2012-07-17

Bipartisanship versus Taxpayers

Posted by David Boaz at http://www.cato-at-liberty.org/bipartisanship-versus-taxpayers/


Last month George Will pushed back against the bipartisan Washington wish for bipartisanship:
Bipartisanship, the supposed scarcity of which so distresses the high-minded, actually is disastrously prevalent.
Since 2001, it has produced No Child Left Behind, a counterproductive federal intrusion in primary and secondary education; the McCain-Feingold speech rationing law (the Bipartisan Campaign Reform Act); an unfunded prescription drug entitlement; troublemaking by Fannie Mae and Freddie Mac; government-directed capitalism from the Export-Import Bank; crony capitalism from energy subsidies; unseemly agriculture and transportation bills; continuous bailouts of an unreformed Postal Service; housing subsidies; subsidies for state and local governments; and many other bipartisan deeds, including most appropriations bills.
And today I see this banner headline in the (actual paper edition of the) Washington Post:
In Senate, farm bill produces a rarity: cooperation
Some see signs of renewed bipartisanship
Paul Kane reports:
To the purported short­list of certainties in life — death and taxes — add large, bipartisan support in the Senate for the farm bill.
Despite the pattern in recent years of intense partisan acrimony, backroom bickering and publicly staged fights over nearly every piece of legislation, the Senate has begun to plod through a nearly $1 trillion farm bill that is likely to get a bipartisan vote for its approval by week’s end.
A trillion dollars. For a farm bill. Have we become so accustomed to throwing around the phrase “a trillion dollars” that this isn’t headline news?  Not to worry, though, Congress is thinking of the taxpayers: They say they’ve cut $23 billion out of the trillion. Sure, let’s look back in a decade and see if those cuts really happened.
Meanwhile, shoveling out money to the farmers isn’t the only time Congress can be bipartisan. There’s also shoveling out money to Boeing and a handful of other big companies with the Export-Import Bank, as the Los Angeles Times reported on May 30:
President Obama has signed into law a bill reauthorizing the Export-Import Bank, saying the rare example of bipartisan cooperation should be a model for a future legislation.
Yessiree, as George Will said, the one thing Congress can join hands and agree on is giving taxpayers’ money to interest groups — whether it’s farmers or airplane manufacturers or college students and their parents or Medicare recipients. Bipartisanship is typically a conspiracy against the taxpayers.

South American Governments Should Not Interfere with Paraguay’s Impeachment Process

Posted by Juan Carlos Hidalgo at http://www.cato-at-liberty.org/south-american-governments-should-not-interfere-with-paraguays-impeachment-process/


By a vote of 76-1, the lower house of Paraguay’s Congress impeached President Fernando Lugo this morning for his role in a deadly clash last week between the police and squatters. The Senate is in session right now holding the political trial and Lugo is expected to testify tomorrow in his defense. However, since the upper house of Congress is controlled by the opposition, it’s very likely that a required two-third majority will vote to remove Lugo from office.
This impeachment process is in accordance with article 225 of the Paraguayan constitution, which states that high ranking government officials such as the president can be impeached for “poor performance of his duties.” As we can see, the constitution is very vague in stipulating the reasons why an official can be removed from office, so it is up to two-third majorities in both houses of Congress to decide.
Removing Fernando Lugo from office could be a premature decision, or an example of bad politics in a country where politicians excel in doing wrong. I won’t discuss those details here. However, it is a perfectly legal and constitutional move.
This is why it is unacceptable that Unasur, a union of twelve South American governments, is threatening to treat Lugo’s possible removal from office as a coup. The secretary general of Unasur has even said that neighboring countries would have the power to invoke the Ushuaia II treaty, which contemplates sanctions against a country where “the democratic order has been breached.” Sanctions include shutting down the borders (a particularly significant threat to a landlocked country such as Paraguay), and suspending communications, trade and energy supplies. It is important to note that Paraguay gets 95% of its energy from the ItaipĂș and Yasyreta hydroelectric dams that it shares with Brazil and Argentina, respectively. Thus, it is highly vulnerable to a shutdown.
Unasur should back off from interfering in the impeachment process against Fernando Lugo. And the U.S. should unequivocally call for respect for Paraguay’s constitutional order.

2012-07-13

A Swiss Response to American Fiscal Imperialism

by Daniel J. Mitchell at http://www.cato.org/publications/commentary/swiss-response-american-fiscal-imperialism

Switzerland is in the unfortunate position of being bullied and harassed by the U.S. government. The crux of the problem is that the United States arguably has the world's worst tax system for international activity, and this creates conflict with other nations, particularly ones that have good tax laws that attract investment.
This has resulted in a number of different attacks against Swiss sovereignty. On the multilateral front, the Obama Administration is actively supporting the anti-tax competition project of the Organization for Economic Cooperation and Development.
On the unilateral front, the United States is imposing onerous laws on the entire world, such as the Foreign Account Tax Compliance Act (FATCA), which seeks to coerce foreign financial institutions into acting as deputies for the Internal Revenue Service (IRS. And on the bilateral front, the American government has initiated actions that specifically target Switzerland, such as legal attacks on individual institutions and pressure for tax agreements that would violate long-standing human rights laws protecting individual privacy.
The challenge for Switzerland is that the United States is the most powerful nation in the world, and the U.S. government has decided to treat its "Sister Republic" almost as if it was some sort of pariah regime.
What makes this situation particularly frustrating is that it is entirely the result of bad American policy.
* America has pervasive double taxation of saving and investment and an imperialistic worldwide tax system, and those bad policies motivate the multilateral, unilateral, and bilateral assaults.
* America is in terrible fiscal shape thanks to overspending by both Presidents Bush and Obama, creating an environment where the IRS has free rein to be extra aggressive in the search for more revenue.
* America has a political class that is willing to engage in (or capitulate to) class-warfare politics, regardless of the adverse impact on U.S. prosperity and competitiveness.
To be optimistic, there is a possibility that these problems will become less onerous after the 2012 elections, even if President Obama wins reelection. To be sure, the President is hostile to the private sector and he ideologically supports higher taxes, so he will want to maintain the U.S. government's unfriendly approach to Switzerland. But it is quite likely that Republicans will control both the House and Senate beginning next year, and that will hinder the President's ability to pursue a hostile agenda. To cite one example, it is quite likely that Congress will seek to slash subsidies for the OECD.
If Governor Romney wins, that could make a difference, especially since he presumably will understand that bad American policy is the reason for the conflict. But that doesn't ensure a change in policy unless America's punitive tax laws are reformed. Unfortunately, Romney will be reluctant — because of his personal wealth — to advance policies that can be portrayed as helping the so-called rich. We can't expect a Reagan-style agenda of economic liberty and individual freedom, so something like a flat tax is very unlikely.
In other words, while the situation will probably improve after the elections, there will still be major challenges. Given this semi-pessimistic outlook, what can Switzerland do to protect its fiscal sovereignty and human rights privacy laws?
Part of the answer is to have a reactive strategy. Swiss firms already are getting rid of American clients. This is particularly bad news for overseas Americans, who are being greatly inconvenienced by the bad laws coming out of Washington, but it is probably too costly and too risky for Swiss institutions to have customers that are also U.S. tax residents.
Swiss institutions also can seek to disengage from the American economy. Without direct investments in American stocks and bonds, there's no nexus for the IRS to exploit. But while this might be an effective approach for particular firms, it's presumably not realistic for the broad financial services industry.
The Swiss government also can help by effectively resisting some of the most outrageous demands by the American government. The Justice Department and Treasury Department are run by leftist ideologues, but some of the bureaucrats who negotiate agreements will not be as unreasonable. And the State Department presumably will have a better understanding of how America's bad tax laws are fundamentally inconsistent with Switzerland's legal and economic policies.
It is also important to have a proactive agenda. Switzerland should be more aggressive about explaining that the conflict with the U.S. government is a result of bad American tax laws. The Swiss government should proudly discuss its admirable human rights policy with regards to financial privacy. And it should educate people in the United States about how policies of fiscal prudence and respect for individual rights have created substantial prosperity.
Switzerland has many allies in the United States, both in Washington and all across the nation. And with an effective education campaign, more support can be generated from members of Congress, public policy groups, and academic experts. The message should be simple: Swiss policies should be emulated, not persecuted.
Last but not least, government officials and private sector representatives in Switzerland should offer some much-needed friendly advice to their American counterparts. There is increasing resentment around the world toward the United States, and there is a growing desire to restrain Uncle Sam — leading some people to say that it's time to end the dollar's role as the world's dominant currency. This would be bad news for the United States, which reaps big benefits because the dollar is the main currency for international transactions, as well as the biggest reserve currency.
This would not happen overnight, particularly since the most obvious alternative — the euro — lost some prestige when the European Central Bank sacrificed its independence by agreeing to bail out some of Europe's bankrupt welfare states.
But if several European nations decided to make a shift, joined by oil-exporting nations and Asia's emerging economic powers, things could change dramatically in just a few short years. That is so especially because nations would see a fringe benefit of being much less susceptible to bad laws such as FATCA once correspondent relationships with U.S. institutions become less important.
To be blunt, the U.S. government needs to understand that bullying unilateralism to enforce bad law is a risky proposition. Not only is it discouraging foreign financial institutions from investing in the American economy, it also could cause other headaches.
Switzerland has the right policy and the moral high ground. With the right approach, a virtuous David can triumph over a misguided Goliath.

