Political Ramblings of a Madman: 2012

2012-11-09

Cato: Immigrants Did Not Take Your Job

Mark Krikorian, executive director of the anti-immigrant Center for Immigration Studies (CIS) and author of the book The New Case Against Immigration: Both Illegal and Legal, criticized a remark I made to Washington Times reporter Stephen Dinan about a new CIS memo.

The memo, which can be found here, claims that immigrants are taking most of the jobs created since President Obama took office. I told the Washington Times that the memo “makes a mountain out of a molehill” because it ignores key economic explanations that have nothing to do with demonizing immigrants. Steven Camarota, one of the authors of the memo, even agreedthat one factor I mentioned could explain his findings.

In response, Mr. Krikorian wrote that I should, “Tell that to the 23 million Americans who are unemployed, forced to settle for part-time work, or gave up looking for work altogether.”

My response is that the CIS memo is so flawed it should not be taken seriously.

Cato: The ‘Lehman Trigger’ Myth Continues…

In yesterday’s defense of President Obama’s economic record, Alan Blinder starts, ”[A]fter the frightening financial panic and deep recession triggered by the collapse of Lehman Brothers in September 2008,” thereby repeating the myth that Lehman’s failure caused the recession.

Below is a chart of real (inflation-adjusted) personal consumption and civilian employment from January 2007 to December 2010. Let’s recall that Lehman’s failure was in September 2008. What should be immediately clear, even to such an accomplished economist as Blinder, is that both consumption and employment began their decline almost a full year before Lehman’s collapse. So unless Lehman’s collapse caused some backward ripple in time, it’s hard to see how it triggered the recession. In fact, about 75% of the decline in personal consumption preceded the Lehman collapse. Also of interest is that the rate of decline in consumption actually slowed after the Lehman collapse.

Cato: End, Don’t Cap, the Mortgage Interest Deduction

The housing market is soft, so this is the worst possible time to get rid of the mortgage interest deduction, right? Well, it’s not that simple.

1.) The deduction is not a subsidy to homeowners. It’s a subsidy to people who have mortgages, and then only if they itemize their taxes. Those claiming the standard deduction can’t take advantage. Paying cash for a home won’t qualify you for the deduction, either. Following a great recession fueled by would-be homeowners borrowing more than they could afford, it’s well past time for the feds to get out of the business of subsidizing home debt.

2.) Borrowing to own a home now costs homebuyers less in interest than it has historically, which means that the cash value of the mortgage interest deduction is lower than it will be under higher (future) interest rates. In other words, this particular tax-code goodie is at a historically low value to taxpayers, so why not get rid of it now?

Cato: We Support Gay Marriage but Oppose Forcing People to Support It

Elane Photography, a Christian-identified business in Albuquerque, N.M., declined to photograph Vanessa Willock’s same-sex commitment ceremony based on the business owners’ personal beliefs. New Mexico law prohibits any refusal to render business services because of sexual orientation, however, so Willock filed a claim with the New Mexico Human Rights Commission. She argued that Elane Photography is a “public accommodation,” akin to a hotel or restaurant, that is subject to the state’s anti-discrimination law.

Read more at http://www.cato-at-liberty.org/we-support-gay-marriage-but-oppose-forcing-people-to-support-it/

Cato: ‘Dems and GOP Agree, Government Needs More Money’

That’s the (fair) title of this blog post over at National Journal‘s Influence Alley:

The federal government needs more money. That’s one thing both parties can agree on, Republican and Democratic lawmakers said Tuesday. The rub, of course, is how to get it.

Reps. Peter Roskam, R-Ill., and Allyson Schwartz, D-Pa. said at a National Journal panel on Tuesday morning that there’s no question that more revenue is needed. Democrats say they can raise the money by letting upper-income tax cuts expire, while Republicans say economic growth alone will help raise the cash.

“We need more revenue,” said Roskam, the House GOP’s chief deputy whip. “If you can get the money to satisfy obligations, that’s an area of common ground.”

Cato: E-Mail Privacy Laws Don’t Actually Protect Modern E-mail, Court Rules

In case further proof were needed that we’re long overdue for an update of our digital privacy laws, the South Carolina Supreme Court has just ruled that e-mails stored remotely by a provider like Yahoo! or Gmail are not communications in “electronic storage” for the purposes of the Stored Communications Act, and therefore not entitled to the heightened protections of that statute.

