Archives: December, 2012

Chuck Hagel Would Be an Excellent Secretary of Defense

The rumors that President Obama will nominate Chuck Hagel to be the next Secretary of Defense should be welcomed by anyone frustrated by years of war and foreign meddling, and out-of-control spending at the Pentagon. Which is to say, nearly everyone. I hope the reports are true.

The biggest boosters of the Iraq war, the Afghan war, the Libyan war, and possible war with Syria and Iran, are apoplectic. And they should be. Hagel, a decorated Vietnam war veteran, understands war, and doesn’t take it lightly.

Although the president will obviously make the decisions, I expect that Hagel will generally advise against sending U.S. troops on quixotic nation-building missions. We might even see a resurrection of another Republican SecDef’s criteria for restraining Washington’s interventionist tendencies. At a minimum, Hagel will reflect Colin Powell’s view that “American GIs [are] not toy soldiers to be moved around on some sort of global game board.”

Hagel’s speech earlier this week to the Atlantic Council encapsulated many of the views that he has articulated throughout his career: he favors active engagement with the outside world, wants America’s allies to contribute more to global security and to cooperate with the United States in addressing common challenges, and is a consistent advocate for free trade.

I don’t put much stock in the neoconservative echo chamber’s claim that Hagel will have a tough time being confirmed. As David Boaz pointed out in 2010, Hagel’s other views should put him squarely in the conservative Republican camp. Aside from the small (and shrinking) Interventionist Caucus in the Senate, on what grounds would other Republicans oppose his nomination? Because he learned the error of his ways in initially supporting the Iraq war, and many of them never did? If more Republicans had come to their senses sooner, they would likely be the majority party in the Senate, and Hagel could just as easily have been nominated by a Republican president.

I had the pleasure of introducing then-Senator Hagel at a Cato event on Capitol Hill in 2007. We welcomed him to Cato to talk about his book in 2008. He is a serious and thoughtful individual who has served this country well, and will do so again. I sincerely hope that President Obama chooses him to be the next Secretary of Defense.

Did the Profit Motive Spark the Recent Asian Factory Fires?

[This is an expanded version of my opinion piece in the New York Times online, today.]

Critics of capitalism and globalization have rendered judgment: Western apparel brands and big box retailers, in their zeal to perpetuate and profit from soulless, rampant consumerism, are to blame for the recent, tragic fires in Bangladeshi and Pakistani apparel factories. Fealty to nothing but the bottom line, so the story goes, drives investment toward the low wages that persist alongside lax health, environmental, and safety standards. Such characterizations evoke Friedrich Engels’ mid-19th century Manchester. Abuse and tragedy are inevitable… unless good people speak out.

(For a sampling of these viewpoints, just Google “factory fire Bangladesh” or read some of the views and comments at “Room for Debate.”)

Most outspoken people express empathy for the victims and sadness about the recent tragedies and then proceed to vent their rage against capitalism and globalization without considering how those processes have improved the lives of billions of people in developing countries. Those for whom feeling crowds-out thinking tend to assume someone can just wave a magic wand and rid the planet of poverty. If Walmart and Target and Sears and Tommy Hilfiger and L.L. Bean weren’t so damn greedy, the thinking goes, life would be better for workers in poor countries.

It’s a bit rich to see enlightened, cosmopolitan members of the media elite expressing disdain for consumerism and demanding greater accountability from the retailers and brands, when their own advertising-revenue-dependent employers are just as complicit (if that’s the right word) in fueling consumerism. Yesterday, when clicking to the second page of this online New York Times story, which seems to confer blame for 112 deaths in Bangladesh on Western brands and retailers, I was mugged by a pop-up ad for Banana Republic. (Hey, before finishing this article, you must spend $199 on this faux-safari outfit or $99 on these seersucker picnic trousers.)

If Walmart is responsible for insuring safety at the factories with which it contracts because the relationship enhances it’s bottom line , shouldn’t the networks, the newspapers, and the magazine publishers (who profit from Walmart’s advertising budget and whose ads perpetuate consumerism) be accountable, too? Alas, nothing would cause greater deforestation than a project cataloging the hypocrisy of the sanctimonious Left – except, perhaps, a project documenting the hypocrisy of the puritanical Right.

