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Hot Air About Cold Air

Cato Op-Eds - Thu, 01/16/2014 - 17:36

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.”

Last summer, we predicted that come this winter, any type of severe weather event was going to be linked to pernicious industrial activity (via global warming) through a new mechanism that had become a media darling—the loss of late summer/early fall Arctic sea ice leading to more persistent patterns in the jet stream. These are known as “blocking” patterns, which generally means that the same type of weather (usually somewhat extremish) hangs around longer than usual.

This global-warming-leading-to-more-extreme-winter-weather mechanism has been presented in several recent papers, perhaps the most noteworthy of which was a 2012 publication by Jennifer Francis and Stephen Vavrus, which was the subject of one of our blog posts last summer. We noted then how their idea ran counter to much of the extant literature of the topic as well as a host of other newly published papers investigating historical jet stream patterns.

After running through a list of observations compiled from the scientific literature countering the Francis and Vavrus explanation of things, we nevertheless wondered:

It’ll be interesting to see during this upcoming winter season how often the press—which seems intent on seeking to relate all bad weather events to anthropogenic global warming—turns to the Francis and Vavrus explanation of winter weather events, and whether or not the growing body of new and conflicting science is ever brought up.

We didn’t have to wait long. After a couple of early winter southward Arctic air excursions, the familiar and benign-sounding “jet stream” had become the “polar vortex”[1] which “sucked in” the United States. Of course, the U.S. being sucked into a polar vortex was part and parcel of what was to be expected from global warming.

Since we had predicted this action/reaction, we weren’t terribly surprised.

What did surprise us (although perhaps it shouldn’t have) is that the White House joined in the polar vortex horror show and released a video in which John Holdren, the  President’s Science Advisor—arguably the highest ranking “scientist” in the U.S.—linked the frigid air to global warming:

The Polar Vortex Explained in 2 Minutes

In the video, Holdren boldly stated:

 …a growing body of evidence suggests that kind of extreme cold being experienced by much of the United States as we speak is a pattern that we can expect to see with increasing frequency as global warming continues…

It seems that Holdren neither keeps up with our writings at Cato nor the scientific literature on the topic.

While perhaps it could be argued that Holdren’s statement is not an outright lie, it is, at its very best, a half-truth and even a stretch at that. For in fact, there is a larger and faster growing body of evidence that directly disputes Holdren’s contention.

In addition to the evidence that we reported on here and here, a couple of brand new papers just hit the scientific journals this month that emphatically reject the hypothesis that global warming is leading to more blocking patterns in the jet stream (and accompanying severe weather outbreaks across the U.S.).

The first paper is a modeling paper by a team of U.K. scientists led by Giacomo Masato from the University of Reading. Masato and his colleagues looked at how the magnitude and frequency of atmospheric blocking events in the Atlantic-Europe region is projected to change in the future according to four climate models which the authors claim match the observed characteristics of blocking events in this region pretty well. What they found was completely contradictory to Holdren’s claim. While the researchers did note a model-projected small future increase in the frequency of blocking patterns over the Atlantic (the ones which impact the weather in the U.S.), they found that the both the strength of the blocking events as well as the associated surface temperature anomalies over the continental U.S. were considerably moderated. In other words, global warming was expected to make “polar vortex” associated cold outbreaks less cold.

The second paper is by a research team led by Colorado State University’s Elizabeth Barnes. In their paper “Exploring recent trends in Northern Hemisphere blocking,” Barnes and colleagues used various meteorological definitions of “blocking” along with various datasets of atmospheric conditions to assess whether or not there have been any trends in the frequency of blocking events that could be tied to changes in global warming and/or the declines in Arctic sea ice.

They found no such associations.

From their conclusions:

[T]he link between recent Arctic warming and increased Northern Hemisphere blocking is currently not supported by observations. While Arctic sea ice experienced unprecedented losses in recent years, blocking frequencies in these years do not appear exceptional, falling well within their historically observed range. The large variability of blocking occurrence, on both inter-annual and decadal time scales, underscores the difficulty in separating any potentially forced response from natural variability.

In other words natural variability dominates the observed record making it impossible to detect any human-caused global warming signal even if one were to exist (which there is no proof of).

So, the most recent science shows 1) no observed relationship between global warming and winter severe weather outbreaks and 2) future “polar vortex”-associated cold outbreaks are projected to mollify—yet the White House prepares a special video proclaiming the opposite with the intent to spread climate alarm.

Full scientific disclosure in matters pertaining to global warming is not a characteristic that we have come to expect with this Administration.

References:

Barnes, E., et al., 2014. Exploring recent trends in Northern Hemisphere blocking. Geophysical Research Letters, doi:10.1002/2013GL058745.

Francis, J. A. and S. J. Vavrus, 2012: Evidence linking Arctic amplification to extreme weather in mid-latitudes. Geophysical Research Letters, 39, doi:10.1029/2012GL051000.

Masato, G., T. Woollings, and B.J. Hoskins, 2014. Structure and impact of atmospheric blocking over the Euro-Atlantic region in present day and future simulations. Geophysical Research Letters, doi:10.1002/2013GL058570.

[1] For what it’s worth, there’s been two polar vortices (north and south) on planet earth ever since it acquired an atmosphere and maintains rotation. 

Categories: Policy Institutes

How's That Oversight Coming Along?

Cato Op-Eds - Thu, 01/16/2014 - 15:41

Jim Harper

One of the claims made by defenders of NSA spying is that it’s overseen and approved by all three branches of the federal government.

Computer security expert Bruce Schneier provides some insight into how well congressional oversight is working in a short blog post entitled: “Today I Briefed Congress on the NSA.”

This morning I spent an hour in a closed room with six Members of Congress: Rep. Logfren, Rep. Sensenbrenner, Rep. Scott, Rep. Goodlate, Rep Thompson, and Rep. Amash. No staffers, no public: just them. Lofgren asked me to brief her and a few Representatives on the NSA. She said that the NSA wasn’t forthcoming about their activities, and they wanted me – as someone with access to the Snowden documents – to explain to them what the NSA was doing.

Many members of Congress have been derelict for years in not overseeing the National Security Agency. Now some members of Congress are asking questions, and they’re being stonewalled.

It’s the government so…

I suggested that we hold this meeting in a SCIF, because they wanted me to talk about top secret documents that had not been made public. The problem is that I, as someone without a clearance, would not be allowed into the SCIF.

Randy Barnett and I made the case last fall that the panels of judges who approve domestic spying under the Foreign Intelligence Surveillance Act should not be regarded as legitimate courts. Their use to dispose of Americans’ rights violates due process.

And the executive branch? Here’s President Obama: “I mean, part of the problem here is we get these through the press and then I’ve got to go back and find out what’s going on…”

How’s that tri-partite oversight coming along?

Categories: Policy Institutes

Fordham's Confusion Over Means and Ends

Cato Op-Eds - Thu, 01/16/2014 - 12:50

Jason Bedrick

On Tuesday, the Fordham Institute released a “toolkit” proposing that all private schools accepting students participating in school choice programs be required to administer the state test. Low-performing schools would be forbidden to participate in the school choice program. As I explained then, that would de facto entail forcing almost all private schools into the Common Core regime, thereby stifling innovation and diversity. The Friedman Foundation pointed to a recent study showing how parents hold private schools accountable already. Matt Ladner highlighted Fordham’s own previous research that exposed state accountability measures as fradulant “illusions.” Greg Forster cast a gimlet eye on Fordham’s assurance that existing private schools don’t really mind the state tests:

Once again, Fordham is operating out of a top-down, anti-entrepreneurial mindset. Existing private schools are not the voice of entrepreneurial innovation. They are the rump left behind by the crowding out of a real private school marketplace; they are niche providers who have found a way to make a cozy go of it in the nooks and crannies left behind by the state monopoly. They are protecting their turf against innovators just as much as the state monopoly.

Milton once used the analogy of hot dog vendors. If you put a “free” government hot dog vendor on every street corner, the real hot dog vendors will all vanish. The same has happened to private schools. If we extend the analogy, we could say that a few hot dog vendors might survive by catering to niche markets – maybe the government hot dog stands can’t sell kosher hot dogs because that would be entanglement with religion. But the niche vendors would not be representative of all that is possible in the field of hot dog vending.

