Archives: 04/2008

Milton Friedman Prize Selection Committee Member Arrested

The Ugandan government has arrested Andrew Mwenda, a member of the 2008 International Selection Committee for the Milton Friedman Prize for Advancing Liberty, along with his fellow journalists Odobo Bichachi and John Njoroge. Andrew Mwenda is a brave journalist who tells it like he sees it. He is well known for standing up for the rights of others; his involvement in the Milton Friedman Prize is only one element of his long commitment to human rights. It’s time that others stand up for his rights and those of Odobo Bichachi and Jhohn Njoroge. Cordial email letters to the Ugandan Embassy and the Ugandan government urging them to release the journalists and respect press freedom can make a difference:

His Excellency Professor Perezi K. Kamunanwire

Ambassador Extraordinary and Plenipotentiary
Fax: (202) 726 1727
pkamunanwire [at] ugandaembassyus [dot] org

Mr. Charles Ssentongo
Deputy Chief of Mission (DCM)/ Minister Counselor
Fax: (202) 726 1727
Cssentongo [at] ugandaembassyus [dot] org

Mr. Emmanuel Bwomono Olobo
First Secretary
Fax: (202) 726 1727
ebwomono-olobo [at] ugandaembassyus [dot] org

Mr. Michael Karugaba
Second Secretary
Fax: (202) 726 1727
mkarugaba [at] ugandaembassyus [dot] org

(In addition to being an outspoken advocate and practitioner of a free press, Andrew Mwenda is an outspoken proponent of development through the free market. Here is Andrew explaining the failures of “foreign aid.”)

Carbon Credits and Persian Prostitution

What do they have in common?

Apparently, buying and selling indulgences.

A piece in Slate, How To Spot a Persian Prostitute: Streetwalkers in chadors, by Juliet Lapidos, informs us:

The penalties for prostitution [in Iran] are severe—ranging from whipping to execution. But there’s a loophole in Islamic law called sigheh, or temporary marriage. According to Shiite interpretation, a man and a woman may enter an impermanent partnership with a preset expiration date. There’s no legally required minimum duration (a day, a week, anything goes) and no need for official witnesses—unless the woman is a virgin, in which case she needs the consent of her legal guardian. An Iranian who’s wary of arrest can simply escort a prostitute to a registry, obtain a temporary contract from a Muslim cleric, and then legally satisfy his sexual needs.

QED (quite easily done).

Is this reminiscent of purchasing carbon credits for that jet flight to Bali, or what?

Were getting real meaningful emission reductions as simple.

Robert Frank Inadvertently Makes the Case for School Choice

Matt Yglesias points to an article in Sunday’s Washington Post by economist Robert Frank that makes a strong case for school choice. Well, OK, he doesn’t explicitly talk about school choice, but he certainly does a good job explaining the problems caused by the absence of choice:

In the 1950s, as now, families tried to buy houses in the best school districts they could afford. But strict credit limits held the bidding in check. Lenders typically required down payments of 20 percent or more and would not issue loans for more than three times a borrower’s annual income.

In a well-intentioned but ultimately misguided move to help more families enter the housing market, borrowing restrictions were relaxed during the intervening decades. Down payment requirements fell steadily, and in recent years, many houses were bought with no money down. Adjustable-rate mortgages and balloon payments further boosted families’ ability to bid for housing.

The result was a painful dilemma for any family determined not to borrow beyond its means. No one would fault a middle-income family for aspiring to send its children to schools of at least average quality. (How could a family aspire to less?) But if a family stood by while others exploited more liberal credit terms, it would consign its children to below-average schools. Even financially conservative families might have reluctantly concluded that their best option was to borrow up.

This is an eloquent indictment of our perverse system of linking schools to real estate. We don’t generally limit access to hospitals, libraries, or colleges by geography, and there’s no good reason children’s schools should be determined that way either. People should be able to live wherever they want, and then they should be free to send their children to any school that meets their needs. There are a variety of ways to allocate space in the most sought-after schools—academic merit, aptitude in the school’s area of focus, demographic diversity, or by lottery—that would be more reasonable than our current policy of arbitrary geographic boundaries.

