Archives: 04/2009

The Sunshine State Lives Up to Its Name

Just when I was getting so jaded by federal education politics that I could have been displayed as part of this exhibit, the Sunshine State comes along and brightens my day.

It’s not just that the Florida Assembly voted to strenghten its k-12 scholarship tax credit program yesterday, it’s that the vote was 94 to 23. In addition to almost universal Republican support, the bill garnered the votes of half the entire state Democratic caucus!

As I wrote on this blog last year, “the [school choice] times they are a changin’.”

Democrats in Washington don’t understand that yet. Perhaps they spend too much time with DC’s NEA lobbyiests. Whatever the reason, the long term health of the Democratic Party depends on its celebration  of its pro-school-choice state-level leaders. If the DNC embraces those state leaders and their policies, it will grow a heart, a brain, and a spine all at once, and secure its viability for the long term.

If they don’t, the national party’s current wretched treatment of poor families and cowtowing to education establishment special interests will drag it down to an ignominy from which it will not soon recover.

And as someone who prefers a balance of power between the two major political parties to the dominance of either, I really don’t want to see the DNC ride the NEA’s bandwagon off a cliff.

Withdrawing from Afghanistan

Oh, the war in Afghanistan. The more I learn, the more I’m convinced that we need to get out.

As I described the situation to my Cato colleague Chris Preble, for lack of a better analogy, the Afghanistan–Pakistan border is like a balloon: pushing down on one side forces elements to move to another — it doesn’t eliminate the threat.

The fate of Pakistan — a nuclear-armed Muslim-majority country plagued by a powerful jihadist insurgency — will matter more to regional and global stability than economic and political developments in Afghanistan. But if our attempts to stabilize Afghanistan destabilize Pakistan, where does that leave us? Like A.I.G., is Afghanistan too big to fail? No.

President Obama earlier this month issued a wide-ranging strategic review of the war and the region, and declared “the core goal of the U.S. must be to disrupt, dismantle, and defeat al Qaeda and its safe havens in Pakistan, and to prevent their return to Pakistan or Afghanistan.” But al Qaeda, as we very well know, is a loosely connected and decentralized network with cells in over 60 countries. Amassing tens of thousands of U.S. and NATO troops in one country — or any country — is unnecessary.

Until Pakistan’s intelligence agency, the ISI, changes priorities, this is a stalemate and we are throwing soldiers into a conflict because policymakers fear that, if we leave, it will get worse. Sound familiar?

The only military role necessary in Afghanistan is trainers and assistance for the Afghan military, police, and special forces tasked with discrete operations against specific targets. The bulk of the combat forces can and should be withdrawn.

As for Pakistan’s impulsive act of gallantry in Buner this week, that’s certainly welcome news. But Mukhtar Khan, a Pakistani freelance journalist whom I’ve talked to on numerous occasions, records here that last year in Buner, a lashkar (tribal militia) successfully beat back the Taliban’s incursions.

Thanks to the Swat Valley peace deal between pro-Taliban TNSM founder Sufi Mohammad and the Pakistani government, militants have spilled back into Buner, killing policemen and terrorizing locals. What’s especially troubling this time around is that the spread from Swat into Buner brings militants closer to Mardan and Swabi, which leads directly to the four-lane motorway running from Peshawar to Islamabad. (I took the picture above when I was on the motorway to Peshawar last August.)

Overall, I’m not optimistic that the Pakistani government’s effort in Buner changes the grand scheme of things. Unless the intervention is coupled with a comprehensive shift in Pakistan’s strategic priorities, which means a move away from allowing its territory to act as a de facto sanctuary for militants undermining U.S. and NATO efforts in Afghanistan, then these sporadic raids tell us nothing about their leaders’ overall commitment to tackling terrorism.

For instance, Pakistan’s Supreme Court recently ordered the release of hard-line cleric Maulana Abdul Aziz on bail. Aziz was a leading figure from the Lal Masjid (Red Mosque) massacre of July 2007 and faces several charges, including aiding militants. For an idea of how pervasive militant sympathies go, when the Islamist political party Jamiat-Ulema-e-Islami was in power in North-West Frontier Province, a Pakistani territory adjacent to the ungoverned tribal areas, its leaders proselytized in mosques about the need for jihad in Afghanistan. In addition, when Abu Musab al-Zarqawi, the head of al Qaeda in Mesopotamia, was killed in Iraq, their parliament observed a two-minute moment of silence.

If leaders within Pakistan’s military and intelligence establishments are serious about combating extremism, it will take more than periodic military moves into restive areas. We will not know for the next several months whether they have abandoned their lackadaisical attitude toward extremism.