And the private schools that don’t participate in choice programs are probably the least entrepreneurial. Notice, for example, that their top complaint is that choice isn’t universal. Why would that prevent them from participating in choice programs? Wouldn’t they want to reach out and serve the kids they can serve, even as they advocate for expansion of the programs to serve others? The private schools participating in choice programs are doing so; they may not be paragons of entrepreneurship, but they are at least entrepreneurial enough to want to help as many kids as they can. The demand for bigger choice payments is also not a sign of hungry innovation on their part (even if the choice payments are paltry in may places).

In response, Fordham’s new president, Michael Petrilli, acknowledges (some of) these concerns, but oddly claims that since we don’t share his proposed government solution, we also must not share his concern about poorly performing private schools. It’s as though Petrilli proposes dousing a burning building with gasoline but when others object that this is a bad idea, he accuses them of thinking that the burning building is a not really a problem.

Sure, as Petrilli notes, there are poorly performing private schools just as there are poorly performing government schools. The question is which system is more likely to reduce the number of bad schools and increase the number of good ones: a system of uniform accountability to the government or a diverse and innovative system where accountability is directly to parents? We believe that the evidence supports the latter and demonstrated why the evidence Fordham relies on lies somewhere between flimsy and non-existent.

Petrilli has at least shown a potential willingness to back down from the worst elements of his proposal:

Maybe the tests that voucher students take need not be the state tests so long as they’re solid measures of achievement. Perhaps we need to let schools point to alternative measures of student outcomes before they are kicked out of choice programs. Possibly we need an accountability regime that’s completely separate from that which governs the public schools. Such compromises might help to ensure that the educational diversity of the private school marketplace isn’t inadvertently diminished.

Unfortunately, he still clings to the notion that what we have now is somehow a “market” in education, concluding: “But the answer cannot be ‘let the market figure it out.’ Because it hasn’t, and it won’t—and somebody must.” But as Forster noted, a system where 90 percent of the “market” is consumed by the “free” government schools is not really a market. If we really want more accountability, then we need more choices. Even Petrilli admits that sometimes families choose a poorly performing private school because it’s the only alternative to a worse performing (or unsafe) government school. Eliminating that alternative by forbidding the private school from participating in a school choice program won’t do any good for those low-income families who will then be shuffled back to the government school.

Instead of government-induced conformity, let’s push for broader education choice programs that give the private schools the space to innovate.

Categories: Policy Institutes

What the DEA and Drug Traffickers Have in Common

Cato Op-Eds - Thu, 01/16/2014 - 11:48

Jeffrey A. Miron

In today’s WaPo, the DEA’s Chief of Operations James L. Capra claims that: 

the movement to decriminalize the sale of pot in the United States will have severe consequences. … Every part of the world where this has been tried, it has failed time and time again.

Capra’s assertion is so ignorant of the facts that it merits little comment; instead, read Glenn Greenwald’s Cato study on decriminalization in Portugal, which shows just the opposite of Capra’s claim.

Capra’s statement about “severe consequences” is not entirely wrong, however; legalization will put thousands of DEA and other law enforcement officials out of work! Perhaps, therefore, the government should outlaw food, clothing, and shelter; then we could emply billions in the attempt to enforce those laws.

An interesting side note is that, like law enforcement officials, drug traffickers also fear legalization. See minute 4:00 of this video.

 

Categories: Policy Institutes

Egypt’s Shambolic Constitutional Process

Cato Op-Eds - Thu, 01/16/2014 - 11:45

Dalibor Rohac

Don’t let yourself be fooled by the overwhelming approval of the new Egyptian constitution in the referendum held earlier this week. While, according to preliminary results, the vast majority of roughly 37 percent of Egyptians who showed up at the polls backed the proposal, very little about the document itself or about the process through which it has come about is consistent with the idea of liberal democracy and limited government. Yesterday’s Bloomberg View editorial summarizes all one needs to know about the new constitution:

The armed forces would for at least the next eight years be independent of civilian control, including over their budget, as they were under former President Hosni Mubarak, himself an air force commander. Military courts would remain autonomous and would have jurisdiction over civilians in many instances. The hated police would also get greater independence, while the Supreme Court would be able to decide its size and membership for itself.

Neither should there be any illusions about the events leading to the adoption of the document. The referendum followed months of a deliberate crackdown on the opposition and disbanding of the largest political force in the country – not to speak of the arrests of activists of the ‘no’ campaign.

In short, Egypt seems to be coming full circle to where it was before the events of the Arab Spring, particularly if General Abdel Fattah el-Sisi announces his candidature for the country’s highest office. The question is how long the Egyptians are willing to put up with it.

As a side note, the constitutional process in Tunisia looks much more encouraging, although as Emmanuel Martin and I argue here, the new constitution is unlikely to be a an impetus for the badly needed economic reforms.

Categories: Policy Institutes

What to Look for in the Upcoming Trade Policy Debate

Cato Op-Eds - Wed, 01/15/2014 - 12:50

K. William Watson

The most important piece of trade legislation Congress has dealt with in years was introduced in the House and Senate last week. The “Bipartisan Congressional Trade Priorities Act of 2014” sets out the parameters for renewing trade promotion authority (TPA), originally known as “fast track,” in order to ease eventual passage of the Trans-Pacific Partnership and other agreements through Congress. There will be a lot of debate in the coming months about what U.S. trade policy should look like, and this TPA bill will do a lot to establish the agenda.

The new bill largely mirrors the last TPA grant in 2002.  The basic idea of fast track is that Congress agrees to hold an up-or-down vote on any trade agreement submitted by the president, while the president agrees to adopt a series of negotiating objectives laid out by Congress. 

I’ve explained before why I think TPA is not necessary right now to get agreements through Congress and why it could even make the TPP negotiations more difficult. However, that argument is temporarily moot since this TPA bill is on the table and will apply not only to the TPP but to the U.S.-EU trade agreement and any World Trade Organzation negotiations for the next four years. 

Defeat of this bill could quite possibly kill any chance the president has to conclude trade agreements before the end of his term. Also, the negotiating objectives included in the new bill are not as bad as I had feared.

At this point, we should be talking about what’s in the new TPA bill and how it might change as the debate heats up.

For starters, the bill’s weak language on currency manipulation is particularly encouraging. American automakers and their allies among House Democrats have made “misaligned” foreign currency their number one trade issue and have insisted on very strong language in TPA. The administration, however, has stated that it does not want the issue addressed in the TPP agreement, as other countries in the negotiations are strongly opposed to the inclusion of currency rules. 

The current text of the TPA bill calls out currency manipulation as a problem but leaves the president a lot of discretion. The political cost of that discretion has been a complete lack of support from House Democrats. Dan Ikenson has explained the troubling politics of this situation and calls for the president to take a tougher stance against Detroit if he wants to make progress with his own trade agenda.

On labor and the environment, the new TPA bill maintains the status quo in U.S. trade policy. The language requiring our trade partners to abide by specific international labor and environmental agreements was not included in the 2002 TPA but reflects a compromise reached in 2007, when Democrats took control of the House. Despite the fact that Republicans have regained their majority, many were worried that the new TPA would impose even stronger objectives on labor and environmental requirements. 

If support from House Democrats is already lost because of the currency issue, Republicans may want to consider whether there’s any room to roll back the objectives on labor and environment. Free trade should not be contingent on the adoption of foreign labor and environmental standards. As Dan Griswold succinctly explained when Congress was debating another fast track bill fifteen years ago:

This debate is not about worker rights or a cleaner environment. It’s about the freedom of people in America and abroad to engage in mutually beneficial trade. In the real world, the international standards and trade sanctions that opponents of fast-track insist upon could in fact slow progress toward better living standards in poor countries.

Now fast track imposes those very same standards and sanctions, but opponents are still not satisfied. Perhaps this Congress in 2014 is incapable of imbuing the trade agenda with much-needed faith in the free market, but there’s little to lose from trying.

