Archives: 03/2012

Capitalism, Medical Progress, and the Tragic Death of John F. Kennedy’s Son Patrick

Many authors have noted how much progress the world has seen since the coming of liberalism, capitalism, and the industrial revolution about three centuries ago: Julian Simon, Matt Ridley, Indur Goklany – who reminds us that we’re living longer, healthier, more comfortable lives on a cleaner planet – even me. Bryan Caplan mused recently on George Vanderbilt’s magnificent house, Biltmore:

Despite his massive library, organ, and so on, I submit that any modern with a laptop and an internet connection has a vastly better book and music collection than he did.  For all his riches, he didn’t have air conditioning; he had to suffer through the North Carolina summers just like the poorest of us.  Vanderbilt did travel the world, but without the airplane, he had to do so at a snail’s pace.

Perhaps most shockingly, he suffered ”sudden death from complications following an appendectomy” at the age of 51.  (Here’s the original NYT obituary).  Whatever your precise story about the cause of rising lifespans, it’s safe to say that George’s Bane wouldn’t be fatal today.

And now a story on NPR’s Morning Edition reminds me of the same point. Dr. Adam Wolfberg, a maternal-fetal specialist at Tufts Medical Center, discussed his new book, Fragile Beginnings: Discoveries and Triumphs in the Newborn ICU. One of the points he made (first lines only in the audio) reminded us of the tremendous progress in neonatal medicine in just 50 years:

President Kennedy’s baby Patrick was born prematurely with a problem breathing that today would be trivial – would be cared for with the assistance of medicines and equipment that are routine in any hospital in the United States and in most hospitals around the world.

The infant son of the president of the United States, a very wealthy man, could not be saved with 1963 medical technology. Yet today saving such a baby is routine. Thanks to the wealth and technology generated by free markets, It’s Getting Better All the Time.

Are Courts Dragging out the Housing Crisis?

Despite what looks like a national mortgage market, what we do not have is a national foreclosure process.  Almost all the law that matters in terms of foreclosures is at the state level (which is both good and bad, and it is not clear to me which dominates).  One of the biggest differences is whether a lender has to go before a court to seek a foreclosure, or whether such can be handled administratively.  Although even in administrative states, borrowers do have redress to the courts when things go wrong (besides the actual fact of a foreclosure).

The following chart, put together by the Mortgage Bankers Association, lists states by percentage of loans in some stage of the foreclosure process.  Also listed (color-coded) is which states have a judicial, that is court-driven, foreclosure process and that those that do not.  The most noticeable difference is that, with a few exceptions, the states with the highest percentage of properties still in foreclosure are those with a judicial foreclosure process.  Perhaps most surprising is that states like California and Arizona, which were ground-zero for the housing bubble, have foreclosure inventories, as a percent of loans, below the national average.

A common refrain for slowing the foreclosure process is that such is thought to slow the decline in housing prices.  The facts, as they relate to judicial foreclosures which do take considerably longer, is just the opposite.  Based on state-level price data from Zillow, non-judicial states saw prices fall 3.3% over the course of 2011, whereas prices fell 4.5% in judicial states.  While there’s a lot driving house price declines, it doesn’t look as if the judicial process is helping.  Similar results hold if you date back to the peak of the bubble.  Judicial states have seen, on average declines of about 20%, whereas non-judicial have seen declines of about 17% (not population weighted).

Now, I am a big believer in respecting contracts, and the existing legal environment is part of the contract, so I’m not advocating that states change their foreclosure process for existing loans.  For loans not yet made, however, there appears to me to be the case for at least examining the merits of judicial foreclosure (or even better let borrowers and lenders freely contract to choose their own rules).

Bombing Iran Risks Mission Creep

In an op-ed in today’s New York Daily News, my co-author Jonathan Owen and I argue that damage to Iran’s nuclear facilities from limited strikes would be modest, and likely require further strikes every few years or a long-term occupation on the ground. The better option at present is for the Obama administration to show restraint and continue to explore diplomatic options:

Unless Americans are willing to fight Iranians to the death — possibly every few years — Washington must stop polarizing the situation. Aggressive policies and rhetoric do not benefit our security.

Without demanding that Iran surrender on the issue of uranium enrichment, the U.S. — which accounts for almost half of the world’s military spending, wields one of the planet’s largest nuclear arsenals and can project its power around the globe — should lift sanctions, stop its belligerence and open a direct line of communication with Tehran.

The President has said repeatedly that “all options are on the table.” But contrary to popular belief, diplomacy with Iran is an option that has yet to be fully exhausted.

Left out in the final cut was the important point that if the United States was to go to war with Iran, U.S. soldiers will once again be asked to risk their lives by prosecuting a reckless war of choice against an enemy willing to accept high casualties. Iraq and Afghanistan should have taught policymakers that mission creep often drives seemingly easy and limited interventions toward prolonged wars of occupation and nation-building. Attacking Iran’s nuclear infrastructure would risk a similar, unacceptable mission creep.

Cross-posted from the Skeptics at the National Interest.

Viral Video Strips Down Strip-Search Machines

The TSA’s response yesterday to a video challenging strip-search machines was so weak that it acts as a virtual confession to the fact that objects can be snuck through them.

In the video, TSA strip-search objector Jonathan Corbett demonstrates how he put containers in his clothes along his sides where they would appear the same as the background in TSA’s displays. TSA doesn’t refute that it can be done or that Corbett did it in his demonstration. More at Wired’s Threat Level blog.

