The Costs of Independence

As my colleague Doug Bandow noted on Cato@Liberty a few days ago, Scottish independence is for the voters of Scotland to decide. And so it should be. But, as I write over at Foreign Policy, U.S. policymakers need to be aware that Scottish independence would carry some key costs for the United States:

  1. The loss of nuclear submarine basing privileges is the most concrete cost of Scottish independence, with Scotland’s nationalist party pledging a ‘nuclear-free’ Scotland if a Yes vote occurs. U.S. nuclear submarines, though based in King’s Bay, Georgia, use the United Kingdom’s HMNB Clyde Naval Base at Faslane, Scotland for maintenance and deployment needs. The site is located conveniently close to key North Sea patrol waters, and has acted as a visiting port for U.S. submarines since the Cold War. The loss of the base will force the UK to relocate its four Trident submarines, and the paucity of available sites in Europe may eventually lead to UK submarines being based alongside their American counterparts in Georgia.
  2. The UK and United States also have strong, historical links in intelligence sharing and military cooperation, formalized in the 1946 UKUSA agreement. Intelligence sharing and operational burdens are widely shared; officers on both sides of the Atlantic even refer to each other as ‘cousins.’ But independence could undermine the value of this alliance for the United States, at least in the short term.  In the case of a Yes vote, the remainder of the United Kingdom (RUK) will need to rebuild its military and intelligence capabilities, extricating itself from Scotland, and negotiating which military assets will go to which country. During this period, the United States will lose the benefit of British intelligence and military support.
  3. The breakdown of the UK will also result in the loss of a valuable U.S. supporter on the world stage. The UK is often the only nation which commits substantial levels of troops or financing to joint military or humanitarian operations. While ‘partner states’ like France committed only 88 troops to the War in Afghanistan, the UK contributed 10-15% of total troops to the conflict. In Iraq, the UK was responsible for almost half of the non-U.S. troops involved. The UK also carries its own weight in NATO, contributing between 2.5-3% of GDP in military spending each year, a level few European states achieve. The loss of Scotland will carve up the UK, removing at least 8% of its population and tax base, making it less able to commit to any U.S. initiatives.

The timing could not be worse: achieving consensus on Syria, Ukraine or a host of other issues will be harder in the turmoil of a Yes vote for independence. Whether the United States should be involved in these conflicts is debatable at best, but they will be costly, especially if Britain can’t contribute.  An independent Scotland, even without the incipient startup costs of independence, is not going to fill that gap. U.S. policymakers shouldn’t be telling Scotland what to do. But they should be worried. If a Yes vote occurs, the costs will certainly impact the United States

Customs and Border Protection’s Extravagant Houses

U.S. Customs and Border Protection is the second largest agency within the Department of Homeland Security (DHS). The agency cost taxpayers $13 billion in fiscal year 2014, and its budget is growing quickly. Spending has increased 85 percent in the last ten years, after accounting for inflation.

This chart shows CBP spending since 1970, including its recent meteoric rise.

Regrettably for taxpayers, all of that money is not being spent wisely. The Washington Post recently highlighted one example of egregious CBP spending:

U.S. Customs and Border Protection “vastly overpaid” for an employee housing project near one of its checkpoints in rural Arizona, spending nearly eight times the average price of homes in the area to build each of the units, according to a federal audit.

The 21 agency homes in Ajo, Ariz, cost about $680,000 each, whereas the average price for a home in the city is $86,500, the Homeland Security Office of Inspector General said in a report on Thursday.

Auditors determined that CBP overpaid for the land, added “nonessential items” and ignored recommendations for the types of houses that should be built. A CBP study had called for one-bedroom homes, but the agency instead built two- and three-bedroom units with amenities such as quartz counter tops, three-car garages and stand-alone freezers.

The report concluded that the homes exceeded employee needs, noting that 80 percent of the agency’s field officers own permanent residences in other locations.

“CBP did not effectively plan and manage employee housing in Ajo, Arizona, and made decisions that resulted in additional costs to the federal government,” the report said.