The new TPA bill also continues the past policy of promoting strong intellectual property rules through trade agreements. This is an area where the United States has to expend a considerable amount of negotiating capital to get marginal changes in foreign IP laws that benefit a handful of U.S. industries. 

IP has also become a focus of domestic opposition to the U.S. trade agenda, as copyright and patent reform advocates recognize the dangers of locking-in bad policy through international agreements. Like labor and environmental targets, the IP component of the trade agenda is an issue where congressional consensus exists despite a pressing need for serious debate.

Finally, some separate trade initiatives may get tied-in to the passage of TPA.

Democrats are certain to insist on an extension of the Trade Adjustment Assistance program before supporting TPA. Trade Adjustment Assistance provides greater welfare benefits to people who can tie their job loss to import competition. It is an entitlement program whose primary purpose is to demonize trade while assuaging anti-trade constituencies. In truth, these jobs are lost due to economic growth and trade is only one of many ways to ensure a dynamic and competitive economy.

Also, the Generalized System of Preferences program that grants tariff-free treatment to imports from poor countries could be extended in conjunction with passage of TPA. The program, though it has its faults, helps many consumers and producers in the United States and creates economic opportunity for people who desperately need it. Despite being generally popular in Congress, the program expired last year.

TPA offers Congress an opportunity both to support and to shape the U.S. trade agenda. Perhaps the current set of negotiating objectives is the best that can be done with this particular Congress this year.  But, this is a good time to have a debate about the goals of U.S. trade policy: to consider ways to make it better and, especially, to keep it from getting worse.

Categories: Policy Institutes

Does Banning Walmart Help Mom-and-Pop Retailers?

Cato Op-Eds - Wed, 01/15/2014 - 12:33

Jeffrey A. Miron

As “Big-Box” retailers like Walmart have proflierated in recent years, “Mom-and-Pop” retailers have asked local governments to ban or limit Big Boxes, arguing that Walmart and their ilk drive small, independent retailers out of business.

One response to this complaint is, “Too bad.”  Walmart’s large size allows it to operate efficiently and offer low prices; independents are less efficient and so should get driven out of business.  Independents may be better than Big Boxes at service, convenience, specialty items, and “personality,” so many will survive despite nearby Big Boxes.  But if some fail and exit, that is what economic efficiency demands.

A different response is that, even if Big Box entry hurts independents, laws that limit Big Boxes do not necessarily help independents.  That is precisely the conclusion of new research by Raffaella Sadun (Harvard Business School).  Analyzing entry regulation in the United Kingdom, she finds that

independent retailers were actually harmed by the creation of entry barriers against large stores. Instead of simply reducing the number of new large stores entering a market, the entry barriers created the incentive for large retail chains to invest in smaller and more centrally located formats, which competed more directly with independents and accelerated their decline.

Thus even if policymakers want to protect small retailers, the “treatment” (government intervention) can be worse than the “disease” (competition)!

Categories: Policy Institutes

Minimum Wage and Unemployment

Cato Op-Eds - Wed, 01/15/2014 - 10:11

William Poole

Seventy-five economists, including seven Nobel winners, have signed a letter advocating an increase in the minimum wage. The letter was preceded by a New York Times editorial on January 2 making the same argument. I assume that there will be an opposing letter shortly, probably also including some Nobel signers. These minimum wage campaigns arise from time to time; this exchange is old hat, but worth reviewing briefly.

The Economics

The new letter claims that “… the weight of evidence now show[s] that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers … .” Relatively few op-ed readers are economists, but anyone interested in the evidence should consider a 2007 National Bureau of Economic Research (NBER) paper by David Neumark and William Wascher, “Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research.” Here is the abstract:

We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few - if any - studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.

It is not hard to explain to the noneconomist why some studies suggest no effect of the minimum wage on employment. In the past, changes in the minimum wage have been relatively small. Trying to sort out the effects of the increase from everything else going on requires high-powered statistics, and even then the effects can be buried by a host of other simultaneous disturbances and influences.

So, consider the following common-sense thought experiment: Suppose Congress were to enact a minimum wage $50 higher than the current one of $7.25 per hour. Would a minimum of $57.25 reduce employment? I know of no economist who would assert a zero effect in this case, and recommend that readers ask their economist friends about this thought experiment. Assume that the estimate is that a minimum of $57.25 would reduce employment by 100,000. The actual number would be far higher but 100,000 will do for this thought experiment. Now, consider several other possible increases of less than $50. The larger of these increases would have substantial effects, the smaller ones smaller effects.

But is there reason to believe that a minimum of $10 would have no effect? I have never seen a convincing argument to justify that belief. If you accept as a fact that a minimum wage of $57.25 would reduce employment, and you accept as a fact that some workers are currently paid $7.25 per hour, then logic compels you to believe that a small increase in the minimum wage above $7.25 will have at least a small negative effect on employment.

The only escape from this logic is to believe that there is a discontinuity in the relationship between the minimum wage and employment. No one has offered evidence that there is a discontinuity at a certain minimum wage such that a minimum above that has an effect and one below does not.

A wage above $7.25 is readily available to anyone willing to move to low-unemployment area such as North Dakota. Instead of calling for a higher federal minimum wage, why not call for federal assistance helping workers to move to labor-short states?

The Ethics of a Minimum Wage Increase

If you accept that a small increase in the minimum wage will have some small negative effect on employment, then you need to consider the nature of the trade-off involved. Those who remain employed—and most workers will remain employed if the minimum wage increase is small—will enjoy the benefits of the higher wage and will thank the politicians who gave it to them. Those who lose employment will, most likely, not even realize that the minimum wage is the cause. Why? Because most firms will adjust by letting attrition run down staff size. Most minimum wage jobs are in industries with high turnover. Thus, few workers are fired; instead, some are not hired to replace workers turning over. Workers not hired are unlikely to have any idea as to the reason.

Who are the workers not hired? They are the least skilled, most disadvantaged members of society. The bottom line is that those who advocate an increase in the minimum wage are willing to trade the higher wages of those who remain employed for reduced employment opportunities for the least skilled.

I finish with a personal story. I remember my father telling me of an effect from the minimum wage increase from $1.00 to $1.15 effective September 1961. The same legislation scheduled a further increase to $1.25 in September 1963. Dad described how the DuPont Company at that point decided to automate elevators in its office building in Wilmington, Delaware. The old elevators worked fine, but required an operator. Within a short time, all the elevators were automated and the operators of the old ones had no jobs.

Today, even modest increases in the minimum wage will have similar effects. For example, fast-food restaurants will replace order takers with electronic order stations that accept cash and credit cards for payment and relay the orders directly to the kitchen.

I wish it were possible for today’s long-term unemployed to plead with the economists and editorial writers not to advocate a higher minimum wage. Will those advocating a higher minimum wage be willing meet face to face with disadvantaged members of society, who are willing and able to work, and explain why their employment needs to be sacrificed for higher wages for those who remain employed?

 

Categories: Policy Institutes

North Korean Politics as Blood Sport: China May be a Target Too

Cato Op-Eds - Tue, 01/14/2014 - 16:54

Doug Bandow

North Korea has never been an easy ally for the People’s Republic of China. With the execution of Jang Song-taek, Kim Jong-un’s uncle and supposed mentor, Beijing’s uncertain clout in Pyongyang is at risk. 

“Dear Leader” Kim Jong-il has been dead barely two years, but his son appears to have turned politics there into blood sport. While family members, including Jang under both Kim Il-sung and Kim Jong-il, were commonly sidelined, they never were publicly executed. 

Now the game has changed. Although Kim appears to be in firm control, the circumstances are extraordinary. A quick execution is as much a sign of weakness as strength, suggesting the need to dispatch a dangerous rival who might gather support. Undertaking a broad and deadly purge creates not only uncertainty but desperation, which might spark unexpected resistance.

As I recently wrote in US-China Focus:

The most obvious concern over the DPRK concerns a foreign policy which has gotten more erratic and confrontational since Kim Jong-il’s death. Kim regularly employed brinkmanship as policy, but always seemed to know just when to stop. Kim fils has demonstrated no such limits. His latest threat of war against South Korea went by fax to Seoul. The possibility of mistake or miscalculation seems much higher.