There are, fortunately, other statutes barring unauthorized access to people’s accounts, and one appellate court has ruled that e-mail is at least sometimes protected from government intrusion by the Fourth Amendment, independently of what any statute says. But given the variety of different types of electronic communication services that exist in 2012, nobody should feel too confident that the courts will be prepared to generalize that logic. It is depressingly easy, for example, to imagine a court ruling that users of a service like Gmail, whose letters will be scanned by Google’s computers to automatically deliver tailored advertisements, have therefore waived the “reasonable expectation of privacy” that confers Fourth Amendment protection. Indeed, the Justice Department has consistently opposed proposals to clearly require a warrant for scrutinizing electronic communications, arguing that it should often be able to snoop through citizens’ digital correspondence based on a mere subpoena or a showing of “relevance” to a court.

Cato: Newsflash: Politicians Pander to Agriculture!

The American Soybean Association (ASA) recently asked each of the presidential candidates to respond to a series of questions about agricultural policy issues. The questions covered farm bill and crop insurance, estate tax, biodiesel, biotechnology, trade, research, regulations, and transportation and infrastructure. The candidates’ responses (full text here) were not exactly models of courageous and principled policymaking.

I won’t parse the entire thing, as it is just too depressing and some of the issues (e.g., the estate tax) fall outside my area of research. But I will comment on a couple of the topics.

2012-11-08

Cato: 21st Century U.S. Trade Policy Should be Pro-Market, not Pro-Business, Pro-Labor, or Pro-Lobbyist

The difference between the trade policy we have today and the trade policy we should have is like the difference between crony capitalism and free-market capitalism. The sausage grinder that is U.S. trade policy serves politicians and rewards lobbyists and gate-keeper bureaucrats, who have the gall to presume entitlement to limiting Americans’ options and picking winners and losers.

In a country that exalts freedom, the default trade policy should be free trade. But it’s not. Why?

The public has been trained to accept that special interests—companies seeking exemptions from competition; unions demanding that citizens ”Buy American”; investors and intellectual property holders demanding the U.S. public assume part of its business risks; enviros insisting on measures that punish developing countries for being poor—are rightly entitled to negotiate, abridge, impair, or sacrifice those freedoms in the name of Team USA.

Cato: Nobel Peace Prize Committee Ignores the Real Heroes of Peace and Freedom

And the 2012 Nobel Peace Prize goes to Mikhail Khodorkovsky, who languishes in a Siberian jail for crossing Russia’s strongman Vladimir Putin. It goes to Prime Minister Morgan Tsvangirai, who was severely beaten by Robert Mugabe’s thugs in Zimbabwe. It goes to Cuban political prisoners (both known and unknown), and millions of North Koreans enslaved in that country’s labor camps.

Just kidding!

The esteemed members of the Nobel Peace Prize Committee have awarded the 2012 prize to the European Union. So, if you thought that awarding it to President Barack Obama for the sole reason of not being George W. Bush was strange and unusual, think again. (By the way, I have nothing against our president. I am sure he was just as embarrassed as everyone else.)

Cato: Here’s Your Answer, Governor Martinez

New Mexico’s Governor, Susana Martinez (R), wrote a letter to DHS Secretary Janet Napolitano last week asking for assurance that implementation of our national ID law, the REAL ID Act, will not be pushed back again beyond the upcoming January 15, 2013 deadline. Here’s your answer, Governor Martinez.

Congress passed REAL ID in 2005 as an attachment to a military spending bill. The law never had a hearing in the House or Senate.

Cato: Nobel Peace Prize to the EU Is a Farce

The Nobel Peace Prize Committee has awarded the 2012 Nobel Peace Prize to the European Unionfor “keeping peace in Europe.” The committee has now turned the award into a farce. But few people are laughing.

The Committee has ignored the important role that the North Atlantic Treaty Organization (NATO) and the United States have played in keeping Europe at peace throughout the Cold War. While it is true that the free trade agreements among the EU countries have led to more prosperity and cooperation, other EU initiatives have exacerbated Europe’s problems and ancient animosities.

Cato: You Say Tomato and I Say Tomate; Let’s Call this Whole Antidumping Racket Off

Last month, on the day the president was addressing audiences in the auto-parts-factory-rich state of Ohio, the administration filed a formal trade complaint before the World Trade Organization alleging that China is subsidizing exports of automobile parts.

Last week, at the request of domestic tomato producers operating preponderantly in the state of Florida, the Commerce Department agreed to terminate a 4-year-old agreement, which has allowed tomatoes from Mexico to be sold in the United States under certain minimum price conditions.

