Archives: 10/2009

More Dairy Shenanigans — and It’s Not Over Yet

Dairy farmers were allocated $350 million in extra assistance recently (as if the billions we artificially funnel to them every year are not enough) because of plummeting prices. The assistance will come mostly in the form of cash, although the federal government will also buy more dairy products for nutrition programs, and at increased prices. (Not to be outdone, hog farmers are asking for the same.) An article from Wednesday’s edition of the Wall Street Journal Online has the details.

In a rare fit of candor, one dairy farmer group admits that the emergency money, and the decades-old programs, are not enough:

The National Family Farm Coalition, a Washington-based farm-advocacy group, is asking for an overhaul of the milk-pricing system, which is based on a complex Depression-era regime administered by the federal government.

So far I’m with them, but then they lose me with this:

The coalition supports an idea that would keep prices stable by creating an oversight entity to manage the amount of milk a farmer can produce.

“While we appreciate this money, it won’t be enough though to keep farms from going broke,” the coalition said in a statement.

Ah, milk quotas. Good idea. And we can learn from the Europeans about how to pull that trick off. 

Seriously? We need a new “oversight entity” to actually “manage the amount of milk a farmer can produce”? Talk about fatal conceit. That’s fatal insanity to think that a centralized agency can manage milk production on a farm-level basis.

The FY 2010 Defense Authorization

Yesterday Congress passed the $680 billion FY 2010Defense Authorization Bill, which authorizes the largest such budget since the end of World War II. If, as is all but certain, President Obama signs the legislation, he will have failed to halt the inexorable growth in military spending, and he will signal to American taxpayers that they should expect more of the same. What’s worse, most of this money is not geared to defending America. Rather, it encourages other countries to free-ride on the United States instead of taking prudent steps to defend themselves.

The defense bill represents only part of our military spending. The appropriations bill moving through Congress governing veterans affairs, military construction and other agencies totals $133 billion, while the massive Department of Homeland Security budget weighs in at $42.8 billion. This comprises the visible balance of what Americans spend on our national security, loosely defined. Then there is the approximately $16 billion tucked away in the Energy Department’s budget, money dedicated to the care and maintenance of the country’s huge nuclear arsenal.

All told, every man, woman and child in the United States will spend more than $2,700 on these programs and agencies next year. By way of comparison, the average Japanese spends less than $330; the average German about $520; China’s per capita spending is less than $100.

The massive imbalance between what Americans spend on our military, and what others spend, flows directly from our foreign policy. Several decades ago, Washington opted to be the world’s policeman, and has ever since discouraged other countries from spending more on their own defense. President Obama has tacitly questioned this approach in the past, and has called on other countries to step forward and do more. But his actions will drown out his words.

The president has defended his support for continued bloated military spending, with additional monies going especially to a larger conventional army, as a way to reduce the strains on our troops and their families. This is a noble impulse. But a far better way to relieve the burdens on our overstretched force is to rethink all of our global military commitments, and align our strategy to our means. A new grand strategy, predicated on self-reliance and restraint, would relieve the burdens from the backs of our troops and from taxpayers. That new strategy would compel other countries to finally assume their rightful responsibilities in defending themselves and their respective regions.  

The governing class in Washington has consistently resisted such a change. It is enamored of its ability to manage not just the rest of the country, but indeed the rest of the world, and sees no reason to change. Neither, it would seem, does President Obama. By embracing a military budget explicitly geared toward sustaining the status quo, the president virtually ensures that other countries will not share in the costs of keeping the world relatively prosperous and at peace.

Executive Comp Restrictions Could End Up Costing the Taxpayer

The Obama administration’s announcement this week on cash compensation for those seven institutions receiving “extraordinary assistance” has generated the all-too-predictable responses. Either you think executives at the entities are bad and greedy and should be punished, or you believe this is just the first step in an all-out class war.  Sadly the real victim in all these efforts has been, and continues to be, the taxpayer.

Now that the taxpayer is the most significant shareholder in these companies, the top priority for Washington, as representative of the taxpayer, should be to see these companies return to profitability.  Quite simply, if these companies are not profitable, that loss will fall on the taxpayer, as shareholder.

And of course, without the ability to retain talent, it is all the more likely that these companies will not maintain profitability.  I suspect the competitors of these seven are already eyeing their best talent.  And let’s not kid ourselves, leaving these companies stocked with mediocre employees will not help taxpayers get their money back. 

In trying to punish the bailed-out  companies, we are also punishing ourselves.  This is one of the very reasons we should never have bailed them out in the first place:  once we are the owners, there fate and ours are linked.

