Archives: 09/2012

If Sweden’s Big Welfare State Is Superior to America’s Medium Welfare State, then Why Do Swedes in America Earn Far More than Swedes in Sweden?

In my travels through Europe, I often wind up debating whether policy is better in the United States or Europe. I generally try to explain that this is the wrong comparison, both because Europe is not a monolithic bloc and also because most individual nations have both good policies and bad policies.

But sometimes you have to use blunt comparisons, which is why this data on living standards is powerful evidence that Europe is paying a high price for excessive government.

When I cite such data, proponents of statism often respond by arguing that I’m being unfair by lumping together more efficient welfare states in Northern Europe with poorly run welfare states in Southern Europe.

That’s a very good point, and I’ve acknowledged that nations such as Swedenand Denmark are examples of how to do the wrong thing in the best possible fashion. They have large welfare states, but they compensate with very pro-market policies in other areas.

Indeed, Sweden is a good example of a nation that has implemented some good reforms in recent years, such as school choice and partial Social Security privatization.

But I argue that these good reforms don’t fully offset the damage caused byexcessive government spending. And now I have a new – and very pointy – arrow in my argumentative quiver. A study from the London-based Institute for Economic Affairs has found that Swedes in America earn significantly more money than Swedes in Sweden.

Here are a couple of excerpts from the IEA study.

The 4.4 million or so Americans with Swedish origins are considerably richer than average Americans, as are other immigrant groups from Scandinavia. If Americans with Swedish ancestry were to form their own country, their per capita GDP would be $56,900, more than $10,000 above the income of the average American. This is also far above Swedish GDP per capita, at $36,600. Swedes living in the USA are thus approximately 53 per cent more wealthy than Swedes (excluding immigrants) in their native country (OECD, 2009; US Census database). It should be noted that those Swedes who migrated to the USA, predominately in the nineteenth century, were anything but the elite. Rather, it was often those escaping poverty and famine. …A Scandinavian economist once said to Milton Friedman, ‘In Scandinavia, we have no poverty’. Milton Friedman replied, ‘That’s interesting, because in America, among Scandinavians, we have no poverty, either’. Indeed, the poverty rate for Americans with Swedish ancestry is only 6.7 per cent: half the US average (US Census).

This is remarkable information, and it reminds me that Thomas Sowell had similar stats for other groups in his great book, Ethnic America.

I’m not familiar with the methodological issues involved in this type of research, but is certainly seems like this is a good way of getting apples-to-apples comparisons of different economic systems.

Like many other people, I’ve argued that the success of the overseas Chinese community (compared to their counterparts stuck in Communist China) is a damning indictment of statism.

Now we see that Swedes do reasonably well when living in a country with a big welfare state, but they do even better when living in a nation with  a medium-sized welfare state.

So you can imagine how prosperous they would be if a bunch of them lived in places such as Hong Kong and Singapore!

Liberty Is No War on Women

One of the most insulting media/political narratives this year has to be the claim that free-market policies are anti-women, anti-poor, anti-minority, etc. in both effect and intent.

Of course the reality is just the opposite. Former Catoite Carrie Lukas (née Lips) and Sabrina Schaeffer (close relation) have a short new book that lays out the details … great prep for the Thanksgiving family debate season coming up.

Confusion in the House: Misunderstanding Spying Law, and Inverting the Lessons of 9/11

The House of Representatives voted by a wide margin on Wednesday to reauthorize the FISA Amendments Act (FAA) for another five year term, despite some vigorous bipartisan opposition. But the supporters of sweeping electronic surveillance authority often seemed confused about what, exactly, the law authorizes—and about the causes of the intelligence failures that allowed the terror attacks of 9/11 to succeed.

