For nearly 30 years, Connecticut beverage distributors received the unclaimed refund value of recycled bottles as part of the state’s Bottle Bill, which set up a refund system for used bottles as an attempt to encourage recycling. As in other states, the law requires beverage dealers to pay refunds for every bottle turned in.
Fiscal troubles in 2008 prompted Connecticut to amend the law, however, to require a “deposit account” from which distributors were to pay the refunds. This requirement was intended to aid the state environmental agency to study the rates of deposit payments and returns. The following year, the fiscal situation worsened, and the Bottle Bill was again amended, this time to require the remaining funds in the deposit accounts (after returns were paid out) to be paid to the state—retroactively including any unpaid remainder funds since the accounts went into effect in 2008.
A. Gallo & Co. and other beverage distributors in Connecticut saw this as an uncompensated taking of their property and sued the state. They took their case through the state court system, but even the Connecticut Supreme Court turned a blind eye, holding that beverage distributors never had a property right in the remainder funds in the first place. The distributors have now asked the U.S. Supreme Court to hear their case, and Cato joined the New England Legal Foundation, the Southeastern Legal Foundation, and the National Federation of Independent Business on a brief supporting their petition.
We argue that Connecticut’s budgetary troubles are no excuse for violating a longstanding property right without compensation. Moreover, by twisting its statutory interpretation to satisfy political pressures, the Connecticut Supreme Court has made itself complicit in the uncompensated taking. It’s bad enough when strapped-for-cash legislatures unfairly force public burdens onto the shoulders of private parties to feed their spending addictions, but when all three government branches – including the one entrusted with soberly interpreting the law, especially in times of fiscal emergency – get drunk on power and deny even the existence of a property right, it’s time for a Supreme Court intervention.
The Supreme Court will decide by winter’s end whether to take the case of A. Gallo & Co. v. Esty.
One of the big Obama administration trade initiatives going on right now is negotiations with eleven countries in the Pacific region, called the Trans Pacific Partnership (TPP). What exactly is being talked about in these trade talks? Is it really about free trade? Based on standard media coverage of the issue, it’s not easy to discern. Here’s an example from the Washington Post.
In the print version of the piece, the title notes that the U.S. is seeking “to shape global trading rules”; and the sub-title says that the goal of the talks is “a freer flow of world commerce.” That sounds free trade-ish. But is it free trade? And if not, what is it?
When you look at the substance that is described in the article, the talks seems much broader, and do not have a very free trade feel. Take a look at these examples:
When Vietnamese officials issued new Internet rules this year, the U.S. tech industry gave a shudder.
The regulations clamp down on political speech, require companies such as Facebook and Google to invest in local computer infrastructure to store information on Vietnamese users, and could force chipmakers to strip standard encryption features from their processors.
Only one of these is about free trade (the local computer storage requirements). The rest are all domestic laws that affect trade. But perhaps more accurately, the U.S. trade goal here is changing other countries’ domestic laws so as to increase US exports, which isn’t free trade at all.
Some of these changes may be good (e.g., taking on speech restrictions); I’m less certain about others, such as the stronger intellectual property rules mentioned later in the article. But the article gives away the real policy goal, when it says:
the more significant fights … are over issues such as the regulation of the Internet and e-commerce, the rules for the patent and sale of biopharmaceuticals, and the oversight of logistics, consulting, energy management and other service industries where the U.S. holds an edge.
Putting it this way, the talks seem to be about economic nationalism pursued through trade agreements! Make everyone use our rules, which will give our companies an advantage. Along the same lines, the online title of the article is as follows: “Through trade treaty, U.S. hopes rules that favor its companies will become the norm.”
There is real free trade in these talks, of course. There will be lower tariffs and liberalized services trade, and government procurement will be opened up to foreign competition. But the shift to other subjects as the focus, and the emphasis on giving advantages to U.S. companies, has fundamentally altered the nature of these agreements and the debate, and in the process left the media confused about how to talk about free trade and trade agreements. They keep trying to make these agreements sound like they are about free trade, but with the hurdle that much of what’s in them is not.
December 26 is the 120th anniversary of Mao Zedong’s birth, typically a date of great celebration in China. But this year the Chinese government seems somewhat ambivalent about celebrating Mao’s disastrous achievements. It’s about time.
Many countries have a founding myth that inspires and sustains a national culture. We’ve just seen South Africa and the world celebrate the accomplishments of Nelson Mandela, the founder of that nation’s modern, multi-racial democracy. In the United States we look to the American Revolution and especially to the ideas in the Declaration of Independence of July 4, 1776.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.
The ideas of the Declaration, given legal form in the Constitution, took the United States of America from a small frontier outpost on the edge of the developed world to the richest country in the world in scarcely a century. The country failed in many ways to live up to the vision of the Declaration, notably in the institution of chattel slavery. But over the next two centuries that vision inspired Americans to extend the promises of the Declaration—life, liberty, and the pursuit of happiness—to more and more people.
China of course followed a different vision, the vision of Mao Zedong. Take Mao’s speech on July 1, 1949, as his Communist armies neared victory. The speech was titled, “On the People’s Democratic Dictatorship.” Instead of life, liberty, and the pursuit of happiness, it spoke of “the extinction of classes, state power and parties,” of “a socialist and communist society,” of the nationalization of private enterprise and the socialization of agriculture, of a “great and splendid socialist state” in Russia, and especially of “a powerful state apparatus” in the hands of a “people’s democratic dictatorship.”
