a victory for Uber and Lyft, both of which offer rideshare services via their apps. The DMV had issued both companies cease and desist letters, saying that they were violating Virginia law.
Towards the end of the news release CEA urges lawmakers to pass legislation that would allow ridesharing companies to operate in Virginia in the long term. Perhaps Virginian lawmakers will look to ridesharing legislation passed in Colorado earlier this year, which was praised by Uber and Lyft.
Although a repeal of the ban should be welcomed, it does not mean that Uber and Lyft do not still face problems in Virginia, as Eric Hal Schwartz explained in InTheCapital:
Uber and Lyft aren’t totally out of the woods yet. Talks are ongoing about finding a solution to the regulatory issues presented by how the companies operate, but it’s definitely a positive sign for those who are fans of the ride-share app system.
As I noted shortly after the Virginia DMV sent cease and desist letters to Uber and Lyft, lawmakers should consider repealing regulations related to taxis:
Rather than hinder the growth of innovative livery companies that are taking advantage of new technology, lawmakers in Virginia and elsewhere across the country should consider repealing current taxi regulations that restrict innovation, strengthen established market players, and stifle competition.
Although the CEA news release is encouraging, it comes soon after Uber and Lyft were ordered to halt operations in Pittsburgh.
I spoke to Caleb Brown about the Virginia Uber and Lyft ban on the Cato Daily Podcast, which you can listen to below.
Not to be missed, the Wall Street Journal offers us two house editorials this morning plus the always colorful online thoughts of James Taranto, all on the Left’s hysterical reaction to Monday’s Supreme Court decision in the Hobby Lobby case. With his usual wit, Taranto presents a rich catalog of the “aggressively ignorant commentary” while the first of the editorial board’s offerings is a clear-eyed statement of the raw politics behind this “ignorance.” It starts with White House press secretary Josh Earnest’s initial remarks—conveniently ignoring that the decision rested not on the Constitution but on a statute that Congress passed all but unanimously—then continuing to Hillary Clinton’s remarkable outburst—likening the result that flows from the statute her husband promoted as president to the treatment of women that we see in the worst Middle Eastern despotisms.
But it’s in its second offering, “The Political Ginsburg,” that the Journal takes off the gloves. The justice’s “hyperbolic dissent is a political call to arms unworthy of a junior judge, much less the nation’s highest Court,” the editors write. Indeed,
The excess begins with her first sentence: “In a decision of startling breadth, the Court holds that commercial enterprises, including corporations … can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.” She goes on to say that the Court’s “radical purpose” may unleash “havoc,” among other flourishes that distort the opinion to the point of intellectual dishonesty.
Summing up its assessment:
Justice Ginsburg’s dissent is so far removed from the legal reality that it doesn’t qualify as a judicial opinion. It is a political opinion whose purpose seems to be to mobilize opposition to the Court and perhaps even motivate Democrats to turn out at the polls. Justice Antonin Scalia sometimes unleashes his rhetorical ferocity on decisions he dislikes, but his dissents are rooted in the law. Justice Ginsburg’s is a flight from the law.
And yet, for all her gross distortion of Justice Alito’s narrow, statutory opinion for the Court, Justice Ginsburg has pointed, doubtless unwittingly, to how far we’ve strayed from our first principle, freedom—something to reflect on as we prepare to celebrate our independence. As I wrote in this space a while back, after oral argument in Hobby Lobby, religious liberty is treated today as an “exception” to the general power of government to rule—captured, indeed, in the very title of the statute on which the Hobby Lobby decision rests: The Religious Freedom Restoration Act. That Congress had to act to try to restore religious freedom—to carve out a space for it in a world of ubiquitous, omnipresent government—speaks volumes. So completely have we come to assume that it’s government first—supplying us with all manner of goods and services—liberty second, that Justice Alito himself was at pains to stress how narrow his opinion was (properly, from a consideration of the scope of judicial authority).
Yet that was not enough for his critics, who have so distorted his opinion. Although most don’t say it, their real beef is with the Act itself. They pit a woman’s “right” to “free” contraceptives, including the abortifacients at issue in this case, against the claim of an employer that he has a right not to provide those (in principle, on religious or on any other grounds). And they add that employers have no right to “interfere” with a woman’s reproductive choices—as if that’s what employers are doing. It’s “reasoning” like that that has undermined our freedoms. And no one has employed it more often than the man now in the White House, who repeatedly tells us that “We’re all in this together.” If we are, then it’s far more than religious liberty that needs restoring.