Downsizing the Interior Department

Posted by Chris Edwards at http://www.cato-at-liberty.org/downsizing-the-interior-department/


Cato has published a new section on www.downsizinggovernment.org that examines the Department of the Interior.
Interior is not one of the largest departments in terms of spending, but it has huge control over the lands and resources of the western United States. It oversees more than 500 million acres of land through the Bureau of Land Management, the National Park Service, the Fish and Wildlife Service, and other agencies. The department also houses the Bureau of Reclamation, which distributes subsidized water, and the Bureau of Indian Affairs, which administers aid programs for American Indians.
Here are some of ideas discussed at www.downsizinggovernment.org/interior:
  • Federal Lands: During the nation’s first century, the federal government focused on selling and giving away its lands to individuals, businesses, and state governments. In the 20th century, the government reversed course and began grabbing more land, but federal ownership has not led to sound economic or environment stewardship. A revival of federalism in land policies is long overdue.
  • American Indians: The federal government has an appalling record in its dealings with Indian tribes, and since 1824 the Bureau of Indian Affairs has been one of the most mismanaged and destructive of federal agencies. The path to prosperity for Indians is not through federal subsidies and top-down regulations, but through reforms to property rights and other institutions on reservations.
  • Water Subsidies: The Bureau of Reclamation operates dams and other water infrastructure in the western states. Its large subsidies for irrigation combined with restrictions on water transfers are contributing to a growing water crisis in many areas. Policymakers should focus on reforms to reduce subsidies, transfer federal infrastructure to state and private ownership, and move towards water trading in open markets.
One interesting thing about reforming the Department of the Interior is that economists and environmentalists share some common ground. Federal policies that set prices for irrigation water, grazing lands, timber, and other resources too low are both economically inefficient and harmful to the environment.
Another interesting thing about Interior is that its long history reveals that special interest lobbying, corruption, and mismanagement are nothing new in Washington. Interior’s troubles have included the “Indian ring” corruption scandals of the 19th century, the Teapot Dome scandal of the 1920s, and Jack Abramoff’s influence peddling during the George W. Bush years.
In 1828, one expert noted that “the derangements in the fiscal affairs of the Indian department are in the extreme… there is a screw loose in the public machinery somewhere.” Fast forward to 2006, and Interior’s Inspector General found that “short of a crime, anything goes at the highest levels of the Department of the Interior.”
Isn’t two centuries of federal bungling and failed policies enough? Policymakers should begin exploring ways to downsize the Department of the Interior.

Egypt’s Arab Spring, One Year Later

Posted by Malou Innocent at http://www.cato-at-liberty.org/egypt%E2%80%99s-arab-spring-one-year-later/


As many expected, Islamist parties will form a dominant majority in Egypt’s first freely elected parliament. The Islamists are here to stay and fear-mongering over their rise is unproductive, since Egyptians will judge for themselves whether Islamists are delivering on their promises. Moreover, understanding the dynamics that brought religious parties to power should be the real goal, and will ultimately prove more useful to those engaging this nascent democracy.
The Freedom and Justice Party (FJP), the political arm of Egypt’s underground religious fraternity, the Muslim Brotherhood, won almost half the seats in parliament. The al-Nour Party and the Islamist Alliance, a coalition of puritanical Salafist parties more conservative than the Brotherhood, came in second with 25 percent of the vote. Combined, Islamists have taken about two-thirds of the seats in the new assembly. If placed on a generic right-left political spectrum, Salafis and other arch-conservatives would be on the far right, socialists and non-Islamists would be on the far left, and the liberal and moderate nationalist parties like al-Wafd would fall somewhere in the middle alongside the right-of-center Muslim Brotherhood. The movement advocates the system of a ceremonial president overseeing foreign policy and a prime minister in control of domestic affairs. It decided not to field a candidate for the presidency.
Egyptians in general and the Muslim Brotherhood in particular prefer stability and economic growth to waging jihad. On the one hand the Brotherhood vows to never recognize Israel, on the other its deputy chairman recently claimed, “We have announced clearly that we as Egyptians will abide by the commitments made by the Egyptian government…They are all linked to institutions and not individuals.” On war, renowned French social scientist Olivier Roy explains that Egypt’s religious parties are constrained by democratic mechanisms that hold the people’s legitimacy:
The “Islamic” electorate in Egypt today is not revolutionary; it is conservative. It wants order. It wants leaders who will kick-start the economy and affirm conventional religious values, but it is not ready for the great adventure of a caliphate or an Islamic republic. And the Muslim Brotherhood knows this.
Elements of the 1978 Camp David Accords are in dispute, but such changes will not lead ineluctably to war. The more interesting questions about the rise of Egypt’s Islamists lie in the domestic arena: Will the Brotherhood make good pluralists? Will religious liberty be deemed apostasy or an individual human right? Will a body of Islamic scholars be established to arbitrate Sharia law? Part of the problem is that the Brotherhood members talk a good game about the principles of “liberty and equalityand economic freedom, but they are also smooth political operators. They have repeatedly down-played their popularity to avoid frightening Egypt’s liberals and foreign observers. In fact, knowing that Turkey—not Iran—is the republican system that many in Egypt want to emulate, the Brotherhood ran a campaign claiming that their party was the Turkish model. It’s not. Al-Wasat, a Turkish-style Brotherhood-offshoot, is “the most moderate on the Islamist spectrum,” observes my friend and former colleague Omar Hossino, who studies Egypt and hails from Syria.  Al-Wasat got 2% (9 seats) of the vote.
So, what’s next? Despite the gathering clouds of conservatism, shifting alliances within Egypt will broaden the culture of political debate. In this respect, contrary to received opinion, the Brotherhood loathes what it considers the destructive excesses of individualism and the oppressive forces of secularism. Post-modern political correctness should not inhibit us from addressing that thorny issue. It matters tremendously. Alongside the military the winners in Egypt’s parliament will help write the country’s new constitution. To pass it needs a two-thirds vote in parliament, which the FJP could have if it formed a coalition with al-Nour. Recently, however, the ultra-conservative Salafis who vilify secularism have reached out to liberal parties to form a minority coalition against what they see as the Brotherhood’s near monopoly on power. As academics Philpott, Shah, and Toft argue here:
The choice facing Arab Spring nations at this point isn’t one between religion and secular government. It’s a choice between democracy that includes all parties — religious and secular—and a regime that imposes a rigid and exclusive secularism.
That distinction is important. In his in-depth historical survey, The Society of the Muslim Brothers, the late academic Richard P. Mitchell writes that although early adherents to the Brotherhood believed their ruler must be “knowledgeable in Muslim jurisprudence, just, pious, and virtuous,” they also believed that “‘The nation,’ ‘the people’, in fact, are the source of all the ruler’s authority: ‘The nation alone is the source of power; bowing to its will is a religious obligation.”
If, in fact, Egypt’s Islamists believe in the “social contract,” in which rulers are the chosen agents of the people, the concern among many in the West that Egypt’s Islamists are inherently incompatible with democracy misses the point. Democracy in an Egyptian context will undoubtedly produce something different; for religious movements like the Brotherhood their primary political focus is the maintenance of Islam. After generations of being oppressed under secular tyrannies, the Brotherhood’s strong defense of Islam through civic activism has resonated with the majority of Egyptians.
Egypt’s revolution is still a work in progress, and thus far, it has not been pretty. A Muslim reformation could be the wave of the future. But while austere interpretations of Islamist doctrine are at odds with Western liberal democratic principles, such contradictions are precisely what Egyptians must sort out. Breathing down their collective neck and attempting to shape their political destiny harms their ability to resolve such incompatibilities on their own terms.
As I wrote a while back, admittedly on a slightly different topic:
Western policymakers, in their attempt to export liberal democracy, also run the risk of establishing a frame of social and political expectation and thereby making the dynamics most necessary for social change inflexible and ethnocentric. Because foreign-led efforts implicitly deprive local people of their ability to deal with social conflicts on their own, there is an argument to be made that societies grow more attached to that which they have sacrificed through arduous struggle.