Of course it would be cynical to believe that these actions have anything to do with an incumbent candidate wielding Executive branch authorities to curry favor with special interests in major swing states before an election. So let’s make this latest episode a teaching moment about the perils of the antidumping status quo.

Cato: Economic Ignorance Accelerates

Just when you thought economic ignorance couldn’t sink any lower, a letter in the Washington Post criticizes Mitt Romney for repairing a brick walkway at his house rather than hiring a contractor — and thus “cheating people out of jobs.”

Uh-oh. I just made myself a sandwich, thus cheating a deli employee out of a job. I drive myself to work instead of using a chauffeur, thus putting chauffeurs out of work. I do my own laundry — well, this could go on all day.

Cato: You Can Say it All You Want

…but that doesn’t make it true.

One of the laws recently signed by the president, which Congress quietly passed before leaving town to campaign, was Public Law 112-176. Among other things, it extended the authorization the national background check system, E-Verify.

Cato: Opting Out of the Regulatory State

What do you do when your economy is suffocating under too many regulations, but strong opposition prevents you from far-reaching liberalization? The British finance minister George Osborne has had an interesting idea regarding Britain’s onerous labor market regulations.

Read more at http://www.cato-at-liberty.org/opting-out-of-the-regulatory-state/

Cato: ‘There Isn’t a Single Honest Health Economist Who Agrees with the LA Times’ on IPAB

I blogged previously about Mitt Romney’s claim that ObamaCare creates “an unelected board that’s going to tell people ultimately what kind of treatments they can have.” President Obama conceded the point when he responded that the Independent Payment Advisory Board “basically identifies best practices and says, let’s use the purchasing power of Medicare and Medicaid to help to institutionalize all these good things that we do.” The president admitted the whole point of IPAB is to let a bunch of experts decide what practices are “best,” and to stop paying for what isn’t.

Read more at http://www.cato-at-liberty.org/there-isnt-a-single-honest-health-economist-who-agrees-with-the-la-times-on-ipab/

Cato: Want Privacy Choice? Papa’s Gonna Give You One

I was interested by the title of a paper called “Behavioral Advertising: The Offer You Cannot Refuse” by a small coterie of privacy activist/researchers. I love the Godfather movies, in which the statement, “I’m going to make him an offer he can’t refuse,” is a coolly tuxedoed plan to threaten someone with violence or death. I don’t love the paper’s attempt to show that government “interventions” are superior to markets in terms of freedom.

Behavioral advertisers are no mafiosi. They are not in the business of illegal coercion. They’re not in any kind of illegal business, in fact. The choice of title suggests that the authors may be biased toward making targeted advertising illegal. (The lead author argued in 2004 that Gmail should be shut down as a violation of California law.)

What was most interesting, though, was the paper’s unspoken battle with lock-in, or path dependence. That’s the idea in technology development that a given state of affairs perpetuates itself due to the costs of changing course.

Cato: Speed of Politics, Speed of Tech

The Brookings Institution held a forum this morning on “Fostering Internet Competition“—at which, oddly, many panelists seemed resigned to the idea that one layer or another of the Internet would not be competitive: The question, as they saw it, was how to regulate the monopoly player at one layer to foster competition at the next layer up.

For Loyola University law professor Spencer Waller, it is online social platforms like Facebook and Twitter and Google that raise the specter of monopoly, and the question is how to regulate them so as to ensure competition and innovation in services built atop these platforms. Harvard’s Susan Crawford thought the application layer could probably take care of itself, provided the monopolisticphysical infrastructure—the means of providing broadband connectivity to end users—was properly regulated. Only one panelist, media theorist Doug Rushkoff, seemed interested in the possibility of fostering competition all the way down—he was, rather astonishingly, the first to utter the phrase “mesh networking” at the very end of the question and answer period. The others—as revealed by frequent analogies to electric grids and interstate highways—seemed stuck in a model that failed to take seriously what is probably the most important fact about Internet policy: Technology moves faster than politics.

Cato: Did Chávez Win the Elections? Is Venezuela a Democracy?

In the aftermath of Venezuela’s elections yesterday, Hugo Chávez’s win is being cited by predictable sources as legitimizing his regime. “The victory of President Chávez is a victory for democracy,” declared Bolivia’s populist president Evo Morales. The earnest participation of the opposition in the elections further bolsters the idea of Chávez’s legitimacy in the minds of some as do references to the notion that “the people have spoken.”

