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Privatizing the Royal Mail

Mon, 03/24/2014 - 17:55

Chris Edwards

Britain privatized its Royal Mail in 2013, proceeding with an initial public offering of shares that raised about $2.7 billion. The government pursued the reform because the company faced falling mail volume, and it needed to reduce costs and increase innovation. Similar issues face the U.S. Postal Service.

The Financial Times has named the reformer leading the privatized Royal Mail its “Person of the Year.” Below is an excerpt about Moya Greene from FT’s story. I have two questions: i) Why don’t we get reforms or reformers like this in Washington? ii) Why are American leaders so comparatively timid in embracing market-based reforms?

Ask anyone who knows Moya Greene, the Canadian chief executive who last year steered Royal Mail, the UK’s 500-year-old postal service, into the private sector, and the same phrases come up. “She’s relentless, a force of nature, a tough lady,” says one admirer.

It took a determined personality to get this behemoth, with £9bn of revenues and 150,000 staff, into a healthy enough state to be floated on the London Stock Exchange, where it went straight into the FTSE 100 index. The goal of privatising Royal Mail had defeated governments for 40 years.

Greene, 59, has been Royal Mail’s chief executive for almost four years, the first woman and first non-Briton to run it since Henry VIII established a “master of the posts” in 1512. Her previous role heading Canada’s postal service – and as a civil servant overseeing the privatisation of that country’s railway and deregulation of its airline and ports systems – gave her the necessary blend of industrial and political experience.

With this British privatization—and past ones—people have quibbled with some of the details. But, all in all, privatization in Britain has been hugely successful. Prime Minister Cameron should be applauded for having the guts to build on the privatization reform legacy of Thatcher, Major, and Blair.

Meanwhile on this side of the pond, Republican Darrell Issa is having trouble getting his own nominally conservative party to accept even small changes to the broken government postal system. Perhaps he could kick-start reforms by inviting Moya Greene to give testimony to his high-profile committee.

For more on postal privatization, see here.   

Categories: Policy Institutes

Beware of the Kremlin’s Propaganda

Mon, 03/24/2014 - 15:00

Dalibor Rohac

Since the beginning of the turmoil in Ukraine, some have attributed a large part of the blame for the crisis to the European Union and the United States, whose meddling allegedly brought down the President Viktor Yanukovych.

While, as a general rule, the foreign policy of the EU and the US deserve to be criticized on various grounds, it should not be forgotten that other actors are present on the world’s geopolitical scene as well – some of them quite malevolent. The idea that the eclectic, bottom-up movement that fueled the revolution in Kyiv was somehow orchestrated by the United States (and/or by the notoriously unimaginative bureaucrats in Brussels) is grotesque – as is the notion that Russia’s invasion of Crimea is a response to genuine secessionist desires of the citizens of South-Eastern Ukraine.

In short, one needs to be careful to avoid the trap of falling for the propaganda spread by Russia’s current regime, as Alexander McCobin and Eglė Markevičiūtė, both from Students for Liberty, argue here:

It’s much too simplistic to solely condemn the United States for any kind of geopolitical instability in the world. Non-interventionists who sympathize with Russia by condoning Crimea’s secession and blaming the West for the Ukrainian crisis fail to see the larger picture. Putin’s government is one of the least free in the world and is clearly the aggressor in Crimea, as it was even beforehand with its support of the Yanukovych regime that shot and tortured its own citizens on the streets of Kyiv.

[…]

Some libertarians’ Kremlin-style speculation about pro-western Maidan’s meddling in Crimea’s affairs is very similar to what Putin’s soft-power apparatus has been trying to sell in Eastern Europe and CIS countries for at least 15 years. Speaking of the Crimean secession being democratically legitimate is intellectually dishonest given that the referendum was essentially passed at gunpoint with no legitimate choice for the region to remain in Ukraine’s sovereign power.

Categories: Policy Institutes

Politico: Private Schooling a Threat to Science Education and Freedom of Conscience

Mon, 03/24/2014 - 14:17

Andrew J. Coulson

In a lengthy piece released this morning, Politico asserts that publicly-funded private school choice programs are teaching creationism around the country and implies that public schools do not do likewise. It then quotes several sources as worrying about the impact that private school choice programs will have on science instruction, and as fretting that their money is being used to promote ideas they strongly disagree with. There are two serious problems with this story.

First, citing the work of activist Zach Kopplin, Politico states that “over three hundred” private schools participating in school choice programs are teaching creationism. Kopplin’s figures have been tabulated by the Friedman Foundation which reports that he identifies 305 creationist schools operating in 10 school choice programs. Those programs are served by a total of 3,084 private schools, so just under 10 percent appear to be creationist.

That may seem like a lot, particularly when you consider that, according to Politico, “Decades of litigation have established that public schools cannot teach creationism or intelligent design.” But that characterization is inaccurate. Public schools cannot constitutionally teach these things, but that doesn’t mean it never happens. In a nationwide poll of public school biology teachers, 21 percent “agree[d] with at least one statement concerning creationism or ID as a valid scientific approach.” What’s more, 14 percent of public school biology teachers both agreed with creationism and/or ID and actually taught about them in class. Though some of these teachers may stop short of endorsing these ideas to their students, it is naive to imagine that all are so self-disciplined.

