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Ted Galen Carpenter

Two countries that have the capacity to cause serious headaches for the United States are Russia and China.  Yet Washington is committing a cardinal sin in foreign policy: getting on bad terms simultaneously with those two major powers.  As I discuss in a recent article at China-U.S. Focus, that approach is especially unfortunate because Beijing has boundary disputes and an array of historical grievances against Russia.  In addition, China is now uneasy about the precedents being set by the Kremlin’s support of secessionists in Crimea and eastern Ukraine.  Those concerns and would normally cause Chinese officials to be wary about close cooperation with Russia.  But because Washington’s own relations with China have become frosty, the Obama administration may be forfeiting an opportunity to keep Moscow and Beijing from developing a common policy directed against the United States.

Two high-priority Chinese foreign policy objectives are now in conflict.  Beijing does not want to encourage the increasing popularity of secession in the international system.  The breakup of the Soviet Union, the violent fragmentation of Yugoslavia, the emergence of South Sudan, and the increasing likelihood of an independent Kurdistan arising from the wreckage of Iraq and Syria, all confirm a powerful trend.  Russia’s actions in Georgia in 2008 (supporting the breakaway regions of Abkhazia and South Ossetia) and now in Ukraine have given that trend a major boost, much to Beijing’s dismay.  Chinese leaders fret about separatist sentiments in Tibet and Xinjiang, as well as Taiwan’s continuing de facto independence.  From Beijing’s perspective, Moscow’s embrace of secessionist movements in neighboring states is most unhelpfu

However, the Chinese government is reluctant to join the West’s campaign of coercion against Moscow.  Not only is Russia an important partner of China’s in the Shanghai Cooperation Organization, the two countries have significant mutual economic and security interests throughout Central Asia and the Middle East.  The multi-billion dollar energy deal that the two governments recently signed underscores yet another aspect of the growing bilateral ties.

China also is receptive to a cooperative relationship with Russia because of pressing security concerns in East Asia.  The upgraded military alliance between the United States and Japan alarms Beijing, as does Washington’s vocal support for Vietnam, the Philippines, and other Chinese rivals regarding territorial claims in the South China Sea.  The last thing Chinese leaders want to do is help the West weaken Russia at a time when Beijing may need Russian support (or at least benevolent neutrality) as the United States and a growing roster of U.S. security partners tighten an implicit containment policy against China.

Ideally, the Obama administration should follow Thomas Jefferson’s advice to seek “peace, commerce, and honest friendship with all nations.”  Washington would be wise to reconsider some of its actions and move to repair relations with both Russia and China.  If U.S. leaders cannot bring themselves to do that, they should at least avoid antagonizing China at a time when tensions with Moscow are reaching alarming levels.

Nicole Kaeding

Ivanpah in California is the world’s largest solar project. The project is owned by Google and NRG Energy, and is heavily subsidized by taxpayers. Ivanpah originally received a $1.6 billion loan from the Department of Energy (DOE) in 2011. Now the company is asking for another government subsidy to pay off its original loan.

Ivanpah’s loan guarantee came from the Section 1705 program created by the 2009 stimulus law. Section 1705 provided up to $18 billion in loan guarantees to “certain renewable energy systems, electric power transmission systems and leading-edge biofuels.” The program was temporary, with loans available until the end of fiscal year 2011. Unlike previous energy loan guarantee programs, Congress even provided subsidies to borrowers to pay the fees on loans.. As a consequence, firms were able to get a federal loan guarantee without any direct expenditure, providing a large incentive for firms to take advantage. By the end of the Section 1705 program in September 2011, DOE approved 27 projects totaling $14.5 billion.

Business failures among these loan recipients were common, the most famous being Solyndra. Solyndra, a solar-panel manufacturer, received a $535 million loan guarantee before filing bankruptcy. An analysis by the Reason Foundation found that 10 of the 27 recipients under Section 1705 experienced some sort of financial trouble.

The survival of Ivanpah is still up in the air. The project came online in December 2013. From January to August 2014, the project generated just one quarter of its predicted amount of electricity.

In February, the company asked DOE for permission to delay payments on its loan. According to the Wall Street Journal, DOE gave Ivanpah a one-year extension on the $132 million first payment. A second subcomponent—the loan is divided among three subcomponents—delayed a June payment of $159 million to December.

Now, Ivanpah is asking for $539 million in cash from the federal government. This time, Ivanpah is targeting a Department of Treasury tax credit program that reimburses renewable energy projects for up to 30 percent of project costs.

 

Ivanpah would use the proceeds to pay off a large portion of its $1.6 billion loan. The company is asking the federal government to provide it with an enormous amount of cash to be used to payoff its debt to taxpayers. DOE actually requires Ivanpah to apply for a tax credit to aid loan repayment.

The process is absurd. First, the government uses tax dollars to provide a loan guarantee to a risky firm. Then, it functionally forgives a large share of the outstanding balance after providing a large tax credit. This is an unjustified giveaway to investors in Ivanpah and a horrible deal for taxpayers.

Energy subsidies have a long history of waste and mismanagement, but Congress ignores the record and keeps the money flowing. If approved, the Ivanpah tax credit would be another $539 million flushed down the drain.

Neal McCluskey

This morning NPR published an interview with Sen. Lamar Alexander (R-TN), the presumptive next chair of the Senate Health, Education, Labor and Pensions Committee. Unfortunately, if you were hoping the new GOP Senate would move decisively in the right direction on education, you may be disappointed. While the interview suggests we could see a moderate move in the right direction at the k-12 level, there is little reason for hope in higher or early childhood education.

For elementary and secondary education Alexander certainly says the right thing – the states should be in charge – and it is better that federal funds be block granted with few rules attached than delivered via numerous, micromanaged streams. So he is moving in the right direction when he says under a Republican plan, “Tennessee, Texas or New York would decide what the academic standards would be, what the curriculum would be, what to do about failing schools and how to evaluate teachers.” His general inclination is also right when he says he wants to “give states the option — not mandate — to take federal dollars and let those dollars follow children to the schools they attend.” Empowering parents beats simply feeding government monopoly schools.

