How Has Your State's Academic Performance and K-12 Spending Changed over the Past 40 Years? Find out Here.
Andrew J. Coulson
Last summer, I stumbled across a clever 1993 paper by education statisticians Mark Dynarski and Philip Gleason that proved it was possible to adjust average state SAT scores for variations in the test participation rate and demographic factors, making them comparable to one another. Barely able to contain my excitment (hey, don’t judge), I set about extending their method so that it could discern trends in state SAT scores over time, and improving the validity of its estimates by using more data, fewer assumptions, and more exhaustive methods. Last week, I released the technical paper presenting those extensions. Yesterday, I released a paper that uses them to chart academic achievement and spending trends, for every state, back to 1972. How did your state do? Find out here.
To pique your interest, here’s the chart for Masschusetts:
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.”
Back in the Bush II Administration, the American Association for the Advancement of Science (AAAS) nakedly tried to nudge the political process surrounding the passage of the environmentally-horrific ethanol fuel mandate. It hung a large banner from the side of its Washington headquarters, picturing a corn stalk morphing into a gas pump, all surrounded by a beautiful, pristine, blue ocean. They got their way, and we got the bill, along with a net increase in greenhouse gas emissions.
So it’s not surprising that AAAS is on the Washington Insider side of global warming, releasing a report today that is the perfect 1-2-3 step-by-step how-to guide to climate change alarm.
This is how it is laid out in the counterfactually-titled AAAS report “What We Know”:
Step 1: State that virtually all scientists agree that humans are changing the climate,
Step 2: Highlight that climate change has the potential to bring low risk but high impact outcomes, and
Step 3: Proclaim that by acting now, we can do something to avert potential catastrophe.
To make this most effective, appeal to authority, or in this case, make the case that you are the authority. From the AAAS:
We’re the largest general scientific society in the world, and therefore we believe we have an obligation to inform the public and policymakers about what science is showing about any issue in modern life, and climate is a particularly pressing one,” said Dr. Alan Leshner, CEO of AAAS. “As the voice of the scientific community, we need to share what we know and bring policymakers to the table to discuss how to deal with the issue.
But despite promising to inform us as to “what the science is showing,” the AAAS report largely sidesteps the best and latest science that points to a much lowered risk of extreme climate change, choosing instead to inflate and then highlight what meager evidence exists for potential catastrophic outcomes—evidence that in many cases has been scientifically challenged (for example here and here).
The AAAS takes us through the standard litany of scare-scenarios and tipping points. If you can imagine it, the AAAS mentions it. Rapid sea level rise? Check. Heat waves, floods, droughts? Check. Check. Check. Deteriorating public health? Check. National security threat? Check. Ecological collapse? Check. And the list goes on.
The AAAS’s justification for such alarm?
Below are some of the high-side projections and tail risks we incur by following the current path for CO2 and other greenhouse gas emissions. Most of these projections derive from computer simulations of Earth and its climate system. These models apply the best understanding science has to offer about how our climate works and how it will change in the future. There are many such models and all of them have been validated, to varying degrees, by their ability to replicate past climate changes.
Somehow in its haste to scare us, the AAAS seems to have missed (or ignored) the two hottest topics in climate change these days—1) that climate models have done remarkably poorly in replicating the evolution of global temperature during the past several decades , and 2) that high end climate change scenarios from the models are largely unsupported by observations.
Thus, “what the science is showing” completely undermines the AAAS contentions regarding alarming climate change.
So here’s what we are left with.
As to the AAAS’s first point that human actions are causing climate change, this is largely correct, although the degree and details—the most important features—are uncertain and still being intensity studied and debated (a fact left out by the AAAS).
As to the second point, the current best science suggests that coming human-caused climate change is going to be less than expected with a much-diminished risk of abrupt changes with catastrophic outcomes (a fact left out by the AAAS).
Which means that the AAAS’s third point, that immediate action is required to reduce the risk of extreme change, is hardly applicable—especially when recognizing that no matter what action we take in the U.S. (the primary audience of the AAAS report) it will have such a small impact on the course of future climate change as to do nothing to alleviate the overblown worries of the AAAS (a fact left out by the AAAS).
Add this all up and you realize that the AAAS report is the epitome of climate alarmism—long in hype and short in fact and aimed squarely at influencing policymakers. We should expect better, but they drank the ethanol years ago.
Benjamin H. Friedman
Three years ago tomorrow, U.S. and allied states began bombing Libya’s military in support of rebels. Today, Libya is back in the news. An eastern militia’s seizure of an oil tanker prompted the U.S. military to seize it back on behalf of Libya’s fledging government, which just fired its Prime Minister over the matter. Meanwhile, the political chaos that caused Ambassador Chris Stevens’ murder in Bhenghazi in 2012 continues. The New York Times recently reported that “Political Killings Still Plaguing Post-Qaddafi Libya.”
So Cato’s forum tomorrow on whether the intervention in Libya succeeded is well-timed. We will answer the question using the criteria set out by intervention’s advocates. President Obama, and the leaders of other intervening states, offered three major goals. First, it would avert a humanitarian disaster: the mass murder of civilians in Bhenghazi, which the Libyan state forces were poised to capture. Second, intervention would help Libya become a democracy. Third, defending Libya’s rebels would deter other authoritarian rulers in the region from cracking down on uprisings in their own countries.