So a core premise of the Politico story, that private school choice programs represent an unprecedented threat to biology instruction, is simply false. Nor should that come as a surprise. Public schools enroll 90 percent of American students and have done so for generations. And yet, the share of American adults who say that humans evolved as a result of purely natural processes is just 15 percent. Those of us who fear weak and mistaken science instruction should arguably be more concerned with our $600 billion / year public school system than with a relative handful of private schools.

The second problem with the Politico story is that it denies a crucial distinction among different types of education policies: some make use of public money, while others do not. Under voucher and “education savings account” programs as well as traditional public schooling, all taxpayers are required to fund types of instruction they may violate their most deeply felt convictions. As noted above, both private school choice programs and public schools have teachers who believe in creationism and teach about it to their students. It is entirely natural that more secular, science-oriented taxpayers would object to this—as does one of the sources cited by Politico.

But education tax credit programs avoid this problem, because they do not rely on public funds. The most common type of education tax credit is called a “scholarship donation” credit. Under these programs, donors who give to a non-profit tuition-subsidy organization receive a credit to cover some or all of their donation, and the organization then distributes their money to families who wish to send their children to private schools. There are two critical features to these programs. First, they are voluntary. If you don’t want to support the private school choices of needy families, you simply keep paying your taxes as you always did and your money goes to the traditional public school system as it always did. Second, if you do choose to participate, you select the scholarship organization that receives your funds, and you can choose one that comports with your own convictions. While some scholarship organizations specialize in serving families of particular faiths, many others do not. So both religious and secular families can find scholarships, and both religious and secular donors can find organizations to help them.

How important are these features? They were the deciding factors used by the U.S. Supreme Court when it rejected a challenge to Arizona’s scholarship donation tax credit program. Plaintiffs had alleged that the program forced them to support religion because, they claimed, it relied on public money. The court explained that “that is incorrect.” The justices went on to explain that since the plaintiffs did not participate in the program, none of their money had gone to religious education. Just last week I shared a pair of video links in which I talked about this issue in more detail.

The Supreme Court decision finding that donations made under education tax credit programs are not government money seems to have escaped the Politico writer, who incorrectly characterizes these donations as public funds on several occasions. They are not. And because they are private funds, voluntarily given, they free taxpayers from the conviction-violating compulsion that besets them under all publicly-funded school systems. Those who value freedom of conscience should thus prefer education tax credits to both public schooling and to vouchers or education savings accounts. Perhaps someday, civil libertarians on the left will come to understand that.

Categories: Policy Institutes

Family Moving to Colorado for Access to Medical Marijuana

Mon, 03/24/2014 - 12:07

Tim Lynch

More information here and here.

Categories: Policy Institutes

Toyota Stumbles Into a Dark Legal Alley...

Mon, 03/24/2014 - 09:52

Walter Olson

…and the U.S. Department of Justice emerges whistling with $1.2 billion. I explain how it happened in a Wall Street Journal opinion piece today (more: Overlawyered). Toyota’s cars are very safe indeed, and “sudden acceleration” was a concoction of media-fueled panic, as the government’s own safety engineers have confirmed. But now the company is being punished not just for alleged data-reporting and compliance infractions unlikely to have caused any genuine material risk to the public, but also for defending itself and its products at Congressional hearings and in the arena of public opinion. DoJ’s demagogic press release cites, among the instances of supposed fraud for which Toyota is now being punished by the gigantic forfeiture, such standard exercises in bland crisis communication as, “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.” 

A couple of other points I didn’t have room for in the WSJ piece: Toyota is settling the government’s trumped-up single charge of mail fraud by way of a so-called Deferred Prosecution Agreement, or DPA, and its terms really must be seen to be believed. “Toyota understands and agrees that the exercise of the Office’s discretion under this Agreement is unreviewable by any court,” appears on clause 14 on page 6, with “Office” referring to the office of the U.S. Attorney for the Southern District of New York, currently Preet Bharara. And if you are expecting even the tiniest squeak from anyone at Toyota in contradiction to the government line, even around the coffee machine at the local dealership, consider clause 13, which states: that Toyota “agrees that it shall not, through its attorneys, agents, or employees, make any statement, in litigation or otherwise, contradicting the Statement of Facts or its representations in this Agreement.” If DoJ catches wind of any such statement it can revoke the agreement not to prosecute, without of course having to give back the billion dollars. “The decision as to whether any such contradictory statement shall be imputed to Toyota for the purpose of determining whether Toyota has violated this agreement shall be within the sole discretion of the Office.” 

When people talk about federal prosecutors having become a law unto themselves, this is the sort of thing they mean.

Categories: Policy Institutes

Why Don't Public Schools Give Parents What They Want?

Sat, 03/22/2014 - 16:06

David Boaz

The Washington Post reports today that it’s “harder to describe” the mission of one of the magnet schools in Arlington County, Virginia: Arlington Traditional School. Not that hard, if you just read the quotes from the principal and parents:

“Our emphasis is on basic education,” Principal Holly Hawthorne said….

“The word ‘traditional’ implies a cachet to us,” said Craig Montesano, a lobbyist for the shipping industry who visited Arlington Traditional with his wife. To him, the word conjures ancient Rome and Greece and the promise that his daughter will be “grounded in the learning that has come down through the ages in Western civilization.”

Some parents say the selective nature and more disciplined culture remind them of private school. 

And it seems to work:

The federal government has twice named Arlington Traditional a National Blue Ribbon School for its academic performance. And its students routinely outscore district averages on the Standards of Learning tests.

