Archives: 02/2009

Napolitano: Scrap REAL ID

She didn’t put it so bluntly, but DHS secretary Janet Napolitano appears ready to scrap the failed national ID program in the REAL ID Act. This is good news.

Is it great news? Not really. Nothing I’m aware of in her public comments reflects awareness of the thoroughgoing weakness of identity-based security or its prohibitive privacy and dollar costs. And she’s looking for an alternative national ID.

“ ‘Enhanced driver’s licenses give confidence that the person holding the card is the person who is supposed to be holding the card, and it’s less elaborate than Real ID,” the Washington Times quotes her saying. Less elaborate? Yes. Reliably secure? Not really. A full-fledged national ID? Eventually.

The point is to get away from national ID systems entirely. It’s not an achievement to produce a national ID that’s less bad than the one that went before. But it is progress.

HUD the Dud

Last week I blogged on President Obama’s “stimulus” rally prop Henrietta Hughes — a.k.a. “the face of the economic crisis.” Ms. Hughes and her son, who were homeless, asked our messianic president to help them since they’ve been stuck on a two-year waiting list at the Fort Myers, Fl., public housing authority. Using the government’s own numbers, I was able to determine that Fort Myers and surrounding Lee County received almost $70 million in U.S. Housing & Urban Development (HUD) money in the past three years. Some $41 million — or $600 per man, woman, and child in Fort Myers — went to the city’s public housing authority alone.

I concluded that HUD’s inspector general should investigate what the housing authority is doing with all that taxpayer change. And if a story coming out of Las Vegas about its public housing authority is any indicator, there’s a good chance a lack of federal funding wasn’t the problem in Fort Myers. According to the Las Vegas Sun,

The North Las Vegas Housing Authority failed to spend up to $2 million on federal housing programs even as thousands of people were on lists awaiting that help, a recent audit has found… The total amount won’t be known until the city audit and a federal investigation are finished, but so far auditors have determined that at least $800,000 was misused, [North Las Vegas City Manager Gregory] Rose said. Still unclear is how the money was spent, who is responsible, and whether any crimes were committed, he added.

I keep hearing the Obama administration say the “stimulus” bill, which will be funding a plethora of notorious HUD programs, will come with transparency and accountability. The odds of accountability at HUD are somewhere around the odds of me taking off and flying after running really, really fast down the street.

In other HUD news this week:

  • A city in Ohio plans on using HUD Community Development Block Grant (CDBG) funds to purchase ball field back stops.
  • Tulsa’s city council wants to know more about the $1.5 million in CDBG money the city inappropriately used to pay for employee salaries. The city was to pay it back, but “In December, the city announced that HUD would allow the city to reapply for the $1.5 million to fund two projects it has deemed meet the required use of the funds.”
  • In New Jersey, “The [Franklin] township’s former housing coordinator and her plumber husband have been indicted on a variety of charges — including official misconduct, forgery and witness tampering — in connection with what authorities are calling a conspiracy to misappropriate more than $100,000 in federal housing rehabilitation funds.”
  • And in West Virginia, the Wheeling city council “voted 6-0 to spend $42,000 in CDBG money to install an outdoor modular floor at the Pulaski Playground tennis courts in South Wheeling.”

Is Sports like Wall Street?

Washington Post sportswriter Sally Jenkins often has sensible things to say. And in today’s paper she makes some interesting points about hyper-competitiveness in sports and finance. But I think she was led astray by investor, college athlete, and Clinton Treasury appointee Roger Altman:

There is a strong natural connection between Wall Street and sports because “both are quite binary worlds, somebody wins and somebody loses,” according to Altman, who was a varsity lacrosse player at Georgetown.

That’s just wrong. In sports it’s true: somebody wins and somebody loses. If the Yankees beat the Red Sox, that’s a binary outcome with a winner and a loser. It’s what economists call a zero-sum game. If Michael Phelps wins the gold, then everybody else doesn’t.

But in the market both parties to a transaction expect to gain. I get a meal, the restaurant owner gets my money. I get a salary, Cato gets my production. As Murray Rothbard wrote in the Concise Encyclopedia of Economics:

The mercantilists argued that in any trade, one party can benefit only at the expense of the other—that in every transaction there is a winner and a loser, an “exploiter” and an “exploited.” We can immediately see the fallacy in this still-popular viewpoint: the willingness and even eagerness to trade means that both parties benefit. In modern game-theory jargon, trade is a win-win situation, a “positive-sum” rather than a “zero-sum” or “negative-sum” game.

No doubt businessmen do like to “win” – sometimes they say “money is a way of keeping score.” They like to make the deal and block their competitors. Sometimes their testosterone may even impel them to make deals that aren’t economically rational, and the market has a way of punishing such decisions. But the people who make the deals – both parties, all parties – all expect to benefit. And usually they’re right. We’ve all bought things that we wish we hadn’t, or made investments that didn’t pan out. Most of the time, though, both parties to a transaction are pleased to make it and remain pleased after the fact. And the process of repeated positive-sum transactions creates economic growth and development.

Sports is different. The game may be fun, for both competitors and spectators. But in the end, as Altman correctly says, in sports “somebody wins and somebody loses.”

The “Stimulus” Package’s Depressing Health Care Provisions

I’ve got a commentary over at NPR about how the health care provisions in the “stimulus” package are bad investments.  Here’s a taste:

We desperately need research on the effectiveness of medical treatments, and the law includes $1 billion for that. Yet experience suggests the benefits of taxpayer-funded research may be zero…

[T]he law’s $33 billion for electronic medical records also fails the cost-benefit test. The CBO estimates it would be cheaper just to do the second MRI…

The law includes $115 billion in health insurance subsidies. Economists have no clue whether that passes the cost-benefit test either…

The law will finance expanded COBRA benefits with a $65 billion hidden tax on other workers’ health insurance premiums. That hidden tax will actually reduce wages and job creation…

The good folks at NPR encourage you to post comments.

(FYI, Cato will host a forum on comparative-effectiveness research on Tuesday, March 3.)

The Ant and the Grasshopper

President Obama’s proposal to tax the thrifty to bail out those who contracted for more house than they could afford – and hearing people on the radio say “I scrimped and saved to buy a house I could afford, and now I’m going to pay for people who overextended themselves?” – somehow got me to thinking of the old fable about the ant and the grasshopper:

In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?”

“I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”

“Why bother about winter?” said the Grasshopper; “we have got plenty of food at present.”

But the Ant went on its way and continued its toil. When the winter came the Grasshopper had no food, and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew:

IT IS BEST TO PREPARE FOR THE DAYS OF NECESSITY.

Unless, of course, you can count on a government bailout.