As Gene Healy notes today in the Washington Examiner, it’s doubtful that we achieved any of those goals. The one thing that the war unequivocally accomplished, the overthrow of Muammar el-Qaddafi, was never an explicit goal of the outsiders. That’s because forming a military alliance against Qaddafi required the pretension, manifest in the U.N. Security Council Resolution authorizing war, that intervention could defend civilians without taking sides.
Christopher Chivvis, who served in the Pentagon at the war’s start, will likely make the argument from his recent book: the action was a moderate success, given its tiny cost. Alan Kuperman, pioneer of the moral hazard critique of humanitarian intervention, will argue that, rather than saving civilians, the intervention backfired, increasing the humanitarian toll and exacerbating the region’s instability.
I’ll say that the war probably did nothing to discourage crackdowns in other nations and might have encouraged them, and the current circumstance in Libya argues against aiding the overthrow of the Mideast’s rulers, even despotic ones. I’ll also criticize Congressional Republicans for obsessing over Bhenghazi without heeding, let alone opposing, the broader U.S. project in Libya. Register here. The event will also stream live on Cato.org.
Whether the Common Core is good policy, or was federally driven, is not dictated by polling results. But the Core’s political fate is tied to public opinion, which is probably why pro-Core pollsters are spinning like mad, and supporters like Bill Gates are undertaking a new PR blitz.
Achieve, Inc., a creator of the Core along with the National Governors Association and Council of Chief State School Officers, has released Common Core survey results for several years running. What these polls have primarily been notable for finding is (1) very few people know much about the Common Core, and (2) if you feed respondents a glowing description of the Core they – surprise! – like it. At the end of last week, Achieve released their latest such survey.
What did they find? According to the main point of their summary, “solid majorities of voters support common standards, common assessments, and allowing teacher (sic) and students time to adjust to these new expectations.” But the really important finding was this: Of the people who reported knowing about the Common Core – those not relying on the loaded description of the Core as all wonderfully state-led and egalitarian – 40 percent reported having unfavorable opinions of the Core, versus 37 percent favorable.
Alas, Achieve blamed this, essentially, on people being misinformed by vocal Core opponents:
It is likely this mixed number is attributable to CCSS opponents who in the past year have made their opposition known through all media outlets, leaving a more negative “impression” among voters.
Opposition couldn’t be based on evidence and logic. No! Common Core is too pure and beloved. It must be coming form a lot of light-thinking, highly impressionable people. In contrast, respondents reporting that they agree with a loaded, glowing description they were just read? That’s real support!
Distaste for the Core among people who report being knowledgeable about it is mirrored in recent polling in New York, the state, along with Kentucky, that is furthest along implementing the Core. After massive “proficiency” decreases under its first round of Core testing, New York is also the state that is most convulsed. A February Siena College poll found Empire Staters very closely split on the Core.
That support cracks after people learn about the Core is almost certainly why defenders like the U.S. Chamber of Commerce and Bill Gates are undertaking a massive PR campaign to push the Core. Unfortunately, based on an ABC News interview with Gates this weekend, and longstanding pro-Core practice, the main messages are likely going to be that the Feds have nothing meaningful to do with the Core; high standards will revolutionize education; and anyone who tells you otherwise is willfully misleading you.
But here’s the thing: Core supporters can spin and spread gloss wherever they want, the more the public experiences the Core, the less they seem to like it. And then, of course, there is all the evidence and logic showing what a policy failure the Core is likely to be. You know, showing that the Feds have driven and must drive the Core; high standards – if the Core even is that – will not fix education; and many Core opponents know exactly what they’re talking about.
Walter OlsonThe Chieftains - The Green Fields of America
“With no taxes or tithes there to devour up your wages/When you’re on the green fields of America.” A classic emigration song for St. Patrick’s Day, sung here by Kevin Conneff of the Chieftains, and from the repertoire of the great Paddy Tunney.
According to textbook economics, government funding is crucial to scientific progress and technological innovation. The reasoning is that pure science (e.g., the structure of DNA) underlies most applied science (e.g., genetic testing). Pure science, however, is easily copied once discovered, so it cannot earn significant profits. Private actors therefore underinvest in pure science, and applied science suffers. In economics lingo, pure science is a public good because knowledge is non-excludable.
This perspective is reasonable but hardly decisive. Government funding suffers bureaucratic inefficiences and risks politicization of the nation’s research agenda (e.g., an excessive focus on defense research). And even if some role for government makes sense, the right amount is hard to gauge; no evidence shows that current amounts are insufficient.