Obama the Planner

New Republic editor John Judis has a couple of insights about the Obama administration’s economic and social goals. He points out that, for more than a century, Progressive and free-market forces have gone through cycles of “reform and reaction.”

The Progressives — who my friend John Baden calls the “American counterrevolutionaries” — have repeatedly sought to increase the size and scope of government: railroad regulation, public land agencies, and the income tax in the 1900s; Social Security, low-interest home loans, and government ownership of power plants in the 1930s; Medicare, the war on poverty, and environmental laws in the 1960s.

In between, friends of free markets tried to roll back those reforms, but were never completely successful. Thus, each successive reform era has further increased government power and reduced free markets.

This reminds me of the basic strategy used by the wilderness movement (in which I was active from about 1975 through 1993). Wilderness activists basically considered land that had already been preserved as wilderness or some other classification to be “theirs,” while all remaining land was “potentially theirs.” Successive congressional land-use bills or presidential decrees would put more land in “their” category, but no matter how much they got, it was never enough.

At the time, I called this the “scorched earth policy,” meaning wilderness advocates embedded so many poison pills in the protected lands that no one would ever try to declassify them. This isn’t necessarily a deliberate strategy, just an effect of our political system.

Judis goes on to outline the ways in which Obama wants to build on past reforms. First, he wants to use “the budget to shift the locus of industrial production toward ‘green’ jobs and products.” He also wants to “make dramatic changes in transportation with [government’s] intervention in the auto industry and in its funding of high-speed rail.” Finally, he wants to institute a form of “national planning” in order to “reverse existing trends” towards “suburban housing [and shopping] malls.”

People who are attracted to such policies tend to judge them based on their intent rather than their results. In fact, these interventions have nearly all either backfired or had huge unintended consequences.

Railroad regulation was imposed just as trucks appeared on the scene in 1907, leaving railroads helpless against growing competition. “Progressive” income taxes ended up with so many loopholes that they weren’t really progressive. The federal loan companies, such as Fannie Mae and Freddie Mac, played a key role in the current crisis when they succumbed to political pressure to buy increasingly risky loans.

Social Security is a giant Ponzi scheme that is also one of the most regressive taxes on the books, not to mention that it has provided billions of dollars of surpluses for Congress to borrow with little hope of ever paying it back. Medicare is an even bigger Ponzi scheme, while the war on poverty created a semi-permanent underclass that has been all but forgotten by the liberals who claim to care most about them.

Environmental laws produced many benefits when they focused on technical solutions, but they failed miserably when they attempted to change people’s behavior. As transportation expert Alan Pisarski recently told the Institute of Transportation Engineers, technical solutions to air pollution are responsible for 95 to 105 percent of the improvements in air quality in the past 40 years, while behavior solutions produced only minus 5 to 5 percent of the improvements — minus 5 meaning some behavioral solutions made pollution worse.

Unfortunately, Obama’s plans are all about changing behavior. This means two things: they will be expensive — especially when counting the unintended consequences — and they won’t work. High-speed rail and urban revitalization, for example, are all about redesigning the country for yuppy elites, not ordinary Americans. The question for free-market advocates is: how can we minimize the damage now and roll back the reforms later?

“… and Replace It with REAL ID”

CNN wrote an exciting headline on Wednesday: “Homeland Security Chief Seeks to Repeal Real ID Act.” What they left out was that the replacement would be … the REAL ID Act.

Intentionally or not, Secretary of Homeland Security Janet Napolitano has created the impression that the national ID law might go away. But simply renaming the Department of Homeland Security’s national ID program is not a repeal of REAL ID.

The REAL ID revival bill that has been circulating is the same national identification and tracking system with a few of the sharpest corners taken off and the hope of federal money held out to up-to-now recalcitrant states. The REAL ID revival bill would corral every American citizen into the national ID system to try and attack illegal immigrants.

Bills to repeal REAL ID were introduced in the previous Congress, but they did not move because the Bush administration and Chertoff DHS would have eagerly demagogued the issue. Those political conditions no longer hold. And just 10 months ago, Secretary Chertoff delayed the implementation of REAL ID without bringing any political repercussions to the Bush administration whatsoever. Secretary Napolitano can do the same if Congress fails to truly repeal REAL ID, as it should.

Waste, Fraud, and Stimulus

At Capitol News Connection, brought to you each morning by your tax dollars, they reported this morning:

With more than a trillion tax dollars tied up in the Troubled Asset Relief Program and stimulus spending, Congress is trying to figure out how to account for every penny.

Uh-huh. Congress is always on top of our federal dollars.