2012-07-12

France: Google’s Free Map Service Unfair To Commercial Map Sellers

Posted by Walter Olson at http://www.cato-at-liberty.org/france-googles-free-map-service-unfair-to-commercial-map-sellers/


We at Cato enjoy citing Frederic Bastiat’s 1845 classic of free-trade pamphleteering, the “Petition of the Candlemakers,” which addresses the French Parliament as follows:
…We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival… is none other than the sun…
The satire goes on to demand that the government banish the unfair competition and restore proper encouragement to domestic industry by requiring that owners exclude sunlight from all building windows.
Once again real life is making it hard to tell satire from reality — appropriately, in Bastiat’s France. According to an Agence France-Presse account, a French commercial court has ordered Google to pay 500,000 Euros to a local map company for unfair practices that constitute an abuse of the “dominant position of its Google Maps application.” In particular, Google provides its maps for free, unlike complainant Bottin Cartographes, which charges good money and has apparently run into trouble holding onto its customers on that basis. Cory Doctorow at BoingBoing:
Bottin Cartographes argued that Google was only planning to give away the service for free until all the competitors had been driven out of business and then they would start charging. This seems implausible to me, and contrary to Google’s business model (give away services, make money from mining the use of those services). Google says it will appeal.
The problem with being a libertarian satirist is that government’s real-world doings keep matching and outrunning the satire.
P.S. Note that the French case arose not from Google’s furnishing of its free map service to individual end customers, but from its furnishing of its map API to businesses that typically adapt it for use in their own sites; as commenters at BoingBoing note, Google has indeed introduced fees for its largest business users of this type (which has caused some of them to adapt by switching from Google’s API to OpenStreetMap, a free wiki-based map service). In short, the complaints about free pricing of too excellent a product draw on the antitrust theory of predatory pricing, which American courts have held in general disfavor since the Chicago antitrust revolution but which continues to hold sway in some other parts of the world. For more on the predatory pricing theory, see these Cato publications.

Transportation Agreement Seems Remote

Posted by Randal O'Toole at http://www.cato-at-liberty.org/transportation-agreement-seems-remote/


House Republicans and Senate Democrats remain at loggerheads over the future of federal highway and transit funding. Although House Transportation & Infrastructure Committee Chair John Mica introduced a compromise transportation bill this week, few are pleased with his proposal. Secretary of Transportation Ray LaHood, for example, calls it “the worst transportation bill” he has ever seen.
Congress passes legislation defining how federal gasoline taxes and other highway user fees will be spent every six years, and the most recent bill lapsed in 2009. Although the revenues all come from highway users, public transit agencies and other interests have captured increasing shares of the funds in successive bills passed since 1982. To please the wide range of interest groups who benefitted from this spending, the 2005 bill (which itself was two years late) made spending mandatory, meaning annual appropriations bills could not refuse to spend the money even if gas taxes failed to cover the costs—which they did after 2008, forcing Congress to transfer general funds to the Highway Trust Fund. In addition, Congress added more and more earmarks to the bills, increasing from 10 earmarks in 1982 to more than 6,000 in the 2005 bill.
The struggle today is between the Democrats (and others) who want to keep spending like there is no tomorrow and the Tea Party Republicans who want to reduce spending to be no more than actual revenues and eliminate earmarks and other pork.
One major source of pork is so-called competitive grants, which are mainly for transit. Although most highway funds have been distributed to the states using formulas based on such things as population, land area, and road miles, competitive transit grants are handed out on a project-by-project basis. Though the money was supposed to be used for the best projects, in fact most of it was distributed based on political power.
Mica’s compromise would keep spending at current levels—which are as much as $10 billion a year more than revenues—but include no earmarks and replace all competitive grants with formula funds. Instead of pleasing everyone, the compromise has simply ticked everyone off.
LaHood and various transit advocates are upset because they lose their funds dedicated to light-rail, streetcar, and other rail transit construction. Conservative groups hate the bill because it almost certainly will require deficit spending.
Mica could have compromised in the other direction: reducing spending to be no more than revenues, but maintaining competitive grants, earmarks, and other pork-barrel programs. This might have been more successful, as fiscal conservatives couldn’t complain about deficit spending while pork-barrelers could point with pride to the earmarks they were funding.
The negative response to Mica’s proposal makes it unlikely that Congress will pass a bill this year. Instead, it will have to once more extend the 2005 bill (which it has already done eight times), as the current extension expires on March 31, 2012. But the extensions maintain spending at current levels, which means the Highway Trust Fund is quickly running out of money.
Advocates of increased spending claim funds are needed to repair crumbling infrastructure. But America’s highways and bridges are actually in pretty good shape, partly because they are largely paid for out of user fees. The infrastructure that is crumbling is mainly those things paid for out of taxes, such as urban transit systems, which have at least a $78 billion maintenance backlog. Even President Obama’s head of the Federal Transit Administration complains that transit agencies are too eager to get federal funds to build new rail lines when they can’t afford to maintain the ones they have.
The real question is why the federal government should be involved at all in highways, urban transit, bike paths, and other surface transportation projects. State and local governments, not to mention private transportation companies, are more likely to make wise transportation investments and less likely to be swayed by pork barrel. Congress should simply eliminate the federal gas tax or, as some have proposed, allow states to opt out of federal programs by raising their gas taxes by the amount of the federal 18.3-cent-per-gallon tax.
Such alternatives will be taken more seriously if Tea Party candidates win more Senate and House seats in the 2012 election. If they lose seats, however, Congress is more likely to raise gas taxes so the transit industry and other interests can continue to get their largely undeserved shares of highway user fees.

