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Human Progress Story of the Day: Speaking Exchanges

Mon, 05/12/2014 - 16:25

Stephanie Rugolo

Technology vastly enriches our lives—sometimes free of charge. Consider Google’s search engine. It’s an incredibly complex algorithm that informs users about any topic imaginable faster than the blink of an eye. And it’s free. And it’s just one of millions of helpful online services provided for free to internet users around the world. For instance, you can Skype for free—that is, video chat with anyone in the world at any time (assuming, of course, that you have internet access). You can email for free—send and receive instantaneous messages and media content from one location to any other location on earth. You can host your own personal webpage that allows you to interact with your friends and family—share photos, videos, stories, and event invitations—for free—on social media websites like Facebook.

Sometimes technological advances are not only useful, but also uplifting. For a group of seniors in the United States, a new, free application helps to cure loneliness. A school in Brazil matches American senior citizens with adolescent Brazilians. Brazilians want to learn English, while elderly people want company. Everyone wins. Here’s the outcome:

CNA - Speaking Exchange

Moreover, the internet and, consequently, all of the free goodies it offers that improve our lives, is spreading throughout the world. As you can see from data taken from the website HumanProgress.org, a majority of Americans and an increasing number of individuals in developing countries have web access:

Categories: Policy Institutes

Stop Insulting Our Intelligence, and the Tea Party, Core Supporters

Mon, 05/12/2014 - 16:15

Neal McCluskey

I really shouldn’t have to write this anymore, because the basic facts should keep anyone from saying that state adoption of the Common Core was “absolutely voluntary.” Yet Chester Finn, president of the Thomas B. Fordham Institute, has made just this proclamationagain. And this time, he has done so right after having written that “the feds blundered into the middle of [Common Core] with ‘incentives’ that turned it into a sort of national piñata.”

I’ll say, “incentives”! At the low point of the “Great Recession,” Washington told states that to fully compete for hundreds-of-millions of Race to the Top dollars – money that state citizens had no choice but to send to DC – states, among other things, had to adopt the Common Core. Later, the feds told states that if they wanted a waiver from the irrational, punishing, No Child Left Behind Act, they had but two standards choices: either adopt the Core, or have a state university system certify state standards “college- and career-ready.” And this came after most states had already promised to adopt the Core for RTTT.

There’s simply no way to call Core adoption “absolutely” voluntary, unless you think bribing someone with money you took from them, or giving them just two ways to stop your throttling them, is absolute voluntarism.

Making matters worse, after boldly denying reality about the Core, Finn continues the cheap-shot, debate-destroying tactic of demonizing Core opponents. He writes that those who oppose the Core are primarily:

interest groups that really don’t want to change how they’ve always done things, whether or not such change would be good for kids or the country. I have in mind textbook publishers, test-makers, teacher unions, and political opportunists of every sort, lately and most prominently of the “tea party” persuasion, who will do and say anything to take down Obama and everything he’s for.

No doubt people have numerous motives for supporting or opposing the Core, and I wouldn’t presume to say I know what they are. I will, though, say I have no reason to suspect Finn and Fordham have anything but the best interest of the nation at heart.

If only they would accord the same presumption to tea party types! Or, at the very least, provide some evidence that tea partiers only oppose the Core because they are obsessed with bringing down President Obama. But Finn offers not a speck of evidence, ironically at the same time the general impression is that tea party types are far too willing to sacrifice political success for principle. And what are tea party principles? Some are quite time-honored, among them that the federal government should not interfere in education, and that education should be controlled by parents.

And let’s be careful who we say is obsessed with taking Obama down over the Core. Fordham has quite prominently blamed the Obama administration (go to the 6:45 mark) for Washington’s “absolutely voluntary” coercion. This despite the fact that the creators of the Core called for federal coercion in 2008, before there was either an official Common Core or Obama Administration, then called for it again after officially launching the Common Core State Standards Initiative.

Apparently, the sign that you want what’s “good for kids or the country” is you attack the President to advance the Core. Oppose the Core, in contrast, and it’s self-evident you actually just despise Mr. Obama.

At this point, Core supporters really need to stop insulting both the tea party and the public’s intelligence. Instead, maybe they should try engaging in factual, reasoned debate.

Categories: Policy Institutes

REAL ID: Walking Dead

Mon, 05/12/2014 - 15:41

Jim Harper

The REAL ID Act is a federal law that calls on states to knit their driver licensing systems together into a national ID. Congress passed it nine years ago yesterday, setting a three-year deadline for state compliance.

