I’m from the Government and I’m Here to Help You—Again!

Most everyone believes that government is an essential institution, necessary to do what people cannot do on their own. And that sounds like a pretty good justification for the state. But it rarely describes what government actually does.

For instance, late last year Rachel Kennedy wanted to bring a Cuban food truck to North Kansas City, Missouri, a town of four square miles and 4500 people. The city agreed to allow the trucks to operate during lunch time and several other operators came too. What could possibly go wrong?

The restaurant owners might lobby to expel the food trucks, that’s what! Complained Monte Martello, a local Dairy Queen operator: “They bring the truck in, they compete against us for four hours, and then they drive away.”

Worse, Martello went on, “They don’t actually contribute to the community in any way.” All the food trucks do is provide hungry people with lunch! Asked city councilman Gene Bruns, “Why are we trying to rob our local businesses with vendors that come in from outside?” Once the protest got going city officials ran for cover. 

Most Americans take for granted the opportunity to drive into a gas station, fuel their auto, and get back on the road. But not in New Jersey and Oregon. These two states ban self-service stations.

Earlier this year legislation was introduced into both states to end the prohibition. In Oregon the state house voted for repeal in rural counties. In New Jersey legislative leaders announced that members would not be allowed to cast a vote.

TONIGHT: Cato Scholars Live-Tweet The First Dem Debate

Tonight, starting at 8:30 p.m. EDT, CNN will host the first Democratic presidential primary debate of the 2016 campaign season, to be held at the Wynn Las Vegas and broadcast nationwide.

Cato scholars will be using #Cato2016 to live-tweet the debate, bringing insightful commentary and hard-hitting policy analysis to the discussion.


Join the conversation on Twitter with #Cato2016.


Tonight will kick off a series of six total scheduled Democratic primary debates to occur roughly once per month. Though a grassroots movement to increase the number of debates has been gaining momentum, the Democratic National Committee has remained firm about their proposed schedule.

 “ Voters will have ample opportunities to hear our candidates discuss their visions for our country’s future,” wrote DNC Chairwoman Debbie Wasserman Schultz in an August 6th post on Medium.

She further clarified her position at a September breakfast sponsored by The Christian Science Monitor, stating “We’re not changing the process. We’re having six debates…The candidates will be uninvited from subsequent debates if they accept an invitation to anything outside of the six sanctioned debates.”

Similar to the earlier GOP debates hosted by Fox & CNN, candidates had to average at least one percent support in a combination of three recognized national polls released between August 1st and October 10th to be invited to participate tonight.

Lincoln Chafee, Hillary Clinton, Martin O’Malley, Bernie Sanders, and Jim Webb will all be taking the stage, while Lawrence Lessig was unable to meet the cutoff.

Better Data, More Light on Congress

There’s an old joke about a drunk looking for his keys under a lamp post. A police officer comes along and helps with the search for a while, then asks if it’s certain that the keys were lost in that area.

“Oh no,” the drunk says. “I lost them on the other side of the road.”

“Why are we looking here?!”

“Because the light is better!”

In a way, the joke captures the situation with public oversight of politics and public policy. The field overall is poorly illuminated, but the best light shines on campaign finance. There’s more data there, so we hear a lot about how legislators get into office. We don’t keep especially close tabs on what elected officials do once they’re in office, even though that’s what matters most.

(That’s my opinion, anyway, animated by the vision of an informed populace keeping tabs on legislation and government spending as closely as they track, y’know, baseball, the stock market, and the weather.)

Our Deepbills project just might help improve things. As I announced in late August, we recently achieved the milestone of marking up every version of every bill in the 113th Congress with semantically rich XML. That means that computers can automatically discover references in federal legislation to existing laws in every citation format, to agencies and bureaus, and to budget authorities (both authorizations of appropriations and appropriations).

You Ought to Have a Look: Publication Bias

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary.

