Should You Need a License to Hang Curtains?

Posted by Ilya Shapiro at http://www.cato-at-liberty.org/should-you-need-a-license-to-hang-curtains/


The latest example of liberty-reducing occupational licensing schemes comes to us from Florida, where a law restricts the practice of interior design to people the state has licensed. Those wishing to pursue this occupation must first undergo an onerous process ostensibly in the name of “public safety.”
In reality, the law serves as an anti-competition measure that protects Florida’s current cohort of interior designers. Our friends at the Institute for Justice have pursued a lawsuit against the law but lost their appeal in the Eleventh Circuit.
Cato has now joined the Pacific Legal Foundation on an amicus brief asking the Supreme Court to review that ruling. The lower court got it wrong not just with respect to the right to earn a living, however, but also on First Amendment grounds.
That is, interior design, as a form of artistic expression, is historically protected by the First Amendment. Indeed, interior designers are measured primarily on the value of their aesthetic expression, not for any technical knowledge or expertise. This type of artistry is a matter of taste, and the designer and client usually arrive at the end result through collaboration and according to personal preferences. Thus, the designer-client relationship has little in common with traditionally regulated professions such as medicine, law and finance, where bad advice can have real and far-reaching consequences—but even then, the Supreme Court has emphasized the First Amendment implications of placing “prior restraints” on expression through burdensome licensing schemes.
Instead of following that precedent, however, the circuit court carved out a constitutionally unprotected exception for “direct personalized speech with clients.” Florida’s “public safety” justification is similarly weak, given that the state has presented no evidence of any bona fide concerns that substantiate a burdensome licensing scheme that includes six years of higher education and a painstaking exam—instead relying on cursory allegations that, for example, licensed designers are more adept at ensuring that fixture placements do not violate building codes.
Finally, the Eleventh Circuit’s ruling disregarded the infinite array of auxiliary occupations the Florida law subjects to possible criminal sanctions: wedding planners, branding consultants, sellers of retail display racks, retail business consultants, corporate art consultants, and even theater-set designers could all get swept in. The state has already taken enforcement actions against a wide spectrum of people who are not interior designers, including office furniture dealers, restaurant equipment suppliers, flooring companies, wall covering companies, fabric vendors, builders, real estate developers, remodelers, accessories retailers, antique dealers, drafting services, lighting companies, kitchen designers, workrooms, carpet companies, art dealers, stagers, yacht designers, and even a florist. This dragnet effect also suggests that the law is too broad to survive constitutional scrutiny.
The Court will likely decide by the end of the year (or early 2012) whether to take this case of Locke v. Shore.

Another Look for Huntsman

by Michael D. Tanner at www.cato.org

Despite the supposed inevitability of Mitt Romney, many conservatives are clearly still looking for an alternative for the Republican nomination. Newt Gingrich has become the latest to hold that title, but, as Gingrich's liberal positions on everything from health care to TARP become better known, conservatives are likely to go shopping again.

One wonders, therefore, if a conservative case could be made for former Utah governor Jon Huntsman, as has been suggested by several conservative columnists recently, including George Will, Jim Pethokoukis, and Joe Scarborough. Indeed, it is interesting that Huntsman was so quickly dismissed as a RINO, when many of his positions actually appear to be to the right of both Romney and Gingrich.
On health care, for example, Huntsman flirted with an individual mandate — unfortunately, a lot of conservatives did when the idea was being pushed by the Heritage Foundation — but, unlike Romneycare, the plan he ultimately developed for Utah did not include one. It did, however, include a new regulatory bureaucracy called "the portal," a less onerous version of President Obama's health-insurance exchanges or Mitt Romney's Connector. Note that "less onerous" does not mean "good idea." On the other hand, Huntsman did not support the Medicare prescription-drug benefit that both Romney and Gingrich backed.

On education, Huntsman clearly has a better record than either Romney or Gingrich. While both of them backed No Child Left Behind and continue to push for greater federal involvement in education, Huntsman opposed NCLB, saying, "We need to take education to the local level, where parents and local elected officials can determine the destiny of these schools." He actually signed a bill that gave Utah's educational standards priority over NCLB, letting education officials in Utah "ignore provisions of federal law that conflict with the state's program." And he pushed through a substantial school-choice program in Utah.
Huntsman also appears to be to the right of both Gingrich and Romney on key economic issues such as taxes, spending, and entitlement reform. He has backed a truly bold plan for tax reform, a flatter tax that eliminates nearly all distortionary deductions and loopholes, while slashing rates. He would reduce the top personal income tax rate to 23 percent, and the corporate rate to 25 percent. The plan has been praised by the Wall Street Journal, which called it "certainly better than what we've seen from the frontrunners."
While he has not signed the Americans for Tax Reform "No Tax Pledge," he joined his fellow Republicans in rejecting even a ten-to-one spending-cut-to-tax-hike deal for deficit reduction.
When it comes to cutting spending, Huntsman is not exactly Ron Paul, but he's not bad compared with most of his other GOP competitors. Huntsman would cap federal spending at 18 percent of GDP. By comparison, Romney has called for a 20 percent spending cap, while Gingrich has made no specific commitments to a level of spending cap. On entitlements, Huntsman, unlike Romney and Gingrich, has explicitly embraced Paul Ryan's Medicare-reform plan. He is vaguer on Social Security reform, but has spoken positively of benefit cuts, including means-testing and raising the retirement age. That's not as good as personal accounts — Huntsman hasn't taken a position on them yet — but it's a reasonable first step.
Huntsman's gubernatorial record suggests reasons for both optimism and concern on tax and spending issues. He sought to replace Utah's graduated income tax with a flat tax, cut the state's food tax in half, and attempted to eliminate the state's capital-gains and corporate-franchise taxes. However, his record is not nearly as good on the spending side of the ledger. During his time in office, he proposed spending hikes in excess of 6 percent annually, well above the growth in Utahans' personal incomes. In fact, measured in terms of percentage growth, Huntsman was one of the biggest-spending governors in the nation. Overall, he received a grade of B on the Cato Institute's fiscal report card for governors. That beats the C that Cato awarded Mitt Romney.
On foreign policy, Huntsman has called for a less interventionist policy. He would move from a nation-building stance in Afghanistan to a counterterrorism approach with a smaller U.S. footprint, accelerating troop withdrawals. He is a strong free-trader and has opposed Romney's mindless demagoguery on China trade.
The policy objections to Huntsman that one hears most from conservatives are about his positions on global warming and gay rights. On global warming Huntsman is clearly out of step with many conservatives both in backing the idea of anthropogenic warming and in calling for government action to combat it. Although he had backed away from his earlier support for cap-and-trade, there is ample reason to be suspicious of how he would govern on this issue. Still, is his position appreciably worse than, say, Newt Gingrich's?
Huntsman also supports civil unions for gay couples. While this may upset some social conservatives, it is well within the mainstream for most American voters. Indeed, with voters increasingly supportive of gay marriage, Huntsman may be the GOP candidate least out of touch on the issue.
But for many conservatives, Huntsman's biggest flaw appears to be a question not of policy positions but of attitude. Huntsman seems so enamored of hearing good things about himself on Morning Joe or in the New York Times editorial pages that it drives him to pick unnecessary fights with the GOP base. He often seems contemptuous and dismissive of those who disagree with him. One can't help feeling that he regards broad swaths of the Republican electorate as ignorant hicks. This is probably unfair — and when it comes to unbridled arrogance, no one can top Newt — but it does raise legitimate concerns about whether a President Huntsman would be willing to take positions that earned him criticism from the establishment press.
Clearly Huntsman would not be an ideal candidate for conservatives. But given the big-government tilt of both Gingrich and Romney, they may want to at least kick the tires on this model.

Another Romneycare/Obamacare Similarity: Earning Their Sponsors Insurance-Company Love

Posted by Michael F. Cannon at http://www.cato-at-liberty.org/another-romneycareobamacare-similarity-earning-their-sponsors-insurance-company-love/


I’ve been meaning to post this article from OpenSecrets.org that sheds light on the claim that either Obamacare or its twin, Romneycare, somehow “get tough” on insurance companies:

Health Insurance Industry Opens Check Books for Mitt Romney, Barack Obama

Research by the Center for Responsive Politics shows that President Barack Obama and his GOP rival Mitt Romney, the former governor of Massachusetts, are the only two presidential candidates to have raised more than $40,000 from the health insurance industry so far this election cycle…
Both men have favored health care policies that include an individual mandate for people to purchase private insurance plans. Romney did so as governor of Massachusetts, and Obama did so as part of the health care reform package he signed into law last year…
Such mandates are supported by the insurance industry, which stand to benefit from increased customers as well as from government subsidies that help enroll people who could not otherwise afford insurance.
Romney, in fact, has received more than five times as much money from the health insurance industry than any other GOP presidential candidate, according to the Center’s research.