Two Thoughts on Susan G. Komen & Planned Parenthood

Posted by Michael F. Cannon at http://www.cato-at-liberty.org/two-thoughts-on-susan-g-komen-planned-parenthood/


I’m sure that many of you are following the controversy over the Susan G. Komen for the Cure Foundation’s decision to suspend its partnership with and funding of Planned Parenthood. Two thoughts on this:
First, this controversy provides a delightful contrast to the Obama administration’s decision to force all Americans to purchase contraceptives and subsidize abortions.
The Susan G. Komen Foundation chose to stop providing grants to Planned Parenthood. Lots of people didn’t like (and/or don’t believe) Komen’s reasons. Some declared they would stop giving to Komen. Others approved of Komen’s decision and started giving to Komen. Many declared they would start donating to Planned Parenthood to show their disapproval of Komen’s decision.
Notice what didn’t happen. Nobody forced anybody to do anything that violated their conscience. People who don’t like Planned Parenthood’s mission can now support Komen without any misgivings. People who like Planned Parenthood’s mission can still support it, and can support other organizations that fight breast cancer. The whole episode may end up being a boon for both sides, if total contributions to the two organizations are any measure. Such are the blessings of liberty.
Contrast that to Obamacare, which forces people who don’t like Planned Parenthood’s mission to support it.
Second, there seems to be a bottomless well of delusion from which supporters of Planned Parenthood draw the idea that this decision shows Komen has injected politics into its grant-making.
Assume for the sake of argument that the Susan G. Komen Foundation has been hijacked by radical abortion opponents who forced the decision to stop funding Planned Parenthood. Even if that is true, that decision did not inject politics into a process previously devoid of politics.
Millions of Americans believe that Planned Parenthood routinely kills small, helpless human beings. Believe it or not, they have a problem with that. When Komen gives money to Planned Parenthood, it no doubt angers those Americans (and makes them less likely to contribute). When Komen decided that the good it would accomplish by funding Planned Parenthood’s provision of breast exams outweighed the concerns (and reaction) of those millions of Americans, Komen was making a political judgment.
Perhaps Planned Parenthood’s supporters didn’t notice the politics that was always there, since Komen had been making the same political judgment they themselves make. But if Planned Parenthood’s supporters are angry now, it’s not because Komen injected politics into its grant-making. It’s because Komen made a different political judgment and Planned Parenthood lost, for now anyway. (Then again, if donations to Planned Parenthood are the measure, the group may be winning by losing.)
I must confess to a little bit of Schadenfreude here, as those who are complaining about Komen’s decision to defund Planned Parenthood are largely the same folks who applaud President Obama’s decision to force everyone to fund it (and, without a trace of irony, describe themselves as “pro-choice”). I predict that when a future president reverses Obama’s decision, supporters of Obama’s policy will likewise delude themselves that the future president has “injected” politics into the dispute.
UPDATE: The Susan G. Komen Foundation has again adjusted its grant-making policies, and Planned Parenthood will once again be eligible for funding. A reporter asks me: “So what does it mean now that Komen’s reversed itself?” My reply:
It does not mean that politics has been banished from Komen’s decisions. It just means that Komen has again made a political decision that more closely reflects the values of Planned Parenthood’s supporters than its detractors. But that is how we should settle the question of who funds Planned Parenthood: with vigorous debate and by allowing individuals to follow their conscience. When Obamacare ‘settles’ the question by forcing taxpayers to fund Planned Parenthood, it violates everyone’s freedom and dignity.

2012-07-11

Six Reasons Why the Wars We Wage Often Go Wrong

by Jim Powell at http://www.cato.org/publications/commentary/six-reasons-why-wars-we-wage-often-go-wrong