And parents like it:

Last spring, 298 families applied for 72 slots.

So why doesn’t the Arlington County School Board expand it, or build more such schools around the county to accommodate all the parents who want their children to get this exotic thing called “traditional” or “back to basics” education? Maybe they just didn’t realize until today – or last spring – how popular it is? Well, as it happens, I live in Arlington, and I recall that the Washington Post has been reporting on the popularity of Arlington Traditional School since the late 1970s. Parents used to camp out overnight to get their children into the school until they created a lottery system. Through the Nexis service, I found some of the stories I recalled. Most of these articles are not online. 

Here’s what the Post reported in September 1982 when the school, then called Page Traditional School, was three years old: 

For Arlington school board member Margaret A. Bocek and her husband, the first day of school this year began late Monday night when they and 40 other parents camped out on the lawn of the county’s Page Traditional School to ensure that their 3-year-old children could attend there on opening day, 1984…. 

In the last three years, such parent stakeouts have become commonplace at Page, a public alternative school that stresses a traditional format of self-contained classrooms, regular homework and strict standards for behavior and appearance. Page parents have been lobbying recently for expanding the program to the eighth grade and for expansion of the school’s program to other schools.

And here’s a report from September 1985:

This year, the line began to form at 10 a.m. on Labor Day, 23 hours before Page Traditional School in Arlington would begin accepting applications for the kindergarten class of 1987.

By the time Principal Frank Miller arrived at 9 a.m. the next day, about 80 parents were waiting on the lawn – more than triple the 25 slots that would be available in the school’s one kindergarten class.

Seven years after its much-heralded establishment as a back-to-basics, structured alternative to the open-classroom schools popular in the mid-1970s, Page is a cause of both enthusiasm and consternation in Arlington.

Each September, eager parents camp out on the lawn at 1501 N. Lincoln St. to put the names of their 3-year-olds on the kindergarten waiting list.

December 1991:

In an effort to stop overnight campouts by parents eager to register their children at Arlington’s three popular alternative schools, county school officials have proposed dropping the first-come, first-served admissions policy in favor of a random drawing.

An October 1999 headline:

School’s Excellence Is in Demand

Now you’ll notice that the 1991 story mentions three “popular alternative schools,” and indeed the other two, Drew Elementary and H-B Woodlawn Secondary, offer a very different alternative, a more informal, individualized style of education reflecting the “alternative” ideas of the 1960s and 1970s. The Post referred in 2004 to Woodlawn’s “quirky, counterculture ways.” In November 1991 the Post reported that “Last weekend, dozens of parents camped in front of H-B Woodlawn to register their children for the 70 sixth-grade slots.”

In 2012 the Arlington school board did vote to expand Arlington Traditional School by 12 classrooms. But why did it take so long? And why not open more “back to basics” schools, and also more “counterculture” schools, if that’s what parents want?

I wrote about that years ago in a book I edited, Liberating Schools: Education in the Inner City.   

In the marketplace, competition keeps businesses on their toes.  They get constant feedback from satisfied and dissatisfied customers. Firms that serve customers well prosper and expand. Firms that don’t respond to the message they get from customers go out of business. Like all government institutions, the public schools lack that feedback and those incentives.

No principal or teacher will get a raise for attracting more students to his or her school. A successful manager in a private business gets a raise, or gets hired away for a bigger salary. A successful entrepreneur expands his or her store or opens a branch. Can one imagine a public school choice system allowing a successful principal to open another school across town and run both of them? 

If Virginia were even a little bit tolerant of charter schools, or if Virginia allowed real private school choice, parent groups or entrepreneurs could organize to deliver the kinds of schools – from traditional to counterculture – that families want. But in a bureaucratic monopoly, the local paper can run thirty years of stories about parents desperate to get their children into particular types of schools, and the central planners can ignore them. 

Categories: Policy Institutes

The Federal Spying Budget

Fri, 03/21/2014 - 15:59

Chris Edwards

The latest revelations regarding the NSA’s bulk data collection illustrate the vastness of the government’s spying apparatus. That vastness costs taxpayers a lot of money.

The cost of the federal spy budget used to be secret, which was a bizarre thing for a government that is supposed to be of the people, by the people, and for the people. But in recent years, policymakers have taken a step toward transparency and released figures on total intelligence spending.

The federal spy budget consists of spending on the National Intelligence Program (NIP) and the Military Intelligence Program (MIP). The Federation of American Scientists has summarized the data. In 2013 the NIP and MIP cost $68 billion. (For 2015, the administration is requesting $46 billion for the NIP and $13 billion for the MIP.)

Even by Washington standards, $68 billion is a lot of money. The chart shows that the spy budget is two-thirds as large as the $96 billion Americans spend on state and local policing activities. And the spy budget is far larger than spending on state and local fire activities ($42 billion), the NASA budget ($17 billion), and the National Park Service budget ($3 billion). (Police and fire data are for 2011; NASA and Park Service data are for 2013.)

What do the NIP and MIP spend so much money on? I assume it’s mainly the wages and benefits of their skilled workers, plus lots of spending on computers, drones, and other technology.

In an analysis of the spy budget (or “black budget”) last year, the Washington Post found that the NIP and MIP spanned 16 agencies and had 107,000 employees. The largest agency is the CIA with a $15 billion budget and 22,000 employees. Further details are here and here.