In the early 1980s a church in Leipzig, East Germany’s second-largest city, began holding “peace prayers” on Monday night. Two young pastors, Christian Führer and Christoph Wonneberger, at the Nikolaikirche, or St. Nicholas Church, led the services. As Andrew Curry wrote in the Wilson Quarterly, it was a dangerous undertaking, but the church was the only place where any dissent could be cautiously expressed. “The church was the one space someone could express themselves,” Führer said. “We had a monopoly on freedom, physically and spiritually.”
Through the 1980s, as Curry reported, the Monday meetings grew. Gorbachev’s reforms gave Eastern Europeans hope. But they knew their history.
In 1953, workers in 700 East German cities declared their opposition to the Unified Socialist Party of Germany, or SED, the party that was synonymous with the East German state, and demanded the reunification of the country. Soviet soldiers fired on demonstrators, and more than 100 were killed. In the years since, all opposition movements in the Soviet bloc had met the same fate: “’53 in Germany, ’56 in Hungary, ’68 in Prague, ’89 in China—that’s how communism dealt with critics,” Führer says.
Suddenly in 1989, with a breach in the Iron Curtain between Hungary and Austria, and Solidarity winning an election in Poland, more people started showing up for peace prayers, more than the small church could hold. People started flooding out of the church and marching with candles through Leipzig. Week by week that fall, more people joined the marches – hundreds, then thousands, then 70,000, 150,000, 300,000. And then, unbelievably, the Communist Party fell, the Berlin Wall opened, and East Germans were free after more than 40 years. As a Leipzig politician told me in 2006, “As it says in the Bible, we walked seven times around the inner city, and the wall came down.”
I was saddened to read that Christian Führer died Monday in Leipzig at 71. “Führer” is a German word meaning “leader.” Christian Führer was truly a Christian leader.
I talked about the Monday prayers and the fall of communism in this 2012 speech:David Boaz Discusses the Heroism That Hastened the Fall of Communism
ISIS’s public declaration that it has restored the caliphate has been noted as a bold move, potentially changing some elements of their revolutionary calculus. Even without such a pronouncement, however, rebel groups like ISIS always share some of the same challenges as states do—broadly speaking, both rebels and states are better off if the majority of their residents comply with their demands. Far from a declaration of outright victory, ISIS’s announcement has simply underscored a number of interrelated challenges that all rebels and states face.
In other words, ISIS now faces the same problems as its enemies.
- Factionalization, and disarmament: The very Sunni militias who facilitated ISIS’s sweep into Iraq may now pose a similar threat to ISIS control as they did to the Iraqi state. Elements of the Iraqi military scattered in the face of ISIS’s most recent onslaught, due to a variety of factors, including commanders who were incompetent or had other loyalties, and lack of local support. The strength of the partnership between ISIS and local discontents seems variable at best. Tension is already showing in these partnerships, which may fracture entirely if ISIS does not undertake serious efforts to solidify these alliances—efforts which may well involve negotiating and compromising around contradictory aims, and tensions between grander ideological goals and local dissatisfactions.
- Disarmament: ISIS now faces the same risk as the Iraqi state—erstwhile allies, if left out of the group’s internal processes, or holding different goals or religious/political preferences may resist ISIS control. Seemingly well aware of this possibility, ISIS is now attempting its own version of DDR (the practice of disarming, demobilizing and reintegrating combatants that often bedevils post-conflict resolution), demanding local fighters swear allegiance to ISIS, and lay down their weapons.
- Territorial control: Factionalization also gives ISIS the same challenge of territorial control as the Iraqi state. The loss of Mosul and other areas of northern Iraq was a political and military setback for the Iraqi state. Even before the pronouncement, ISIS touted much of its claims to victory in territorial terms, and has certainly sought to retain the control it has gained in Syria. In Iraq, participation of local Sunni resistance aided ISIS’s territorial sweep. Loss of local allies may yet cost ISIS some of this control. After all, many of these local Sunni forces are the same that first joined in resistance to American forces, and welcomed, but then expelled ISIS’s precursor Al Qaeda in Iraq.
- Running the caliphate: As the BBC’s Jim Muir notes, “if the caliphate project is to take root, it will need administrators and experts in many fields, whom Abu Bakr al Baghdadi is clearly hoping will flood to heed his call.” ISIS has demonstrated some capacity to do this in Syrian cities like Raqqa, where observers note its extensive and coercive reach into residents’ lives. But as any administrator will tell you, competent technocrats are not necessarily easy to come by. For ISIS, much may depend on how its declaration of the caliphate is taken among well-qualified individuals elsewhere, and the group’s willingness to engage in the compromise and politicking to build alliances. It is possible well-qualified personnel may find ISIS’s announcement attractive (augmented by the group’s ability to pay them, at least for now). But such individuals often bring with them their own political and religious preferences. If ISIS refuses to compromise, it will be fishing for administrators in a doubly shallow pool of those with sufficient competence and affinity for its particular ideological brand. Moreover, if ISIS does attract quality personnel, using them for administrative demands means the group cannot simultaneously use their skills in leading or planning attacks to expand or defend ISIS territory.