Drums are beating for a pre-emptive war to take out such nuclear facilities as Iran might have. But considerable caution is in order, because this is basically the same story Americans heard not so long ago, in 2003, to promote the pre-emptive war against Iraq. Although the United States “won” that war, intelligence about Iraq’s alleged weapons of mass destruction turned out to be wrong, the killing has gone on for nearly a decade, Sunni and Shiite factions appear to be going at each other again, and with Saddam Hussein gone, there’s a political/military vacuum that Iraq’s larger neighbor Iran is undoubtedly eager to exploit.
The calls for another pre-emptive war are particularly ironic considering that Iran used to be a friend of the United States. Our CIA helped the Shah secure his power in 1953, because he helped prevent Soviet penetration of the Mideast. But the Shah went on to establish a secular, authoritarian regime that made plenty of enemies. Ayatollah Khomeini became one of the Shah’s most formidable enemies as early as the 1960s. Because the U.S. backed the Shah, his enemies became our enemies, and they unexpectedly seized power in 1979. The U.S. affirmed its status as an enemy by backing Saddam Hussein after he attacked Iran the following year, in what became an eight-year blood bath.
Iranian leaders have done just about everything to convince the world that they are a bunch of dangerous fanatics, so the prospect of a nuclear Iran is scary. But by now we ought to have learned that a pre-emptive war can multiply the complications.
This is because war is the most costly, violent and unpredictable thing governments do. Again and again, even decisive victories can turn out to be serious mistakes, if not catastrophes, because of unintended consequences. While we might be able to control what we do, we cannot control how other people react to what we do.
Here are 6 reasons why wars go wrong:
1. Nations at war often try to avenge their suffering, which means they are likely to inflame hatreds that persist for a long time and provoke more wars.
In April 1917, President Woodrow Wilson led the United States into World War I. He claimed it was “the war to end wars.” He vowed that it would “make the world safe for democracy.” At that time, the war had been stalemated for three years — neither side able to impose its will on the other. By intervening on the side of the British and the French, Wilson made it possible to break the stalemate, win a decisive victory and dictate terms to the losers.
Wilson imagined he could negotiate peace on noble principles expressed in his January 1918 ”Fourteen Points” speech before a joint session of Congress. But almost a million British soldiers and civilians died in the war. Almost 1.7 million French soldiers and civilians died. Hundreds of thousands of soldiers succumbed to the influenza pandemic. In addition to battle-related destruction of property, retreating soldiers destroyed just about everything that might be useful for their adversaries. They cratered roads, burned homes, demolished factories, poisoned wells, flooded mines, ruined crops and slaughtered livestock.
Wilson, who had more formal education than any previous U.S. president, failed to understand how determined British Prime Minister David Lloyd-George and French Premier Georges Clemenceau were to avenge their grievances against Germany. Clemenceau, for instance, acknowledged that “My life hatred has been for Germany because of what she has done to France.” Wilson was hopelessly outmaneuvered during the postwar negotiations, and the result was the vindictive Versailles Treaty that had nothing to do with the Fourteen Points.
The treaty, forced on the Germans, triggered a nationalist firestorm that enabled a lunatic like Adolf Hitler to attract thousands of followers by promoting hatred and violence. If the United States had stayed out of the war, quite likely it would have ended with some kind of negotiated settlement and better long-term prospects for peace.
2. The overwhelming stresses of war can trigger economic chaos, political crises and totalitarian regimes.
As long as Woodrow Wilson was neutral during World War I, he didn’t have any reason to care what the Russians did. But when he entered the war, he had an incentive to keep Russia fighting on the Eastern Front. This tied up German soldiers there. If the Russians quit the war, as they were anxious to do, Germany would have been able to move some of their soldiers to the Western Front, causing more trouble for the British, French and Americans. So Wilson put pressure on the Russian government. His policy was “No fight, no loans.” He bribed the financially-strapped Russians.
But Russia had begun disintegrating from the day it entered the war in August 1914. Harvard historian Richard Pipes reported that “the army required each month a minimum of 100,000 to 150,000 new rifles, but Russian industry at best could provide only 27,000.” Large numbers of Russian soldiers were sent to the Eastern Front unarmed, and Russian mothers were outraged. The government conscripted some 11 million peasants into the army, which depopulated farms and caused chronic food shortages. In any case, there wasn’t enough railroad capacity both to ship soldiers to the front and ship food for the people — three-quarters of Russian railroad lines had just one track. Massive corruption undermined political support for the government. “There is no indication that the dark and violent history of Russia ever occupied Wilson’s attention,” American diplomat and historian George F. Kennan observed in Russia Leaves The War (1956), which won a Pulitzer Prize.
By keeping Russia in the war, Wilson unintentionally accelerated the disintegration of the Russian army. Kennan reported, “not only had Russia become involved in a great internal political crisis, but she had lost in the process her real ability to make war. The internal crisis was of such gravity that there was no chance for a healthy and constructive solution to it unless the war effort could be terminated at once.” Staying in the war, Kennan added, “provided grist to the mill of the agitator and the fanatic: the last people one would have wished to encourage at such a dangerous moment.” Lenin tried to seize power three times during the summer of 1917, but he failed even though hundreds of thousands of Russian soldiers were deserting. Lenin didn’t succeed until his fourth attempted coup in October 1917, when the Russian army had virtually collapsed.
On August 23, 1939, Lenin’s successor Josef Stalin approved a pact with Hitler, pledging (1) that Germany and the Soviet Union wouldn’t attack each other and (2) that they would carve up Poland. “By freeing Germany from the risk of waging war on two fronts,” noted the French historian StĂ©phane Courtois, “the pact led directly to the outbreak of World War II.” A week after the pack was approved, Hitler invaded Poland, and the war was underway. We might have been spared all that if Woodrow Wilson hadn’t been so anxious to have Russia continue fighting in World War I.
3. If allies have conflicting aims, a war is likely to have conflicting outcomes.
U.S. President Franklin Delano Roosevelt and British Prime Minister Winston Churchill embraced Stalin as an ally after Hitler ordered the invasion of the Soviet Union in June 1941, even though Hitler and Stalin had been odious allies up to that point. FDR and Churchill figured they needed all the help they could get.
But this marriage of convenience changed the nature of World War II. It was no longer a struggle for freedom, because Stalin ranked among history’s worst mass murderers — approximately 42 million deaths. Moreover, the Nazis developed concentration camps based on what they had learned about earlier Soviet concentration camps. Rudolf Hess, who organized Auschwitz, cited Nazi reports that “described in great detail the conditions in, and organization of, the Soviet camps, as supplied by former prisoners who had managed to escape. Great emphasis was placed on the fact that the Soviets, by their massive employment of forced labor, had destroyed whole peoples.”
Stalin exploited more opportunities to expand his Soviet empire after he allied with FDR and Churchill than before. Hundreds of millions of people were liberated from the Nazis, but most were re-enslaved by Stalin. He seized Estonia, Latvia, Lithuania, generous portions of Poland, Finland and Rumania. Moreover, Poland, Bulgaria, Czechoslovakia, East Germany, Hungary and Rumania became Soviet satellites.
On August 8, 1945, two days after the United States dropped an atomic bomb on Hiroshima, the Soviet Union declared war against Japan and grabbed more territory. The Soviet Union conquered Manchuria, Inner Mongolia, Sakhalin Island, the Kuriles and Korea. In addition, Stalin helped Mao Zedong who was fighting to establish a communist regime in China. Altogether, within five years after World War II the number of people subject to communist oppression in Europe and Asia soared from 170 million to about 800 million.
4. A vulnerable adversary can become unbeatable if it unexpectedly gains a big ally.
At the National Press Club, January 12, 1950, Secretary of State Dean Acheson gave a speech identifying nations that the United States pledged to defend from an attack. Acheson’s “defense perimeter” notably didn’t include South Korea. That nation, after all, had long been embroiled in conflicts involving its neighbors China, Russia and Japan.
Then on June 25, 1950, North Korean communist dictator Kim Il Sung attacked South Korea. North Korean soldiers crossed the 38th Parallel and entered South Korea. President Harry Truman decided to try stopping this communist aggression, even though South Korea was much less of an issue than China that had already fallen to the communists the previous year. On July 19, Truman asked Congress for $10 billion of emergency appropriations to fund a “police action” in Korea — he didn’t want to ask Congress for a declaration of war and risk having that defeated.
U.S. forces, led by General Douglas MacArthur, landed behind North Korean lines at Inchon — a very bold move — and within a few weeks he was advancing into North Korea. He did so well that Truman let him have a substantially free hand. In late 1950, MacArthur told reporters that the war was almost over.
He might have been wise to settle for occupying North Korea’s capital, Pyongyang, but he pushed his luck as he continued heading north toward the Yalu River on the Chinese border. Then came reports that indicated South Korean soldiers were “heavily engaged with a fiercely resisting [unidentified] enemy.” U.S. forces captured some prisoners who turned out to be Chinese. MacArthur began to hear that Chinese “volunteers,” as Chairman Mao called them, had crossed the border. MacArthur commented that the situation was “not alarming.” But the increasing number of shootouts suggested that a large number of Chinese soldiers might be in North Korea. Then the New York Times reported that “Chinese Communist hordes, attacking on horse and foot to the sound of bugle calls, cut up Americans and South Koreans in an Indian-style massacre.”
In fact, some 300,000 Chinese soldiers had swarmed across the border and forced MacArthur to retreat. The Chinese captured Seoul, South Korea’s capital. Eventually MacArthur battled his way back to the 38th Parallel, and the war became stalemated.. An armistice was signed on June 7, 1953. U.S. armed forces had doubled to 3 million, military spending had quadrupled, the war had cost an estimated $75 billion (real money back then), and 54,246 American lives had been lost. Six decades later, U.S. forces are still in South Korea.
5. Major powers can be thwarted by people who are fighting for their homeland, know their territory well and have nowhere else to go.
After running as a peace candidate during the 1964 election, President Lyndon Johnson authorized the escalation of the Vietnam War. He embraced the “domino theory” that a communist takeover in one country like Vietnam could result in other Asian countries falling to communists. But as noted, the biggest domino — China — had already fallen.
President Johnson seemed to view Vietnam as if it were a social welfare program. He declared, “Our foreign policy must always be an extension of our domestic policy” — namely, his Great Society entitlements. “I want to leave the footprints of America [in Vietnam]. I want them to say, ‘This is what Americans left — schools and hospitals and dams.’” Johnson’s Vice President Hubert Humphrey was even more carried away by the dream of doing good in Vietnamese jungles: “We ought to be excited about this challenge, because here’s where we can put to work some of the ideas about... nation-building... new concepts of education, development of local government, the improvement of health standards... and really the achievement and fulfillment of full social justice.”
Johnson made many mistakes besides having unrealistic expectations. He micro-managed the war and severely restricted what military commanders could do. His policy of gradual escalation seemed to convince the communist North Vietnamese that the United States was a reluctant warrior who could be defeated if they persisted long enough. Johnson and his top brass over-estimated the American advantages of superior weapons, especially air power.
Such policies led many observers to believe that if only the military had been unleashed, they could have won the Vietnam War, but there are reasons to doubt that. Vietnamese were fighting on their homeland. They knew the jungles well, they had nowhere else to go, and their survival was at stake. Americans didn’t know the jungles, everyone figured that eventually we would go home, and American survival wasn’t at stake, because the United States was more than 8,000 miles away. Moreover, since North Vietnamese insurgents wore ordinary civilian clothing, and they mingled among the South Vietnamese, American soldiers could never be sure which were the people they were trying to help and which were the enemies plotting for murder and mayhem. These are crucial advantages that native people always have when dealing with a foreign military presence. Such advantages go far to explain why major powers have become bogged down in guerrilla wars.
6. People don’t want somebody else building their nation, even when they’re making a mess of it — especially during a civil war.
In 1957, the U.S. Central Intelligence Agency fixed parliamentary elections in Lebanon. Former CIA officer Victor Marchetti recalled, “the CIA had helped elect so many pro-American candidates that the established Arab nationalist politicians were furious, realizing that the cheating was eroding their power base. The feud that had been brewing between Arab nationalists and the pro-Western Christians erupted into civil war. President Eisenhower sent in the marines. They were withdrawn after a few months, but what had been perhaps the most stable state in the Middle East was on the road to total polarization and eventual disintegration.”
A quarter-century later, U.S. and French forces were in Lebanon again. They attempted to serve as peacekeepers amidst the civil war that raged on. In October 1983, two truck bombs struck the barracks — an inviting stationary target. Among the dead were 58 French personnel and 241 Americans. The American death toll included three Army soldiers, 18 Navy seamen and 220 Marines. Apparently recognizing the futility of trying to referee a civil war, President Ronald Reagan ordered that U.S. forces be withdrawn from Lebanon.
In 1993, Bill Clinton imagined that the U.S. could build a nation in Somalia — or as Clinton’s then-UN ambassador Madeleine Albright put it: “nothing less than the restoration of an entire country.” The first step was to be the disarming of warlords. Of course, they wouldn’t be warlords without their guns, so the U.S. found itself embroiled in another civil war. Tragically, American soldiers were killed for nothing that involved a vital U.S. interest, certainly nothing that well-intended intervention was capable of resolving. Clinton recognized the futility of the intervention and withdrew U.S. forces.
The following year, however, Clinton was at it again. He ordered 20,000 U.S. soldiers to Haiti, so they could help alleviate hunger and establish a democracy. Eight years later, Haitian poverty rates were higher, literacy rates were lower than when the mission had begun, and political turmoil persisted. Why was anybody surprised at the futility of this intervention?. Since Haiti gained independence in 1804, Historians Robert Debs Heinl, Jr. and Nancy Gordon Heinl described it as “a country with nearly 200 revolutions, coups, insurrections and civil wars.”
After 9/11, President George W. Bush ordered U.S. forces into Afghanistan to destroy the camps where al-Qaeda terrorists were trained. This mission became a decade-long (and counting) nation-building project. Now, although almost 2,000 U.S. soldiers have died there and hundreds of billions of dollars have been spent fighting, Afghans continue to grow opium, stone women and engage in bloody power struggles. One might have thought that our sacrifices would have at least bought a loyal ally. But Afghan President Hamid Karzai declared his country would side with Pakistan in the event of a conflict with the United States. The British weren’t able to reform Afghanistan, nor could the Russians, and it’s doubtful whether we’ll be able to do any better.
Clearly, if government intervention cannot save relatively small nations like Lebanon, Somalia, Haiti or Afghanistan, there’s no reason to believe the world can be saved by having our government spend more money and order more American soldiers into harm’s way. Washington would do well if it could save itself from bankruptcy as a result of runaway spending and debt.
What people everywhere need is more freedom and free markets. We can’t force these things on others, but we can reverse anti-business policies that have throttled the American economy. When America becomes a dynamo again, more people overseas will find it in their self-interest to adopt the kinds of policies that work for us, much as millions of people embraced English as a principal language of business, science, technology and popular culture.
We need less foreign intervention, not more, to avoid gratuitously making enemies and contributing to difficult situations like we face with Iran now. This means restraining the government sector — the sector of bellicose rhetoric, seizures, embargoes, blockades, sanctions and wars. We need to encourage more voluntary, people-to-people international relations by businesses and nonprofits as well as individuals. Government can help do this by reducing restrictions on the movement of people, goods and capital.
Meanwhile, we need to be vigilant about maintaining a strong national defense that can protect us against aggression and perhaps more important, a strong national defense that can convincingly deter aggression. Deterrence is probably our best bet with Iran as it proved to be with the Soviet Union and China. Britain’s Prime Minister Margaret Thatcher paid Ronald Reagan a supreme compliment when she declared that “He won the cold war without firing a shot.”