I don’t think we know what share of the total $68 billion goes toward worker wages and benefits. Let’s take a wild guess and say that the average compensation of intelligence workers is $200,000. If we apply that figure to the workforce of 107,000, we get a total compensation cost of $21 billion. But that’s less than one-third of the total spy budget. So it appears that the great bulk of the spy budget goes toward procuring goods and services from contractors.

The good news is that the spy budget has come down from a peak in 2010. Further cuts would have the beneficial effect of forcing agencies to better prioritize and hopefully cut some of their excessive data collection activities and most intrusive programs. In many areas of the federal budget, spending and civil liberties can be inversely related. Cato analysts have proposed reducing the spy budget by one-quarter in conjunction with an array of other federal spending cuts.

Categories: Policy Institutes

The Silver Lining in the Florida School Choice Expansion Loss

Fri, 03/21/2014 - 13:29

Jason Bedrick

Supporters of the Florida Tax-Credit Scholarship (FTS) program are understandably disappointed that the state senate abandoned legislation to expand the program on Thursday. The FTS assists low-income families that want to enroll their children in private schools by offering tax credits to donors of nonprofit scholarship organizations. This year, the state’s only active scholarship organization, Step Up For Students, was able to aid more than 60,000 students but there were not enough funds to aid the more than 30,000 additional applicants. The proposed expansion would have provided enough funds to aid about 6,000 more students. The bill’s withdrawal therefore leaves 6,000 students without the funds they need to attend the school of their choice.

However, the disappointment should be tempered by a large measure of relief. While the legislation contained several praiseworthy changes and eliminated some red tape (including a requirement that would-be scholarship recipients spend a year in a government-run school first), legislative negotiations threatened to add a poison pill that would have severely affected school autonomy and parental choice.

The FTS currently mandates that all participating schools administer a nationally norm-referenced test. Nevertheless, Florida Senate President Don Gaetz insisted that the FTC expansion bill include a provision requiring that scholarship students take the Florida Comprehensive Assessment Test (FCAT), which is soon to be replaced by a Common Core-aligned assessment.

While the existing mandate is unnecessary because private schools are already directly accountable to parents, it still allows schools and parents some measure of flexibility in deciding how best to measure performance. By contrast, the proposed state testing mandate would have forced all schools into a uniform testing regime. Since tests dictate what is taught, when, and how, this mandate would have induced conformity at the expense of diversity and innovation. As explained in the open letter on choice and accountability that the Cato Institute recently issued along with the Heritage Foundation, Friedman Foundation for Educational Choice, and others, such mandates undermine the central purpose of educational choice:

Educational choice has also been repeatedly shown to produce far higher levels of parental satisfaction than does centrally planned schooling. That’s because choice empowers parents to find the best education for their children, and test scores are not their only consideration. Research shows that many parents care more about safety and discipline, graduation and college acceptance rates, and moral values.

Dictating uniform standards and tests threatens those other valued features by redirecting educators’ focus from serving families to catering to bureaucrats. It also contributes to a culture of “teaching to the test” that has already resulted in several large-scale public-school cheating scandals.

Children are not interchangeable widgets that can be beneficially fed through their education on the same conveyor belt. Even within a single family, children often learn different subjects at different speeds. Myriad new options are arising in response to that reality that allow students to learn at their own pace in every subject, helping all to fulfill their individual potential — the very antithesis of uniform government mandates.

Fortunately, the FTS already contains an “escalator” provision that allows it to grow over time, albeit not as quickly as it would have under the expansion bill. Hopefully, Florida legislators will take a second look at some of the important reforms that would have expanded access to the program. Meanwhile, other states that are considering scholarship tax credit legislation should learn from Florida’s experience. Design matters.

Categories: Policy Institutes

Frank Underwood Wants a Subsidy

Fri, 03/21/2014 - 12:23

David Boaz

House of Cards is a Netflix television series about a powerful, manipulative politician who gets what he wants with little regard for the public good. Here’s an example:

“House of Cards” star Kevin Spacey is booked to appear in Annapolis on Friday night as the fate of a tax credit that has benefited the production of his Netflix series hangs in the balance.

Gerard E. Evans, an Annapolis-based lobbyist for the show, has invited the entire Maryland General Assembly to a local wine bar to meet the two-time Academy Award winner who plays the scheming Vice President Frank Underwood in the series. An invitation describes the event as “an evening of Annapolis, D.C. and Hollywood.”…

The visit is scheduled just a few days after the Senate voted to increase the amount the state can spend next year, to $18.5 million, on a tax credit that rewards movie and television production companies that choose to film in Maryland. “House of Cards” has been the biggest beneficiary in recent years.

The House of Delegates has yet to act on the bill, with about two and a half weeks remaining in this year’s 90-day legislative session in Maryland. Evans said he has been encouraged by recent meetings with House Speaker Michael E. Busch (D-Anne Arundel) and other key delegates.

A few weeks before the second season of “House of Cards” debuted online, the show’s production company sent letters to Busch and Gov. Martin O’Malley (D) making clear they could film elsewhere if the debate over the tax credit didn’t end well.

It’s hard to imagine a better example of rent-seeking, crony capitalism, and conspiracy between the rich, the famous, and the powerful against the unorganized taxpayers. A perfect House of Cards story.

The Tax Foundation has been covering film tax credits in general and the House of Cards saga in particular. The Mackinac Center has been campaigning against Michigan’s film tax credits, and Gov. Rick Snyder has tried to rein in the program. But it’s hard to beat Frank Underwood.