You might think that a program would be dead if it failed to materialize after more than triple the time Congress gave for its implementation. But REAL ID is walking dead.

After the law passed, half the states in the country passed resolutions objecting to REAL ID or laws barring their states from complying. And the Department of Homeland Security has pushed back the deadline again and again and again. But the federal government keeps funding REAL ID, and state bureaucrats keep plodding forward with the national ID system.

In a Policy Analysis released today, we examined the progress of REAL ID in states around the country. REAL ID: A State-by-State Update reveals that some states’ legislatures have backtracked on their opposition to the national ID law. Some motor vehicle bureaucrats have quietly moved forward with REAL ID compliance contrary to state policy. And in some states, motor vehicle bureaucrats have worked to undercut state policy opposing REAL ID and the national ID system.

Louisiana recently reversed course and embraced the national ID law. The District of Columbia began requiring drivers to get REAL ID-compliant licenses effective May 1st.

Funds for implementing REAL ID come from DHS annual budget, which is appropriated by the House and Senate Appropriations Committees’ homeland security subcommittees. Congress has put around $50 million a year toward REAL ID in recent years, part of $300 to $500 million a year it spends on identification and tracking programs.

The alternative is better: Congress could save money and protect liberty if it fully defunded REAL ID. State political leaders should check to see if the administrators who work under them are building a national ID contrary to state policy, or if bureaucrats are lobbying to put the legislature behind the national ID program.

It hasn’t been implemented, but because it hasn’t been repealed or defunded, REAL ID awaits the day when the political winds blow in favor of a national ID.

Categories: Policy Institutes

Michael Sam and the Cost of Discrimination

Mon, 05/12/2014 - 14:30

David Boaz

Classical liberals and libertarians have always sought a world in which people are judged as individuals, not as members of groups. Over the centuries most societies have been arranged as hierarchies, with people assigned to classes by birth. The great liberal historian Henry Sumner Maine wrote that the history of civilization was a movement from a society of status to a society of contract — that is, from a society in which each person was born into his place and was defined by his status to one in which the relationships among individuals are determined by free consent and agreement. Liberals argued for “la carrière ouverte aux talents” (“opportunity to the talented”).

Individuals may also be classified by race, religion, sexual orientation, or other characteristics. One of the great achievements of American society has been the progressive extension of the promises of the Declaration of Independence – life, liberty, and the pursuit of happiness – to people who had been excluded from them. That process has included the abolition of slavery, the civil rights revolution, the women’s liberation movement, more recently the gay rights movement.

Lately some people have proclaimed victory in the battle for equal treatment of gays and lesbians. Last month a group of gay marriage supporters urged their allies to be magnanimous in the final period of the “hard-won victory over a social order in which LGBT people were fired, harassed, and socially marginalized” and not to seek to punish remaining dissenters from the new perspective.

But this past weekend has reminded us that we haven’t quite achieved “opportunity to the talented.” Michael Sam was the Co-Defensive Player of the Year in the country’s strongest football conference, yet many people wondered if any NFL team would draft the league’s first openly gay player. Turns out they were right to wonder. Here’s a revealing chart published in yesterday’s Washington Post (based on data from pro-football-reference.com and published alongside this article in the print edition but apparently not online).

Every other SEC Defensive Player of the Year in the past decade, including the athlete who shared the award this year with Michael Sam, was among the top 33 picks in the draft, and only one was below number 17. Does that mean that being gay cost Michael Sam 232 places in the draft, compared to his Co-Defensive Player of the Year? Maybe not. There are doubts about Sam’s abilities at the professional level. But there are doubts about many of the players who were drafted ahead of him, in the first 248 picks this year. Looking at this chart, I think it’s hard to escape the conclusion that Sam paid a price for being openly gay. That’s why classical liberals – which in this broad sense should encompass most American libertarians, liberals, and conservatives – should continue to press for a society in which the careers are truly open to the talents. That doesn’t mean we need laws, regulations, or mandates. It means that we want to live in a society that is open to talent wherever it appears. As Scott Shackford writes at Reason, Sam’s drafting is “a significant cultural development toward a country that actually doesn’t care about individual sexual orientation. The apathetic should celebrate this development, as it is a harbinger of a future where such revelations become less and less of a big deal.” Let’s continue to look forward to a society in which it’s not news that a Jewish, Catholic, African-American, Mormon, redneck, or gay person achieves a personal goal.

Categories: Policy Institutes

Cut Spending Because Government Hurting Nation

Mon, 05/12/2014 - 14:17

Chris Edwards

I have posted an updated plan to cut spending by one fifth and balance the federal budget. These cuts are not the only ones needed, but they are a mix of reasonable reforms spread broadly across the government.