Tragically, unbelievably, this vision appealed not only to many Chinese but even to Americans and Europeans, some of them prominent. But from the beginning it went terribly wrong, as really should have been predicted. Communism created desperate poverty in China. The “Great Leap Forward” led to mass starvation. The Cultural Revolution unleashed “an extended paroxysm of revolutionary madness” in which “tens of millions of innocent victims were persecuted, professionally ruined, mentally deranged, physically maimed and even killed.” Estimates of the number of unnatural deaths during Mao’s tenure range from 15 million to 80 million. This is so monstrous that we can’t really comprehend it. What inspired many American and European leftists was that Mao really seemed to believe in the communist vision. And the attempt to actually implement communism leads to disaster and death.
When Mao died in 1976, China changed rapidly. His old comrade Deng Xiaoping, a victim of the Cultural Revolution, had learned something from the 30 years of calamity. He began to implement policies he called “socialism with Chinese characteristics,” which looked a lot like freer markets — decollectivization and the “responsibility system” in agriculture, privatization of enterprises, international trade, liberalization of residency requirements.
The changes in China over the past generation are the greatest story in the world—more than a billion people brought from totalitarianism to a largely capitalist economic system that is eroding the continuing authoritarianism of the political system. On its 90th birthday, the CCP still rules China with an iron fist. There is no open political opposition, and no independent judges or media. And yet the economic changes are undermining the party’s control, a challenge of which the party is well aware. Five years ago Howard W. French reported in the New York Times:
Political change, however gradual and inconsistent, has made China a significantly more open place for average people than it was a generation ago.
Much remains unfree here. The rights of public expression and assembly are sharply limited; minorities, especially in Tibet and Xinjiang Province, are repressed; and the party exercises a nearly complete monopoly on political decision making.
But Chinese people also increasingly live where they want to live. They travel abroad in ever larger numbers. Property rights have found broader support in the courts. Within well-defined limits, people also enjoy the fruits of the technological revolution, from cellphones to the Internet, and can communicate or find information with an ease that has few parallels in authoritarian countries of the past.
The Chinese Communist Party remains in control. But it struggles to protect its people from acquiring information, routinely battling with Google, Star TV, and other media. Howard French noted that “the country now has 165,000 registered lawyers, a five-fold increase since 1990, and average people have hired them to press for enforcement of rights inscribed in the Chinese Constitution.” People get used to making their own decisions in many areas of life and wonder why they are restricted in other ways. I am hopeful that the 100th anniversary of the CCP in 2021 will be of interest mainly to historians of China’s past and that the Chinese people will by then enjoy life, liberty, and the pursuit of happiness under a government that derives its powers from the consent of the governed.
Two of my lifelong interests — government over-regulation and scrumptious Scandinavian baked goods — have finally intersected:
…scientists have now discovered that too much of the most commonly used type of cinnamon, cassia, can cause liver damage thanks to high levels of coumarin, a natural ingredient found in the spice.
The EU has accordingly decreed that coumarin levels must be kept below 50 mg per kg in “traditional” or “seasonal” foodstuffs eaten only occasionally, and 15 mg per kg in everyday “fine baked goods.” This is triggering a crisis in Denmark:
Last month, the Danish food authority ruled that the nation’s famous cinnamon swirls were neither traditional nor seasonal, thus limiting the quantity of cinnamon that bakers are allowed to use, placing the pastry at risk – and sparking a national outcry that could be dubbed the great Danish bake strop.
The president of the Danish Bakers’ Association, Hardy Christensen, said: “We’ve been making bread and cakes with cinnamon for 200 years. Then suddenly the government says these pastries are not traditional? I have been a baker for 43 years and never come across anything like this – it’s crazy. Using lower amounts of the spice will change the distinctive flavour and produce less tasty pastries. Normally, we do as we’re told by the government and say OK, but now it’s time to take a stand. Enough is enough.”
The one thing cinnamon buns have been missing all these years is a sense of outlaw defiance of authority. Now they are perfect. [adapted from Overlawyered]
Last week President Obama commuted the sentences of eight inmates caught up in the crack cocaine sentencing fury, all of whom had served at least 15 years for what was often relatively peripheral involvement in the drug trade. Clarence Aaron, for example, was serving three life sentences without possibility of parole for a first-time nonviolent offense. Many advocates from all political viewpoints pushed for Aaron’s release, among them Debra Saunders who wrote dozens of columns on his case in the San Francisco Chronicle over the past 12 years.
I’ve got a new op-ed for Bloomberg View (my first appearance there) calling the new venture in presidential clemency “mingy and belated”:
According to the Washington Post, one of the administration’s motives was, oddly, its wish to help “eliminate overcrowding in federal prisons.”
If that’s the case, Obama is trying to bail out Lake Michigan with a paint can. The federal prison population has increased by more than 700 percent since 1980 and the number of inmates now exceeds the Bureau of Prisons bed capacity by 35 percent to 40 percent, requiring the use of contract prisons, halfway houses and other makeshifts.
Even if the president could free another batch of eight prisoners every week for a year, his mercy will still have touched only about one-fifth of 1 percent of the inmates in federal prisons.
One argument I’ve heard on behalf of the White House is that this is a trial balloon, and if the President doesn’t suffer political damage from it, he may be back with broader pardons later, perhaps after the mid-term elections. It’s a politically coherent argument, I suppose, but I can’t think it’s one that’s especially flattering to Obama as he will appear to later historians.
[cross-posted and adapted from Overlawyered]
Marian L. Tupy
I hope that many of you had a chance to check out Cato’s new website: www.humanprogress.org.
In the same vein, here is a just-released video put together by the folks at Science Magazine summing up the greatest scientific advances of 2013:
As G.K. Chesterton put it, “The world will never starve for want of wonders; but only for want of wonder.”
Daniel J. Mitchell
Last year, while writing about the corrupt and self-serving behavior at the IRS, I came up with a theorem that explains day-to-day behavior in Washington.
