Archives: 11/2011

Is Cato Taking the Faculty Productivity Debate National?

From some of the coverage of the release of the new University of Texas report on the productivity of its faculty, you might get the sense that this Friday’s Cato/Center for College Affordability and Productivity conference will be the national coming out party for the faculty productivity debate.  As the The Daily Texan writes, echoing an earlier Texas Tribune article:

with elected officials like Florida Gov. Rick Scott praising Texas’ controversy as good for higher education reform and with the Cato Institute hosting a conference called “Squeezing the Tower: Are We Getting All We Can from Higher Education?” this Friday in Washington D.C., this is very much a national debate.

This is—and must be—a national debate, because huge amounts of taxpayer dollars from all levels are at stake, not to mention oodles of bucks from students and parents. But don’t expect the sides to be well settled. Speakers on Friday are likely to offer a variety of opinions on how to hold schools and their faculties accountable, and there will be no simple left/right breakdown. I telegraph a bit of what I’ll be saying in this new Education News interview.

Cato and CCAP certainly want to take this crucial discussion national, and I hope you’ll join us on Friday. Register here!

Congressional Insider Trading: Is It Legal?

Washington has been buzzing for the past 48 hours over revelations that some of Capitol Hill’s best-known lawmakers have been making fortunes speculating in the stocks of companies affected by official actions, typically while in possession of market-moving inside information. Rep. John Boehner (R-OH), Senatorial wife Teresa Kerry and others made bundles trading in health companies’ stocks shortly before Congressional or executive-branch action affecting the companies’ fortunes. After closed-door 2008 meetings in which Fed chairman Ben Bernanke briefed Congress on the gravity of the financial collapse, some lawmakers dumped their own stockholdings or even placed bets that the market would fall. Rep. Nancy Pelosi (D-CA) got access to highly desirable IPO (initial public offering) stock placements, some in companies with business before Congress. And so on. Studies have found that lawmakers as a group reap far above-average returns on their investments—suggesting either that these politicians are among the world’s cleverest investors, or else that they are profiting from inside information. All this has been turned into a front-page issue thanks to Throw Them All Out, a book by Hoover fellow Peter Schweizer, whose findings were showcased the other night on 60 Minutes.

So the question is: is all this legal? While there’s some difference of opinion on the issue among law professors, the proper answer to that question is most likely going to be, “Yes, it’s legal.” As UCLA’s Stephen Bainbridge points out, existing insider trading law, developed by way of a long series of contested cases under the Securities and Exchange Commission’s Rule 10b-5, assigns liability to persons who are not corporate insiders if they are violating a recognized duty of loyalty to those for whom they work. As applied to the investment whizzes of the Hill, this implies that trading on inside information might be a violation if done by Congressional staffers (since they owe a duty of loyalty to higher-ups) but not when done by members of Congress themselves.

It is tempting to approach the new revelations the way an ambitious prosecutor might, trying to stitch together a test-case indictment from, say, the penumbra of the mail and wire fraud statutes bulked up with a bit of newly hypothesized fiduciary duty here and a little “honest services” there. But that’s not how criminal law is supposed to work: for the sake of all of our liberties, prohibited behavior needs to be clearly marked out as prohibited in advance, not afterward once we realize it doesn’t pass a smell test. But we are still free to deplore the hypocrisy of a Congress that has long been content to criminalize for the private sector—often with stiff jail sentences—behavior not much different from what lawmakers are happy to engage in themselves.

Coburn Report on Subsidies for Millionaires

Sen. Tom Coburn’s (R-OK) new report on the various federal subsidies being collected by millionaires deserves applause for not resorting to class warfare rhetoric in making the point that it’s silly for wealthy folks to receive taxpayer handouts:

We should never demonize those who are successful. Nor should we pamper them with unnecessary welfare to create an appearance everyone is benefiting from federal programs.

Coburn says that “this reverse Robin Hood style of wealth redistribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit.” That’s true. Whether it is food subsidies or unemployment benefits, the cheerleaders for federal redistribution schemes would have the public believe that it’s all about “helping those in need” when in fact it’s really about fostering dependency on taxpayers. A dirty little secret that the media typically fails to recognize is that many of the people pushing for these programs stand to financially benefit themselves. And as we have documented over at DownsizingGovernment.org, government programs do a poor job of helping the people that they purportedly serve.

No Compelling Evidence ‘No Child’ Worked

Over the last few days the Wall Street Journal has run two articles suggesting that the No Child Left Behind Act has been somewhat successful. But that’s not supported by the federal government’s own measure, the National Assessment of Educational Progress.

The WSJ’s first article appeared on Saturday, and while focusing on the stagnation of high-achieving students, it asserts that NAEP exams show “dramatic progress—sometimes double-digit increases—for the lowest achievers over the last two decades, especially after No Child Left Behind.”