ISIS’s breathtaking victories and their proclamation that it has reestablished the caliphate have produced widespread alarm. But this headline-ready proclamation simply emphasizes a wider irony—ISIS’s conquests saddle them with the same challenges of state building as the Iraqi state they’ve pushed back. The past decade has ample evidence that proclaiming, “mission accomplished” vis-à-vis Iraq does not guarantee success.
ISIS’s success, and the weaknesses of the Iraqi state it highlights, cannot be dismissed. But neither can their military and media victories indefinitely paper over the hard realties of governance.
At the moment, ISIS has the advantage of momentum, cash, and an internally dysfunctional adversary. But it is early days yet, and it remains to be seen how ISIS will fare against these challenges. It must decide how much it is willing to compromise and negotiate to build robust alliances out of partnerships that may thus far have been more opportunistic. It must recruit and allocate both financial and personnel resources to managing the territory it holds, and in which its pronounced caliphate resides. ISIS’s ability to further expand its territories or pose a threat to other states depends in large part on its choices and abilities to address these challenges.
Paul C. "Chip" Knappenberger and Patrick J. Michaels
Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”
With hurricane Arthur headlining the news as throwing a possible wet blanket on 4th of July fireworks shows along the Northeast coast and with a new record being set each passing day for the longest period between major (Category 3 or greater) hurricane landfalls anywhere in the U.S. (3,173 days and counting), we thought that now would be a good time to discuss a new paper which makes a tentative forecast as to what we can expect in terms of the number of Atlantic hurricanes in the near future (next 3-5 years).
With every storm post priori blamed on global warming (or at least being “consistent with expectations”), we thought it would be interesting to actually establish a priori what the expectations really are.
To this end, a new paper authored by a team led by Leon Hermanson has just appeared on-line in the journal Geophysical Research Letters that describes a decadal forecasting model developed by the U.K. Met Office and called, rather unimaginatively, the Decadal Prediction System (DePreSys).
Hermanson and colleagues identified the “North Atlantic Subpolar Gyre” (SPG) as a key factor which influences a variety of weather patterns from North America to Europe. The SPG is a collection of processes most readily manifest in the variability of the average sea surface temperature in an area extending in latitude from 50°N to 66°N and in longitude from 60°W to 10°W. Variability in the SPG has been associated with precipitation and temperature patterns across the in the U.S., Europe, and North Africa, as well as hurricane frequency in the Atlantic Ocean.
The relationship between the SPG and hurricanes was pointed out back in 2001 in a prominent paper in Science magazine by a team of leading hurricane researchers including Stanley Goldenberg, Chris Landsea and William Gray. This team countered the prevailing (in the popular press anyway) and rather shrilly-delivered hypothesis that the upturn in hurricane activity which began in the mid-1990s was caused by anthropogenic global warming. In their paper, Goldenberg and colleagues pointed out that, no, it wasn’t. Rather than global warming, the patterns of hurricane frequency were driven by naturally occurring variability in the patterns of sea surface temperature in the North Atlantic (related to the SPG). And since this variability takes place over multidecadal timescales, conditions conducive to elevated hurricane activity in the Atlantic Ocean would be with us for a while (a couple of decades or so beginning in the mid-1990s). Despite this explanation/warning from these prominent scientists, determined parties did not stop blaming each and every hurricane on global warming.
Now, according to the DePreSys model run by Hermanson and colleagues, this favorable hurricane environment is projected to start to draw to an end—a result of a forecasted weakening of the SPG leading to cooler sea surface temperatures in the upper the North Atlantic.
Figure 1 below shows the 5-year running average of tropical cyclone numbers in the Atlantic Ocean since 1960 along with the DePreSys model hindcasts and forecasts. The model projects that the elevated hurricane numbers characteristic of the past two decades will fall back towards normal over the next few years.Figure 1. Tropical storm counts for storms in the latitude band 5°N-25°N in the Atlantic that last more than two days (HURDAT2 are the observations). The year indicates the central year of the five-year mean. The 50% probability spread of the hindcasts/forecasts is indicated by the vertical lines (from Hermanson et al., 2014).
The authors note that the decline in hurricane numbers occurs as a result of a combination of internal (natural processes) as well as a bit of an influence from anthropogenic climate change—an influence which is projected to mount a downward pressure on Atlantic hurricane numbers going forward.