And yes, some schools would choose students based on their ability to pay. What Frank’s article nicely illustrates is that our current system of geographically-based school assignment already segregates children by their parents’ income, it just does so in an unnecessarily cumbersome manner. If we had a free market in education, parents who wanted to invest in sending their children to a better school would be able to do so directly, instead of having to buy more house than they might want just so they can get a spot at a better school.

The most important thing to note, though, is that the scarcity of good schools Frank identifies is not an inherent fact about the universe, but a consequence of the public school monopoly. In a competitive education market, a shortage of good schools in a given area would spur people to either start new schools or expand the best of the existing ones. But the public school system has few mechanisms for doing either of those things (charter schools are a very limited mechanism for starting innovative public schools). Which means that the supply of good public schools is artificially limited, leading parents to bid up their price. The way to alleviate the shortage of good schools is not to re-regulate the mortgage market, but to reform the education system so that it’s easier to start and expand high-quality schools. Few things would do that as effectively as a robust program of school choice.

The Milton Friedman Prize Goes to a Hero

The 2008 Milton Friedman Prize for Advancing Liberty has been awarded to Yon Goicoechea. Goicoechea was a key leader of the Venezuelan student movement that rallied the country to vote down Hugo Chavez’s referendum on a constitutional change that would have turned Venezuela into a socialist dictatorship. More on Yon here, as well as information on the gala May 15 dinner in New York at which the Prize will be presented.

It’s interesting to reflect on the diversity of the first four recipients of the Prize. The first Prize in 2002 went to Peter Bauer, presumably in recognition of his lifelong scholarship on development economics and the sources of wealth. (I say “presumably” because the Selection Committee doesn’t formally explain its decisions. But the announcement of the award referred to “his pioneering work in the field of development economics, where he stood virtually alone for many years as a critic of state-led development policy with its emphasis on central planning and external foreign aid.”)

The second Prize went to Hernando de Soto, an author of two books on economics but more importantly a tireless crusader and activist on behalf of poor people and their need for property rights.

The third Prize, in 2006, went to Mart Laar, the youngest prime minister in the history of Estonia, who led his country out of the Soviet Union and into the European mainstream. He slashed taxes and transfer payments, privatized state agencies, liberalized international trade, and created one of the fastest-growing economies in the world, dubbed the “Baltic Tiger.”

And this year the Prize goes to a young man who is not–not yet, at least–a scholar, an author, or an elected official. He’s just a law student who stood up when others wouldn’t and helped to create a movement that prevented a strongman from becoming a dictator.

I think the diversity of the recipients reflects the many ways in which liberty must be defended and advanced. People can play a role in the struggle for freedom as scholars, writers, activists, organizers, elected officials, and many other ways. Some may be surprised that a Prize named for a great scholar, a winner of the Nobel Prize in Economics, might go to a political official or a student activist. But Milton Friedman was not just a world-class scholar. He was also a world-class communicator and someone who worked for liberty in issues ranging from monetary policy to conscription to drug prohibition to school choice. When he discussed the creation of the Prize with Cato president Ed Crane, he said that he didn’t want it to go just to great scholars. The Prize is awarded every other year “to an individual who has made a significant contribution to advance human freedom.” Friedman specifically cited the man who stood in front of the tank in Tiananmen Square as someone who would qualify for the Prize by striking a blow for liberty. Yon Goicoechea not only stood in front of the tank, he stopped it. Milton Friedman would be proud.

I notice that the Prize has gone each time to someone almost a generation younger than the previous recipient. I’d guess that trend won’t continue, unless President Obama’s daughter convinces him to privatize Social Security.

