17 February 2010

Today’s Tabbloid
PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com

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Tuesday Links [Cato at Liberty]

FEB 16, 2010 05:40P.M.

By Chris Moody

• How the Tea Party movement can prove its authenticity.

• Why Americans’ first loyalty must be to the Constitution

• “Snowmageddon!” If you’ve been watching the news, recent snow

storms both prove and disprove global warming, depending on who
you talk to. According to Pat Michaels, both sides are wrong: “The
fact of the matter is that global warming simply hasn’t done a
darned thing to Washington’s snow. The planet was nearly a degree
(Celsius) cooler in 1899, when the previous record was set. If you In Monty Python’s Quest for the Holy Grail, the assembled knights look
plot out year-to-year snow around here, you’ll see no trend in awe upon the imposing walls of “Camelot”… until someone points out
whatsoever through the entire history.” that “it’s only a model.”

• Did last week’s government shutdown actually save American’s I feel I’m watching a remake of Quest every time I read another blog post
billions of dollars? about the economics paper “Anti-Lemons” by MacLeod and Urquiola.

• Podcast:”Scrap ‘Don’t Ask, Don’t Tell’” featuring Christopher A. Matt Yglesias reproduced its abstract last month, saying “I would have to
Preble. pay $5 to read the whole paper, but the abstract conveniently supports
political positions I like, so I’ll talk about it some more.” That, needless
to say, isn’t the sort of talk that calls for a thoughtful response.

FISCALLY CONSERVATIVE BLOG FEEDS But now that Megan McArdle has picked up the thread from a second
Yglesias post, read the paper, and it given it a favorable verdict, it’s time
It’s Not Camelot, ‘It’s Only a to point out that “it’s only a model” — and not a very good one at that.

Model’ [Cato at Liberty‘It’s Only “Anti Lemons” is not an empirical study. Instead it presents a series
of abtract mathematical models with arbitrary assumptions. The final
a Model’] model purports to demonstrate the authors’ conclusion that “For-profit
FEB 16, 2010 04:09P.M. entry turns out to be feasible, despite these assumptions, as long as
private schools can cream skim the highest ability students from the
By Andrew J. Coulson public system.”

What are the authors’ assumptions?

