Archives: 06/2009

States “Creating” Jobs - One Corndog at a Time

A couple weeks ago, I blogged about the foolishness of press release economics: states “creating” jobs by handing out taxpayer money to select businesses.  I concluded by saying that “journalists should be on the lookout for more press-release economics schemes coming from the states as revenues remain tight and politicians become desperate to demonstrate they’re “doing something.”  Journalists should examine a state’s tax structure when a taxpayer giveaway is announced to see if perhaps the governor is masking economic-unfriendly fiscal policies.”

Sure enough, the Pew Center’s Stateline.org has an article up detailing the efforts of state governors dealing with the recession by giving businesses taxpayer money to “create” jobs.  Of course, it would make more sense for a state to simply reduce the tax and regulatory burden on a businesses looking to expand or relocate operations within its borders.  But then state politicians might miss out on the short-term benefit of issuing fluffy press releases that are particularly helpful when a state is bleeding jobs.

Stateline notes that “You’d never know Michigan has the nation’s highest unemployment by visiting the Michigan Economic Development Corporation’s Web site, which trumpets a string of successes in recent months that have resulted in thousands of jobs in a state battered by the decline of auto manufacturing.”  And in neighboring Indiana, the state’s economic central planners are celebrating the “creation” of 50 jobs at a corndog and fritter manufacturer.  Anyone familiar with Hoosier waistlines knows there’s no shortage of corndogs in the state to justify taxpayers having to subsidize their production.

However, Stateline reports that Wisconsin officials are targeting Minneapolis-St. Paul manufacturers with a study that shows relocating to west central Wisconsin would save the Minnesota businesses millions of dollars due to lower worker’s compensation costs, corporate income taxes, and property taxes.  Whatever else Wisconsin’s economic development bureaucrats are up to, this is the right idea.

Morozov vs. Cyber-Alarmism

I’m no information security expert, but you don’t have to be to realize that an outbreak of cyber-alarmism afflicts American pundits and reporters.

As Jim Harper and Tim Lee have repeatedly argued (with a little help from me), while the internet created new opportunities for crime, spying, vandalism and military attack, the evidence that the web opens a huge American national security vulnerability comes not from events but from improbable what-ifs. That idea is, in other words, still a theory. Few pundits bother to point out that hackers don’t kill, that cyberspies don’t seem to have stolen many (or any?) important American secrets, and that our most critical infrastructure is not run on the public internet and thus is relatively invulnerable to cyberwhatever. They never note that to the extent that future wars have an online component, this redounds to the U.S. advantage, given our technological prowess.  Even the Wall Street Journal and New York Times recently published breathless stories exaggerating our vulnerability to online attacks and espionage.

So it’s good to see that the July/ August Boston Review has a terrific article by Evgeny Morozov taking on the alarmists. He provides not only a sober net assessment of the various worries categorized by the vague modifier “cyber” but even offers a theory about why hype wins.

Why is there so much concern about “cyber-terrorism”? Answering a question with a question: who frames the debate? Much of the data are gathered by ultra-secretive government agencies—which need to justify their own existence—and cyber-security companies—which derive commercial benefits from popular anxiety. Journalists do not help. Gloomy scenarios and speculations about cyber-Armaggedon draw attention, even if they are relatively short on facts.

I agree.

He Is the Very Model of a Modern Right-Wing Foreign Policy Thinker

Jim Lobe points us to the thoughts of Andrew McCarthy, a fellow at the Foundation for the Defense of Democracies, on Barack Obama’s reticence to urge other people to spill their blood in Iran.  A few choice bits below:

  • andymccarthy“The fact is that, as a man of the hard Left, Obama is more comfortable with a totalitarian Islamic regime than he would be with a free Iranian society.”
  • The divergences between radical Islam and radical Leftism are much overrated — ‘equal rights’ and ‘social justice’ are always more rally-cry propaganda than real goals for totalitarians, and hatred of certain groups is always a feature of their societies.”
  • It would have been political suicide to issue a statement supportive of the mullahs, so Obama’s instinct was to do the next best thing: to say nothing supportive of the freedom fighters.”
  • It’s a mistake to perceive this as ‘weakness’ in Obama. It would have been weakness for him to flit over to the freedom fighters’ side the minute it seemed politically expedient. He hasn’t done that, and he won’t. Obama has a preferred outcome here, one that is more in line with his worldview, and it is not victory for the freedom fighters. He is hanging as tough as political pragmatism allows, and by doing so he is making his preferred outcome more likely.  That’s not weakness, it’s strength — and strength of the sort that ought to frighten us.”