There also is rising doubt as to the PRC’s ability to offer a moderating influence on Pyongyang. China’s relationship with the DPRK never has been easy. Still, Chinese energy and food aid has been essential, and most recently Chinese investment has provided the DPRK an economic lifeline. 

There has been a recent hardening of attitudes in the PRC. Nevertheless, until now the North continued to seek support from China. But now Jang is gone.

Jang was widely thought to play an important role in economic affairs and place greater emphasis on economic development, which probably meant support for economic liberalization.

Moreover, Jang had established a strong relationship with Chinese officials. Bilateral deal-making seemed to accelerate in Kim Jong-il’s final years, when Jang played an important leadership role. In 2012, the latter headed a large delegation which discussed expanding special investment zones with Beijing’s support. Many North Koreans linked to Jang were in business in the PRC. 

It is widely presumed that Jang was removed for political reasons. Yet the bill of particulars included several economic charges.

For instance, Jang was accused of having “seriously obstructed the nation’s economic affairs and the improvement of the standard of people’s living.”  Even more telling, Jang’s indictment includes the charge of “selling of precious resources of the country at cheap prices” and having “made no scruple of committing such act of treachery in May last as selling off the land of the Rason economic and trade zone to a foreign country for a period of five decades under the pretext of paying those debts.” Moreover, corruption was charged involving a 2011 project at Rason. 

Of course, China is the “foreign country” cited.

The charges could merely reflect a “kitchen sink” quality, but they seem too specific for Beijing’s comfort. So far nothing has obviously changed. New contracts have been signed and one North Korean economic official announced “It’s just the same as before.” Still, inertia might continue to govern, with change to come. Zhu Feng of Peking University observed: “the negative impact must be tremendous.”

Chinese with whom I spoke in early December admitted that they could only speculate. But if the North really is targeting Beijing along with Jang, relations could deteriorate quickly.

North Korea’s urge to purge should prompt rethinking in Beijing about the North Korea “problem.” The PRC should explore options with South Korea and America, including taking a much tougher policy toward the DPRK in return for allied attention to Chinese concerns over economic costs, refugee flows, and security issues. The North’s neighbors should work together to ensure a stable and peaceful future no matter what.

Categories: Policy Institutes

Orange Revolution Redux in the Ukraine: America Should Stay Out

Cato Op-Eds - Tue, 01/14/2014 - 14:23

Doug Bandow

Nine years after the so-called Orange Revolution against electoral fraud, opponents of Ukrainian President Viktor Yanukovich hope to stage a repeat.  But the issue today, whether Kiev aligns economically with Europe or Russia, doesn’t much concern the U.S. 

In 2004 the Orange Revolution helped deliver the presidency to Western-favorite Viktor Yushchenko, a disastrous incompetent.  Yanukovich narrowly won the 2009 race. 

He has been negotiating over an Association Agreement with the European Union.  However, Brussels demanded political concessions, most importantly the freeing of opposition leader Yulia Tymoshenko, who had been prosecuted by Yanukovich’s government, and refused to offer cash assistance. 

At the same time Vladimir Putin pushed Kiev to forswear the EU and join the Moscow-led Customs Union.  And Moscow brought cash to the table.  To the consternation of Brussels, last month the Yanukovich government signed an accord with Russia—though without joining the CU.

Brussels and Washington were shocked, shocked.  New German Foreign Minister Frank-Walter Steinmeier said “It is utterly scandalous how Russia used Ukraine’s economic plight for its own ends.”

Sen. John McCain visited Kiev, where he complained that “President Putin has pulled out all the stops to coerce, intimidate and threaten Ukraine away from Europe.”  Former Undersecretary of State Paula Dobriansky demanded “a broad range of measures, including WTO sanctions, Russian expulsion from the Group of Eight and even a boycott of the 2014 Winter Olympics by political leaders, unless Moscow abandons its strong-arm tactics toward Kiev.” 

The hypocrisy is breathtaking. 

After all, the EU was pushing Kiev into making political concessions and choosing Europe over Russia.  In return, the Europeans offered the prospect of economic gain through increased trade.  After Kiev said no European officials said billions in grants and loans would have been forthcoming had Ukraine signed with the EU. 

As I point out in my latest Forbes online column:

Of course, Washington goes not one hour, let alone one day, without attempting to bribe or coerce another government to do something.  The American secretary of state circles the globe constantly lecturing other nations how to behave.  Since the end of the Cold War the U.S. has been the warrior state, routinely using military means to achieve its ends.  Indeed, Sen. McCain has variously supported war against Iran, Iraq, Libya, North Korea, Serbia, and Syria.

Russia is guilty of heavy-handedness?

Yes, the West offers a better, freer path.  Which is why protests have broken out over Ukraine’s abandonment of the EU.  It’s fair for Washington to wish the critics well and warn Kiev against a violent response. 

But why should Brussels or Washington meddle in the decision itself?  The Wall Street Journal insisted that the Obama administration “stand up for America’s interests and values.”  But what are they in Ukraine? 

Assistant Secretary of State for European Affairs Victoria Nuland declared at the opposition rally in Kiev:  “the U.S. stands with you in your search for justice, for human dignity and security, for economic health, and the European future that you have chosen and deserve.” 

Washington should endorse justice and human dignity, which justifies support for honest elections and warnings against police brutality.  But Ukraine’s “economic health” and “European future” aren’t American values and are barely American interests.  How would Americans feel if Ukrainian politicians showed up at a Republican rally in Washington vowing to stand with protestors in the name of Ukrainian “interests and values”?

A stable, democratic Ukraine would be benefit all.  However, Russia’s activities in Ukraine do not threaten the U.S.  In contrast, bringing NATO up to Russia’s southern border could not help but be seen as threatening by Moscow—imagine the Warsaw Pact expanding to Mexico. 

The West should acknowledge legitimate Russian interests in Ukraine, while offering new incentives for Kiev to look westward.  Moreover, Europe should seek compromise with Moscow.  Ukraine has proposed creation of “a tripartite commission to handle complex issues,” including greater links between the EU and the Russian-lead CU, which might reduce Moscow’s pressure on Kiev.

If Ukraine wants to look east, so be it.  Even with Russia’s money Yanukovich’s reelection prospects are weak and Ukraine is likely to eventually join the West.  If not, the country never was the EU’s or Washington’s to lose.

Categories: Policy Institutes

The Minimum Wage: Immoral and Inefficient

Cato Op-Eds - Tue, 01/14/2014 - 12:47

Doug Bandow

Democratic politicians are desperate to make up for ObamaCare’s disastrous roll-out.  Thirteen states are increasing their minimums this year, and some Democrats believe raising the national minimum wage is a winning campaign issue for November.

There’s no doubt that raising the minimum wage would reduce employment and slow economic growth.  Worse, government wage-setting is immoral.  It is unfair and wrong for politicians to posture as philanthropists while forcing other people to pay higher salaries.

The first question is the minimum’s impact on employment and price levels.  The answer is clear:  the cost of higher wages will be borne in varying degrees by customers, workers, and investors.  As I wrote in the American Spectator:

as Nobel Laureate Milton Friedman observed, there ain’t no such thing as a free lunch.  Arbitrarily raising the cost of labor—there is no principled basis for choosing any particular government minimum—will increase prices, reduce investor returns, and cut employment levels.

Most vulnerable are workers with the least education, experience, and skills, who tend to be young and minorities.  Forcing up wages will not only reduce overall employment, but shift jobs toward higher-skilled workers who are more productive and thus warrant higher pay.  The minimum wage also encourages mechanization, since it makes economic sense for companies to invest more in machines to spend less on labor. 

In effect, the minimum wage is a tax on labor-intensive companies.  No surprise, then, as explained by Mark Wilson of Applied Economic Strategies in a Cato Institute Policy Analysis:  “The main finding of economic theory and empirical research over the past 70 years is that minimum wage increases tend to reduce employment.” 

The strangest claim may come from the Financial Times, which editorialized:  “a higher wage would stimulate the economy without adding a dime to federal spending.”  However, to the extent raising the minimum increases the total amount of wages, it does so by redistributing the money from other people, who end up with less to spend on consumption. 