i) individuals differ only with respect to innate ability

ii) all schools are equally productive

iii) for-profit schools must operate unsubsidized

The first two of these assumptions are nonsense and the third

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
contravenes the whole point of a school choice program (whether tax
credits or vouchers), which is to subsidize access to private schooling for
those who could not otherwise afford it.
As if these problems were not enough, the model also
incorrectly assumes that when academic selectivity is permitted, every
private school will not only select students based on academic entrance
tests, but that they will all use the same test. Like the others, this
assumption is out of touch with reality. When I analyzed survey data for
Arizona private schools in 2006, I found that nearly half of all private
schools were not academically selective. Only a third actually
administered an academic admissions test of any kind. The only
admissions criteria applied by a majority of schools were measures of
student and parent desire to attend the school and students’ and parents’
willingness to abide by its code of conduct.
So the MacLeod and Urquiola model has precious little to do with reality.
It tells us nothing about the real world or about tax credit or voucher
programs or proposals. In fact, it seems to serve no productive purpose
whatsoever, unless one considers it productive to give left-wing bloggers
a study abstract to talk about that “conveniently supports political
positions [they] like.”
Though MacLeod and Urquiola briefly discuss a modified model that
relaxes the proscription against subsidization of private schools, its other
erroneous assumptions remain and so it produces a result that is, not
surprisingly, completely at odds with the reality established by the large
body of empirical findings in this field.
Last year, I reviewed the worldwide literature comparing public and
private schools (65 studies reporting 156 different statistical findings)
and found that the statistically significant findings favor private schools
by a margin of roughly 8 to 1. More importantly, when we focus more
precisely and compare truly market-like school systems to monopolies
such as U.S. public schooling, the statistically significant results favor
markets by a margin of nearly 15 to 1 (and they greatly outnumber the
insignificant findings as well). It is thus the least regulated private
schools that show the most consistent advantage.
MacLeod and Urquiola mischaracterize that research literature as
follows: “there is no consistent evidence that introducing choice
substantially improves learning, or that private schools have higher value
added than public ones.” The sources they cite to back up their
mischaracterization are both incomplete and imprecise, failing to look at
a large swath of the research and failing to distinguish among various
forms of “choice” with fundamentally different features.
So, no, the “Anti-Lemons” study is not the Camelot it is cracked up to be
by recent rhapsodic blog posts. It’s not even a good model.
[Should anyone want to interject Hsieh and Urquiola’s 2006 empirical
study of the highly regulated Chilean voucher system at this point, I’ve
already offered my thoughts on it here.]
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17 February 2010
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The Government Has Your
Baby’s DNA [Cato at Liberty]
FEB 16, 2010 02:52P.M.
By Jim Harper
My 2004 Cato Policy Analysis, “Understanding Privacy — and the Real
Threats to It,” talks about how government programs intended to do
good have unintended privacy costs. “The helping hand of government
routinely strips away privacy before it goes to work,” I wrote.
There could be no better illustration of that than the recent CNN report
on government collection and warehousing of American babies’ DNA.
“Scientists have said the collection of DNA samples is a ‘gold mine’ for
doing research,” notes a sidebar to the story.
I have no doubt that it is—and that government-mandated harvesting of
this highly valuable personal data from children is an unjust enrichment
of the beneficiaries.
FISCALLY CONSERVATIVE BLOG FEEDS
Evan Bayh and Congressional
Comity [Cato at Liberty]
FEB 16, 2010 02:50P.M.
By Roger Pilon
Today Politico Arena asks:
Is Bayh’s lament on target?
My response:
The heart of Evan Bayh’s surprising announcement yesterday that he
would not be seeking another term in the Senate was captured in three
short sentences:
For some time, I have had a growing conviction that Congress
is not operating as it should. There is too much partisanship
and not enough progress — too much narrow ideology and
not enough practical problem-solving. Even at a time of
enormous challenge, the peoples’ business is not being done.
Beguilingly attractive as those sentiments may be, suggesting that some
Golden Age of congressional comity has been lost, a candid look at our
history shows that comity has been the exception, not the rule. And it’s
occurred mainly when one party dominated Congress, as Democrats did
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during a fair part of the post-War period while Republicans were
searching for their identity. So why not over the past year, when those
conditions seemed to be in place? Is there something about today’s
congressional divisiveness that distinguishes it from the past? I submit
that there is, that it’s not narrow policy differences that mainly underpin
what we’re seeing, but that the nation is up against a
fundamental reality that much of the public is coming to see, even if
many in Congress are slow to grasp it.
To barely summarize the matter, the Constitution sets forth a plan for
limited government, not for government engaged in all manner of
“problem-solving,” as Bayh put it – the problems of private life,
mostly, from retirement security, to health care, education, job-creation,
you name it. But for more than a century, Progressives have worked to
overturn that design. And their something-for-nothing promises that
have spurred the ever-greater socialization of life have attracted enough
people to make it seem that we were, wonderfully, “all in this together,”
especially since the costs of socialization were largely put off to the
future. That’s the “comity” of the good life on borrowed money. But those
costs cannot be put off forever. Eventually, they come due. And when
they do, the differences between those who come finally to recognize
reality, and those who still live the dream, are irreconcilable — because
reality doesn’t “compromise.” I submit that we’re now at that point.
Not that there haven’t been voices decrying our episodic flights from
reality all along — indeed, from the nation’s founding. But the post-New
Deal trends, and the critique of those trends that came to wider
attention through the Goldwater-Reagan revolution within the
Republican Party, which the two Bush presidencies inflamed and thus
sharpened, have produced a perfect congressional storm, so to speak,
with irreconcilable proposals for how to get out of the mess looming
before us. At bottom, in short, two different conceptions of government
are at war.
Senator Bayh tells us that he looks forward to working with the president
during the next 11 months ”to get our deficit under control, get the
economy moving again, regulate Wall Street to avoid future financial
crises, and reform education.” Yet his party’s actions, building on
many of the Bush administration’s, have given us a
deficit unprecedented by orders of magnitude, an economy stagnating
due largely to political uncertainty, an analysis of our financial crisis that
blames Wall Street while all but ignoring the role of the Fed and
government-sponsored enterprises like Fannie and Freddie, and an
approach to educational “reform” that denies poor children in the
District of Columbia the vouchers that have enabled them to flee our
appalling public schools. Compromise? How does one compromise with
a proposal to expand Medicare when the program itself is moving fast
toward bankruptcy?
Which brings us to the nub of the matter. It’s easy to get into socialism.
Getting out is much harder, as the nations of Eastern Europe discovered,
and are still seeing. It is here that compromise and comity are needed —
to chart a way out. But that will never be achieved as long as there are
enough in Congress who cling to the something-for-nothing myths that
have brought us to this state. A comity that shields us from this reality is
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17 February 2010
no answer to the divisiveness before us. If the elections of the past few
months are any indication, the people are ahead of the politicians in
seeing this — and that’s a good thing. If war is needed to reclaim a
footing in reality, bring it on.
FISCALLY CONSERVATIVE BLOG FEEDS
The Capture of Mullah Baradar
in a Regional Context [Cato at
Liberty]
FEB 16, 2010 02:48P.M.
By Malou Innocent
The capture of the Taliban’s top military commander, Mullah Abdul
Ghani Baradar, is a success in the broader war on terror; however, only
time will tell whether it signals Pakistan is convinced that its future
security no longer lies in its support for Islamist proxies.
It is important to recognize that this apprehension was not a result of
blunt military force, but a direct result of diligent intelligence gathering
by the military and CIA, in close cooperation with Pakistan’s Inter-
Services Intelligence. This fact serves to further question our objectives
in Afghanistan, where blunt military force is the main solution. Indeed,
over 100,000 U.S. and coalition troops are deployed, large amounts of
resources are expended, and lives are continually lost for what President
Obama’s national security adviser, Gen. James Jones, noted in October,
“is less than 100 [al-Qaeda] operating in [Afghanistan].”
Another important point is that for years the United States and Pakistan
were not on the same page at the strategic level. Pakistan’s cooperation
in this recent operation could signal a shift in its strategic thinking;
however, U.S. policymakers must recognize that along with an increased
push toward negotiating with ground insurgents, they must also
acknowledge how Pakistan’s strategic orientation and its regional
tensions with India impact Afghanistan. Only by developing a
comprehensive South Asia strategy and moderating the strategic
competition between India and Pakistan will there be hope for anything
more than temporary peace in Afghanistan. In this respect, while Mullah
Baradar’s capture is great news, it might do little to compel regional
belligerents to alter their policies as it impacts Afghanistan—the
underlying source of the Afghan mission’s vulnerability.
In short, the broader policy prescription of remaining in Afghanistan
without addressing Pakistan’s use of extremist proxies vastly
oversimplifies the conditions that exist between Pakistan and India and
the ability of present solutions to influence their policies. Long-term
stability will only come about when all countries in the region are on the
same page, but judging from history, that prospect looks unlikely.
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
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Rhode Island District Fires All
its HS Teachers [Cato at
Liberty]
FEB 16, 2010 12:07P.M.
By Andrew J. Coulson
Performance, it seems is abysmal. The district’s high school graduation
rate is said to be less than 50 percent, and things have been bad for a
long time. Charged with turning things around, the superintendent
asked teachers (who are making between $70,000 and $78,000 vs. the
town’s median income of $22,000) to work an extra 25 minutes a day,
provide tutoring on a rotating schedule, and have lunch with the kids
once a week. The union said no. So superintendent Frances Gallo went
reluctantly to plan B: she fired the school’s entire staff.
Union leaders seem to think that the old rules still apply. Maybe they do,
for now. The union plans to challenge the firings and it remains to be
seen if they’ll find a way to reverse them.
But America is reaching a tipping point after which the old rules will go
out the window. Having more than doubled public school spending per
pupil in real terms over the past 40 years and not seen a smidgen of
improvement in outcomes at the end of high school in return, having
become frustrated that we have choice in virtually every area of life
except public education, Americans are starting to chafe. When an
education system fails to deliver on its promises for generation after
generation, Americans will ultimately throw it on the scrap heap of
history, and find something that will fulfill their educational needs and
ideals. Yes. We. Can.
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17 February 2010
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Tea Party Optimism and
Skepticism [Larry Kudlow’s
Money Politic$]
FEB 16, 2010 12:04P.M.
Money and politics is about my favorite topic (apart from spiritual faith,
of course). And we had plenty of both in the last day or two.
Moderate Democrat Evan Bayh retires from the Senate, kind of sticking
it to Team Obama (and by the way, Harry Reid), basically saying, “You
know, if you quit all this left-wing, cap-and-trade, government-takeover-
of-health-care stuff, and the constant political favors and favoritism to
the unions, especially the government employee unions, you might have
a shot at saving your presidency and containing the midterm-election
losses this November.”
But Mr. Bayh’s departure also opens up an eighth solid potential GOP
Senate seat. And that brings Washington that much closer to grid-
locking the left wing — something that stock markets and the investor
class are cheering, with share prices jumping 170 Dow points today.
Might the tax hikes be stopped? It’s possible. Might the big-government
assault on businesses and capital and free markets be stopped, or at least
slowed? Again, it’s possible.
And then there’s the Gov. Chris Christie story. Out of the blue the
moderate Republican turns to Reaganism by announcing a freeze on $1.6
billion of unspent balances, according to the Wall Street Journal, saying
“government is the problem, not the solution.” It’s a veritable shot across
the bow of Washington big-government leftism. The freeze might save
New Jersey from bankruptcy. It might even save socialist Greece by
setting an example of fiscal responsibility (although that’s a bit far-
fetched). Heck, it might even save America from bankruptcy if the
political class in Washington takes notice.
Meanwhile, the tea-party movement rolls on. I call it free-market
populism, or “leave us alone and let us keep more of what we earn.” Fifty
leaders are meeting with RNC chair Michael Steele, and I sure hope Mr.
Steele listens carefully. It’s Scott Brown, Chris Christie, Bob McDonnell,
Prop. 13, Ronald Reagan, and the Constitutional Fathers all rolled into
one. (There’s even a little bit of tea party in Germany, which so far is
rejecting a bailout of Greece.)
But here’s the rub. The price of gold is booming again, up huge today,
despite the fact that the dollar has been rising. This is a message of tea-
party skepticism. It’s a message that worldwide big government spending
is still the dominant political thinking.
The dollar is not really strong; it’s the euro that’s very weak. But gold is
saying a pox on all your houses. It’s a currency substitute. It’s an
inflation play. It says that all this government spending will eventually be
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
monetized by big-government central-bank money-creation. Therefore,
gold becomes a safe harbor, still doubtful that a tea-party revolution in
the U.S. will actually come to pass and possibly spread around the world.
Because I share the tea-party optimistic view that We the People,
Thomas Jefferson style, can overturn central-planning elites and the left-
wing college professors, I am hoping that the gold rally falls short.
Time will tell.
FISCALLY CONSERVATIVE BLOG FEEDS
Food Stamp Price Tag Rising
[Cato at Liberty]
FEB 16, 2010 09:18A.M.
By Tad DeHaven
Food stamp usage is at record levels according to the New York Times,
with one in eight Americans now receiving benefits. There are several