 

Categories: Policy Institutes

RIP Tonie Nathan, the First Woman to Receive an Electoral Vote

Fri, 03/21/2014 - 09:03

David Boaz

Theodora (Tonie) Nathan, the 1972 Libertarian Party vice presidential nominee who became the first woman in American history to receive an electoral vote, died Thursday at 91.

Tonie Nathan was a radio-television producer in Eugene, Ore., when she attended the first presidential nominating convention of the Libertarian Party in 1972. She was selected to run for vice president with presidential candidate and philosophy professor John Hospers. Although the ticket received only 3,671 official votes, Virginia elector Roger L. MacBride chose to vote for Hospers and Nathan rather than Nixon and Agnew, thus making Nathan the first woman in American history to receive an electoral vote. MacBride, an author and former legislator, had been elected on the Republican slate. As I wrote in Liberty magazine when he died in 1995, “MacBride became a ‘faithless elector’—faithless to Nixon and Agnew, anyway, but faithful to the constitutional principles Rose [Wilder] Lane had instilled in him.”

Brian Doherty, author of Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement, writes:

It is a shame that her historical status for the advancement of woman’s role in what had been entirely a man’s world has been little noted or long remembered, mostly I suspect because the Libertarian Party is not much respected by institutional feminism (though it should be).

Nathan was also the first Jewish person to receive an electoral vote.

After her vice-presidential run, she ran for office as a Libertarian candidate during the 1970s through the 1990s for numerous offices, vigorously though never successfully. In the 1980 U.S. Senate election in Oregon, Nathan participated in three statewide television debates with incumbebt Bob Packwood (R) and then–state senator Ted Kulongoski (D). She served as national vice-chair of the Libertarian Party, and at the 2012 Libertarian National Convention she announced former New Mexico governor Gary Johnson as the presidential nominee. She founded the Association of Libertarian Feminists in 1973 and served as its chair.

Note: Premiering tonight on Showtime is a new documentary about Geraldine Ferraro, the 1984 Democratic vice presidential nominee, whom many people would likely identify as the first woman to receive an electoral vote.

Categories: Policy Institutes

Conspiring to Be Civil

Fri, 03/21/2014 - 08:32

Andrew J. Coulson

A few days ago, a reporter asked me to comment on a conference video in which I appeared. The event was four or five years ago, but the Florida teachers’ union must have just discovered the video and apparently was circulating it to the media. Couched as a smoking gun, it was purported to reveal school choice advocates’ “true intentions.” But the media, apart from some left-leaning Florida bloggers, seem to have concluded it was wasn’t newsworthy (not enough hand-wringing or maniacal laughter, I suppose).

That’s really too bad, because upon rewatching the clips that the union selected, I’m really pleased to have attention drawn to them. Several deal with the strongest argument that can be leveled at government-funded school choice: that, like state-run schools, it can force taxpayers to pay for the promotion of ideas that violate their convictions, leading to social conflict.

Here’s my take on how to address that problem:

And here’s how I responded to the claim that violating taxpayers’ freedom of conscience isn’t a big deal:

 

Categories: Policy Institutes

Litt on Warrants for Searching American Communications: Either Misleading or Terrifying

Thu, 03/20/2014 - 18:08

Julian Sanchez

At a hearing Wednesday, members of the Privacy & Civil Liberties Oversight Board asked intelligence official Robert Litt a crucial question: If the sweeping general warrants authorized by the FISA Amendments Act are only supposed to be used for “targeting” foreigners for surveillance, shouldn’t a judicial warrant be necessary before NSA can intentionally dig through its massive database of intercepts for Americans’ communications? Otherwise, after all, such “backdoor searches”—currently allowed under NSA guidelines—seem a dangerous loophole that enables an end-run around the rules that would require court approval to directly target an American’s communications for interception.

Litt’s answer was either extremely misleading or extremely disturbing. He told the oversight board that the number of annual queries to the intercept database was “considerably larger” than the few hundred analysts currently run against NSA’s vast archive of telephony metadata records.  That would make the “operational burden” of a warrant requirement utterly impractical, Litt asserted, and that the Foreign Intelligence Surveillance Court  “would be extremely unhappy if they were required to approve every such query.”

Now, it’s possible that Litt was talking about the total number of queries analysts run against the database of intercepted communications as they sift through it for nuggets of foreign intelligence.  No doubt that number is very large indeed. But it’s also utterly irrelevant to the question PCLOB was asking. Nobody, after all, is suggesting that a warrant be required for every query of NSA’s databases—including queries for topical keywords or “selectors” associated with known foreign intelligence targets.  The question, rather, was whether a warrant should be required for the subset of those queries involving the name or e-mail address of a particular U.S. person—the very query terms that the government would be forbidden from using as selectors to task interception without first obtaining a particularized, probable cause warrant.  If Litt was answering that question by alluding to the total number of queries, then his answer had little bearing on what the PCLOB was trying to discover, and would vastly overstate the practical burden of such a requirement—seriously misleading overseers about the feasibility of a proposed civil liberties safeguard. Litt ought to correct the record if that is what he meant.