Now we know—a near normal numbers of hurricanes for the next couple of years would be “consistent with” model forecasts including the influence of global warming.
So in the event of above normal hurricane counts during the next couple of years, one thing we know a priori, is that such an occurrence is NOT consistent with anthropogenic climate change.
Make sure to remember this when reading all the stories that will certainly proclaim the contrary. If history is any guide to the future, it is likely that some such stories will emanate from the White House in its zeal to dredge up support for its Climate Action Plan and any carbon dioxide restrictions that it can squeeze out—despite the ineffectiveness of any such restrictions on altering the course of future climate, including Atlantic hurricanes.
Hermanson, L., et al., 2014. Forecast cooling or the Atlantic subpolar gyre and associated impacts. Geophysical Research Letters, doi: 10.002/2014GL060420
Goldenberg, S. B., Landsea, C. W., Mestas-Nunez, A. M. & Gray, W. M., 2001. The recent increase in Atlantic hurricane activity: Causes and implications, Science, 293, 474–479.
Since 2005, the city of Winona, MN will not grant rental licenses to property owners if more than 30 percent of the lots on their block already have rental licenses (the 30% “rule”). The rule contains a “grandfather clause,” however, that allows property owners who had licenses prior to the rule to continue renting even if their block has already reached the 30 percent threshold. Therefore, many blocks in the city violate the rule, which the Minnesota Supreme Court is now reviewing.
Cato has filed an amicus brief, joined by the Minnesota Free Market Institute at the Center of the American Experiment, supporting the property owners challenging the rule. We argue that the rule is an arbitrary, inefficient, and unconstitutional restraint on an essential and fundamental property right because it strips property owners of their right to manage and enjoy their property at the result of actions of their neighbors. The rule also damages communities by reducing property values and creating inefficiencies in the local economy and housing market without a substantial government interest.
First, the rule is a significant intrusion into the fundamental rights of residential property owners because it denies the right to rent—one of the three principal ways to use a property—and significantly limits the right to sell. In addition, since the rule restricts fundamental rights, it needs to be tailored to achieve a legitimate government interest to be held valid—but the rule is both over-inclusive and under-inclusive.
Second, the right to rent is too important to restrict with an arbitrary limit on rental licenses. The rule isn’t an effective way to protect “community character”—its purpose according to the city—especially given the fact that the law has many exceptions and is applied arbitrarily. For example, the rule favors currently licensed property owners and encourages them to add rental properties to their lots, thereby defeating the asserted goal of avoiding rental clustering. Finally, the rule harms communities by artificially depressing property values and increasing the probability of vacancy. It further fails to rationally address the city’s other concerns. For example, one of the rule’s ostensible purposes is to reduce student-housing-related nuisance complaints, but it still allows large groups of students to live together in “theme houses.”
For these reasons, the Minnesota high court should reverse the lower courts’ ruling and protect the full constitutional rights of Minnesota property owners.
(Full disclosure: My condo building established a similar rule a few years ago because, due to federal regulation, it’s hard to get lenders to approve mortgages to finance purchases in buildings with a high rental quotient. Because I’m one of the original owners in my 7-year-old building, my unit is grandfathered in—except the condo board is now trying to apply the rental cap even to owners who predate the rule. It hasn’t come to litigation yet and the issue here is contractual rather than constitutional or statutory—and I don’t plan to rent out my place any time soon—but this episode just reinforced for me the practical importance of the high-fallutin’ principles Cato defends.)
And so another term has come and gone at the marble palace at One First Street NE. Like last year, Cato did swimmingly, compiling a 10–1 record in cases where we filed an amicus brief. Notably, we again vastly outperformed the solicitor general’s office, which went 11–9 on the year. Perhaps the government would be better served following our lead on constitutional interpretation, advocating positions that reinforce our founding document’s role in securing and protecting individual liberty.
Cato was also the only group in the country to file on the winning side of this term’s three highest-profile 5-4 cases: McCutcheon v. FEC (campaign finance), Harris v. Quinn (workers’ rights), and Burwell v. Hobby Lobby (HHS mandate). This again matches our performance last year, when we were the only ones to file on the winning side of Fisher v. UT-Austin (racial preferences), Shelby County v. Holder (voting rights), and United States v. Windsor (DOMA). There’s an obvious reason why it’s become a “best practice” among elite Supreme Court advocates to solicit an amicus brief from Cato; while our denial rate is lower than the Supreme Court’s, it’s been growing steadily given increasing requests without a commensurate growth in manpower.