That should weigh on the minds of states that are considering whether to create the health insurance “exchanges” that will implement Obamacare’s individual mandate and subsidies for insurance companies.

Why Doesn't South Korea Defend the United States?

by Doug Bandow at www.cato.org

Seoul is the political and industrial heart of the Republic of Korea. The metropolitan area holds half of the country's population. Amid the city's bustle the threat from the so-called Democratic People's Republic of Korea seems far away, but Seoul's suburbs lie just 25 miles south of the demilitarized zone, within range of North Korean artillery and Scud missiles. Hence the North's latest threat to turn Seoul into a "sea of fire,"

South Korea became a defense dependent of Washington decades ago. Like America's other alliances around the globe, the "mutual" defense treaty with Seoul does not protect the U.S. Given the South's recent economic success, Americans should ask: When will this prosperous and populous friend begin defending America?
U.S. troops have been in South Korea for 61 years. Washington first intervened to reverse the North's invasion of the ROK in 1950. Three years later the fighting ended in an armistice, with no peace treaty ever reached. Since then American troops have formed a military tripwire to ensure Washington's involvement in any new war.
However, Seoul has precious few responsibilities in return. ROK forces never have been stationed in America. There were never plans for the South to assist the U.S. if the latter was attacked by the Soviet Union. No South Korean ships patrolled the sea lanes and no South Korean aircraft guarded the sky.
In the early days there was little the ROK, an impoverished dictatorship, could do. Seoul could not protect itself, let alone anyone else. But then, Washington should not have maintained the fraud that the security tie was mutual.
The South since has joined the first tier of nations. It obviously can do more, much more. Nevertheless, the treaty remains a one-way relationship. The ROK occasionally has contributed to Washington's foolish wars of choice, such as Vietnam and Afghanistan, in order to keep American defense subsidies flowing. But this is no bargain for the U.S., which is expected to protect Seoul from all comers.
Of course, it might be too much to expect even a wealthier South Korea to help protect the U.S. After all, no nation poses a serious threat to America. Russia has a nuclear deterrent, little more. China is expanding its military, but remains far behind us. Every other potential adversary is a comparative military pygmy: Cuba, Burma, Iran, North Korea. Indeed, Washington's "defense" budget has little to do with defense—of the U.S., at least. America spends far more to protect its allies, such as the ROK.
However, Seoul should at least defend itself if not the U.S.
One of the attributes of a serious nation is handling its own security. In the past, at least, no great and influential nation would subcontract its defense to another country. Doing so would make one a dependent, even a puppet. Early Americans were willing to assert themselves against great odds in both the American Revolution and the War of 1812.
Yet the ROK continues to rely on Washington. Indeed, South Korean troops would be under U.S. command in war, an arrangement that was supposed to change next year. However, at Seoul's request that transfer has been postponed until 2015. With 40 times the GDP of the North and twice the population, the South continues to plead helplessness in the face of potential aggression. It is as if the peninsula had a special geographical force field which prevented the country to the south from ever matching the military of the nation to the north.
Of course, the problem is the one-way U.S. defense guarantee, not a mystical force field. As long as Washington politicians force American taxpayers to underwrite the ROK's defense, why should Seoul burden its own citizens? It is a great deal—for the South, which can spend much less on the military.
Even under President Lee, who has pressed for more military outlays, the South's defense budget has lagged behind threats. Reported the Congressional Research Service: "Defense Reform 2020 calls for defense budget increases of 9.9% each year, but the Lee Administration reduced the increase to 3.6% for FY2010, citing economic pressures." Bruce Klingner of the ROK-friendly Heritage Foundation has written of "defense budget shortfalls" by the ROK.
Although these advantages of being a defense dependent are obvious, America's military presence creates costs for the South as well. Hosting 28,500 mostly young men from another country and culture isn't easy. Indeed, two recent rapes by American service personnel triggered protests and discussion about revising the Status of Forces Agreement. But such problems are inevitable when a nation asks another country for aid.
Most important, the South's defense remains in outside hands. As guarantor of the ROK's security, the U.S. inevitably will meddle in South Korean affairs. Yet in a crisis, Washington will do what Washington believes to be in its interest, not the South's interest.
Still, just as alcoholics hate to give up liquor, South Koreans are unlikely to give up their defense free ride. Doing without an American tripwire would mean either achieving a modus vivendi with the DPRK, which seems unlikely, or spending more to bulk up forces for both defense and retaliation, which would be politically unpopular.
Unfortunately, the American people have to pay more because Washington treats the South as an international welfare dependent. And the problem is getting worse. Despite the budget crunch at home, the Obama administration has been expanding defense aid to the South.
For instance, on his recent visit to the South, Defense Secretary Leon Panetta discussed a joint response to any future North Korean provocation. He explained: "We have an alliance. We can provide strong and effective responses to those kinds of provocations if we work together." The U.S. is "prepared to defeat the North" if war occurs, added the secretary, using "the full range of capabilities, including the U.S. nuclear umbrella, conventional strike and missile defense capabilities." Finally, he asserted, "These efforts deter North Korean aggression by demonstrating that we have the will and the means to defend the ROK."
The Defense Department also is relocating U.S. forces from Seoul's Yongsan base to U.S. Army Garrison Humphreys to the south. This will cost several billion dollars, which makes sense only if the deployment is eternal. Moreover, the Pentagon has been planning to "normalize" the tours of American military personnel in South Korea, implementing longer stays and allowing troops to bring families. This step indicates that the American garrison is a permanent part of the South Korean landscape.Some South Koreans even are calling for reintroduction of U.S. tactical nuclear weapons in the South.
But there is no defense justification for preserving Washington's security commitment to the ROK. The Cold War is over, South Korea is far stronger than the North, and neither China nor Russia would support Pyongyang in a new war. As former Defense Secretary Robert Gates observed, anyone advocating another land war in Asia should "have his head examined." Military commitments should reflect geopolitical realities; alliances should be a means, not an end. Today, however, Washington appears determined to maintain alliances simply to have alliances, whether or not they benefit America.
Alliance advocates occasionally defend the alliance in terms of ChinaWashington Times editorial page editor Brett M Decker claimed that "The rapid militarization of the People's Republic of China makes the decades-old alliance between the Republic of Korea and the United States just as important as ever." But the ROK is unlikely to act as a cheerful member of a new containment ring around the PRC. Seoul might like to be defended in the unlikely event that Beijing moved to swallow the peninsula. However, no South Korean government is likely to make itself a permanent enemy of the PRC by backing Washington in a conflict elsewhere, say over Taiwan.
Indeed, the Roh Moo-hyun government insisted that American forces based in the ROK could not be used elsewhere in the region without its consent. The Lee government has a better relationship with Washington and adopted an ambiguous compromise which might allow American forces in the South to deploy, though not operate, from their bases. But maybe not. The U.S. can count on nothing in a crisis.
Beyond China it is hard to imagine how the alliance could act like the"lynchpin of not only security for the Republic of Korea and the United States but also for the Pacific as a whole." More sensible would be to leave the Japanese and South Koreans to overcome old antagonisms and create a relationship that could act as a security foundation for what is, after all, their region.
In 2009 the U.S. and ROK produced a Joint Vision for the Alliance which proposed greater cooperation in a lot of other areas, including counter-terrorism, anti-piracy, and development. But none of these activities require a military alliance, security guarantees, and military deployments by America. Indeed, such agreements would be most effective if implemented by equals, not superior and dependent.
Some advocates of permanent defense subsidies for Seoul point to the DPRK's nuclear program. There is no easy answer to the threat of North Korean nuclear proliferation. But promising to shield the South from a DPRK nuclear attack is not costless. Maintaining a nuclear umbrella entangles the U.S. in unpredictable Northeast Asian disputes which pose no vital interest to America. Indeed, should the North develop even a crude ICBM and accompanying nuclear warhead, the U.S. would have to contemplate sacrificing Los Angeles for Seoul, a bad deal for America.
In any case, Washington's garrison in the ROK does not constrain the North's nuclear ambitions; to the contrary, there are now 28,500 nuclear hostages nearby for Pyongyang to target. The North's nuclear program actually is yet another compelling reason for America to bring home its troops.
Moreover, it might be better for the South to have its own nuclear deterrent than for the U.S. to stay involved. Although Washington is dedicated to the principle of nonproliferation, U.S. policymakers should consider whether guaranteeing that North Korea alone among smaller power possesses a nuclear arsenal is a good policy. The effect is a bit like domestic "gun control"—only the bad guys end up armed. The prospect of nuclear weapons in the hands of the ROK (and Japan) also would get China's attention, encouraging Beijing to take tougher action against the North's nuclear activities.
To coin a phrase, it is time for a change. Some Americans have reacted in anger against South Koreans who criticize America. For instance, columnist Dennis Prager called the ROK "the most ungrateful country in the world." He proposed a South Korean referendum: "The beauty of such a plebiscite is that if a majority of the South Korean people wants American troops out, we have no moral obligation to stay there."
But Americans have no moral obligation to stay in any case. Washington should deploy troops based on the interest of the U.S., not of other nations.
Washington should begin a quick and complete withdrawal of forces from the South. The Lee government recently received the ROK's first AWACS plane, with three more to assembled in South Korea. Washington should sell Seoul whatever other conventional weapons the latter desires. The Obama administration already has discussed selling drones to the South, and should accede to the South's request to adjust the bilateral treaty limiting the range of ROK missiles.
There still will be issues upon which the two governments can cooperate, but Washington should eschew the kind of "benefit inflation" which seems to permeate Washington today. A couple years ago the White House announced that the two countries "are building an Alliance to ensure a peaceful, secure and prosperous future for the Korean Peninsula, the Asia-Pacific region, and the world." The world?
America's alliance with the ROK once made sense. Sixty years ago. It is time to end military welfare for South Korea and other countries around the world. Iraq is not the only country where American troops should be home by Christmas.

