Cato Op-Eds

Subscribe to Cato Op-Eds feed
Individual Liberty, Free Markets, and Peace
Updated: 20 min 24 sec ago

Downsize the Department of Energy

Thu, 01/09/2014 - 11:33

Caleb O. Brown

The Department of Energy spends $29 billion per year on various schemes with a disastrous track record, often with bipartisan support. From regulations that destabilize markets, decrease domestic output and harm consumers, to subsidies that pick and choose winners and losers, this department is a perfect example of a white elephant – an expensive project of little to no useful purpose.

Solyndra is the best example of such waste. The solar panel company received a $535 million loan before filing for bankruptcy in 2011. The federal government will likely recover just $27 million from that loan.

The department can be abolished by relegating security and clean-up-related tasks to the EPA or the Department of Defense and by returning research functions to the private sector. In all, abolishing the Department of Energy would save taxpayers about $7 billion a year. To that end we’ve created a short video which makes these and other points, which you can watch below.

Categories: Policy Institutes

Education Guns Fire Blanks in War on Poverty

Thu, 01/09/2014 - 11:10

Neal McCluskey

A lot of federal weapons were created to fight President Lyndon Johnson’s ”War on Poverty,” and some of the biggest were in education. The Elementary and Secondary Education Act, the Higher Education Act, and Head Start are all parts of Johnson’s overall effort to end poverty and create a “Great Society.” They also share two other things in common: pretty damning evidence that they are failures, and Cato videos laying out the bad news.

The first video – which calls for the end of the U.S. Department of Education, but in so doing highlights ESEA and HEA programs – presents the big evidence of K-12 and higher ed failure: massive spending, stagnant test scores, and turbo-charged college tuition inflation. Of course, a lot of variables affect these things, but there is simply no compelling evidence of federal success. 

Downsize the Department of Education

The second video is of Cato’s recent forum, “Preschool Education: What the Research Says.” While there is a great deal of debate about the effectiveness of preschool generally, there seems to be consensus that Head Start has few, if any, meaningful, lasting, positive effects. Yet not only do we stick with it, President Obama is pushing to expand federal preschool intervention, to the tune of $75 billion over ten years.

What keeps these misfiring, War on Poverty blunderbusses in service? Not their effectiveness, because, well, there is precious little evidence of any. Most likely, it is that it’s very compelling to “help” the young and poor with big programs, while it is cost prohibitive for the average American, with a full-time job and other interests, to research whether these programs actually help. Finally, for most politicians – where the public-sentiment rubber meets the public-policy road – the costs of appearing not to care are much too great to act on the powerful evidence that voters rarely see.

Hopefully, voters will see these videos.

Categories: Policy Institutes

U.S. Leverage over Iraqis? When Did We Have That?

Thu, 01/09/2014 - 10:10

Christopher A. Preble

Today’s Wall Street Journal features a front-page story (may be paywalled) on the civil war raging in Iraq. The headline observes that the United States has minimal leverage in Iraq, and that American officials fear that they will therefore be unable to halt the war, at least not any time soon.

Despair over our supposed “lost leverage” has been building for a while. Late last month, Max Boot lamented “the tragedy of Maliki’s Iraq” and opined “Maliki needs to implement a comprehensive counterinsurgency campaign…whose central feature must be outreach to the estranged Sunnis.” “The tragedy,” Boot concluded, “is that Maliki lacks the acumen to do that–and the U.S. lacks the leverage to compel him, because of the ill-advised pullout of American forces at the end of 2011.”

Such recommendations are based on two fundamental misconceptions: 1) That Americans once had leverage over the Iraqis, and that we lost it around the time U.S. troops were withdrawn from Iraq; and, 2) that there is a durable political solution within reach, if only we had the gumption to go back in.

Instead, the hard fighting of brave Americans to secure Iraq’s future have been, in the inimitable Boot’s words, “squandered by politicos in Baghdad and Washington.” 

Boot ignores there was no public appetite for leaving U.S. troops in Iraq after 2011, and there is even less enthusiasm for sending them back in today. If he wants to criticize politicos in Baghdad and Washington, he must also criticize the voters who elected them. Otherwise, he is effectively howling at the moon.

Thankfully, there is intelligent, informed commentary on what is happening in Iraq, commentary that recognizes political realities in Iraq, and doesn’t succumb to fantasies about the United States’ magical democracy-making powers. I especially appreciated the New America Foundation’s Douglas Ollivant’s piece at His advice to Iraqi Prime Minister Nouri al-Maliki? Fight. There is no talk in Ollivant’s piece about American soldiers fighting for him.

The central problem in Anbar province and other Sunni-dominated areas, Ollivant writes: 

is that significant numbers of Anbaris have not yet reconciled themselves to the loss of power – and the privileges that came with it – after the fall of Saddam Hussein. This has spawned two results: demonstrations to express demands that are politically impossible outside an authoritarian system and a return to the violence that al Qaeda has been trying for years to precipitate.


So when analysts (or U.S. senators) suggest that Maliki meet the protesters’ demands, what are they really saying? Do they mean he should take extraconstitutional measures to bring about preferred policies such as limiting de-Baathification or regularizing how oil is produced and its revenues distributed – two legislative initiatives that Iraq’s lawfully elected parliament failed to approve? 


This is not to say that Maliki and his government are blameless. There are no doubt actions the prime minister has taken that he wishes he could take back. Politicians make mistakes and miscalculate. But the fact remains that a terrorist force is blowing up thousands of Iraqi citizens. What kind of responsible elected official would just sit around and do nothing?

(Read the whole thing here.)

Maliki represents a constituency within Iraq, certainly not perfectly, as Ollivant notes, but well enough to get elected. Those who note that he was actually defeated in 2010, but managed to hold onto power illegally, cannot point to a credible alternative leader who might have been able to lead Iraq out of this dark period through negotiations. Any such person would surely be confronted by rejectionists who would rather fight than make concessions to their enemies. 

Achieving peace and reconciliation in Iraq is going to be very hard. I’d say impossible, at least for a while. And, most importantly, it will be done by Iraqis, not by Americans on behalf of Iraqis. Remember that the next time you hear people talking about the leverage that Americans once had over Iraqis, and that we could get that leverage back, if only we had U.S. troops on the ground.

Categories: Policy Institutes

Making a Blood Purge Pay in North Korea

Thu, 01/09/2014 - 08:45

Doug Bandow

North Korea long has been called the “Hermit Kingdom.”  Although the North’s isolation has eased in recent years, it still resembles “a riddle wrapped in a mystery inside an enigma,” as Winston Churchill famously described the Soviet Union.  No one is sure what to make of the execution of the young leader’s uncle and one-time mentor Jang Song-taek. 