The most common refrain from FAA supporters was that the law only concerned surveillance targeting “foreigners in foreign lands”—meaning it could not possibly affect the rights of Americans. Rep. Trey Gowdy (R-SC), in an impressive display of lung power, delivered a five minute floor shout to this effect. “This bill has nothing to do with Americans on American soil,” Gowdy thundered, “This bill doesn’t implicate the Bill of Rights, any more than it implicates any other part of our Constitution, unless you think that foreign nationals who are on foreign land fall within the protections of the United States Constitution.” But Gowdy has to know that this is false, because the secretive Foreign Intelligence Surveillance Court has already ruled on at least one occasion that surveillance authorized by the FAA did violate the Fourth Amendment’s prohibition on “unreasonable searches and seizures.”

It did not rule this way, of course, because foreigners on foreign soil have Fourth Amendment rights, but because the FAA authorizes large scale surveillance of Americans’ communications. Supporters of the act suggested again and again that this can’t be true, because the law requires NSA surveillance programs to have a foreign “target.” But this is based on a misunderstanding of what “target” means in FISA. As former Deputy Attorney General David Kris explains at length in his book on the law, the “target” of a surveillance program under FAA is typically just the foreign group—such as Al Qaeda or Wikileaks—that the government is seeking information about. The FISA court approves general procedures for surveillance, but it’s NSA agents who decide which particular phone lines and e-mail accounts will be wiretapped, and there is no explicit requirement that these particular phones and e-mail addresses be foreign—only the program’s overall target. And of course, there is something historically very strange about imagining that surveillance can only violate the rights of named targets: The Founders abhorred “general warrants,” which they passed the Fourth Amendment to abolish, precisely because these warrants authorized searches of people and homes who were not specifically named targets, exactly as the FAA does.

Rep. Lamar Smith (R-TX) cited an additional protection: The law, he claimed, prohibits any interception of purely domestic communications. (Think about it for a second: If the “targeting” requirement really limited surveillance to foreigners, why would you even need this additional prohibition?)  But Smith conveniently omitted a crucial clause: “Known at the time of acquisition.” In other words, the NSA is generally permitted to acquire communications under FAA programs unless it knows in advance that both sides are domestic. With phone calls, that will often be obvious—but with e-mail, it rarely will. So imagine NSA wants to download the entire contents of a GMail account that has traded messages with one of their foreign targets. Well, anyone can open a GMail account from anywhere—and even if they somehow know that account belongs to an American, any of the people he’s communicating with might be overseas—so typically those communications won’t be “known” to be entirely domestic until after they’re acquired.

Intelligence Committee Chairman Mike Rogers (R-MI) was slightly more equivocal, seemingly acknowledging that the law might permit surveillance of Americans, but that this would happen only very rarely.  The mystery here is how he could possibly know that. Sen. Ron Wyden (D-OR) has repeatedly asked the NSA for a rough ballpark estimate of how many Americans—100? 1,000? 100,000?—have had their communications caught up in the agency’s FAA dragnets. If Rep. Rogers were correct, you’d expect the answer to be “almost none”—but instead the agency has repeatedly insisted that it is unable to provide even an approximate figure. Unless Rep. Rogers somehow knows things about the NSA’s databases that the NSA does not know, he can’t have any real basis for this claim.

Finally, Rep. Dan Lungren (R-CA) suggested that the necessity of the FAA was demonstrated by the failures of intelligence leading up to 9/11. After all, the 9/11 Commission had again and again emphasized the central failure to “connect the dots” that would have revealed an imminent attack before it occurred—and to “connect the dots,” Lungren asserted, intelligence agencies would need still more expansive power to first “collect the dots.” This is, in a way, the most breathtakingly erroneous statements heard during Wednesday’s floor debates, because turns the 9/11 Commission’s findings completely on their head. Their report conspicuously did not identify a lack of legal authority to conduct surveillance as a serious problem: If anything, the trouble was that agencies were drowning in information they lacked the capacity to  analyze and put to use. Perversely, Lungren trades on a familiar phrase—”connect the dots”—to utterly invert the Commission’s diagnosis of the causes of 9/11.

In short, the supporters of the FISA Amendments Act appear to misunderstand both what the law they just voted for actually does, and what broader defects in our intelligence system present the most serious risks to national security. If you’re wondering why we don’t have better intelligence policy, it’s not that hard to connect the dots.