Simply stated, government is a racket that benefits the D.C. political elite by taking money from average people in America
I realize this is an unhappy topic to be discussing during the Christmas season, but the American people need to realize that they are being pillaged by the insiders that control Washington and live fat and easy lives at our expense.
If you don’t believe me, check out this map showing that 10 of the 15 richest counties in America are the ones surrounding our nation’s imperial capital.
Who would have guessed that the wages of sin are so high?
D.C., itself, isn’t on the list. But that doesn’t mean there aren’t a lot of people living large inside the District.
Here are some interesting nuggets from a report in the Washington Business Journal:
D.C. residents are enjoying a personal income boom. The District’s total personal income in 2012 was $47.28 billion, or $74,733 for each of its 632,323 residents, according to the Office of the Chief Financial Officer’s Economic and Revenue Trends report for November. The U.S. average per capita personal income was $43,725.
Why is income in D.C. so much higher? Well, the lobbyists, politicians, bureaucrats, interest groups, contractors, and other insiders who dominate the city get much higher wages than people elsewhere in the country.
And they get far higher benefits:
In terms of pure wages, D.C., on a per capita basis, was 79 percent higher than the national average in 2012 — $36,974 to $20,656. …Employee benefits were 102 percent higher in D.C. than the U.S. average in 2012, $7,514 to $3,710. Proprietor’s income, 137 percent higher — $9,275 to $3,906. …The numbers suggest D.C. residents are living the high life.
Below is a chart from Zero Hedge comparing income growth for both D.C. and the nation as a whole over the last few decades. It uses median household income rather than total personal income, so the numbers don’t match up exactly with the numbers from above. Regardless, it shows how D.C. income grew faster than the rest of the nation during the Bush years, and then even more dramatically during the Obama years.
Want some other examples of profitable Washington sleaze? Here are some excerpts from Rich Tucker’s column for Real Clear Policy:
The real place to park your money is in Washington, D.C. That’s because the way to get ahead isn’t to work hard or make things; it’s to lobby Washington for special privileges. Look no further than the sweet deal the sugar industry gets. It’s spent about $50 million on federal campaign donations over the last five years. So that would average out to $10 million per year. Last year alone, the federal government spent $278 million on direct expenditures to sugar companies. That’s a great return on investment.
Big Corn may get an even better deal than Big Sugar:
Until 2012, the federal government provided generous tax credits to refiners that blended ethanol into gasoline. In 2011 alone, Washington spent $6 billion on this credit. The federal government also maintains tariffs (54 cents per gallon) to keep out foreign ethanol, and it mandates that tens of billions of gallons of ethanol be blended into the American gasoline supply. Nothing like a federal mandate to create demand for your product. How much would you pay for billions of dollars worth of largesse? Well, the ethanol industry got a steep discount. In 2012, opensecrets.org says, the American Coalition for Ethanol spent $212,216 on lobbying.
Rich warns that the United States is sliding in the wrong direction:
What makes Washington especially profitable is that its only products are the laws, rules, and regulations that it has the power to force everyone else to follow. …[W]e seem to be sliding toward what the authors term “extractive” institutions. That means government [is] using its power to benefit a handful of influential individuals at the expense of everyone else.
And let’s not forget that some people are getting very rich from Obamacare while the rest of us lose our insurance or pay higher prices.
This Reason TV interview with Andrew Ferguson explains that there is a huge shadow work force of contractors, consultants, and lobbyists who have their snouts buried deeply in the public trough:Washington’s Parasitic Economy with The Weekly Standard’s Andrew Ferguson
I particularly like his common sense explanation that Washington’s wealth comes at the expense of everyone else. The politicians seize our money at the point of a gun (or simply print more of it) to finance an opulent imperial city.
So if you’re having a hard time making ends meet, remember that you should blame the crowd in Washington.
P.S.: Despite Republican claims of being the party of free markets and smaller government, the insider corruption of Washington is a bipartisan problem. Indeed, some of the sleaziest people in D.C. are Republicans.
P.P.S.: Though scandals such as Solyndra show that Obama certainly knows how to play the game.
P.P.P.S.: Making government smaller is the only way to reduce the Washington problem of corrupt fat cats.
Patrick J. Michaels and Paul C. "Chip" Knappenberger
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.”
We know this: Every holiday season some of our readers make some offhanded comment at a party, to the effect that, well, global warming (or its effects) appear to have been a bit overblown. Before you finish, you’re likely to be assaulted by a sharp ranch dressing-laden carrot stick or you might get a face full of dill-dipped broccoli.
Fight back! Before things escalate to the level of food assaults, trot out some of the facts in this, our annual guide for holiday parties.
First of all, the tendency for prominent findings about the impacts from human-caused global warming to be “worse than we thought” is not only a pure play for press coverage, but also strains, if not obliterates, scientific credibility.
The unscientific preponderance of “worse than we thought” stories is starting to become more widely recognized (although we have been talking about it for years). And it is having consequences. Fresh from accepting his Nobel Prize for physiology/medicine, University of California’s Randy Schekman announced that his lab would no longer be sending any research papers to “luxury journals” like Science and Nature because of their preference to select papers “that will make waves because they explore sexy subjects.” Schekman explains that “These journals aggressively curate their brands, in ways more conducive to selling subscriptions than to stimulating the most important research.” Global warming alarmism is a prime example of this.
In fact, there are scientific studies that conclude that things aren’t likely to be worse than we thought, but looking to the “luxury journals” or to the press to highlight them is a fool’s errand.
But that’s where we can help!
In the spirit of this season of good cheer, and as a respite for the increasing number of those out there suffering from “apocalypse fatigue,” your obedient servants at the Center for the Study of Science are here to bring you a little holiday joy and good news.
Below, we’ve collected some clips and quips culled from the recently published scientific literature (and observations) that show that perhaps the impacts from climate change resulting from our production of energy from fossil fuels isn’t going to worse than we thought—and, in fact, may not prove to be so bad at all.