reasons for the upswing, including expanded eligibility in the 2000s and
the severe economic downturn. The following chart shows the dramatic
rise in spending for the Supplemental Nutrition Assistance Program,
known as the Food Stamp program until 2008 when Congress changed
its name to sound more palatable.
Most Americans think that we should aid those in real need, but
individuals should do so voluntarily without resorting to forced
government transfers.
The Times gives three examples of people who recently started receiving
food aid. Each offers some food for thought.
The first is a 45 year-old Harlem widow with an annual income of
$15,000. A food bank had encouraged her to apply for the benefits:
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17 February 2010
A big woman with a broad smile, Ms. Bostick-Thomas swept
into the group’s office a few days later, talking up her
daughters’ college degrees and bemoaning the cost of oxtail
meat. “I’m not saying I go hungry,” Ms. Bostick-Thomas said.
“But I can’t always eat what I want.” The worker projected a
benefit of $147 a month. “That’s going to help!” she said. “I
wouldn’t have gone and applied on my own.”
I don’t know this woman’s exact circumstances, and there’s no reason to
doubt she needs assistance. But aren’t her college-educated daughters in
a position to help their mother? Government welfare undermines the
traditional role the family played in mutual assistance.
Here’s the second example:
Juan Diego Castro, 24, is a college graduate and Americorps
volunteer whose immigrant parents warned him “not to be a
burden on this country.” He has a monthly stipend of about
$2,500 and initially thought food stamps should go to
needier people, like the tenants he organizes. “My concern
was if I’m taking food stamps and I have a job, is it morally
correct?” he said.
But federal law eases eligibility for Americorps members, and
a food bank worker urged him and fellow volunteers to apply,
arguing that there was enough aid to go around and that use
would demonstrate continuing need. “That meeting definitely
turned us around,” Mr. Castro said.
This fellow’s annualized monthly stipend is more than I made in my first
job in Washington. And for Mr. Castro, who was warned not to be a
burden on this country, he ought to be told that the federal Americorps
program is exactly that. But more disconcerting is the fact that the food
bank worker urged him and his colleagues to go the dole in order to
advertise it.
This anecdote illustrates Michael Tanner’s argument that government
poverty programs serve vested interests:
Among the non-poor with a vital interest in anti-poverty
programs are social workers and government employees who
administer the programs. Thus, anti-poverty programs are
usually more concerned with protecting the prerogatives of
the bureaucracy than with fighting poverty.
The last example from the Times is a Colombian immigrant who missed
three months of work as a janitor because she fell and had to have knee
surgery:
Last November, she limped into a storefront church in
Queens, where a food bank worker was taking applications
beside the pews.
About her lost wages, she struck a stoic pose, saying her san
cocho — Colombian soup — had less meat and more
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plantains. But her composure cracked when she talked of the
effect on her 10-year-old daughter. “My refrigerator is
empty,” Ms. Catano said.
Last month, Ms. Catano was back at work, with a benefit of
$170 a month and no qualms about joining 38 million
Americans eating with government aid. “I had the feeling that
working people were not eligible,” she said. “But then they
told me, ‘No, no, the program has improved.’”
This is precisely the sort of person that is deserving of charity. But the
federal government isn’t a charity; it is a forced transfer machine. The
less fortunate, and society as a whole, would be better off if the taxes paid
to support inefficient, counterproductive government programs were
instead left in the hands of supportive individuals and organizations.
See this essay for more on government food subsidies.
FISCALLY CONSERVATIVE BLOG FEEDS
China’s Dilemma [Cato at
Liberty]
FEB 16, 2010 09:06A.M.
By David Boaz
In the Wall Street Journal, Ian Buruma puts Google’s conflict with China
in its historical context: the long struggle by China’s leaders to have the
benefits of knowledge and trade from around the world without
loosening their own hold on the Chinese people:
One way of dealing with this problem was to separate
“practical knowledge” from “essential” culture, or ti-yong in
Chinese. Western technology was fine, as long as it didn’t
interfere with Chinese morals and politics. In practice,
however, this was not feasible. Political ideas came to China,
along with science, economics, and Western religion. And
they did help to undermine the old established order. One of
these ideas was Marxism, but once Mao had unified China
under his totalitarian regime, he managed for several decades
to insulate the Chinese from notions that might undermine
his power.
Once China opened up to the world for business again in the
late 1970s, under the leadership of Deng Xiaoping, the old
problem of information control emerged once again. Deng
and his technocrats wanted to have the benefit of modern
economic and technological ideas, but, like the 19th century
mandarins, they wished to ban thoughts which Deng called
“spiritual pollution.” The kind of pollution he had in mind
was partly cultural (sex, drugs and rock ‘n’ roll), but mainly
political (human rights and democracy).
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17 February 2010
Way back in 1979, David Ramsay Steele of the Libertarian Alliance in
Great Britain wrote about the changes beginning in China. He quoted
authors in the official Beijing Review who were explaining that China
would adopt the good aspects of the West — technology, innovation,
entrepreneurship — without adopting its liberal values. “We should do
better than the Japanese,” the authors wrote. “They have learnt from the
United States not only computer science but also strip-tease. For us it is
a matter of acquiring the best of the developed capitalist countries while
rejecting their philosophy.” But, Steele replied, countries like China have
a choice. “You play the game of catallaxy, or you do not play it. If you do
not play it, you remain wretched. But if you play it, you must play it. You
want computer science? Then you have to put up with striptease.”
As I wrote on the eve of the Beijing Olympics, China is launched on a
long process of economic growth and openness to the world, which is
inevitably leading to political unrest and challenges to established
authority. I believe that the changes in China over the past generation
are the greatest story in the world — more than a billion people brought
from totalitarianism to a largely capitalist economic system that is
eroding the continuing authoritarianism of the political system. In the
long run, I think that the attractions of growth and openness will
overwhelm the rulers’ attempt to maintain their hold on power. But that
process is rarely entirely peaceful, and we can expect conflicts of all kinds
as this struggle proceeds.
FISCALLY CONSERVATIVE BLOG FEEDS
School Choice, Realpolitik, &
Brookings [Cato at Liberty]
FEB 16, 2010 08:38A.M.
By Andrew J. Coulson
Jay Greene has responded to my review of the new Brookings Institution
school choice report which he co-authored, raising a crucial issue for the
education policy and research communities. Jay points out that the
report is a work of realpolitik rather than scholarship, and as such
contends that it must find a compromise between the policies best
supported by the evidence and those that have a real chance of being
implemented. He makes the related argument that incrementalism is the
only realistic path to success.
I agree with Jay that it’s good for analysts to find ways of improving
current policy even when the ideal policies are not politically feasible.
But these realpolitik recommendations must be clearly distinguished
from the ideal policies themselves. Analysts should report both viable
compromise reforms AND ideal policies, explaining to policymakers the
likely costs and risks associated with the compromises–the reasons why
they are inferior. Failing to do this leads to two serious problems:
First, presenting only the compromises robs the public and its elected
representatives of crucial information, making it more difficult to build
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support for the ideal policies and leading to guilt by association when the
compromise policies prove disappointing for reasons that should have
been — but were not — clearly laid out in advance.
Second, when analysts don’t present their ideal policies and the evidence
(if any) on which they are based, there is no way for the public or
policymakers to judge the wisdom of their realpolitik
compromise recommendations. This is particularly problematic when
the analysts’ recommendations conflict with what the available evidence
shows to be ideal policy.
As to the need for incrementalism in U.S. policy reform, the evidence is
not entirely one-sided. The Emancipation Proclamation did not give
slaves a 50 percent share in themselves, rising gradually to 100 percent
over time. When women won the franchise, it was not at a discounted
rate — one female vote equal to 1/3 or 1/2 of a male vote. They won the
right to vote outright. Prohibition was not undone gradually, with
beverage categories being re-legalized in order of alcohol content. I’m
sure we could think of other major policy shifts in U.S. history that were
not incremental.
In all of the above cases, major social movements were necessary to win
the day, and if scholars and advocates who knew better had championed
only half-measures instead of the policies they knew to be right, it surely
would have delayed the eventual victories. Scholars who know what kind
of school choice is necessary to best serve children should clearly
advocate such policies, especially in any context in which they also offer
any interim recommendations they deem more politically feasible.
And even if we grant, for the sake of argument, that all school choice
policies must be incremental, there are incremental policies already in
existence that are highly consistent with ideal policy. Existing
scholarship donation tax credits such as those in PA, FL, RI, etc., and
personal use education tax credits such as those of Illinois and Iowa, are
expanding organically over time. Eventually, as that expansion
continues, they could be combined and thus ensure universal access to
the education marketplace without needing to impose regulations on
private schools that the research shows to be intrusive and
counterproductive. By contrast, it is hard to see how introducing federal
regulation of virtual schools (a Brookings Report recommendation)
moves us close in the direction of the minimally regulated parent-driven
markets supported by the evidence.
So, yes, let’s be realistic in our policy recommendations, but let’s also be
clear about the ideal policies indicated by the empirical evidence, so that
policymakers and the public hear a consistent message about where we
need to go.
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17 February 2010
FISCALLY CONSERVATIVE BLOG FEEDS
Cantwell-Collins Energy Bill
Not a CLEAR Choice
[Americans for Tax Reform]
FEB 15, 2010 05:20P.M.
On December 11, 2009 Senator Maria Cantwell (D – WA) and co-
sponsor Senator Susan Collins (R – ME) introduced a new carbon-
limiting bill that has hints of the Waxman-Markey Cap-and-Tax bil...
FISCALLY CONSERVATIVE BLOG FEEDS
Washington Is Booming in the
Bush-Obama Years [Cato at
Liberty]
FEB 15, 2010 05:17P.M.
By David Boaz
Unemployment is high in most of the country, but the Washington area
is adding jobs — at least in the government sector:
Walking around the District, Abel Lomax can’t help but look
around and think: What recession?
After a stint abroad, it took the 27-year-old just four months
to find a job with the government — not bad for the Great
Recession. And the neighborhoods where he spends his time
sport new restaurants crowded with patrons enjoying Czech
Pilseners and Wagyu beef brisket….
With thousands of new federal and government-related jobs,
Washington has benefited from some of the circumstances
that have caused Main Streets to go dark elsewhere. The
government has taken a greater oversight role on the
financial sector, and companies have been drawn to the area
because of its economic stability.
But even in Washington, people in the productive sector of the economy
are not doing so well.
About 42,000 local jobs were lost over the past year, most of
them in less-affluent areas and among lower-paying positions
in retail and construction….
From November 2008 through November 2009, about
27,000 jobs were created in the Washington area, among
them positions for lawyers, lobbyists, accountants, federal
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workers, educators, health professionals and government
workers, according to an analysis by Fuller.
Of the 42,000 jobs lost, about 16,000 were in construction,
9,000 in retail and about 11,000 in financial and information
fields that had been in decline since before the recession.
Find more on the Washington boom in the Bush years (and here) and in
the Obama years (and here).
FISCALLY CONSERVATIVE BLOG FEEDS
Krugman: The Hubris of
Central Planning [Cato at
Liberty]
FEB 15, 2010 04:27P.M.
By David Boaz
In the New York Times today, Paul Krugman discusses the Euro and the
problem of Greece. He hastens to note that the problem is not debts,
deficits, and government profligacy, which it sure might seem like to the
untrained eye. But he fingers a different and deeper problem:
No, the real story behind the euromess lies not in the
profligacy of politicians but in the arrogance of elites —
specifically, the policy elites who pushed Europe into
adopting a single currency well before the continent was
ready for such an experiment….
It’s an ugly picture. But it’s important to understand the
nature of Europe’s fatal flaw. Yes, some governments were
irresponsible; but the fundamental problem was hubris, the
arrogant belief that Europe could make a single currency
work despite strong reasons to believe that it wasn’t ready.
Now, you’ll note that Krugman says that Europe wasn’t yet “ready” for a
single currency, suggesting that in some happy day it will be. Because of
course the logic of history is always to move toward centralization and
conformity, right? Nevertheless, it’s great to see Paul Krugman criticizing
the arrogance of elites and the hubris of the centralizing impulse.
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17 February 2010
FISCALLY CONSERVATIVE BLOG FEEDS
Government-Run Monopolies
or School Choice Competition?
[Cato at Liberty]
FEB 15, 2010 03:19P.M.
By Daniel J. Mitchell
Cato’s Isabel Santa uses school choice as an example of why competition
is better than government-imposed monopolies. The video explains that
government schools cost more and deliver less, which is exactly what one
might expect when there is an inefficient monopoly structure. The
evidence about the school-choice systems in Sweden, Chile, and the
Netherlands is particularly impressive.
There are many other reasons to support school choice, including
diversity and innovation. There also is no need for fights over school
prayer and sex education when parents can choose schools that reflect
their values.
Perhaps most important, school choice should be the civil rights issue of
the 21st century. Many minority families live in areas where the
government school monopoly does a scandalously poor job of educating
children, even though these often are the school districts with higher-
than-average per-pupil spending.
For more information about education issues, see what Cato’s scholars
have written.
FISCALLY CONSERVATIVE BLOG FEEDS
Evan Bayh’s “Conservative”
Record? [The Club for Growth]
FEB 15, 2010 12:38P.M.
It always irks me when people characterize someone like Evan Bayh as a
s scorecards: 2008 - 11% 2007 - 9% 2006 - 1% 2005 - 2% No matter how
you approach his record, Evan Bayh is not a fiscal conservative.
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 17 February 2010