Unfortunately, moving somewhat in the right direction isn’t the same as doing the clearly right thing. The Constitution does not allow federal funding of education (outside of D.C. and federal installations), nor does the record indicate that federal funding is educationally effective. The feds should therefore get out of education, including abandoning plans to provide private school choice, which if voucherized would eventually deliver stultifying federal rules and regulations to private schools nationwide.

Alas, things only go downhill in the interview after tackling k-12.

On higher education, as I feared, Alexander gives no indication he will do what must be done to address colossal waste and crippling price inflation: significantly reduce student aid. Indeed, what he seems most intent on doing is simplifying the Federal Application for Federal Student Aid, which makes sense from a paperwork-reduction standpoint but might actually lead to more aid flowing from Washington as more people complete aid applications. At least, though, Alexander recognizes the danger of the federal government trying to rate all of the nation’s postsecondary institutions, ranging from “Nashville Auto-Diesel College…[to] Harvard.”

And then there is pre-kindergarten. Again, Alexander rightly warns about federal micromanagement, but he seems to fully accept that Washington should be spending tens-of-billions of dollars on pre-k. Indeed, he states that, “The question is not whether early childhood education is a good idea. It’s how best to encourage it.” But the question absolutely is – or at least should be – whether early childhood education is a good idea. As the Cato Policy Analysis published last month by George Mason University professor David J. Armor made abundantly clear, the pre-k research simply does not support the conclusion that early childhood programs work, and talking like it is a settled issue does not make it so.

Based on this one interview, the good news is that Senate Republicans might try to make horrible federal education policy a little bit better. The bad news is that something made a little less horrible is still awfully bad.

Doug Bandow

It’s easy to be pessimistic about the future of liberty.  Yet sometimes freedom advances with extraordinary speed.  Like 25 years ago in Europe.

As 1989 dawned communism had ruled what was the Russian Empire reborn for seven decades.  The system failed to fulfill its promise of human liberation, but survived with the backing of secret police, gulags, and the Red Army.

Then in an instant it all was swept away.  On November 9, 1989, the Berlin Wall was open.  One of the most dramatic symbols of human tyranny was gone. 

Tens of thousands of East Germans were imprisoned for “Republikflucht,” or attempting to flee the East German paradise.  Some 1000 people died trying to escape East Germany, about 200 from Berlin.

As 1989 dawned there was obvious unrest in what Ronald Reagan had called the Evil Empire.  Hope was rising, but no one could forget that previous popular demands for freedom always had been crushed by Soviet tanks. 

In 1989 Hungary led the way.  Plans were made for multiparty elections.  The Communist Party dissolved.  When the new leadership tore down Hungary’s wall with the West the Iron Curtain had a huge hole.

Poland’s communist regime made a deal with a revived Solidarity Union and held free elections.  The liberal tide rose in Czechoslovakia, sweeping away the hardline leadership installed to squelch the Prague Spring of 1968.

The East German regime remained tough.  Frustrated East Germans began escaping through Hungary, with its open border. 

Protests spread, causing the communist leadership to temporize.  On November 4 a million people gathered in East Berlin. 

On November 9 visibly struggling Politburo member Guenter Schabowski declared that East Germans would be free to travel to the West “immediately.”  Border guards desperately sought guidance as tens of thousands of people gathered demanding to be let through. Just before midnight the security forces stood aside. 

The rest of the European communist dictatorships soon fell.  These revolutions were mostly peaceful.  But Romania capped the year with the Christmas Eve execution of Nicolae and Elena Ceausescu, the most odious members of Communism’s ruling menagerie. 

The transition from totalitarian communism to democratic capitalism turned out to be far more difficult than most anyone expected.  But it is important not to forget how awful communism truly is.  The Black Book of Communism figured the overall death toll to be more than 100 million.  In Death By Government the late R.J. Rummel estimated the butcher’s bill to be nearly 160 million. 

As I point out in the Freeman, “we should celebrate a quarter century after the collapse of communism.  The events of 1989 represent a massive increase in liberty, a fantastic triumph of the human spirit.  With so little bloodshed everyday people ousted a gaggle of tyrannies.  They have given hope for future generations, and themselves, that freedom can emerge against seemingly impossible odds.”

There were many heroes in the battle for liberty.  Particularly important were Mikhail Gorbachev and Ronald Reagan.  The former ended the Soviet police state and kept the Red Army in its barracks as the Soviet satellites fell out of orbit. 

Ronald Reagan understood that communism was morally evil.  On June 12, 1987 he stood in front of the Brandenburg Gate and said:  “General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization:  Come here to this gate!  Mr. Gorbachev, open this gate!  Mr. Gorbachev, tear down this wall!”  But Reagan did something else equally important:  he recognized that Gorbachev was different than previous Soviet leaders and would be willing to accept the opening of the Berlin Wall.

There is much today to frustrate those who believe in liberty.  Yet we must not give up hope.  May the spirit of liberty from 1989 remain strong among us.

 

Paul C. "Chip" Knappenberger

The front page of yesterday’s New York Times included the beginning of a long article about geoengineering—in this case, as it applies to purposeful activities aimed at changing the earth’s climate at a large scale. Why on earth would anyone even think of doing something like that? Why to avoid catastrophic global warming, of course!

Thankfully, most signs point to only a modest global temperature increase resulting from our fossil fuel usage—a rise that will be readily adapted to and which actually may work out to be more beneficial than detrimental. Thankfully, we say, because geoengineering schemes seem like really bad ideas full of nasty consequences (unintentional and otherwise) and we are glad that no one is seriously entertaining them.

Most folks who spend much time critically thinking about geoengineering the climate arrive at the same conclusion.

Here are a couple of reasons why:

● Who would be in charge of the global thermostat?

● What temperature would it be set to?

●  Who gets to decide?

● What if a country doesn’t like the decision?

● Does the thermostat control rotate between counties every so often?

● If you don’t like the weather can you lobby someone to change it?

● If you don’t like the weather can you sue the entity responsible?

● The unintended consequences are mind-boggling!

● How do you know it is effective (climate models can’t accurately foresee annual to decadal variability)?

● Schemes to remove CO2 from the air are detrimental to agriculture.

These are just tastes of the problem, it shouldn’t be hard to come up with more on your own. If you need some help, the always insightful Roger Pielke Jr. has a series of articles on his blog over the years dedicated to this highly controversial topic (see here for starters).