Credit Where It’s Due: DOJ Changes Its Tune on FISA Transparency

Earlier this week, I complained that the Department of Justice seemed to be stonewalling a Freedom of Information Act request I’d filed seeking copies of mandatory semi-annual reports to Congress on the National Security Agency’s compliance with the procedures and civil liberties safeguards of the FISA Amendments Act—which the House voted yesterday to reauthorize for another five years. After sitting on the request for two months (the statutory deadline is 20 business days), DOJ had finally replied with a letter claiming they could “neither confirm or deny the existence” of reports that were required by federal law. I thought this was a little ridiculous. Fortunately, there were officials at the Justice Department who thought so too.

Having appealed the denial of my request, I got an impressively prompt reply on Tuesday evening from the director of the Office of Information Policy at DOJ, assuring me that she recognized the agency’s initial response had been “incorrect,” and that a new one would be forthcoming immediately. By Wednesday morning, their stance had changed entirely: They had found the reports I sought, and were forwarding them to the Office of the Director of National Intelligence (ODNI) for review to determine what would need to be redacted before release—with a request that ODNI seek to expedite its analysis to compensate for their own delay.

Now, to be sure, I’d rather have had this response a month ago, and the documents before the House vote, but at this point DOJ appears to be doing exactly what they’re supposed to and making a good faith effort to facilitate the redaction and release of these important assessments. So it seemed appropriate to follow up on my initial blog post to acknowledge that—and in particular Office of Information Policy director Melanie Pustay, who straightforwardly acknowledged the error and acted quickly to correct it. We’ll see soon enough whether a similar spirit of transparency reigns at ODNI.

The Government Commission on Acceptable Satire

Marion Barry—the District of Columbia’s rather notorious former mayor and current city councilman—has a knack for making embarrassing and controversial public statements. One of the more recent, spectacularly offensive even by Barry’s standards, was his widely-condemned remark that the city should “do something” about Asian Americans opening up “dirty shops” in his district, and that they “ought to go” to allow African American business owners to “take their places.”

Annoyed that Barry “gets away with this stuff continuously,” local bar owner Tony Tomelden decided to satirize the councilman at his establishment, The Pug, with a sign advertising a new drink special, “Marion Berry’s [sic] Dirty Asian Summer Punch.” The sign was illustrated with an offensive caricature of an Asian man declaring “No tickee, no punchee.” Even assuming the intent of the caricature was to lampoon Barry’s crude and stereotypical views, it’s hard to deny that this was a rather tasteless and poorly thought-out piece of satire. Customers unfamiliar with the controversy over Barry’s remarks would surely be offended by it, and even among those who understood the context, many would doubtless find the use of a racist caricature objectionable regardless of the owner’s ironic intent. But does that mean it should be illegal?

In a society governed by the First Amendment, there’s no place for government bureaucrats to determine which satires of public officials are acceptable and which are so offensive they should be met with the threat of legal sanctions. Yet that’s just what the D.C. Commission on Human Rights has presumed to do, invoking a section of the city’s Human Rights Act which makes it illegal to post any sign at a business indicating that members of any minority group are unwelcome as customers.  In the Commission’s view, apparently, the statute doesn’t just bar straightforward declarations that some people will not be served, but gives them veto power over any sign—including political satire—that its members deem “not demonstrative of the shared values and practices that make the District a fully inclusive environment for all residents and visitors.” That’s a bridge too far.

Maybe this sign is a bad and inept political satire; maybe it’s tasteless, or offensive; and maybe it fails to get its intended message across clearly—making it easy to interpret as an expression of racism rather than a criticism or spoof of it. But for legal purposes, that shouldn’t matter, because the point of the First Amendment is that government officials don’t get to make that judgment call—especially when the target of that satire is another local official. And the Constitution prohibits granting them that power through an overbroad interpretation of anti-discrimination rules just as surely as it prohibits doing so directly and overtly with censorship legislation. Otherwise any political speech someone thinks could make members of a particular group uncomfortable—a sign opposing gay marriage? a sign supporting it?—becomes vulnerable. Legal equality cannot become a pretext for bureaucratic censorship, as certainly seems to have occurred here.