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Bayh Retirement; Instant, Gut- Dumbest Sentence I’ve Read

Instinct Analysis [The Club for Today [The Club for Growth]
FEB 15, 2010 09:51A.M.
Growth]
FEB 15, 2010 11:34A.M. This comes from a letter to the editor of a New Jersey newspaper:
Protectionism is never the solution if the goal is more prosperity and
Every question that begins, s liberal extremism? Evan Bayh is many more freedom.
things, but stupid is not one of them.

FISCALLY CONSERVATIVE BLOG FEEDS

FISCALLY CONSERVATIVE BLOG FEEDS
Fisking Pawlenty [Cato at
Same Old SAFRA Tune [Cato at
Liberty]
Liberty] FEB 15, 2010 08:10A.M.
FEB 15, 2010 11:19A.M.
By Michael F. Cannon
By Neal McCluskey
Having fisked Newt Gingrich’s and John Goodman’s “best” health care
Congressman George Miller (D-CA) is at it again, publishing a letter in reform ideas, I probably should do the same for Minnesota Gov. Tim
the New York Times Saturday implying that the Student Aid and Fiscal Pawlenty’s similar oped in the Washington Post. Pawlenty makes five
Responsibility Act — which is, thankfully, languishing in the Senate right recommendations:
now — would save taxpayers $87 billion over ten years.
1. “Incentivize patients to be smart consumers.” Setting aside
Quite the opposite: The bill would almost certainly cost taxpayers his use of the grating word incentivize (down with suffix creep!),
additional tens-of-billions, not save money. But that doesn’t seem to Pawlenty is on the right track. But he’s so vague as to leave
deter Miller. Unfortunately, neither does the galactic national debt, nor (himself?) room for mischief. “Make quality and costs more
that people appear to have had it with seemingly incessant expansion of transparent”? “Incentivize smarter health-care decisions”? A pol
federal power. could claim to be doing those things while falling far short of what
he should be doing: letting Americans — rather than employers or
government — control their health care dollars and choose their
own health plan. If that’s what Pawlenty means, heck, say it.
FISCALLY CONSERVATIVE BLOG FEEDS
2. “Congress should pass reforms that allow people to stop
BREAKING: Senator Evan Bayh paying for procedures and start paying for results.”
Pawlenty appears to think government should find the “right”
to Retire [The Club for Growth] payment system, rather than allow for competition between
FEB 15, 2010 11:07A.M. different ways of paying health care providers — between fee-for-
service, capitation, and everything in between. Such competition
POLITICO s Jim Geraghty is tracking them. promotes all dimensions of quality. Government isn’t equipped to
define and pay for performance, and bad things happen when it
tries.

3. “Liability reform.” To recap: federal limits on med mal liability

unconstitutional; Republicans unprincipled.

4. “Interstate health-care insurance.” Pawlenty doesn’t seem to

get that the point of letting individuals and employers purchase
health insurance across state lines is to force regulators to compete.
His “interstate purchasing pool with strict standards” idea makes it
sound like he doesn’t get it.