While opposition candidate Henrique Capriles recognized his loss, it would be a mistake to interpret the election result as an accurate reflection of public sentiment. That’s because Chávez rigged the election process so firmly against any challenger that it’s astounding the opposition did so well (it got about 45 percent of the vote). Ask yourself this: If the following occurred in your country—as did in Venezuela—would you consider the outcome acceptable?

Cato: The Day After the Election in Venezuela

Unfortunately there was no upset in yesterday’s presidential election in Venezuela. Hugo Chávez handily won another six-year term with 54% of the vote. Despite running an inspiring campaign that at some point seemed to threaten Chávez’s rule, Henrique Capriles came up short with 44%. The vote was clean, even though the election wouldn’t be considered fair in any mature democracy.

What happened? It seems clear that Chávez was able to mobilize his people to the polls. Despite the mismanagement of the economy, the spike in crime, the crumbling infrastructure and widespread corruption, many Venezuelans still like Chávez. And he made sure to buy their love this year by increasing public spending in the last 12 months by 30% in real terms.

Cato: France to Ban School Homework

Let’s say that you are a newly-elected French president and you have a lot on your plate. The unemployment rate is 10.2 percent and youth unemployment hovers around 23 percent. The budget deficit is 4.5 percent of the GDP and the explicit national debt 90 percent of the GDP. Your economy is at a standstill and your currency is on the verge of collapse. Many of your most productive people wonder if they should pack up and leave, because you have just asked them to fork over 75 percent of their earnings to the taxman. Your popularity is shrinking faster than you can say sacre bleu! So, what do you do?

Read more at http://www.cato-at-liberty.org/france-to-ban-school-homework/

Cato: Privatize or Contract Out?

The Metropolitan Atlanta Rapid Transit Authority (MARTA) spends $50 million more than its peers on employee benefits, says KPMG in an audit of the agency. Reducing benefits to national average levels (easier said than done) and contracting out some services such as cleaning would allow MARTA to erase a $33 million deficit in its annual budget.

Comparing a transit agency’s efficiency to its peers is like criticizing a bank robber for stealing more than home burglars. The fact is that they are both ripping people off, and just because some are a bit less rapacious doesn’t make them any more morally correct.

Cato: The First Amendment and Zombies

I’m pretty much a free speech absolutist. I know that’s an epithet, but to me it’s kind of like being an arithmetic absolutist: There are right and wrong answers. Emotional attachment to the right answers might be kooky — but it sure beats being attached to the wrong ones.

In Slate, Eric Posner reminds us that the rest of the world doesn’t love the First Amendment. Even Americans weren’t always free speech absolutists, Posner notes; for much of our history, the state blithely ignored the First Amendment whenever it became inconvenient. American governments cheerfully arrested anarchists, communists, pacifists, and purveyors of birth control literature. They prosecuted publishers of works by James Joyce and William S. Burroughs.

It might be better, Posner suggests, if we went back to the good old days.

Cato: Is the Federal Government Bound by the Agreements It Makes With States?

The Interstate Agreement on Detainers, a compact authorized by federal statute, provides a simple procedure for transferring custody of prisoners between states. Because the federal government annually seeks to prosecute thousands of prisoners already in state custody, it joined the IAD in 1970 to get the benefit of this unified procedure. When it joined, it did so as a “state” for purposes of the agreement, and exempted itself from only two provisions (which aren’t relevant here). One of the provisions that the federal government decided not to exempt itself from, Article IV(a), allows the governor of the sending state to deny any request made by a receiving state to transfer a prisoner.

In September of 2010, Jason Pleau offered to plead guilty to robbery and murder charges in Rhode Island in exchange for life in prison without parole, the harshest sentence that state’s law allows. Pleau’s crimes also allegedly violated federal law, however, and the U.S. government wanted to prosecute Pleau itself in order to seek the death penalty. The federal government thus sought custody through the IAD by filing for the little-known writ of habeas corpus ad prosequendum (“show me the body for prosecution”).

Cato :ObamaCare Is Pro-Market Like the Berlin Wall Was Pro-Migrant

Today’s New York Times features an opinion piece by J.D. Kleinke of the conservative American Enterprise Institute. Kleinke’s thesis is that ObamaCare’s conservative opponents should stop complaining. “ObamaCare is based on conservative, not liberal, ideas.”

If one defines conservative ideas as those that emphasize free markets and personal responsibility, there is zero truth to this claim.