Coral reefs are supposed to suffer badly under a process called “ocean acidification” in which the pH levels of the oceans drop as more carbon dioxide (a result of burning fossil fuels) is absorbed by ocean waters. The resulting pH drop is supposed to erode the shells of calcifying organisms such as those that build coral reefs. A recent study summed up the doom and gloom outlook:
Coral communities may have limited capacity to adapt to levels of acidification projected for the 21st century, and that healthy coral reefs could cease to exist within this time frame. [citations omitted]
But new research by Kathryn Shamberger and colleagues describes the existence of coral reefs in locations that, for a variety of reasons, have naturally occurring acidification levels on par with those projected to result from human carbon dioxide emissions. The authors write:
Here, we report the existence of healthy, diverse coral reef communities living under levels of natural acidification approaching those projected for the tropical western Pacific open ocean by 2100. Understanding the combinations of genetic and/or environmental factors that enable coral reefs to thrive under relatively extreme conditions … will help to improve projections of reef health.
Apparently, in the real world, coral reef communities can well-adapt to the prevailing conditions.
Arctic Sea Ice
A new paper characterizes the situation with Arctic sea ice:
The observed reduction in sea-ice extent has been significantly faster than projected by most numerical models using realistic anthropogenic increases in greenhouse gases. The mismatch between observations and models can arise from: model underestimation of the sensitivity of sea ice to radiatively forced climate change, incorrect or missing types of radiative forcing, and/or nonmodelled natural variability. [citations omitted]
The first two potential reasons why the observed Arctic sea ice decline (note that in the Antarctic, sea ice has increased contrary to model projections) has been faster than model projections imply things are “worse than we thought.” But this new research favors the latter explanation—that is, the decline from global warming has been boosted (temporarily) by natural variability acting in the same direction. From a paper by Martin Miles and colleagues:
These results imply that the AMO [natural variability operating over the Atlantic Ocean basin] may be an important factor in the faster-than-projected decreases in sea ice, in qualitative agreement with a recent modelling–satellite-data analysis [Day et al., 2012] that attributes up to 5–30% to the satellite-era (1979–2010) summer sea-ice decrease to the concurrent AMO warm phase, and an even higher proportion for the winter sea ice.
In other words, the influence from human-caused global warming is not “worse than we thought.”
Great Lakes Water Levels
Another doom and gloom climate change projection is that the water levels in the Great Lakes will fall dramatically, interfering with (degrading) all sorts of environmental and economic activities. Last year’s Midwestern drought was a sign to some that things were even worse than we thought.
A new paper by Carl Watras and colleagues sums up the situation:
During the past decade, unusually low water levels have been observed in both the NHLD [Northern Highland Lake District of Wisconsin] and the upper Great Lakes. Following a peak in 1998, NHLD water levels have trended downward for roughly 12 years – reaching a record low elevation in 2010. Similarly, the water level of Lake Michigan-Huron recently dropped at a rate not seen since the 1930s mega-drought. Both Lake Superior and Lake Michigan-Huron have been consistently below average level for the longest sustained period in their historical records; and in January 2013 Lake Michigan-Huron reached an all-time low water level. [citations omitted]
Watras et al. go on to conclude that the low water levels of the past 12 years may “mark the onset of a new hydroclimatic regime.”
But, in what is an incidence of unfortunate timing, just as the Watras paper was being published, Mother Nature has made her own announcement. After reaching historic (or nearly so) low lake levels during the beginning of 2013, over the course of this year, and as a result of ample precipitation, the water levels in the Great Lakes have risen rapidly. The Detroit Free Press observes:
A snowy winter and wet spring and summer led to an almost unprecedented recovery of Great Lakes levels this year, officials with the U.S. Army Corps of Engineers and National Oceanic and Atmospheric Association said Wednesday.
The extended lake level forecasts keep the water levels near or just-below normal for the foreseeable future.
Perhaps a new climate regime of low Great Lakes water levels is not upon us. In fact, the situation doesn’t look to be worse than we expected after all.
Global warming has been variously predicted to slow down, or even shut down, the Gulf Stream, wreaking havoc on the climate on both sides of the North Atlantic and leading to sea level rise along the U.S. East Coast that may even be worse than expected from warming oceans and melting ice.
Last summer, an article in USA Today stoked these fears with its coverage of a just-published article in the one of the “luxury journal” offshoots—Nature Climate Change:
From Cape Hatteras, N.C., to just north of Boston, sea levels are rising much faster than they are around the globe, putting one of the world’s most costly coasts in danger of flooding, government researchers report.
U.S. Geological Survey scientists call the 600-mile swath a “hot spot” for climbing sea levels caused by global warming. Along the region, the Atlantic Ocean is rising at an annual rate three times to four times faster than the global average since 1990, according to the study published Sunday in the journal Nature Climate Change.
It’s not just a faster rate, but at a faster pace, like a car on a highway “jamming on the accelerator,” said the study’s lead author, Asbury Sallenger Jr., an oceanographer at the agency.
Now, a newly-published study says “nonsense” to this claim. Tom Rossby and colleagues looked at 20 years of direct measurements of Gulf Stream behavior and found no evidence at all that it is slowing down or effecting sea level rise along the East Coast. Rossby et al. took direct aim at the findings highlighted by USA Today:
Recently, two papers have suggested that the [Gulf Stream] may be weakening based on the well-documented accelerated Sea Level Rise (SLR) along the U.S. east coast (Sallenger et al., 2012; Ezer et al., 2013). …In contrast to these recent assertions of a weakening Gulf Stream our direct measurements of Gulf Stream currents for the past 20 years indicate no such trend…”
Not only is the situation not “worse than we thought,” but it is leaning toward being even “not as bad as we thought.”