Coincidentally, just hours after the CNC report, the Government Accountability Office released a report warning about the lack of oversight procedures in the kitchen-sink stimulus bill. And a few days earlier the inspector general for the TARP program reported that Treasury has no real details on how TARP funds are being spent. In fact, IG Neil Barofsky told Congress that there were 20 criminal investigations into possible TARP fraud already underway.

Two months ago Barofsky and the comptroller general had warned of the likelihood of waste in huge new government programs:

Neil Barofsky, the special inspector general for the $700 billion Troubled Asset Relief Program, told a House subcommittee that the government’s experiences in the reconstruction of Iraq, hurricane-relief programs and the 1990s savings-and-loan bailout suggest the rescue program could be ripe for fraud…

Gene Dodaro, acting comptroller general of the U.S., told the subcommittee that a reliance on contractors and a lack of written policies could “increase the risk of wasted government dollars without adequate oversight of contractor performance.”

One of Greg Mankiw’s readers worked on the new Department of Homeland Security and reported recently:

[Y]ou cannot juice up a government agency’s budget by tens of billions (or in the case of the stimulus package, hundreds of billions) and expect them to be able to process the paperwork to contract it out, much less oversee the projects or even choose them with any kind of hope for success. It’s like trying to feed a Pomeranian a 25 lb turkey. It’s madness. It was years before DHS got the situation under control and between the start and when they finally assembled a sufficiently capable team of lawyers, contracting officials, technical experts and resource managers, most of the money was totally wasted.

Linda Bilmes, coauthor with Nobel laureate Joseph Stiglitz of The Three Trillion Dollar War: The True Cost of the Iraq Conflict, analyzes the massive problems in three somewhat smaller government projects — the Iraqi reconstruction effort, Hurricane Katrina reconstruction, and the Big Dig artery construction in Boston — and finds that “in any organization that starts to increase spending very rapidly there are risks of waste, fraud and inefficiency.”

Milton Friedman summed up the basic problem with government waste back in 2002:

When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it. When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on. When a man spends someone else’s money to buy something for himself, he is very careful about what he buys, but doesn’t care at all how much he spends. And when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you.

Members of Congress can make all the speeches they want about their commitment to ferreting out waste and fraud, but waste and fraud are inevitable in government spending and inevitably large in such massive programs. Some people think that’s fine. At least they’re realistic. But reporters shouldn’t fall for politicians promising to spend unprecedented sums of other people’s money quickly and wisely.

Cleveland Park Embraces Free Markets

Cleveland Park, an upscale neighborhood here in the District of Columbia, might be the last place you would expect appeals to the principles of the free market.  It is, after all, the home of what David Brooks once called ”Ward Three Morality,” an outlook that celebrates government control of the economy. But not always.

Recently an entrepreneur proposed opening a new wine store in Cleveland Park. He sought the support of the advisory neighborhood commission, a local government board, before making his case for a liquor license to DC’s Alcohol Beverage Control Board.  The most serious opposition to the entrepreneur’s plans seems to have come from an existing wine store nearby. According to its attorney, the existing wine store was “a beloved extension of the community.” More candidly he noted the new store would offer competition to the existing business. At this point, you might think: the Cleveland Park commission blocked opening of the new business while congratulating themselves on protecting the town from a ruthless “capitalist logic.”

Well, not quite. Peter Fonseca, the lawyer for the entrepreneur, reportedly “urged the commissioners to consider free-market principles when making their decision. ‘This is America.’” And they did: “Commissioner Richard Rothblum agreed, saying commissioners should not get in the way of free enterprise. ‘I don’t think we have any place telling people what their business plan should be.’” The commission then voted 8-0 to support the entrepreneur’s effort at the Alcohol Control Board. The appeal to “free market principles” seems to have carried the day in Cleveland Park!

Perhaps this is only the beginning. If the free market is desirable for fine wines, why not the auto industry and the banks?

The Joys of Stock Ownership

I happen to own shares in Bank of America, so I’ve just received a proxy statement for the upcoming annual meeting. The Board of Directors recommends that I authorize them to vote my shares FOR an uncontested slate of candidates for the board. Usually I go along with such proxy requests.

But this time I thought: Why should these people get something like $250,000 a year to take orders from President Obama and Secretary Geithner? It’s become pretty clear that the Obama administration intends to use the bailout money to control private companies. He intends to tell companies what cars to make, how much to lend, how much to charge for credit cards, what to pay their executives, what kinds of bonuses are acceptable, and other crucial management decisions.

So I decided to write in “Barack Obama” for all 18 positions on the Board of Directors. However, neither the paper ballot nor the online ballot allowed for write-ins. I guess the official slate will win. But make no mistake. Obama’s the boss.