Free markets require freedom, like the freedom to control your own property, to enter markets, and to negotiate prices and other contractual terms. ObamaCare mandates how people must dispose of their property, imposes tremendous barriers to entry into markets, and imposes price controls and myriad other terms on ostensibly private contracts.
Market prices are the lifeblood of a market economy. Kleinke considers them a “flaw” that ObamaCare uses “market principles” to “correct.”
As I have written elsewhere, ObamaCare “promotes irresponsibility by allowing healthy people to wait until they get sick to buy coverage. It creates that free-rider problem, which has been known to make insurance markets collapse. Supporters of the law could have taken personal responsibility for this instability they introduced into the market—say, by volunteering to pay the free riders’ premiums. Instead, they imposed a mandate, which attempts to stabilize the market by depriving others of their money and freedom. Forcing others to bear the costs of your decisions is the opposite of personal responsibility.”
Employers are hardly “free to decide” under a law that penalizes them for not offering government-designed health benefits.
Kleinke is apparently unaware that half of the $2 trillion of new government spending in this “pro-market” law comes from a massive expansion of a tax-financed, government-run health insurance program that crowds out private markets — Medicaid.

2012-11-07

Cato: Segmenting the Libertarian Vote: Tea Partiers, Civil Libertarians, and Libertarian Independents

Last week, I posted data from the latest Reason-Rupe poll showing 77 percent of libertarians supporting Romney—the highest percentage share of the libertarian vote of any Republican presidential candidate since 1980.

Many commenters on Twitter and Facebook were horrified! Surely, many reasoned, this large vote share is a measure of antipathy for Obama rather than affinity for Romney. Others commented that any libertarian supporting Romney doesn’t deserve to be considered a “true” libertarian.

I wanted to reflect on this last comment. Who should count as a libertarian?

Cato: Renters Have Privacy and Property Rights Too

A person’s home is his castle and thus affords certain protections and immunities — including the right to exclude unwanted visitors — that apply whether you own or rent.

Unfortunately, ordinances authorizing general administrative searches of rental properties have been increasingly adopted by local authorities with little protection for privacy interests. These inspections reach the whole of the buildings and all of the activity that occurs within, opening up every aspect of people’s lives to the government: political and religious affiliations, intimate relationships, and even all those Justin Bieber posters and Fifty Shades of Gray books you hide when people come over.

For the past five years, the city of Red Wing, Minnesota, has been enforcing such a rental property inspection program whereby landlords and tenants must routinely open their doors to government agents. These searches take place even if both the landlord and tenant believe it not to be necessary. The owner of the property even has to pay a fee for the unwanted search to receive a rental license!

Cato: A Divide and Conquer Trade Policy

California Rep. Devin Nunes has proposed what seems like a neo-con approach to trade policy: Trade with our allies, not with our perceived enemies. His goal is to make trade policy part of our general foreign policy, which, in his view, should focus on making alliances with our friends and isolating our enemies.

This is a bad idea, for many reasons. I’ll explain the details of his plan a bit more, then I’ll go over all of the problems I see with it.

As he explains over at NRO, Rep. Nunes would like to create “an alliance of free-trading nations.” He supports the Trans Pacific Partnerhship (TPP) negotiations, and would also like to see U.S.-EU and U.S.-Brazil free trade agreements. He then talks about “distinguishing friend from foe,” and singles out Venezuela, the Gaza Strip, Russia and Egypt as countries who are “hostile” to the United States.

Cato: Transparency: Obama Lags House Republicans

Maybe President Obama made a mistake during the 2008 campaign, promising great strides in government transparency as he did. Because he hasn’t delivered them.

House Republicans, on the other hand, started from a better place than President Obama, made modest claims about how they would improve, and took some steps in the direction of improvement.

This makes it pretty easy to say that the president lags House Republicans in terms of transparency.

This afternoon, I presented at an Advisory Committee on Transparency panel about how well government data is published.

Cato: Credit Where It’s Due: DOJ Changes Its Tune on FISA Transparency

Earlier this week, I complained that the Department of Justice seemed to be stonewalling a Freedom of Information Act request I’d filed seeking copies of mandatory semi-annual reports to Congress on the National Security Agency’s compliance with the procedures and civil liberties safeguards of the FISA Amendments Act—which the House voted yesterday to reauthorize for another five years. After sitting on the request for two months (the statutory deadline is 20 business days), DOJ had finally replied with a letter claiming they could “neither confirm or deny the existence” of reports that were required by federal law. I thought this was a little ridiculous. Fortunately, there were officials at the Justice Department who thought so too.

Read more at http://www.cato-at-liberty.org/credit-where-its-due-doj-changes-its-tune-on-fisa-transparency/

Cato: The CFPB Gets One Right?