However, the latest turmoil provides an important entrepreneurial opportunity for the Democratic People’s Republic of Korea, one of the world’s poorest nations.  Jang was denounced for having “seriously obstructed the nation’s economic affairs and the improvement of the standard of people’s living.”

No one knows the truth of this charge.  But something continues to obstruct economic development.  There may be an answer.  As I suggest in my latest American Spectator article:

Something needs to be done to spark the sort of growth in North Korea occurring elsewhere in East Asia, including China.  The answer is to turn the purge into a profit-making opportunity. Communist countries always have had a special talent for treating power struggles as public spectacles. Why not also use the ongoing purge to make some cash?

Start with T-shirts. A colleague of mine suggested “I Survived the Purge” would be a winner with tourists—as well as residents of Pyongyang, assuming anyone actually survives the purge. Other ideas include “I was Purged and All I got was this T-Shirt” and “Purge them All and Let God Sort Them Out.” 

Tourist shops could stock bobble-heads of political favorites, including winners and losers in the North’s ongoing political battles. Directed especially at the Russian market would be matryoshka dolls, with successively smaller figures fitting within the others. 

The Kim dynasty could license a special line of liquors, along the lines of Jack Daniels’ new “Sinatra Select,” named after Frank Sinatra, who favored the brand. The late Kim Jong-il was a devoted fan of Chivas Regal. Perhaps Kim fils has a special drink he relaxes with—and sips while purging and executing his enemies. 

Another opportunity is product endorsements. Kim Jong-il cornered the market on platform shoes and big sun-glasses, as well as bouffant hair styles. Kim Jong-un loves basketball.  What American boy would want to be without the special Kim Jong-un ball and hoop set?

Indeed, there’s no reason to stop with basketball products. The latter Kim could team up with his close personal friend and former NBA great Dennis Rodman to start a professional basketball league in North Korea. Imagine the Pyongyang Purge playing on an international tour. 

The North Koreans also should create board, card, and video games centered around their unique “social system,” as they called their society when I visited years ago. Who needs “Monopoly” when you can have “Show Trial”?  Combat games could feature liberation from South Korean oppression, overthrow of Japanese colonialism, and, of course, destruction of American imperialism. 

Finally, the North needs to tap into the global cultural marketplace. Who needs Hollywood, Bollywood (India), and Nollywood (Nigeria) when you could have Pollywood in Pyongyang?  (In fact, Kim Jong-il was so committed to developing a domestic movie industry that he ordered the kidnapping of foreigners to produce North Korean works.)

Obviously, these activities would only be the start of an economic revival.  But the legacy of Jang Song-taek, noted “human scum,” could live on if the Kim regime grasps the opportunity before it. With the right marketing, Jang could end up bigger than Darth Vader, an enemy of truly global proportions. And Pyongyang could profit in the process.

Categories: Policy Institutes

Police Misconduct -- The Worst Case in December

Wed, 01/08/2014 - 17:05

Tim Lynch

Over at Cato’s Police Misconduct web site, we have identified the worst case for December. It was the case of Eric Crinnian, a Kansas City man who was threatened by police for refusing them warrantless entry into his home. When Crinnian, a lawyer, refused to let officers search his home in the middle of the night without a warrant, he says an officer told him, “If we have to get a warrant, we’re going to come back when you’re not expecting it, we’re going to park in front of your house, where all your neighbors can see, we’re gonna bust in your door with a battering ram, we’re gonna shoot and kill your dogs…and then we’re going to ransack your house looking for these people.”

That kind of conduct shows a clear contempt for the Constitution, which is supposed to be the law of the land.

We welcome assistance from readers. If you see a police misconduct story while you are reading the news, send it our way using this form. Thank you.

Categories: Policy Institutes

Challenging the Conventional Wisdom on Fast Track

Wed, 01/08/2014 - 15:23

K. William Watson

The Wall Street Journal’s Mary O’Grady put out an excellent column yesterday expressing skepticism about the trade agenda in 2014.  I agree with almost everything in the piece, with one major exception.  Contrary to the prevailing conventional wisdom, the lack of “fast track” trade promotion authority has not been and will not be an obstacle to completing the Trans-Pacific Partnership negotiations. 

Her concern about the lack of fast track relates to the willingness of other countries to negotiate when the president has not secured trade promotion authority:

Mr. Obama’s trade team has been working on [the TPP] for years. But U.S. negotiators still don’t have “trade promotion authority” (TPA) from Congress. This means there really hasn’t been much negotiating at all because the U.S. team still doesn’t know how much flexibility it has from Congress to cut final deals on sensitive areas of trade. That will come with TPA, which sets “objectives” that the administration must meet. No U.S. trading partner is going to talk seriously unless the president has it.

I strongly disagree with this characterization. For the last three years, countries have been knocking down the door trying to get into the TPP negotiations. They have done this even while knowing that the TPP will inevitably be a vehicle for pushing U.S. economic and strategic priorities at their expense. These governments see the economic benefit of access to the U.S. market and have shown no reluctance to engage in negotiations despite the Obama administration’s apparent disinterest in securing fast track authority from Congress.

If you believe the administration’s claim that the TPP negotiations are in their closing stages, then the impact of fast track could be especially counterproductive. It is true that a bill from Congress laying out its sensitivities will better inform and ensure foreign negotiators, but it will also reduce the flexibility of U.S. negotiators to make the concessions needed to get the deal completed. 

The real danger that fast track helps alleviate is not completion of the negotiations, but passage of the agreement through Congress. In the past, it made sense to impose Congress’s negotiating objectives through a fast track bill because Congress was unlikely to ratify an agreement that didn’t meet their demands.

But today, trade agreements are passed through Congress on largely partisan lines regardless of what’s in them. As O’Grady notes, House Democrats are not even involved in crafting the fast track bill because nothing in the bill will convince them to support the TPP when it finally comes up for a vote.

We shouldn’t forget that those same House Democrats, when they were in charge in 2007, ignored the previous fast track arrangement, demanded major changes to already completed agreements, and refused ever to hold a vote on agreements with Colombia, Korea, and Panama. As O’Grady explains:

Mrs. Pelosi didn’t want the Colombia FTA to go to the floor for a vote because it had enough support to pass. So even though the law instructed her to send it, she refused and stuck it in a drawer. That amounted to double-crossing the best ally the U.S. has in Latin America.

So if trade promotion authority convinces U.S. trading partners that Congress won’t obstruct or meddle with the agreement, they haven’t been paying attention. Senate Democrats are much friendlier toward trade and Republicans hold a majority in the House. It’s hard to imagine this Congress refusing to hold a vote on the TPP even without trade promotion authority.

Unfortunately, while fast track is neither necessary nor sufficient to get agreements through Congress, it is certain to reduce the value of the TPP as a vehicle to liberalize trade.  Any fast track bill coming out of Congress this year is bound to contain demands to include harmful rules in the TPP related to labor and environmental protection. Republicans are so eager to see progress on trade that they appear ready to accept these restrictions without a fight. 