What would be hugely more disturbing, however, is if Litt really was giving an answer pertinent to the question he was asked.  In that case, he would be representing that NSA runs “considerably more” than a few hundred annual queries for the names and e-mail addresses of specific U.S. persons, against a database of private communications gathered via general warrants—an authority justified on the premise that it is “targeted” exclusively at non-Americans located outside the United States. That would suggest that the blanket surveillance authority created by §702 of the FISA Amendments Act is precisely what civil libertarians feared: A Trojan Horse mechanism for spying on Americans using the pretext of “foreign targeting.”

In short, either added safeguards on NSA’s use of the §702 database are far more feasible than Litt led the PCLOB to believe, or the authority is being used in a way that circumvents constitutional and statutory protections for Americans’ communications on a chilling scale. Litt should clarify which it is—and then Congress should hasten to reform §702 accordingly.

Categories: Policy Institutes

Death Of An Honest Taxman

Thu, 03/20/2014 - 15:25

Walter Olson

The New York Times notes the death at age 100 in Atlanta of Randolph Thrower, “a Republican lawyer who headed the IRS under President Richard M. Nixon from 1969 to 1971 before losing his job for resisting White House efforts to punish its enemies through tax audits.” When White House staffers began pressuring Mr. Thrower to apply hostile tax scrutiny to the Administration’s critics, including journalists and Senators, he assumed President Nixon had no knowledge of what was happening and requested a meeting with the chief executive so as to warn him. Instead he was summarily fired, with the White House putting out the story that Thrower had departed “for personal reasons.”

In White House tapes and memos released in later years, Nixon described the situation differently. “May I simply reiterate for the record that I wish Randolph Thrower, commissioner of the Internal Revenue Service, removed at the earliest feasible opportunity,” he wrote on Jan. 21, 1971, five days before the White House announced that Mr. Thrower was stepping down.

That May, as the administration continued to look for a successor to Mr. Thrower, Nixon made clear what kind of IRS commissioner he wanted. “I want to be sure he is a ruthless son of a bitch,” he was recorded as saying, “that he will do what he is told, that every income tax return I want to see I see” and “that he will go after our enemies and not go after our friends.”

It’s a good thing Nixon isn’t in power any more.

Categories: Policy Institutes

Free Trade: Do It for the Children

Thu, 03/20/2014 - 15:24

Simon Lester

Here’s a WSJ article describing a Chinese investment in France, made for the purpose of exporting back to China:

Mayor Christian Troadec is trying a new formula to revive his sleepy town in central Brittany: quenching Chinese thirst for baby milk.

On a recent damp morning at exactly 08:08—a lucky number in Chinese culture—workers broke ground on a 37-acre tract the municipality sold to Synutra International Inc., one of China’s top 10 baby-formula makers, to build a milk plant.

“In Brittany, we produce some of the world’s best-quality milk but we don’t have enough [economic] activity,” said Mr. Troadec, walking the muddy field where a dozen Caterpillar bulldozers and other earth movers lined up to start laying the foundation for the factory.

Synutra is investing €90 million ($125 million) to build what will be the region’s largest milk-drying factory and the first infant-formula plant on French soil entirely in the hands of a Chinese company.

The plant feeds two needs. China’s voracious demand for infant formula is surging as the middle class flourishes. But since a 2008 scandal, when Chinese-made formula tainted with the industrial chemical melamine killed six infants and sickened 300,000, parents have preferred to buy formula from well-known Western brands. Now, dairy companies in China, already the world’s largest importers of milk, are racing to win back consumers by tying up with producers abroad.

At the same time, Chinese investment offers a lifeline to Brittany, a farmland on the western tip of Europe that has been hurt by the unwinding of European subsidies.

Synutra plans to ship the entire output from its new plant swiftly to China. The company teamed up with French dairy cooperative Sodiaal to secure access to 300,000 million liters of milk a year over the next decade—the entire milk production of farmers within a radius of 20 kilometers of Carhaix—and 30,000 tons of whey, all of which will be transformed into dried baby milk and sent by boat.

So it’s a win-win. France gets investment; Chinese consumers get high quality products, for babies nonetheless.  It can help to put a human face on free trade, especially when it’s this one:

 

Categories: Policy Institutes

WaPo Blogger Wrong About School Choice... Again

Thu, 03/20/2014 - 13:07

Jason Bedrick

Once again, the Washington Post’s education blogger, Valerie Strauss, failed to do her due diligence before posting a hit piece on school choice. A year ago, she falsely claimed that scholarship tax credit programs benefit corporate donors and wealthy recipients. In fact, donors break even at most and the best evidence suggests that low-income families are the primary beneficiaries even in the few programs that are not means-tested. Unfortunately, Strauss has still failed to issue a correction.

Now Strauss has posted an op-ed from an anti-school choice activist in Florida that contains numerous additional errors, which the good folks at RedefinED.org have thoroughly debunked, including the following canard:  

Any way you look at it, private entities receive public tax dollars with no accountability.”

One can certainly debate whether there is sufficient accountability, but there is certainly more than none. All scholarship students take state-approved nationally norm referenced tests such as the Stanford 10 or Terra Nova. The gain scores are reported publicly, both at the state level and for every school with 30 or more tested scholarship students. Additionally, schools with $250,000 or more in scholarship funds must submit independent financial reports to the state.

Not only did the op-ed’s author fail to correctly explain the law, she failed to understand that school choice is accountability. As explained in an open letter that the Cato Institute recently issued along with the Heritage Foundation, Friedman Foundation for Educational Choice, and others: “True accountability comes not from top-down regulations but from parents financially empowered to exit schools that fail to meet their child’s needs.” 