The Federal Reserve's Crony Capitalism

by James A. Dorn at http://www.cato.org/publications/commentary/federal-reserves-crony-capitalism

The Federal Reserve’s decision to release forecasts for short-term interest rates is supposed to clarify monetary policy and reassure the public. By keeping the federal funds rate close to zero for three more years, and switching from shorter to longer-term securities, the Fed hopes to spur investment and growth. The problem is that manipulating interest rates and allocating credit to favored parties fosters crony capitalism, not market liberalism.
Clarity in capital markets is not improved by distorting interest rates, which are relative prices. Nor is monetary policy improved by engaging in fiscal policy and the allocation of credit. Targeting inflation at 2 percent is 2 percent too much. Nominal interest rates should reflect real interest rates in a world of zero inflation, if they are to perform their function of allocating capital efficiently.
By pegging nominal interest rates at artificially low levels, the Fed is penalizing millions of people who have their assets in saving accounts or money market funds and are getting near zero nominal returns. With CPI inflation of 3 percent in 2011, the real rate on those assets is negative. The Fed’s low interest rate policy, designed to help fund big government and stimulate housing, is decapitalizing many households who do not want to take on more risky assets. Private virtue is being penalized by public vice.
Retirees, or those near retirement, typically prefer less risky assets. But with the average rate on a savings account at 0.24 percent, on a money market account at 0.22 percent, and on a 1-year CD at 0.53 percent, nominal returns are close to zero, and real returns are negative—even at relatively low rates of inflation.
The longer rates are held artificially low, the more savers will suffer, and the more tempted they will be to take on risks they never would have considered. Risk mismatches will complicate Fed policy when rates must rise to prevent serious inflation. Bond prices will collapse, and those investors who trusted the Fed to support longer-term asset prices will be especially harmed. There will be significant political pressure to keep all rates lower for longer, even if inflation is above the Fed’s 2 percent target. So how can that target be credible?
Fed chairman Ben Bernanke has said that he will put equal weight on price stability and full employment, as dictated by the Fed’s dual mandate. But “price stability” means zero inflation, not 2 percent. The Fed has no fixed anchor: there is no rule to guide it, only discretion. And that discretion is still influenced by Keynesian thinking and a Phillips Curve mentality.
Bernanke is willing to tolerate a little more inflation to try to engineer less unemployment. Yet, he must know this is a Faustian bargain that cannot work. Indeed, the Fed’s press release following the FOMC meeting on January 25 admits, “The maximum level of employment is largely determined by nonmonetary factors.”
The Fed has largely lost its independence. Congress has asked too much of the Fed, and Bernanke has vastly expanded the Fed’s powers and balance sheet to comply. Some asset prices have been inflated (especially gold and bonds), but overall inflation has remained relatively low because people and businesses have been holding large cash balances, and banks have parked their excess reserves at the Fed for a risk-free return. The Fed has helped create its own “liquidity trap” by paying interest on excess reserves, which has reduced the so-called money multiplier.
However, as the economy regains steam and loan demand increases, those excess reserves will enter the marketplace and increase nominal spending and prices. The Fed will need to reduce the size of its balance sheet and nip inflation in the bud; but policymakers may act too late. The result will be stagflation.
Bernanke has placed the Fed in a precarious position. There is no way the FOMC can accurately forecast interest rates or determine what the efficient allocation of capital should be. Interfering with market interest rates is an exercise in market socialism, not capitalism.
In his press conference following the historic January 25 policy meeting, Bernanke was asked whether the Fed’s inflation target of 2 percent was intended to depreciate the purchasing power of the dollar. Bernanke replied that the real purpose is to “avoid deflation.” He then tried to downplay the idea that mild inflation would erode the value of money, because most people would protect their money by investing it, and not put it under the mattress. He admitted that interest rates are low now, but in the long run they tend to “compensate” for inflation.
This was an artful dodge. In fact, inflation always erodes the domestic purchasing power of the dollar. At the current 3 percent CPI inflation rate, the average level of money prices would increase by 34 percent in a decade, and by 81 percent in 20 years. Even at 2 percent, the price level would double every 35 years—no matter what the interest rate is. By suppressing nominal interest rates, the Fed is denying savers the means to safeguard their property; yet Bernanke barely gives that failure a mention.
Transparency is a noble goal, but it is best achieved under a rule of law and freely determined prices. The Fed’s transparency crusade has not imposed any rule on the Fed or moved us closer to sound money. Forecasting short-term rates near zero for the foreseeable future sends the wrong signal—namely, that financial repression and crony capitalism will continue.