Government and Job Creation: Help or Hindrance?

Posted by Daniel J. Mitchell at http://www.cato-at-liberty.org/government-and-job-creation-help-or-hindrance/


I recently posted four charts eviscerating Obama’s record on jobs.
My Cato colleagues, Caleb Brown and Austin Bragg, have a good complement to those charts. They’ve put together a short video looking at how government spending and regulation undermine job creation.

Caleb says he will be doing more excellent videos like this, which is very encouraging since there is so much more ground to cover — particularly when trying to educate people in Washington.

One thing he should explain is that jobs don’t exist without profits. As I explained in a New York Post column last year, employers “only create jobs when they think that the total revenue generated by new workers will exceed the total cost of employing those workers.”

This seems like an elementary observation, but it’s one that most politicians don’t seem to understand. Or don’t care to understand.

That certainly seems to be the case at 1600 Pennsylvania Avenue. The president will speak tonight and supposedly will propose a $300 billion plan. He’ll claim, of course, that this new “stimulus” package will boost growth.

But a look at the various components that reportedly will be in his plan doesn’t create a sense of optimism. Especially since it appears that he’s mostly recycling proposals that already have failed at least once.

Maybe the President should copy the policies of a former resident of the White House, who also had to deal with a deep downturn, but managed to produce dramatically better results.

North Korea: Kim Jong-il’s Death and the Coming Succession Struggle

Posted by Doug Bandow at http://www.cato-at-liberty.org/north-korea-kim-jong-il%E2%80%99s-death-and-the-coming-succession-struggle/


North Korea’s “Dear Leader” Kim Jong-il is dead. There is now no prospect of negotiating and implementing a new nuclear agreement with the North in the near future. The so-called Democratic People’s Republic of Korea is likely to be consumed with a power struggle which could turn violent. Washington’s best policy option is to step back and observe.
After his stroke three years ago, Kim anointed his youngest son, Kim Jong-un, as his successor. However, the latter Kim has had little time to establish himself. The previous familial power transfer to Kim Jong-il took roughly two decades. There are several potential claimants to supreme authority in the North, and the military may play kingmaker.
Some observers hope for a “Korean Spring,” but the DPRK’s largely rural population is an unlikely vehicle for change. Urban elites may want reform, but not revolution. If a North Korean Mikhail Gorbachev is lurking in the background, he will have to move slowly to survive.
During this time of political uncertainty no official is likely to have the desire or ability to make a deal yielding up North Korea’s nuclear weapons. The leadership will be focused inward and no one is likely to challenge the military, which itself may fracture politically.
Nor is China likely to play a helpful role. Beijing views the status quo as being in its interest. Above all else, China is likely to emphasize stability, though it may very well attempt to influence the succession process outside of public view. But China does not want what America wants, preferring the DPRK’s survival, just with more responsible and pliable leadership.
Washington can do little during this process. The United States should maintain its willingness to talk with the North. American officials also should engage Beijing over the future of the peninsula, exploring Chinese concerns and searching for areas of compromise. For instance, Washington should pledge that there would be no American bases or troops in a reunited Korea, which might ease Beijing’s fears about the impact of a North Korean collapse.
Most important, the Obama administration should not rush to “strengthen” the alliance with South Korea in response to uncertainty in the North. The Republic of Korea is well able to defend itself. It should take the steps necessary to deter North Korean adventurism and develop its own strategies for dealing with Pyongyang. America should be withdrawing from an expensive security commitment which no longer serves U.S. interests.
Kim Jong-il imposed unimaginable hardship on the North Korean people. However, what follows him could be even worse if an uncertain power struggle breaks down into armed conflict. Other than encourage Beijing to use its influence to bring the Kim dynasty to a merciful end, the United States can—and should—do little more than watch developments in the North.

RIP Christopher Hitchens

Posted by David Boaz at http://www.cato-at-liberty.org/rip-christopher-hitchens/


Christopher Hitchens, a man of great passions and great talents, perhaps the greatest essayist of our age, has died. Among his lesser-known works was a Cato Institute talk, “Mayor Bloomberg’s Nanny State,” delivered at a seminar in New York City on December 10, 2004.
Ten years before that, in his still-thoroughly-leftist era, he offered us this backhanded compliment in the Nation of December 12, 1994:

During the lunacy of the Reagan period, I was impressed by how often it was the Cato Institute that held the sane meeting or published the thoughtful position paper.

Herewith “Mayor Bloomberg’s Nanny State”:

I often take the train from Washington, D.C., to New York and back. A few years ago they put the smoking car on the end of the train so nonsmokers wouldn’t have to go through it to get to other parts of the train. And then the day came when they said, “We’re taking that car off the train altogether.” And I thought, “Now we’ve crossed a small but important line.” It’s the difference between protecting nonsmokers and state-sponsored behavior modification for smokers.
And I thought there was insufficient alarm at the ease with which that was done. Because state behavior modification, no matter what its object, should be viewed skeptically at the very least. There’s serious danger in the imposition of uniformity—the suggestion that one size must fit all.
When the complete ban on smoking in all public places was enacted in California, I called up the assemblyman who wrote the legislation and I said: “I’ve just discovered that bars are not going to be able to turn themselves into a club for the evening and charge a buck for admission for people who want to have a cigarette. You won’t be able to have a private club. You won’t even be able to have a smoke-easy, if you will, in California.”
And he said, “That’s right.”
I said, “Well, how can you possibly justify that?”
And he said, “Well, it’s to protect the staff. It’s labor protection legislation. We don’t want someone who doesn’t want to smoke, who doesn’t like it, having to work in a smoky bar.”
And I said, “You don’t think that if there were bars that allowed it and bars that forbade it, that, sooner or later people would apply for the jobs they preferred, and it would sort of shake out?”
He replied, “No. We could not make that assumption.”
So we have to postulate the existence, if you will, of a nonexistent person in a nonexistent dilemma: the person who can find only one job, and that job is as barkeep in a smoking bar. This person must be held to exist, though he or she is notional. But everyone who actually does exist must act as if this person is real.
There used to be areas, like the West Village in New York or North Beach in San Francisco, that are now dull and boring and have to be policed. And I think that’s a terrible loss. I write better when I have a cigarette and a drink. I’m more fun to be with—other people seem less boring. The life of bohemia, of the small cafe and the little bar that never quite closes, is essential to cultural production. It may seem like a small thing. It doesn’t add very much to the GNP. But if you take it away, you may not know what you’ve lost until it’s too late.
But suppose all this was really a good idea—people might live longer. Suppose all that was really true. There would still be the question of enforcement, that awkward little bit that comes between your conception of utopia and your arrival there. The enforcement bit. You could appoint regulators and inspectors to enforce the law. It would take quite a lot of them, but you could do it. There are such people. I know about them because they’ve come after me.
My editor, Graydon Carter, the splendid editor of Vanity Fair, and I were having a cigarette in his office. And someone on our staff—it’s not very nice to think about it—was kind enough to drop a dime on us. And round the guys came. “You’re busted!” These people are paid by the city, which evidently has no better use for its police.
I think that’s bad enough. But then Graydon went on holiday, and I went back to Washington. And his office was empty. But they came round again and they issued him another ticket because he had on his desk an object that could have been used as an ashtray. In his absence. With no one smoking. But there are officials who have time enough to come round and do that.
The worst part is that the staff has to become the enforcers. The waitresses have to become the enforcers. The maitre d’ has to become the enforcer. He has to act as the mayor’s representative. Because it’s he who is going to be fined, not you. If you break the law in his bar, he is going to have to pay.
So everyone is made into a snitch. Everyone is made into an enforcer. And everyone is working for the government. And all of this in the name of our health.
Now, I was very depressed by the way that this argument was conducted. There were people who stuck up for the idea that maybe there should be a bit of smoking allowed here and there. But they all said it was a matter of the revenue of the bars and the restaurants. That was the way the New York Times phrased it.
In no forum did I read: “Well, is there a question of liberty involved here at all? Is there a matter of freedom? Is there a matter of taste? Is there a matter of the relationship of citizens to one another?”
And something about it made me worry and makes me worry still. The old slogan of the anarchist left used to be that the problem is not those who have the will to command. They will always be there, and we feel we understand where the authoritarians come from. The problem is the will to obey. The problem is the people who want to be pushed around, the people who want to be taken care of, the people who want to be a part of it all, the people who want to be working for a big protective brother.