In addition, the textbook argument assumes that private actors will not fund basic research. Yet as this New York Times piece documents, private actors contribute mightily to scientific research:
Paul G. Allen, a co-founder of Microsoft, .. set up a brain science institute in Seattle, to which he donated $500 million, and Fred Kavli, a technology and real estate billionaire, … then established brain institutes at Yale, Columbia and the University of California. …
The new philanthropists represent the breadth of American business, people like Michael R. Bloomberg, the former New York mayor (and founder of the media company that bears his name), James Simons (hedge funds) and David H. Koch (oil and chemicals), among hundreds of wealthy donors. Especially prominent, though, are some of the boldest-face names of the tech world, among them Bill Gates (Microsoft), Eric E. Schmidt (Google) and Lawrence J. Ellison (Oracle). …
So far, Mr. Ellison, listed by Forbes magazine as the world’s fifth-richest man, has donated about half a billion dollars to science. …
The philanthropists’ projects are as diverse as the careers that built their fortunes. George P. Mitchell, considered the father of the drilling process for oil and gas known as fracking, has given about $360 million to fields like particle physics, sustainable development and astronomy — including $35 million for the Giant Magellan Telescope, now being built by a private consortium for installation atop a mountain in Chile. …
Eli Broad, who earned his money in housing and insurance, donated $700 million for a venture between Harvard and the Massachusetts Institute of Technology to explore the genetic basis of disease. Gordon Moore of Intel has spent $850 million on research in physics, biology, the environment and astronomy. The investor Ronald O. Perelman, among other donations, gave more than $30 million to study women’s cancers — money that led to Herceptin, a breakthrough drug for certain kinds of breast cancer. Nathan P. Myhrvold, a former chief technology officer at Microsoft, has spent heavily on uncovering fossil remains of Tyrannosaurus rex, and Ray Dalio, founder of Bridgewater Associates, a hedge fund, has lent his mega-yacht to hunts for the elusive giant squid.
Whether a role remains for government funding is not clear; perhaps the projects funded by private investors will not address the breadth of important questions in basic science.
And government funding has undoubtedly supported huge amounts of valuable research; that is not in dispute, only whether the research would have occurred even without government.
The wealth of private funding nevertheless suggests that outrage over cuts to science budgets is misguided. The private sector will fill much, perhaps all, of the gap.
From a Baltimore Sun article on the regulatory fate of car-sharing services Uber and Lyft, bitterly attacked by their more highly regulated taxi competitors:
At a recent work session on the issue, Kelley [Sen. Delores G. Kelley, D-Baltimore County] rejected the contention from Lyft and Uber that it’s a matter of consumer choice about whether to use the application to book a ride and they won’t do it if the price is too high.
“We regulate all sorts of things because the general public is not smart enough to know when they’re about to be fleeced,” Kelley said.
But what about members of the general public who are smart enough to know they’re about to be fleeced, but are unable to do anything about it because it’s lawmakers and market incumbents combining to make that happen?
“IMF Warns on the Dangers of Inequality,” screams the headline of a story by Ian Talley in the Wall Street Journal. The IMF – which Talley dubs “the world’s top economic institution”– is said to be “warning that rising income inequality is weighing on global economic growth and fueling political instability.”
This has been a familiar chorus from the White House/IMF songbook since late 2011, when President Obama’s Special Assistant David Lipton became Deputy Managing Director of the IMF. It echoes a December 2012 New York Times piece, “Income Inequality May Take Toll on Growth,” and a January 14, Financial Times feature, “IMF warns on threat of income inequality.” This isn’t news.
Talley writes, “The IMF … says advanced and developing economies need to raise more revenues through taxes, focusing on progressive taxation that moves more of the burden for social security, health care and other state benefits to the high-income earners.” That isn’t news either. The IMF has an ugly history of advising countries to raise tax rates, with disastrous results. The inequality crusade is just a new pretext for old mistakes.
The only news in the Journal article is “a 67-page paper detailing how the IMF’s 188 member countries can use tax policy and targeted public spending to stem a rising disparity between haves and have-nots.” That paper is just one of many “staff discussion notes” which “should be attributed to the authors and not to the IMF.” The main “warning” from those authors (Jonathan Ostry, Andrew Berg, and Charalambos Tsangarides) is that “the data are particularly scarce and unreliable for redistribution, even more so than for inequality.” Despite unreliable data, the IMF economists nevertheless claim that” higher inequality seems to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect.”
This IMF discussion draft relies on “a recently-compiled cross-country dataset (Solt 2009) that carefully distinguishes net from market inequality and allows us to calculate redistributive transfers—defined as the difference between the Gini coefficient for market and for net inequality.” Frederick Solt of Southern Illinois University reconstructed the usual pretax, pre-transfer Gini indexes to estimate a “net” Gini – adjusted for direct taxes and cash transfers, but not sales taxes or in-kind transfers.
The Solt Gini index is scaled from zero to 100, where zero would be total equality (everyone has the same income) and 100 would be total inequality (one person has all the income). The U.S., for example, had a pretax, pre-transfer Gini of 46.5 in 2011, but a much lower net Gini of 37.2 after adding cash transfers and subtracting taxes. The net Gini would be much lower if the data accounted for America’s unique reliance on refundable tax credits and in-kind benefits (which makes U.S. inequality appear higher than in countries that pay transfers in cash).
According to The Wall Street Journal, “Inequality in several advanced economies, including the U.S., has returned to levels not seen since before the Great Depression, the fund said.” Irrelevant nonsense. The IMF study’s data only go back to 1960. The authors once rehashed rhetorical comparisons to 1928 in a blog, but that is a stale fallacy repeated uncritically from Thomas Piketty and Emmanuel Saez. It wrongly compares prewar data based shares of personal income with incompatible postwar data based on shares of a much narrower measure of income reported on individual tax returns after subtracting all transfer payments.
Getting back to the Solt list of 153 countries, inequality is lowest in countries with a net Gini around 30 and highest with a Gini over 45. Yet most countries The Wall Street Journal singles out as suffering from high inequality actually have low inequality.