The Expanding Store of Human Knowledge

The store of human knowledge continues to expand and so do the incremental improvements of our lives. Here are some of the stories that caught my eye last week:

Deleting genes could boost lifespan by 60 percent, say scientists

Scientists believe that making small tweaks to our genes could dramatically increase our lifespans. Experiments on yeast cells have identified 238 genes that increased lifespan when silenced. Since we share many of same genes, the next important task will be to identify similar genes in human beings. One of the candidates for future research is LOS1 – a gene linked to calorie restriction that could increase our lifespans up to 60 percent.

Pioneering surgical technique enabled surgeons to restore hand, arm movement to quadriplegic patients

A new surgical technique has restored hand and arm movement to patients paralyzed by spinal cord injuries in the neck. By redirecting peripheral nerves in a quadriplegic’s arms and hands to healthy nerves, conversation between the brain and muscles can be restored. While this technique is only effective for injuries on the lowest two vertebrae on the neck and physical improvements were often small, the psychological benefits were often profound.


The Real Bills Doctrine: A Short Response

Juan Ramón Rallo has thoughtfully replied (in English) to my earlier Alt-M post that discussed two versions of the real-bills doctrine and what I took to be his defense of a prudent-banking version of the doctrine. Here I offer a few comments on his reply.

  1. One topic under discussion is the common banking practice of borrowing short and lending long (aka maturity transformation). The practice is remunerative to the bank when short-term interest rates are lower than long rates, but it exposes the bank to risks that I previously discussed.

    In his latest piece Rallo suggests a categorical condemnation of the practice: “The banks that transform the maturities of their assets and liabilities are causing a discoordination between savers and investors. They are promising savers to redeem their liabilities much sooner than the moment when their assets will be paid by investors, i.e., they are promising savers the availability of some future goods before they are provided by the investors’ projects they are financing.” In my view, by contrast, whether there is a “discoordination” does not depend so much on the promises or contract terms, or what we may call the de jure maturities, as on the de facto maturities.

    As Rallo recognizes, holders of short-term liabilities have the option to roll them over. This is especially obvious for demand deposits that remain in the bank for longer than one instant. A one-year certificate of deposit that is renewed at an unchanged interest rate can be considered de facto a two-year (or longer, if renewed again) deposit. This means that a profit-seeking bank faces the challenge of estimating the distribution of actual times-to-withdrawal-or-repricing of its liabilities, which are longer than the de jure maturities.

A Tale of Two Studies

Academics and professional economists have critiqued many well known academic papers on immigration in the last year. The first was by Alan de Brauw and Joseph R.D. Russell and it replicates and expands a famous 2003 paper by Harvard University economist George Borjas entitled “The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market.” 

Borjas famously found that from 1960-2000 there was a  wage elasticity of -0.38, meaning that a 10 percent increase in the size of the labor force due to immigration in a particular skill-cell lowered the average weekly wages in that cell by 3.8 percent relative to workers in other skill-cells.  Borjas’ paper is an impressive piece of scholarship and has been the lynchpin of arguments to close the border in order to protect wages.  Many economists disagree with Borjas

De Brauw and Russell had three findings.  Their first finding was that the wage elasticity dropped to -0.22 when they extended Borjas’ study to 2010. That is an important finding by itself – if the Borjas model was correct then why would the impact of immigrants on wages decrease as more of them entered the labor force between 2000 and 2010? 

Their second set of findings is that small changes in variable definitions turned some of Borjas’ ideas into statistically insignificant results. While not definitive, that suggests that the conclusions in his paper are not reliable.     

That leads to De Brauw and Russell’s third set of findings. They looked at the relationship between annualized male and female wages in the skill-cells when women entered the workforce in significant numbers. The correlation turned out to be positive­, which means men and women with the same skill level are complementary.  Thus, they argued that Borjas’ model is misspecified as it assumed immigrants and natives in the same skill-cells are more substitutable than they really are. If this finding is true, it would call into question the assumptions Borjas’ built in to his model, namely that immigration and natives are substitutable rather than complementary.

I’m still eagerly awaiting Borjas’ response to De Brauw and Russell’s paper. The critique of Borjas’ paper was serious because it replicated his work, extended it another decade, and found the results didn’t hold up. Many academics have already contested Borjas’ claims in numerous ways as I document here and here but this challenge cuts deep.