Bill of Rights Day: What's Left of Them?

by Nat Hentoff at http://www.cato.org

John Jay, the co-writer of the Federalist Papers and the first chief justice of the United States (1789-95), wrote in a 1786 letter to Thomas Jefferson that he was worried that under our evolving founding document that became the Constitution, Congress would have exorbitant power.

“These three great departments of sovereignty,” he told Jefferson, “should be forever separated and so distributed to serve as checks on each other.”

The separation of powers was indeed embodied in the Constitution, but especially in the Bush and Obama administrations, the executive branch has been so disproportionately and unilaterally strengthened that I urge the Cato Institute to actively redistribute, with a short epilogue, its 2008 book by Gene Healy, The Cult of the Presidency: America’s Dangerous Devotion to Executive Power. It can make for more crucially discerning voters in 2012.

The Bill of Rights’ First Amendment, from which all our individual liberties flow, is still working. Although FBI agents, during J. Edgar Hoover’s reign, knocked on my door to supplement the FBI files on me, I have not since been visited by them. However, despite the Fourth Amendment, like so many Americans, I am aware that this is increasingly a society under government surveillance and tracking. Accordingly, many Americans are becoming careful about what they say on the phone or the Internet, let alone on cell phones or social media.

The Bill of Rights’ now-broken Fourth Amendment guaranteed that we are protected against “unreasonable searches and seizures” by the government. But it is now on life support, thereby beginning to diminish citizens’ confident exercise of the First Amendment. Do you want the FBI to know everything you’re saying?
Also, the new generation — and quite possibly others to follow — are recognizing that what they put about themselves on Facebook, Twitter and other newly quickening means of communication may be embedded in FBI and other government files.

Also under attack by the government is the distinctively American Fifth Amendment: No person “shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty or property, without due process of law...”

Due process of law is our bedrock of citizenship, and it’s greatly envied by many around the world. But the Bush-Cheney administration cast it aside with regard to suspected terrorists — including American citizens in certain contexts. Then, in 2009, President Barack Obama began pursuing, as Bush-Cheney already had, preventive detention, by which terrorism suspects, including Americans, can be held without going to a U.S. court, thereby also doing away with due process.

Recently, Obama appears to have moderated in part his further suspension of the Fifth Amendment, without abandoning preventive detention entirely. This happened concerning a 93-to-7 Senate vote for an amendment to the National Defense Authorization Act that would empower the military to seize and hold terrorism suspects, including Americans, within our borders, in preventive detention. No right to trial.

What surprised me was that Obama, because of extraordinary control given the military by the Senate vote, threatened a veto of the bill, while also among its opponents were FBI Director Robert Mueller and Defense Secretary Leon Panetta — neither of whom would have been recognized by John Jay or Thomas Jefferson as civil libertarians.

As of this writing, the ultimate vote on this defense authorization bill is still pending; but alarming is the fact that 93 senators — in what these days was an astonishingly large bipartisan vote — were so eager to deny these suspects, including Americans, any trace of due process of law.

Were he still alive, John Jay would remind us why he so feared a Congress so leaping over the separation of powers.

Another section of the Bill of Rights, the Eighth Amendment’s banning of “cruel and unusual punishments,” was brutally suspended during the Bush-Cheney “torture policy” in the CIA secret prisons (“black sites”) and elsewhere. And the CIA “renditions” to other nations known for torturing their prisoners continue, to some extent, under President Obama. I have reported, for instance, on a covert part of a U.S. prison on our Bagram Air Base in Afghanistan where former prisoners have described being tortured to the BBC.

The Republican presidential aspirants seem to have only the smallest concern about any of this dismembering of the Bill of Rights I have cited in my inability to celebrate, rather than mourn, Bill of Rights Day. The incumbent in the White House has refused any attempts at accountability — through independent investigations — for the Bush-Cheney desecration of the Bill of Rights, let alone his own.

How many voters in 2012 will keep in mind America’s continuous Dangerous Devotion to Executive Power?

Today Is Bill of Rights Day

Posted by Tim Lynch at http://www.cato-at-liberty.org/today-is-bill-of-rights-day/


Today is Bill of Rights Day. So it’s an appropriate time to consider the state of our constitutional safeguards.
Let’s consider each amendment in turn.
The First Amendment says that “Congress shall make no law… abridging the freedom of speech.” Government officials, however, have insisted that they can gag recipients of “national security letters” and censor broadcast ads in the name of campaign finance reform.
The Second Amendment says the people have the right “to keep and bear arms.” Government officials, however, make it difficult to keep a gun in the home and make it a crime for a citizen to carry a gun for self-protection.
The Third Amendment says soldiers may not be quartered in our homes without the consent of the owners.  This safeguard is one of the few that is in fine shape — so we can pause here for a laugh.
The Fourth Amendment says the people have the right to be secure against unreasonable searches and seizures. Government officials, however, insist that they can conduct commando-style raids on our homes and treat airline travelers like prison inmates by conducting virtual strip searches.
The Fifth Amendment says that private property shall not be taken “for public use without just compensation.” Government officials, however, insist that they can use eminent domain to take away our property and give it to other private parties who covet it.
The Sixth Amendment says that in criminal prosecutions, the person accused is guaranteed a right to trial by jury. Government officials, however, insist that they can punish people who want to have a trial—“throwing the book” at those who refuse to plead guilty—which explains why 95 percent of the criminal cases never go to trial.
The Seventh Amendment guarantees the right to a jury trial in civil cases where the controversy “shall exceed twenty dollars.” Government officials, however, insist that they can impose draconian fines on people without jury trials.
The Eighth Amendment prohibits cruel and unusual punishments. Government officials, however, insist that a life sentence for a nonviolent drug offense is not cruel.
The Ninth Amendment says that the enumeration in the Constitution of certain rights should not be construed to deny or disparage others “retained by the people.” Government officials, however, insist that they will decide for themselves what rights, if any, will be retained by the people.
The Tenth Amendment says that the powers not delegated to the federal government are reserved to the states, or to the people. Government officials, however, insist that they will decide for themselves what powers they possess, and have extended federal control over health care, crime, education, and other matters the Constitution reserves to the states and the people.
It’s a disturbing snapshot, to be sure, but not one the Framers of the Constitution would have found altogether surprising. They would sometimes refer to written constitutions as mere “parchment barriers,” or what we call “paper tigers.”  They nevertheless concluded that having a written constitution was better than having nothing at all.
The key point is this: A free society does not just “happen.”  It has to be deliberately created and deliberately maintained.  Eternal vigilance is the price of liberty.  To remind our fellow citizens of their responsibility in that regard, the Cato Institute has distributed more than five million copies of our pocket Constitution.  At this time of year, it’ll make a great stocking stuffer.
Let’s enjoy the holidays but let’s also resolve to be more vigilant about defending our Constitution.  To learn more about Cato’s work in defense of the Constitution, go here.  To support the work of Cato, go here.

Ron Paul in Iowa

I glanced at an article this morning about Ron Paul in Iowa.  The question was: Will he win the caucus?  The answer: If he was anybody else, yes.  But as a libertarian, he doesn't sit well with the evangelicals.

My response: What?  Ron Paul a libertarian?  Do these news agencies do fact checking?

For a while, I thought Paul was a libertarian.  That's what he was always described as.  But actually looking at his policies and beliefs, it's pretty obvious that it's not true.  And this also serves to illustrate how far the two parties have strayed from their traditional beliefs.

Have you ever seen the two-dimensional map of political ideology?  On one axis it goes conservative-liberal on economic policies, and the other goes conservative-liberal on social policies.  Conservative on both is a Conservative - the Republican party.  Liberal on both is a Liberal - the Democratic party.  Liberal on social and conservative on economic is Libertarian.  And conservative on social and liberal on economic is Authoritarian.

This all seems to make sense, although it does grossly oversimplify things.  But better this than the one dimensional Left-Right line.

Let's first look at Ron Paul.  He is decidedly conservative on economic issues.  And social issues?  Paul is also moderately conservative on social issues.  He tries to downplay social issues and focus on economic issues, but he still has those conservative social issues.  That would place him as a Conservative - right where the Republican party 'should' be sitting.  So where is the Republican party?