All told, the auditors identified $4.6 million in expenses that “could have been put to better use.” They noted that CBP increased the cost of the project seven times without explaining how the extra funds would be spent.

Ajo, Arizona represents just one of six areas where CBP is building new homes for its agents. The Inspector General’s report calls on CBP to postpone further construction until it gets this wasteful spending under control.

This is one more example to add to the ever-growing list of wasteful federal spending.
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Curious how much other agencies spend? You can make your own spending charts here at www.DownsizingGovernment.org.

Scottish Independence Will Kill Socialism on Both Sides of the Border

Much has been said about the impact of Scottish independence on British politics. With the predominantly socialist parliamentarians from Scotland gone, the Conservative Party would likely come to dominate British politics for the foreseeable future. The much needed economic reforms and, perhaps, withdrawal from the European Union would become very likely. 

What about the impact of independence on Scotland? The breakup of the Czech and Slovak Federal Republic some 21 years ago provides an interesting example.

The 1992 elections produced dramatically different results in the two parts of the former Czechoslovak federation. In the Czech Republic, the election was won by the Civic Democratic Party (ODS) led by Vaclav Klaus. Klaus was a highly regarded former federal Finance Minister, who later became Prime Minister and President of the independent Czech Republic. The ODS was dominated by economic reformers whose main goal was a speedy transition of the Czech Republic from a centrally planned economy to capitalism.

In Slovakia, the election was won by the left-leaning Movement for Democratic Slovakia (HZDS) led by Vladimir Meciar. Meciar, a former communist with who instinctively opposed dramatic economic reforms favored by Klaus, won by promising the increasingly nationalistic Slovaks some type of a confederal arrangement with the Czechs, but not outright independence. Since the HZDS, with support of smaller Slovak National Party, had enough votes to block all legislation in the Federal Parliament, the future of the federation would depend on an agreement between the ODS and the HZDS.

While demanding an increased autonomy for Slovakia, the Slovak leadership did not bother to find out how far the Czechs were prepared to go. The Slovak leadership seemed to believe that the Czechs, who were more emotionally attached to the continuation of the Czechoslovak federation than the Slovaks, would simply accede to whatever demands the Slovaks chose to make. That turned out to be a colossal miscalculation.

Cutting Business Property Taxes to Improve Competitiveness

Tax Foundation has released a study comparing country tax codes. The “International Tax Competitiveness Index” by Kyle Pomerleau and Andrew Lundeen found that “the United States has the 32nd most competitive tax system out of the 34 OECD member countries.” In other words, the United States is a bad place to invest from a tax perspective.

Factors behind America’s poor score include “the highest corporate tax rate in the developed world” and the fact that we are “one of the six remaining countries in the OECD with a worldwide system of taxation.”

Another cause of our poor score is our high property taxes. Many U.S. jurisdictions impose property taxes not just on land and buildings, but also on business machinery and equipment. These taxes are a strong deterrent to capital investment, and they should be repealed. U.S. state and local governments collect a huge $242 billion a year in business property taxes, according to E&Y.

In an upcoming Fiscal Report Card on America’s Governors, Nicole Kaeding and I mention efforts to cut property taxes on business equipment, including reforms in Indiana and Michigan. I suspect one reason for Detroit’s economic demise has been its very high property tax burden.

Using Tax Foundation data, the chart shows property taxes as a percent of gross domestic product for the 34 OECD countries.

Ryan Ellis highlights some more of the Tax Foundation results here.

Decrying “Wishful Science” on NPR(!)

Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”


First, a disclaimer. I don’t listen to NPR. “State radio” bugs me. But I have friends who do, and I was bowled over when one sent me a seemingly innocuous story about the search for a pharmaceutical treatment for Amyotrophic Lateral Sclerosis [ALS], the horrific ailment also known as Lou Gehrig’s Disease.