How Do Teachers’ Unions Affect Public School Outcomes?

That’s a question I was asked this morning by a reporter. Interesting as it seems, it misses the real impact that teachers unions have on American education: protecting the public school monopoly from private sector competition.

Average compensation for public school teachers is $17,000 higher than for their private sector peers. That’s despite the fact that private schools perform as well or better academically and have higher graduation and college matriculation rates (after taking student/family background and other differences between sectors into account). So public schools offer generally inferior outcomes at a roughly 50% cost premium over independent schooling.

Were it not for the relentless and historically highly effective campaigning of teachers’ unions, it is hard to imagine that the public would have so long perpetuated the public school monopoly. At the federal level, public school employee unions contribute as much as Chevron, Exxon Mobil, the NRA, and Lockheed Martin combined—$56 million between 1989 and 2010.

But that figure pales in comparison to what teachers’ unions spend protecting their government monopoly at the state level. They spent $55 million in California alone—in a single year—fighting then-governor Schwarzenegger’s 2005 reform initiatives. During the 2006–07 school year, the NY state teachers union spent $571,012 at a single luxury hotel, the Desmond, near the statehouse in Albany.

This lobbying is to protect union members from competition by preventing American families from easily accessing independent, non-unionized, alternatives. The teachers’ unions lobby against charter schools, vouchers, and education tax credit programs that make private schooling affordable to lower and middle income families. And while the unions have lost a few high profile battles in the past year, the vast majority of American children are still assigned to a government school, based on where they live, by bureaucrats who have never met them.

It is a system that only makes sense if the goal of public education is to create a protected class of government employees. If we want a system that will serve the needs of children, then all schools should have to compete for the privilege of serving each and every student, and their revenues should depend on parents’ estimation of the quality of that service… just as happens right now in the vastly more efficient and responsive independent education sector.

Robinson on Arrow and Szasz

With the passing of Cato adjunct scholar Thomas Szasz, it might be worthwhile to share this excerpt from Berkeley economist James C. Robinson’s contribution to a retrospective on Nobel laureate economist Kenneth Arrow’s highly influential 1963 article, “Uncertainty and the Welfare Economics of Medical Care.”

The irony of “Uncertainty and the Welfare Economics of Medical Care” is that it brought to articulation a view of professionalism and the physician-patient relationship on the very eve of a massive and largely successful assault on that view and the social relationships it embodied. The decade of Arrow’s article produced a generation of now-classic critiques of the principle that patients must rely on trust in the benevolence of physicians for understanding, treatment, and personal coping with their diseases. Medical sociology turned its back on Talcott Parsons (1962) and savaged professional dominance through the writings of Elliot Freidson and his followers. The Boston Women’s Health Book Collective denounced the paternalism and status inequalities inherent in the conventional clinical relationship, founding what became known as the women’s health movement. Thomas Szasz’s denunciation of psychiatry as pseudoscience and a threat to personal freedom launched the mental patients’ rights movement, building on exposés of coercive institutions that embodied the ultimate in asymmetric information between physician and patient. Ivan Illich carried the Szasz framework to the whole of medicine, characterizing medical professionalism as the expropriation of health from the people, the deliberate creation of unequal access to information.

“Uncertainty and the Welfare Economics of Medical Care” was and remains an important article, a spur to thinking and an identifiable starting point for the modern moment in health economics. Its influence pales, however, in comparison to the rich and radical debates spurred by Professional Dominance (Freidson 1970), Our Bodies Ourselves (BWHBC 1969), The Myth of Mental Illness (Szasz 1961), Medical Nemesis (Illich 1976), and the other calls for a new social and clinical contract, a relationship of equals between patients and physicians, the people and the profession. Arrow’s article experienced the fate of many seminal writings, to describe as the present a world that already was past.

R.I.P.