No doubt, the employment impact of a small increase, especially if salary levels have been rising, would be modest, which explains recent economic studies demonstrating lesser job loss.  But the less significant the increase, the less meaningful any potential benefit.

In contrast, those who claim that raising today’s minimum would have no impact on employer behavior fail to demonstrate the courage of their convictions.  If government can hike wages without harm, why stop at $10 or $15 an hour?  Why not go to $1000 or $1500?  Then everyone in America could be rich at no cost to anyone!

Yet there is an even more fundamental issue.  The minimum wage is the modern perversion of compassion into coercion:  I believe there is a moral imperative for you to earn more, so I force someone else to pay more.  I feel moral while sticking someone else with the bill. 

However, if “we,” the citizens of America, believe people should earn more, then “we,” the citizens of America, not a few labor intensive businesses, should pay for those above-market wages.  Opposing the minimum wage is simple fairness.

While many advocates no doubt are true believers, for some fairness talk is pure twaddle.   John Cassidy wrote in the New Yorker:  “In the current political environment, there is little chance of pushing through another hike in income-support programs.  Raising the minimum wage pushes the burden onto corporations and consumers.” 

Washington should be systematically reducing, not increasing, the cost of doing business.  Yet the regulatory-happy Obama Administration has been imposing multiple burdens on commerce, starting with ObamaCare. 

The next time someone rises to support arbitrary government wage-setting, they should be asked what they are doing personally to help the economically disadvantaged.  Raiding the wallets of others does not count as compassion

Categories: Policy Institutes

Unanimous SCOTUS Decides Two Civil Procedure Cases

Cato Op-Eds - Tue, 01/14/2014 - 12:43

Walter Olson

This morning the U.S. Supreme Court handed down two unanimous cases correcting appeals courts on issues of civil procedure. In Mississippi ex rel. Hood v. AU Optronics, it reversed a Fifth Circuit ruling that a consumer lawsuit by the state of Mississippi was enough like a class action that it should be heard in federal rather than state court under the procedures specified by the Class Action Fairness Act. In Daimler AG v. Bauman et al, it reversed a Ninth Circuit ruling that because worldwide auto giant Daimler has operations in California, it can properly be sued in that state over alleged misconduct in Argentina that has nothing in particular to do with its California operations. 

Neither result is even remotely surprising (and Cato did not file amicus briefs in either case). In the AU Optronics case, CAFA’s plain language supported the state of Mississippi’s position, and arguments that removal was more consistent with the law’s spirit added up to a plea for the business community (which identifies with the defendant side here) to get a better deal than it managed to get during the negotiations that led to the law’s passage. In the Daimler case, the Court again confirmed, as in the Kiobel v. Royal Dutch Petroleum case discussed at length by Kenneth Anderson in the latest Cato Supreme Court Review, that it is deeply out of sympathy with “universal jurisdiction” notions beloved in some parts of legal academia and the world of activist NGOs (non-governmental organizations), under which labeling something a “human rights” matter should open the way for suit to be brought over it in more or less any court anyplace.

The cases remind us that despite the various attacks on the Court as result-oriented and ideology-driven, much of its work consists simply of trying to keep the law on a logically coherent and predictable course. Anti-business activists couldn’t win a single vote for their supposed human rights claims in Daimler, just as their more radical claims had unanimously flopped in Kiobel.  By the same token the organized business community couldn’t win a single Justice in AU Optronics, though it put a real effort into defending its Fifth Circuit victory. It’s long past time for Sen. Elizabeth Warren (D-Mass.) to apologize for her demagogic portrayal of the Court as headed toward a condition as “wholly owned subsidiary of Big Business”.

 

 

Categories: Policy Institutes

FCC to Make Internet Service a Public Utility

Cato Op-Eds - Tue, 01/14/2014 - 11:55

Jim Harper

Do you want your Internet service provider to operate like the water company or the electric company? Internet access services will be more like these leaden public utilities if the Federal Communications Commission tries one of the more likely workarounds to a D.C. Circuit Court decision today that restricts its authority to regulate.

The story is long and involved—read it in the court’s opinion if you like—but the FCC has sought for years now to regulate broadband Internet service providers something like it used to regulate AT&T, with government mandated terms of service if not tarriffs and price controls. This doesn’t fit the technical environment of the Internet, which allows for diverse business models. Companies that experiment with network management, pricing, internal subsidy, and so on can find the configurations that serve widely varying consumers and their differing Internet needs the best. If government believes in fast lanes and slow lanes, surely Internet service providers could optimize service for movie delivery, video calling, and such, while email arrives a little less speedily.

The court found that the FCC’s plans don’t fit with its classification some years ago of broadband as an “information service,” subject to the light-touch regulation under Title I of the Communications Act. Title II, which applies to “telecommunications carriers,” allows common carrier regulation of the type the FCC is trying to impose. So watch for the FCC to conveniently change its mind and begin pushing for treatment of broadband once again as a “telecommunications service.” This is so it can have more control over the business decisions made by Internet service providers.

We made the case more than five years ago that “ ‘Net neutrality” is a good engineering principle, but it shouldn’t be a legal mandate. Technology and markets surpassed any need for command-and-control regulation in this area long ago. But regulators don’t give up power without a fight. To maintain power, the FCC may try to make Internet service a public utility.

Categories: Policy Institutes

Would Anti-Marijuana Activists Also Try to Keep Alcohol Illegal?

Cato Op-Eds - Tue, 01/14/2014 - 11:30

David Boaz

After I read the latest of Mitchell S. Rosenthal’s tirades against drug legalization in the Wall Street Journal, I must have fallen asleep and dreamed of a world in which marijuana is legal and alcohol is illegal. Not one of Coleridge’s opium-induced dreams, alas, so I didn’t wake up to write a classic poem. But I did wonder what op-ed the Journal might publish in such a world if people began to agitate for the freedom to drink alcohol. With the help of Matthew LaCorte, I discovered you wouldn’t have to change many words. I imagine it might go something like this: 

Let’s Not Kid Ourselves About Alcohol

By Rose Ethel Mitchell

Booze is always good for a giggle, and that makes it hard to take alcohol seriously. The news and entertainment media couldn’t resist puns on “LAX new rules” when California started the year with legal sales of alcohol for recreational purposes. TV stations across the country featured chuckling coverage of long lines outside the state’s new state-licensed liquor shops.

Legalizing alcohol isn’t just amusing. It’s increasingly popular with legislators and the public. And why not? No matter how drunk drinkers get, they’re nowhere near as useless in society as lazy pot-heads, right?  Drinkers don’t clear all the munchies off the grocery shelves or grow their hair out like hippies. But studies show that, unlike pot, alcohol leads to violence and aggression, especially with friends or partners.

A recent study found that alcohol is more dangerous than such legal drugs as cannabis and Ecstasy. We should not be raising a glass to the coming acceptance of alcohol use and dependency. Alcohol is far from safe, despite the widespread effort to make it seem benign. Drinking damages the heart, increases the incidence of anxiety, depression and schizophrenia, and can trigger acute psychotic episodes. Many adults appear to be able to use alcohol with relatively little harm, but the same cannot be said of adolescents, who are about twice as likely as adults to become addicted to drinking. The new California law limits alcohol sales to people 21 or older, but making it available for recreational use normalizes it in society. The drug will be made more easily available to those under 21, and how long until the age limit is dropped to 18? Having some bubbly may enhance social interactions, but at what cost?

Adolescents are vulnerable—and not just to booze. That’s how they are programmed. They make rash and risky choices because their brains aren’t fully developed. The part of the brain that censors dumb or dangerous behavior is last to come on line (generally not before the mid-20s). Meanwhile, the brain’s pleasure-seeking structures are up and running strong by puberty. When you link adolescent pleasure-seeking and risk-taking to liquor’s impairment of perception and judgment, it isn’t surprising that a 2004 study of seriously injured drivers in Maryland found half the teens tested positive for booze.

Drinking impairs judgment—no small matter during the adolescent years—and it can do lasting harm to the brain. The National Institute on Alcohol Abuse and Alcoholism has found that alcohol disrupts the brain’s communication pathways and can change mood and behavior, making it harder to think clearly and move with coordination. Long-term drinking can damage the heart, inflame the liver, increase risk of cancer, and weaken the immune system.