I knew something big was about to happen when correspondent Richard Harris led off with this zinger:

There’s a funding crunch for biomedical research in the United States—and it’s not just causing pain for scientists and universities.  It’s also creating incentives for researchers to cut corners—and that’s affecting people who are seriously ill.

Predictably, NPR, itself a federally (and privately) funded creature, said the problem was a lack of funding, even titling the piece, “Patients Vulnerable When Cash-Strapped Scientists Cut Corners.”

Allow NPR its sins, because what’s in the article is one key to a very disturbing trend, not just in biomedical science, but in “most disciplines and countries.” It seems that negative results are systematically disappearing from science. Those words appear in the title of a blockbuster 2012 article by University of Montreal’s Daniele Fanelli, more completely, “Negative Results are Disappearing from Most Disciplines and Countries.”

Memo to NPR:  Scientists  are always “cash-strapped.” Just ask one. The reason is very simple, and can be illustrated by my area, climate science.

There are actually very few people formally trained at the doctoral level in this field (yours truly being one of them).  One reason was that, prior to the specter of anthropogenerated climate change, there wasn’t very much money from the federal government. It was about a $50 million a year operation, if that much. We didn’t have enough research dough. 

Now the federal outlay is $2.3 billion. Guess what: we’re all climate scientists now. So ecologists, plant biologists, and even psychologists hitched their wagons to this gravy train. Today’s shocker: we don’t have enough research dough.

What Harris found out about ALS really does apply in a Fanelli-like fashion. It seems that drugs that work fine on mice and rats flop miserably when tested on humans. It turns out that the animal studies were all pretty shoddy.

Story Landis, director of the National Institute of Neurological Disorders and Stroke, explained why.  According to NPR, “There is no single answer, she says, but part of the explanation relates to a growing issue in biomedical science: the mad scramble for scarce research dollars.”  She went on: “The field has become hypercompetitive,” and NPR added, “Many excellent grant proposals get turned down, simply because there’s not enough money to go around. So Landis says scientists are tempted to oversell weak results.”  

“Getting a grant requires that you have an exciting story to tell, that you have preliminary data and you have published”, she says. “In the rush, to be perfectly honest, to get a wonderful story out on the street in a journal, and preferably with some publicity to match, scientists can cut corners.”

According to a research paper published earlier this year, corner-cutting turned out to be the rule, rather than the exception, in animal studies of ALS.

Stefano Bertuzzi, the executive director of the American Society for Cell Biology, says that’s because there is little incentive for scientists to take the time to go back and verify results from other labs;

“You want to be the first one to show something”, he says—not the one to verify or dispute a finding, “because you won’t get a big prize for that.”

Landis noted that “ALS is not the only example of this type of wishful science [emphasis added].”  She found similar problems with other drugs for other diseases.

It’s too bad that NPR didn’t then go to Montreal’s Fanelli, because they would have found that similar problems are infecting science everywhere, which is why Cato now has a Center for the Study of Science.

Coming up: I’ll be posting soon on what this does to science itself.  Teaser: if there’s little incentive to publish negative results, whatever reigning paradigm is operating in a given field will be very resistant to change. As the Center for the Study of Science’s Richard Lindzen has observed, there has been a remarkable lack of paradigm substitution in overall science as research budgets ballooned. Ironically, the more we spend on science, the more science can be harmed.

 

German Uber Ban Lifted

Today, a court in Frankfurt lifted the temporary ban on Uber’s ride-sharing service imposed at the beginning of this month. Judges were reportedly sympathetic to the claim brought by Taxi Deutschland, an association of taxi dispatchers. However, Judge Frowin Kurth ruled that Taxi Deutschland had waited too long to file for an injunction. A spokesman for the court said that the case must have been filed within two months of Uber’s ride-sharing service launching in Germany.

Taxi Deutschland claimed that Uber’s ride-sharing service was in violation of legislation prohibiting drivers without a commercial license charging passengers more than the operating cost of a ride. 

Although the temporary ban has been lifted the court has not made a judgment on whether Uber’s ride-sharing service is legal in Germany.