Talking about Ayn Rand

Two new books about Ayn Rand are just hitting the bookstores: Ayn Rand and the World She Made, by Anne C. Heller, and Goddess of the Market: Ayn Rand and the American Right, by Jennifer Burns.

As Janet Maslin writes in the New York Times, reviewing the two books, the 1970s were “one Rand moment. This seems to be another.” Brian Doherty, historian of libertarianism, agrees. Sales of The Fountainhead are soaring in India. The chairman of BB&T was inspired by her work to renounce lending to eminent-domain projects and to spread her ideas in schools and colleges. She’s being blamed for the financial crisis on government TV, but the takeovers and bailouts have caused sales of Atlas Shrugged to soar.

Both the books are getting good reviews, though reviewers have varying perspectives on the subject of the bios. Rand has been denounced in the New Republic (yet again), and defended against TNR’s criticisms by our own Will Wilkinson. Embattled governor Mark Sanford declares her prophetic in Newsweek. New York magazine calls her “Mrs. Logic,” not without irony. Caroline Baum of Bloomberg says Rand would tell us to stop blaming capitalism for problems caused by regulation and cronyism. Conor Friedersdorf can’t believe how wrong Hendrik Hertzberg gets her in the New Yorker.

Find out for yourself next Wednesday when Burns and Heller speak at a Cato Book Forum, “The Life and Impact of Ayn Rand.” If you can’t get to Washington, watch it on the web.

Attending to Business

In today’s Politico Arena, the editors ask:

Is Obama “dithering” on Afghanistan (Cheney) or fulfilling his “solemn responsibility” (Gibbs)?

My response:

President Obama got some adult criticism this week from Dick Cheney, none too soon.  While the risk to American troops in Afghanistan grows, Obama dithers, unable to decide whether to get in or get out — whether to be the one thing the Constitution authorizes him to be, Commander in Chief.  Yet he finds time to fly off to Copenhagen to promote Chicago for the Olympics, to insinuate himself in local political campaigns, to go on “Fox hunts,” yesterday excluding Fox News from the White House pool allowed to interview his executive pay czar, and now, we learn, to slash executive salaries at companies not only partially owned but simply regulated by the government.  Are there no limits to the man’s hubris?

Even the Washington Post this morning, no bastion of free-market fervor, noted that this “represents a signal moment in the history of the American economic experiment,” moving us ever closer to the European model.  But it was Arena contributor Allan Meltzer who yesterday hit the nail on the head:  ”All the noise about pay and pay cuts is part of an effort to divert the public’s attention from the main cause of the mortgage fiasco — the role that Congressman Frank and others had in creating the mortgage crisis by refusing to limit the activities of Fannie Mae and Freddy Mac after 2003.”  That these regulators will be able to calculate the salary that is appropriate to discourage excessive risk-taking is simply comical.

And so we have here a textbook example of modern government:  Obama fails to do or do well what he is authorized to do, yet he strides into matter far beyond his authority — or competence.  He seems not to understand the Constitution he once taught, and more recently promised to uphold.

Neoconservatism and Militarism

Matt Yglesias identifies a puzzle, comparing Cold War/Irving Kristol neoconservatism to today’s Weekly Standard Wilsonianism:

[E]ven though the high-level theoretical content of the realpolitiker 70s version of neoconservatism and the Wilsonian 2000s version of neoconservatism seem very different, the operational content is extremely similar. You have support for higher defense budgets, a tendency toward threat-inflation and hysteria, a belief in an aggressive military posture and extensive saber-rattling, hostility to negotiations, and hostility to international law both in theory and in practice. This was initially presented to the world as a “realistic” alternative to lefty critiques of US support for anti-communist dictators and more recently appeared as an “idealistic” critique of lefty reluctance to launch wars, but the continuity between the views is enormous.

What Matt doesn’t say is why the policy outcomes stayed largely the same despite shifting theoretical sands.  I think this piece by Brian Schmidt and Michael Williams can help shed some light on the problem.

Irving Kristol's Medal of Freedom Award (Paul Hosefros/The New York Times)Irving Kristol’s Medal of Freedom Award (Paul Hosefros/The New York Times)

A social order based purely on narrowly egoistic interests, neoconservatives argue, is unlikely to survive — and the closer one comes to it, the less liveable and sustainable society will become. Unable to generate a compelling vision of the collective public interest, such a society would be incapable of maintaining itself internally or defending itself externally. As a consequence, neoconservatism regards the ideas at the core of many forms of modern political and economic rationalism — that such a vision of interest can be the foundation for social order — as both wrong and dangerous. It is wrong because all functioning polities require some sense of shared values and common vision of the public interest in order to maintain themselves. It is dangerous because a purely egoistic conception of interest may actually contribute to the erosion of this sense of the public interest, and the individual habits of social virtue and commitment to common values that sustain it.