First we should probably talk about what exactly it means to be conservative/liberal on economic/social issues.  On social issues, I think it's a bit easier to see.  Although my description of both of these will display my libertarian flavoring.  Socially conservative is believing that the government should step in to control the social morals of society.  Socially liberal is believing the government should not enforce any one group's morals on the rest of society.  While most people stop there, I feel there is a bit more to say about this.  It simply isn't Evangelicals-conservative while athiests-liberal or even oppose same-sex marriage-conservative with support same-sex marriage-liberal.  While both of those conservative examples are true, if you go too far in the other direction, you swing back around and end up at conservative again.  Everyone should go with my beliefs and banning same-sex marriage should be forced on everyone - Conservative.  Government should protect people's individual liberty and allow same sex marriage - Liberal.  Everyone should go with my beliefs and allowing same-sex marriage should be forced on everyone - Conservative.

What about economic issues?  I label conservative as free-market capitalism.  And moving towards the liberal end gets more and more government involvement.  That means that socialism is on the far end of liberal.  It also means that crony-capitalism falls into moderately liberal.  Crony capitalism being government stepping in and interfering for the benefit of select businesses.  But enough talk about my political ideology labeling (we'll leave more of that for another blog post).  Back to where is the Republican party?

The Republican party is socially conservative and economically moderately liberal.  They want to force 'conservative' morals on everyone and believe in crony capitalism.  Most of the Republican candidates fall into this description.  Paul is economically conservative instead of moderately liberal.  Huntsman and Johnson appear to be socially moderate or liberal and economically conservative.

The Democratic party is economically liberal and socially moderate.  They want the government to have more control of businesses and the economy and, while preaching individual liberty, are quite fine to throw it away when the President needs to fight the omnipresent terrorist threat.

But more of that in another blog post.  The point of this is that Ron Paul is not a libertarian.  He has introduced legislation forcing his conservative morals on everyone.  He is a traditional Republican.  The Republican party has been moving further into Authoritarian.  The Democratic party is straddling the line between Liberal and Authoritarian.

USPS Sends a Message to Congress

Posted by Tad DeHaven at http://www.cato-at-liberty.org/usps-sends-a-message-to-congress/


On Monday, the U.S. Postal Service filed its proposal to reduce service standards with the Postal Regulatory Commission (PRC). The USPS is seeking to cut costs by closing about half of its mail processing facilities, which would mean slower mail delivery. Given that the USPS is running on financial fumes and Congress is still trying to figure out how to kick the can down the road, management apparently decided that it had to act.
Sen. Tom Carper (D-DE), the chairman of the Senate subcommittee that oversees the USPS, acknowledges this in his statement on the proposal:

Although we’ve made some progress in moving postal reform bills forward in the House and Senate, we still have a lot of work that needs to be done in order to find a comprehensive solution to the Postal Service’s serious financial problems. In the absence of assistance from Congress and the Administration, the Postal Service has been forced to take matters into their own hands and try to modernize their business model with the limited tools and resources available to them. This situation is less than ideal. The few measures that the Postal Service can adopt on its own—such as closing distribution centers and slowing down first-class mail delivery times—to extend its survival and avoid insolvency will also potentially further erode its declining business.

Carper concluded his statement by making a pitch for bipartisan postal reform legislation that I recently panned.
The biggest obstacle standing in the way of the proposal is, of course, Congress. I would venture a guess that legislation will be introduced to stymie the plan—if it hasn’t already. After all, members of Congress have consistently fought USPS efforts to shutter post offices. Naturally, the postal employees unions aren’t happy and will make sure that policymakers know it.
Anticipating the pushback from policymakers and special interests, postal management sent a not-so-subtle message at the conclusion of the filing (bolded text is my emphasis):

The statutory scheme governing operation of the Postal Service permits the agency to make rational adaptations to market and fiscal realities, while still fulfilling its public service obligations. That scheme does not require that long-standing products, service features, and operational practices be maintained primarily for the purpose of preserving a tangible link to an iconic past, or to perpetuate a nostalgic image of the agency or its employees. It would be troubling for the future of the Postal Service if stakeholders responsible for its stewardship allowed their vision to be so clouded that, through omission or commission, they undermined or prevented significant adaptations that could help to preserve the long-term viability and relevance of the postal system. The needs of postal customers are changing. The circumstances affecting the Postal Service are dire. If the Postal Service is to remain viable and relevant, it must be permitted to implement operational and service changes consonant with such changing needs and dire circumstances.

I couldn’t have said it better myself—although I believe that privatization is the best way to “preserve the long-term viability and relevance of the postal system.”

Deja Voodoo: Detroit Repeats Big City Rail Mistakes

by Randal O'Toole at www.cato.org

Despite massive losses in similar transportation systems in Portland and Denver, Sen. Carl Levin, D-Michigan, and President Obama this fall announced a commitment of millions in federal taxpayer dollars to a Detroit light rail line down Woodward Avenue. "Detroit deserves a world-class transportation system," Levin crowed.

But light rail is sooo last century. In fact, it is a giant hoax perpetrated on the taxpayers of Detroit and the United States.

Developed in the 1930s, light rail is an obsolete form of transportation that does not promote economic development, relieve congestion, save energy, or reduce air pollution. All it does is cost lots of money.

Although promoters often call light rail "rapid transit," it is actually very slow.

Nationally, light-rail lines average little more than 20 miles per hour. When operating in city streets such as Woodward, they average less than 15 mph. Such slow speeds entice few people out of their cars. The $60 million-per-mile cost of building light rail is enough to build a four-lane freeway. But the average light-rail line carries only about one-fifth of a freeway lane. Since most of those people would have ridden a bus, light rail offers little congestion relief.

Take Portland.
In 1980, 9.8 percent of Portland-area commuters took buses to work. Since then, Portland has built four light-rail lines, a commuter-rail line, and a streetcar line. Now only 7.5 percent of commuters take transit to work — partly because the high cost of rail transit forced the city to increase fares and cannibalize its bus routes.

Or consider Denver.
The Rocky Mountain city is planning six new rail lines at a cost of $7 billion — or more than half of the region's transportation spending for the next decade. Denver planners admit that all these trains will take just one-half a percent of cars off the road. Denver could relieve more congestion by simply coordinating the city's traffic signals, which would cost less than one mile of light rail.

"The rail expansion tax of 2004 will likely go down in Denver history as the greatest swindle ever perpetrated in Colorado," says Jon Caldara, president of Colorado's Independence Institute and former Chairman of Denver's Regional Transportation District. "And given Colorado was a gold-rush state, that says a hell of a lot. The project will drain money from real transportation projects for decades to come."
Nor is light rail good for the environment. Nationally, light-rail operations use slightly less energy, per passenger mile, than the average car. But building light rail requires enormous amounts of energy that will never be repaid by the annual energy savings.

Light rail's big selling point, that it promotes urban revitalization, is also a Big Lie.
When Portland opened its first light-rail line in 1986, planners rezoned the areas around each station for high-density, transit-oriented development. Ten years later, planners admitted that not one single such development had been built.

When asked why they didn't build around the light-rail stations, developers said there was no demand for such developments. So Portland began subsidizing transit-oriented developments, and to date has spent hundreds of millions of dollars on developmental subsidies. Such subsidies, using tax-increment financing, are now common in almost all cities that have light rail.

Tax-increment financing takes money that would have gone to schools, fire, libraries, and other urban services and spends it subsidizing developers. The schools and other agencies still need to serve the new developments, so other taxpayers must either pay more taxes or expect lower urban services.
Developers, and the politicians whose campaigns they support, win. Everyone else loses.

Cities that build light rail without development subsidies rarely get new development, while cities that offer development subsidies without light rail do get new development. In other words, the subsidies drive the development, not light rail.

Not only does light rail cost a lot, the costs never stop. Construction costs are only the beginning. These are followed by the subsidies to development, which in Portland cost taxpayers $60 million a year. Then there are the maintenance costs — all those tracks, wires, stations, and expensive railcars are far more costly to maintain than buses.

Finally, transit agencies are never satisfied with just one light-rail line, and later lines are almost always far more expensive than the first. Portland spent under $20 million a mile on its first light-rail line. The latest one is costing more than $200 million a mile.

Buses can do anything light rail can do except spend lots of your money, but buses are faster, safer, and more flexible than trains. If traffic patterns change, bus routes can change overnight while moving a rail line takes years of planning and construction.

Rail advocates say you need rail transit to be a world-class city. The truth is that cities that use 1930s technologies to solve 21st century transportation problems are world-class chumps.

The Growing Wealth Gap? Fortune Makes up the Numbers

Posted by Alan Reynolds at http://www.cato-at-liberty.org/the-growing-wealth-gap-fortune-makes-up-the-numbers/


The latest Fortune magazine contains a page on “The Growing Wealth Gap.” The author, Doris Burke, says, “here are some of the facts.”   But they aren’t facts, or even official estimates.

The opening line is, “The top 1% owns 36% of all wealth” as of 2009.  Yet the latest figure was 33.8 percent in the Arthur Kennickell’s report on the Federal Reserve’s triennial Survey of Consumer Finances (SCF) and that was for 2007, not 2009.  There will never be an estimate for 2009 (the next one is for 2010), so something is obviously fishy.