Most disturbing is a recent discovery about alcohol from the Center for Addiction and Mental Health which found alcohol is the third leading cause of disease around the world. The lead author wrote, “Alcohol consumption has been found to cause more than 200 different diseases and injuries.” While New Yorkers are sipping their “Long Island iced tea” or vacationers are singing about tequila, the facts show that their bodies don’t think these drinks are going down smooth.

Many experts are troubled by changing teen attitudes about drinking.   Half of adolescents have already tried illegal alcohol. Teen marijuana use and cigarette smoking have declined, and their abuse of prescription painkillers has fallen off sharply, but teen imbibing  continues to increase.  And a shocking 15% exhibit signs of alcoholism even in their teen years. This binge of facts will only worsen with legal alcohol.

No one can say how liquor legalization will play out. A perception of legal alcohol as safe, combined with sophisticated marketing, may well double or triple drinking. Warning of aggressive promotion, alcohol-policy expert Luke Farmer, who studied potential issues of a legal alcohol market for the New York City Council, pointed out last year: “The only way to sell a lot of alcohol is to create a lot of alcoholics.”

As we learn more about the realities of legalizing recreational booze, I suspect it won’t seem so funny anymore. Remember, potheads used to be good for a laugh too. A spaced-out pothead was a staple of Hollywood comedies in the 1960s and ’70s. Smoking cigarettes was considered cool. The reality of wrecked lives and ruined health eventually changed public perceptions of these addictions. Now liquor is becoming more widely regarded as a harmless amusement. That’s not funny, it’s tragic. Drinkers may enjoy a Scotch on the rocks, but the social effects will be rocky for us all.

It’s always hard to imagine a counterfactual. I wrote once about a world in which education was provided on the free market but shoes were produced and distributed by the government, and how people would have trouble imagining how a free market in shoes would work. In this case, however, we did go through an episode of substance prohibition, followed by legalization. And despite all the real problems created by alcohol use, we decided that a liberal system created fewer social problems than Prohibition. Surely we can imagine the same with regard to marijuana.

 

 

Categories: Policy Institutes

Wasteful Federal Aid to the States

Cato Op-Eds - Tue, 01/14/2014 - 10:52

Chris Edwards

Photo credit: House Committee on Oversight and Government Reform

In my testimony last week to the House Oversight Committee, I focused on aid-to-state programs as a major source of waste in the federal budget.

The federal government spent about $560 billion on aid to the states in 2013, making it the third largest item in the budget after Social Security and defense. The aid system includes more than 1,100 different programs for education, housing, community development, and many other things.

The aid-to-state system is rife with waste and inefficiency. So I was not surprised to see that many of the 100 programs in Senator Tom Coburn’s new wastebook are aid programs. Federal aid stimulates overspending by state and local governments and encourages them to put money into dubious projects that they would not spend their own money on.

Here are some of the wasteful aid-to-state projects profiled by Coburn and his expert staff:

  • $1 million for a gold-plated bus stop in Arlington, Virginia
  • $50 million for a fancy parking lot (“transit center”) in Maryland that has quintupled in cost
  • $65 million for New York and New Jersey to advertise that they are (supposedly) good places to do business
  • $3.5 million for a New Hampshire airport to buy solar panels, which will save less than the cost of the project, and which are creating dangerous glare for pilots
  • $67 million for the Alaska Bridge to Nowhere
  • $195,000 from a substance-abuse program to throw a Hollywood party
  • $8 million for an unfinished, unneeded, and overbudget transportation conference center—which is named after a congressman—at South Carolina State University
  • $140,000 in housing aid to fix up some random house in Patterson, New Jersey, on which the city already spent $260,000, and which is only worth $171,000
  • $3.9 million on a tiny airport in St. Cloud, Minnesota, which has no daily commercial service
  • $1.25 million for the State of Florida to settle a lawsuit with one of its contractors
  • $532,000 to beautify one block on main street in Rossville, Kansas (pop. 1,150), which Google streetview indicates is a rather empty place
  • $30 million for “coastal conservation” in Mississippi, which is partly being spent on non-conservation items such as an art museum
  • $800,000 for Las Vegas to award a prize to someone who has a good economic development idea
  • $368,000 of “community development” money to an electric golf cart maker in Montana.

The money for all of these projects initially flows to Washington from taxpayers who live in the 50 states. It travels through the federal bureaucracies and funds generous salaries for many paper pushers, and then a reduced amount flows back to chosen state and local governments. Those governments treat the funding coming from the distant national capital as free, and they proceed to fritter it away on low-value and often hare-brained public and private schemes.

The bottom line is that the federal aid system is a roundabout and inefficient funding method for state, local, and private activities. Cutting aid programs would be a great way to reduce government waste.

Categories: Policy Institutes

CO2 Regulation News from the Federal Register

Cato Op-Eds - Tue, 01/14/2014 - 10:48

Paul C. "Chip" Knappenberger and Patrick J. Michaels

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.”

The Federal Register has been brimming with announcements of government activities aimed to reduce/regulate carbon dioxide emissions emanating from the United States.

You may wonder why the government finds the need to pursue such action since 1) U.S. carbon dioxide emissions have already topped out and have generally been on the decline for the past 7-8 years or so (from technological advances in natural gas extraction and a slow economy more so than from already- enacted government regulations and subsidies); 2) greenhouse gases from the rest of the world (primarily driven by China) have been sky-rocketing over the same period, which lessens any impacts that our emissions reduction have); and 3) even in their totality, U.S. carbon dioxide emissions have a negligible influence on local/regional/global climate change (even a immediate and permanent cessation of all our carbon dioxide emissions would likely result in a mitigation of global temperature rise of less than one-quarter of a degree C by the end of the century).

We wonder the same thing. Nevertheless, the government has lots of ideas for how to save ourselves from ourselves (with likely to opposite outcome).

Here is a summary of new announcements appearing in the Federal Register over the past month or so on actions aimed to curtail our carbon dioxide emissions (primarily the result of our desire for cheap and reliable energy—gasp!).

Posted November 26, 2013: The Office of Management and Budget (OMB) announced a call for review of the Technical Support Document currently justifying the Administration’s value of the social cost of carbon (SCC) used in federal cost/benefit analyses.  We have discussed this announcement previously, and while it provides a glimmer of hope for injecting some new science and common sense into the government’s social cost of carbon, we are highly skeptical of a positive outcome. We mention the announcement again here, because the public comment period ends on January 27, 2014.  Comments can be submitted here.

Posted December 6, 2013: The Department of Energy announced another in its seemingly endless string of intrusions into our personal choices through its energy efficiency requirement updates for all sorts of consumer products. These revised efficiency regulations rely on the SCC to offset the costs and enrich the apparent benefits of the new requirements. We have already submitted comments on several of these proposed regulations (from walk-in refrigerators to furnace fans), but they just keep on coming.  The latest pertains to commercial and electric motors. Final comments are due February 4, 2014 and con be submitted here.

Posted December 31, 2013: The Department of Energy (DoE) announced that it has declined a Petition for Reconsideration of its rule updating the energy conservation standards for of microwave ovens.  The Petition for Reconsideration was brought by the Landmark Legal Foundation which pointed out that the DoE used a social cost of carbon estimate in the cost/benefits analysis for the rule that had not been subject to public comment and which was some 50% higher than the value used in the C/B analysis that was available for public comment.  In other words, the DoE pulled a pretty big bait and switch.  We at the Cato’s Center for the Study of Science submitted comments on the Landmark Petition pointing out just how far afield from the actual science that the Administrations SCC estimate had become.  The denial was disappointing, but the fight over the proper value for the SCC has now moved to the OMB (as described above).