In this context consider the worshipful treatment of men like Teddy Roosevelt and Rudy Giuliani by neoconservatives, and neoconservatives’ utter contempt for libertarians and individualism.  For neocons, the higher defense budgets and militarism, the aggressive military posture and extensive saber-rattling, the nationalism, were in some sense ends in themselves rather than rationally calculated means to defend the country.  Without an enemy and a grand national project — note in the article to which Matt points Kristol’s admonition that “statesmen should, above all, have the ability to distinguish friends from enemies” — the society would descend into a variety of individual pursuits — family, profit, local community, learning — that provide no unifying politics.  Again, for Kristol, “a nation whose politics turn on the cost of false teeth is a nation whose politics are squalid.”  A grand national project, be it a global proxy war against the Soviet Union, a crusade to end terrorism, or even a recurring fetish for space travel, provides unifying substance for the country.

The trouble, as Matt rightly observes, is that you can’t explicitly just go around glomming onto whatever rationale provides the best argument for militarism and nationalism today. The citizens of the country seem unlikely to support costly and destructive policies based on the idea that it’s all for their own good.  I am reminded of Ed Crane and Bill Niskanen’s apt reference to neoconservatism as “a movement with a head but no body,” meaning that it lacked indigenous support at the grassroots level.  So the obvious play for neocons was to sew the neoconservative head onto the conservative nationalist body.  To justify endless war, the idea of “real America” being under siege by both an insular and tweedy academy (in Schmidt and Williams’ story, the scientific-rationalist realists) and an array of foreign devils allowed a group of radical ideas to strike a conservative pose:

In foreign policy as in domestic policy, neoconservatism claims to represent the majority of real Americans, to speak on their behalf, and to defend the validity of their beliefs in their virtues and values (and their place as the basis for the national interest of the United States), just as vociferously as it has represented those values against the depredations of elites in the culture wars. Although a high proportion of neoconservatives are intellectuals — and are often part of what would be considered an academic elite by any standards — they are able to represent themselves as outsiders shunned and victimized by liberal (and realist) intellectuals in precisely the same way that real people are, and for the same reasons — for expressing what the people really know in an elite cultural environment dominated by self-interested, self-righteous, and yet culturally decadent liberal elites.

In this reading, trying to ground the policy outcomes in a coherent theory of international politics is bound to be fruitless.  The policy outcomes themselves are designed to provide a centripetal counter to the polity’s natural tendency to fly apart.  On this point Schmidt and Williams cite Midge Decter (“domestic policy was foreign policy, and vice-versa”) and Robert Kagan (“there can be no clear dividing line between the domestic and the foreign”).  I think there’s something to this.

To Make Health Care Affordable, Don’t Add Regulations — Repeal Them

David Freddoso of the Washington Examiner reveals how the monopolies that states enjoy over licensing doctors, nurses, and other clinicians reduce access to care for low-income Americans:

Stan Brock just wants to help. The former co-star of “Wild Kingdom” wants to deliver free medical, dental and vision care to the poor. Whereas most politicians talk about “bending the cost curve” in health care, Brock simply wants to break it - to provide care free of charge, at the hands of unpaid volunteer doctors and dentists using donated equipment.

Brock’s group, Remote Area Medical, wants to bring its services to Washington, and soon. He wants his volunteer eye doctors to grind new glasses on the spot for those having trouble seeing.

He wants his dentists to pull rotten teeth and perform root canals in badly neglected mouths. He wants to give checkups and HIV tests to the uninsured and the underinsured. No questions asked.

The only question is whether the bureaucrats will let him do it.

That sounds like hyperbole.  It’s not.  Read the whole thing (it’s short) and you’ll learn how in-state clinicians shamelessly use monopolistic licensing laws to protect themselves from competition – even at the cost of denying medical care to poor people.

Yesterday, Cato released a study where I advocate breaking up the state’s licensing monopolies and making state-issued licenses portable.  Such a law would completely solve Remote Area Medical’s problem.

This Cato study by economist Shirley Svorny reveals how clinician licensing laws do more harm than good.

(Cross-posted at Cato@Liberty Politico’s Health Care Arena.)