Why Does U.S. Pay to Protect Prosperous Allies?

by Christopher Preble at http://www.cato.org/publications/commentary/why-does-us-pay-protect-prosperous-allies

For some time now, Republican hawks like Sen. John McCain and Rep. Howard P. "Buck" McKeon have been saying that our military budget is inadequate for the threats we face. They like to gripe that President Barack Obama is orchestrating the decline of American power.
Some of this is pure partisanship. Republicans criticize Democrats just as Democrats criticized President George W. Bush. The hawks, though, have a special devotion to the military budget. In their view, some military spending is good; more is even better. But if overspending on the military and promoting the United States as global policeman are benchmarks of approval, they should have little to complain about with our current president.
Contrary to his rhetoric of change, the president sounded like a neoconservative when he declared during his recent State of the Union address that the United States was, and would remain, the world's "indispensable nation." Obama's proposed Pentagon budget, released last week, affirmed his intention to retain most of the U.S. military's current missions, even when they aren't needed to safeguard the United States' vital security interests.
Meanwhile, the Pentagon's latest strategy document was carefully designed to convince allies and adversaries alike that the United States can continue to prosecute multiple armed conflicts in far-flung corners of the globe. Taken together, Obama's strategy document, budget and State of the Union remarks articulate a coherent philosophy on military spending and global engagement that ought to hold a lot of appeal for the neoconservatives in the GOP.
But partisan politics aside, what our foreign policy leaders have consistently ignored is an argument that should have strong sway at a time of economic uncertainty: This country's tax dollars can be better spent than on defending wealthy allies who are more than capable of protecting themselves.
The administration plans to withdraw some U.S. troops from Europe, but as many as 70,000 are likely to remain. Meanwhile, the number of troops in Asia will be increased. These troops serve to reassure our allies of our commitment to defend them. It is working as designed: Other countries do not spend enough to satisfy their defense needs.
The end result is that Americans pay more. The Obama administration's budget will cost every American nearly $2,000 next year. The figure rises by hundreds of dollars when one accounts for homeland security, payments to veterans, and the few billion dollars tucked away in the Department of Energy for the nation's bloated nuclear arsenal. All told, every American will likely shell out more than $2,700 on spending classified as national defense. That is at least 2½ times what the British spend, five times more than what the Germans spend, and six times what the Japanese spend.
It is hard to see how that is good news for Americans struggling to make ends meet. Obama's magnanimity is especially ironic given his emphasis on "fairness" and "shared sacrifice." His rhetoric apparently does not apply to people living outside the United States. American troops will continue to be tasked with policing the world, and American taxpayers will be on the hook to pay for it.
The administration has proposed to restrain the growth of military spending. But total U.S. military spending will remain well above pre-9/11 levels. The Obama administration is requesting $525 billion for the Pentagon's base budget in 2013, plus another $88.4 billion to pay for the war in Afghanistan. To put this in perspective, that is more than the annual average during Ronald Reagan's time in office (about $526 billion in today's dollars). One seldom hears GOP hawks speak of Reagan as a misguided dove who left the country vulnerable to attack.
Focusing only on budget numbers, however, misses the big picture. Instead, we must focus on what we will spend and why. The answer is clear: Our military budget is large by historical standards because Washington is unwilling to revisit the premise that Americans are responsible for everything that happens in the world, even things that have no connection to American security or prosperity.
Our fiscal crisis has created an opportunity to revisit our commitments abroad. We should focus American power on our core interests, and call on other countries to take responsibility for their own defense.
Intuitively, that exercise should satisfy both liberal demands that "everyone pay their fair share" and conservative demands that our government "live within its means." But given the rhetoric we have heard so far, it is doubtful that this election cycle will produce a leader who will seriously contemplate how we can most prudently provide for our common defense.

2012-07-10

Our Constitution Is Out of Step with the Rest of the World

Posted by Roger Pilon at http://www.cato-at-liberty.org/our-constitution-is-out-of-step-with-the-rest-of-the-world/


Is the Constitution out of date? That’s the impression that comes across from an article in yesterday’s New York Times, written by the paper’s crack Supreme Court reporter, Adam Liptak. It comes in turn from an article he points to by two law professors, David S. Law at Washington University in St. Louis and Mila Versteeg at the University of Virginia, scheduled for the June New York University Law Review. In it the authors conclude that the Constitution appears to be losing its appeal as a model for constitution drafters in other countries, despite its having served that role up until as recently as 1987, the year of its bicentennial. So what’s changed over the past quarter century?
Unfortunately, from the Times article we don’t get a clear picture of just how it is that the constitutions other countries have drafted in recent years differ from our own, except for the emphasis throughout the piece on rights. Yet right there is a clue about what’s going on. On that score, in fact, Liptak cites striking comments Justice Ruth Bader Ginsburg made in a television interview during a visit to Egypt last week:
“I would not look to the United States Constitution if I were drafting a constitution in the year 2012,” she said. She recommended, instead, the South African Constitution, the Canadian Charter of Rights and Freedoms or the European Convention on Human Rights.
Liptak then notes, not entirely accurately, that “the rights guaranteed by the American Constitution are parsimonious by international standards, and they are frozen in amber.”
To be sure, the rights enumerated in our Constitution and in the amendments that were added later, including in the Bill of Rights, are few in number. But numbers alone, like rights alone, tell only part of our constitutional story. To tell the story more fully and accurately, we have to step back a bit.
It’s true that our Framers, unlike many others, especially more recently, did not focus their attention on rights. Instead, they focused on powers— and for good reason. Because we have an infinite number of rights, depending on how they’re defined, the Framers knew that they couldn’t possibly enumerate all of them. But they could enumerate the government’s powers, which they did. Thus, given that they wanted to create a limited government, leaving most of life to be lived freely in the private sector rather than through public programs of the kind we have today, the theory of the Constitution was simple and straightforward: where there is no power there is a right, belonging either to the states or to the people. The Tenth Amendment makes that crystal clear. Rights were thus implicit in the very idea of a government of limited powers. That’s the idea that’s altogether absent from the modern approach to constitutionalism—with its push for far reaching “active” government—about which more in a moment.

During the ratification debates in the states, however, opponents of the new Constitution, fearing that it gave the national government too much power, insisted that, as a condition of ratification, a bill of rights be added—for extra caution. But that raised a problem: by ordinary principles of legal reasoning, the failure to enumerate all of our rights, which again was impossible to do, would be construed as meaning that only those that were enumerated were meant to be protected. To address that problem, therefore, the Ninth Amendment was written, which reads: “The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people.” Over the years, unfortunately, that amendment has been misunderstood  and largely ignored; but it was meant to make clear that the people “retained” a vast number of rights beyond those expressly enumerated in the document.
Thus, the rights expressly enumerated in the Constitution may be “parsimonious,” but understood in light of the larger theory of the document, they are not. Neither, moreover, are they “frozen in amber,” because the courts are called on regularly to interpret and apply them in the varying factual contexts that surround the cases or controversies that are brought before them. Thus, the right to freedom of speech has been read to entail the right to desecrate the flag, and the right to liberty has been read to entail the right to engage in sexual practices that others may dislike. Judges may sometimes fail to draw the proper inferences, of course, or draw inferences not entailed. But that says nothing about the Constitution itself.
The idea, then, that our Constitution is terse and old and guarantees relatively few rights—a point Liptak draws from the authors of the article and the people he interviews—does not explain the decline in the document’s heuristic power abroad. Nor does “the commitment of some members of the Supreme Court to interpreting the Constitution according to its original meaning in the 18th century” explain its fall from favor. Rather, it’s the kind of rights our Constitution protects, and its strategy for protecting them, that distinguishes it from the constitutional trends of recent years. First, as Liptak notes, “we are an outlier in prohibiting government establishment of religion,” and we recognize the right to a speedy and public trial and the right to keep and bear arms. But second, and far more fundamentally, our Constitution is out of step in its failure to protect “entitlements” to governmentally “guaranteed” goods and services like education, housing, health care, and “periodic holidays with pay” (Article 24 of the UN Universal Declaration of Human Rights). And right there, of course, is the great divide, and the heart of the matter.
The modern view, which we too have followed, at least statutorily if not constitutionally, is to recognize all manner of “entitlements” of a kind that can be provided only through massive governmental institutions that engage in material and regulatory redistribution. We are constitutionally out of step in that, to be sure. Countries like Greece, Italy, Spain, and Portugal are far ahead of us.