O’Grady also hits the nail on the head with this observation about the inevitable inclusion of currency rules in the fast track bill:

It also may contain a provision aimed at allowing the U.S. to accuse countries of “currency manipulation” and apply “safe-guards,” i.e. protection. Given the resistance to this concept among many U.S. trading partners, completion of the TPP would become more difficult.

All of the observations O’Grady makes about the sad state of the TPP negotiations and trade politics in Washington right now are the very reasons why fast track is not only useless but harmful to the advancement of free trade.

Categories: Policy Institutes

Holder's DOJ Wants a Veto over Parents' Choice of School

Wed, 01/08/2014 - 14:18

Jason Bedrick

Though the U.S. Department of Justice partially backed down on its lawsuit against Louisiana’s school choice program in November, yesterday the DOJ filed its proposal to oversee the program. The program provides school vouchers to low-income families with children otherwise assigned to failing government schools. Among many proposed regulations, the DOJ wants the state of Louisiana to give the federal government the following information about each school choice applicant: 

1. Name

2. Student ID number

3. Address

4. Grade

5. Race

6. School applicant attends in current school year, if any

7. Louisiana School Performance Score (letter grade) for school in (6), above, if applicable

8. Public school district of the school in (6), if applicable

9. District public school applicant would be assigned to attend for the upcoming school year if applicant does not receive a voucher

10. Louisiana School Performance Score (letter grade) for school in (9), above

11. Student enrollment in the school in (9), above, for the current school year, by race

12. Public school district for (9), above

13. Student enrollment in the public school district in (12), above, for the current school year, by race

14. Whether applicant is attending a voucher school during the current school year, and if so, the name of the voucher school

15. The list of voucher schools, in order of stated preference, identified on the student’s application form

16. Whether the State determined that the applicant failed to meet the criteria for participation in the voucher program

17. Reason for determination that the applicant failed to meet the criteria for participation in the voucher program, if applicable

18. Reason, if any, for preference in proposed award of voucher (e.g., sibling)

19. School to which the State intends to assign the applicant through the Voucher Program (“proposed voucher school”) 

20. Student enrollment of the proposed voucher school in (19), for the current school year, by race

The state would be required to give all of this information over to the federal government at least 45 days before awarding school vouchers and the federal government would have the authority to veto the award of any voucher. Given that the vast majority of students participating in the program are African-American, the DOJ essentially seeks the power to keep low-income black kids in failing government schools.

The state of Louisiana’s counter-filing argued that the DOJ’s demands are unreasonable since the state already takes steps to ensure that there is no segregation in private schools. The state declared that it is:

willing to share relevant information in its possession on a schedule that does not disrupt the operation of the Scholarship program, the State will not agree to terms that would cede its sovereign authority over the Scholarship program or the public schools, it will not agree to permit the United States to participate in the administration of the program, and it will not agree to demands for information that the State does not have or schedule changes that would disrupt the Scholarship program.

The state’s counterfiling also noted that the DOJ fundamentally misunderstands the school choice program. In item #19 above, the DOJ assumes that the state “assigns” students to a given school. The state corrected that error:

Contrary to the repeated claim made by the United States, the State does not “assign” Scholarship students to participating private schools; rather, Scholarship awards are based on parental choice. […] 

Families choose which private school students will attend under the Scholarship program. The State’s role in the Scholarship program is limited to three functions: verifying eligibility, conducting a lottery to determine whether the student will receive an award when necessitated by excess demand, and disbursing the student’s scholarship to his or her school on a quarterly basis. The State never imposes a binding assignment and never prohibits a student from attending a school. The only authority that “assigns” a child to a school is the child’s local school district, which gives every student under its jurisdiction a publicschool assignment. Faced with a public school assignment from the school district and a scholarship award from the State, families decide where their students will attend school.

The counter-filing also took the DOJ to task for wanting to restrict parents’ choices of schools based on their race:

[The] United States apparently believes that the State should restrict the choices made by families participating in the Scholarship program based on their race and the racial composition of the schools they wish to attend…

Louisiana Governor Bobby Jindal responded harshly to the DOJ’s demands:

 “President Obama’s Department of Justice is continuing its attempt to red-tape and regulate the Louisiana Scholarship Program to death.  The Department’s request for a 45-day review period for every scholarship award shows the Justice Department believes bureaucrats in Washington know better than Louisiana parents.    I am also shocked to learn that the Justice Department is now asking for the state to provide an analysis of the racial composition of our states private schools.  The federal government’s new request is a frightening overreach of the federal government and shows it knows no bounds.   President Obama’s Department of Justice has admitted it cannot prove that Louisiana school choice is violating desegregation efforts, yet it continues to seek the ability to tell a parent their child cannot escape a failing school because their child is not the ‘right’ race.   The Department of Justice proposal reeks of federal government intrusion and proves the people in Washington running our federal government are more interested in skin color than they are in education.”
Categories: Policy Institutes

Is Free Trade in Energy Finally on the Horizon?

Wed, 01/08/2014 - 13:50

Scott Lincicome

Over the last few months, the media and the policy world have discovered that America’s archaic crude oil export restrictions are really bad policy. Two new and important developments give this welcome and growing movement even more momentum:

  • In a much-publicized speech yesterday, Sen. Lisa Murkowski (R-AK), ranking member of the Senate Energy Committee, advocated modernizing U.S. export restrictions on energy products, particularly natural gas and crude oil. Accompanying her speech was a new white paper on the same topic, which (i) highlights the serious economic problems caused by the current crude oil export licensing system (which is effectively a ban on exports to all countries except Canada); (ii) confirms the widely held view that oil exports won’t cause higher gas prices; and (iii) recommends that the president, the Commerce Department, or–if they continue to do nothing–Congress relax the export ban. Just as importantly, Murkowski’s views were recently echoed by Sen. Mary Landrieu, (D-LA) who stands to take over the Senate Energy Committee this year. Thus, there could be bi-partisan support for easing the U.S. crude oil ban on the Senate committee arguably most integral to any such reforms.
  • Also, today, the American Petroleum Institute’s president and CEO Jack Gerard reiterated his organization’s support for lifting the crude oil export ban:

API’s Jack Gerard on US crude exports: “action should be taken” to free oil trade. “It’s time for a change of mentality” #SOAE2014

— Ed Crooks (@Ed_Crooks) January 7, 2014

Gerards’s formal announcement echoes a few previous statements from folks at API (which is the largest U.S. energy trade association and a big player on Capitol Hill) and is a good sign that they’re going to push harder on this issue in the future. (API’s related blog post, which calls the crude export ban “obsolete,” certainly indicates as much.)