North American Pika
And we’ll end with something warm and fuzzy—the North American pika. This little critter has long appeared on global-warming-is-going-to-kill-all-things-cute-and-cuddly posters, alongside polar bears, puffins, sea turtles, etc. The story goes that as the climate warms, the high-altitude, cold weather-loving pikas will be pushed off their mountain-top refuges and into extinction.
New research, however, shows that the pikas aren’t quite so prone to climate change extermination after all. According to the authors of a soon-to-be-published paper in the Journal of Mammalogy, by altering their foraging behavior and diet,
“[Pikas] may be more resistant to climate change than we thought.”
Call us stunned—not!
So there you have it, a stocking’s full of good news regarding climate change.
All of this could come in handy during holiday cocktail parties and post-dinner conversations—FIGHT CARROT STICKS WITH FACTS!!!
Miles, M. W., et al., 20130. A signal of persistent Atlantic Multidecadal variability in Arctic sea ice. Geophysical Research Letters, DOI: 10.1002/2013GL058084
Rossby, T., et al., 2013. On the long-term stability of Gulf Stream transport based on 20 yers of diurect measurements. Geophysical Research letters, DOI: 10.1002/2013GL058636
Shamberger, K. E. F., et al., 2013. Diverse coral communities in naturally acidified waters of a Western Pacific reef. Geophysical Research Letters, DOI: 10.1002/2013GL058489
Watras, C. J., et al., 2013. Decadal oscialltion of lakes and aquifers in the upper Great Lakes region of North America: hydroclimate implications. Geophysical Research Letters, DOI: 10.1002/2013GL058679
Jeffrey A. Miron
To address global warming, many economists advocate raising carbon taxes while lowering income taxes or other distorting taxes. This makes sense in principle–if global warming concerns are valid–but in practice the approach can easily generate more cost than benefit.
For those who believe global warming merits a policy response, therefore, the question is whether any policy change can generate greater benefit than cost.
The answer is yes: removal of existing carbon subsidies. As documented by economist Lucas Davis (Berkeley), many countries keep gasoline and diesel prices far below market levels, thus encouraging over-consumption. These subsidies harm economic efficiency, independent of global warming.
Other policies have the same features as carbon subsidies: they reduce economic efficiency and encourage over-consumption of energy. One example is the deductibility of mortgage interest, which means bigger houses and therefore higher heating and cooling bills. A second example is agriculture subsidies, which encourage production in inefficient locales that require energy-intensive techniques like irrigation.
Repeal of all such policies is thus a no-brainer. When policy is shooting the economy in the foot, the best response is less shooting, not new taxes to fund a bullet-proof shoe.
The new budget bill has passed, hiking spending and taxes. Capitol Hill is back to the bipartisan business of mulcting taxpayers.
Unfortunately, Washington can’t afford to wait for fiscal reform. The Congressional Budget Office’s most optimistic estimate, the so-called “baseline,” is that Uncle Sam will add $6.3 trillion more in red ink over the next decade. Annual deficits are expected to begin moving up again in 2016.
More realistic is CBO’s “alternative” scenario, given how politicians usually behave. In this case Uncle Sam would run up $8.8 trillion more in red ink.
These estimates presume good economic times ahead and a minimum of new bail-outs. Unfortunately, that seems over-optimistic. Even the Postal Service continues to lose money.
Moreover, the entitlement tsunami—Social Security, Medicare, Medicaid, and now health insurance subsidies—will not have fully developed by 2023. As a result, warned CBO, without substantial policy changes “debt will rise sharply relative to GDP after.” Put everything together and economist Laurence Kotlikoff figures that unfunded federal liabilities currently exceed $220 trillion.
There’s more. Because federal debt crowds out private investment, CBO estimates that every additional dollar of government debt reduces national saving by 57 cents. As a result, the GDP likely will drop between four and seven percent, or perhaps even more, by 2038.
As I observe in my new column in American Spectator online:
In short, borrowing more causes us to owe more and pay more in interest. At the same time, we will be saving, producing, and earning less. It’s a prescription for economic and budget disaster.
Unwilling to cut spending, Uncle Sam instead would have to raise taxes or borrow ever more. Under the alternative scenario the official (exclusive of Social Security-Treasury transfers) debt to GDP ratio would run around 190 percent by 2038, greater than Greece at its worst. In a paper for the U.S. Monetary Policy Forum earlier this year, economists David Greenlaw, James D. Hamilton, Peter Hooper, and Frederick S. Mishkin posited one scenario under which “The debt/GDP ratio would rise much more rapidly, hitting 304 % of GDP by 2037.”
Moreover, explained CBO, “Growing federal debt would increase the probability of a fiscal crisis, when … the government would thereby lose its ability to borrow at affordable rates.” Based on international experience, David Greenlaw and his colleagues warned “that countries with debt above 80 percent of GDP and persistent current-account deficits are vulnerable to a rapid fiscal deterioration as a result of these tipping-point dynamics.” In that case federal liabilities likely would explode, as they did in the 2008 financial crisis.
The feedback loop would continue to worsen. Noted Greenlaw, et al., “If U.S. government finances are not put on a sustainable path, … then the public might expect the Federal Reserve to be forced to monetize this debt. What would then unhinge inflation expectations would be the fear of fiscal dominance, which could then drive up inflation quickly.”
Amazingly, observed David Greenlaw, et al., “As recently as the 1990s, the United State government was running budget surpluses and there was serious discussion of what would happen if the federal government was able to retire its debt.” That world is long gone, probably forever.
Still, Washington is celebrating Good News! For the first time in five years, the annual federal deficit has dropped below $1 trillion.