A new poll discussed in Govexec.com finds that “Americans have more confidence in the abilities of individuals and local organizations to effect positive political and social change in this country than they do in the federal government … Fifty-eight percent of respondents said they believed the federal government was ‘mostly hurting’ the country with respect to the ‘major issues and challenges’ confronting America today.”

My fellow Americans, you have it exactly right. The enormous size of the federal government is harming the economy, society, individual freedom, and good governance in the nation. That is why spending cuts would be a good idea whether or not the federal government was running budget deficits.

Some economists claim that cutting government spending would hurt the economy, but that idea is based on faulty Keynesian theories. In fact, federal spending cuts would shift resources from often mismanaged and damaging government programs to more productive private sector activities, thus increasing overall productivity, output, and incomes.

The federal government’s fiscal mess is an opportunity to make reforms that would both spur growth and expand freedom. My new plan includes a menu of cuts to individual subsidies, business subsidies, so-called entitlements, aid to the states, and the military. There are also numerous activities that can be removed from the federal budget by privatization, such as air traffic control, passenger rail, and electric utilities.

These and other reforms are discussed further in essays at DownsizingGovernment.org.

Categories: Policy Institutes

The Cost of Regulation

Mon, 05/12/2014 - 10:52

John H. Cochrane

Gordon Crovitz has a nice piece in the Wall Street Journal, Monday May 5, titled “The end of the permissionless web” which sparks several thoughts.

What has made the Internet revolutionary is that it’s permissionless. No one had to get approval from Washington or city hall to offer Google searches, Facebook  profiles or Apple  apps, as Adam Thierer of George Mason University notes in his new book, “Permissionless Innovation.” [Available free and ungated here. - JC]

The central fault line in technology policy debates today can be thought of as ‘the permission question,’ ” Mr. Thierer writes. “Must the creators of new technologies seek the blessing of public officials before they develop and deploy their innovations?”

This brings to mind a recent discussion I’ve had with Glen Weyl and Eric Posner on their proposal for a financial FDA, in which financial companies have to get prior approval for any new products (here and here). I don’t think I ever expressed well just how much it strangles growth and innovation for companies to have to prove ahead of time, to the satisfaction of discretionary regulators and politicians, that their products are good. The following examples make the point forcefully.

That strangulation is especially clear in these examples since they show that so much regulation serves to prop up the profits of incumbents and to protect them from competition.  If Uber had to ask permission ahead of time, it never would have happened, because the point of regulation is to protect the taxi industry. Uber  only happened now because it grew so fast and so well that its customers became a political force, in a way that (say) jitney customers never did.

In a recent New York Times opinion article, New York Attorney General Eric Schneiderman…argues: “The only question is how long it will take for these cyber cowboys to realize that working with the sheriffs is both good business and the right thing to do.”

“Working with the sheriffs.” What a nice way to express the trade of regulatory blessing and protection in return for political support that poisons our economy and democracy.

Mr. Schneiderman has targeted Airbnb, an online service that lets users easily rent homes or apartments for short-term stays, giving travelers a new option. The hotel industry, concerned about being disrupted, is lobbying hard to kill the upstart. …costly regulatory overreach will inevitably suppress new startups from trying to compete.

I think we can find a better word for “competitors eating your lunch by providing better cheaper service” than “disrupted.”

Like Airbnb, mobile-phone app Uber creates a marketplace directly linking buyers and sellers—in its case, passengers and drivers—outside the ornate regulations of analog-era municipal taxi commissions. Brussels, Seattle and Miami have banned or strictly limited Uber cars. New York’s Mr. Schneiderman objects to the company’s practice of pricing more when demand is heavy. The alternative is severely restricted supply, as anyone knows who has tried to hail a cab in the rain.

The drone industry in the U.S. has been grounded because the Federal Aviation Administration has banned commercial use of drones pending new regulations. Meanwhile, countries such as Canada and Australia encourage drones. “As American regulators struggle to come up with a rulebook for the fast-moving industry,” Toronto’s Globe and Mail bragged recently, “Canada has emerged as perhaps the center of commercial drone technology—from Ontario farmlands to Alberta’s oil sands.”

Other examples include the Food and Drug Administration’s scrutiny of 23andMe’s marketing, which forced the company to stop offering health data from its at-home $99 genetics-analysis kit, and prohibitions against selling self-driving cars, which have left the U.S. in the dust behind less regulated Europe.