Obviously, developing country factory conditions do not appeal to rich-country sensibilities. But the proper comparison is not between wages and conditions in a factory in Dhaka, Bangladesh and Dayton, Ohio. More appropriate is to consider the alternatives that would exist in poor countries in the absence of Western investment. In a series of articles over the years, New York Times columnist Nicholas Kristof has argued that factory work offers a step up the ladder for billions of impoverished people around the world. His stories about the subsistence options confronting Cambodian women before the arrival of apparel factories – picking through garbage dumps, backbreaking agricultural work, and prostitution – remind us to not make the perfect the enemy of the good.

Of course that doesn’t justify an unsafe work environment. And, in fact, Western investment in developing country factories, whether through ownership or partnership with local owners, tends to raise the average wage, improve the health and safety conditions of the workplace, and reduce the average environmental impacts. Why? Because of that reviled profit motive.

Western companies usually offer wages that are higher than the local average to attract the most productive workers. Those companies are protective of their brands, which in some cases are their most valuable assets. Labor or environmental abuse, lax safety standards, and unhealthy or hazardous products associated with the brand are detrimental to the bottom line. As cold as that may sound, those considerations compel companies to submit to third party verifications of all sorts of working conditions because they have incentives, through the market, to get it right (or, perhaps more aptly, disincentives to get it wrong).

Exposure of labor abuses, safety violations, tainted products, environmental degradation, and other social ills associated with a brand or a retailer hurts to bottom line. Thus, company management doesn’t necessarily have to have genuine empathy for its workers and concern for the environment when there are proper incentives in place to compel them to behave as if they do have genuine empathy or concern for the environment. Bad press and bad perceptions can quickly degrade or destroy a brand in an age where the public increasingly demands social accountability as an attribute of the products and services it consumes. The verdict of the marketplace can be swift and unambiguous. Just ask Mattel, whose bottom line took a beating during the lead-paint-in-kids-toys debacle a few years ago or Nike, which has suffered boycotts and profit suppression over the years for allegedly contracting with “sweatshops.”

Critics wrongly complain that there’s little accountability. There is accountability, but that doesn’t insure against all accidents or abuses. There are industrial accidents and abuses in U.S. workplaces. But what if there were no Western investment in poor countries? What employment options would the locals have? Working for a local factory? Okay, but there is certain to be much less accountability under that arrangement. Western investment in developing country factories and just doing business with locals brings much greater accountability to the work environment. It doesn’t mean there won’t be any problems, but without that investment, abuses and tragedies would be more frequent.

The most prominent entities in the supply chain will be held to account for these fires, and safety procedures and infrastructure will surely be evaluated and upgraded, not only in Pakistan and Bangladesh, but in whatever jurisdictions these entities’ supply chains traverse. Tragedies have provided teaching moments throughout history. Unfortunately, one lesson that hasn’t been absorbed by enough Americans is that capitalism and globalization are making life much better for people in developing countries.

Sad Federal Employees :(

Federal employees are overpaid and underworked (probably a good thing), but a tear-jerker in today’s Washington Post reports that “job satisfaction across the government has hit its lowest point in almost a decade”:

It’s no secret that federal workers are feeling worn down. They’ve had their salaries frozen and are at the center of a partisan debate over the value of their work. A report due out Thursday, based on the largest sample ever of the workforce of 2 million, confirms a steady decline in morale and ebbing commitment.

Meanwhile, private sector workers – the people whose taxes pay for the salaries and benefits of federal workers – are still dealing with the aftermath of an economic downturn caused in large part by federal policies. Federal workers – with their cushy benefits and job protections – are worn down? Tell that to private sector workers who have seen their benefits reduced and their job security undermined by the economic uncertainty being engineered by the Beltway kleptocrats.

As if the fiscal angle wasn’t irritating enough, we’re apparently supposed to feel sorry for the government employees who get paid to trample on our civil liberties:

Just 52.9 percent of employees at the sprawling Department of Homeland Security, for example, are satisfied with their jobs, making it the lowest-ranked large agency, followed by the Department of Veterans Affairs…

“We work for a horrible agency, but we do great work,” said Ricky D. McCoy, a transportation security officer at Chicago O’Hare International Airport and president of Local 777 of the American Federation of Government Employees. Just 32 percent of employees at the Transportation Security Administration, part of DHS, are satisfied with their pay, which is among the lowest in the government.