Don’t Shoot the Messenger

I’m sorry to bring bad tidings so close to the weekend, but apparently House and Senate conferees have reached agreement [$] on the broad outlines of a Farm Bill.

We will have to wait until Monday to get the full, disgusting details but broadly, we know this about the proposed bill:

  • it will raise the target prices and loan rates for northern crops (i.e., wheat, soybeans, other feedgrains) beginning in 2010
  • raise the sugar loan rate three-quarters of a cent
  • include a sugar-to-ethanol program (whereby the USDA would buy sugar that would otherwise threaten the domestic minimum price and sell it, presumably at a loss, to ethanol plants)
  • an additional $4 billion for conservation programs
  • $10.361 billion extra for domestic and international food aid programs
  • The bill also includes the new “permanent” disaster program (some thoughts on that here), albeit at $250 million less than the original $4 billion request

To pay for this, your representatives in Congress cut the $5.2 billion per year direct payments program (that is the program that pays farmers on the basis of past production and yields, regardless of what they produce now) by 2 percent per year for four years. Recall that the direct payments program, while an offence to taxpayers everywhere, is at least less trade distorting than the price-linked subsidies that the conferees have agreed to increase. And in the final year, when it really counts for purposes of planning future spending levels (i.e., the baseline), the direct payments will go back up again.

The one possible bright light at the end of this sewer-pipe: a presidential veto. No word from the administration on this latest deal, but it does not fit their past definition of an acceptable amount of reform and thus, assuming intestinal fortitude on the part of President Bush (I know, I know), would likely elicit a veto threat.

Happy weekend, everybody.

A “Crisis” of Their Own Making

A National Conference of State Legislatures report released today is sparking gloom-and-doom headlines about states in fiscal crises. Conspicuously absent from the news stories is any mention of the root cause of the “shortfalls” supposedly wrecking havoc in state capitols.  Over the last few years, state lawmakers forgot the lessons of the 1990s, and decided to add new programs and significantly expand general fund spending on existing programs.

Now, according to NCSL:

Current state fiscal conditions are being driven by weak revenue performance. State officials expected revenue growth to slow in FY 2008, but not as dramatically as it has. […] Because most FY 2008 budgets were built on revenue forecasts that are not materializing as expected, budget gaps have grown.

This reminds me of a short story by J.D. Salinger in which the main character describes the tragic lives of “bananafish:”

Well, they swim into a hole where there’s a lot of bananas. They’re very ordinary-looking fish when they swim in. But once they get in, they behave like pigs. […]  Naturally, after that they’re so fat they can’t get out of the hole again. Can’t fit through the door.

In FY 2007 alone, states raised general fund spending by 9.3 percent, well above the 30-year average of 6.4 percent.  18 states saw spending rise by at least 10 percent.  The only real news here is that state governments are finding themselves in a fiscal “hole” because they gorged on revenues when times were good, and now they have been fat so long they forgot how to go on a diet.

Peggy Noonan on Conservative Disenchantment

Peggy Noonan has a column in today’s WSJ in which she reports having given a speech in Lubbock, Texas that was tough on the current president and of the attendees at the talk “no one–not one–defended or disagreed.” She closes this way:

I finally understand the party nostalgia for Reagan. Everyone speaks of him now, but it wasn’t that way in 2000, or 1992, or 1996, or even ‘04.

I think it is a manifestation of dislike for and disappointment in Mr. Bush. It is a turning away that is a turning back. It is a looking back to conservatism when conservatism was clear, knew what it was, was grounded in the facts of the world.

The reasons for the quiet break with Mr. Bush: spending, they say first, growth in the power and size of government, Iraq. I imagine some of this: a fine and bitter conservative sense that he has never had to stand in his stockinged feet at the airport holding the bin, being harassed. He has never had to live in the world he helped make, the one where grandma’s hip replacement is setting off the beeper here and the child is crying there. And of course as a former president, with the entourage and the private jets, he never will. I bet conservatives don’t like it…