These two developments should be welcome news for anyone concerned with free markets, economic growth, and well-functioning energy markets. As I argued in a February 2013 Cato paper (and subsequent podcast), the crude oil export restrictions–and the similar, more well-known restrictions on U.S. natural gas exports–raise a host of economic, legal, and policy concerns. These restrictions should be replaced with a simple, transparent, and automatic licensing system for all exports of U.S. energy goods (not just fossil fuels).

Does this week’s news and the growing momentum for reform mean that the U.S. crude oil export ban will finally die the fiery death that it deserves in 2014? I’m a bit pessimistic for two reasons. First, Sen. Murkowski is not calling for a complete overhaul of the crude oil export licensing system (or its natural gas cousin): her white paper merely recommends that the Commerce Department or the president exercise their discretion within the current system and thereby approve crude exports to countries other than Canada (which, as noted above, enjoys a presumption of approval). And, according to the Financial Times, Murkowski stated today that any legislation from her on this issue would be “small, targeted bills” to “move the ball forward”–clearly not the systemic reform (or total elimination) that free traders, supporters of U.S. energy production, and America’s trading partners would ideally want. Indeed, the maintenance of an ad hoc discretionary export licensing system for crude oil would do little to provide energy markets with the consistency and predictability that they need to operate most effectively. Additionally, such a system wouldn’t quell concerns that the export restrictions violate World Trade Organization rules.

Second, while API’s support is obviously important, there will undoubtedly be intense opposition to any reform efforts. As National Journal reported yesterday, some uninformed U.S. politicians and certain domestic refiners–who benefit greatly from the ban–have already come out against reform. Combine that opposition with the inevitable push-back from fossil fuel-averse environmentalists–who have a new and sympathetic ear in the White House in John Podesta–and you have a recipe for a big political battle in Washington and diminished hopes for any quick resolution to this problem. (That Podesta’s former digs immediately “blasted” Sen. Murkowski’s remarks may be a good indication of his position.)

In short, crude oil exports could end up being like KeystoneXL or natural gas exports all over again–a frustrating and cripplingly slow process that’s subject not to rational market forces but the mercurial whims of our political class.

And, make no mistake, the crude oil situation really is a problem. As I detailed in June, beyond the legal and policy issues, the export restrictions harm U.S. producers and workers, and even worse problems are on the horizon:

[B]y curtailing exports and subjecting license approvals to the whims of bureaucrats, the current system slows domestic production, breeds economic distortions, discourages investment and destabilizes energy markets.

U.S. oil producers, for example, lose an estimated $10 billion a year due to their inability to sell crude in foreign markets. They’ve also spent hundreds of millions of dollars building “mini-refineries” in the Midwest and Gulf region to circumvent the current restrictions and export a slightly processed, cheaper product — leaving another $1.7 billion in potential profit on the table.

As Rube-Goldbergian as this sounds, producers have few alternatives, given that U.S. oil consumption has collapsed in recent years and building new refinery capacity is virtually impossible in many “environmentally friendly” states. These problems prompted the head of the International Energy Agency to warn recently that U.S. export restrictions put the “American oil boom” at risk.

Unfortunately, the serious oil supply and price disruptions that I contemplated–already experienced for natural gas–could be happening a lot sooner that anyone thought, as a domestic glut of light, sweet crude oil (i.e., the type of oil gushing from U.S. shale finds and spearheading the American energy revolution) finds itself at U.S. ports with literally no place to go.

The obvious solution to this problem is for the U.S. government to completely lift the ban on crude oil exports as soon as possible. Doing so would restore a little sanity to U.S. energy policy (although more definitely needs to be done), avoid global trade conflicts, and provide ample benefits for the domestic economy–all issues that we’ll be discussing at an upcoming Cato forum in February. However, if the aforementioned concerns and the government’s track record with KeystoneXL and natural gas exports are any indication, U.S. energy producers, consumers, and the broader market may endure a lot more pain before any serious, long-term solution is implemented.

If it ever is.

Categories: Policy Institutes

Administration's Good Intentions Could Hurt Black Students' Achievement

Wed, 01/08/2014 - 13:03

Andrew J. Coulson

Today the Department of Education and Justice Department released new discipline guidelines intended to reduce racial disparities in punishment in the nation’s schools. The move stems from a combination of factors: African-American students are disciplined more harshly, on average, by public schools; and suspensions and expulsions are associated with negative long-term educational outcomes for the disciplined students. The guidelines are technically voluntary, but as the Associated Press reports, “the federal government is telling school districts around the country that they should adhere to the principles of fairness and equity in student discipline or face strong action if they don’t.” Unfortunately, this federal pressure may end up hurting black students far more than it helps them.

The problem is that while expelling disruptive students may be associated with negative educational outcomes for the disruptor, it is associated with positive educational outcomes for the rest of his classmates. That is the finding of a uniquely sophisticated study conducted by Joshua Kinsler and published last year in the prestigious International Economic Review (a draft is available here). Kinsler found that cutting out-of-school suspensions in schools with many disruptive students lowers overall student achievement.

In that and earlier work, Kinsler also discovered that the disparity in punishments handed out to students of different races is almost entirely explained by the schools the students attend, and not by racism. Black students, Kinsler found, are more likely to attend schools that have harsh discipline policies, and hence are more likely to receive harsh discipline. But, within a given school, the punishments accorded to white and black students are generally the same. Majority black schools with severe discipline policies apply those policies in the same way to their white students, and majority white schools with more lenient policies also apply those policies in the same way to their black students (see Kinsler’s 2011 study in the Economics of Education Review, a draft of which can be found here).

There are much better approaches to school discipline than those practiced in most public schools today, but until such time as those policies become widely adopted, simply pressuring districts to mete out less severe punishments seems likely to drive down the academic achievement of the very students it is meant to help.

What are those better discipline policies and how can we encourage their widespread adoption? I offered some suggestions in my Senate testimony on the subject a little over a year ago.

Categories: Policy Institutes

Progressives in Space

Wed, 01/08/2014 - 10:00

Marian L. Tupy







st1\:*{behavior:url(#ieooui) }

/* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;}







st1\:*{behavior:url(#ieooui) }

/* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;}

According to the Wall Street Journal:

“If all goes according to plan, Hollywood icon Leonardo DiCaprio will blast into space aboard the maiden voyage of Richard Branson’s Virgin Galactic spaceship sometime this year, opening up a new era of civilian space travel….Mr. DiCaprio is on the board of trustees of the Natural Resources Defense Council and has decried overconsumption. ‘We are the number one leading consumers, the biggest producers of waste around the world,’ the actor said in 2008.”

Leo’s 6 minutes of weightlessness will cost him a cool $250,000 and while it is his money to burn, lecturing the rest of us about overconsumption and waste is, well, hypocrisy of galactic proportions.