For the record, here’s a record of cases in which we filed this term (in order of argument):
Winning side (10): McCutcheon v. FEC; Schuette v. Coalition to Defend Affirmative Action; Bond v. United States; Noel Canning v. NLRB; Brandt v. United States; McCullen v. Coakley; Harris v. Quinn; Burwell v. Hobby Lobby; SBA List v. Driehaus; Riley v. California
Losing side (1): Kaley v. United States
To learn more about all these cases and the views of Cato-friendly scholars and practitioners, register for our 13th Annual Constitution Day Symposium, which will be held September 17 to review the term just past and look ahead to the next one. (This year’s conference features P.J. O’Rourke, Miguel Estrada, and Judge Diane Sykes, among others.) That’s also when we’ll be releasing the latest volume of the Cato Supreme Court Review. Speaking of which, I’d better get editing…
Egypt’s government spends more on subsidies of consumer products—most prominently energy and food—than on health and education combined. Subsidies distort markets, lead to waste, and are largely ineffective in helping Egypt’s poor. Therefore, it should be heartening to see the government tackling the problem, as part of its effort to bring down the country’s fiscal deficit.
According to Finance Minister Hany Kadri Dimian, in the new fiscal year 2014–2015, “[T]he allocation for fuel subsidies has been cut from around EGP144bn ($20bn) last year to EGP100bn in the new budget.”
On the surface, that appears to be a bold step, slashing spending on fuel subsidies—which are by far the biggest fraction of the total subsidy bill—by almost a third. But there is a catch. According to the budget for the past fiscal year, 2013–2014, the subsidies to oil materials were already supposed to be close to EGP100bn ($14bn). Yet, the actual spending was drastically higher, perhaps by as much as an additional EGP70bn ($10bn)
And, similarly, in the preceding fiscal year, 2012–2013, the budget for fuel subsidies was to be EGP70bn, in what was seen at the time as an attempt to bring spending under control, especially relative to the previous fiscal year. But again, the actual spending on fuel subsidies during the year was drastically higher. Some of the Finance Ministry’s revised estimates were at EGP100bn, while others claimed the real numbers were even more sizeable.
In short, in recent years the government of Egypt systematically—and quite substantially—underestimated the planned spending on fuel subsidies. One can blame that on many factors, most prominently on the political turmoil, but this track record gives little guarantee that this time will be different.
Although the awareness of the problem, as well as the wider use of smart cards to allocate subsidies, are both encouraging, one needs to keep in mind that the most recent announcement is a far cry from a genuine reform plan. Even if actual spending on subsidies were exactly equal to the amount allocated in the budget, in nominal terms that would only bring Egypt back to the spending levels of fiscal 2011–2012, which were already unsustainable. As I argued in an earlier paper, what Egypt needs is a plan to phase out fuel subsidies altogether and replace them with targeted cash transfers. Alas, such a plan is nowhere in sight.
The conflict in Iraq started a century ago. So did the civil war in Syria. And so did Russia’s dismemberment of Ukraine.
All of those conflicts, and much more, grew out of World War I.
At the turn of the 20th century, Europe was prospering. But on June 28, 1914, 19-year-old Serb nationalist Gavrilo Princip assassinated Franz Ferdinand, heir to the Austro-Hungarian Empire, and his wife Sophie.
The following weeks were filled with ultimatums, plans, and pleas. But governments soon found that “control has been lost and the stone has begun to roll,” as German Chancellor Theobald von Bethmann-Hollweg put it.
Among the Great War’s participants, Great Britain enjoyed the best reputation because it was on the winning side and ran the war’s most brilliant public relations operation. Germany’s franchise was in fact broader, though Wilhelmine Germany’s political structure was flawed. Belgium looked to be the most innocent, but its rule killed millions of Africans in the Belgian Congo. France was a revenge-minded democracy. Austro-Hungary was less democratic, but the empire contained important checks and balances within.
A member of the Entente—the allies that included Britain, France, and ultimately the United States—was the antisemitic despotism of the Tsar. Its protégé, Serbia, backed Princip as an act of state terrorism against Austro-Hungary. The sclerotic and authoritarian Ottoman Empire and Bulgaria completed the Quadruple Alliance, while Romania, Italy, and Japan, joined the Entente.
The United States had nothing at stake in this quarrel. Unfortunately, America’s president, the haughty, sanctimonious, and egotistical Woodrow Wilson, imagined himself as being annointed by God to bring peace to the earth.
With Germany facing defeat, an armistice was reached in November 1918. The vainglorious Wilson enunciated high-minded principles for peace, but was out-maneuvered at the Versailles Peace Conference the following year.
The allies plundered the defeated while dictating a vengeful peace. Like the journey from Princip to World War I, the path from Versailles to Adolf Hitler was long but clear.