So next time you hear someone offer up geoengineering as a way to “offset” anthropogenic climate change, just say “No, thank you, I’d much rather take my chances with the climate that comes than risk the alternative.”

Jim Harper

The benefits of transparency are hard to explain. Bit by bit, we’re improving public oversight of government, I’ve been heard to say, implying more libertarian-friendly outcomes—never quite sure that I’m getting my message through.

Now comes a comment on transparency that articulates its importance better than I ever could. It’s Obamacare architect Jonathan Gruber describing how lacking transparency allowed the president’s signature health care regulation to pass.

A gaffe in Washington is when somebody tells the truth. Thanks to this one, more people may understand how non-transparent government undercuts their freedoms. Insisting on government transparency can protect them.

Christopher A. Preble

The Congressional Budget Office estimates that the costs of the Pentagon’s current plans will total nearly $3.8 trillion over the next seven years, $308 billion more than is permitted by the 2011 Budget Control Act (BCA).

That $3.8 trillion represents the Pentagon’s base budget, not the entirety of federal spending on national security. It does not include, for example, nuclear weapons spending in the Department of Energy; nor the Departments of Homeland Security and Veterans Affairs; nor overseas operations in Afghanistan, and the campaign against ISIS in Iraq and Syria. But I digress.

If spending exceeds the BCA caps, CBO observes, the Pentagon will be forced to “make sharp additional cuts to the size of its forces, curtail the development and purchase of weapons, reduce the extent of its operations and training, or implement some combination of those three actions.”

A more likely scenario, however, is that the new Republican-controlled Congress will adjust or eliminate the BCA spending caps. According to The Daily Beast, Sen. John McCain’s “first order of business as chairman of the Senate Armed Services Committee will be to end the budget rule known as sequestration, which requires the U.S. military to cut its budget across the board.”

If McCain succeeds, military spending advocates can be expected to push through dramatic increases in the Pentagon’s budget. Indeed, if House Budget Committee Chairman Rep. Paul Ryan’s FY15 budget is any indication, the Pentagon would receive over the next seven years nearly $100 billion more than it has requested.

How would Republicans pay for such increases? Many would prefer to find the money by cutting non-defense discretionary spending, or by reforming entitlement programs. But it’s difficult to envision Democrats agreeing to such proposals, especially if the Pentagon is the primary beneficiary. Others, including Sen. Lindsey Graham, are open to the idea of raising tax revenue by closing loopholes and eliminating deductions. But most Republicans remain allergic to tax increases, and they are likely to confront a bipartisan coalition of outside groups that has adamantly opposed past efforts to circumvent the BCA in order to fund higher Pentagon budgets. The easiest path is, as usual, debt. Thus, expect another Ryan-Murray style “cave-in” that puts additional Pentagon spending on the country’s credit card.

Despite all that talk during the mid-term election campaigns of President Obama’s reckless deficits, Washington’s willingness to spend the people’s money – including money the people don’t yet have – is a bipartisan affliction.

The only hope, it seems, is to stick to the current spending caps, imperfect though they may be. The BCA caps are not the wisest way to curb military spending, but they are all we have.  

Alan Reynolds

Wall Street Journal columnist E.S. Browning presents a graph titled “Wages Still Soft …  hourly wage gains have been sluggish.”   It shows the percentage change in average hourly earnings from a year earlier.  That rate of change slowed from about 3.5 percent in early 2009 to 1.5 percent in late 2012 before rising to 2.2-2.4 percent in recent months.   The upside, in Browning’s view, is that “wage gains still aren’t big enough to push inflation higher.”  In reality, wage gains never push inflation higher, but inflation can certainly push real wages lower.

The trouble with Browning’s graph is that it shows only changes in nominal earnings – unadjusted for the huge drop in inflation after July 2008 when the year-to-year increase in consumer prices reached 5.5 percent in July 2008 (up from 1.9 percent in August of 2007).  Nominal wage gains miss the real story.

In the graph shown below, I adjust the same hourly earnings figures for inflation by using the PCE deflator.  Note that real earnings rose rapidly when inflation dropped to zero or less in 2009 – when Browning’s chart begins.  But employers could not afford to pay rising wages when their prices were falling, so employment collapsed.

Measured in 2009 dollars, real average hourly earnings for production and nonsupervisory workers have been rising slowly but surely for two years – from $18.55 in October 2012 to $18.95 in October 2014, or 1.1 percent a year.  That’s not so terrible considering the slow pace of growth of GDP and productivity.

Despite hazardous chatter from the likes of Paul Krugman and Larry Summers about U.S. inflation being too low, the truth is that low inflation has been raising U.S. real wages even as confused politicians and journalists erroneously bemoan slow growth in nominal wages.

Simon Lester

To follow-up on my colleague Walter Olson’s earlier post on the Paul Krugman piece on King v. Burwell, what struck me was Krugman’s flexible approach to statutory interpretation.

Here he is in today’s piece:

Last week the court shocked many observers by saying that it was willing to hear a case claiming that the wording of one clause in the Affordable Care Act sets drastic limits on subsidies to Americans who buy health insurance. It’s a ridiculous claim; not only is it clear from everything else in the act that there was no intention to set such limits, you can ask the people who drafted the law what they intended, and it wasn’t what the plaintiffs claim. …

 if you look at the specific language authorizing those subsidies, it could be taken — by an incredibly hostile reader — to say that they’re available only to Americans using state-run exchanges, not to those using the federal exchanges.

As I said, everything else in the act makes it clear that this was not the drafters’ intention, and in any case you can ask them directly, and they’ll tell you that this was nothing but sloppy language. …

So, don’t worry so much about the specific language; instead, look at the drafters’ intent and the surrounding context. Got it.

On the other hand, here’s Krugman from January of 2013, writing about the idea of a platinum coin:

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

So in this situation, you should stick to the “letter of the law,” and not worry so much about the drafters’ intent.

Hmm, how to reconcile those two Krugman assertions about the proper approach to statutory interpretation?  That’s a tough one.  Wait, I got it!  We’ll call this the Krugman canon of construction: “Interpret statutes in whatever way makes them consistent with your policy preferences.”

Doug Bandow

President Barack Obama finally is obeying the law. He wants Congress to authorize military action against the Islamic State. 