Last month I debunked the idea that historically struggling groups have seen dramatic improvements under NCLB, laying out the data from numerous NAEP tests. Quite simply, looking at score gains per year, there were many periods before NCLB that saw faster improvements. Below are two more tables from the latest NAEP scores, released a couple of weeks ago. These are for the so-called “main” NAEP, which is not nearly as valuable as the long-term trends exam for seeing historical patterns, but the WSJ cites it and it does contain new information. The results are for the bottom 10 percent of performers.

As always, at what year one could start crediting results to NCLB is debatable. (Actually, you can never simply look at NAEP scores and attribute them to one factor because so many variables influence outcomes.) That date cannot be earlier than 2002, the year the law was enacted, and probably should be 2003, by which time most of the regulations were written and the law began to take real effect. To deal with this problem, the tables include only years that fully include NCLB or do not include it at all. Also note that there are two pre-NCLB time bands for reading because there are no 2000 8th grade reading scores.

Mathematics, 10th Percentile


Reading, 10th Percentile


Once again, there is is no pattern of faster improvement under NCLB than before it. Highlighting periods with greater growth than under NCLB, you can see that in 4th grade math improvements were faster before NCLB than after. In 8th grade math, it’s essentially a dead heat. In 4th grade reading, there’s sizable improvement under NCLB, and in 8th grade reading there’s an appreciable advantage before NCLB.

The second WSJ piece that gives NCLB undue credit is an op-ed from Kevin Chavous. Chavous, a tremendous advocate for school choice, implies that NCLB supplies “accountability” needed to make American kids competitive with their international peers. But as we’ve seen, there’s precious little evidence that NCLB has done anything to improve educational outcomes. Meanwhile, it has cost us a mint, with Department of Education k-12 spending rising from $27.3 billion in 2001 to $37.9 billion in 2011.

Unfortunately, Chavous’s piece seems more aspirational than reality-based, as is often the case in education policy. “We must try to make schools and teachers accountable,” he seems to be saying. “Heaven knows the states won’t do it!”

The need to deal in reality is why Mr. Chavous’ main concern—getting school choice—is so crucial. Government schooling will never be fundamentally changed because those who would be held accountable—teachers, administrators, bureaucrats—have by far the most motivation to be involved in education politics, the greatest ability to organize, and hence the biggest store of political power. Their livelihoods, after all, are at stake. And what do they want? What we’d all probably like: as much pay as possible with as little accountability.

The only way to end employee domination of education is to fundamentally change the system: instead of having politics control schooling, let parents control education money so they can take their children out of schools they don’t like and put them into those they do. Don’t force them to undertake the endless, hopeless warfare of having to form coalitions, try to get politicians’ ears, spur politicians to move and, if they can ever get decent changes, then force them to constantly fight to keep the reforms against opponents with full-time lobbyists and political machines. No, let them vote with their feet, right away, and get their children the education they need.

NCLB is, by most indications, an abject failure, and the very nature of government schooling doomed it to be so.

New Study on Mexico’s Drug Cartels and the Global War on Drugs

Yesterday, Juan Carlos Hidalgo pointed out that Colombian president Juan Manuel Santos became the latest world leader to recognize the need to rethink the prohibitionist policies that allow powerful drug traffickers to flourish. Santos called for a new approach to “take away the violent profit that comes with drug trafficking” and that governments around the world, including the United States, the United Kingdom, and the European Union, need to debate legalizing select drugs, such as cocaine.

From Colombia to Mexico, the drug war rages on. Despite two decades of U.S.-aided efforts to eradicate drug-related violence in Colombia, the problem persists. Indeed, the trickle-down effects from Mexico southward now threaten to engulf Guatemala. Costa Rica, Honduras, and El Salvador are all experiencing alarming homicide rates at least partially related to drug trafficking. To address these spikes in violence and stem the flow of drugs, the United States has spent billions of dollars in Mexico and throughout Latin America. Sadly, there is little evidence that this policy has been successful, and the evidence mounts that it has been an outright failure.

A new policy is needed to stem the violence and consequences of the Mexican drug cartels pervasive power. In a new study released today, Ted Galen Carpenter, senior fellow, argues that the only lasting, effective strategy for dealing with Mexico’s drug violence is to defund the Mexican drug cartels. “The United States could substantially defund these cartels,” says Carpenter, “through the full legalization (including manufacture and sale) of currently illegal drugs.”

The new study, “Undermining Mexico’s Dangerous Drug Cartels,” is available here.

Live Stream of Cato’s Drug Conference

Tune in to the live stream at www.cato.org/live of the Cato Institute conference, “Ending the Global War on Drugs,” from 9:05 am to 6:15 pm ET today.

Join the conversation on Twitter with the hashtag #EndDrugWar, and follow live tweets from the conference in English from @CatoInstitute, in Spanish from @ElCatoEnCorto, and in Portuguese from @OrdemLivre.