9
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
5. “Modernize health insurance.” Again, with the vagueness. If
Pawlenty means he wants to let individuals control their health
care dollars and choose their own health insurance — see here for
how — then terrific. But when he recommends that we should
“make health insurance transferable so employees can keep their
coverage if they switch jobs” and “prohibit insurance companies
from discriminating against individuals whose preexisting
conditions were covered under insurance they lost through no fault
of their own,” it sounds like he thinks regulation is the solution.
FISCALLY CONSERVATIVE BLOG FEEDS
Hotel Afghanistan: We Can
Check Out but Never Leave
[Cato at Liberty]
FEB 15, 2010 08:08A.M.
By Doug Bandow
The U.S. remains stuck in Iraq, as the country moves toward a
potentially messy and not so democratic (lots of disqualified
parliamentary candidates, etc.) election. Iran’s refusal to back away from
its nuclear program has intensified calls for an American military strike
— which, Sarah Palin assures, would even help the president politically.
North Korea unsurprisingly is showing reluctance to rejoin international
talks over its nuclear program: renewed proposals for a U.S. military
build-up in South Korea and even war against the North are likely to
follow. And then there is Afghanistan.
Even though President Barack Obama talks about deadlines and
drawdowns, there is little in present policy to suggest that the U.S. will
be able to leave Afghanistan in even the mid-term. Afghan President
Hamid Karzai certainly doesn’t think so. He figures on U.S. military
support for at least another decade, with continuing international
financial support for years after that.
Reports the Associated Press:
Afghan President Hamid Karzai warned Thursday that
foreign troops must stay in his country for another decade, as
world powers agreed on an exit map including a plan to
persuade Taliban fighters to disarm in exchange for jobs and
homes.Divisions emerged between the U.S. and its partners
over Kabul’s willingness to offer peace to Taliban leaders who
once harbored al-Qaida, instead of the more limited deal for
lower-ranking fighters emphasized by the Americans.
All agree that reconciliation means bringing on board what
Mark Sedwill, NATO’s newly appointed civilian chief in
Afghanistan, called “some pretty unsavory characters.”
10
17 February 2010
The conference was called to help the U.S. and its allies find a
way out of the grinding Afghan war amid rising U.S. and
NATO casualties and falling public support. NATO has agreed
to accelerate the training of Afghan security forces and
gradually transfer more combat responsibility to them.
“With regard to training and equipping the Afghan security
forces, five to 10 years will be enough,” Karzai told the BBC.
“With regard to sustaining them until Afghanistan is
financially able to provide for our forces, the time will be
extended to 10 to 15 years.”
It sounds a bit like the Afghan equivalent of the Eagles’ Hotel California.
Defeat or bribe the Taliban and keep Karzai in power, and we will have
“won” — but we still won’t be able to leave. And the Afghan government,
assuming it achieves a modicum of honest competence, will still have
little incentive to meet even President Karzai’s distant check-out date.
Who in Kabul will want to do without abundent Western cash 10 or 15
years from now?
In 2001 the U.S. had a simple, important, and achievable mission in
Afghanistan: disrupt al-Qaeda and oust the Taliban. American military
forces succeeded. Alas, we’ve spent the succeeding eight years
attempting to build a nation state where none exists. It’s time to draw
down our forces and again focus on combatting terrorists.
FISCALLY CONSERVATIVE BLOG FEEDS
Switzerland’s Strong Human
Rights Laws Should Be
Emulated, not Persecuted [Cato
at Liberty]
FEB 15, 2010 08:06A.M.
By Daniel J. Mitchell
In a rational world, Switzerland would be a role model for other nations.
It is quite prosperous thanks largely to a modest burden of government.
There is remarkable ethnic and religoius diversity, but virtually no
tension because power is decentralized (sort of what America’s Founders
envisioned for the United States). Yet despite these — and many other —
attractive features, Switzerland is being persecuted because of strong
human rights laws that protect financial privacy. Money-hungry
politicians from other nations resent Swtizerland’s attractive policies,
and they would rather trample Swiss sovereignty rather than fix their
own oppressive tax laws. An official from the Swiss Bankers Association
provides some background in a New York Times column:
In Switzerland, this tradition of treating a client’s financial
affairs in confidence became law in 1934 when it was codified
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
in Article 47 of the country’s first-ever federal banking act as
a contemporary reaction to the economic crisis, various
domestic political considerations and well-publicized cases of
espionage involving France and Germany. …Banking
secrecy…reflects the very high degree of trust that exists
between the Swiss state and its citizens and it has strong
democratic foundations. …The Swiss are proud of their
system and they reward it with a high level of taxpayer
honesty. It works because the Swiss vote their own taxes, they
have a high degree of control over the way tax revenues are
spent and over all they believe their tax system to be
reasonable, comprehensible, transparent and fair. …Doesn’t
Switzerland hear the snapping jaws and cracking whips of
foreign finance ministers, tax collectors, O.E.C.D.
bureaucrats, cash-dispensing government agents and other
denizens of the encroaching real world as they circle round
Mother Helvetia intent on biting huge chunks out of her
banking secrecy, if not swallowing it whole? …In March last
year the Swiss announced they would give up the evasion-
fraud distinction for foreign bank clients and adopt the
O.E.C.D. standards on information exchange in tax matters.
…However, requests for assistance must be made with regard
to a specific individual, and “fishing expeditions” — any
indiscriminate trawling through bank accounts in the hope of
finding something interesting — remain ruled out.
…Switzerland demonstrates to the world that it is possible for
a state to collect taxes with a high degree of taxpayer honesty
and without the authorities being corroded with suspicion
about the financial activities of their citizens. Citizens in a
democracy would never allow their police force to have an
automatic right of forced entry into their homes just on the
off-chance of finding some stolen goods, so why on earth
should the state have an automatic right of forced entry into
citizens’ banks accounts just on the off-chance of discovering
some tax evasion? There must be a limit to the extent to
which respect for an individual’s privacy is sacrificed on the
altar of international cooperation in tax matters.
Sadly, the United States is part of the effort to create a global tax cartel.
An “OPEC for politicians” would be terrible news for taxpayers, though,
much as a cartel of gas stations would be bad for driviers. So-called tax
havens play a valuable role in curtailing the greed of the political class.
Ask yourself a simple question: Would politicians be more likely or less
likely to raise tax rates if they knew taxpayers had no escape options?
11
17 February 2010
FISCALLY CONSERVATIVE BLOG FEEDS
Tax Foundation on Glenn Beck
[Tax Foundation]
FEB 15, 2010 12:00A.M.
Tax Foundation President Scott Hodge appeared on Fox News Channel’s
“Glenn Beck” program on February 5 to participate in a panel discussion
on budget problems among states with progressive policies — most
notable among them, California. Other fiscally troubled states are
experiencing similar problems, however: tax systems that are heavily
reliant on high-income earners, out-of-control spending, promises that
can’t be met and millions off the tax rolls. Other panelists included Josh
Barro, a fellow with the Manhattan Institute (and former Tax
Foundation staff economist) and Troy Senik, a contributing editor with
the Center for Individual Freedom.
See excerpts of the hour-long discussion below.
View all six segments of the interview here. For more of the Tax
Foundation’s broadcast media coverage, visit the Tax Foundation on
YouTube and check out the playlist “Tax Foundation in the News.”
FISCALLY CONSERVATIVE BLOG FEEDS
“Economic Development”
Teams in VA, MD and DC Bid
for Northrop Grumman
Headquarters [Tax Foundation]
FEB 15, 2010 12:00A.M.
Of three jurisdictions bidding for the privilege to host Northrop
Grumman’s new corporate headquarters, only the District of Columbia’s
government is saying publicly how many millions of its taxpayers’ money
it is willing to shell out: a property tax abatement of $1.9 million a year
and $5.5 million to help with relocation costs. The Washington Post’s
Anita Kumar had the story.
Virginia is the presumptive front-runner because Northrop Grumman is
already the largest private employer in the state, and Virginia has
substantially lower personal and corporate income tax rates than either
Maryland or DC (see tables below).
But Maryland Governor Martin O’Malley isn’t giving up. He rushed back
from a visit to snowed-in rural Maryland counties, still wearing
camouflage hunting jacket and boots, in time to give a red carpet tour of
the State House to Northrop Grumman officials.
The Tax Foundation takes a dim view of such bidding wars. States often
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 17 February 2010

overpay, granting such generous tax abatements that their already District of Columbia
resident taxpayers must pitch in more just so that state “economic
development” officials can make headlines rolling out the red carpet for a 9.975%
newcomer. A better approach is to maintain a business-friendly tax and
regulatory regime and keep special concessions to a minimum, if * Virginia levies a bewildering local gross receipts tax called the BPOL
possible limited to infrastructure improvements to the chosen that might vary from 0.03% to 0.31% depending on the category of
site. Virginia should not have to pony up much to win this particular activities Northrop Grumman is engaged in.
contest. Source: State and local tax forms; and see a 50-state table on the Tax
Foundation site.
Table 1
Personal Income Tax Rates (State Plus Local) for Middle-
Income People in DC Region*, as of January 1, 2010

State

Tax Rate
FISCALLY CONSERVATIVE BLOG FEEDS
Virginia
Is Madonna Eminent? Or Is
5.75%
This Just “Celebrity Domain”?
Maryland
[Cato at Liberty“Celebrity
7.95%**
Domain”?]
District of Columbia FEB 13, 2010 02:20P.M.