Indian Gaming: The Lobbyists Always Win

Posted by Chris Edwards at http://www.cato-at-liberty.org/indian-gaming-the-lobbyists-always-win/


One of the issues discussed in my new essay on the Bureau of Indian Affairs (BIA) is the lobbying by groups of American Indians seeking official tribal status. The BIA has the power to confer tribal status, and it does so in a non-transparent manner. With official status comes tribal access to a wide range of federal subsidy programs plus the ability to earn monopoly profits with a casino. The gaining of official status for tribes was one of Jack Abramoff’s specialty services.
The most recent BIA decision to confer tribal status is a classic case. The 221-member Tejon tribe in California received a thumbs up from the BIA in January 2012. The group’s reservation and its tribal status had been dissolved decades ago, but it hired some powerful Washington lobbyists to work their magic. An article in the Bakersfield Californian notes, “In their quest to gain recognition, the Tejons had the help of an unnamed ‘financial backer’ who had paid $300,000-plus to the tribe’s attorneys.” This financial backer was “banking on a casino.”
A Mountain Enterprise story says that once the Tejon tribe’s status was official, “speculation began almost immediately about the tribe’s plans to affiliate with Tejon Ranch Corporation and Las Vegas investors to establish a casino facility.” Famous D.C. lobby shop Patton Boggs earned $120,000 in fees on the deal.
For the Tejons, the lobbyists produced results. There are hundreds of Indian groups who have petitioned the BIA for tribal status, and the BIA only confers status to a few tribes a year. Yet somehow the Tejons managed to jump to the front of the queue. This list (and this one) appear to show that the tribe ranked low on the recognition waiting list at #230 (but I admit I’m not an expert on how the system works).
The tribes who hire lobbyists don’t always win. Here’s a story about the 450-member Muwekma Ohlone of California:
Financed by their own casino sugar daddy, Florida real estate tycoon Alan Ginsburg and his associates, as well as with proceeds from the tribe’s own archaeological consulting firm, the otherwise humble Muwekma have spent millions of dollars on the effort. Much of that money has gone toward procuring the aid of a high-powered Washington, D.C., law firm…. [R]ecognition would open the door for the tribe… to place land in federal trust as a ‘reservation’ on which it could open a casino. Indeed, should they attain recognition, the Muwekma almost assuredly will become the envy of non-gaming tribes from outlying regions of the state who’ve tried and thus far not succeeded at ‘reservation shopping’ — that is, attempting to set up casino operations in urban areas far from their aboriginal homeland.
The Muwekma Ohlone tribe lost an important court ruling last year, which has set back their search for official recognition. In this case, the only winners were the lawyers and lobbyists, who apparently pocketed huge fees from the tribe. This data source shows that lawyers and lobbyists gain about $20 million a year in fees on Indian gaming-related issues. Jack Abramoff alone raised $80 million from half a dozen tribal clients in the early 2000s for lobbying on a wide range of tribal issues.
Indian gaming and other complex regulatory schemes usually generate “rent” or monopoly privileges that groups vie for a manner that is unproductive to society as a whole. When the government confers special benefits through regulation, wealth is channeled to lawyers and lobbyists but the overall economy shrinks due to the misallocation of resources.
The best policy for gaming would be to repeal all government restrictions and to treat gaming like any other industry. That would eliminate rents and the related lobbying, and it would create an equal and competitive playing field for Indians and non-Indians alike.
The good thing about Indian gaming is that it has shown that Indians are every bit as entrepreneurial as other Americans. But gaming is not likely to be a stable platform for long-term Indian economic development. That’s because as tribal and nontribal gaming continues to expand, profit levels in tribal gaming are likely to decline.
A more durable strategy for Indian prosperity is to make institutional reforms on reservations to encourage broad-based investment in a range of industries, as discussed here.

SOPA’s Last Gasp: Was the Internet Misinformed?

Posted by Julian Sanchez at http://www.cato-at-liberty.org/sopas-last-gasp-was-the-internet-misinformed/


In the wake of an unprecedented online protest, the Stop Online Piracy Act and PROTECT-IP Act—a pair of ill-conceived proposals to combat digital copyright infringement—appear to be dead for now, and politically toxic for the foreseeable future. But in the proud tradition of the former Iraqi Information Minister,  many supporters of increased Internet regulation remain in profound denial about the scope and seriousness of public resistance to meddling with the structure of the open Net, even for a legitimate purpose like fighting piracy. Exhibit A: Wednesday’s New York Times op-ed by Recording Industry Association of America head Cary Sherman.
On the basis of no discernible evidence, Sherman is determined to believe that literally millions of Internet users who spoke out against online censorship—to say nothing of the scores of eminent constitutional scholars, network engineers, security specialists, and entrepreneurs—were little more than dupes of a few big tech companies.  This was a widely-condemned, lobbyist-scripted proposal whose political viability was so plainly purchased that Hollywood all but demanded a refund when it didn’t pass—yet in Sherman’s mind, incredibly, it was the immense popular backlash against this that “raised questions about how the democratic process functions in the digital age.”
There is a perverse logic to this: What Sherman has in mind is the familiar  “democratic process” where policy is ultimately crafted and debated behind closed doors by powerful institutional stakeholders.  Broader public involvement—should it become an unpleasant necessity—consists exclusively of being roused to enthusiasm or opposition, as necessary, by the stakeholders’ competing marketing campaigns. The defining principle of the modern Web—that users are not passive consumers of ideas, but the source of whatever value and creativity the platform enables—is alien to the model.
Unsurprisingly, Sherman’s op-ed doesn’t really read as though it’s aimed at the general public, but rather as a last desperate pitch over their heads to members of Congress: Pay no attention to the folks in front of the curtain! Since Sherman never takes seriously the possibility that opposition was grounded in well-informed concerns, it is little surprise that he makes scant attempt to seriously address them.
Instead, the piece is an extended exercise in stroking the wounded egos of legislators: You understood the severity of the online piracy problem, having diligently examined our fabricated statistics. You “studied the problem in all its dimensions, through multiple hearings”—only one of which actually concerned SOPA specifically, and all of which were transparently stacked with handpicked supporters of the legislation. Congress heard from Floyd Abrams, commissioned by the film lobby to give the legislation his constitutional seal of approval, but not from more than 100 eminent legal scholars who explained why it was an affront to the First Amendment.  Nor did they hear from the 83 respected network engineers, or the government’s own cybersecurity experts, who warned that it would interfere with efforts to secure the Internet’s Domain Name System against malicious hackers. Indeed, online opposition truly exploded after a session of the House Judiciary Committee where it became embarrassingly clear to the tech community how imperfectly legislators truly understood the network they were regulating, in no small part because the bill’s sponsors had steadfastly resisted holding a hearing with real technical experts. When Rep. Darrell Issa finally scheduled such a hearing, SOPA boosters rapidly retreated on the previously non-negotiable question of DNS blocking, perhaps because they realized how poorly it would reflect on their own process.
What, then, is Sherman’s evidence that opponents were misinformed?  Apparently because they thought a system requiring ISPs to block access to entire web domains—including protected speech along with copyright infringing content—and forcing search engines to redact their results might plausibly be described as “censorship.” Of course, it is so glaringly obvious that this is censorship that Sherman can’t quite bring himself to describe it in literal terms, falling back instead on strained physical analogies and the strange premise that censorship isn’t censorship if you only intend to block bad speech. On this definition, I suppose, censorship only occurs when the authorities approve of the information they are demanding be filtered out.
Beyond that, there’s precious little effort to substantiate the claim that companies opposed to SOPA “drowned out” accurate information by blasting their users with propaganda.  Indeed, the media companies backing the legislation seemed conspicuously uninterested in doing much of anything to inform their own enormous audiences about the legislation—perhaps because they harbored no illusions about how ordinary people would react once they started looking into the proposals. Like Sherman, they weren’t really seeking better informed public participation; they preferred not to have to worry about public participation at all. That suited the copyright lobbies quite nicely for decades as they steamrolled through one bill after another aimed at impoverishing the public domain and swelling corporate coffers, with no compensating benefit in additional creative output.
Hence this editorial, in which Sherman does his best Grima Wormtongue impression, reassuring members of Congress that their wisdom (fed by his solicitous guidance) is unimpeachable, and that any complaints from the masses—even masses taking their cues from legal and technical experts—can only demonstrate the enemy’s willingness to resort to lies and manipulation.  It’s an appealing pitch because it ties into the fiction most legislators will find psychologically necessary to do their jobs: that a few hundred sufficiently wise men and women can aspire to such universal competence that they’re able to make rules on every topic under the sun, however complex, for a vast nation of millions. But uncomfortable as it must be to contemplate that this may not be true, such humility—as Socrates first taught us—is the beginning of true wisdom.