Poverty’s Decline and Its Causes

It is always refreshing to see journalists draw attention to the incredible decline in world poverty. An article that did just that appeared yesterday in the Christian Science Monitor. The piece shines a spotlight on three heartening facts in particular. 

First, poverty is decreasing. Not only have poverty rates fallen, but the total number of people in poverty has decreased. This is incredible when one considers population growth—there are more people alive today who aren’t in poverty than ever before. The Brookings Institution projects poverty will be practically eliminated by 2030. 

Second, average incomes are rising. World per capita GDP, adjusted for inflation and differences in the cost of living, has never been higher. And average income growth is not limited to developing countries: the average American has more disposable income left after basic expenses

Finally, humanity is healthier. Globally, average life expectancy is at an all-time high, largely due to plummeting infant mortality rates. More people have enough to eat and enjoy access to clean drinking water and improved sanitation facilities. The developed world has also seen health gains, with cancer death rates falling for both men and women in the OECD countries. 

The article attributes improvements in well-being to three main factors: the fall of communism, the rise of trade and globalization, and the courage of those who stood up against tyranny. 

While the CSM article gives some credit to international aid programs, it is important to recognize that aid is not a good driver of economic development. Even vocal aid-proponent Bono acknowledges that international aid and charity pale in comparison to the prosperity-creating power of people engaging in market exchange. 

When given the freedom to do so, it is truly remarkable what ordinary people can achieve. Consider the utter transformation of Singapore from poverty to riches – that is the power of economic freedom!

Court Swats Away Immunity for Obviously Reckless Police Behavior

On Friday, a federal appellate court issued an opinion in Stamps v. Town of Framingham, holding that a SWAT team officer who points and accidentally fires a loaded semi-automatic weapon at a subdued 68-year-old grandfather is not immune from facing a lawsuit for using excessive force in violation of the Fourth Amendment.

Eurie Stamps was the stepfather of Joseph Bushfan, whom the police suspected of dealing crack. Effectuating a search warrant on Stamps’s apartment, the SWAT team raided the apartment at midnight on January 5, 2011.  Stamps—whose presence the SWAT team was aware of and who was not suspected of any wrongdoing—lay prostrate and motionless on the ground with his hands out while Officer Duncan guarded him. During the time that Duncan was guarding him, Duncan moved his finger to the trigger and accidentally fired, killing Stamps.

The real story is how this seemingly obvious outcome—that juries should be able to decide whether officers who finger the trigger of loaded guns pointed at non-threatening individuals use excessive force—even became an issue. At the district court, Officer Paul Duncan claimed that his actions aren’t subject to scrutiny because of a doctrine entitled qualified immunity. As I wrote in September:

Under the doctrine of “qualified immunity,” government officials—including police officers—are immune from suit if their actions don’t violate a “clearly established” constitutional right. The crux of Duncan’s argument is that when his weapon discharged, he became immune from suit even if pointing an assault rifle at Stamps was an unconstitutional act by itself—because there’s no clearly established right against accidental death.

The district court rightly rejected that argument, which Cato categorized as both “dangerous and bizarre” in our brief. The U.S. Court of Appeals for the First Circuit was plain in its rejection well: “The defendants’ proposed rule has the perverse effect of immunizing risky behavior only when the foreseeable harm of that behavior comes to pass.” It seems that the court agreed with Cato’s position that “foreseeable accidents don’t remove liability from the harming actor . . . immunizing an officer from liability for the foreseeable result of his intentional actions [is improper].” Indeed, the court noted the “widespread agreement” of other federal courts in rejecting exactly that sort of argument.

Thus, because Officer Duncan’s actions were not immunized, the case goes back to the jury to determine whether he is liable for his actions, and what the damages should be. (In all likelihood, Duncan will now settle the case because it’s hard to imagine that a jury won’t rule for Stamps’s family here.)

This decision comes at a time when SWAT raids across the country creates pressing issues on the proper use of government force in effectuating criminal arrests. In a militarization case with nearly identical facts, Kane v. Lewis, Cato filed a brief noting that “SWAT team deployments have increased more than 1,400% since the 1980s … .  SWAT teams and tactical units were originally created to address high-risk situations, such as terrorist attacks and hostage crises. Today, however, these extreme situations account for only a small fraction of SWAT deployments; they’re used primarily to serve low-level drug-search warrants.”

Federal courts should continue to reign in the use of militarized SWAT teams – and indeed government officials abusing their powers in all contexts – improving respect for law enforcement officers as well as protecting arrestees and innocent bystanders.

Unintended Consequences of Proffer Reform in Virginia

The Virginia legislature is moving forward with so-called “proffer” reform.  Proffers are local amenities such as parks, computers for schools, architectural changes and other benefits provided by housing developers to local governments in exchange for a relaxation of zoning restrictions on new housing development.  A bill to restrict these deals has passed the state’s House of Representatives and is moving through its Senate. While this prohibition on a “gray market” may appear to be good policy reform, the result will likely be less development and higher housing prices.  The reform seeks to ban all proffers that do not address “an impact that is specifically attributable to a proposed new residential development…”.