“For the fund,” says the Journal, “protests in Athens, Lisbon, Caracas and Tripoli … are manifestations of the broader underlying reality of income inequality.” That might work for Lebanon, but not the others. The latest net Gini is a low 33.1 for Greece, 33.2 for Portugal, and 35.6 in Venezuela. The Journal also claims income inequality “helped propel widespread unrest” in Egypt and Ukraine, but the latest Gini was a super-low 30.9 in Egypt and an amazing 25.6 in Ukraine (much lower than even the USSR in 1992). Mr. Tally may mean these egalitarian governments went broke trying to redistribute too much, but that would contradict the IMF paper’s other claim – that redistribution is innocuous.
Contrast the very low inequality numbers from countries like Greece and Ukraine with the much higher Gini estimates for all the rapidly-expanding BRIC countries. The latest net Gini is 46.4 for Brazil, 49.9 for Russia, 49.7 for India and 47.4 for China. Among these fastest-growing economies the Gini is virtually the same with or without taxes and transfers, suggesting no redistribution. Minimal redistribution just lowers the Gini from 47.9 to 47.4 in China and from 50.6 to 49.7 in India.
Unfortunately, countries begging for IMF loans may have to swallow IMF advice to push their highest tax rates even higher, and redistribute the added revenue (if any) to appreciative political supporters. Such loans may shore up unworthy governments, but the attached strings will surely strangle the nascent private economy.
In the 1996 case Auer v. Robbins, the Supreme Court ruled that where there is any ambiguity or disagreement over what a federal regulation means, courts should defer to the interpretation favored by the agency that issued the regulation. The practical consequence of this decision has been that government agencies have had the power not just to create and enforce their own rules but also to definitively interpret them. Given the mind-boggling number of federal regulations that exist—and the exceptional breadth of behavior that they govern—the importance of this “Auer deference” can’t be overstated.
While handing the powers of all three branches of government to the bureaucracy is problematic in and of itself, a recent decision by the U.S. Court of Appeals for the Ninth Circuit further extended the deference courts show to agency rulemakers by declaring that an agency’s interpretation of its own rule is authoritative even if the agency has altered its interpretation dramatically since the regulation came into effect. Under that logic, an agency could spend decades saying that its regulation governing footwear only applied to shoes—and then, without warning or consultation, unilaterally decide to extend the rule to sandals and slippers (despite explicitly saying for years that they were not covered by the regulation).
Such a power to rewrite regulations through after-the-fact “reinterpretation” is incredibly tempting, freeing agencies to change the rules of the game without further legislation or congressional oversight, or even the formalized rulemaking process required by the Administrative Procedure Act.
Peri & Sons, a family-run farm in Nevada (one of America’s largest onion producers), is caught in just such an Kafkaesque morass. In its case, the Ninth Circuit ruled that even though the Department of Labor for over five years interpreted regulations issued under the Fair Labor Standards Act to mean that employers aren’t required to pay employees for the costs of moving for a job (including passport and visa applications), DOL is free to change its interpretation to now require employers to cover those costs.
Cato, along with the Center for Constitutional Jurisprudence and the National Federation of Independent Business, filed a brief urging the Supreme Court to hear this case. We argue not just against the Ninth Circuit’s extension of Auer to cases where the agency has reversed its position, but also that Auer itself was incorrectly decided. Granting agencies post-hoc control over their regulations’ textual meaning is an abdication by the courts of their constitutional duty to zealously guard against executive encroachment on the judiciary’s role as interpreters of the law. And we’re not alone in questioning the wisdom of Auer; as recently as 2011, Justice Scalia criticized the ruling as being “contrary to [the] fundamental principles of separation of powers.”
The Supreme Court will be deciding this spring whether to hear Peri & Sons Farms v. Rivera.We urge the Court to take the case and restore a modicum of the Constitution’s separation and balance of powers.
The great classical liberal sociologist Henry Sumner Maine theorized that societies progressed from status to contract: In a status-based society, one is born into a place in a hierarchy. That place may change, but typically it doesn’t change very much, and your place governs your rights and obligations. Societies of status are stable, rigid, and often deeply illiberal. They tend to be dominated by kinship groups, or clans, and those can be quite collectivist and hostile to individual liberty.
Contract-based societies are very different: In a contract-based society, individuals tend to be legally equal at birth. Family ties are affective and not quite so legally binding. Obligations tend to be voluntarily undertaken rather than assumed at birth. Societies of contract are flexible, may change rapidly, and will often act to protect individual liberty.
At Cato Unbound, this month’s lead essayist, legal historian Mark S. Weiner, argues that the state performs a sometimes unappreciated role in keeping away the status-based society: without a state that’s strong enough to break the power of the clans, then the clans will return, and individual liberty will suffer.
But how real is the danger? Do we really have the strong state to thank for our liberty? Economist Arnold Kling argues that other institutions, including the nuclear family and consensual transfers of property, make clannishness unappealing. The American Conservative’s editor, Daniel McCarthy, suggests that even liberal government is at times a very collectivist, and thus clannish, activity. Legal historian John Fabian Witt will weigh in on Monday, and we welcome your comments as well.
My op-ed in today’s New York Times has prompted numerous critical comments on the NYT website. Let me address some of them.
Some readers questioned the linked source for my statement that infrastructure spending in the United States is about the same level as in other high-income countries. This fact does need some explanation, but I didn’t have room to include it in the op-ed. The data I cited were emailed to me by the author of the linked OECD report. It is national accounts data on gross fixed investment. I charted the data here in Figure 2.