Wilson’s hope to reorder the world backfired spectacularly. The potentially reforming empires of Austria-Hungary, Germany, and Russia all disappeared. Eastern Europe was filled with what Germans called Saisonstaaten, or “states for a season.” The allies carved up the carcass of the Ottoman Empire, creating artificial entities like Iraq and Syria.
Economic and social crises afflicted even the victors, while the virulent bacilli of communism, fascism, and Nazism were loosed among the losers. The Great Depression spread misery widely.
A generation later, Europeans went to war again, causing more death and destruction. Today, territorial creations in the Balkans and Middle East continue to implode.
Winston Churchill observed in 1936:
America should have minded her own business and stayed out of the World War. If you hadn’t entered the war, the Allies would have made peace with Germany in the spring of 1917. Had we made peace, then there would have been no collapse in Russia followed by Communism, no breakdown in Italy followed by Fascism, and Germany would not have signed the Versailles Treaty, which has enthroned Nazism in Germany.
The so-called Great War demonstrated that appeasement often works. As I point out in my new Forbes online article:
Political figures routinely intone “Munich” without understanding that episode’s unique circumstances. A little more “appeasement” in the summer of 1914 would have prevented World War I—and its many spinoff conflicts.
Alliances often accelerate hostilities rather than deter conflict. In World War I, the two competing blocs became transmission belts of war. Two gunshots in Sarajevo triggered a conflict that eventually reached America.
War is no humanitarian exercise. Countries practiced “war socialism” and sacrificed civil liberties everywhere.
Intervention usually creates additional problems, begetting more intervention. Most every military step, from World War I to the Iraq invasion, spawned new geopolitical crises and demands for military action.
Today Washington is filled with proposals for new interventions. Most seem unlikely to trigger a new world war. But a century ago no one expected a distant assassination to do so either. Americans should make war truly a last resort.
One of the points supporters of the Ex-Im Bank like to make is that other countries have their own versions of the bank to help finance purchases of those countries’ exports, and the United States should not “unilaterally disarm.” Here’s the NY Times:
[M]ost governments around the world support exports in similar ways, and if the United States dismantled the bank unilaterally, as some lawmakers are advocating, American companies could lose billions of dollars in overseas orders and decide to move their operations to other countries that provide generous export financing.
It’s true that other countries provide similar export subsidies, but I see this as an opportunity, not a hurdle to getting rid of Ex-Im. Liberalization through international trade negotiations has been struggling in recent years. Getting rid of Ex-Im could give it a boost. If we could end Ex-Im, and then call on our trading partners to follow our lead, it could give trade talks an important and meaningful purpose. In these negotiations, governments often seem reluctant to give up any protectionism until others agree to do so as well. That has not served us well recently; not much liberalization has occurred. It may be time to try something new, and lead the way with a unilateral liberalization proposal, to show the world we actually believe in free trade (they have good reason to doubt this), and encourage others to move in that direction as well.
Yesterday ride-sharing app operators Uber and Lyft were issued cease and desist orders in Pittsburgh. The orders were granted by two judges, who were reportedly convinced by the Pennsylvania Public Utility Commission’s Bureau of Investigation and Enforcement that the two companies are a threat to public safety. The orders state that Uber and Lyft cannot operate in Pittsburgh without the Pennsylvania Public Utility Commission’s approval.
The orders come less than a month after the Virginia Department of Motor Vehicles issued Uber and Lyft cease and desist orders, saying that the companies are violating state law. Uber and Lyft have both continued to operate in Virginia despite the orders.
The Pennsylvania Public Utility Commission’s three major concerns regarding Uber and Lyft relate to background checks for drivers who use the app, vehicle inspections, and insurance. However, both companies already carry out strict background checks, have means by which to drop drivers with unsatisfactory vehicles, and have insurance schemes in place.
Drivers who want to use the Uber and Lyft apps to rideshare must pass background checks. Uber will not allow drivers to use its service if there are any DUI or drug offenses in the driver applicant’s record in the last seven years (although California requires no DUIs in the last 10 years). Lyft will not let any driver use its service if the applicant has any DUI or drug offenses at all. The background checks used by Uber and Lyft also screen for violent and sexual offenses.
Lyft carries out an in-person inspection of vehicles before drivers can use their service. Uber’s vehicle inspection is less rigorous. According to reporting from earlier this year on San Francisco drivers using UberX (Uber’s ridesharing service), Uber does not do in-person inspections of vehicles and only requires drivers to send in photos of their cars. Under legislation passed last month in Colorado, which were praised by Uber and Lyft, rideshare vehicles must be inspected.