Posted January 8, 2014: Last, but certainly not least, the U.S. Environmental Protection Agency (EPA) announced its new proposed rule “Standards of Performance for Greenhouse Gas Emissions From New Stationary Sources: Electric Utility Generating Units.” This is the second iteration of the EPA’s rule which effectively seeks to prohibit the construction of any new coal-fired power plants. The Administration/EPA made a big splash back in September when they announced the details of the plan to the press, but it didn’t clear all the necessary hurdles to make it official until last week. The public comment period on the major piece of intrusive legislation is only open for 60 days, ending on March 10, 2014 (comments should be submitted here). The EPA’s initial proposal limiting carbon dioxide emissions from new power plants, announced back in April 2012, received more than 2.5 million comments. When the EPA announced the new proposed rule, the EPA withdrew the old one and announced that it was not going to consider any of the comments submitted on the original proposal. This despite the fact the new proposed rule is grounded in the same (faulty) science as the original  and has effectively the same impact on coal-plants.  Substantially nothing changed, but the EPA is requiring a redo of the substantial effort that it takes to file comments on such a broad proposal.

This is probably just the tip of the iceberg. Undoubtedly there will be major federal announcement to come of rules and regulations aimed at reducing carbon dioxide emissions—in fact, the Administration has already promised a proposal to limit CO2 emissions from existing power plants. If you think the fight over regulations covering new power plants is contentious (with its 2.5 million comments and all), just wait until that one is proposed.

We see busy times for us ahead!

 

Categories: Policy Institutes

Our Broken Judicial Nominations Process

Cato Op-Eds - Tue, 01/14/2014 - 10:10

Jason Kuznicki

This month at Cato Unbound, we’re discussing the federal judicial nominations process: Is it broken? (Spoiler: Yes!) How did it get that way? And what can be done to fix it? 

Our lead essayist is John R. Lott, Jr., author of the new book Dumbing Down the Courts: How Politics Keeps the Smartest Judges Off the Bench. His lead essay charges that the growth of the federal government’s regulatory reach has raised the stakes in the judicial nominaitons process: Now it’s a much graver matter when the other party’s judges end up on the bench – particularly if the nominees in question are especially smart and persuasive. Lott writes:

Think that attending a top university and graduating at the top of the class is the key to your success? Not if you’re headed for a federal judgeship. In fact, today the most accomplished candidates are the most likely to be rejected. And this phenomenon has only gotten worse, with the quality of judges declining over the last four decades…

A smart, persuasive judge might convince other judges to change their votes on a case. Judges who can write powerfully worded decisions also are more likely to be cited more frequently in other judges’ decisions and to influence their decisions.

The president wants to nominate influential judges to successfully push the positions he values. His political opponents, however, naturally fear such judges—and, therefore, vehemently oppose their appointments.

Agree? Disagree? We’ll see some of each this month at Cato Unbound, and we invite you to follow the conversation as it develops. Coming up we’ll have essays by Professor Michael Teter of the University of Utah, on January 15; Clint Bolick of the Goldwater Institute, on January 17; and John O. McGinnis of Northwestern University, on January 20. A conversation among all four participants will then be held through the end of the month.

Lastly, if you like Cato Unbound, be sure to like us on Facebook and follow us on Twitter.

Categories: Policy Institutes

RIP Economist and Cato Friend Walter Oi: An Advocate for Liberty and the Volunteer Military

Cato Op-Eds - Tue, 01/14/2014 - 09:00

Doug Bandow

With most people focused on the coming of Christmas, the death of economist Walter Oi received little attention.  Educated at the University of Chicago and appointed professor at the University of Rochester, Oi was an outstanding labor economist.  He was no mere ivory tower advocate of liberty.  He was a Nisei, or second-generation Japanese-American.  At age 13 during World War II his family was interned in California.

Life didn’t get easier for him.  His eyesight steadily deteriorated, and he could not read text upon entering college.  He fully lost his sight in 1956.  Yet he went on to gain a PhD, teach, research, serve on presidential commissions, and gain a long list of honors.  His career should embarrass the rest of us.

Moreover, like Cato’s late chairman, Bill Niskanen, Oi stood on principle irrespective of cost.  In warm tribute to the latter, economist David Henderson, a University of Rochester colleague and another Cato Institute friend, pointed to Oi’s criticism of the future prospects for agriculture when teaching at Iowa State University and opposition to proposals for government reparations for the internment of Japanese-Americans.

Oi’s research interests were many but, Henderson wrote:  “If you are an American male younger than 66, you should take a moment and give thanks to economist Walter Oi.  Walter died on Christmas Eve 2013.  Even though you probably haven’t heard of him, he has had a profound effect on your life.  He helped end military conscription in the United States.”

I am one of those who was able to choose my own way, rather than be subject to presidential diktat and sent off to fight in a stupid, unnecessary foreign war.  Tens of thousands of Americans would have been alive had the draft not been available in the 1960s to provide a guaranteed supply of cannon fodder for Lyndon Johnson’s and Richard Nixon’s misadventure in Vietnam.

Many people played critical roles in causing this self-proclaimed free society to rely on a free people for its defense.  Richard Nixon, who proposed the All-Volunteer Force.  Martin Anderson, for whom I later worked in the Reagan White House, who convinced Nixon to tackle the issue.  Milton Friedman, who served on the famous “Gates Commission,” which recommended the shift.

And Walter Oi, who served as a staff economist on the latter panel.

As Henderson, who now educates military officers at the Naval Postgraduate School, explained, Oi’s “passion for free labor markets was what motivated his work on the draft.  His contribution was to point out—and estimate two costs.  First, there was the hidden cost imposed on draftees and ‘draft-induced’ or ‘reluctant’ volunteers.  …  The second cost Oi estimated was the increased annual budget outlay needed to eliminate the draft.”

The AVF obviously was a moral triumph.  It also turned out to be a practical achievement.  The military did far better recruiting people who wanted to serve than impressing those who only wanted out.  Today America has the finest military it has ever fielded, and the best in the world. 

As I wrote in a Cato Policy Analysis:

Indeed, a draft would degrade the military’s performance, requiring induction of less-qualified personnel, who are rejected today, and raising the rate of ‘indiscipline’ by filling the armed services with people who don’t want to serve.  It comes as no surprise that the military leadership opposes conscription.

Walter Oi was sui generis.  He personally suffered from tyrannical though democratic government.  He overcame disability without complaint.  He risked job and opposed government benefits because he valued honesty and principle.  He backed his commitment to liberty with wide-ranging and quality economic research.  And he made a huge difference in the lives of tens of millions of his countrymen.

RIP Walter.

Categories: Policy Institutes

The Common Coring of Private Schools

Cato Op-Eds - Tue, 01/14/2014 - 09:00

Jason Bedrick

Today, the Fordham Institute released a “policy toolkit” proposing private schools be required to administer state tests to all students participating in a school choice program, and publicize the results. Private schools that the state deemed persistently underperforming would be expelled from the program. Fordham argues that such measures have the potential to raise student achievement and provide parents with the information needed to make better decisions about their children’s education. Though Fordham’s plan is well-intentioned, their justifications are unpersuasive and their proposal is more likely to do harm than good.

Little Evidence to Support a Testing Mandate for Private Schools

First, there is scant evidence to support Fordham’s claim that test-based accountability measures “may boost student achievement.” Fordham rests its claim on the results of but a single year in a single study of a single school choice program: the final year of the School Choice Demonstration Project’s five-year analysis of the Milwaukee voucher program.

During the first four years of the study, voucher students took a low-stakes test, but in the final year of the study, policymakers increased the stakes by mandating that the test results be publicized and the scores improved. Fordham argues that this proves that high-stakes testing improves performance but one of the study’s authors, Dr. Patrick Wolf of the University of Arkansas, has previously cautioned the Fordham Institute against reading too much into that finding, calling it “enticing and suggestive but hardly conclusive”:

As we point out in the report, it is entirely possible that the surge in the test scores of the voucher students was a “one-off” due to a greater focus of the voucher schools on test preparation and test-taking strategies that year.  In other words, by taking the standardized testing seriously in that final year, the schools simply may have produced a truer measure of student’s actual (better) performance all along, not necessarily a signal that they actually learned a lot more in the one year under the new accountability regime.

But even if the was no question that the higher test scores actually reflected increased performance, it would still only be one study. When Fordham cited this study as support for its proposal six months ago, Andrew J. Coulson responded

A single study, no matter how carefully executed, is not a scientific basis for policy. Because a single study is not science. Science is a process of making and testing falsifiable predictions. It is about patterns of evidence. Bodies of evidence. Fordham offers only a toe.