Alas, the cheery interlude will be brief. Soon the red ink again will be growing, and the more government spends and taxes, the worse will be the economic impact. No wonder CBO warned of “the unsustainable nature of the federal government’s current tax and spending policies.”
Washington only faces “difficult choices,” in CBO’s words. America’s political leaders should be choosing among them instead of passing another dishonest feel-good budget agreement.
If you’ve been reading Cato at Liberty and www.cato.org, then you already know, as the lead story in the Washington Post reported this morning, that both the constitutionality and the necessity of the NSA’s massive surveillance are in doubt:
From the moment the government’s massive database of citizens’ call records was exposed this year, U.S. officials have clung to two main lines of defense: The secret surveillance program was constitutional and critical to keeping the nation safe.
But six months into the controversy triggered by former NSA contractor Edward Snowden, the viability of those claims is no longer clear.
In a three-day span, those rationales were upended by a federal judge who declared that the program was probably unconstitutional and the release of a report by a White House panel utterly unconvinced that stockpiling such data had played any meaningful role in preventing terrorist attacks.
Immigration and Customs Enforcement (ICE) released figures showing that they deported fewer people during FY2013 than any year since FY2008 –368,644. But that number is still higher than at any time during the Bush administration despite the unauthorized immigrant population peaking in 2007. Just eyeballing the bottom graph confirms that the level of deportations is largely explained by the size of the unauthorized immigrant population (R-Squared=813). The more unauthorized immigrants there were, the higher the number of deportations.
Source: Department of Homeland Security and author’s estimate.
So how does Obama’s enforcement record compare to the years before he took office? Is he under-enforcing or over-enforcing immigration laws relative to what we’d expect given the size of the unauthorized immigrant population?
President Obama is over-enforcing immigration laws. During his administration a yearly average of 3.37 percent of all unauthorized immigrants have been deported every year compared to just 2.3 percent during President George W. Bush’s administration. It is true that deportation as a percent of the unauthorized immigrant population have slackened in 2013 but that is still above any year during the Bush administration.
Source: Department of Homeland Security, Pew, and author’s estimate.
Shifting subjects a bit, these deportation numbers point to just how effective immigration enforcement is. There are only 11.7 million unauthorized immigrants in the United States – an admittedly large number – but much smaller than I would expect given the tremendous economic gains from coming here. Measured in that way, most would-be unauthorized immigrants actually follow our laws.
Last June I wrote a post where I was shocked at just how low the total number of unauthorized immigrants is. Here is an updated chart from that post using data that is more specific to the characteristics of the immigrants themselves and the skilled-specific occupations they’re most likely to have in the United States.
Median Earnings, US Full Time
Income in Home Country
1st Year Wage Gain/SmugglingBrazil
Source: 2011 American Community Survey, DHS, Havocscope, Center for Global Development
Our immigration laws are terribly restrictive, do great harm to immigrants and Americans, and are responsible for creating such a large unauthorized immigrant population in the United States. But immigration laws, unlike most other laws, are intended to regulate foreigners more than Americans, so just examining the number of unauthorized immigrants in the U.S. is not a good measure of how well-followed or enforced these laws are. Given the number of people who want to immigrate here, the relatively low price of coming here illegally, and the tremendous economic gains from doing so, our immigration laws are shockingly well-enforced and followed by most people of the world.
On Thursday, [Democrat State Senator Capri] Cafaro released the following statement in regard to Senate Bill 248 [a.k.a. “Teddy’s Law”]:
“SB 248 was never meant to be a policy debate about educating children in the home. It was meant to address weaknesses in the law pertaining to child protection. Unfortunately, the true intent of the bill to curtail child abuse has been eclipsed the by the issue of homeschooling.”
In fact, the bill was entirely about homeschooling. The bill would have forced all would-be homeschoolers to seek permission from the government to educate their own children at home. Homeschooling parents would have had to submit to background checks and social services would interview each member of the family separately, then the government would decide whether homeschooling was in the children’s “best interest.” In other words, the government would treat all homeschooling parents as child abusers until proven innocent.
It is said that the price of liberty is eternal vigilance. This episode demonstrates that vigilance pays off.
The “President’s Review Group on Intelligence and Communications Technologies” has issued their report. Convened in late summer to advise the president on what to do in the wake of the Snowden revelations (without mentioning Snowden), the group was rightly criticized for its ‘insider’ composition. The report has beaten the privacy community’s low expectations, which is good news. It advances a discussion that began in June and that will continue for years.
- Contrary to expectations, the report is outside the White House’s “comfort zone.” That’s good, because, as noted, this group could easily have decided to ratify the status quo, handing the administration and the National Security Agency a minor victory. The report positioned Senate Judiciary Committee chairman Patrick Leahy (D-VT) to say: “The message to the NSA is now coming from every branch of government and from every corner of our nation: You have gone too far.”
- There is no reason to treat the report as a reform “bible.” This was a problem with the 9/11 Commission report, for example, which was held up as sacrosanct even when it was wrong. The Review Group report is right about some things, such as eliminating administratively issued National Security Letters, it is wrong about some things, and it omits some key issues, such as the government-wide penchant for secrecy that created the current problems.
- Weaknesses are more interesting than strengths, and a particular weakness of the report is its call for retaining the phone calling surveillance program. Recommendation Five calls for legislation that “terminates the storage of bulk telephony meta-data by the government under [USA-PATRIOT Act] section 215, and transitions as soon as reasonably possible to a system in which such meta-data is held instead either by private providers or by a private third party.” The debate over data retention mandates ended some years ago, and the government was denied this power. The NSA’s illegal excesses should not be rewarded by giving it authorities that public policy previously denied it. Outsourcing dragnet surveillance does not cure its constitutional and other ills.