Categories: Policy Institutes

Japan and South Korea: The Other Worrisome Spat in East Asia

Tue, 01/07/2014 - 16:45

Ted Galen Carpenter

Considerable attention has focused on the rising tensions between Japan and China, with some experts now warning that we should not underestimate the possibility of war between the region’s two major powers. Relations between Tokyo and Beijing have certainly become hostile over the past year or so. The ongoing, highly emotional dispute over the Diaoyu/Senkaku Islands in the East China Sea has been the principal source of friction, but Japanese Prime Minister Shinzo Abe’s late December 2013 visit to the Yasukuni Shrine, which contains the remains of 14 high-level, World War II war criminals, also infuriated the Chinese.

Washington is understandably concerned about the deterioration of Sino-Japanese relations, but the surging animosity between those two countries is not the only source of worry for U.S. policy makers. Although it has received less attention, relations between Japan and South Korea are also on an ominous trajectory. The reaction in South Korea to Abe’s pilgrimage to Yasukuni was as angry as the response in China. Seoul also has its own territorial disputes with Tokyo, primarily over a chain of small islands called Dokdo in Korea and Takeshima in Japan, and those controversies are intensifying.

All of this might be a matter of limited concern to the United States if it were not for Washington’s defense treaties with Japan and South Korea. U.S. leaders have already taken the dubious step of insisting that the bilateral defense pact with Tokyo applies not only to indisputable Japanese territory but also to the highly contested Diaoyu/Senkaku Islands. That stance has drawn sharp objections from Beijing and puts the United States on the front lines of a worsening confrontation between China and Japan.

Although an armed conflict between Tokyo and Seoul is less likely than a Sino-Japanese war, Washington’s defense obligations put the United States in an extremely awkward position if the Japanese-Korean relationship crumbles. Clearly, Washington would not be able to honor its obligations to both parties, if they came to blows. One wag suggested that the U.S. Army could fight alongside the Koreans, while the U.S. Marines (based mainly on Okinawa) could assist the Japanese.

It’s no laughing matter, though, and the current tensions underscore the pitfalls of Washington’s tendency to acquire allies or security clients in a promiscuous manner. At a minimum, such ties cause diplomatic headaches; at worst, they can entangle the United States in unwanted, even irrelevant, conflicts. It’s not a new problem. During the Cold War, Washington repeatedly found itself trying to keep NATO allies Greece and Turkey from going to war against each other.

That history, along with the current turmoil in East Asia, should cause U.S. leaders to conduct a thorough re-assessment of the country’s overgrown alliance commitments. Alliances are supposed to advance America’s interests and enhance its security, not drag this country into unnecessary, dangerous quarrels.

Categories: Policy Institutes

Downsize the Department of Agriculture

Tue, 01/07/2014 - 15:23

Caleb O. Brown

The Department of Agriculture spends over $150 billion dollars per year on various programs related to agriculture and food. It spends tens of billions on farm subsidies that largely go to growers of just a few crops: wheat, corn, soybeans, rice, and cotton. Beyond this, it subsidizes food through the federal food stamp program, which is rife with waste and corruption. It also regulates many agricultural products, most notably milk and sugar, setting minimum prices which artificially keep food prices high for consumers.

The federal government has little reason to be engaging in any of these activities, which should be left to the states in the case of food stamps, or eliminated entirely in the case of regulations or subsidies. This could save taxpayers $140 billion per year. To that end we’ve created a short video which makes these and other points, which you can watch below:

Categories: Policy Institutes

The Good Old Days of Global Poverty

Tue, 01/07/2014 - 12:32

Simon Lester

Noah Smith has a piece in the Atlantic in which he tries to revitalize the anti-WTO Seattle protests. We were wrong to mock them, he says. They were “mostly right”! And “on nearly every count”!

All right, I’ll bite.  How, exactly, were they right?

His damning evidence against globalization starts with those dastardly “cheap imports,” which supposedly put Americans out of work. He acknowledges that such imports lower prices for consumers, but says those benefits are “spread very thinly.”

There are a lot of ways to refute this argument. I’m going to focus on two.

First, regardless of whether the benefits of low prices are spread thinly, such benefits outweigh any lost jobs arising from foreign competition. That is to say, the benefits of free trade outweigh the costs.  Just be clear, this isn’t controversial, and is not contested by the economists he cites.  Furthermore, the impact of Chinese and other imports on U.S. workers isn’t really all that great, and imports actually support many U.S. jobs.  So, overall, his argument in this respect is a bit underwhelming.  Oh, and by the way, if it’s poor Americans you are worried about, they are the ones who benefit most from trade with China.

Second, there is a larger point. Smith wants to present the issue as whether free trade takes jobs from the middle-class in order to give benefits to consumers and the rich. But that’s not the right way to think about things. The better way to understand the situation is the following: Protectionism takes a lot of money from everyone, in order to give concentrated benefits to a small group of politically connected interest groups. This is the kind of policy that is usually condemned by both the left and right. In the case of the trade debate, however, some well-respected opinion leaders seem OK with such policies. Why is that? My best guess is that it taps into an emotional “us versus them” worldview. It isn’t really about economics at all. It’s about patriotism and nationalism. “They” are bad. “We” are good. So let’s punish them, even if in doing so we are really punishing us.

Smith makes several other points: imports can be unsafe, free trade leads to environmental destruction, globalization is bad for poor workers. On the last two, Smith successfully refutes his own arguments, so I don’t need to do any more work here. As for imports being unsafe, just to be clear, WTO rules allow governments to regulate imported and domestic products for safety and health.  Smith is free to argue that the U.S. government does a bad job regulating food and product safety. But that’s not the WTO’s fault.

Now, perhaps the Seattle protesters’ real beef was not with the WTO, but with globalization itself. They would rather live in a world where China had not experienced industrialization and rising living standards.  In other words, a world where Chinese people are much poorer. But I don’t think the Chinese people want to live in that world, and neither do I. And it doesn’t seem that Smith does either, as he says:

The industrialization of China and (to a lesser degree) India has been the biggest and most effective anti-poverty program the world has ever seen. Capitalism has its flaws, but it works.

It sounds to me like his real conclusion here is that the protesters were, in fact, wrong!

So what is his complaint about the WTO and globalization exactly?  He says:

…  a WTO-led globalization could have been implemented a lot better.

Could trade rules be implemented better?  Sure. But couldn’t everything?  That’s not much of a critique.  In the end, it turns out he doesn’t have any specific suggestions or proposals, just general angst. Which kind of reminds me of the Seattle protests.

Categories: Policy Institutes

NYT Reports on Indigent Defense Vouchers in Texas

Mon, 01/06/2014 - 19:21

Tim Lynch

Yesterday, the New York Times reported on a pilot program involving indigent defense vouchers that will soon begin in Comal County, Texas.