Congress should respond as it was prepared to do when the president requested permission last year to bomb Syria: Capitol Hill should say no.

Candidate Barack Obama stated: “The president does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.”  But three years ago, President Obama took America into war against Libya.  Three months ago, he initiated hostilities in Iraq against the Islamic State. Both without a congressional vote.

Most recently, administration officials claimed authority under the Authorization for Use of Military Force against al-Qaeda adopted in the aftermath of September 11.  But the Islamic State is not al-Qaeda and ISIL’s leaders did not help organize the attacks on the twin towers and the Pentagon. 

The president obviously changed his mind after his party was defeated in the off-year elections.  At least he now is following the Constitution. 

The Founders gave most military powers to Congress: raising and funding the military, writing the rules of war, issuing letters of marquee, and ratifying treaties. Moreover, Article I, Section 8 (11) states: “Congress shall have the power … to declare war.” 

The early Americans feared a president and war like today.  The Founders particularly opposed a system which subjected the nation’s peace to the whims of one man, accountable to no one.

For instance, at the Constitutional Convention George Mason advocated “clogging rather than facilitating war” because he didn’t believe the president to be “safely to be entrusted with” the authority to commence military action.  James Wilson applauded the convention’s language,  “It will not be in the power of a single man, or a single body of men, to involve us in such distress; for the important power of declaring war is in the legislature at large.” 

Today’s “president-as-king” club contends that “declare” simply meant to take note of the fact that the chief executive had dragged America into war.  But the convention delegates complained about the monarch taking them into unnecessary wars. 

John Jay argued that kings relied on dubious motives and engaged “in wars not sanctified by justice or the voice and interests of his people.”  Pierce Butler spoke against placing in the president’s “hands the influence of a monarch, having an opportunity of involving his country in a war whenever he wished to promote her destruction.” 

Over the centuries several of America’s most respected presidents affirmed the original constitutional understanding.  George Washington observed:  “no offensive expedition of importance can be undertaken until after [Congress] shall have deliberated upon the subject, and authorized such a measure.” 

Abraham Lincoln opined that the Framers recognized war “to be the most oppressive of all Kingly oppressions; and they resolved to so frame the Constitution that no one man should hold the power of bringing this oppression upon us.”  Dwight Eisenhower promised that he would not “order any troops into anything that can be interpreted as war, until Congress directs it.” 

Supreme Court Justice Antonin Scalia, a conservative icon, more recently wrote: “Except for the actual command of military forces, all authorization for their maintenance and all explicit authorization for their use is placed in the control of Congress under Article I, rather than the president under Article II.”

Now that President Obama finally has requested congressional authorization, legislators should vote no.

As I observed on Forbes online:  “Congress has no obligation to support a bad presidential request.  The Islamic State is evil, but that hardly makes it unique.  American foreign policy should focus on protecting Americans, and not undertaking a Quixotic crusade around the globe.” 

President Obama did the right thing by belatedly asking Congress for authority to go to war.  Congress also should do the right thing—by saying no.

Daniel J. Mitchell

I’ve argued that we’ll get better government if we make it smaller.

And Mark Steyn humorously observed, “our government is more expensive than any government in history – and we have nothing to show for it.”

But can these assertions be quantified?

I had an email exchange last week with a gentleman from Texas who wanted to know if I had any research on the efficiency of government. He specifically wanted to know the “ratio of federal tax dollars collected to the actual delivery of the service.”

That was a challenge. If he simply wanted examples of government waste, I could have overloaded his inbox.

But he wanted an efficiency measure, which requires apples-to-apples comparisons to see which jurisdictions are delivering the most output (government services) compared to input (how much is spent on those services).

My one example was in the field of education, where I was ashamed to report that the United States spends more per student than any other nation, yet we get depressingly mediocre results (though that shouldn’t be a surprise for anyone who has looked at this jaw-dropping chart comparing spending and educational performance).

But his query motivated me to do some research and I found an excellent 2003 study from the European Central Bank. Authored by Antonio Afonso, Ludger Schuknecht, and Vito Tanzi, the study specifically examines the degree to which governments are providing value, and at what cost.

The objective of this paper is to provide a proxy for measuring public sector performance and efficiency. To do this we will put together a number of performance indicators in the government’s core functions. …We will set these indicators in relation to the costs of achieving them. We will, hence, derive simple performance and efficiency indicators for 1990 and 2000 for the public sectors of 23 industrialised OECD countries. …As a first step, we define 7 sub-indicators of public performance. The first four look at administrative, education, health, and public infrastructure outcomes. …The three other sub-indicators reflect the “Musgravian” tasks for government. These try to measure the outcomes of the interaction with and reactions to the market process by government. Income distribution is measured by the first of these indicators. An economic stability indicator illustrates the achievement of the stabilisation objective. The third indicator tries to assess allocative efficiency by economic performance.

Here’s a flowchart showing how they measured public sector performance.

I should explain, at this point, that I’m not a total fan of the PSP measure. Most of the indicators are fine, but some rub me the wrong way.

I think an even distribution of income is a nice theoretical concept, for instance, but I don’t think it can be mandated by government (unless the goal is to make everybody poor). Economic stability also isn’t necessarily a proper goal. I’d much rather live in a society that oscillates between 7 percent growth and -2 percent growth if the only other alternative was a society that had very stable 1 percent growth.

But enough nit-picking on my part. What did the study find when looking at public sector performance?

Indicators suggest notable but not extremely large differences in public sector performance across countries… Looking at country groups, small governments (industrialised countries with public spending below 40 percent of GDP in 2000) on balance report better economic performance than big governments (public spending above 50 percent of GDP) or medium sized governments (spending between 40 and 50 percent of GDP).

These are remarkable findings. Nations with small governments achieve better outcomes. And that’s including some indicators that I don’t even think are properly defined!

But what’s most amazing is that the above findings are simply based on an examination of outputs.

So what happens if we also look at inputs to gauge the degree to which governments are delivering a lot of bang for the buck?