- The data retention recommendation is in conflict with another part of the report, which calls for risk management and cost-benefit analysis. “The central task,” the report says, “is one of risk management.” So let’s discuss that: Gathering data about every phone call made in the United States and retaining it for years produces only tiny slivers of security benefit, the NSA’s unsupported claims to the contrary notwithstanding. Considering dollar costs alone, it almost certainly fails a cost-benefit test. If you include the privacy costs, the failure of this program to manage security risks effectively is more clear. The Review Group’s conclusion about communications surveillance is inconsistent with its welcome promotion of risk management.
Most legal scholars and most civil liberties and privacy advocates punt on security questions, conceding the existence of a significant threats, however undefined and amorphous. They disable themselves from arguing persuasively about what is “reasonable” for Fourth Amendment purposes. Concessions like these also prevent one from conducting valid risk management and cost-benefit analysis. Some of us here at Cato don’t shy from examining the security issues, and we do pretty darn good risk management. The Review Group should practice what it preaches if it’s going to preach what we practice!
From the Miami Herald:
President Barack Obama on Thursday issued 13 pardons and commuted the sentences of eight individuals.
The commuted sentences involved men and women serving long terms on drug charges, including several sentenced to life without parole.
“Each of them has served more than 15 years in prison,” Obama noted. “In several cases, the sentencing judges expressed frustration that the law at the time did not allow them to issue punishments that more appropriately fit the crime” …
Another prisoner whose sentence Obama commuted, Clarence Aaron of Mobile, Ala., was sentenced to life without parole in 1993 following his conviction on cocaine charges. Aaron has been a “model prisoner (who) has taken courses in religious studies, economics, Spanish, photography and behavioral development,” according to Families Against Mandatory Minimums.
Obama’s actions here are welcome news to the prisoners and their families, but, from a big picture perspective, the president’s actions are stingy and long overdue. For additional background, go here and here. The Pardon Power blog has more details.
Flashback: I call for the Bush administration (2007!) to pardon Clarence Aaron.
On Wednesday, the Congressional Budget Office (CBO) released a cost-estimate for the Legal Workforce Act (H.R. 1772). That bill is one part of the House Republican’s immigration reform package that would nationally mandate a version of E-Verify.
Source: CBO Cost Estimate for H.R. 1772 Legal Workforce Act, page 2.
CBO notes that many unverifiable employees will be pushed deeper into the underground economy by E-Verify – something that is already occurring in states that mandate its use. Some employers would no doubt continue to pay unverified employees, but would do so off the books and off the radar of the IRS and Social Security Administration. While the government would receive an expected $49 billion in on-budget revenues from new sources of income tax revenue and payroll tax revenue from 2014 to 2023, it would lose $88 billion in off-budget revenue during the same period – mostly from Social Security payroll taxes lost as workers join the underground economy. That’s a $39 billion net loss to revenues due mainly to E-Verify.
My colleagues and I have written extensively about the threat that E-Verify poses to employees, employers, and civil liberties. The CBO estimates that expanding E-Verify would cost the federal government $635 million over the 2014-2018 period, followed by a similar amount from 2018 to 2023. That translates to roughly $1.2 billion in new hires, data retention systems, enforcement tools, and other goodies for the Department of Homeland Security.
The Legal Workforce Act would also impose costly new mandates on state and local governments and the private sector. The CBO estimates at least $10 million in total annual costs to be imposed on state and local governments that will be forced to comply (currently, only 20 states mandate the use of E-Verify for new public hires). And the office estimates a minimum cost of $200 million annually from 2016 to 2018 for private sector employers as they struggle to verify an estimated 50 million employees.
The Legal Workforce Act imposes new costs on the federal government, on state and local governments, on employers and employees, and will push some workers further into the underground economy – all without (thankfully) achieving its core objective of excluding unauthorized immigrants from the workforce. While the CBO may not be known for its accurate fiscal projections, the inevitable net fiscal costs of this bill make it hard to draw anything positive from this recent report.
This post was written wtih the help of Scott Platton.
Patrick J. Michaels and Paul C. "Chip" Knappenberger
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.” In this edition, we cover an important story that we missed back in 2008.
People send us stuff. As a result of our recent Global Science Report on global warming ruining our bananas, one of our fans directed our attention to an important effect of climate change that we somehow missed, back in 2008, when the alarmists at the BBC wrote that it was threatening haggis.
Haggis, for the uninitiated, is sheep stomach stuffed with minced lung, liver, heart, tongue, suet, onions and oats. How offal!
While there’s no accounting for taste, it tastes as bad as it smells.
According to the story, there has been a rise in a parasite effecting Scottish sheep that renders the lung “unfit for consumption” (something that many of you probably thought was the case already).
And, so as not to miss the bandwagon, an official from the Scottish Agricultural College Veterinary Investigation Centre told the BCC that:
Part of the reason will be the parasite is able to live a pretty happy life on the ground because of higher temperatures. Maybe it’s climate change.
Or maybe not.
It turns out that another potential cause of the increase in the lung parasite is that Scottish farmers have reduced their application of parasite treatment due to declining infections of roundworm. The treatment of roundworm also killed the lung parasite.
There was no mention made in the BCC article as to whether global warming was behind the decrease in roundworm infestations.
Instead, the article went on the describe the events which took place in the World Haggis Eating Championship, won by Willie Robertson from Dunkeld, who managed to put away a pound of haggis in 125 seconds. For his victory, Mr. Robertson was awarded a trophy and a bottle of whiskey—no doubt a key feature in the rest of the day’s merrymaking.
BBC’s writing in the haggis story appears similarly merry. Here are the last three paragraphs of their report, verbatim, a candidate for first place in the 2008 International Nonsequitur Competition.
The championship was held as part of the 125th Birnam Highland Games, and attracted competitors from Australia, New Zealand and the US.