Moreover, the claim that “private entities receive public tax dollars” is also false. The money flows from private donors to private nonprofits to private citizens to spend on their children’s tuition at private schools. That the donors receive a tax credit does not transmogrify their donation into “public” money. Indeed, the U.S. Supreme Court ruled that this view erroneously “assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. Private bank accounts cannot be equated with the … State Treasury.” Likewise, neither tax deductions for donations to a church nor the church’s own property tax exemption mean that churches are therefore funded by “public tax dollars.”

The Washington Post has an in-house fact-checking team. They should not have to rely on RedefinED.org or others to ensure the veracity of what their bloggers post. 

Categories: Policy Institutes

Putin’s Animal Farm

Thu, 03/20/2014 - 12:31

Chris Edwards

In today’s Washington Post, Pamela Constable describes the scene in Crimea, and it reminds me of George Orwell’s Animal Farm.

Vladimir Putin is playing the starring role of Napoleon the pig. To consolidate his power, Putin is employing menacing dogs, just as Napoleon did. Constable writes:

As the referendum approached, the capital was calm, but the streets were filled with a swelling number of stocky security men on corners and outside government facilities … For the most part, they stood around looking tough, but their mere presence was intimidating …

As on Orwell’s farm, Crimea has a few skeptical donkeys, but most people are apparently gullible sheep:

Occasionally, I met someone who questioned the official line … One was a stocky former soldier in his 50s named Volodya who was downing shots of vodka between bites of potato salad at a working-class cafe. “They say my pension will go up, but so will this meal,” he said. “People in a crowd tend to hear slogans and get excited.”

In Orwell’s book, the animals are propagandized with “four legs good, two legs bad.” In Crimea, people are being told that the folks in Kiev have two legs. Constable talked to one person who: “confided that his parents had been won over by the barrage of pro-Russian propaganda warning of fascist threats from Kiev. ‘They told me to be careful and not to associate with people there,’ he said with chagrin. ‘It is like a demon that possesses people and they are no longer able to think.’” 

Finally, the Russian national anthem is stirring the nationalist sole in Crimea, just as “Beasts of England” did on Animal Farm. Constable says:

Even if you don’t know the lyrics, the state anthem of the Russian Federation is one of the most stirring national anthems ever written. This week, on assignment in Crimea, I heard it in full rousing splendor, sung by a chorus of uniformed young men standing at attention, and I had to catch myself from being swept up in the moment.

Categories: Policy Institutes

The Administration’s Plan to Kill Elephants and Treat Americans as Criminals

Thu, 03/20/2014 - 10:22

Doug Bandow

Today the Advisory Council on Wildlife Trafficking is meeting near the nation’s capital to plot the administration’s impending ban on ivory sales. The plan is typical for counterproductive government regulation.

The panel’s proposals would accelerate the slaughter of African elephants and turn millions of law-abiding Americans into criminals. The Council also would destroy hundreds of millions of dollars worth of property legally acquired by everyone from antique dealers and restorers to tourists and retirees.

Elephants are magnificent creatures—intelligent, social, and expressive—and threatened by widespread poaching. Unfortunately, international activists sometimes appear more interested in feeling virtuous than in deterring poaching. In 1989 an international convention outlawed the sale of new ivory.

Unfortunately, the ban increased the price of ivory, which remains in high demand, especially in Asia. Daniel Stiles of the IUCN/SSC African Elephant Specialist Group explained: “The inconvenient truth is that the CITES ivory trade ban and [subsequent CITES] votes to cut off legal raw ivory supplies are the real causes of the recent elephant holocaust.”

Yet the U.S. Fish and Wildlife Service plans what it calls “a nearly complete ban on commercial elephant ivory” trade.

Talented craftsmen long used ivory to make items both practical and beautiful. Today these objects—created, sold, given, and bequeathed legally over decades and centuries—have made their way into private collections and public museums across America and the world.

Outlawing this trade makes no sense. In September 2012 USFWS admitted: “we do not believe that there is a significant illegal ivory trade into this country.” Most ivory in America, 95 percent or more, is older and legal.

Obviously, buying and selling objects derived from elephants long dead does not endanger elephants today. USFWS argues that it is hard to distinguish between new and old ivory, so the agency’s answer is to turn most everyone who attempts to sell most any ivory into a criminal.

Targeting the law-abiding is a tactic of the indolent, not the serious. Differences between antique and modern items are many and numerous aspects of age are hard to fake. Enforcing the law requires effort, but that is no reason to treat innocent and guilty alike.

Turning everyone into a criminal would accelerate the slaughter of elephants. Greatly increasing the amount of illegal contraband and number of illegal traffickers would dissipate already limited enforcement resources.

Moreover, USFWS would turn every owner of legal ivory today into an enemy. Some Americans would respond by turning to people who know best how to flog illegal ivory objects—those currently dealing in poached ivory.

Criminalizing otherwise legal conduct also would be unfair to the millions of Americans who followed the rules in building businesses and collections involving ivory. Imagine Washington declaring that since it is difficult to distinguish between legitimate diamonds and “blood diamonds” used by warring groups in Africa, diamonds no longer could be sold in America.

Most dramatically, the administration would ban the interstate sale of anything not an antique, meaning 100 years old. Newer, legal items dating before 1989 could be sold only within states: it would be illegal for Americans across the nation to trade with one another!