McCoy said he expects the TSA’s first collective-bargaining agreement, signed in November, to improve morale. “We’re hopeful now that things will turn in our direction,” he said.

The president has said that he wants to make working for the federal government “cool again.” Gee, what could be cooler than getting a pay raise for molesting people all day?

A Poor Excuse for Even Poorer Legislation

According to The Hill, yesterday Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-CA) told reporters, “I am going to form a climate change caucus, because people are coming up to me, they really want to get into this. I think Sandy changed a lot of minds.”

Changed a lot of minds about what?   As I have pointed out, the link between “superstorm” Sandy and anthropogenic climate change is weak, and weaker still is our understanding of whether climate change strengthened or weakened Sandy. But regardless of whether or not human greenhouse gas emissions impacted Sandy in some detectable way, it is certain that Congressional attempts to drive down U.S. greenhouse gas emissions will have absolutely zero detectable impact of such storm systems, and any other type of extreme weather you can think of.

Why? Because, as I have shown, under business-as-usual scenarios, the U.S. greenhouse gas emissions are only expected to be responsible for maybe 7% of the total global human greenhouse effect impact over the course of this century.  Detecting a human impact on extreme weather systems is already hard enough (due to human-signal to natural-noise ratio problems), and detecting only 7% of it is impossible (and 7% is the best case scenario if all U.S. greenhouse gas emissions forever ceased starting tomorrow, which, I can assure you, will not be the case).

Sandy is a poor excuse to pursue even poorer legislation.

Working on Trade Policy Can Be Depressing

This is from a Washington Post article on a recent survey of federal workers:

The Office of the U.S. Trade Representative ranks as the worst small agency, [with 32.7 percent of employees saying they are satisfied]. Former employees said its sense of mission was eroded by an ambivalent attitude toward free trade early in the Obama administration and during the economic crisis. Views of the agency’s leaders plummeted 18.9 percentage points over 2011.

Here’s hoping that the Obama administration will push harder for free trade in the second term, for the good of the country and to cheer up the folks at the U.S. Trade Representative’s office!

Where Will the Senate ‘School-to-Prison Pipeline’ Hearing Lead?

The Senate hearing at which I testified yesterday, chaired by Sen. Dick Durbin, seemed designed to raise support for legislation imposing federal mandates on states or districts to curtail the use of out-of-school suspensions, to make suspension policies uniform across schools, or both.

The motivations for such legislation are understandable. Out-of-school suspensions do little to help the suspended students educationally and they are correlated with arrests and incarceration. The Judiciary Subcommittee on the Constitution, Civil Rights, and Human Rights, which Sen. Durbin chairs, is particularly interested in these facts because African American students are much more likely to be suspended than whites.

But the facts do not support the kind of legislation that seems to be under consideration. Two recent and highly sophisticated studies by Rochester University professor Joshua Kinsler shed new light on the well-established trends noted above. For the first time, Kinsler factored-in between school variations in discipline policy when looking at the racial disparity in out-of-school suspensions. He discovered that, within any given school, black and white students sent to the principal’s office for a given reason are issued the same suspensions at the same rates. The disparity is all between schools.

Schools with predominantly black student bodies are more likely to issue suspensions, and to issue longer ones, for a given offense. White students at those schools get the same treatment, but most white students are in predominantly white schools that are less severe in their discipline policies. Black students at mostly white schools also get less severe punishments.

Kinsler did find that African American students were more likely to be referred to the principal’s office, which has long been seen as evidence of systemic racism.  To investigate that explanation, Kinsler looked for any relationship between teachers’ referral rates to the principal’s office and the race of those teachers and of the students they refer. He found none. This does not mean that racism plays no role, but it calls into question the view that racism is a dominant factor in referrals to the principal’s office.