8.50% By David Boaz

* A couple with $100,000 in taxable income living in DC or the suburban The AP reports:
counties of Virginia and Maryland.
** Maryland is the only state in the region with significant local income In a land dispute pitting Madonna against African villagers,
taxes: the rates are 3.1% of income in Prince George’s County and 3.2% Malawi’s government has sided with the pop star who has
of income in Montgomery and Howard Counties. pumped millions into the impoverished Southern African
http://individuals.marylandtaxes.com/incometax/localtax.asp. country and adopted two of its children.
Source: State and local tax forms, and see a 50-state table on the Tax
Foundation site. Villagers have been refusing to move from a plot of land near
the capital, Lilongwe, where Madonna wants to build a $15-
million school for girls. The government, however, says it had
originally planned to develop the plot, and only allowed the
Table 2 villagers to live there until a project was identified.
Corporate Income Tax Rates in DC Region, as of January 1,
2010 Lilongwe District Commissioner Charles Kalemba,
accompanied by other government officials and
State representatives from Madonna’s Raising Malawi charity, on
Thursday met with about 200 villagers and told them they
Tax Rate would have to move. The villagers have been offered other
government land.
Virginia
“Government allowed you to occupy this land because there
6.00%* was no project yet. But now that Madonna wants to build you
a school you have to give way,” Kalemba told the villagers.
Maryland “You are lucky that Madonna has compensated you for your
houses, gardens and trees.”…
8.25%