By contrast, there is a significant body of evidence that school choice programs work without Fordham’s sought-after government regulation. Of twelve randomized controlled trials—the gold standard of social science research—eleven found that school choice programs improve outcomes for some or all students while only one found no statistically significant difference and none found a negative impact. None of these school choice programs studied were designed along the lines of the Fordham proposal.

In fact, Fordham’s preferred policy is undermined by a large body of evidence. A 2009 literature review of the within-country studies comparing outcomes among different types of school systems worldwide revealed that the most market-like and least regulated education systems tended to produce student outcomes superior to more heavily regulated systems, including those with a substantial number state-funded and regulated private schools. In short, the best form of accountability is directly to parents, not government bureaucrats and their tests.

Accountability Should Be To Parents

Fordham argues that school choice programs, including both vouchers and scholarship tax credits, should fall under the same accountability regimes as public schools because they utilize public funds. In Fordham’s words, “The taxpayer also needs assurances that schools are producing solid learning results for the children who participate in such programs.” This reasoning should not apply to scholarship tax credits which, as the U.S. Supreme Court held in ACSTOv. Winn, do not involve public funds at all:

Like contributions that lead to charitable tax deductions, contributions yielding [scholarship] tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations. Respondents’ contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence. Private bank accounts cannot be equated with the … State Treasury.

But even in the case of direct government subsidies, it’s far from clear that accountability to government is necessary or even prudent, as Professor Jay P.  Greene of the University of Arkansas explains:

Most state funded programs require no formal accountability to the state and instead rely primarily on the self-interest of the recipients to use the funds wisely.  For example, the largest domestic program, social security, is designed to prevent seniors from lacking basic resources for housing, food, or clothing.  But we don’t demand that seniors account for the use of their social security checks.  They could blow it at the casino if they want.  We’re just counting on the fact that most would have the good sense to make sure that their basic needs are covered first.

Even in the area of education most government programs require no formal accountability.  Pell Grants, Stafford Loans, and the Daycare Tuition Tax Credit do not require state testing for people using those funds.  We just trust that the public purpose of subsidizing education will be served by people pursuing their own interests. […]

Don’t parents need state testing requirements for consumer protection and to get information to make intelligent choices?  Most markets generate consumer information without government mandates for them to do so.  For example, I have more information than you can imagine to pick a hotel or restaurant through Trip Advisor, Yelp, Urban Spoon, etc…  GreatSchools.org and other market sources of information about education are already springing up as choice expands without government mandates.  But if you still feel the need to require testing, why not just require choice schools to take any one of a large number of standardized tests?  At least that way we place fewer restrictions on the curriculum schools could pursue.

Indeed, a recent Friedman Foundation report showed that parents actively seek out relevant information before choosing a school and are less likely to enroll their children in schools that will not provide them with the information they seek. However, barely more than half of the survey respondents said that standardized test scores are “important” and barely 10% listed “performance on standardized tests” as one of their top five reasons for choosing a school.  

Uniform Testing Mandates Stifle Diversity and Innovation

While the benefit of Fordham’s proposal is dubious, the harm is more certain. By forcing every school to administer the same tests, states would induce conformity and stifle diversity and innovation. Fordham partially concedes that this is a concern, noting that if there is “a downside to this proposal, this is it.” However, they minimize the concern by claiming that the standards “only provide an endpoint” but do not prescribe a curriculum.

Though the tests do not dictate curriculum per se, they create a powerful incentive for schools to teach the same concepts in the same order at the same time. This would make it all but impossible for schools to experiment with new ways of tailoring education to meet the needs of individual children, rather than expecting that all children who happened to be born in the same year should progress at the same rate across subjects.

Common Core is already moving the nation’s education system toward greater uniformity. If states adopt Fordham’s proposal, they would almost entirely eliminate any viable alternative to the Common Core regime. As Professor Greene explained:

Such uniformity would only make sense if: 1) there was a single best way for all students to learn; 2) we knew what it was; 3) we could be sure the people running this nationalized education system would adopt that correct approach; and 4) they would remain in charge far into the future. But that isn’t how things are. There is no consensus on what all students need to know. Different students can best be taught and assessed in different ways.

Financial Incentives Would Leave Private Schools Little Choice But To Conform

Fordham also downplays the likely effect of their proposed regulations by assuring that they “won’t scare away [private] schools,” citing a previous Fordham study which found that most private schools would participate in a school choice program even if that meant accepting such regulations. But Fordham’s finding actually reveals the gravity of the concern. Again, Coulson addressed this argument months ago: 

The problem is not that private schools won’t participate in heavily regulated school choice programs. The problem is that they will. Hold-outs will be in the minority, and will gradually be driven out of business by their subsidized counterparts due to the uneven fiscal playing field (much as America’s once-dominant private schools were marginalized by the spread of “free” state-run schools).

We know this because there is extensive evidence to that effect from all over the world and across history. Everywhere that private elementary and secondary schools are eligible for government subsidies, the share of unsubsidized school enrollment falls. The higher the subsidy and the longer it has been in place, the more the unsubsidized sector is generally diminished.

Conclusion

If state governments follow Fordham’s advice and expand their authority over private schools, even Fordham will likely come to regret it. Ultimately, it won’t be Fordham’s friends who are always and everywhere in charge, but the teachers unions and other vested interests. As Professor Greene warned, “Minority religions shouldn’t favor building national churches because inevitably it won’t be their gospel being preached.”

Categories: Policy Institutes

A Governor's Warped Priorities

Cato Op-Eds - Mon, 01/13/2014 - 16:40

Jason Bedrick

The governor of New Hampshire just submitted an amicus brief in the lawsuit against the “Live Free or Die” state’s scholarship tax credit program. Last year, Governor Maggie Hassan unsuccessfully sought its repeal. The brief offers nothing new in the way of legal arguments. As with the ACLU and, unfortunately, the trial court judge, the governor’s brief tries to imagine a constitutional difference between tax credits and tax deductions and absurdly assumes that money that a private corporation donated to a private nonprofit that financially assists private citizens sending their children to private schools is somehow “public” money because the state could have collected it in taxes had the legislature so decided. This claim contradicts both logic and the U.S. Supreme Court’s holding in ACSTO v. Winn:

Like contributions that lead to charitable tax deductions, contributions yielding [scholarship] tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations. Respondents’ contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands. That premise finds no basis in standing jurisprudence. Private bank accounts cannot be equated with the … State Treasury.

The Cato Institute submitted an amicus brief defending the constitutionality of the program back in November.

What’s noteworthy here is not the legal reasoning, but the governor’s chutzpah. First, as the Union Leader noted, “Hassan is pushing state-funded, need-based scholarships for college students while trying to eliminate need-based scholarships for students in grades K-12.” The governor’s amicus brief does not explain why direct public expenditures that students can use at a Catholic college are perfectly constitutional but a low-income student using a tax-credit scholarships at a religious elementary or secondary school would, as her amicus brief melodramatically puts it, “jeopardize both the hallowed underpinnings of religious tolerance and freedom, and the prohibition against entanglement made sacred by [the] New Hampshire Constitution.” 

Second, Hassan is a strong proponent of “research and development” tax credits that pick winners and losers among certain types of businesses and business activities, thereby distorting the market. Moreover, by the governor’s faulty logic, these tax credits constitute direct subsidies of public funds to profit-seeking entities. R&D tax credits clearly reduce state revenue to fund activities that businesses are generally doing anyway for their own financial self-interest.  

By contrast, scholarship tax credits expand the market for private education without distorting it. Parents pick winners and losers among schools rather than the government. The corporations who receive the 85 percent tax credits do not benefit financially – indeed, they’d be better off financially had they not donated at all. Moreover, the Josiah Bartlett Center projected that, if fully utilized, the scholarship tax credits would save New Hampshire taxpayers millions of dollars in the long run by reducing state expenditures by more than they would reduce state tax revenue.

In short, Governor Hassan supports corporate welfare but opposes tax credits that assist low-income families seeking the best education for their children.

Categories: Policy Institutes

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