“left the U.S. in the dust behind less regulated Europe” is not a phrase I thought I’d hear in my lifetime. (Monday morning and already grumpy…)

This sparks a second and larger thought. The big macroeconomic question is, why is US growth so stagnant? The Keynesian side has one simple answer: lack of “demand,” easily curable by spending a lot of money, even if that spending is totally wasted. None of these stories matter. The “supply” or, better, “equilibrium” answer is that we have thrown a lot of sand in the gears, and maybe we should take the same market-liberalization diagnosis and cures that we offer Greece and Italy.

The hard question for both sides is to quantify their frictions. How much of the perceived shortfall in GDP or GDP growth comes from your mechanism? Keynesians have not, that I know of, come up with any independent measure of lack of demand.  Likewise, how much of our stagnant GDP growth comes from these regulatory impediments? At least here we all know the sign. We can all see regulatory strangulation as a major factor in foreign countries. But it is devilishly difficult to come up with a solid number.  I think equilibrium macro (or macro as micro, or macro as growth theory) gets short shrift just because it’s hard to come up with the numbers, and so much easier to say “well, it must be lack of demand.”  But coming up with a serious measurement strikes me as a very useful exercise. Hence, I added the “thesis topics” label.

[Cross-posted from The Grumpy Economist blog]

Categories: Policy Institutes

Piketty Should Focus on Increasing the Scope of Markets, Not Expanding the Power of Government

Mon, 05/12/2014 - 08:33

James A. Dorn

In his best-selling book Capital in the Twenty-First Century (Harvard University Press), French economist Thomas Piketty is concerned with equality of outcome, not equality under a rule of law safeguarding one’s unalienable rights to liberty and property. 

He finds that inequality of income and wealth is increasing as the return on capital assets exceeds the growth of real GDP.  His policy for reducing inequality is to use the power of government to impose very high marginal tax rates on the incomes of the rich and near rich, and also impose an annual wealth tax.  His goal is “to put an end to such incomes.”

Piketty’s leveling schemes in the pursuit of “social justice” would undermine the primacy of property rights under the U.S. Constitution, adversely affect incentives to save and invest, stifle entrepreneurship, and slow economic growth. He seems more interested in penalizing the rich than in thinking of ways to create wealth by expanding opportunities for market exchange.

Underlying his approach to equality is the false idea that the rich get richer at the expense of the poor.  He ignores the reality that voluntary exchanges in the marketplace make parties to the trades better off—and wealth is created.

He also ignores the wisdom of the late development economist Peter Bauer who warned: “The unholy grail of economic equality would exchange the promised reduction or removal of differences in income and wealth for much greater actual inequality of power between rulers and subjects.” 

Capital is best understood as a bundle of ownership rights—in particular, the right to sell one’s property and the right to receive the income from that property.  When those rights are attenuated, capital is destroyed. 

Gary Becker, the late Nobel laureate economist, showed the importance of human capital (i.e., the skills individuals acquire through education and training) for a person’s future income and economic growth. High marginal income tax rates and wealth taxes dampen incentives to invest in human and non-human capital—and when investment slows so will economic growth. 

Imposing a 50 percent marginal tax rate on individuals with incomes starting at  $200,000 and increasing that rate to 80 percent at $500,000, as Piketty proposes, would heavily penalize those who have invested in their human capital and discourage others from doing so.

Likewise, Piketty’s proposed wealth tax would translate into a very high tax on the income from non-human capital.  For example, with some simplifying assumptions, a 2 percent wealth tax is equivalent to a tax rate of 67 percent on capital income if the discount rate is 3 percent.  Piketty proposes a 5 to 10 percent annual tax on the net worth of individuals with at least $1 billion in assets.  A 10 percent wealth tax translates into a tax on capital income of 333 percent (assuming a discount rate of 3 percent).

Such confiscatory tax rates would not raise much revenue because the rich would move to low tax regimes like Hong Kong that relish economic freedom.  That is why Piketty wants a global wealth tax—but that’s pie in the sky.

The high taxes on capital would ultimately harm workers in those countries that followed Piketty’s policies, as incomes grew more slowly. Rich capitalists are not the enemy of poor workers.  Capital freedom and private property allow for upward mobility.    

Piketty does the economics profession a disservice by focusing on outcomes rather than institutions, incentives, and processes.  He believes more in the power of government than in the power of markets to transform people’s lives.  History has shown that individuals have a natural desire to improve themselves and that economic freedom—not the redistributive state—is the key to human progress.

 Instead of calling for higher taxes to reduce the return on capital, Piketty would be on firmer ground by arguing for an increase in economic freedom and more limited government to increase the range of choices open to people. 