Public expenditure, expressed as a share of GDP, can be assumed to reflect the opportunity costs of achieving the public sector performance estimated in the previous section. …Public expenditures differ considerably across countries. Average total spending in the 1990s ranged from around 35 percent of GDP in the US to 64 percent of GDP in Sweden. The difference is mainly due to more or less extensive welfare programs. …we now compute indicators of Public Sector Efficiency (PSE). We weigh performance (as measured by the PSP indicators) by the amount of relevant public expenditure, PEX, that is used to achieve a given performance level.

And what did the experts discover? Just below is a chart showing the results. There’s a lot of data, particularly if you’re looking at individual countries. To see the bottom-line results, look at the numbers circled in red.

As you can see, countries with small governments are far more productive and efficient.

We find significant differences in public sector efficiency across countries. Japan, Switzerland, Australia, the United States and Luxembourg show the best values for overall efficiency. Looking at country groups, “small” governments post the highest efficiency amongst industrialised countries. Differences are considerable as “small” governments on average post a 40 percent higher scores than “big” governments. …This illustrates that the size of government may be too large in many industrialised countries, with declining marginal products being rather prevalent.

The conclusion of the study makes some very important observations.

Unsurprisingly, countries with small public sectors report the “best” economic performance… Countries with small public sectors report significantly higher PSE indicators than countries with medium-sized or big public sectors. All these findings suggest diminishing marginal products of higher public spending. …Spending in big governments could be, on average, about 35 per cent lower to attain the same public sector performance.

Though I can’t help but wonder what the results would have been if Hong Kong and Singapore also were added to the mix.

After all, I don’t consider the United States to have a “small” government. Same for Japan, Switzerland, and Australia. Those are simply nations where government isn’t as big and bloated as it is in France, Italy, Sweden, and Greece.

Imagine the results if you could measure public sector performance and public sector efficiency for the United States and other developed nations in the pre-World War I era, back when the burden of government spending averaged less than 10 percent of economic output.

I strongly suspect we got far more “bang for the buck” when government was genuinely small.

But I don’t want to make the perfect the enemy of the good, so let’s focus on the results of the study. The clear message is that big governments spend a lot more and deliver considerably less.

And that’s a very worrisome message since the burden of government is projected to increase substantially in the United States thanks to demographic changes and poorly designed entitlement programs.

So at the very least, we should do everything possible to reform those programs to keep America from becoming Greece.

And once we achieve that goal, then we can try to reduce the size and scope of government so we’re more like Hong Kong and Singapore, with only about 20 percent of GDP diverted to government.

Then, in my libertarian fantasy world, we can cut, prune, privatize, and eliminate until government once again only consumes about 10 percent of economic output.

Walter Olson

Even by his standards, Paul Krugman uses remarkably ugly and truculent language in challenging the good faith of those who take a view opposed to his on the case of King v. Burwell, just granted certiorari by the Supreme Court following a split among lower courts. Krugman claims that federal judges who rule against his own position on the case are “corrupt, willing to pervert the law to serve political masters.” Yes, that’s really what he writes – you can read it here.

A round of commentary on legal blogs this morning sheds light on whether Krugman knows what he’s talking about. 

“Once upon a time,” Krugman claims, “this lawsuit would have been literally laughed out of court.” [Citation needed, as one commenter put it] The closest Krugman comes to acknowledging that a plain-language reading of the statute runs against him is in the following:

But if you look at the specific language authorizing those subsidies, it could be taken — by an incredibly hostile reader — to say that they’re available only to Americans using state-run exchanges, not to those using the federal exchanges.

New York City lawyer and legal blogger Scott Greenfield responds

If by “incredibly hostile reader,” Krugman means someone with a basic familiarity with the English language, then he’s right.  That’s what the law says. … There is such a thing as a “scrivener’s error,” that the guy who wrote it down made a mistake, left out a word or put in the wrong punctuation, and that the error was not substantive even though it has a disproportionate impact on meaning.  A typo is such an error.  I know typos. This was not a typo. This was not a word misspelled because the scribe erred.  This was a structural error in the law enacted. Should it be corrected? Of course, but that’s a matter for Congress.

While some ObamaCare proponents may now portray the provision as a mere slip in need of correction, as I noted at Overlawyered in July, “ObamaCare architect Jonathan Gruber had delivered remarks on multiple 2012 occasions suggesting that the lack of subsidies for federally sponsored exchanges served the function (as critics had contended it did) of politically punishing states that refuse to set up exchanges.”

Josh Blackman, meanwhile, points out something incidental yet revealing about Krugman’s column: its homespun introductory anecdote about how his parents discovered that they had been stuck with a mistaken deed to their property, fixed (“of course”) by the town clerk presumably with a few pen strokes and a smile, couldn’t possibly have happened the way Krugman said it did. Property law, much more so than statutory construction, is super-strict about these matters.

If your deed is incorrect, you cannot simply get the “town clerk” to “fix the language”. … Mistakes are enforced by courts. That’s why [everyone] should purchase title insurance. … 

So this is the exact opposite example of what Krugman would want to use to illustrate why King is “frivolous.” If courts applied property doctrine to the construction of statutes, this case would be over in 5 seconds. The government loses. 

To be sure, there may be better arguments with which to defend the Obama administration’s side of the King case. But do not look for them in Paul Krugman’s commentary, which instead seems almost designed to serve the function of pre-gaming a possible defeat in King by casting the federal judiciary itself as “corrupt” and illegitimate.  

 

 

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

You Ought to Have a Look is a feature from the Center for the Study of Science, posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger. While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic. Here we post a few of the best in recent days, along with our color commentary.

Leaving the election results aside (noting that they were bad for the Obama administration’s ill-founded and executive-ordered climate policies), we highlight a couple (among the many) interesting climate change–related tidbits scattered among the intertubes.

The first is an analysis of what was left out of the latest (final?) report from the United Nations’ Intergovernmental Panel on Climate Change (IPCC), conducted by Marcel Crok, a Dutch journalist who covers climate change with a somewhat skeptical eye.

Crok recently partnered up with climate researcher Nic Lewis to produce a major analysis of climate sensitivity—one of the key parameters in helping to understand how much influence human activities will have on the future climate—for the United Kingdom’s Global Warming Policy Foundation  (another site that you’ll surely be hearing from in these pages from time to time). Lewis and Crok found that the IPCC greatly overestimated the climate sensitivity based on a critical review of the extant scientific literature on the topic.