Some background: Fifty years ago, the Supreme Court held that anyone accused of a crime who could not afford an attorney would have one appointed to him by the court. The Court did not say how these attorneys would be financed, but jurisdictions around the country have drifted toward the public defender model. To the extent that indigent defense is debated among policymakers, it has pretty much centered on how much money should be spent on the public defender offices.

That’s about to change. In Comal County, policymakers are going to try using a system of vouchers. Like the school voucher concept, the idea is to put money directly into the hands of the customers, who will then decide which attorney they would like to retain. If a certain law firm earns an excellent reputation for handling criminal cases, more customers will turn to them for help, and they will hire and train more lawyers. The attorneys who do a lousy job will get less and less business. The market process in action.

According to the NYT article, the Texas Indigent Defense Commission became aware of the voucher proposal when the Cato Institute advanced the idea in a 2010 paper:

The intellectual parents of the movement toward letting poor people choose a lawyer are the law professors Stephen J. Schulhofer of New York University and David D. Friedman of Santa Clara University, who first published their idea in American Criminal Law Review in 1993. A revised and compressed 2010 version, in Policy Analysis, a Cato Institute publication, caught Mr. Bethke’s attention.

Here is how the Cato paper summarizes the benefits to be realized from a voucher system:

We maintain that defense vouchers will improve the quality of legal representation for the poor. Better legal representation will, in turn, produce at least three benefits to the community:

  • Improving defense services will reduce the liklihood of mistakes. That is, it will be less likely that innocent persons will be wrongfully convicted of crimes.
  • Improving defense services will also minimize adverse consequences to the innocent persons who would have been acquitted under current systems of indigent defense. That is, a better defense means it is more likely that those innocents will be released from custody even sooner (pre-trial) and with less disruption to their lives and the lives of their family members.
  • Improving defense services will bring more complete information to the sentencing phase of the criminal justice system—making it more likely that just punishment will be imposed on those who are guilty of committing criminal offenses.

This is a good example of how think tank work can have an impact on policy. And one of the benefits of our decentralized criminal justice system is that jurisdictions can try different policies and we can then see what works well. 

Stay tuned on the defense voucher experiment.

Categories: Policy Institutes

'Worse Than We Thought' Rears Ugly Head Again

Mon, 01/06/2014 - 15:56

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.”

Our last post was a brief run-through of some items of interest from the recent scientific literature that buck the popular alarmist meme that human-caused climate change is always “worse than we thought.” But as we said in that post, finding coverage of such results in the dinosaur media is a fool’s errand. Instead, it thrives on “worse than we thought” stories, despite their becoming a detriment to science itself.

Not to disappoint, headlines from the first major climate change story of the new year claim “Climate change models underestimate likely temperature rise, report shows,” and it’s clearly Worse Than We Thought. In its January 5 (Sunday) paper, the editorial board of the Washington Post points to the new results as a call for action on climate change.

The trumpeted results appear in a paper published in the January 2nd 2014 issue of Nature magazine by a team led by University of New South Wales professor Steven Sherwood and colleagues which claims that the earth’s equilibrium climate sensitivity—how much the global average surface temperature will rise as a result of a doubling of the atmospheric carbon dioxide content—is being underestimated by most climate models. Sherwood’s team finds “a most likely climate sensitivity of about 4°C, with a lower limit of about 3°C.”

Sherwood’s most likely value of 4°C is about twice the value arrived at by a rather largish collection of other research published during the past 2-3 years and lies very close to the top of the likely range (1.5°C to 4.5°C) given in the new report from the U.N.’s Intergovernmental Panel on Climate Change (IPCC).

While there are a host of reasons as to why our understanding of the true value of the climate sensitivity is little better constrained now that it was some 20+ years ago (it was given as 1.5°C to 4.5°C in the IPCC’s first report issued, almost a quarter-century ago), it is widely recognized that our understanding of the role of clouds in a changing climate is central to the issue.

In describing the why climate models have such different climate sensitivity values, the IPCC writes, in the 2013 edition of it’s science compendium,

There is very high confidence that uncertainties in cloud processes explain much of the spread in modelled climate sensitivity.

Sherwood and colleague set out to see if they could help nail down the specific cloud processes involved in the model spread and to see if recent observations could help better understand which models were handling  processes related to cloud behavior better than others.

The rate of vertical mixing in the lower atmosphere has a direct role in the formation of clouds. In a broad sense, according to the authors, the more vertical mixing that takes place in the lower atmosphere, the more drying that occurs in the lowest levels of the atmosphere, and therefore cloud amounts must decrease. 

Sherwood and colleagues then compared the amount of mixing simulated by a collection of climate models with some observations of the mixing rate derived from weather balloon observations and other observation/model hybrids (called “reanalysis” products). They found that the climate models which most closely match the observations turned out to be the climate models with the highest climate sensitivity. Climate models with low sensitivities largely failed to contain the observations at all.

Based on this general finding—that climate models with a greater sensitivity to carbon dioxide increases produce a better match to observations of low level mixing rates—Sherwood and colleagues conclude that future global warming is going to progress much faster than is generally accepted.

This is the EEBE (“everything else being equal”) trap in big print.

While Sherwood et al., and press coverage of their paper, emphasize model comparisons with the “real world” they fail to show the “real world” comparison that makes the most sense—how do the climate model projections of global temperature changes compare with observations of real world temperature changes?

If they aren’t strongly related to vertical motion changes, then everything else is most decidedly not equal.

Our Figure 1 below shows the observed global surface temperature history from 1951-2013 compared with the temperature evolution projected by the collection of models used in the latest IPCC report. We broke the climate models down into two groups—those  which have a climate sensitivity greater than 3.0°C (as suggested by Sherwood et al.) and those with a climate sensitivity less than 3.0°C.  Figure 1 shows that while neither model subset does a very good job is capturing evolution of global temperature during the past 15-20 years (the period with the highest human carbon dioxide emissions), the high sensitivity models do substantially worse than the lower sensitivity models.

How in God’s getting-greener earth did the reviewer boffins at Nature miss this? (Hint:  it messes up the meme.)

Figure 1. Observed global average temperature evolution, 1951-2013, as compiled by the U.K’s Hadley Center (black line), and the average temperature change projected by a collection of climate models used in the IPCC Fifth Assessment Report which have a climate sensitivity greater than 3.0°C (red line) and a collection of models with climate sensitivities less than 3.0°C (blue line) (climate model data source: Climate Explorer).

Sherwood et al. prefer models that better match their observations in one variable, but the same models actually do worse in the big picture than do models which lack the apparent accuracy in the processes that Sherwood et al. describe.

It’s Worse Than We Thought all right—but for the climate models, not the real world.  The result can only mean that there must still be even bigger problems with other model processes which must more than counteract the effects of the processes described by Sherwood et al. After all, the overall model collective is still warming the world much faster than it actually is.