It’s no secret that I’m not a big fan of the Dodd-Frank-created Consumer Financial Protection Bureau (CFPB), mostly because I believe it will not be good for consumers. So let me acknowledge an instance in which the agency is attempting to do something good.

One thing I dislike more than the CFPB is the practice of many state and local governments to use their “abandoned” property laws to steal the remaining value of a consumer’s gift card. Here’s how it often works: Say your favorite aunt gives you an Amazon gift card for your birthday. Now you don’t know what you want to use it for, so you put it in a drawer in your house. If you leave it there for more than two years—even considering that it is in your house (that is, in your actual possession)—but you don’t use it, states like Maine consider it “abandoned” and force the merchant (in this case Amazon) who issued it to transfer its outstanding value to the government. If that’s not theft, I don’t know what is.

Cato: Can I Get Some Free Trade in My Free Trade Agreements?

Last week, I voiced several complaints about the Trans Pacific Partnership, the main trade agreement being negotiated by the U.S. Let me add another concern: There’s too much protectionism in this “free trade” agreement.

Read more at http://www.cato-at-liberty.org/can-i-get-some-free-trade-in-my-free-trade-agreements/

Cato: Challenging the Need to Modernize the U.S. Nuclear Arsenal

Over the weekend, the Washington Post published a lengthy story by Dana Priest on plans to modernize the nation’s nuclear arsenal. It is difficult to comprehend the strategic rationale for the nation’s nuclear arsenal and force structure, and politics and parochialism (especially the jobs associated with the various nuclear labs) add a further layer of complexity. Most casual observers can be forgiven for becoming lost in the haze of secrecy and deliberate obfuscation that has swirled around the nation’s nuclear deterrent for decades. To her credit, Priest, one of the better national security reporters out there, is trying to pierce the fog. Unfortunately, this particular story may obscure more than it illuminates.

In excruciating detail, the Los Alamos Study Group’s Greg Mello points out his many complaints. Those who read the entire Priest story might at least want to consider Mello’s point by point analysis. For my part, I tend to agree with Mello that this line–”The need to spend heavily to modernize the nation’s shrinking nuclear stockpile has been apparent for at least two decades”–is the “money quote” of the piece.

Cato: The U.S. Takes a Dive in Economic Freedom of the World Index

Economic freedom in the United States has plummeted to an all-time low. According to theEconomic Freedom of the World: 2012 Annual Report, co-published today with the Fraser Institute, the United States’ ranking has dropped to 18th place after having ranked 3rd for decades up to the year 2000. The loss of freedom is a decade-long trend—the United States ranked 8th in 2005—that has accelerated in recent years.

Virtually every U.S. indicator has seen a deterioration. Government spending and regulations have grown, the rule of law and protection of property rights have weakened, and foreign investment and non-tariff barriers have increased. Authors James Gwartney, Robert Lawson, and Josh Hall note some of the reasons for the decline, including the war on terror and the growth of crony capitalism.

Cato: The ’47 Percent’ and the Fundamental Attribution Error

There are a number of things wrong with Mitt Romney’s now infamous suggestion that the 47 percent of Americans who don’t pay federal income tax will automatically support larger government, because those “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them” can never be persuaded to “take personal responsibility and care for their lives.” For one, as both Matt Yglesias and Ezra Klein note, the people who aren’t paying income tax are overwhelmingly either college-aged or elderly retirees who aren’t making much taxable income, not able-bodied layabouts in their 30s and 40s. In other words, they’re mostly not some distinct parasite class, but rather ordinary, hard-working people who either already have paid or will soon be paying quite substantial taxes.

The deeper mistake, however, is what social psychologists have dubbed the “fundamental attribution error”: the nigh universal human tendency to ascribe actions and outcomes to immutable personal characteristics rather than situational factors. We assume too quickly that someone behaves kindly or callously because they are a “kind person” or a “callous person”—yet research suggests that minor variations in circumstances can elicit either type of behavior from the very same people.

Cato: Mitt Romney’s Contrived Trade War

The Obama administration filed a formal complaint with the World Trade Organization on Monday alleging that the Chinese government is bestowing various prohibited subsidies upon Chinese automobile and auto parts producers to the tune of $1 billion and that Beijing is, accordingly, in violation of its commitments under the WTO Agreement on Subsidies and Countervailing Measures.