In a post this week on his blog (which is sometimes written in Dutch), Crok compares how the IPCC treatment of climate sensitivity changed from being-front-and-center in its 2007 Fourth Assessment Report to being nearly buried in its 2014 Fifth Assessment Report.  

Why the change? Because the more people look at climate sensitivity, the less it looks like the IPCC produced a very good “assessment” of it. Virtually the entirety of their reports are premised on a climate sensitivity of around 3.5°C. A much more realistic value is around  2.0°C—a difference so large as to consign most of the IPCC reports to the dustbin of climate history.

In his article “IPCC Bias In Action,” Crok writes:

The IPCC was saddled with a dilemma. A lot of conclusions in the report are based on the output of models and admitting that the models’ climate sensitivity is about 40% too high was apparently too … inconvenient. So IPCC decided not to mention climate sensitivity anymore in the SPM of the Synthesis Report. It decided to give the world a prognosis which it knows is overly pessimistic. One may wonder why. Did it want to hide the good news?

We could hardly have said it better ourselves!

Another site worth clicking on from time to time is a blog called The Blackboard, run by Lucia Liljegren, and independent climate researcher and all-around busybody. Previously, we have teamed up with Lucia to examine how the observed evolution of the global average temperature compares with expectations of the behavior as produced by climate models. Our results indicated that climate models were not faring too well. While everyone knows this now, 4–5 years ago this was cutting edge, and the establishment wanted nothing to do with it.  Thus, our paper was never published (rejected by several journals). Nevertheless, it was a scientifically robust work that was a harbinger of things to come. It  is available here.

Lucia continues to keep a tab on climate model performance. Recently, she updated her analysis to check to see if reports of the death of the global warming “hiatus” were accurate. Like Mark Twain before her, she found them to be greatly exaggerated. Lucia reports:

Anyway: I’m rather unconvinced ‘the hiatus’ is over. That said: it’s a bit difficult to say for sure because the definition of ‘hiatus’ is rather vague. It does seem to me we are going to need to see quite a bit of warming to overcome the doubts of those who think models are not well suited to predicting warming over periods as long as 20 or 30 years.

The reason for this is simple. It will take several years of warming to establish a significant trend since 1997. For example, if warming began in 2014, at the same rate that was established between the late 1970s and the late 1990s, the “hiatus” would extend to 24 years (using annual data) before the post-1997 trend became significant.

And finally, we’d be remiss if we didn’t point out that level-headed science/science policy researcher Roger Pielke Jr. of the University of Colorado has a new book out that should be of interest to anyone who seeks the truth behind the (lack of) identifiable linkages between extreme weather and human greenhouse gas emissions. His book is called The Rightful Place of Science: Disasters and Climate Change, and it is available from Amazon at the insanely cheap price of only $5. For more info and to see what folks have to say about it, you ought to have a look here.

Ilya Shapiro

While the Supreme Court’s decision last month not to take up the same-sex marriage cases that had accumulate over the summer surprised some (but not all), that “decision not to decide” was easily explained by the absence of a conflict in the lower courts. All of the federal courts of appeal to have ruled had held traditional state definitions of marriage to be unconstitutional. As of this past Thursday, however, that’s no longer the case.

In case you’ve been overly focused on the last few days’ other big legal news, the Cincinnati-based U.S. Court of Appeals for the Sixth Circuit ruled 2-1 in favor of the state marriage laws of Michigan, Ohio, Kentucky, and Tennessee (cases in which Cato filed several briefs). Judge Jeffrey Sutton – whose previous turn in the national spotlight came when he voted to uphold Obamacare’ individual mandate before the Supreme Court got that case – wrote a magisterial opinion rejecting the challengers arguments regarding the Fourteenth Amendment. While I disagree with it for reasons spelled out in Cato’s various briefs, it’s seriously the best possible legal articulation of why states should remain free to restrict marriage licenses to opposite-sex couples. Sutton’s elegant and well-crafted opinion, though ultimately wrong, puts to shame many of the opinions that nevertheless correctly struck down state marriage laws – most notably Seventh Circuit Judge Richard Posner’s, which reads like a stream-of-consciousness college-sophomore sociology paper.

And this development wasn’t surprising. The conventional wisdom was that Sutton would be the swing vote on the panel and that he would invoke Baker v Nelson – the Supreme Court’s 1972 dismissal of a gay-marriage lawsuit “for want of a substantial federal question” – as binding lower courts’ hands notwithstanding Windsor v. United States and other legal developments. Ilya Somin makes an astute observation comparing Sutton’s approach to what he did in the Obamacare case:

Some of the flaws in Sutton’s analysis in the same-sex marriage case bear a surprising resemblance to those of his most famous previous opinion: his concurrence upholding the Obamacare individual health insurance mandate. In that case, he relied on an idiosyncratic interpretation of the distinction between facial and as-applied challenges that went against Supreme Court precedent, and was not adopted by any of the other judges who considered the issue on either the Supreme Court or the lower courts (including the many who voted to uphold the mandate on other grounds). Both opinions combine strong rhetorical statements about the humility required of lower court judges – especially when it comes to deferring to the Supreme Court – with neglect or significant misunderstanding of relevant Supreme Court precedent.

The practical question now is whether the cert-petition process will be completed quickly enough for the Court to consider these cases this term or whether it’s pushed to next fall (meaning a ruling as late as June 2016). Dale Carpenter and Josh Blackman sketch out the twists and turns we can expect, ultimately concluding that it’ll be very close, given that generally only cases the Court takes by early January make it onto the argument calendar for the same term. The challengers will be filing their cert petition(s) this very week, which makes an argument in late April still theoretically possible. 

My bet is that Chief Justice Roberts maneuvers behind the scenes in such a way that argument won’t be until next term begins in October but the ruling will come by Christmas 2015. Of course, if Justice Ginsburg retires or is otherwise unable to perform her duties at any point in this process, the case/ruling will be held up, thus setting up a presidential election in which same-sex marriage figures much more prominently than any we’ve had.

Ilya Shapiro

President Obama has finally managed to strike the proper political tone on something. His nomination of federal prosecutor Loretta Lynch is unlikely to ruffle the feathers of the lame duck Congress and should let the Justice Department operate with less political opposition. Like George W. Bush’s appointment of Michael Mukasey to replace the embattled Alberto Gonzalez, Lynch is likely to be a low-profile steady hand to replace the radioactive Eric Holder.