Predictably, such a conclusion is absent from popular coverage of these results and from call-to-action editorials based upon them.



Sherwood, S. C., S. Bony, and J-D. Dufresne, 2014. Spread in model climate sensitivity traced to atmospheric convective mixing. Nature, 505,37-42, doi:10.1038/nature12829.

Categories: Policy Institutes

Even the Establishment Media Is Now Admitting the French Economic Model Is Fatally Flawed

Mon, 01/06/2014 - 12:37

Daniel J. Mitchell

Some things in life are very dependable. Every year, for instance, the swallows return to Capistrano.

And you can also count on Dan Mitchell to wax poetic about the looming collapse of French statism.

Geesh, looking at that list, I guess I’m guilty of - in the words of Paul Krugman - being part of the “plot against France” by trying to discredit that nation’s economy.

Or maybe I’m just ahead of my time because we’re now seeing articles that almost sound like they could have been written by me appearing in establishment outlets such as Newsweek. Check out some amazing excerpts from an article by Janine di Giovanni, who lives in France and serves as the magazine’s Middle East Editor.

…what is happening today in France is being compared to the revocation of 1685. …the king closed churches and persecuted the Huguenots. As a result, nearly 700,000 of them fled France, seeking asylum in England, Sweden, Switzerland, South Africa and other countries. The Huguenots, nearly a million strong before 1685, were thought of as the worker bees of France. They left without money, but took with them their many and various skills. They left France with a noticeable brain drain.

It’s happening again, except this time the cause is fiscal persecution rather than religious persecution. French politicians have changed the national sport from soccer to taxation!

Since the arrival of Socialist President François Hollande in 2012, income tax and social security contributions in France have skyrocketed. The top tax rate is 75 percent, and a great many pay in excess of 70 percent. As a result, there has been a frantic bolt for the border by the very people who create economic growth – business leaders, innovators, creative thinkers, and top executives. They are all leaving France to develop their talents elsewhere.

It’s an exaggeration to say “they are all leaving,” but France is turning Atlas Shrugged from fiction to reality.

Many of the nation’s most capable people are escaping - ranging from movie stars to top entrepreneurs.

What I find most amusing is that France’s parasitical political elite is whining and complaining that these people won’t remain immobile so they can be plundered.

And when the people who have the greatest ability leave, that has an impact on economic performance - and ordinary people are the ones who suffer the most.

…the past two years have seen a steady, noticeable decline in France. There is a grayness that the heavy hand of socialism casts. It is increasingly difficult to start a small business when you cannot fire useless employees and hire fresh new talent. Like the Huguenots, young graduates see no future and plan their escape to London. The official unemployment figure is more than 3 million; unofficially it’s more like 5 million.

The article also gives some details that will help you understand why the tax burden is so stifling. Simply stated, the government is far too big and pays for things that should not be even remotely connected to the public sector.

Part of this is the fault of the suffocating nanny state. …As a new mother, I was surprised at the many state benefits to be had if you filled out all the forms: Diapers were free; nannies were tax-deductible; free nurseries existed in every neighborhood. State social workers arrived at my door to help me “organize my nursery.” …The French state also paid for all new mothers, including me, to see a physical therapist twice a week to get our stomachs toned again.

Government-subsidized “toned” stomachs. Hey, maybe big government isn’t all bad. Sort of reminds me of the taxpayer-financed breast augmentation in the United Kingdom (British taxpayers also have paid for sex trips to Amsterdam).

More seriously, all the wasteful spending in France erodes the work ethic and creates a perverse form of dependency.

I had friends who belonged to trade unions, which allowed them to take entire summers off and collect 55 percent unemployment pay. From the time he was an able-bodied 30-year-old, a cameraman friend worked five months a year and spent the remaining seven months collecting state subsidies from the comfort of his house in the south of France. Another banker friend spent her three-month paid maternity leave sailing around Guadeloupe – as it is part of France, she continued to receive all the benefits. Yet another banker friend got fired, then took off nearly three years to find a new job, because the state was paying her so long as she had no job. “Why not? I deserve it,” she said when I questioned her. “I paid my benefits into the system.”

So what’s the bottom line? Well, the author sums up the issue quite nicely.

…all this handing out of money left the state bankrupt. …The most brilliant minds of France are escaping to London, Brussels, and New York rather than stultify at home. …“The best thinkers in France have left the country. What is now left is mediocrity.” From a chief legal counsel at a major French company: “France is dying a slow death. Socialism is killing it…”

As the old saying goes, this won’t end well. Maybe France will suffer a Greek-style meltdown, but perhaps it will “merely” suffer long-run stagnation and decline.

Which is a shame because France is a beautiful country and is ranked as one of the best places to live, at least if you happen to already have a considerable amount of hard-to-tax wealth.

But bad government can screw up a country, even if it does have lots of natural advantages.

And that’s exactly what generations of French politicians have done to France. The tax system has become so bad that more than 8,000 French households had to pay more than 100 percent of their income to the government in 2012.

The French government has announced, by the way, that it intends to cap taxes so that no household ever pays more than 80 percent to the state. Gee, how merciful, particularly since the French President has echoed America’s Vice President and asserted that it’s patriotic to pay higher taxes.

That’s why I’ll stand by my prediction that President Obama will never be able to make America as bad as France. Heck, France has such a bad approach on taxes that Obama has felt compelled to oppose some of that country’s statist initiatives.

P.S. The big puzzle is why the French put up with so much statism. Polling data from both 2010 and 2013 shows strong support for smaller government, and an astounding 52 percent of French citizens said they would consider moving to the United States if they got the opportunity. So why, then, do they elect statists such as Sarkozy and Hollande?!?

Categories: Policy Institutes

Criminalizing "Emotional Blackmail"

Mon, 01/06/2014 - 09:50

Walter Olson

From Britain: “Domestic abuse involving ‘emotional blackmail’ – but no violence – could become a criminal offense carrying a heavy jail term under tough new measures published for the first time.” While the cross-party group of Members of Parliament who are introducing the bill do not speak for the Cameron administration, notes David Barrett in the Telegraph, they have a track record of some success at getting their ideas on domestic abuse enacted into legislation:

“Critically, its [the draft’s] definition of abuse includes “controlling or coercive behavior” which would “encompass but is not limited to physical, financial, sexual, psychological or emotional abuse”.

“Controlling behavior” would also lead to criminal charges, including when a partner makes another person “subordinate”, “exploits their resources” or “deprives them of the means needed for independence”.

The offense would apply to abuse committed against any spouse, partner or former partner, regardless of gender.