Using actual SCF estimates instead of Fortune’s made-up numbers, the first column in my table shows that the top 1 percent’s share of household net worth briefly spurted to 34.6 percent in 1995, but subsequently stabilized at  33.9% in 1998, 32.7% in 2001, 33.4% in 2004 and 33.8% in 2007.


An alternative source − a study of estate tax data in June 2004 The National Tax Journal by Wojciech Kopczuk of Columbia University and Emmanuel Saez at UC Berkeley − found the top 1 percent’s wealth share has fallen over the years from 26 percent in 1939 to 24.4 percent in 1962, 22% in 1989 to 20.8% in 2000 (shown in the table as 2001).  The press repeatedly cites Saez’s estimates of the top 1 percent’s average income up until 2007 (since top incomes fell by 19.7 percent in 2008 and by a similar amount in 2009), but nobody ever mentions Saez’s estimates about the top 1 percent’s share of wealth.

So where did Fortune’s estimate of 36% (actually 35.6%) come from? The author cites the left-of-center Economic Policy Institute (EPI), which turns out to mean a paper by Sylvia Allegretto.  (Fortune’s more amateurish sources include Deloitte and somebody named Mark Kroll).  The EPI estimates, shown in the second column of the table, purport to be from the SCF but are simply mysterious. The dates were supposedly “chosen based on the data available,” but there is no data for 2009 while there is data for the strangely missing years of 1992 and 1995.  Ironically, these enigmatic EPI estimates show the top 1 percent’s share of wealth declining since 1989 or 1998, which is not the impression that the EPI or Fortune hope to convey.

To fabricate a number for 2009, Ms. Allegretto relies on her own “author’s analysis” of an “unpublished analysis” by Ed Wolff “prepared for” the EPI  but not on the website of Wolff or the EPI.   Allegretto’s inexplicable analysis of Wolff’’s invisible analysis supposedly “updates” the official figures “based on changes in asset prices between 2007 and 2009 using Federal Reserve Flow of Funds data.”   But changes in the flow of funds estimates are also rough and incomparable with the SCF, partly because they combine households with nonprofit organizations and unincorporated businesses.

Financial assets of households and nonprofits were worth $78.6 trillion at the end of 2007, according to the flow of funds, while homes were worth only $20.9 trillion and half of that was mortgaged. Allegretto implies that the top 1 percent’s share rose in 2009 because the flow of funds’ estimated 18 percent drop in the value of homes from 2007 to 2009 supposedly exceeded the drop in the value of assets that dominate the top 1 percent’s assets in 2007 – such as unincorporated business (whose value fell by 28.7 percent) and stocks (down 23.5 percent).  Even if the flow of funds data confirmed the allegedly greater drop in home values than in, say, stocks, Allegretto’s own figures (her Table 6) show that stocks accounted for 30.8 percent of the wealth of the bottom 95 percent, but only 19.2 percent for the top 1 percent.  In any case, home equity is too modest fraction of total wealth to drive the top 1 percent’s share upward at a time when stocks and small businesses were crashing.  There is ample evidence (e.g., my forthcoming Wall Street Journal article updating the “new” CBO estimates to 2009) that recessions always drive down the top 1 percent’s share of both wealth and income.   For those who obsess over the top 1 percent’s share, including the CBO and the Occupy Wall Street crowd, deep recessions should properly be celebrated as  a wonderful decline in “inequality” by their twisted definition.

Fortune does not know what the top 1 percent’s share of wealth was in 2009, and it never will (because the next SCF survey will be for 2010).  When the 2010 results are released, however, the top 1 percent’s wealth share will surely be lower than it was in 2007, not higher.

Give Us Your Engineers, Yearning to Innovate

by Daniel Griswold at http://www.cato.org

After years of legislative stalemate on immigration reform, Congress may be ready to enact a modest but important change that will loosen self-defeating restrictions on the hiring of highly skilled foreign-born workers.

Called the Fairness for High-Skilled Immigrants Act (House Resolution 3012), the bill would relax the quota system on high-tech visas so U.S. companies could hire the best-qualified foreign-born scientists and engineers regardless of their country of origin. It would be a rare step in the right direction for U.S. immigration policy.
Under current law, no more than 7 percent of the 140,000 annual permanent "green card" employment visas can be awarded to workers from any one country.

That arbitrarily excludes qualified potential immigrants from China and India, each with more than 1 billion residents and thriving technology sectors. This makes no sense.

Enter H.R. 3012, sponsored by Rep. Jason Chaffetz, Utah Republican, which the House Judiciary Committee passed by a voice vote last week. The bill would eliminate the per-country limit on employment-based visas by 2015 after a three-year phase-in period. During that time, extra visas would be allocated to highly skilled workers from India and China to reduce backlogs in applications that currently stretch up to nine years.

The biggest shortcoming of the bill is that it does not increase the overall number of employment visas issued each year. Despite the ongoing jobs recession, American companies need more highly skilled workers. U.S. colleges are simply not graduating enough Americans trained in the STEM subjects — science, technology, engineering and math — to meet the needs of the nation's high-tech sector. Immigrants are necessary to fill the gap.

Highly skilled immigrants enable American firms to create products and new ways of doing business. Immigrants co-founded some of America's top technology companies, such as Google and Intel. A Duke University study found that a quarter of high-tech and engineering startup companies between 1995 and 2005 had immigrant co-founders. One-quarter of international patents filed from the United States are credited to foreign-born residents.

For the government, educated immigrants are pure gravy. Because of their higher salaries and low unemployment rates, they pay more in taxes than they consume in government services from Day One. According to an authoritative study by the National Research Council, each college-educated immigrant and his or her descendants represent a $198,000 fiscal gain (in net present value) for the United States. That means a boost of 50,000 such immigrants in a year would be equivalent to retiring almost $10 billion in government debt.

Many potential highly skilled immigrants graduate from American universities. According to Gordon Hanson of the University California at San Diego, in an upcoming article for the Cato Journal, foreign students account for three-fourths of doctorates awarded by U.S. universities in mathematics, computer science and engineering, three-fifths of doctorates in physical sciences, and one-half of doctorates in life sciences. "Today, the difficulty is not in attracting top foreign students to America," Mr. Hanson writes, "but in keeping them here after they graduate."

Yet our government limits temporary H1-B visas to 85,000 a year for U.S. industry, a quota that often is filled months before the fiscal year begins. Permanent green-card employment visas, which also include family members of highly skilled immigrants, are capped at 140,000 a year.

America's immigration system sends the signal to those foreign-born students with valuable skills that we would really prefer that they return to China or India to start companies and file international patents rather than remain here in the United States. And if U.S. companies cannot hire the workers they need here, they eventually will relocate their productive facilities to nations where they can.
It should not require a doctoral degree to see that allocating more green cards for highly skilled immigrants would be a big winner for the struggling American economy.

We’ve Had Enough Government ‘Stimulation’

Posted by Tad DeHaven at http://www.cato-at-liberty.org/we%E2%80%99ve-had-enough-government-%E2%80%98stimulation%E2%80%99/


After three years and $4 trillion in combined deficit spending, unemployment remains stubbornly high and the economy sluggish. That people are still asking what the government can do to stimulate the economy is mind-boggling.
That the Keynesian-inspired deficit spending binge did create jobs isn’t in question. The real question is whether it created any net jobs after all the negative effects of the spending and debt are taken into account. How many private-sector jobs were lost or not created in the first place because of the resources diverted to the government for its job creation? How many jobs are being lost or not created because of increased uncertainty in the business community over future tax increases and other detrimental government policies?
Don’t expect the disciples of interventionist government to attempt an answer to those questions any time soon. It has simply become gospel in some quarters that massive deficit spending is necessary to get the economy back on its feet.
The idea that government spending can “make up for” a slow-down in private economic activity has already been discredited by the historical record—including the Great Depression and Japan’s recent “lost decade.”
Our own history offers evidence that reducing the government’s footprint on the private sector is the better way to get the economy going.
Take for example, the “Not-So-Great Depression” of 1920-21. Cato Institute scholar Jim Powell notes that President Warren G. Harding inherited from his predecessor Woodrow Wilson “a post-World War I depression that was almost as severe, from peak to trough, as the Great Contraction from 1929 to 1933 that FDR would later inherit.” Instead of resorting to deficit spending to “stimulate” the economy, taxes and government spending were cut. The economy took off.
Similarly, fears at the end of World War II that demobilization would result in double-digit unemployment when the troops returned home were unrealized. Instead, spending was dramatically reduced, economic controls were lifted, and the returning troops were successfully reintegrated into the economy.
Therefore, the focus of policymakers in Washington should be on fostering long-term economic growth instead of futilely trying to jump-start the economy with costly short-term government spending sprees. In order to reignite economic growth and job creation, the federal government should enact dramatic cuts in government spending, eliminate burdensome regulations, and scuttle restrictions on foreign trade.
The budgetary reality is that policymakers today have no choice but to drastically reduce spending if we are to head off the looming fiscal train wreck. Stimulus proponents generally recognize that our fiscal path is unsustainable, but they argue that the current debt binge is nonetheless critical to an economic recovery.
There’s no more evidence for this belief than there is for the existence of the tooth fairy.
Not only has Washington’s profligacy left us worse off, our children now face the prospect of reduced living standards and crushing debt.