At the same time, picking the first black woman AG allows the president to further his diversity agenda without spending tremendous political capital (which he doesn’t now have) – in a way that wouldn’t have been possible with Tom Perez, the controversial labor secretary who was also thought to be a contender for the job. All in all, while I’m sure I’ll disagree with some of Lynch’s enforcement decisions, this nomination means that legal analysts’ focus will largely remain on those policy issues rather than the controversial personalities and politics behind them.

Michael F. Cannon

I applaud the Supreme Court’s decision to grant certiorari in King v. Burwell.

Since January, the Obama administration has been spending billions of unauthorized federal dollars, and subjecting nearly 60 million Americans to unauthorized taxes, all to hide the full cost of the Patient Protection and Affordable Care Act, or ObamaCare. The administration’s actions have not only violated the law and caused massive economic disruption, they have also subverted the democratic process. The plaintiffs in Pruitt v. BurwellHalbig v. Burwell, King v. Burwell, and Indiana v. IRS seek to put an end to those unlawful taxes and spending.

The Supreme Court’s decision is a rebuke to the Obama administration and its defenders, who dismissed as frivolous the plaintiffs’ efforts to defend their right not to be taxed without congressional authorization.

It is essential that these cases receive expedited resolution, if only to eliminate the uncertainty currently facing states, employers, insurers, and taxpayers.

Most important, these cases deserve expedited consideration because only they can bring an end to the greatest domestic-policy scandal of this administration.

Click here for reference materials on these cases, including all court filings and judicial opinions. Click here for news and opinion coverage of these cases.

David Boaz

At NBCNews.com, I make the case for term limits in a video sidebar to Meet the Press.

For those who prefer print, I summarize my argument here (not all of which survived NBC’s editing):

Only 15 percent of Americans approve of Congress’s performance. Yet we’re about to have another election where more than 90 percent of incumbents are reelected. In fact, the most common reelection rate for House members over the past 30 years is 98 percent.

98 percent reelection—that’s what you expect to see in Russia, not in a democracy.

Americans don’t want a permanent ruling class of career politicians. But that’s what the power of incumbency and all the perks that incumbents give themselves are giving us.

We want a citizen legislature and a citizen Congress—a government of, by, and for the people.

To get that, we need term limits. We should limit members to three terms in the House and two terms in the Senate. Let more people serve. Let more people make the laws.

And let’s get some people who don’t want to make Congress a lifelong career.

Some say that term limits would deprive us of the skills of experienced lawmakers. Really? It’s the experienced legislators who gave us a $17 trillion national debt, and the endless war in Iraq, and a Veterans Affairs system that got no oversight, and massive government spying with no congressional oversight, and the Wall Street bailout.

Politicians go to Washington and they forget what it’s like to live under the laws they pass. As we’ve seen in some recent elections, they may not even keep a home in the district they represent.

The American Founders believed in rotation in office. They wanted lawmakers to live under the laws they passed—and wanted to draw the Congress from people who have been living under them.

For more on term limits, see the Cato Handbook for Congress, Ed Crane’s 1995 congressional testimony, or this very thoughtful article by Mark Petracca, “The Poison of Professional Politics.”

Randal O'Toole

Having taken both houses of Congress, Republicans are eager to make changes. Here are some guidelines they should follow:

1. Learn from history.

At least since the Clinton administration, this country has suffered from a consistent pattern: First, one party takes the White House and Congress. Thrilled with the taste of power, they overreach, provoking a backlash. This allows the other party to soon take control of at least one house of Congress, leading to gridlock for the next several years.

Republicans can avoid this scenario. Instead of immediately trying to pass legislation that will please certain of their constituents, Republicans should propose changes that will build strategic alliances with a wide range of groups. That may mean an incremental approach to change, but each increment should be designed to make the next increment more—not less—politically feasible.

2. Focus on fiscal issues.

Part of the historic pattern is that Democrats win on social issues while Republicans win on fiscal issues. Whichever party is in power usually shoots itself in the foot by giving the other party ammunition on its winning issues. For example, Democrats’ obsession with government-run health insurance turned a social issue—poor people’s access to health care—into a fiscal issue. Republicans’ obsessions with abortion and gay rights give Democrats tools to bring them down.

Since tax and fiscal issues are what Republicans win on, they should stick to those issues. That means no introducing bills to limit third-trimester abortions, no proposals for constitutional amendments to declare that marriage is between a man and a woman, and no efforts to open the Arctic National Wildlife Refuge (ANWR) to oil drilling. Any of those efforts would give fiscal liberals the openings they need to retake at least one house of Congress in 2018 (if not 2016), thus restoring gridlock.

3. Fix incentives, not outcomes.

Nearly all of the problems with the federal government are due to poor incentives. It is incentives that determine what agencies do and whether they will be efficient doing it. In the long run, if the incentives are right, everything else will take care of itself (including a reduction in the size of government).

Unfortunately, members of Congress almost never think about incentives when they pass legislation—or when they do, they think about them the wrong way, as in “How can I create an incentive to produce the outcome I want?” Instead of worrying about outcomes, Congress should create a level playing field, with a minimal amount of regulation and subsidies.

4. Tread lightly on the environment.

We can have a cleaner, healthier environment without strict government mandates and regulation. One way is to protect the environment through better incentives. Without exception, environmental issues consist of resources that are not properly marketed (such as water or endangered wildlife) threatened by resources that are (such as minerals or oil & gas drilling). Too many people think the market resource is the evil, but the real evil is that some resources are not in the market. Creating markets for those resources will go far toward protecting them.

Treading lightly means not trying to force oil drilling in ANWR, not opening up public lands to more subsidized cattle grazing, and not declassifying wilderness areas to allow more fracking. Instead, let energy companies and other land users demonstrate that they can do a responsible job on lands that are less controversial first, then allow them to bid on doing the same (without subsidies) on public lands, while letting environmental groups submit bids to keep areas that they regard as critical closed to development.