As Lobe notes, this prompted a rare “that’s over the line” type response from National Review editor Rich Lowry, but McCarthy is having none of it.  Instead, McCarthy says that by no means were his earlier remarks out of bounds, and argues that Obama is going to transform the United States into the sort of country that the Islamic Republic will be fond of.

That’s the sort of calm, reasoned debate we’ve come to expect from the establishment Right.  I’m trying to think, which conservative thinker does this sort of thing finds its lineage in?  Burke?  Kirk?  Carl Schmitt?  It’s tough to say.

The “Culture of Spending” from the Mouths of Babes

Each semester, when I speak to Cato’s new employees and interns, I give them a quick discussion of some of the reasons that government tends to grow, such as the problem of concentrated benefits and diffuse costs and what James Payne called “the culture of spending.” In his book by that title, Payne noted:

The congressman lives in a special world, a curiously isolated world that is dominated by the advocates of government action. He is subjected to a broad chorus of persuasion that incessantly urges the virtues of spending programs. Year after year he hears how necessary government programs are.

Day after day, year after year, people come to the congressman’s office with stories about why some particular government program is needed – to help their grandfather, their brother-in-law, their community – and rarely if ever does a constituent fly to Washington to urge his congressman to vote against any particular one of the myriad programs that add up to his entire income tax bill.

The Washington Post has a great illustration of this problem in the Sunday paper. The little town of Owego, New York, was excited to hear that Lockheed Martin would build the new presidential helicopter – it’s called Marine One, though fortunately for Lockheed the government wanted 23 of them – at a plant in Owego. But as the price tag ballooned from $6.8 billion to $13 billion, even politicians began to see it as an unnecessary expense. The military canceled the program on June 1. Hundreds of jobs will be lost in Owego. And as the Post writes:

An 11-year-old Owego girl, whose parents are longtime Lockheed employees, recently hand-wrote a letter to Obama. It was published in the local newspaper and quickly became a voice for her shaken community.

“Lockheed is the main job source in Owego,” Hailey Bell, now 12, wrote. “If you shut down the program, my mom may lose her job and a lot of other people too… . Owego will be a ghost town. I’ve lived here my whole life and I love it here! Please really, really think it over.”

I’m sure she loves her parents and her town. And there’s no reason to expect Hailey to understand what $13 billion means to taxpaying Americans all over the country. But this is just the kind of story that members of Congress hear all the time: save my parents’ jobs, save my community, save our farms. And it all adds up to a $4 trillion federal budget with a $1.8 trillion deficit. (And by the way, if you Google “fiscal 2009 budget,” you will quickly find the Obama administration’s budget page, which somewhat oddly does not show the actual budget totals but does invite you to “Use the map below to learn more about how the President’s 2010 Budget is restoring long-term opportunity and prosperity in your state.”)

For a more, shall we say, adult view of what it means to direct federal dollars to particular areas, we might turn to an advertisement in the Durango, Colorado, Herald in 1987, which touted the Animas-La Plata dam and irrigation project  and made explicit the usual hidden calculations of those trying to get their hands on federal dollars:

Why we should support the Animas-La Plata Project: Because someone else is paying the tab! We get the water. We get the reservoir. They get the bill.

That’s the way they tell it back home, usually without putting it in writing. In public and in Washington, they say, “Without this dam, our little town will waste away. Only you can save us, Mr. Congressman.” And it’s bankrupting us.

Privatize the Post Office

Another day, another story on financial troubles at the federal government’s mail monopolist.  We don’t expect the government to make our blue jeans, transport fruits and veggies from the farm to the market, build computers and IPods, or manage the manufacturing of automobiles, so why must it continue to deliver first-class mail?  The quality of the USPS’s “services” has been a punchline in my family since I learned to walk.  But with technology rendering it’s clunky business model increasingly moot, Government Mail’s bottom line is looking uglier and uglier. It would cost me 44 cents to mail a letter to California, and it would cost me the same amount to mail that letter to the next town over.  What sense does that make?