Some readers wondered about my definition of “infrastructure.” That word is often used loosely. The definition that makes sense to me is the broad one of gross fixed investment, which includes such items as government highways and private pipelines and factories. The data are available from BEA Table 1.5.5, where you can see that private investment—even aside from residential—dwarfs government investment.
One reader expressed a common view that in traveling abroad you often find nicer airports than in this country. I think that’s correct, and often those foreign airports are private or partly private, while ours are government-owned.
Numerous readers pointed to shortcomings of particular private companies, and some of those complaints are surely correct. Private companies often screw up, but my experience is that governments screw up more because of deep, structural incentive problems. Furthermore, private markets have the powerful built-in mechanism of competition to fix problems over time, whereas government shortcomings often go unaddressed. Where there is a lack of competition in private markets, policymakers should focus on opening entry to increase it.
A number of readers thought my mention of the Iron Bridge spurious. I thought of that very old cast iron structure after reading this WNYC story about Wednesday’s gas explosion in Harlem. A Con Ed senior VP says that the company checked the Harlem pipes less than two weeks ago and found no leaks. The story notes,
The bulk of the main on that block, however—about 150-feet—is cast iron from 1887. Con Edison has been working to replace such aging pipe citywide. [Con Ed VP] Foppiano said cast iron mains can be in the ground for a couple hundred years and age is not necessarily a factor.
Finally, one reader pointed to rising congestion as a reason to invest more in highways, even aside from the highway quality issue that I touched on. I agree that congestion is a big problem, and in this essay I discuss how we can improve the efficiency of our investment to better solve it.
The Democratic People’s Republic of Korea long has been recognized as one of the globe’s most difficult challenges. For two decades concern over Pyongyang’s nuclear program has dominated international attention toward the Korean peninsula.
What to do about The North Korea Problem has troubled three successive U.S. administrations. The result is a tentative nuclear state seemingly ruled by an immature third-generation dictator willing to terrorize even his own family.
Particularly unlucky are the residents of North Korea. There never has been any question about the extraordinary nature of DPRK tyranny. But the United Nations just released its own gruesome analysis.
The finding is simple: “systematic, widespread and gross human rights violations have been and are being committed” by the DPRK. “In many instances, the violations found entailed crimes against humanity based on State policies.”
Yet the challenge facing the U.S. and other nations regarding human rights in the North is a lot like the security problem: what to do? The Kim dynasty has demonstrated no interest in disarming. Nor has it ever hinted at the slightest interest in treating the North Korean people better. Arguing that human rights should be an international priority doesn’t change matters.
Trying to convince the isolated and militaristic regime that a more pacific policy is in its interest so far hasn’t worked. Trying to convince the same leadership that it also should dismantle the political system that it dominates is even less likely to succeed.
However, the human rights report might be more effectively directed at another nation, the People’s Republic of China. The PRC is North Korea’s chief enabler. (For a time South Korea shared that title, with its bountiful subsidies as part of the Sunshine Policy.)
The reasons are understandable if not necessarily laudable. Washington’s push for Beijing to press the DPRK more seriously, repeated during Secretary of State John Kerry’s recent China visit, founders on the PRC’s perception of its interests.
The North is unpredictable, except for always being ever unreasonable and difficult. Nevertheless, Beijing fears destabilizing the peninsula more than it fears North Korea nuclearizing the peninsula.
To change China’s position requires addressing that government’s concerns, particularly regarding the impact of a united Korea allied with America at a time when the U.S. appears committed to a policy of soft containment. The DPRK’s growing reputation as a human rights outlaw might help.
Beijing obviously is sensitive to the issue, given its own human rights failings. Nevertheless, there is no comparison between the two nations. China also has much at stake in the global order, including its reputation, which will be tarnished if it continues to be widely seen as the only reason the Kim regime survives.
Simply bashing Pyongyang won’t be enough. Washington needs to develop a positive package for a reform North Korean leadership: peace treaty, trade, aid, and integration. The U.S. also should involve South Korea and Japan.
This approach should directed as much at the PRC as North Korea. Even Chinese officials frustrated with the DPRK tend to blame the U.S. for creating the hostile threat environment which led the North to develop nuclear weapons.
The PRC still might decide the price of cooperating with America is too high. But the allies have no better alternative approach. The DPRK has spent recent years alternating whispers of sweet nothings with screams of blood-curdling threats, tossing in occasional missile and nuclear tests for good measure. Nothing suggests that the younger Kim has abandoned brinkmanship as Pyongyang’s preferred policy and decided to negotiate away his nation’s most important weapon.
Some day monarchical communism will disappear from the Korean peninsula. It will do so sooner if China uses its considerable influence—and threatens to withdraw its even more important aid—to press Pyongyang to reform. The UN’s scathing report on DPRK human rights practices might help win Beijing’s cooperation.
Steve H. Hanke
During his State of the Union address, President Obama announced that he intended to raise minimum wages to $10.10/hour for certain workers. Based on data from EU countries, it is clear that minimum wage laws kill jobs. I concluded that hiking the minimum wage will kill jobs in the U.S., too. Executives surveyed in the Duke University/CFO Magazine Global Business Outlook Survey agree.
Chief Financial Officers from around the world were interviewed and the majority of them concurred: a minimum wage increase from $7.25/hour to $10.10/hour would kill a significant number of jobs.
Here’s what the CFOs had to say:
Daniel J. Ikenson
Jobs are good. Exports create jobs. We create exports. Renew our charter.