Climate change, meanwhile, has been blamed for affecting natural habitats in Scotland and across the world.
Most notably, scientists and conservationists say it threatens survival of polar bears.
Federal Reserve chairmen are famous for their opaque but sophisticated-sounding comments designed to make it appear that they know more about the shape of the economy than they really do. But outgoing chairman Ben Bernanke’s direct and transparent assertions yesterday about fiscal policy also left me scratching my head.
In response to a reporter’s question about why the economy has not created more jobs:
Bernanke saw several of the usual reasons: the nature of the financial crisis, the housing bust and trouble in Europe. But he added one more. ‘On the whole, except for in 2009, we’ve had very tight fiscal policy,’ he said. ‘People don’t appreciate how tight fiscal policy has been.’
In the usual (and weird) Keynesian view of the economy, government deficits are stimulative while surpluses are “tight” or destimulative. The following chart (based on CBO) shows that in the four years after 2009, we had $4.4 trillion of federal deficit spending, or supposed Keynesian stimulus. Calling that “very tight fiscal policy” is absurd.
Daniel J. IkensonEarlier this month in Bali, WTO ministers reached agreement on a set of negotiating issues known as “trade facilitation,” which deal mostly with customs reform and related measures to reduce the time and cost of transporting goods and services across borders. If removing tariffs is akin to turning on a water spigot full blast, trade facilitation is the act of untangling and straightening out the attached hose. A kinked hose impedes the flow as an administratively “thick” border impedes trade. This paper, which I wrote a few years ago, describes the importance of trade facilitation reforms to economic growth, and explains why subjecting such self-help reforms to negotiation – instead of just undertaking them as a matter of surviving in a competitive global economy – would only delay the process of removing inefficiencies. Five years after the paper was written and 12 years after multilateral negotiations were launched in Doha, a deal was reached obligating governments to reform and streamline their customs procedures, with technical and financial assistance provided by the wealthy to the developing countries. As I wrote yesterday, this is small relative to the overall Doha Round agenda and relative to what might have been accomplished over these past 12 years in the absence of Doha (i.e., without adhering to the pretensions that our own domestic barriers to foreign commerce are assets to be dispensed with only if foreigners dispense of theirs). But perhaps nobody has been more gifted at exposing the absurdity of administrative trade barriers with pithy wit and grace than the 19th century French classical liberal business and economics writer Frederic Bastiat. Around 1850, Bastiat made a case for trade facilitation that can scarcely be improved: Between Paris and Brussels obstacles of many kinds exist. First of all, there is distance, which entails loss of time, and we must either submit to this ourselves, or pay another to submit to it. Then come rivers, marshes, accidents, bad roads, which are so many difficulties to be surmounted. We succeed in building bridges, in forming roads, and making them smoother by pavements, iron rails, etc. But all this is costly, and the commodity must be made to bear the cost. Then there are robbers who infest the roads, and a body of police must be kept up, etc. Now, among these obstacles there is one which we have ourselves set up, and at no little cost, too, between Brussels and Paris. There are men who lie in ambuscade along the frontier, armed to the teeth, and whose business it is to throw difficulties in the way of transporting merchandise from the one country to the other. They are called Customhouse officers, and they act in precisely the same way as ruts and bad roads. Congratulations, negotiators, for agreeing to remove the kinks from your hoses.
Daniel J. Mitchell
After nearly five years in office, what’s President Obama’s most significant accomplishment?
This is a serious question, so no jokes about the Nobel Prize he received for not being Bush. And no partisan GOP answers about the 2010 election, either.
Put yourself in the position of a future historian and think about what you would put in a book to describe Obama’s biggest accomplishment.
Proponents of big government, by contrast, also aren’t big fans of the stimulus, though they’re dissatisfied because they think Obama should have wasted even more money.
Another potential answer is Obamacare. Libertarians and conservatives, needless to say, would say it was a significant accomplishment in the same sense that the Titanic had a significant maiden voyage.
Leftists, by contrast, obviously can’t be pleased by the way Obamacare is imploding in the short run, but they nonetheless may think that it will be worth it in the medium run because more people will be dependent on government (though they may regret their choice in the long run).
Killing Osama bin Laden is probably a good answer, but if terrorism and conflict with the Islamic world are still big issues in the future, then I suspect the achievements of Seal Team Six won’t be seen as making that much of a difference.
For what it’s worth, I think the change in public opinion may be the President’s most long-lasting and significant accomplishment. Take a look at these remarkable results just published by Gallup. A record share of the population now say that big government is the biggest threat to the nation’s future.
Wow. I’m tempted to say that this is strong evidence of the effectiveness of the Cato Institute (and there is independent data to support that position), but I feel compelled to admit that Obama also deserves a good bit of the credit.
Even more amazing, President Obama has done something that is probably beyond even the ability of Cato. He’s convinced partisan Democrats that big government is a serious threat. Look at how the numbers have dramatically changed since 2008.
What’s particularly amazing about the shift among Democrats isn’t that 56 percent now view big government as the major threat today, compared to 32 percent about five years ago. What’s shocking is that this change happened with a Democrat in the White House.
This is newsworthy because partisan Republicans and Democrats have a tendency to say things are good or bad depending on whether “their team” is in charge.
While these numbers are remarkable, I suppose it’s too early to say the growing concern about big government is the most significant accomplishment of the Obama presidency.
That being said, anxiety about big government may lead to big political changes in 2014 and 2016, and those political changes may then lead to big policy changes such as entitlement reform and tax reform.
And if that happens, then the shift in public opinion during the Obama years may turn out to be profoundly important. In other words, Obama may turn out to be another Herbert Hoover – a politician whose statist policies set the stage for dramatic changes in public policy.
And if that happens, Obama truly will deserve to be named “libertarian of the year.”