This article originally appeared in a PolicyMic debate between the Cato Institute’s Tad DeHaven and Demos senior fellow Lew Daly. Check out Daly’s piece here.

Let's Prize Climate Skepticism

by Swaminathan S. Anklesaria Aiyar at http://www.cato.org

This article appeared in The Philadelphia Inquirer on October 25, 2011. 

The latest Nobel Prize for chemistry has confirmed what science students are taught early on: that all scientific theories are intrinsically uncertain; that science progresses through skepticism and attacks on existing theories, and that successful attacks are sometimes rewarded with Nobel Prizes. It follows that skepticism about global warming, far from being antiscience, is in keeping with the standard scientific approach — and could one day fetch a skeptic a Nobel Prize.

The Nobel for chemistry was awarded to the Israeli scientist Daniel Shechtman for his discovery of "quasicrystals," which violate standard theories about crystals. Scientists had believed that all crystals form in repeated periodic patterns, and commercial production of crystals was based on that understanding. But Shechtman exploded the conventional wisdom by discovering quasicrystals, which form regular patterns that never repeat.

When Schechtman first announced his discovery, his superiors were scornful, telling him he should review his basic chemistry textbooks. When he persisted, he was asked to leave his research group. His first paper on the topic was rejected by the Journal of Applied Physics. But Schechtman persevered, and he proved that what 99.9 percent of scientists believed was wrong.

Sound familiar? We keep hearing that 95 percent or 98 percent of scientists believe catastrophic, man-made global warming is proven. Climate skeptics are widely denounced as science deniers. However, as Schechtman showed, 99 percent of scientists can be and have been wrong.

Science proves nothing beyond all doubt. Rather, it progresses by knocking down existing theories in favor of better ones, which in turn are subject to fresh attacks. Skepticism is at the very heart of the scientific method. The scientific approach is at odds not with climate-change skeptics, but with those who claim global warming is completely proven, contestable only by madmen and blackguards paid by oil companies.

A recent experiment at the CERN laboratory in Switzerland is casting doubt on another idea believed by about 100 percent of scientists: Einstein's theory of relativity. CERN scientists have found particles called neutrinos that seemed to have traveled faster than light, challenging a fundamental plank of modern science. According to the theory of relativity, a particle traveling faster than light will go backward in time.

Environmentalists denounce climate skeptics as science deniers. But have the CERN scientists been denounced as Einstein deniers? No. The scientific community is shocked by the discovery but keeping an open mind — even about something as firmly established as the theory of relativity.

To say 95 percent of scientists believe in global warming suggests, incorrectly, that the skeptics are loonies. In fact, they have included Nobel laureates such as Ivar Giaever, Robert B. Laughlin, and Norman Borlaug. Giaever recently resigned from the American Physical Society in protest against its insistence that global warming is "incontrovertible." He declared, "The claim ... is that the [global average] temperature changed from 288.0 to 288.8 degrees Kelvin in 150 years, which (if true) means to me ... that the temperature has been amazingly stable."

The most scientists know about the climate is not much. They know so little that they can't predict the next drought or El Niño. When they try to predict temperatures a century hence, it's a real stretch.

When people know only a little about a topic, they tend to make a lot of the little they know. The little in this case is that rising concentrations of greenhouse gases will raise temperatures if other things remain constant. But other things are not constant; they vary in ways we do not fully understand.

That's why we cannot say why temperatures were high in the medieval period despite low carbon dioxide concentrations. It's also why the U.N. Intergovernmental Panel on Climate Change does not make a definite prediction of future temperatures, instead positing six scenarios ranging from benign to catastrophic.

We know so little about the climate that we can't rule out the possibility of a catastrophe. So we can discuss how much insurance we should buy to cover a disaster that may never happen. But that's different from planning for certain disaster.

Answering the insurance question requires massive funding of research not just by proponents of global warming, but also by skeptics — the breed that has repeatedly won Nobel Prizes for overthrowing the existing orthodoxy.

Math vs. Myth

by Michael D. Tanner at http://www.cato.org

This article appeared in the National Review (Online) on October 19, 2011.

It is a medical truism that if you get the diagnosis wrong, the treatment will be wrong. The same holds true with Washington budgeting. Unfortunately, as we prepare for yet more debates over budgeting, spending, and stimulus, we can expect to once again enter a fact-free debate.

Among the most common myths:

1. Republicans have slashed government spending. While there are political reasons for both Democrats and Republicans to pretend that we've entered a new age of austerity, it's not even close to true. According to figures released last week by the Treasury Department, federal spending this year is up by roughly 5 percent over the same period last year. That's a $120 billion increase in just the first nine months of this year. That's right: Despite a near shutdown of the government and "holding the debt ceiling hostage," government spending is still increasing. And not surprisingly, we are borrowing more money in order to fund it. The deficit is already $23.5 billion higher this year — with three months still to go. As a result, our national debt continues to grow. This month it will close in on $15 trillion. Throw in the unfunded liabilities of Social Security and Medicare, and our real indebtedness tops $120 trillion and rising. If Keynesian-style stimulus worked, we should be swimming in jobs.

2. States are firing teachers and firefighters because they are broke. Washington has to help. That's the logic behind the president's plan for $35 billion in additional federal aid to the states, a bill that the Senate is expected to vote on this week. In reality, however, state government spending has also been rising, up more than 10 percent in the past two years. And while some of that represents a pass-through of federal aid from earlier stimulus bills, state general-fund spending rose 5.2 percent this year. If state governments are laying off teachers and firefighters, it's because they are failing to manage their priorities, not because they don't have any money.

3. We have a revenue problem. Yes, tax revenues are low today by historic standards, in part because of the recession and in part because of the Bush tax cuts. But this is a temporary phenomenon. According to the Congressional Budget Office, even if the entirety of the Bush tax cuts were made permanent and the Alternative Minimum Tax (AMT) repealed, tax revenue would rise to more than 20 percent of GDP by 2020. That's roughly two percentage points of GDP above the historic average. If taxes will bring in more revenue than usual, how is it that we are still projecting huge future deficits? Simple, spending is expected to rise even faster. In 2020, federal spending is estimated to be roughly 25 percent of GDP, roughly four percentage points higher than historic averages, and seven points higher than it was under President Clinton. So, which side of the ledger has a problem?

4. We can solve our problems by taxing the rich and closing corporate loopholes. Set aside the question of whether higher taxes on the rich would stifle economic growth and job creation. There is simply no way to raise enough money to cover our deficits by taxing the rich. As the president would say, "It's math." This year, we will run a deficit of roughly $1.3 trillion. Eliminating the tax break for corporate jets, a prime Democratic talking point, would raise roughly $300 million this year. Yes, that's million with an "m." Ending tax breaks for oil and gas companies, another frequent Democratic target, would bring in somewhat more, nearly $4 billion per year. And, the big enchilada, the Democrats' proposed 5.6 percent surtax on "millionaires and billionaires," would raise an average of $45.3 billion in additional revenue per year. Therefore, if the Democrats were able to get every penny that they want, they would raise all of $49.6 billion per year, leaving us with a budget deficit this year of only $1.25 trillion.

5. We can balance the budget by cutting "fraud, waste, and abuse." This is the Republican flip side of the Democrats' reliance on higher taxes, a way to avoid making tough choices about cutting defense and reforming entitlements. Total domestic discretionary spending — everything from the Department of Education to the Department of Commerce, from the FBI to the FDA — amounted to roughly $650 billion this year. If we simply abolished all of those programs, the muscle and bone as well as the fat, we would still have a $650 billion budget deficit. That is not to say that we shouldn't cut everywhere we can, but to spend too much time searching for "fraud, waste, and abuse" is to pluck out a splinter while the patient is bleeding to death.

With any addiction, the first step to recovery is to admit that you have a problem. Washington remains addicted to spending. It is time for Congress to get honest about that and stop hiding behind these budget myths. Maybe then, we can begin the path to economic recovery.

'Burden-Sharing' Basics

by Alan Reynolds at http://www.cato.org


This article appeared in The New York Post on September 20, 2011. 

Warren Buffett, the chairman of Berkshire Hathaway, has been complaining that he pays a lower tax rate than his secretary — and President Obama says he wants to fix this. Good luck.

Buffett is the second-wealthiest man in America, but he's way down the list when it comes to income reported to the IRS. What little income he reports from his wealth is long-term capital gains — which is why his average tax is closer to 15 percent (the cap-gains rate) than 35 percent.