5. End the war on drugs.

The war on drugs has been fought for more than a century with little success and much harm, as the United States has just about the highest incarceration rate in the world. Ending the war doesn’t mean letting school children take heroin any more than ending Prohibition let school children drink hard liquor. Nor does it mean imposing such high taxes on drugs like marijuana that people would continue to buy them on the black market. Since Prohibition ended more than 80 years ago, we have the experience of 51 sets of state and D.C. laws regarding alcohol, and we can pick the best of those and encourage states to apply them to drugs as well.

6. Give up on the war on illegal immigration.

After losing on abortion and gay marriage, immigration is the next social issue for Republicans to lose and Democrats to make hay. Considering that Latinos are one of the nation’s fastest-growing demographics, and that they regard a war on illegal immigration to be a war on their families, Republicans should reverse course. The economic truth is that immigrants have always added more to our economy than they take away, and by achieving the American dream for themselves, they create demand for more work for people who already live here.

Worries that immigrants will abuse our welfare system are just symptoms that the welfare system should be reformed, for if it gives immigrants bad incentives, it must also give American citizens bad incentives. Reversing course on immigration is not just the economically correct thing to do, it is also politically strategic because it will allow Republicans to regain the support of Latinos, many of whom hold conservative beliefs and should feel right at home in a Republican Party that doesn’t treat them as enemies of the state.

Conclusions

These suggestions presume that the people who will take charge of Congress next January are sincerely interested in the economic health and future vitality of this country, and not just in their own short-term political and economic prospects. That’s a strong assumption based on past behavior, but it’s one I’m willing to make, especially with respect to many of the newcomers over the past four years who came in with fiscally conservative goals . If they follow these guidelines, the United States should return to strong economic growth, which in turn should support a healthier environment.

Roger Pilon

When Republicans take control of the Senate in January, should they revive the judicial filibuster that Democrats instituted in 2003 when George W. Bush was president, but ended last November when Republicans were filibustering Obama nominees? That heads-I-win-tails-you-lose question probably answers itself, but the background is a bit more complicated.

In fact, in a post I rushed into print yesterday morning I mangled some elementary filibuster facts, which I partially corrected late in the day after a reader kindly alerted me to the error. I’m tempted to say that an impostor was writing under my name, but the better explanation perhaps is too little sleep from following overnight election returns. In any event, it turns out that Harry Reid, having gone “nuclear” by ending the judicial filibuster a year ago is in no worse shape going into the next two years, as I’d initially implied, than he would have been had he kept it in place. It’s after that, if there’s a Republican president, that he’ll no longer have the filibuster at hand.

So what’s going on here? Let’s start at the beginning. Article I, section 5 of the Constitution says that “Each House may determine the Rules of its Proceedings.” As students of the subject know, those rules can be arcane. And they change, about which there are also rules. The filibuster is a case in point. It’s nowhere in the Constitution, and it’s changed over the years. On the merits, a good case can be made on either side of the practice. In general, it can keep bad (or good) laws from being enacted—or bad (or good) laws from being removed. In the abstract, therefore, it’s a wash. Empirically, it depends on the history of its use—and where you sit.

It’s on legislation, however, that we usually think of the filibuster, not on executive branch nominations, and for good reason. As Ed Whelan wrote at NRO yesterday:

Filibusters over legislation date back to the 1830s. By contrast, nominations (as this law-review article co-authored by parliamentary expert Martin B. Gold puts it) were “swept into” a reform of the filibuster only in 1949 and “only by happenstance.” And … even after this nominal inclusion of nominations in the filibuster rule in 1949, Senate practice continued to regard the partisan filibuster of judicial nominees as illegitimate.

In fact, apart from the anomalous 1968 filibuster of Abe Fortas, there were no judicial filibusters until 2003, when Democrats, having just lost the Senate, began the practice to block Bush’s nominees. (During the previous two years they simply sat on his nominations, as I discussed in detail here.) And Democrats continued the practice until the 2005 “Gang of 14” compromise was imposed, after which things settle down a bit. But as Republicans discovered, selectively, the judicial filibuster remained an option once Obama was elected.

That changed when Harry Reid went nuclear last November—ending the practice without regard to the two-thirds rule for changing Senate rules (not to be confused with the three-fifths filibuster rule). And that’s where the hypocrisy comes in: Senate Democrats began judicial filibusters in 2003, when they were in the minority and a Republican was in the White House; they ended the practice when Republicans were in the minority and a Democrat was in the White House. If there’s going to be a rule, it’s got to apply equally—few “meta-rules” are more basic than that.

And that’s just the problem with proposals that are in the air to restore the judicial filibuster now that Republicans have retaken the Senate. I discussed similar proposals when they arose a year ago, after Reid went nuclear. The newest ones are discussed more fully by Ed Whelan in the piece linked above, and in a piece in today’s Wall Street Journal by Senator Orrin Hatch and Ambassador C. Boyden Gray. In a nutshell, with Democrats having twice now demonstrated their unwillingness to “play by the rules”—whatever they may be—it’s no time for Republicans to unilaterally disarm, as Hatch and Gray put it. You don’t have to be a partisan to understand that.

 

Walter Olson

If money rules American politics, as we constantly hear from some quarters, you sure couldn’t tell from the stunning upset in the Maryland governor’s race (which I saw coming, having had a good chance to watch as a local resident and citizen volunteer.) Here’s blogger/Republican consultant Mark Newgent:

Anthony Brown lost despite outspending Larry Hogan by $15 million and with the aid of two Super PACs. Hogan took public financing. The Maryland gubernatorial race shows that no amount of money can change a bad message — or overcome a lack of message. The Maryland Democratic Party screamed like banshees over the Citizens United decision yet bit their collective tongue when their candidate availed himself of the very “dark money” they pretend to abhor. That Brown supporters Ben Cardin, Barbara Mikulski, and Donna Edwards all supported amending the First Amendment to allow Congress to regulate speech reveals that [some] Maryland Democrats don’t dislike money in politics — they dislike the opposition’s money in politics.

Mayor Michael Bloomberg’s gun control group alone said it would pour $500,000 in outside money into attacking Hogan. That had no visible effect, and it was worth putting up with the ads for the sake of getting a governor who certifiably owes nothing whatever to Michael Bloomberg. 

We now return you to the regularly scheduled rants about how American democracy cannot possibly survive the free-speech guarantees of Citizens United.

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