Offenses will carry a sentence of up to 14 years in prison. As Pamela Stubbart notes at the Daily Caller, when based on purely psychological and emotional interactions and states of dependence, concepts like “control” and “coercion” are at best a highly subjective affair, inviting unpredictable legal application as well as he-said-she-said legal battles in the wake of breakups or other relationship failures. The measure would also threaten criminal liability for some speech (e.g., emotionally hurtful insults not involving threats of violence) that would often be included in definitions of free speech. Meanwhile, a ban on exploiting partners’ resources or denying partners financial independence threatens to throw a shadow of criminal liability over many marital and romantic arrangements long deemed unproblematic, whether or not egalitarian. What’s most obviously “controlling or coercive” here is the proposed law itself.

Related: periodic proposals in state legislatures and elsewhere to ban “workplace bullying” (more) raise some of the same issues, as do enactments (like “Grace’s Law” in Maryland) endeavoring to ban “cyber-bullying.” [cross-posted and slightly adapted from Overlawyered]

Categories: Policy Institutes

Bernanke’s Fallacious Fiscal Facts

Mon, 01/06/2014 - 08:38

Chris Edwards

In a speech on Friday, outgoing Fed Chairman Ben Bernanke defended his record of extraordinary policy interventions. One of his framing techniques is to claim that extreme monetary efforts were needed in the last few years—from his Keynesian perspective—to offset “contractionary” fiscal policy.

Here’s what Bernanke said about federal fiscal policy:

To this list of reasons for the slow recovery … I would add one more significant factor—namely, fiscal policy. Federal fiscal policy was expansionary in 2009 and 2010. Since that time, however, federal fiscal policy has turned quite restrictive.

Here I show that federal deficits in 2011, 2012, and 2013 were an enormous $1.3 trillion, $1.1 trillion, and $680 billion, respectively. In Keynesian terms, those deficits are the farthest thing from “quite restrictive” fiscal policy. To Keynesians, those deficits should have made the economy boom, yet the United States has had the slowest recovery since World War II.

Here’s what Bernanke said about state fiscal policy:

In addition, throughout much of the recovery, state and local government budgets have been highly contractionary, reflecting their adjustment to sharply declining tax revenues. To illustrate the extent of fiscal tightness, at the current point in the recovery from the 2001 recession, employment at all levels of government had increased by nearly 600,000 workers; in contrast, in the current recovery, government employment has declined by more than 700,000 jobs, a net difference of more than 1.3 million jobs. There have been corresponding cuts in government investment, in infrastructure for example, as well as increases in taxes and reductions in transfers.

Bernanke is trying to pull the wool over your eyes here. He calls state/local budgets “highly contractionary,” but notice how he does not give the actual budget numbers, and instead jumps to employment and infrastructure.

The following chart shows total state/local government spending from BEA Table 3.3. Spending in recent years has been “flat,” not “highly contractionary.” (For 2013, I used the average of the first three quarters). By the way, this BEA table also shows that state/local deficits have been up in recent years compared to before the recession, which is also not “contractionary.”

On employment, Bernanke resorts to the convoluted statistic of 1.3 million and provides no context. Total employment at all levels of government is available here from the BLS. In November, there were 21.9 million government workers in the United States. As Bernanke notes, that is down about 700,000 since the end of 2009. But that’s only a cut of three percent, which surely is not “highly contractionary.”

Besides, the government worker reduction is “contractionary” to Keynesians in the sense that wage payments are ended for 700,000 workers. But those aggregate wage payments are tiny in the $17 trillion U.S. economy. If those workers had earned, on average, say $60,000 a year, that amounts to only $42 billion less in government spending. And those wages are part of overall state/local spending, which the chart showed has been flat, not declining.

The bottom line is that efforts by Keynesian economists to blame the slow U.S. recovery on government fiscal contraction is not supported by the facts, even if such a theory made any sense.

Categories: Policy Institutes

Is Warmer Better? Florida Soon to Surpass New York as Nation’s Third Most Populous State

Fri, 01/03/2014 - 11:57

Paul C. "Chip" Knappenberger

Hmmm. A pounding blizzard hits the Northeast, followed by an Arctic cold blast. All the while, Florida is set to oust New York and join California and Texas as the top 3 most populous states in the U.S.

Here is the story according to the Associated Press:

Florida to Surpass New York in Population

So while some folks yammer on about the perils of a warming climate (and try to force regulations upon us aimed at “doing something” about it), a great many others are actively seeking out warmer places to live. Perhaps not entirely for the climate, but that factor is almost assuredly not out of mind.

Maybe the public doesn’t think that its “health” is as “endangered” by a warmer climate as the U.S. Environmental Protection Agency contends.

Categories: Policy Institutes

Emergency UI Benefits: Reasons Against

Fri, 01/03/2014 - 11:29

Chris Edwards

The Senate is considering legislation to revive the emergency unemployment insurance program. These federally funded benefits were in place from mid-2008 to the end of 2013.

Federal policymakers like to spend money helping people in need, but there are large and less visible costs to such welfare legislation. Here are some reasons why new UI spending is not a good idea:

  • The U.S. economy has been out of recession and growing for more than four years. The unemployment rate is down to 7 percent and jobs are being created. The time for “emergency” UI benefits has passed and it’s time for us to go back to the regular benefit structure of 26 weeks. We all want the economy to grow faster and create more jobs, but the way to do that is to enact free market policies, not more welfare spending.
  • There is no free lunch. Extending UI benefits for another year would cost approximately $25 billion, which is money the federal government does not have. It would have to borrow every cent of the added spending, and thus impose those costs (plus interest) on working Americans in the future. Proponents of more UI spending point to sad stories of individuals out of work, but there will be far more pain inflicted on millions of Americans in coming years unless we get federal spending and debt under control.
  • Large UI benefits are counterproductive because they push up unemployment, as discussed here. Long-term unemployment has been particularly high in recent years. Meanwhile, employers may have a bias against hiring people who have been unemployed a long time. The upshot is that if generous UI benefits discourage people from taking less-than-optimal job offers early on, it ends up hurting them later when it is harder to find any job. Government “help” often backfires.
  • States can fund their own benefits. Nevada Sen. Dean Heller wants to “shrink the size” of the federal government, yet he is co-sponsoring legislation to revive emergency federal UI benefits because his state has high unemployment. But there is nothing stopping Nevada from funding its own extra UI benefits, and thus no need for Heller to try to impose the cost of his state’s problems on the other 49 states.
  • From a political perspective, it would be a big mistake for Republican leaders to go along with the push to spend more on UI. GOP leaders already caved in with more spending on the recent Ryan-Murray budget deal. If they cave in on UI, cave in on the costly farm bill, and cave in on upcoming debt-limit legislation, there would be no reason for fiscal conservatives to show up and vote Republican in November.    

Our current UI system is economically damaging, hugely complex, and fraud-ridden. Rather than adding to the system’s problems with higher benefits, policymakers should consider moving to a pro-growth savings-based UI system, as Chile has done.

Categories: Policy Institutes