Categories: Policy Institutes

Voter ID Laws and Rights of Convicted Felons

Sat, 05/10/2014 - 10:55

Robert A. Levy

Nothing in the Constitution requires voter ID laws. Nor does any provision bar voter ID laws, except: (1) the 14th Amendment forecloses state denial of equal protection of the laws to any person, and (2) the 15th Amendment forecloses discrimination by race in determining who can vote.

Accordingly, a voter ID law would be unconstitutional if it discriminated by race without a compelling state justification.  Put differently, to justify a discriminatory voter ID law, a state would have to show: (a) there’s significant voter fraud, (b) the law would fix the problem; and (c) there’s no other way to accomplish the same ends without discriminating.

The convicted felon problem is more complicated.  Rand Paul argues that 180,000 convicted felons in Kentucky should be allowed to vote. Does the constitution support that view?  Of course, prisoners can be denied the right to vote while in prison.  By committing a felony, they forfeit certain rights, which can even include the most fundamental right – the right to liberty.  But after a felon completes his sentence, his voting rights should (in my view) be restored.

Indeed, if the law denying his voting rights were passed after his commission of the felony, that law would be unconstitutional because it’s ex post facto.  If the law were passed prior to his commission of the felony, it would still be subject to the test noted above.  That is, government would have to show a compelling need for the discriminatory law, its effectiveness at satisfying that need, and no less discriminatory means of accomplishing the same ends.  Frankly, I doubt that many, if any, states can make that showing.

To complicate matters still further:  The threshold question is whether there’s discrimination.  The constitutional test is based on discriminatory intent – i.e., whether the purpose of the law is to discriminate. Some legal authorities argue, however, that section 2 of the Voting Rights Act prevents states from passing laws that are neutral on their face but have a discriminatory impact.  For example, a law that applied neutrally to all convicted felons may not have been intended to discriminate by race, but because a disproportionate number of felons are African Americans, the law would have a discriminatory effect.

Notwithstanding the legal controversy:  From a policy perspective, I would restore voting rights to felons who have completed their prison terms.  I see no compelling reason to deny such rights.  Decreasing the number of Democratic voters is not a legitimate reason. 

Ideally, states (not the feds) should enact such laws.  Federal re-enfranchisement is constitutionally suspect.  Any federal statute to remedy state discrimination would have to be congruent and proportional to the discrimination.  A one-size-fits-all federal remedy probably wouldn’t pass muster.  Individual states might even prefer a limited rather than blanket restoration, based on (say) the nature and severity of the crime, any history of recidivism, and the length of time since release from prison.

[As an aside, you’ll likely hear some of these same arguments with respect to restoring gun rights to non-violent felons.  Predictably (and somewhat hypocritically), many legislators switch roles, with conservatives favoring and liberals opposing restoration.]

Categories: Policy Institutes

The Case for Fishery Property Rights

Fri, 05/09/2014 - 16:32

Peter Van Doren

In the last few days, some commentators have praised the role of federal regulation in enhancing the health of fishing stocks. Brad Plumer at Vox.com, Paul Krugman at the New York Times, and Kevin Grier at Cherokee Gothic, have all weighed in.

The current issue of Regulation features a cover story that offers insight into what government interventions work and what doesn’t in the management of fisheries.

Authors Jonathan Adler and Nathaniel Stewart argue that fisheries are a classic example of what economists call the “Tragedy of the Commons.” Open access resources such as fishing stocks are overharvested because no one owns the rights to the harvest. Instead, everyone has an incentive to grab what fish they can before another boat does.

The traditional policy response to the commons problem has been regulating the length of the fishing season or limiting the total amount of fish that can be caught. The problem is these policies don’t change the incentives that lead fishermen to race after and grab as many fish as they can. For example, codfish quotas in the Gulf of Maine and Georges Bank were cut 77% and 61%, respectively in 2013. Such regulations do not fix the problem because the incentives for boats to get faster or bigger remain.

A better solution would be a system of Individual Transferable Quotas. These quotas assign to individuals a right to a small portion of the total allowed catch in a fishery. This “catch share” ends the incentive to race and grab because a fisher owns the rights to a defined amount of fish, and no one can take that right from him. A 2012 study of 15 catch-share programs in the United States and Canada found that, because the programs worked so well, fishinging seasons were lengthened from 63 to 245 days. And the introduction of the catch-share systems allowed fish populations to recover from previous overharvesting. After five years of catch share implementation, catch limits increased 13 percent on average.

Fishery property rights a vast improvement over traditional fisheries regulation.

Categories: Policy Institutes

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