Archives: 07/2008

Arrogant European Bureaucracy Run Amok

The European Commission is an unelected bureaucracy that is slowly but surely seizing powers to govern member nations. This is bad news for national sovereignty and jurisdictional competition, but it also leads to crazy regulations, including proposals to prohibit the British from using acres instead of hectares, banning the traditional preparation of Peking Duck, and detailed rules about the proper size and shape of vegetables. 

But regulatory overkill is just the tip of the iceberg. Far more troubling is the effort to subvert democracy in order to further centralize power in Brussels. The EU Constitution, which would have expanded the powers of the European Commission, was rejected by the voters of France and the Netherlands a few years ago. Rather than shelve the proposal, the European elites renamed it the Lisbon Treaty and said that it no longer was necessary to let the people vote. Fortunately, Ireland still has the rule of law and held a referendum - and the EU Constitution/Lisbon Treaty was decisively rejected. 

The French President has since asserted that the Irish should vote again (and presumably again and again) until they reach the “right” decision. But perhaps the most Kafkaesque reaction came from a French bureaucrat, who was quoted in Le Figaro stating, “It isn’t about putting pressure on the Irish.  We well understand that they have expressed themselves democratically.  But so have the other 26!” Only the French could deny their people the right to vote and then claim their voters (and the disenfranchised people in the European Union’s other 25 nations) had somehow expressed their views.

Naomi Klein Doesn’t Know What She’s Talking About

Johan Norberg has done the world a service with his workup of Ms. Klein’s rubbish, but now here’s Jonathan Chait to pile on:

[Klein] pays shockingly (but, given her premises, unsurprisingly) little attention to right-wing ideas. She recognizes that neoconservatism sits at the heart of the Iraq war project, but she does not seem to know what neoconservatism is; and she makes no effort to find out. Her ignorance of the American right is on bright display in one breathtaking sentence:

“Only since the mid-nineties has the intellectual movement, led by the right-wing think-tanks with which [Milton] Friedman had long associations–Heritage Foundation, Cato Institute and the American Enterprise Institute–called itself ‘neoconservative,’ a worldview that has harnessed the full force of the U.S. military machine in the service of a corporate agenda.”

Where to begin? First, neoconservative ideology dates not from the 1990s but from the 1960s, and the label came into widespread use in the 1970s. Second, while neoconservatism is highly congenial to corporate interests, it is distinctly less so than other forms of conservatism. The original neocons, unlike traditional conservatives, did not reject the New Deal. They favor what they now call “national greatness” over small government. And their foreign policy often collides head-on with corporate interests: neoconservatives favor saber-rattling in places such as China or the Middle East, where American corporations frown on political risk, and favor open relations and increased trade. Moreover, the Heritage Foundation has always had an uneasy relationship with neoconservatism. (Russell Kirk delivered a famous speech at the Heritage Foundation in which he declared that “not seldom has it seemed as if some eminent neoconservatives mistook Tel Aviv for the capital of the United States.”) And the Cato Institute is not neoconservative at all. It was virulently opposed to the Iraq war in particular, and it opposes interventionism in foreign policy in general.

Finally, there is the central role that Klein imputes to her villain Friedman, both in this one glorious passage and throughout her book. In her telling, he is the intellectual guru of the shock doctrine, whose minions have carried out his corporatist agenda from Santiago to Baghdad. Klein calls the neocon movement “Friedmanite to the core,” and identifies the Iraq war as a “careful and faithful application of unrestrained Chicago School ideology” over which Friedman presided. What she does not mention–not once, not anywhere, in her book–is that Friedman argued against the Iraq war from the beginning, calling it an act of “aggression.”

It ought to be morbidly embarrassing for a writer to discover that the central character of her narrative turns out to oppose what she identifies as the apotheosis of his own movement. And Klein’s mistake exposes the deeper flaw of her thesis. Friedman opposed the war because he was a libertarian, and libertarian conservatism is not the same thing as neoconservatism. Nor are the interests of corporations always, or even usually, served by war.

No word on any forthcoming apology from John Cusack.

Secretary Chertoff Brings Security Revelation to Capitol Hill … After Four Years

But will it change policy?

To the amusement of those of us who have focused on the security value of watch-listing for some time now, Department of Homeland Security Secretary Michael Chertoff said some interesting things on Capitol Hill last week. Reports CBS News:

“The terrorists are deliberately focusing on people who have legitimate Western European passports, who don’t appear to have records as terrorists,” Chertoff told lawmakers. “I have a good degree of confidence we can catch people coming in. But I have to tell you … there’s no guarantee. And they are working very hard to slip by us.”