Local groups are famously resistant to housing development. This makes sense to some extent, because new development can impose external costs on existing residents in the form of traffic congestion and overutilized municipal infrastructure.  An ideal resolution of such external costs would be an explicit market for zoning change.  Such a market would allow developers to explicitly negotiate with relevant community groups and homeowners associations.  The consent of existing residents for new denser more urban development would be obtained in exchange for cash and/or home buyouts.  The payments would compensate existing residents for change.

Given that such explicit markets for zoning change do not exist, how should municipalities negotiate with housing developers? Some, such as Steve Teles from Johns Hopkins University and Jonathan Rauch from the Brookings Institution have argued that allowing a broad scope of for negotiation with less transparency can yield better political outcomes. Inability to accept community demands for ancillary benefits can prevent new developments from ever getting off the ground. Similarly, William Fischel of Dartmouth has long argued that allowing highly-specific tradeoffs for community support can make sense in many cases.

The Virginia bill would restrict local powers to negotiate highly specific development agreements without adding any mechanism that facilitates either an explicit or an alternative “gray” market to ensure that restrictions would encourage development. While it may seem sleazy to allow communities to demand computers for schools in exchange for denser development, if cash were exchanged for denser development, the cash recipients might very well use the cash for computers rather than a park or wider roads.  While the gray market is imperfect, putting more restrictions on it will make development less rather than more likely.

This blog post was coauthored with Cato research assistant Nick Zaiac.

Just Give Us the Data! End-of-Term Org-Chart Edition

Public oversight of government and internal managment could both improve dramatically with an authoritative, machine-readable representation of what the federal government is. Right now, there isn’t a list of all of the federal government’s agencies, bureaus, programs, and projects. That’s a big part of why the government is run so badly and so impervious to change. The government is illegible, even to many insiders.

Happily, the Obama Administration recently promised to produce a machine-readable federal government organization chart. And it promised to do so in a matter of months. That’s something the administration can do to leave a lasting legacy and fulfill an important part of his promise of more transparent government, something we touted here in a 2008 policy forum, Just Give Us the Data!

Europeans, not Americans, Should Spend More on Europe’s Defense

The U.S. plans on filling Eastern Europe with thousands of troops along with vehicles and weapons to equip an armored combat brigade. That will require a special budget request of $3.4 billion for next year.

An unnamed administration official told the New York Times, that the step “fulfills promises we’ve made to NATO” and “also shows our commitment and resolve.” Moreover, said another anonymous aide: “This reflects a new situation, where Russia has become a more difficult actor.”

However, the basic question remains unanswered: Why is the U.S. defending Europe? The need for America to play an overwhelming role disappeared as the continent recovered and the Cold War ended.

For Cam Newton, Adding Super Tax Insult to Super Bowl Injury

When I give speeches in favor of tax reform, I argue for policies such as the flat tax on the basis of both ethics and economics.

The ethical argument is about the desire for a fair system that neither punishes people for being productive nor rewards them for being politically powerful. As is etched above the entrance to the Supreme Court, the law should treat everyone equally.

The economic argument is about lowering tax rates, eliminating double taxation, and getting rid of distorting tax preferences.

Today, let’s focus on the importance of low tax rates and Cam Newton of the Carolina Panthers is going to be our poster child. But before we get to his story, let’s look at why it’s important to have a low marginal tax rate, which is the rate that applies when people earn more income.

Venezuela: Ricardo Hausmann versus Nicolas Maduro

Prof. Ricardo Hausmann, a native of Venezuela and professor at Harvard, concluded in a Financial Times op-ed last week that Venezuela will go down the tubes. Indeed, Hausmann wrote that “It is probably too late to avoid a Venezuelan catastrophe altogether. But to reduce its length and intensity, the country needs to adopt a sound economic plan that can garner ample international financial support. This is unlikely to happen while Mr. Maduro remains in power.”

The nub of Hausmann’s diagnosis of the infirmed patient is clear:

As bad as these numbers are, 2016 looks dramatically worse. Imports, which had already been compressed by 20 percent in 2015 to $37bn, would have to fall by over 40 percent, even if the country stopped servicing its debt. Why? If oil prices remain at January’s average levels, exports in 2016 will be less than $18bn, while servicing the debt will cost over $10bn. This leaves less than $8bn of current income to pay for imports, a fraction of the $37bn imported in 2015. Net reserves are less than $10bn and the country, trading as the riskiest in the world, has no access to financial markets.

There’s no doubt that Hausmann’s arithmetic is correct. Add to that the fact that Venezuela’s implied monthly inflation rate is 21%, according to my estimates, and its implied annual inflation rate is 442%. Not a pretty picture.

And that’s not all. As I observe the socialist destruction of Venezuela that has ensued under the reign of Hugo Chavez and now Nicolas Maduro, it is clear that Maduro has no economic strategy. Indeed, I doubt if Maduro knows what the word “strategy” means.

Venezuela is going down the tubes.

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