What Obama and Buffett ignore is the fact that people like Buffett go to great lengths to keep much of their money "invisible" to the taxman.
In his New York Times oped last month, Buffett complains that his federal income tax last year was "only 17.4 percent of my taxable income" — less than $7 million on a taxable income of about $40 million. He claims that other "mega-rich pay income taxes at a rate of 15 percent on most of their earnings." That's just not true: The average income-tax rate of those earning between $1 million and $10 million was 29.5 percent in 2009, according the same IRS data that Buffett cites.

Now, raising income-tax rates, as both Obama and Buffett propose, would barely affect Buffett: His actual salary is only $100,000 (which also explains how he pays less than his employees do in payroll taxes for Social Security and Medicare).

What if we raise tax rates on dividends and capital gains, too? The Berkshire Hathaway holding company is itself a way to own dividend-paying stocks without paying taxes on the dividends. Buffett is famous for collecting stocks with a generous dividend yield without Berkshire itself paying any dividend; the holding company reinvests the dividends it receives in buying more stocks, so Berkshire ends up with more assets per share (which should result in capital gains, but more on that later).

And nobody with substantial wealth can be forced to actually sell an asset and so pay capital-gains tax — which is why the government can't afford to raise this tax, particularly on those most likely to pay it.

In 1977, the capital-gains tax was 39.9 percent — and realized gains amounted to less than 1.57 percent of GDP. From 1987 to 1996, when the tax was 28 percent, realized gains rose to 2.3 percent of GDP. Since 28 percent of 2.3 is larger than 39.9 percent of 1.57, the lower tax rate clearly raised more tax revenue.

From 2004 to 2007, when the cap-gains tax was 15 percent, realized gains amounted to 5.2 percent of GDP — so again, the lower tax rate raised more tax revenue.

What's going on? With the lower cap-gains rates, taxpayers are more willing to sell assets and pay the tax — so the government's getting to tax more income. So "the rich" are paying more total tax than they would have at a higher cap-gains tax rate.

Mind you, they're paying a lower average tax rate even as they pay more in taxes, because the cap-gains rate is lower than the tax rate on salaries. But they're still doing more of the "burden-sharing" that the president likes to talk about, because they're letting the tax man at more of their wealth.
It is easy to advocate a higher tax rate on capital gains, but it is even easier to avoid paying that higher tax rate. Choosing to pay tax on capital gains and dividends is usually voluntary — and when the rate gets too high we run short of volunteers.

In 1977, with super-high tax rates of 39.9 percent on capital gains and 70 percent on dividends and salaries, federal revenues were 18 percent of GDP. In 1992, revenues were only 17.5 percent of GDP. In 2007, thanks in large part to a 15 percent tax rate on capital gains and dividends, revenues were 18.5 percent of GDP.

To hold out the tax policies of 1977 or 1992 as examples of effective ways to raise more revenue is ludicrous. It didn't work then and it wouldn't work now.

Paternalism and Principle

by Michael D. Tanner at http://www.cato.org

This article appeared on National Review (Online) on October 5, 2011. 

If you are looking for a single statement that defines the essence of the modern welfare state, look no further than Secretary of Energy Steven Chu's defense of the administration's efforts to ban incandescent light bulbs. "We are taking away a choice that continues to let people waste their own money," Chu said, quite satisfied with government's efforts to protect Americans from their own choices.

Contrast this with Milton Friedman's view that

those of us who believe in freedom must believe also in the freedom of individuals to make their own mistakes. If a man knowingly prefers to live for today, to use his resources for current enjoyment, deliberately choosing a penurious old age, by what right do we prevent him from doing so? We may argue with him, seek to persuade him that he is wrong, but are we entitled to use coercion to prevent him from doing what he chooses to do? Is there not always the possibility that he is right and we are wrong? Humility is the distinguishing characteristic of the believer in freedom, arrogance of the paternalist.

For too long, both liberals and too many conservatives have attempted to impose on people the government's standards of what is best for them rather than leaving them to their own decisions, merely because those decisions may be mistaken. That is the real legacy of the welfare state as expanded by President Obama and as it has been practiced on a bipartisan basis for the last half century or more: We are, quite simply, less free.

In some cases, the restrictions on liberty are tangible and easily seen. As the economy becomes more and more socialized, so too do the consequences of individuals' behavior. This, in turn, creates an incentive for the state to control that behavior. After all, if individual decisions impose a collective cost, it is only rational for those bearing that cost to demand input on those decisions. Thus, the nanny state seeks to restrict all manner of private consensual activity, whether it is eating fast foods and smoking or having consensual sex or driving without a seat belt.

But there are other equally important, if less obvious, ways that the welfare state restricts liberty. Government-run health-care systems, for example, impose a minimum amount that you must spend on health care, either through taxes or through insurance mandates, as with the Patient Protection and Affordable Care Act. They determine which medical conditions and eventualities you must insure against, even if you would prefer not to cover such conditions. Thus, they turn individual moral decisions, such as whether to buy insurance that covers abortion, contraception, or drug-abuse treatment, into political questions. And in some government-run systems they deny people the right to purchase the health care they want even with their own money.

By the same token, government-run anti-poverty programs limit your ability to support the charity of your choice. Money you pay in taxes to support government charity is money that you cannot donate to private charity. Yet the charitable activities chosen by the government may not be the ones that you would have chosen, or even the ones most needed. Indeed, the government's charitable decisions are likely to be driven by politics, favoring those constituencies with the greatest voting power or those causes that capture the public imagination because they are on television or in the newspapers.
Government-run schools automatically pit the values of one group of parents against the values of other groups. How many textbook controversies or debates about what to teach about homosexuality, whether students may pray, or phonics versus whole language could be avoided if parents could choose the school their child attended?

Social Security may or may not be a Ponzi scheme, but it prevents people — especially poor people — from saving and investing for their own retirement in ways that would allow them to build real, inheritable wealth.

Beyond the programs themselves, there is the simple fact that every dollar that the welfare state consumes to pay for itself is one fewer dollar that individuals have to spend the way that they want to, however that may be. As the French economist Frederic Bastiat put it in his parable of the shopkeeper with the broken window, "He would, perhaps, have replaced his old shoes, or added another book to his library." Or to put it in today's context, he might have purchased health care, saved for his retirement, or donated to charity. He might have started a business and hired workers. Or he might have spent it entirely on pleasure or frivolities. He might even have bought energy-inefficient light bulbs.
Whatever he might have done, he is now deprived of that choice. He is, in fact, less free.

Once paternalism is accepted in principle, there is no limit to the actions that government may take in controlling our lives and restricting liberty. The ultimate result, as Friedman writes, is "dictatorship, benevolent and maybe majoritarian, but dictatorship nonetheless."

As we debate the ever-expanding welfare state and all its consequences — joblessness, a crushing debt burden on our children and grandchildren, and the loss of opportunity for the neediest among us — let us not forget the other casualty of big government: freedom.

Bad for Taxpayers and Whales

by Mark A. Calabria at http://www.cato.org

This article apppeared on The New York Times (Online) on September 30, 2011. 

Congress created the National Flood Insurance Program in 1968 as a way to reduce the expense of federal disaster assistance. The idea was that those choosing to live in harm's way should contribute ahead of time to their own assistance. Instead, the program has grown into a disaster of its own, currently $18 billion in debt.

The dirty little secret of federal flood insurance is that one of its largest beneficiaries is the private insurance industry. Rather than compete with the private sector, the program pays the private sector to administer the program — about a third of the total budget goes straight into the industry's pocket — leaving taxpayers to bear the risk.

Putting flood insurance completely into the private market might actually reduce costs, even in the absence of a subsidy. Disputes arise after every hurricane over whether damage is caused by flood or wind. The existence of the National Flood Insurance Program allows both insurers and state insurance commissions to avoid the obvious solution of private policies that combine both flood and wind coverage.

It would be bad enough if the harm done by the flood insurance program were inflicted solely upon the taxpayer, but another victim of the program is the environment. The National Marine Fisheries Service has found that the flood insurance program is pushing orcas and several runs of salmon towards extinction.

The destruction of Gulf Coast wetlands, which had acted as a buffer from hurricanes, magnified the impact of Hurricane Katrina. We can debate the role of Washington in protecting the environment, but at a minimum we can all agree we should not be actively subsidizing its destruction with tax dollars.
The flood insurance program not only places the environment in harm's way, but does the same to the very people it attempts to benefit. By under-pricing flood risk, the program makes it cheaper to live in a flood plain than it would be otherwise. Unquestionably, that distortion gives families who would not have done so an incentive to live in the path of a potential flood.

If we should have learned one lesson from the financial crisis, it is that gross under-pricing and the subsidization of risk will result in individuals making choices that will harm them and taxpayers. We must begin today to roll back the various subsidies toward housing. The National Flood Insurance Program is an easy and reasonable place to start.