However, it is worth noting that Uber and Lyft allow for passengers to rate drivers, and both companies do drop drivers who do not maintain good ratings. It is unlikely that a driver with a dirty or unsafe vehicle is going to be able to maintain a good rating for very long without making changes.
These plans may not be the same as those demanded by the Pennsylvania Public Utility Commission, but the information is freely available to Uber and Lyft passengers and drivers.
Thankfully, Uber and Lyft have an ally in Pittsburgh Mayor Bill Peduto, who tweeted the following yesterday:
We will not let PUC shut down innovation without a battle. Ride sharing is worldwide—technology does not stand still. PA PUC must change.
The growth of so-called “sharing economy” companies such as Uber, Lyft, Airbnb, and TaskRabbit highlights not only that customers like the services that they provide, but also that the economy will almost certainly become increasingly peer-to-peer as technology improves and becomes more accessible. Cease and desist orders such as those issued yesterday are the latest examples of outdated regulatory framework that is understandably failing to keep up with technology being used by innovative companies. That innovation should be welcomed, not hampered.
Yesterday, NASA aborted a third attempt to launch a probe that would measure the level of atmospheric carbon dioxide, where it comes from, and where it is stored. The agency may try again today, as the probe’s findings, we are told, will be “crucial to understanding how much human activity affects the planet’s climate.”
While we eagerly await NASA’s findings, it is well-known that carbon dioxide emissions are on the rise worldwide. We also know that developed countries emit less, or increase emissions at a slower pace, than in the past. Crucially, developed countries also show falling emissions per dollar of output and per person.
According to HumanProgress.org and the World Bank, developed countries’ growth in carbon dioxide emissions has slowed or reversed over time.
Carbon dioxide emissions per person in these developed countries have been on the decline since at least 2000.
Over time, developed countries emit less carbon dioxide per unit of wealth created.
There are several causes for this trend, one of which is free enterprise. While history shows that corporations can be serious polluters, we also know that the free market helps to reduce emissions. That is because a concern for public opinion coupled with a desire to limit inputs (both of which affect profits) incentivize businesses to reduce emissions. After all, pollution is simply wasted resources contributing nothing to profits, a fact that leads companies to voluntarily reduce their emissions and waste. That is why in 1972, a pound of aluminum yielded 21.75 soda cans and in 2012 (as a result of can-makers’ use of less metal per unit), one pound of aluminum produced 33 cans.
The federal Highway Trust Fund (HTF) is running out of money. Congress will likely pass a short-term fix for the program in coming weeks. Over the longer term, many policymakers favor raising taxes to close the $14 billion annual gap between HTF spending and revenues.
Tax-hike advocates say the gap is caused by insufficient gas tax revenues. It is true that the value of the federal gas tax rate has been eroded by inflation since it was last raised two decades ago. But the gas tax rate was more than quadrupled between 1982 and 1994 from 4 cents per gallon to 18.4 cents. So if you look at the whole period since 1982, gas tax revenues have risen at a robust annual average rate of 6.1 percent (see data here).
In recent years, gas tax revenues have flat-lined. But the source of the HTF gap was highway and transit spending getting ahead of revenues, and then staying at elevated levels.
The chart below (from DownsizingGovernment.org/charts) shows real federal highway and transit spending since 1970. Real highway spending (red line) has almost doubled over the last two decades, from $29.1 billion in 1994 to $56.2 billion in 2014. Real transit spending (green line) has also risen since the mid-1990s. (If you visit the /charts page, you can see the dollar values by hovering the mouse over the lines.)
Caleb O. Brown
Following last week’s event for Ralph Nader’s Unstoppable, I sat down with himto discuss some of the ideas he expressed about how best to gather a large coalition to end corporate welfare, crony capitalism, and corporatism. We may agree more than this discussion indicates, but we disagree quite a bit, as you’ll see. You be the judge.
A somewhat longer audio version is available here.
In a recent article for The New Yorker, Aaron Reiss explores New York City’s shadow transportation system – a network of so-called “dollar vans” that serve mostly low- income areas with large immigrant communities. The system lacks “service maps, posted timetables, and official stations or stops,” but Ross uses interactive maps and videos made with Nate Lavey to detail routes in Chinatown, Flatbush, Eastern Queens, Eastern New Jersey, and the Bronx.
Not too surprisingly, this ingenious shadow system faces serious regulatory obstacles. Vans have had a long and tumultuous regulatory history, with oversight changing hands several times in the past thirty or so years and the largely immigrant drivers facing police harassment. Since 1994, the New York City Taxi and Limousine Commission has been issuing van licenses, allowing vehicles to serve parts of the city with sufficient public need. Still, the number of illegal, unlicensed vans continues to outstrip by far the 481 licensed ones. The licensed vans operate under highly restrictive rules, which forbid them from picking up along New York City’s innumerable bus routes and require all pick-ups to be prearranged and documented in a passenger manifest.