More than six months ago, the D.C. Circuit Court of Appeals required the Transportation Security Administration to commence a rulemaking to justify its strip-search machine/prison-style pat-down policy. TSA has not done so. The result is that the agency still does not have a sturdy security system in place at airports. It’s expensive, inconvenient, error-prone, and privacy-invasive.

Making airline security once again the responsibility of airlines and airports would vastly improve the situation, because these actors are naturally inclined to blend security, cost-control, and convenience with customer service and comforts, including privacy.

I have a slight difference with Corbett’s characterization of the problem. The weakness of body scanners does not put the public at great danger. The chance of anyone exploiting this vulnerability and smuggling a bomb on board a domestic U.S. flight is very low. The problem is that these machines impose huge costs in dollars and privacy that do not foreclose a significant risk any better than the traditional magnetometer.

Corbett is right when he urges people to “demand of your legislators and presidential candidates that they get rid of this eight billion-dollar-a-year waste known as the TSA and privatize airport security.”

Not Everything Can Be a Federal Crime

Cato legal associate Carl DeNigris co-authored this blogpost.

Over the last few decades, the number of federal crimes has exploded. The U.S. criminal code has grown so large and so expansive that no one is exactly sure how many federal crimes are actually on the books, with estimates ranging from 4,000 to 300,000. As Justice Scalia has noted, “It should be no surprise that as the volume increases, so do the number of imprecise laws.”

Many individuals and organizations from across the ideological spectrum have voiced concern over this growing trend, recognizing that broadly defined crimes lack the clarity traditionally required before depriving citizens of their liberty.

The expansion of 18 U.S.C § 1001, which criminalizes the knowing and willful making of materially false statements in “any matter within the jurisdiction of” the United States, exemplifies this broadening scope. Cory King was prosecuted under this statute for making a false statement to a state official wholly unconnected to any federal agency or investigation. Yet, the Ninth Circuit held that Mr. King violated § 1001 because the subject matter of his statement was one over which a federal government agency possessed regulatory authority.

King has now asked the Supreme Court to hear his case. Cato has joined the National Association of Criminal Defense Lawyers and the Texas Public Policy Foundation on a brief supporting him and arguing that the Ninth Circuit stretched § 1001 beyond its proper jurisdictional reach. Such an unbounded interpretation risks greater over criminalization and further misuse of the federal criminal code.

Moreover, since § 1001 is a “process crime” that focuses on offenses “not against the particular person or property, but against the machinery of justice itself,” an excessively broad construction would undermine the integrity of the criminal justice system. Wider application of such crimes facilitates pretextual prosecutions, in which “the operating philosophy seems to be that, if the government cannot prosecute what it wished to penalize, it will penalize what it can prosecute.”

Such an arbitrary and far-reaching application of the criminal code – the federal criminal code, at that – has no place in a free society.

The Court will decide whether to take up King v. United States sometime this spring.

Obama Fixes the Housing Market Again (and Helps the Troops)

Yesterday President Obama announced yet another set of programs intended to help the housing market.  The majority of these are aimed at helping active service members of the military.  For instance the proposal would compensate service members who were wrongly foreclosed upon and help re-finance into lower rates service members wrongly denied that opportunity.  Assistance would also be provided to service members who suffered losses because they had to sell their homes due to a change in station (that is the military ordered them to move).

While some of these changes are likely to benefit service members, the impact on the overall housing market is likely to be very small.  From what little details we have, it appears most benefits will be limited to currently active service members.  Let’s start with the re-finance piece.  There are just over 1 million active military living in the U.S. (another quarter million stationed overseas, who we lack data on), of those just over 300,000 both own their home and have a mortgage (about 80,000 own free and clear).  Interestingly just over 2/3rds purchased their home since the housing bubble burst.  During this time mortgage rates have been fairly low, so its probably reasonable to assume that these borrowers already have low rates and won’t benefit from a re-finance.  I haven’t been able to find data on how many longer-term borrowers have already re-financed, but its sure to be a significant amount.  So our upper-bound is that about 100,000 service members might be able to benefit from a re-finance, I suspect the actual number is much lower.  And of course, who knows what “wrongly denied” means.

The “wrongly foreclosed” piece is a lot harder to estimate, so take this with a huge margin of error.  First we don’t know how many active duty borrowers have even been foreclosed upon.  If we assume foreclosure rates similar to the VA loan program (good reasons to think it could be higher or lower), then about 12,000 service members are likely to have been foreclosured upon since the bubble burst.  The “wrongly” is even harder to figure out.  If interpreted narrowly, then say 1%, gets us to just over 100 loans.  Even 10% gets us to about 1,000 loans.  Under any reasonable estimate a pretty small number compared to the overall housing market.

The permanent change of station piece is the other big piece.  Setting aside that service members taking a loss on their home has long been an issue and just why it has become important now we will leave to the imagination (an election year perhaps?).    Of those active duty service members who moved in the last year, about 100,000 had a mortgage, and so could have taken a loss.  If they were underwater to the same extent as the general population (probably an under-estimate), then this program will help somewhere between 20,000 and 30,000 borrowers.

While it is important that anyone actually wronged be compensated (that’s what we have courts for), the impact of Obama’s latest plan, like his previous plans, is likely to be extremely small and do almost nothing to help the overall housing market.

Note:  data are my estimates from Census’ American Community Survey.  If you have better, please share.