Sellers also would have to prove age “through documented evidence.” Alas, documentation does not exist for most ivories owned by most people since it has never before been required. Unfortunately, carvers from decades and centuries ago did not provide notarized affidavits and certificates of authenticity. Deceased parents didn’t include original receipts and descriptions with their bequests.

The administration should act. It should develop a strategy targeted against the real criminals—those guilty of killing elephants, poaching tusks, and selling illegal objects.

A ban on ivory sales might appear to be of interest only to a few people. As I point out in my latest Forbes column: “But it raises fundamental questions: Is the U.S. still governed by the rule of law, does government still respect private property, and can citizens expect law enforcement to treat them with basic fairness?” If not, all Americans will have lost something very important.

Categories: Policy Institutes

Government Infrastructure Is Inefficient Everywhere

Wed, 03/19/2014 - 17:23

Chris Edwards

An op-ed in the Wall Street Journal today indicates that Edwards’ Law of Cost Overruns is an international standard. If a politician says that a project will cost $100 million, it will end up costing $200 million or more.

The WSJ piece by Bent Flyvbjerg and Atif Ansar examines the results of an Oxford University study looking at 245 dam projects around the world. The projects had a “dismal track record” in terms of sticking to their promised budgets. The “actual construction costs of large dams are globally on average 96 percent higher than their budgets,” say Flyvbjerg and Ansar. That means a doubling, which is right in line with Edwards’ Law.

Rachel Maddow has drawn the lesson from Hoover Dam that big government projects are really great. But Flyvbjerg and Ansar describe a more typical government project: “Brazil’s Itaipu Dam was built in the 1970s. It cost nearly $20 billion, 240 percent more in real terms than predicted and it impaired Brazil’s public finances for three decades.”

I’ve written in detail about the history of U.S. government dam building, which has been chock-full of economic and environmental mismanagement. One reason for large cost overruns is that policymakers lie or conceal. I wrote that the Bureau of Reclamation “began constructing the Grand Coulee Dam with $63 million in funding from Congress, but it later became clear that the agency had a $270 million project in mind.” And I wrote regarding Jerry Brown’s father that “in pushing for approval of the huge State Water Project in California in 1959, Gov. Pat Brown kept throwing out a bogus cost estimate of $1.75 billion, even though he knew it would cost far more, as he later admitted.”

Liberals, such as Maddow, who hunger for big government infrastructure projects would cure their misguided lust by reading Cadillac Desert. Written by an environmentalist, I think it is one of the best public policy books of recent decades.

I’ve written about government cost overruns here, partly drawing from Flyvbjerg’s excellent research on the topic.

Categories: Policy Institutes

The Economics of House of Cards

Wed, 03/19/2014 - 13:36

Caleb O. Brown

Doing his best “Weird Al” impression, my friend Andrew Heaton stars in this explainer entitled “The Economics of House of Cards.” It’s produced by our friends at EconStories.tv. Enjoy.

EconPop - The Economics of House of Cards

Their debut effort was a quick analysis of some of the economics of Dallas Buyer’s Club.

Categories: Policy Institutes

While You Fill Out Your Bracket, Chris Christie Busts the NCAA's Racket

Wed, 03/19/2014 - 11:16

Ilya Shapiro

After considerable debate, the Founding Fathers elected to give the new federal government the power of regulating commerce among the several states. We’ve all seen what’s become of that power, but in the beginning, giving the federal government the ability to regulate—literally, to “make regular”—interstate commerce made good sense as a way to avoid the otherwise inevitable collective-action problems, like trade wars and anti-competitive jockeying for monopolies. The goal was to ensure that federal law would not permit or bestow any unfair competitive advantage to any one state or group of states over the others.

Throughout much of our nation’s history, the federal government has, for the most part, succeeded at this particular goal. Thanks to the Professional and Amateur Sports Protection Act of 1992 (PASPA), however, Congress’s power to keep states from obtaining unfair advantages is being used to grant some states (most notably Nevada, but also Oregon, Montana, and Delaware) an unfair advantage: a special right to license gambling, which PASPA prohibits to other states.

In 2012, New Jersey Governor Chris Christie signed a sports-gambling bill into law, and as a result was sued by the NCAA, NFL, MLB, NHL, and NBA, who believed that additional sports betting would result in corruption and game-fixing. Christie defended his actions by arguing that PASPA violates the 10th Amendment by restricting New Jersey’s right to govern itself, and also that it violates the equal-sovereignty doctrine by giving an unfair advantage on certain states.

The federal district court and the U.S. Court of Appeals for the Third Circuit failed to recognize these constitutional flaws, so New Jersey has now asked the Supreme Court to hear its case. Cato has joined the Pacific Legal Foundation on a brief supporting New Jersey’s petition.

We explain that the principle of equal sovereignty was central to the creation of Congress’s power to regulate interstate commerce, and that conferring state-specific advantages is precisely opposite to the federal power that the Framers created. We think it important that the Supreme Court hear this case because it offers an excellent opportunity to explain the equal-sovereignty doctrine and how it furthers federalism, and to provide guidance as to the scenarios in which the doctrine applies. Congress shouldn’t be able to pick winners and losers among the states.

The Supreme Court will likely decide whether to take the case of Christie v. NCAA before recessing for the summer at the end of June.

This blogpost was co-authored by Cato legal associate Julio Colomba.

Categories: Policy Institutes

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