Uber has been facing opposition across Europe. In June, London cabbies protested how Uber was being regulated by the city’s transportation agency. In March, Milan taxi drivers held a strike protesting Uber. According to Reuters, Milan’s taxi unions believed Uber was operating illegally:

Milan’s taxi unions say that because the app allows drivers to be summoned while in their car, it violates a 1992 law which describes hired drivers as a service ordered from the garage where their business is based, as distinct from taxis, which can pick up passengers on the move.

 In Germany and the U.K. the Uber protests reportedly resulted in an explosion in signups.

Grenade Launchers: The Newest Must-Have School Supply

The Wall Street Journal reports [$] today that government-run schools are stocking up on military surplus equipment—including M-16 rifles, grenade launchers, and even multi-ton armored vehicles—through a controversial federal program. 

In the wake of school shootings in Sandy Hook, Conn., and elsewhere, some school security departments developed SWAT teams, added weapons to deal with any contingency and called on the federal government to help supply the gear. But now the program is facing renewed scrutiny from both outside observers and police using the program.

In south Texas, near the Mexican border, the sprawling Edinburg Consolidated Independent School District has 34,700 students and operates its own SWAT team, thanks in part to military gear it was given in recent years.

The department received two Humvees and a cargo truck from the surplus program, as well as a few power generators, said district Police Chief Ricardo Lopez. The district applied for weapons, too, but wasn’t given any, so instead purchased its own M-4 and AR-15 assault-style rifles, he said.

The Humvees have turned out to be helpful in responding to events such as burglaries at some remote elementary schools on ranchlands, he said, though the 12-member SWAT team hasn’t responded to any major incidents.

They need Humvees to respond to burglaries? And under what conceivable scenario is a grenade launcher needed in a school? At least the officials at L.A. Unified claim that they never intended to put grenades in the grenade launchers:

Some school districts, including the Los Angeles Unified School District, stocked up on grenade launchers, M-16 rifles and even a multi-ton armored vehicle, only to realize the downside of the free gear is the cost to maintain it and train officers to use it.

The district is getting rid of the grenade launchers, which it never intended to use to launch grenades or use in a school setting, said Steven Zipperman, chief of police of the Los Angeles Schools Police Department. The launchers, received in 2001 and classified “as less lethal munitions,” might have been useful to help other police forces in the county disperse crowds by shooting foam or rubber bullets, he said.

Reason’s Zenon Evans reports that officials claim they need the wanna-be tanks “victim rescue vehicles” to extract students from a school shooting:

The L.A. school cops also have a mine-resistant ambush protected vehicle (MRAP), a piece of equipment that often weighs upwards of 14 tons and was designed to fight asymmetrical warfare against Iraqi insurgents, not provide backup during study period patrol. Los Angeles school officers also have 61 M-16 rifles, presumably to prevent food fights from breaking out. The MRAP is worth $733,000 and each rifle is worth $499, but the DoD gives equipment away for the price of shipping.

L.A. cops aren’t the only ones with MRAPs this back to school season. The San Diego Unified School District has one, too. Oakland got stuck with a “tactical” utility truck. 

“We recognize the public concern over perceived ‘militarization of law enforcement,’ but nothing could be further from the truth for School Police,” Capt. Joseph Florentino of the San Diego district told NBC yesterday. Apparently, his department is converting it to a “victim rescue vehicle” that will “be designed for us to get into any hostile situation and pull kids out.”

Professor Jay P. Greene of the University of Arkansas cuts right through the absurdity of schools stocking up on military equipment:

This is a toxic combination of 1) school districts lining up for anything the feds are handing out, 2) the excessive militarization of local police (and apparently school security) forces, and 3) schools focusing on incredibly rare events, like school shootings, as opposed to incredibly common ones, like incarcerating millions of children in schools that fail to serve their needs.

Perhaps the U.S. Department of Education could set an example for school districts by dismantling its SWAT team

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