Archives: October, 2008

Don’t Cash that “Fact Check” Just Yet

The Associated Press continues its series of presidential “fact check” pieces today with a rundown on last night’s presidential debate. On the subject of education they write:

It’s unclear whether the four-year-old Washington [DC voucher] program is actually working. So far, the Education Department has found little if any difference in the test scores of kids who got vouchers to attend private school.

The implication here is that test scores are the only thing that matter in evaluating whether or not an education system is “working.” In reality, most people not only care how good something is, but also how much it costs. If we take cost into account, does the picture change?

According to the most recent report on the DC voucher program, to which the AP is alluding, the average tuition charged by voucher-accepting private schools is $5,928. As I reported in the Washington Post and fully documented on this blog, total per-pupil spending in DC public schools was $24,600 in the 2007-08 school year. Even if we allow for the fact that the typical private school receives something like 20 percent of its revenue from sources other than tuition, this is still rather a big difference. Public schools are spending more than three times as much to get about the same academic result. Meanwhile, as the DC voucher study notes, parents are a lot happier with their chosen voucher schools than the city’s public school parents are with their schools.

Parents are happier, and the program produces academic achievement at least as good as the district schools at less than one third their cost. For a nation in a bit of a financial bind, this seems to me like a program that’s working, even though it does have its faults and there are even better options.

Two Reasons to be Optimistic

The chart below reflects the public mood about government spending over the past half century. The higher the line on the chart, the more the public wants government to spend. (The chart is the work of James Stimson, a public opinion expert at the University of North Carolina, Chapel Hill).

The public has become more favorable toward public spending since 2001. However, it is likely that Obama’s election will coincide with a peak in this trend. Both LBJ’s election in 1964 and Clinton’s in 1992 marked such peaks. In Obama’s case, however, the peak will be substantially lower than in the Johnson and Clinton cases. Note also that those earlier peaks were followed immediately by declining support for more spending.

If history is any guide, Obama will not have as much public support for more spending as Clinton or LBJ and such support as he has will begin to decline almost immediately after he takes power.

Do Aussies Really Think Fannie, Freddie, the Fed, and the Community Reinvestment Act Are Part of “Extreme Capitalism?”

The turmoil in financial markets is not good news, but one silver lining to the dark cloud is the rather amusing contest for the most inane reaction by a political figure. Australia’s Prime Minister is proudly demonstrating his economic illiteracy by blaming “extreme capitalism” even though the financial services are heavily regulated and a wide range of policy mistakes created the housing bubble. Agence France Presse (how appropriate) reports:

The global economic crisis is a result of the “comprehensive failure of extreme capitalism,” Australian Prime Minister Kevin Rudd said Wednesday as he took aim at bulging executive pay packets. The centre-left Labor Party leader named greed and fear as the “twin evils” at the root of the financial sector collapse, which began in the United States and swept the world. “What we have seen is the comprehensive failure of extreme capitalism – extreme capitalism which now turns to government to prevent systemic failure,” Rudd told the National Press Club in Canberra. …Governments should act so that greed and lax regulation were never allowed to put the world in the same position again, he said, adding that Australia would press for this at a meeting of the G20 group of 20 rich and emerging nations next month. …Rudd said his government would work with the Australian Prudential Regulatory Authority (APRA) to bring fat-cat pay packets under control. “This is not just a question of fairness and perceived fairness in the system, it goes actually to the kernel of the incentive structures around risk-taking,” he said.