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
Headman Binson Chinkhota urged residents to move, saying
the school would benefit their children. But Amos Mkuyu
said the $1 500 in compensation he received from Madonna
for mango trees and three homes was not enough. He said his
family had been living on his three-hectare plot for three
generations.
Susette Kelo vs. Madonna — that would be a great battle. As usual, the
government has a beneficent purpose in taking these people’s land. They
took Kelo’s home for a development that would yield “new jobs and
increased tax revenue.” They’re taking Amos Mkuyu’s home for a school.
But stealing land is not beneficent; it is not an act of kindness and
charity.
In this case the Malawian government says that the villagers are living on
government land. But Mkuyu says his family has been there for three
generations. Sounds like they thought it was theirs. For a discussion of
collective and traditional property inspired by the movie “Avatar,” click
here. Hernando de Soto, author of The Mystery of Capital, has spent a
career showing how the lack of well-defined property rights hurts the
poorest people in the world.
FISCALLY CONSERVATIVE BLOG FEEDS
DC Disconnect [Larry Kudlow’s
Money Politic$]
FEB 12, 2010 04:42P.M.
The disconnect between Washington and the rest of the country has
never been greater. Why can’t the political class in D.C. produce a fiscal
product that voters, taxpayers, and investors are willing to consume?
According to the Washington Post, voters want smaller government and
fewer government services by a large 58 to 38 percent margin. Pollster
Scott Rasmussen reveals that 61 percent of voters believe tax cuts help
the economy, that 59 percent think tax cuts are a better job-creation tool
than increased government spending, and that another 59 percent
believe higher deficits hurt the economy. Rasmussen also reports that a
full 83 percent of Americans blame the deficit on the unwillingness of
politicians to cut government spending. And get this: In a whopper of a
poll result, the New York Times reports that 75 percent of Americans
dislike Congress.
This is why there’s a political revolt out there. Washington just doesn’t
get it.
Inside the Beltway, Democrats are sending a profoundly pessimistic
message that only government knows best. But out there in the heartland
there is an optimistic message that We the People know best. And that
heartland optimism will not be stopped.
The future of the U.S. economy — including jobs, growth, and the stock
13
17 February 2010
market — hangs in the balance. Government-controlled health care, with
Senate vote-purchasing and union special-interest loopholes, is not the
answer. Nor is a $2 trillion tax hike on banks, multinational
corporations, capital gains, inheritance, and successful upper-income
earners. Nor is a doubling of the publicly held federal debt to $19 trillion,
or nearly 80 percent of GDP. Nor is a federal spending ratio of 25
percent of the economy. Nor is a budget deficit at a 10 percent share of
GDP for as far as the eye can see.
Again, Washington doesn’t get it. Politicians are delivering a fiscal
product that no one in America wants. It’s no wonder small businesses
aren’t hiring. Yes, there is a cyclical recovery going on, but it is
incomplete without the jobs.
The so-called $85 billion jobs program is not a jobs program at all. It is a
spending bill. Temporary tax credits to hire new workers have virtually
no permanent job-creating effect. In budget terms, these kinds of
temporary tax credits are scored as tax expenditures, i.e. spending. Only
a permanent reduction in the marginal business tax rate has the
incentive effect for long-run job creation. Reducing the business tax rate
makes firms more profitable after-tax. And it gives them more cash flow.
Those incentives will work to expand investment and jobs.
And taxing capital is the worst idea of all. That’s why the capital-gains
tax must not be increased. Plus, raising the top two income-tax brackets
from 33 to 35 percent, and then from 35 to 40 percent, thereby
penalizing those who own about half of the small-business income, is a
job destroyer.
Why Republicans are flirting with this terrible temporary small-business
tax credit is beyond me. This is a moment for the GOP to send a message
that they are the party of growth through across-the-board reductions in
marginal tax rates — for everyone. That includes large and small
businesses, along with all individuals and families. All producers and
investors should get lower tax rates. At a bare minimum, Republicans
should be fighting hard to extend the Bush tax cuts on the way to a
longer-term goal of low-rate, flat-tax reform.
So no wonder we’re witnessing a growing tea-party revolt. I call it tea-
party, free-market populism. But one-party partisan stubbornness in
Washington just won’t listen to it. Democrats refuse to heed the message
of the polls, or the election results in Virginia, New Jersey, and — of
course — Massachusetts. They simply will not acknowledge the meaning
of Scott Brown’s miracle win.
The stock market peak occurred about a month ago, with
announcements of a bank tax hike, a corporate tax hike on foreign
earnings, and a massive spending-and-borrowing federal budget. That’s
not a coincidence, folks.
While voters may not love the Republicans, they do want political
balance back in Washington. They don’t want any of this manufactured,
left-wing, class-warfare populism. That’s why the anti-incumbency mood
is so prevalent today, and why there is going to be major change in
Washington.
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
What do I think voters want? Traditional, commonsense, center-right,
free enterprise, which basically says to the government, “Please, let me
keep more of what I earn, and please, just leave me alone.”
The time has come for our government to get out of the way, allow the
American people to prosper, create wealth, build businesses, and
advance technology, and let the United States be the number-one
country in the world from now until forever.
It’s called optimism.
FISCALLY CONSERVATIVE BLOG FEEDS
Thoughts on the New Brookings
School Choice Report [Cato at
Liberty]
FEB 12, 2010 04:41P.M.
By Andrew J. Coulson
A new Brookings Institution report suggests ways for the federal
government to promote school choice. On the eve of its release, I voiced
some practical and constitutional objections to the idea. Now that the
report is out, contributing author Jay Greene asks if I’m still
apprehensive. The short answer is yes.
Brookings assembled an impressive group of scholars to write the report,
and their education policy recommendations deserve serious
consideration. Their goal of ensuring more and better access to more and
better educational choices is one that I share, and I hope the following
comments will help advance that goal.
Good policy, like good science, is grounded in concrete evidence. Only
where evidence is lacking is it wise to fall back on theory. The Brookings
report relies on theory in a couple of important areas where extensive
evidence is available to show us the way. In particular, the authors
acknowledge that U.S. experience with alternative school systems is
minimal, but (with a single exception — see below) they do not discuss
the vast wealth of evidence from other nations that have more extensive
and longer-running experience with school choice systems.
Some have argued that we can learn little about school governance from
other nations because cultural and economic factors affect educational
outcomes too greatly. This criticism does not apply to within-country
comparisons of alternative school systems — and virtually all of the
literature comparing alternative school systems is within-country. A
comparison of government-run, government-funded private, and parent-
funded private schools within India, for instance, is not muddied by
cultural or economic differences between India and the United States.
14
17 February 2010
What’s more, if we see the same pattern of inter-sectoral results
manifested within many different countries, we can be even more
confident that the observed differences are truly systemic than if we had
inter-sectoral results for only a single nation. A thorough review of the
worldwide within-country comparative school governance research is
thus essential to optimal education policy design.
It’s also worth noting that openness to non-U.S. research is the norm in
engineering and in other scientific fields. If an Indian computer
programmer develops an improved sorting algorithm, his American
counterparts don’t discount it for cultural reasons. Nor do U.S. civil
engineers disregard what can be learned from French bridge projects.
Nor do physicians ignore the results of high quality genetic or drug
research performed in Iceland or England. As long as the methodologies
employed control for cultural and other mitigating factors that might
affect the results, American scientists and engineers are not, as a rule,
parochial. Education seems the sole exception.
The one bit of foreign school choice evidence discussed in the new
Brookings report is a paper by Hsieh and Urquiola reporting results from
Chile’s highly regulated voucher-like system. More than a dozen studies
of Chile’s voucher system have been conducted, the majority finding that
private voucher schools significantly outperform public schools after
suitable controls, or that the competition engendered by the program has
improved overall academic achievement, attainment, or ultimate
earnings of graduates.
Seeming to deviate from this pattern, Hsieh and Urquiola found that the
regions in which private school enrollment grew most quickly had overall
achievement (of public and private students) that was no better or was
even worse than in regions where it grew more slowly. Hsieh and
Urquiola concluded from this that increased competition did not
improve achievement. But their evidence also supports a quite different
conclusion: that regions with bad and worsening public schools drove
families more quickly into the private sector.
Hsieh and Urquiola looked at the first 16 years of the program, during
which time public schools still enrolled the majority of students (though
that share was falling continuously and has since dropped below 50
percent). Overall academic performance was thus still chiefly a function
of public school performance, and public schools are protected from
private sector competition by receiving extra municipal funding that is
not tied to enrollment and to which the private voucher-receiving
schools do not have access. So it was never reasonable to expect, based
on the design of the Chilean system, that public schools would show
significant gains from competitive forces, because those forces never
really touched them.
Given the evidence just presented and the fact that the bulk of studies of
the Chilean program contradict Hsieh and Urquiola’s conclusion, it
seems likely that they did indeed misinterpret their findings.
More importantly, Hsieh and Urquiola’s conclusion is not only an
aberration within the Chilean research, it is also an aberration within the
worldwide literature on the relative merits of market and monopoly
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
provision of education. When I reviewed this research for the Journal of
School Choice last year, I found 65 studies reporting 156 separate
statistical comparisons of public and private school achievement. When
truly market-like programs are compared to monopolistic ones such as
U.S. public schooling, the statistically significant results favoring
markets outweigh the results favoring monopolies by a margin of 15 to 1
(and they also handily outnumber the insignificant findings).
By offering only the uncharacteristic Hsieh and Urquiola study out of the
vast literature just described, the Brookings paper is apt to give readers a
mistakenly negative perception of the worldwide evidence. This is
particularly true because the authors are avowed supporters of school
choice.
In the absence of the international evidence, the Brookings authors are
forced to resort to theory on several crucial policy issues, such as the
need for and merits of state regulation of the marketplace (e.g., with
respect to virtual schools) and state information services to supply a
perceived gap in information available to parents. Consulting that
evidence leads to the conclusion that government regulatory efforts to
improve the quality of educational services are ineffective at best and
counterproductive at worst (see the paper linked above for the evidence
supporting that pattern, and see James Tooley’s The Beautiful Tree for
an explanation of its cause). It shows, furthermore, that even illiterate
parents in the poorest slums of the third world are not only capable of
making wise educational choices for their children in the absence of
government advice, but that they are already doing so in massive
numbers.
In addition to the above concern, the practical and constitutional issues I
raised in advance of the Brookings report’s publication still apply now
that I have read it in full.
That said, this is one of the most benign sorts of disagreements scholars
can have, rooted as it is on our having developed our policy
recommendations from different data sets. I look forward to hearing how
the authors of the Brookings report think the worldwide evidence bears
on school choice policy.
15
17 February 2010
FISCALLY CONSERVATIVE BLOG FEEDS
Average vs. Marginal Effects of
Health Insurance [Cato at
Liberty]
FEB 12, 2010 02:35P.M.
By Michael F. Cannon
I have to thank Ezra Klein. I have for some time been trying, without
success, to spark a debate about whether expanding health insurance
coverage would actually save any lives. Even my bet with Karen
Davenport seemed to go nowhere. But when Klein accused Sen. Joe
Lieberman (I-CT) of being “willing to cause the deaths of hundreds of
thousands of people” because Lieberman was jeopardizing passage of
legislation that would expand health insurance to 30 million people,
Klein made a debate possible.
Following on my first response to Klein that the evidence supporting his
claim is remarkably thin, others have joined the discussion. Matt
Yglesias of the Center for American Progress rose to Klein’s defense.
Megan McArdle (in The Atlantic magazine and her blog) and Tyler
Cowen (at Marginal Revolution) both argue that we don’t really know if
Klein’s claim is true.
Today, Yglesias poses the following question on his Twitter page:
Do rightwingers really believe that US health insurance has
no mortality-curbing impact?
I see two problems. First, there are no right-wingers in this debate.
McArdle, Cowen, and I all support gay marriage, for example.
Second, Yglesias sets up a straw man. He asks whether health insurance
on average has a positive impact on mortality, when the debate is
actually over the effect of health insurance at the margin. In other
words, would covering the uninsured save lives?
I don’t know anyone who thinks health insurance has zero effect on
mortality overall. Yet it is entirely possible for the average effect to be
positive and the marginal effect to be zero. One reason may be that the
uninsured do benefit from the human and physical capital that health
insurance makes possible. It may also be the case that when the
uninsured do obtain health insurance, the additional medical care they
receive is more likely to harm them than to help them. The researchers
behind the RAND Health Insurance Experiment make essentially the
same point.
If the marginal effect of health insurance on health is zero, it raises other
interesting questions. Would it also have zero effect on health outcomes
if we were to reduce the number of people with health insurance? What
is the size of the margin over which health insurance has zero impact?
(Robin Hanson suggests it may be very, very large.)
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Klein recently declined an invitation to debate these issues at Cato. Too
bad. This is worth pursuing.
FISCALLY CONSERVATIVE BLOG FEEDS
Rick Barber Signs the Taxpayer
Protection Pledge in Alabama
Congressional Contest
[Americans for Tax Reform]
FEB 12, 2010 02:27P.M.
Alabama businessman Rick Barber has recently signed the Taxpayer
Protection Pledge in his 2010 bid for Alabama’s 2nd Congressional
District seat. AL-02 becomes yet another district where there a...
FISCALLY CONSERVATIVE BLOG FEEDS
Congress Goes After Citizens
United [Cato at Liberty]
FEB 12, 2010 01:43P.M.
By John Samples
Snowstorm notwithstanding, Sen. Charles Schumer and Rep. Chris Van
Hollen introduced legislation in response to the Citizens United decision.
A summary of their effort can be found here.
Some parts of the proposal are simply pandering to anti-foreign bias
(corporations with shareholding by foreigners are prohibited from
funding speech) and anger about bailouts (firms receiving TARP money
are banned from funding speech). Government contractors are also
prohibited from independent spending to support speech. We shall see
whether these prohibitions hold up in court. The censorship of
government contractors and TARP recipients will likely to prove to be an
unconstitutional condition upon receiving government benefits.
Despite Citizens United, Congress will try to suppress speech by other
organizations. Schumer-Van Hollen relies on aggressive disclosure
requirements to deter speech they do not like. CEOs of corporations who
fund ads will be required to say they “approve of the message” on camera
at the end of the ad.
Citizens United upheld disclosure requirements. But it also vindicated
freedom of speech. The two commitments may prove incompatible if
Schumer-Van Hollen is enacted. This law uses aggressive mandated
disclosure to discourage speech. We know that members of Congress
believe this tactic could work. Sen. John McCain said during the debate
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17 February 2010
over McCain-Feingold that forcing disclosure of who funded an ad will
mean fewer such ads will appear. In other words: more disclosure, less
speech. Just after Citizens United, law professor Laurence Tribe called
for mandating aggressive disclosure requirements in order to “cut down
to size” the impact of disfavored speech. During the next few months the
critics of Citizens United may well show beyond all doubt that the
purpose of its disclosure requirements are to silence political speech. In
evaluating the constitutionality of Shumer-Van Hollen the Court could
hardly overlook such professions of the purpose behind its disclosure
requirements.
One other part of Schumer-Van Hollen is probably unconstitutional.
They would require any broadcaster that runs ads funded by
corporations to sell cheap airtime to candidates and parties. Several
similar attempts to equalize speech through subsidies have recently been
struck down by the Court. This effort would share a similar fate.
All in all, Schumer-Van Hollen is a predictable effort to deter speech by
disfavored groups. Congress is reduced to attacking foreigners and
bailout recipients while hoping that mandated disclosure will discourage
speech. The proposal law suggests a comforting conclusion. For most
Americans, Citizens United deprived Congress of its broadest and most
effective tools of censoring political speech.
FISCALLY CONSERVATIVE BLOG FEEDS
Friday’s Daily News [The Club
for Growth]
FEB 12, 2010 11:16A.M.
The Economist Test.
FISCALLY CONSERVATIVE BLOG FEEDS
If the So-Called Stimulus Was
an Unsung Hero, I’d Hate to
Meet a Singing Enemy [Cato at
Liberty]
FEB 12, 2010 11:10A.M.
By Daniel J. Mitchell
The White House recently released the Economic Report of the
President. In a post at the White House blog, Christina Romer brags that
the stimulus legislation was a big success.
This Act is the great unsung hero of the past year. It has
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provided a tax cut to 95 percent of America’s working families FISCALLY CONSERVATIVE BLOG FEEDS
and thousands of small businesses. It has meant the
difference between hanging on and destitution for millions of Cartoon of the Day [The Club
unemployed workers who had exhausted their conventional
unemployment insurance benefits. It has kept hundreds of for Growth]
thousands of teachers, police, and firefighters employed by FEB 12, 2010 10:36A.M.
helping to fill the yawning hole in state and local budgets.
And, it has made crucial long-run investments in our HT: James Crain
country’s infrastructure and jump-started the transition to
the clean energy economy. All told, the Recovery Act has
saved or created some 1½ to 2 million jobs so far, and is on
track to have raised employment relative to what it otherwise FISCALLY CONSERVATIVE BLOG FEEDS
would have been by 3.5 million by the end of this year.
Patrick Kennedy Won’t Seek Re-
Let’s set aside some of the disingenuous components of her post, such as
categorizing income redistribution as tax relief, and focus on her claim Election [The Club for Growth]
that the legislation created at least 1.5 million new jobs when total FEB 12, 2010 09:13A.M.
employment has dropped by 3 million. Romer is not bad at math.
Instead, she is saying that the economy would have lost 4.5 million jobs From Roll Call newspaper ($): Rep. Patrick Kennedy (D-R.I.) has
if it were not for the $787 billion increase in government spending. This decided not to seek re-election in November, sources confirmed to Roll
what-might-have-been analysis is completely legitimate, assuming that Call on Thursday night after the news was first reported by the
there is good theory and evidence to back the assertion. Unfortunately Associated Press. The Associated Press reported that Kennedy taped a
(at least for the White House’s credibility), Ms. Romer and another message to be aired on TV in his home state Sunday night and in it he
colleague last year prepared a supposedly rigorous what-might-have- said his life is s scorecard: 2008 - 0% 2007 - 6% 2006 - 7% 2005 - 7%
been report, where they estimated that the so-called stimulus would keep
the unemployment rate at 8 percent and that failure to increase the
burden of government spending would drive the unemployment rate to 9
percent. Yet as this chart from their paper indicates, when we add in the FISCALLY CONSERVATIVE BLOG FEEDS
data for what actually has happened, in turns out that bigger government
is not only theoretically misguided, but it also doesn’t work in the real Stimulus Hypocrisy and the Tea
world.
Partiers [Cato at Liberty]
FEB 12, 2010 08:54A.M.