Such is the essence of the marketing pitch of the U.S. Export-Import Bank, whose officials have begun ramping up their lobbying efforts ahead of a 2014 vote concerning reauthorization of the Bank’s charter, which expires in September. Last go around, in 2012, Ex-Im ran into some unexpected turbulence when free-market think tanks, government watchdog groups, and limited government Republicans in Congress raised some compelling – but ultimately ignored – objections to reauthorization.
The ostensible purpose of the Ex-Im Bank is to assist in financing the export of U.S. goods and services to international markets. Even if that were a legitimate role of government, the public must keep a watchful eye on how much and to whom loans are made – especially given the current administration’s tendency to bet big on particular industries and specific firms, and in light of its commitment to seeing U.S. exports reach $3.14 trillion in 2014.
From the U.S. Export-Import Bank’s 2013 Annual Report:
The Ex-Im Bank’s mission is to support American jobs by facilitating the export of U.S. goods and services. The Bank provides competitive export financing and ensures a level playing field for U.S. exporters competing for sales in the global marketplace. Ex-Im Bank does not compete with private-sector lenders but provides export financing that fill gaps in trade financing. The Bank assumes credit and country risks that the private sector is unable or unwilling to accept. It also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters. The Bank’s charter requires that the transactions it authorizes demonstrate reasonable assurance of repayment.
The defensive tone of this mission statement anticipates Ex-Im critics’ objections, but it certainly doesn’t answer them. The objectives of filling gaps in trade financing passed over by the private sector and expecting a reasonable assurance of repayment are mutually exclusive – unless the threshold for “reasonable assurance” is more risk-permissive than the private-sector’s most risk-permissive financing entities. Therefore, Ex-Im is either putting taxpayer resources at risk or it is competing directly with private-sector lenders for customers in need of finance. And if the latter, then as it seeks to create the proverbial “level playing field” for the U.S. companies whose customers it finances, Ex-Im is un-leveling the playing field for the finance industry, as well as for the U.S. firms in industries that compete globally with these U.S-taxpayer financed foreign companies.
The Bank does more harm than good. It assists some – mostly large, politically savvy, deep-pocketed – U.S. companies at the expense of others. When U.S. taxpayers provide the financing for foreign companies’ purchases from U.S. companies, they are subsidizing the foreign competitors of downstream U.S. companies. This is analogous to the tariff-rate quotas of the U.S. sugar program, to give one example, which benefit cane and beet producers and refiners, but put U.S. sugar-using firms in the food processing, bakery, and confectionary industries at disadvantages vis-à-vis their foreign competitors, who have access to cheaper sugar. It is an exercise in picking winners and losers with the winners being those firms and industries with the most effective K Street operations.
Delta Airlines objected and even went to court on the grounds that Ex-Im’s financing of Air India’s purchase of 30 Boeing aircraft subsidized its foreign competition. Likewise, Cliffs Natural Resources, a mining company that operates three iron ore mines in Minnesota and one in Michigan, continues to object to Ex-Im’s $694 million financing of an Australian iron mine’s purchases of U.S.-made bulldozers and trucks from Caterpillar, locomotives from General Electric and drilling rigs from Copco. According to the Duluth News Tribune, “[t]he Roy Hill project in Australia’s outback is so big and so remote that entire new cities, ocean ports, roads, an airport and a 220-mile railroad are being built for a single mine that annually will produce 55 million tons - more iron ore than all U.S. mines combined. The project is owned by billionaire Gina Rinehart, the richest person in Australia.”
Leaving the question of why U.S. taxpayers should be subsidizing purchases of Australia’s richest person aside, iron ore extracted from Australian mines competes with U.S. iron ore for customers in the steel industry. In that regard, the Roy Hill project financing benefits some U.S. equipment manufacturers at the expense of U.S. mining interests and U.S. steel producers, whose Asian competitors get cheaper raw materials. This imbalance, this picking of winners and losers, this battle in the political arena that should be occurring in the marketplace will persist as long as the Ex-Im Bank is open for business.
The validity of these and many other objections notwithstanding, after several months of debate and deliberation in 2012, Republican leadership in Congress not only caved to establishment pressure to reauthorize the Bank’s charter, but also upped its annual allowance by 40 percent to $140 billion. One “rebellious” Republican who voted against reauthorization in 2012 is Jeb Hensarling, who now chairs the House Financial Services Committee, which will consider the reauthorization bill this session. The Ex-Im reauthorization debate and vote will provide Hensarling and other Republicans the opportunity to distinguish free-market capitalism from the crony variety that has given capitalism a bad name.
In this Washington Examiner column from last week, Tim Carney suggests that by opposing reauthorization of the Ex-Im bank, the GOP can make the 2014 elections a referendum on corporate welfare. Let’s hope he’s right.
As this issue is likely to become topical in the weeks and months ahead, following is a list of papers, op-eds, and blog posts written by Cato scholars (mostly by Sallie James, who has moved on to new endeavors) over the years.
Earlier today, Attorney General Eric Holder asked the U.S. Sentencing Commission to reduce sentences for a broad range of federal drug crimes. This is a long way from legalization, but it goes in the right direction. More broadly, Holder’s action signals that drug crime will continue to fade as an enforcement priority for the federal government. This makes it easier for state and city governments to scale back enforcement as well.