In August last year Sean Malone of the Charles Koch Institute spoke to Reason TV about a film he had made featuring a Jamaican immigrant, Hector Ricketts, who faced regulatory hurdles after starting a commuter van service that transported healthcare workers to New York City’s outer boroughs. Thankfully, with the help of the Institute for Justice, Ricketts was allowed to stay in business.
Reiss’s article and Malone’s film both highlight the perversities of regulations that shield traditional public transit from competition in a free market. You might think that policymakers concerned with improving opportunities in low-income areas would want to celebrate and encourage the entrepreneurial initiative and community service represented by “dollar vans” and the service run by Hector Ricketts. Instead, they choose to chase such enterprising service providers into the legal shadows.
Even before Obamacare, many states faced the prospect of a doctor shortage due to an aging population and a limited supply of physicians. Obamacare will exacerbate this shortage by expanding insurance coverage to some degree, which will further increase the demand for care. One study projects that this increased demand will require between 4,300 and 7,000 more physicians by 2019.
Earlier this week, the New York Times reported that state medical boards across the country “have drafted a model law that would make it much easier for doctors licensed in one state to treat patients in other states, whether in person, by videoconference or online,” in what they are saying has the potential to be “the biggest change in medical licensing in decades.” This is a positive development, especially given that it seems to have a measure of bipartisan support, with 10 Republicans and 6 Democrats endorsing the plan in a recent letter. If ultimately enacted, it could go a long way to increasing access to care, especially in underserved areas, but there are still many obstacles to seeing this plan become a reality, and it is far from the only option at the disposal of policymakers.
Another proposal to address this doctor shortfall is to expand the role of nurse practitioners (NP’s), who are registered nurses who have also received a graduate degree in nursing. States determine what services these NP’s can perform, and their scope of practice varies significantly. States that currently have reduced or restricted scope of practice should explore loosening these restrictions, because doing so could go some way to addressing the looming doctor shortage and increase access to care without a reduction in quality.
This idea has been explored in the past, garnering support from non-partisan organizations, and some states have already made progress in expanding scope of practice for NP’s. A 2010 Institute of Medicine report recommended that state legislatures “remove scope of practice barriers,” and a 2012 National Governor’s Association report suggested states “consider changing scope of practice legislation” as a way to increase the role of NP’s in providing primary care. Despite this support that in some ways transcends traditional partisan lines, there is still much to be done, as this map shows:
Source: American Association of Nurse Practitioners, “2014 Nurse Practitioner State Practice Environment,” http://www.aanp.org/images/documents/state-leg-reg/stateregulatorymap.pdf.
This year, 19 states (and D.C.) allow nurse practitioners to diagnose and, to some extent, treat patients without a physician’s involvement, otherwise known as ‘full practice.’ The remaining states only allow ‘reduced’ or ‘restricted’ practice, which means NP’s require some degree of physician involvement.
There has been some progress in recent years; Massachusetts and Minnesota transitioned from ‘reduced’ to ‘full’ practice this past year, but many of the most populous states like Florida, Texas and California still have restrictive scope of practice laws in place.
Skeptics of expanded scope of practice raise the concern that the quality of care could suffer as some duties are shifted from physicians to NP’s, but a systematic review of 26 recent studies in a Health Policy Brief for Health Affairs found that “health status, treatment practices, and prescribing behavior were consistent between nurse practitioners and physicians.” Some studies even find that NP’s score higher in patient satisfaction than physicians for certain services.
In a time when health care policy at the state level so often seems to be gridlocked, there are still channels to improve the access to care without increasing costs or reducing quality. This is not to say state lawmakers should shift all focus from the many pervasive problems with Obamacare, but perhaps, on this specific issue, there could be a separate peace and real, positive reform can be enacted.
Cato Institute Adjunct Scholar Shirley Svorny has explored the many problems posed by medical licensing in depth, and you can find her research here.
Michael F. Cannon
The administration’s loss in the Hobby Lobby case is a bitter pill to swallow, but it is not a lethal threat to Obamacare. For critics of the law, Halbig is everything that Hobby Lobby is not. Where Hobby Lobby exempts only closely held corporations from a portion of the ACA rules, Halbig could allow an mass exodus from the program. And like all insurance programs, it only works if large numbers are insured so that the risks are widely spread. Halbig could leave Obamacare on life support — and lead to another showdown in the Supreme Court.
A ruling is expected from the D.C. Circuit in Halbig any day now. Here are some materials that will let you hit the ground running.