By Tad DeHaven

The Washington Times recently used the Freedom of Information Act to

obtain letters sent to the USDA by numerous Republican lawmakers
seeking stimulus money for their constituents. All of these Republicans
had publicly criticized the stimulus and voted against it.

Georgia Rep. John Linder wrote on his website in October that recent
unemployment figures “only reinforce the fact that the $787 billion
’stimulus’ signed into law eight months ago has done nothing for job
growth in this country.” But just two weeks earlier the congressman had
sent a letter to Secretary Vilsack on behalf of a foundation in his district
seeking stimulus funds in which he claimed “the employment
opportunities created by this [foundation’s] program would be quickly
utilized.”

Remember South Carolina Rep. Joe Wilson who infamously shouted

“You lie!” during President Obama’s speech to Congress in September?
Here’s what he had to say in a letter to USDA Secretary Tom Vilsack on
behalf of a foundation in his district:

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“We know their endeavor will provide jobs and investment in
one of the poorer sections of the Congressional District.”
According to his spokeswoman, Rep. Wilson opposed the stimulus as a
“misguided spending bill,” but wanted to make sure his constituents
“receive their share of the pie.” That’s pretty much the same excuse the
rest of the GOP lawmakers gave: the stimulus is bad but my constituents
deserve their “fair share.”
entrepreneurship more expensive than they already are.”
I hope John’s right because if the movement allows itself to become
entangled with the same party that publicly eschews big government
stimulus while groveling behind the scenes for a piece of it, the [tea]
party will be over.

So much for principles.

Speaking of principles, it’s stories like this that should give the
burgeoning tea party movement pause before getting too close to GOP
politicians. I spoke to a newly formed group of a hundred or so tea
partiers in southern Indiana back in December. The vast majority was
concerned about Washington’s spending addiction and Beltway
encroachment on their lives. In the two hours I fielded questions, only
one brought up illegal immigration and nobody brought up Obama’s
birth certificate. They weren’t worried about Muslims and gays — they
were worried about what the mounting federal debt meant for their
children and grandchildren’s future.

Therefore it was disconcerting to read that the organizers of this past

weekend’s Tea Party Convention in Nashville brought in Tom Tancredo
and Sarah Palin to speak. Tancredo’s agenda was typically nasty and
counterproductive, while Palin’s combined her formulated hockey mom
shtick with a sophomoric jingoism that should have appalled devotees of
limited government. Yet, according to the video of her speech, the crowd
loved it.

Instead of spending $100,000 on Palin, I suggest tea party organizers

bring in my colleague John Samples to speak at the next convention.
(John’s worth $100,000 but can be had for considerably less.) John
recently wrote a column, entitled “Tea Partiers Shouldn’t Date the GOP,”
that every budding tea partier should read.

Here’s an excerpt:

The quality that gives the Tea Party movement its legitimacy
is that it is so fundamentally illegitimate: outside the
establishment, bereft of representation on K Street, and
without an identifiable face to speak for it on Meet the Press.
This is a movement that sprang deep from within the viscera
of America, not from some political poll or focus group.

It is not Republican; it is not even conservative. It has no

interest in debating the merits of No Child Left Behind,
abstinence-only sex education or George W. Bush’s rationale
for going to Iraq. Replacing a “spend and borrow” Democrat
with a “spend and borrow” Republican is not the goal of the
Tea Party movement.

This movement is simply saying: “We are fine without you,

Washington. Now for the love of God, go attend a reception
somewhere, and stop making health care and

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