As long as drug prohibition is on the books, it has potential for great harm. In particular, a new administration can easily reverse the Obama administration’s enforcement priorities.
But the harm from prohibition increases with the level of enforcement, so any de-escalation is welcome. And perhaps political realities dicate that gradualism is the way to eventually eliminate prohibition entirely.
Michael Gerson, former speechwriter to Bush the Younger and perennial libertarian antagonist, has denounced Rand Paul’s foreign policy views. That should surprise no one, but the manner in which he did so bears discussing.
Gerson’s bill of particulars is as follows:
The younger Paul has proposed defense cuts, criticized foreign aid, led opposition to U.S. involvement in Syria, raised the possibility of accepting and containing a nuclear Iran and railed against “possible targeted drone strikes against Americans on American soil.”
Each of these is its own argument, but what’s more interesting is how Gerson broadens the discussion in an attempt to paint the younger Paul in a conspiratorial light:
His libertarian foreign policy holds that America is less secure because it has been “too belligerent” and that decades of international engagement have both corrupted our constitutional order and corrupted other nations with our largess or militarism.
Reasonable people can disagree about the extent to which U.S. foreign policy has gone off the deep end in recent decades. Also, with due acknowledgment of the victims of U.S. “engagement” in places from Laos to Iraq, people could also disagree about the extent to which our militarism has “corrupted other nations.” But nobody with a lofty perch like Gerson’s should dispute the idea that international engagement has corrupted our constitutional order.
You could fill a library with the volumes that demonstrate how war and preparation for war—which is what Gerson means by “engagement”—have contributed to the growth of the state and the evolution of American political, economic and legal institutions. As that last link shows, influential American legal scholars are hailing Nazi jurist Carl Schmitt as “our hero” in providing the legal case for an unchecked presidency, with James Madison playing the republican bad guy.
And it is the height of irony that Gerson holds up for ridicule the idea that our foreign policy has corrupted our constitutional order the very same week that a U.S. Senator—who is a strong partisan of the CIA—gave a 40 minute speech lambasting the Agency for spying on the legislature in the context of the latter’s investigation of the CIA’s use of torture, or if you prefer, “enhanced interrogation techniques.”
Warrantless NSA spying on Americans, senior Executive Branch officials baldly lying to Congress about it with no consequences, the tortured legal reasoning that led to Guantanamo Bay, the American president claiming the power to assassinate a US citizen with no meaningful legal or legislative oversight on the grounds that he’s talked it over with his legal team, the internment of more than a hundred thousand American citizens for the crime of having had the wrong ancestors… One could go on.
The people who framed our constitution were the sort of people who opposed forming a standing army at a time when European empires were mucking around in the Western hemisphere. So whatever his disagreements with Rand Paul on foreign policy, Gerson could stand to consider—or better yet, do some reading—about how war and militarization have “corrupted our constitutional order.” It’s a bit of an open-and-shut case.
As the New York Times reported yesterday, President Obama intends to barge unilaterally into a hotly contested area of employment law by ordering the Department of Labor to develop regulations “to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as ‘executive or professional’ employees.” As with the expansion by decree of minimum wage law, it will be interpreted in some quarters as an undiluted boon to the employees it covers – their employers will either raise their pay or limit the hours they are expected to work, or both, and how could they be anything but happy about that? But as the piece quotes Cato’s Dan Mitchell as warning, ”There’s no such thing as a free lunch… If they push through something to make a certain class of workers more expensive, something will happen to adjust.”
At Forbes, Daniel Fisher explains some of the mechanisms by which that will happen. It will probably become harder to retain exempt status, for example, for “management-plus” jobs, such as one where a shift manager is expected to fill in occasionally at the register during a cashier’s break. That will hit smaller establishments especially hard, while yanking away transitional positions by which ambitious hourly hires can cross over to management. Moreover:
…non-exempt employees will be watched more closely to avoid tripping the sort of litigation threat that increasing numbers of labor lawyers are looking out for. Working at home could become taboo, since the employer has more difficulty monitoring hours and working conditions. Employees who harbor the perhaps foolish idea that by working hard and taking on greater responsibilities they can move up in the organization will instead be told to go home and relax.
Already, wage-and-hour lawsuits are a thriving hub of litigation, since the law sets up a retrospective guessing game as to whether or not exemption will be upheld: “Enterprising plaintiff attorneys have made hundreds of millions of dollars pursuing lawsuits on behalf of stockbrokers, mortgage loan officers and other white-collar professionals not normally associated with punch-the-clock, shop-floor labor.”
For years, some lawyers have been advising clients not to hand out company-paid cellphones to any workers who lack a lawful overtime exemption, lest a claim later be made that work was done on the phones during evenings and weekends. Where the law is particularly stringent about calculation of lunch breaks, as in California, some lawyers have advised employers to make it a firing offense to do any work during the allotted break.
Obama’s edict is anything but a done deal: it will first enter the slow and contentious Department of Labor regulatory process, and if the Senate turns Republican with this November’s election, the chances of stopping it in Congress will improve. Should it go into effect, however, it will sow widespread disruption in the business sector, deepen suspicion and polarization at the workplace, and frustrate ambitious individuals who willingly tackle long hours to rise into management ranks. Increasingly, Obama’s binge of executive orders and unilateral decrees to bypass Congress is coming to resemble a toddler’s destructive tantrum.