There are reasons to shake one’s head at this move, including the apparent hypocrisy it reveals of an administration that spins the $85 billion of subsidies it heaped upon two U.S. car companies and the United Autoworkers union as its chief economic accomplishment. Of course that figure doesn’t even include the $12-$14 billion in unorthodox tax breaks granted to GM under the bankruptcy terms; $17 billion in funds committed from the TARP to GM’s former financial arm GMAC (which received taxpayer support to facilitate GM auto sales); GM’s portion of the $25 billion Energy Department slush fund to underwrite research and development in green auto technology; and the $7,500 tax credit granted for every new purchase of a Chevy Volt, and more. (Full story here.)

Cato: When ‘Free Speech’ as a Concept Vanishes

A sign mentioned in the New York Times coverage of the ongoing protests in the Muslim world crystallized a question that had been nagging at the back of my head since the attacks on the American embassies in Libya and Egypt. The sign read: “Shut up America!” and “Obama is the president, so he should have to apologize!”

What a strange non-sequitur, to Western ears! What does the president—or the U.S. government in general—have to do with some crude, rinky-dink YouTube video produced by an apparent con man? Surely, like the overwhelming majority of Americans, Barack Obama would never even have been aware of the trailer for “Innocence of Muslims” if it hadn’t become the bizarre focus of controversy abroad. Even if the video was more catalyst than cause of the outrage, commenters all along have remarked how absurd, almost surreal, it seems that one shoddy YouTube—surely one of many containing harsh criticism of Islam or its prophet—could trigger such a massive reaction. If people hadn’t died, it would be comical.

Cato: Hooray for the Rankings!

Heaven knows there are oodles of problems with American higher education – and you’ll get them all thoroughly dissected, diagnosed, and wellness plans delivered at SeeThruEdu – but I want to start my blogging here on a positive note. At least, a relatively positive note: American higher education is way closer to a free market than our moribund elementary and secondary system, and there’s no better sign of that than the oft-maligned U.S. News and World Reportcollege rankings released last week.

Just like higher education generally, the U.S. News rankings have huge problems. Heck, Emory University admitted to having sent inflated SAT and ACT scores, as well as class ranks, to the publication for years. As a result, in the latest rankings Emory moved…not one bit. The school stayed as number 20 among “national universities,” and U.S. News apparently just accepted the data Emory submitted this time based on the school having “confirmed” them. More broadly, the rankings are based far more on inputs such as endowment funds, and dubious academic reputation surveys, than measures of what students actually learn.

Cato: ‘Do Indians Rightfully Own America?’

Bryan Caplan at Econlog revisits an old libertarian chestnut about land ownership, and following the lead of Murray Rothbard analyzes it in a priori fashion with little attention to the devices that Anglo-American law long ago evolved to adjudicate claims of ancient title, such as statutes of limitations and repose, laches, and adverse possession. But in fact we don’t need to consider these questions in a historical and empirical vacuum. Not only has Indian title been the subject of an extensive legal literature since the very start of the American experiment — much of it written by scholars and reformers highly sympathetic toward Native Americans and their plight — but Indian land claims resurged in the 1970s to become the subject of a substantial volume of litigation in American courts, casting into doubt (at least for a time) the rightful ownership of many millions of acres, until the past few years, when the U.S. Supreme Court finally brought down the curtain on most such claims.

Read more at http://www.cato-at-liberty.org/do-indians-rightfully-own-america/

Cato: Just as ‘Fair Trade’ Means Protectionism for the Benefit of Special Interests, ‘Fair Tax Competition’ Means Tax Harmonization for the Benefit of Politicians

Very few people are willing to admit that they favor protectionism. After all, who wants toembrace a policy associated with the Great Depression?

But people sometimes say “I want free trade so long as it’s fair trade.” In most cases, they’re simply protectionists who are too clever to admit their true agenda.

Election Results

Dear whichever Rebulicrat won the election,

Do you realize how many people disagree with you? How many people voted against you? Whatever victory margin you had does not mean you have a resounding mandate to drag the country even further in your preferred direction.

Dear whatever people voted for the winner,

Do you realize how many people in the country disagree with you? You are barely the majority. Just because Obomney won doesn't mean you can completely ignore everyone who voted against Obomney.

Look at the approval ratings for the federal government. Even if the House, Senate, and Presidency switched parties in the election, I bet the approval ratings will still be abysmal. Being disliked less than the other guy doesn't mean you're actually liked.

PS - I hope Johnson gets 5% of the national vote. Completely absurd dream is that Johnson, Stein, and Goode all get 5%. And while I'm dreaming, why not change the election method to alternative voting...