In a subsequent empirical study, Kinsler investigated what would happen if all schools were compelled to observe a more lenient suspension policy, to close the black/white discipline gap. He found that this would disproportionately hurt the achievement of African American students, widening the black/white achievement gap.  The reason for this, according to Kinsler’s findings, is that serious suspensions do in fact discourage misbehavior, and that removing disruptive students from the class does improve the achievement of the other students.

Kinsler’s methodology, which jointly models discipline policy, student behavior and student academic achievement, is the most advanced I’ve seen used in this field. Unless and until his findings are found to be in error, or are contradicted by similarly sophisticated research, it would be unconscionable and counterproductive to impose a blanket reduction in suspensions on the nation’s schools.

None of this is meant to defend the cavalier use of out-of-school suspensions. As I explain in my written testimony to the Committee, there are much better alternatives and there are policies that will systematically encourage the use of those superior alternatives. I sincerely hope that Senator Durbin and his Committee do not leap before they look at these alternatives and at professor Kinsler’s findings.

Promises to Restrict Future Spending Are Worthless

It appears likely that congressional Republicans are eventually going to accept a tax increase in exchange for real spending cuts smaller spending increases in the future. If and when that happens, Speaker Boehner should surround himself with Santa Claus, the Easter Bunny, and the Tooth Fairy at the press conference on the deal.

I could spend days explaining my pessimism, but I’ll just point to two pertinent examples of Congress being unable to control itself. First, we have the so-called Medicare “doc fix,” which was adeptly explained by Reason’s Peter Suderman earlier this week. In 1997, Congress created a formula (“sustainable growth rate”) to constrain physician reimbursements. But shortly after the formula started to do what it was intended to, Congress got cold feet:

The next year, when the formula called for another reimbursement cut, Congress passed an override. And each year since, Congress has followed the same pattern. The SGR calls for a reimbursement cut. Congress either freezes payments or gives physicians a small increase for a short period of time. Sometimes the overrides last for a few months. More often they last for about a year. But a permanent fix never arrives. And each time the formula calls for a bigger cut—because with each override, Medicare’s physician payment levels grow further and further from the trendline called for by the formula. If the doc fix is allowed to occur this year, physicians face a 26.5 percent cut in Medicare fees. At the same time, the long-term cost of a permanent fix grows each year. Last year’s one-year fix cost $18.5 billion. This year’s is expected to cost about $25 billion. Estimates put the cost between $244 and $370 billion over a decade. The ever-rising cost means that with each override the chances of a permanent fix grow even harder.

The second example – a federal aid package for states affected by Hurricane Sandy – hasn’t actually happened, but it will. Indeed, the White House just requested $60.4 billion for Sandy relief. The Obama administration has no honest interest in spending cuts, so it’s not much of a surprise that it would submit a bill that isn’t offset by spending cuts (real or imagined) elsewhere. But shouldn’t House Republicans be counted on to push for offsets, especially at a time when they keep telling the world that deficit reduction requires spending cuts? Well, according to the The Hill, that’s probably not going to happen:

Passage of a Hurricane Sandy supplemental spending bill this month appears more likely following a meeting on Thursday between Speaker John Boehner (R-Ohio) and Gov. Chris Christie (R-N.J.). Sen. Robert Menendez (D-N.J.) said on Thursday that Boehner indicated to Christie that offsets, or dollar-for-dollar spending cuts, are not going to be a big issue. “The governor did say that the Speaker … has said that while some in his conference may raise offsets, that is not where he believes the majority of his conference will be on this issue. That is critically important for us,” Menendez told reporters…

“Speaker Boehner is deeply concerned by the devastation resulting from this terrible storm. When we get the request from the Obama administration, we will get to work immediately,” Boehner spokesman Michael Steel said in response. Last month, Rep. Pete King (R-N.Y.) told The Hill that Boehner told him he supports moving a bill without offsets.

What about those budget caps that were agreed to as part of the 2011 deal to raise the debt ceiling? It’s hard to imagine that a bill that large wouldn’t breach the caps.

Anyhow, even if Sandy aid doesn’t do it, some future war, natural disaster, or economic downturn will create an excuse for Congress to spend more money than some past deal said it was allowed to. The only real way to make spending cuts stick – or at least give it a good chance – is to actually terminate agencies and programs. Unfortunately, that’s not on the agenda of either party.