In an ideal world, governments would recognize the benefits of trade liberalization, and eliminate domestic tariffs on their own. In the real world, though, much of the tariff reduction process comes through international agreements between countries, which go something like this: We will agree to lower our tariffs if you agree to lower yours. Most people recognize that this is a silly way to do things, but in the end it leads to lower tariffs and it’s the only way to do so within existing political constraints, so we go along with it.
But it can be really painful to watch in action. Here’s an article in the FT about the U.S.-EU trade talks:
The US has accused the EU of abandoning a pledge to remove all tariffs applied to goods traded across the Atlantic, in the first substantive row to hit landmark trade negotiations between the two economies.
The EU and US last year launched a push to reach a Trans-Atlantic Trade and Investment Partnership billed as the world’s largest regional trade negotiation covering economies comprising almost half of the global economy.
Much of the focus of the discussions has been on bringing regulations in line to encourage more trade and on reducing other non-tariff barriers. But both sides had also pledged to seek to remove all tariffs on transatlantic trade, and in a sign of the difficult discussions to come the US has accused the EU of backing away from that goal.
In discussions this week in Brussels, EU officials have told their US counterparts that they plan to allow US beef, chicken and pork into the EU only under a quota system. The move amounts to a stick in the eye of US negotiators who face powerful agricultural lobbies at home and a Congress that is appearing ever more sceptical about the value of trade agreements.
It also follows a concerted effort by Karel De Gucht, the EU trade commissioner, to label the US’s original tariff offers tabled last month as less ambitious than the EU’s. The EU’s original offer would eliminate tariffs on 96 per cent of goods traded across the Atlantic while the US offer promised to wipe out tariffs on 88 per cent of goods.
US officials insist they plan to negotiate their offer upward and remain committed to the goal of eliminating all tariffs. However, EU officials, they say, have told their US counterparts that they will not eliminate tariffs on beef, chicken or pork and instead subject them to a sliding system of tariff-rate quotas.
At the end of all this, my hope is that most U.S. and EU tariffs will be eliminated. But watching everyone haggle about it, and demonstrate so much reluctance to do what is clearly in their interest, is not much fun.
There’s been a lot of confusion over what constitutes “accountability” in education lately. In response, representatives of the Cato Institute, Heritage Foundation, Friedman Foundation, Heartland Institute, and the Center for Education Reform have issued a joint open letter explaining why the best form of accountability is directly to parents.
To some, accountability means government-imposed standards and testing, like the Common Core State Standards, which advocates believe will ensure that every child receives at least a minimally acceptable education. Although well-intentioned, their faith is misplaced and their prescription is inimical to the most promising development in American education: parental choice.
True accountability comes not from top-down regulations but from parents financially empowered to exit schools that fail to meet their child’s needs. Parental choice, coupled with freedom for educators, creates the incentives and opportunities that spur quality. The compelled conformity fostered by centralized standards and tests stifles the very diversity that gives consumer choice its value.
This confusion about accountability is not limited just to tests. It even extends to personnel management. An example of this confusion comes to us today from a Republican legislator in Tennesee:
Rep. David Alexander, R-Winchester, a voucher critic, has filed an amendment that would tweak Gov. Bill Haslam’s voucher bill by requiring private schools that take public scholarship dollars to use the controversial Tennessee Evaluator Acceleration Model [TEAM] to grade its teachers.
The reason government schools need such heavy-handed evaluation systems is because tenure and union contracts make it nearly impossible to fire a teacher. According to the National Center for Education Statistics’ “School and Staffing Survey,” during the 2010-11 school year, only 1.9 percent of Tennessee teachers were dismissed or did not have their contracts renewed due to poor performance, up from 1.1 percent in 2007-08.
By contrast, private schools have greater flexibility than government schools over hiring, firing, and evaluating teachers. They’re also held directly accountable to parents, so there is market pressure not to retain teachers who perform poorly.
Moreover, the legislator’s argument that the government should force its evaluation system on private entities because they are accepting students who are publicly subsidized is patently absurd. It’s like arguing that all employees at grocery stores that accept food stamps or hospitals that accept Medicaid must be evaluated according to the same metrics as DMV employees.
State and local governments have the prerogative to devise whatever accountability measures they deem necessary to operate their schools and manage their employees. Private schools should continue to enjoy the freedom to set their own goals and to determine how best to measure their own performance and we should empower parents to choose the school that best meets their children’s needs.
Andrew J. Coulson
Over the years, countless reporters and even policy analysts have attempted to draw conclusions from changes in state SAT scores over time. That’s a mistake. Fluctuations in the SAT participation rate (the percentage of students actually taking the test), and in other state and student factors, are known to affect the scores.
But what if we could control for those confounding factors? As it happens, a pair of very sharp education statisticians (Mark Dynarski and Philip Gleason) revealed a way of doing just this—and of validating their results—back in 1993. In a new technical paper I’ve released this week, I extend and improve on their methods and apply them to a much larger range of years. The result is a set of adjusted SAT scores for every state reaching back to 1972. Vetted against scores from NAEP tests that are representative of the entire student populations of each state (but that only reach back to the 1990s), these adjusted SAT scores offer reasonable estimates of actual changes in states’ average level of SAT performance.
The paper linked above reveals only the methods by which these adjusted SAT scores can be computed, but next week Cato will publish a new policy paper and Web page presenting 100 charts—two for each state—illustraing the results. How has your state’s academic performance changed over the past two generations? Stay tuned to find out…