Cato: U.S. Corporate Tax Rate Is Double the Average

Cato has released a new study by scholars Duanjie Chen and Jack Mintz on corporate effective tax rates in 2012 for 90 countries. The study provides estimates of marginal effective tax rates, which are an important driver of real investment flows.

Read more at http://www.cato-at-liberty.org/u-s-corporate-tax-rate-is-double-the-average/

Cato: ‘Has the Fed Been a Failure?’

That is the provocative title of the lead paper in the prestigious economics publication, theJournal of Macroeconomics. It is authored by George Selgin, William D. Lastrapes, and Lawrence H. White. (Selgin and White are professors, Cato scholars, and many-time participants in the annual Cato monetary conference).

The journal’s editor considered the paper so important that he devoted a section of the September issue to it, with discussion by a number of prestigious economists, including professors Allan Meltzer and Jeffrey Miron (a Cato senior fellow).

Cato: Where Have All the Foreign Policy Experts Gone?

Why is it that so many people with so little foreign policy experience wind up as top foreign policy advisers to campaigns and presidents?

I touched on this question in a 2011 Politico piece looking at President Obama’s advisers:

Before Obama named [Leon] Panetta as CIA director, the former congressman from California had little experience on national security issues. This was part of a larger trend: many of the president’s important foreign policy aides have scant training in foreign policy.

For example, the president’s national security adviser, Tom Donilon, had been a Beltway lawyer, lobbyist and executive at Fannie Mae. The lead author of the president’s National Security Strategy, Ben Rhodes, has a background in fiction and poetry, putting aside work on his first novel (“The Oasis of Love”) to join the administration’s speech-writing team, from which he moved over to the National Security Council.

Cato: Jurisdictional Competition Is Why the West Became Rich While Asia languished

During the dark ages, nations like China were relatively advanced while Europeans were living in squalid huts.

But that began to change several hundred years ago. Europe experienced the enlightenment and industrial revolution while the empires of Asia languished.

What accounts for this dramatic shift?

I’m not going to pretend there’s a single explanation, but part of the answer is that Europe benefited from decentralization and jurisdictional competition. More specifically, governments were forced to adopt better policies because labor and capital had significant ability to cross borders in search of less oppression.

I’m certainly a big fan of making governments compete with each other, but even I didn’t realize how jurisdictional rivalry gave us modernity.

2012-11-06

Cato: Incoherent Politicians Lag Public Opinion on TSA

If you needed proof of politicians’ sensitivity to, and encouragement of, persistent terrorism fears, look no further than today’s hearing in the House Homeland Security Subcommittee on Transportation Security. It’s called “Eleven Years After 9/11 Can TSA Evolve To Meet the Next Terrorist Threat?” and it’s being used to feature—get this—a report arguing for a “smarter, leaner” Transportation Security Administration.

Could the signaling be more incoherent? The hearing suggests both that unknown horrors loom and that we should shrink the most visible federal security agency.

Lace up your shoes, America—we’re goin’ swimmin’!

Our federal politicians still can’t bring themselves to acknowledge that terrorism is a far smaller threat than we believed in the aftermath of the September 11, 2001, attacks, and that the threat has waned since then. (The risk of attack will never be zero, but terrorism is far down on the list of dangers Americans face.)

Cato: Paul Ryan, Deficits, and Smaller Government

NPR notes on Sunday that Rep. Paul Ryan’s voting record in Congress calls into question his image as a deficit hawk. But they emphasize Alice Rivlin’s explanation:

I think you have to distinguish deficit hawk from small-government conservative. I think of him as a man committed to a smaller government that has less of a role in people’s lives. He really believes that: that the government does too much. And he thinks taxes should be less.

Cato: Is Government like Immigrants?

In his speech last night, President Obama listed a lot of groups of people whom we shouldn’t blame for “all our problems”:

We don’t think the government can solve all our problems. But we don’t think that the government is the source of all our problems, any more than are welfare recipients, or corporations, or unions, or immigrants, or gays, or any other group we’re told to blame for our troubles.

He’s right to discourage scapegoating. But there’s a category error here. Government is not just a group of people distinguished by their place of birth, or sexual orientation, or economic organization. Government is defined by its power to use force to achieve its purposes. Gays and immigrants don’t have such power. Neither do corporations or unions or welfare recipients.

No one blames governments for “all our problems.” Indeed, libertarians should be the first to remember, as Dr. Johnson told us,

How small, of all that human hearts endure,
That part which laws or kings can cause or cure!

2012-11-09

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2012-11-07

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