As today’s editorial in the Washington Post leads off:

THE POST office may be the next too-big thing. If it continues on its present course, the U.S. Postal Service stands to post $6 billion to $12 billion in losses by the end of the fiscal year. By the end of the second quarter of fiscal 2009, it had racked up an operating loss of more than $2 billion, almost equal to its total losses last year. So far, the Postal Service has depended on loans from the Federal Financing Bank, a federal borrowing agency, to help make up the difference, but it is fast approaching its $15 billion credit limit. Something has to give.

Kudos to the Washington Post for proceeding to acknowledge that the rest of the western world has been trending toward privatization of it’s government mail monopolies for years.  My colleague Chris Edwards recently touched on the issue of privatizing the USPS as part of a larger piece on privatizing a plethora of federal operations:

The mammoth 685,000-person U.S. Postal Service is facing declining mail volume and rising costs. The way ahead is to privatize the USPS and repeal the company’s legal monopoly over first-class mail. Reforms in other countries show that there is no good reason for the current mail monopoly. Since 1998, New Zealand’s postal market has been open to private competition, with the result that postage rates have fallen and labor productivity at New Zealand Post has risen. Germany’s Deutsche Post was partly privatized in 2000, and the company has improved productivity and expanded into new businesses. Postal services have also been privatized or opened to competition in Belgium, Britain, Denmark, Finland, the Netherlands, and Sweden. Japan is moving ahead with postal service privatization, and the European Union is planning to open postal services to competition in all its 27 member nations.

Who’s Blogging about Cato

Here’s a round-up of bloggers who are writing about Cato commentary, research and analysis:

  • Real Clear World blogger Greg Scoblete quotes Justin Logan on how pundits in Washington are handling the protests in Iran.
  • In a round-up of commentary about Obama’s health care plan, Liberty Papers blogger Stephen Gordon quotes Michael Tanner’s analysis of Obama’s proposal.
  • Colin Grabow writes about Brandon Arnold’s commentary on the effect of taxes on European sports.

The Supreme Court Decision on NAMUDNO v. Holder

In the case of Northwest Austin Municipal District Number One (“NAMUDNO”) v. Holder, the Supreme Court issued a narrow decision today that avoided ruling on the constitutionality of Section 5 of the Voting Rights Act.

Section 5 requires any change in election administration in certain states and counties—mostly but not exclusively in the South—to be “precleared” by the Department of Justice in Washington. As I wrote earlier, this is a remnant of the Jim Crow era, and southern states’ massive resistance to attempts to enforce the 15th Amendment.

The ruling correctly allows a small utility district (and other political subdivisions) to seek relief—known as a “bailout”—from the 1965 Voting Rights Act’s onerous pre-clearance requirements. There is simply no reason for jurisdictions that have, at worst, gone decades without any voter intimidation or disenfranchisement—where the Act succeeded in stamping out or preventing racial discrimination—to continue to go before the Department of Justice for the most innocuous changes in state and municipal election procedures.

Here, for example, an electoral district that wasn’t even created until 1987 wants to move its polling locations from private garages to public schools, for ease of voting. Since Congress amended the Act in 1982, only 17 of 12,000 covered jurisdictions have been able to come out from under the thumb of federal oversight. Congress clearly never intended it to be so difficult to escape having to seek federal approval for such minor changes in election procedure.

This is one “bailout” that actually saves taxpayer money and makes common sense.

Unfortunately, the constitutionality of the Act’s Section 5—in the absence of the “exceptional conditions” the Court cited in 1966 as justifying “extraordinary legislation otherwise unfamiliar to our federal system”—remains in doubt. While it is a close call whether the Court need resolve that issue to dispose of the NAMUDNO case, Section 5’s validity as a matter of constitutional law and public policy is assuredly not a close call.

As Chief Justice Roberts notes in his majority opinion: “The evil that § 5 is meant to address may no longer be concentrated in the jurisdictions singled out for preclearance.”

Indeed, blatantly discriminatory evasions of federal decrees are exceedingly rare. Minority candidates run for and hold office at unprecedented rates—particularly in the South. The racial gap in voter registration—the primary concern of the VRA—is higher nationwide than it is in the covered states; in some covered states, blacks register and vote at higher rates than whites.

As Justice Thomas says in his partial dissent: “Admitting that a prophylactic law as broad as § 5 is no longer constitutionally justified based on current evidence of discrimination is not a sign of defeat. It is an acknowledgement of victory.”