Perhaps this is new information to Secretary Chertoff. Perhaps this is revelation to lawmakers. But some of us have had in inkling about this problem for a little while now. In August 2004, the 9/11 Commission reported that two out of three terrorist planners prefer clean-skin terrorists. (Sound like a toothpaste commercial?) From page 234:

Khallad claims it did not matter whether the hijackers had fought in jihad previously, since he believes that U.S. authorities were not looking for such operatives before 9/11. But KSM asserts that yound mujahideen with clean records were chosen to avoid raising alerts during travel. The al Qaeda training camp head mentioned above [not identified by name in the report] adds that operatives with no prior involvement in activities likely to be known to international security agencies were purposefully selected for the 9/11 attacks.

Given the availability of this tactic, I wrote in my book Identity Crisis: How Identification is Overused and Misunderstood (available to anyone in Congress free for the asking going on two years now) that watch-listing is essentially impotent against terrorism.

So maybe Congress will now get it. But will it change policy?

Bob Blakely of the Burton Group has used the occassion of the millionth entry on the terrorist watch list to write on his personal blog about the chance of catching terrorists with watch-listing. He does an elaborate examination of the process given various reasonable assumptions about the number of border crossers and the number of terrorists, known and unknown. Read through it to take the nature of the problem and Bob’s thinking to heart, but here’s his conclusion:

[T]his system is trivially easy for even the dumbest terrorist to circumvent. It doesn’t take a genius to figure out that the thing to do to defeat this system is stop sending known terrorists through it. Catching a new recruit without a terrorist history happens only by accident, and it happens with very low probability. We’re spending God knows how many millions of dollars on this list, and it cannot possibly do the job for which it’s intended.

Bob has some understanding of bureaucratic behavior, and he has a clever answer to the question whether all this knowledge will change policy.

I realize that it’s bureaucratically impossible to dismantle a large government system which has been publicly criticized, so in a helpful and public-spirited gesture I’ll offer the following alternative suggestion:

Put everybody on the list.

It’s cheap, it’s fast, it’s inevitable eventually anyway as long as the list continues to grow at its current rate, and it makes checking people against the list really easy (you can do it even without a computer!).

Hilarious! That will satisfy the political impulse to double-down on bad policies, and once everyone is on it, the list can be ignored by our security bureaucracy, freeing it to focus on security measures that work.

Public Schooling as a 1971 Chevy Impala

U.S. student achievement at the end of high school has stagnated (reading and math) or declined (science) since nationally-representative NAEP tests were first administered around 1970. Meanwhile, education spending has risen by a factor of 2.3 over that same period, from $5,247 per student to about $12,000, in inflation-adjusted (2008) dollars. [To get the most up-to-date figures you have to use multiple sources and adjust to 2008 dollars yourself, but an older data series can be found in this table.]

1970 Chevy Impala

What would the U.S. automobile industry look like if it were run the same way, and had suffered the same productivity collapse, as public schooling? To the left is a 1971 Chevrolet Impala. According to the New York Times of September 25th, 1970, it originally sold for $3,460. That’s $19,011 in today’s dollars. If cars were like public schools, you would be compelled to buy one of these today, and to pay $43,479 for that privilege (2.3 times the original price).

But, thank heavens, the automobile industry is part of the free enterprise system that thrives everywhere in our economy outside the classroom. A brand new 2008 Impala, pictured to the right, costs only slightly more in real terms than the 1970 model did: $21,975. But it is a very different beast.2008 Impala

Apart from its far superior fit and finish, it comes standard with technologies that could barely be imagined 40 years ago: OnStar satellite communications, side-curtain airbags, and anti-lock brakes, to name a few. And if you don’t like the looks of it, or if it doesn’t fit the needs of your family, you can buy something else  — something bigger or smaller, faster or more fuel efficient.

So, do you wish the automobile industry were run like public schooling, or do you wish that public education was part of our free enterprise system, with financial assistance to ensure universal access to the marketplace?

Federalism and School Choice

Down on The Corner, Ramesh Ponnuru has written that I seemed a “bit over-hasty” in my recent blog entry stating that federal efforts to promote school choice (outside of Washington, D.C., I should make clear) would be “beyond the feds’ constitutional purview.” Ponnuru suggests that Washington could constitutionally “equalize the tax treatment of payments to private and public schools. That is, stop making state and local taxes (or at least the portion of them that go to public schools) deductible, or start making private-school tuitions deductible.”

I’m afraid I don’t see how either of these fits the dual requirements of being both constitutional and promoting school choice, but I can be pretty dense at times and might need some elaboration.