Chavez 1, Bush 0

It’s never enjoyable to be mocked by a socialist dictator, but Hugo Chavez of Venezuela scores some solid points as he welcomes comrade Bush to the socialist camp. Reuters also reports that Chavez says Bush is both “clueless” and to the “left of me.” Whether he’s right about Bush, Chavez certainly is right about the aptitude of anyone to his left:

Socialist Venezuelan President Hugo Chavez mocked George W. Bush as a “comrade” on Wednesday, saying the U.S. president was a hard-line leftist for his government’s intervention of major private banks in the U.S. financial crisis. Chavez, who calls capitalism an evil and ex-Cuban leader Fidel Castro his mentor, ridiculed Bush for his plan for the federal government to take equity in American banks… “Bush is to the left of me now,” Chavez told an audience of international intellectuals debating the benefits of socialism. “Comrade Bush announced he will buy shares in private banks.” Chavez, who has insulted Bush in the past as a drunkard or the devil, called him clueless on Wednesday. He accused him of simply parroting the words of his aides without understanding the new policies that rely on heavy state intervention.

Nothing New Under the Sun

Remember the “Ledeen Doctrine” that Jonah Goldberg used to promote the Iraq War? ( It’s unavailable for some reason on the National Review website Here it is on NRO ):

Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business.

It turns out that aside from the strategic and moral bankruptcy of the doctrine, it isn’t even original to Ledeen or Goldberg:

These half-civilized Governments such as those of China, Portugal, Spanish America, all require a dressing down every eight or ten years to keep them in order. Their minds are too shallow to receive an impression that will last longer than some such period and warning is of little use. They care little for words and they must not only see the stick but actually feel it on their shoulders before they yield to that argument which brings conviction.

That’s Lord Palmerston in 1850, addressing the House of Commons, as cited in Lawrence James, The Rise and Fall of the British Empire.

News That Rich People Can Use

I was astounded to watch a segment on the Newshour With Jim Lehrer tonight about the concerns of Seattle-area arts and public service organizations in the face of Washington Mutual’s acquisition by JPMorganChase, an annual donor of $100 million to nonprofits.

This was not a story about the loss of funds. It was a story about concerns with the potential loss of funds.

Colorful images of ballet dancers, a symphony orchestra, and stage actors in rehearsal flowed across the screen as non-profit heads fretted about the fate of their funding sources.

I enjoy the Newshour and its long-story format, but I’m aware of its government funding and it’s skew toward the wealthy and the politically liberal. And I have to say I can’t recall seeing a story more effete or more indulgent of this audience. The financial crisis - whither capitalism? - is causing arts agencies … concerns.

Something many people don’t seem to understand about mergers, acquisitions, and bankruptcies is that the assets involved in all these transactions don’t just go away. They continue in use under different owners or managers. That’s it! If philanthropy was a good idea before the acquisition of WaMu, it’s a good idea afterwards. If it wasn’t, it wasn’t, and it will go away as it should. I, for one, would rather get cheap or free checking than donate to other rich people’s arts organizations through my banking.

Will wealthy liberals lose corporate-subsidized access to ballet? Oh, I swoon!

Or, here’s an alternative: Get out your checkbooks, richies!

Surely, there are stories about the financial crisis with more substance than this. How about something on Franklin Raines, who headed Fannie Mae from 1999 to 2004 and received a slap on the wrist for accounting irregularities in an organization that we now know was a dumptruck careening toward a crowd of schoolchildren. There are a zillion stories more important than the nervousness of ballet directors in the northwest.

Rant over.

Live Debate Commentary from Cato Scholars on Twitter

Join Cato policy analysts while they comment on the presidential debates live tonight at 9:00 p.m. EST.

Here’s how: Log on to Twitter when the debate begins and see what Cato scholars have to say about the policies the candidates propose.

Some Twitter highlights from the last presidential debate:

Did Sen. McCain answer the question about Social Security? I’d say no. –Jagadeesh Gokhale
Obama’s health plan would outlaw the most affordable 50 percent of health insurance plans currently on the market. -Michael Cannon
Need to understand the rest of the tax code to fix Social Security? Dissemblobama at its best! –Jagadeesh Gokhale
The $700 billion financial-sector bailout is less than one percent of the amount required to bail out Medicare. -Michael Cannon

Read more about Cato’s live-blogging of the debate on K Street Cafe.