Concerning the first proposal, I don’t understand how eliminating deductions for state and local taxes would advance choice. The problem is having to pay taxes to support “free” public schools in the first place, not that you can deduct those taxes from your federal taxable income. As far as I can figure, eliminating the deductions would increase the tax burden on public- and private-schooling parents (and all other citizens), but would do little to end the private-schooling penalty of having to pay once for public schools and a second time for private.

With regard to the second proposal, I don’t understand how allowing deductions for private-school tuitions is constitutional. The deductions would be explicitly for schooling, and the enumerated powers for which the Constitution permits Washington “To lay and collect Taxes” include nothing about education.

What have I missed?

Temper, Temper

After reading John McCain’s education-centric speech to the NAACP yesterday, I had a pretty enthusiastic reaction. However, having just taken in McCain’s newly posted “Plan for Strengthening America’s Schools,” my exuberance has been significantly tempered.

Don’t get me wrong: I still think McCain’s emphasis on choice yesterday, even if it turns out to be only rhetorical, is great. We need national leaders (and state, and local) to stop parroting clap-trap about fighting to the last kid for the bureaucratic, special-interest-dominated, public-schooling system, and focus instead on helping children get the education they need. But while McCain’s straight (ugh!) talk about choice was refreshing, his plan hardly is.

All that McCain’s plan offers in terms of specifics is that he’d reapportion federal money slated for attracting, rewarding, and training teachers; somehow give principals more control over their budgets; and expand the use of online education. Oh, and importantly(though most voters, concerned primarily about their own kids, probably won’t care), McCain would increase funding for D.C.’s school-choice program.

All of this adds up to little more than tinkering and really doesn’t give voters much to hang their hats on. There’s nothing sweeping and bold like yesterday’s commitment to seek “school choice for all who want it,” and the largely programmatic changes McCain does offer are far too wimpy if he plans to take on Barack Obama, huge promise for huge promise.

Of course, it would be outstanding if McCain has kept his plan small because he doesn’t believe that Washington should be meddling in education. But if that’s his true motivation, he should put it front and center, offering something really principled that could appeal to both disaffected small-government Republicans and liberals who have had it with No Child Left Behind. But what McCain proposes would all come from the feds, and his plan includes nothing about cutting Washington’s education presence down to size. Oh, and there’s the matter of his apparent promise to “fully fund” NCLB

Choice for all is a great theme. But from the looks of his plan, tweaking federal programs will be McCain’s true, disppointing, education focus.

Update: Here’s my chat with Caleb Brown about McCain’s push for choice in a Cato Daily Podcast (iTunes).

Levin’s Misguided War Against Tax Havens

The Senate’s leading opponent of tax competition is Carl Levin of Michigan, and a subcommittee he runs held a hearing yesterday to bash low-tax jurisdictions.

His main target was the Swiss banking and finance conglomerate UBS, which sent its employees to the United States to solicit and serve clients — an approach that even I have a hard time defending. Swiss banks have every right to accept U.S. clients, and Switzerland has every right to have a stronger human rights policy than the United States with respect to financial privacy, but Swiss law applies in Switzerland. If Swiss bankers come to the United States and violate American law (regardless of how bad the law is), they should understand that they run the risk of legal trouble.

That being said, Levin is 99 percent wrong on tax competition issues. Perhaps his most laughable assertion was the statement that “tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers.” He is factually wrong and morally bankrupt. Regarding the facts, academic researchers have shown that tax havens boost economic activity in non-haven nations (largely by providing a platform for investments that otherwise would not take place). Moreover, even Treasury Department data confirm that tax havens help bring trillions (yes, trillions) of dollars of investment into the U.S. economy. Regarding morality, Levin is a typical politician who routinely votes for higher taxes on honest hardworking Americans. For what it’s worth, he also routinely votes for corrupt, special interest spending such as farm bills that funnel money from average people to well-heeled agribusiness lobbies.

ABC News has the story:

Federal regulators should consider revoking the U.S. banking license of the giant Swiss Bank UBS because of its role in helping wealthy Americans evade billions of dollars in taxes, Sen. Carl Levin (D-MI) told ABC News today. …UBS’s role in arranging “undeclared” accounts for an estimated 19,000 U.S. citizens was one focus of a hearing by the Senate Permanent Subcommittee on Investigations, chaired by Levin today. The role of the LGT bank, owned by the royal family of Liechtenstein, was also investigated.

…A UBS executive, Mark Branson, said the bank will no longer provide “undeclared” accounts to U.S. citizens and is “winding down” its business involving already existing accounts. …Levin called for passage of new laws to end tax haven abuses. “Tax havens,” said Levin, “are engaged in economic warfare against the United States and honest, hardworking American taxpayers.”