Archives: February, 2013

No, Race Doesn’t Explain Disappointing Results in “High Quality” Pre-K States

After my previous post showing the lackluster overall achievement trends in states with purportedly “high quality” universal pre-K programs, one response was that this might miss better results among minority students. Well, I’ve had a chance now to chart the results for African American kids and… they’re slightly worse. See below. Can we now, finally, stop for a moment and reflect before lavishing tens of billions of dollars we don’t have on a federal expansion of such programs?

Ronald Dworkin, R.I.P.

The influential legal philosopher has died in London at age 81 (Lawrence Solum, Godfrey Hodgson/Guardian). Adam Liptak’s sharp obituary for the NYT sums up some of the virtues that quickly carried Prof. Dworkin to the academic peaks where he remained through his life: passionately held views, close engagement with the arguments of figures like Hart and Rawls, a flair for exploring complications in a relatively accessible way. Yet Liptak does not stint the view of exasperated critics like judge/scholar Richard Posner: “Dworkin’s dominant bent as a public intellectual,” Posner wrote, “is to polemicize in favor of a standard menu of left-liberal policies.”

I’ve taken a less-than-reverent view of Dworkin’s work myself on occasion, but obituaries make a suitable time to emphasize the positive, and the fact is that over decades of intra-Left legal debates, Dworkin repeatedly took the better side, arguing for the importance of individual rights, free speech and the integrity of law as a discipline in itself. His forceful arguments on First Amendment values were important in preventing the anti-speech feminism of Catherine MacKinnon from becoming the dominant view in American progressive circles. He warned appropriately against the temptation on both left and right to abdicate questions of jurisprudence to simple majoritarianism in one form or another, and argued eloquently on behalf of both formalism and constitutionalism (legal reasoning yields correct answers for adjudicating particular cases, and law is not merely an extension of politics by other means). True, he tended to fill these honorable vessels with very different contents than I or my Cato colleagues might. But better that than to smash the vessels and leave us with no inheritance of law or constitution or legal principle or rights at all, as not a few others on the Left were attempting to do over Dworkin’s long heyday. 

For those who would like to learn more, let me recommend this fine short essay by the late Norman Barry at FEE’s The Freeman sketching out areas where classical liberals might and might not find common ground with the late Prof. Dworkin. 

“High Quality” Pre-K States Show Mixed Results

In previous blog posts I’ve pointed out that federal pre-K programs have proven ineffective for half a century and that the claims of large returns-on-investment due to pre-K stem almost exclusively from just three small-scale programs—out of hundreds of such programs operating around the nation for decades. Naturally, if we confine ourselves to talking about the tiny minority of programs that appear to have worked, we’ll find, well, that they worked. Pretending that their results are representative is not scientifically-based policymaking, it’s willful self-delusion—particularly when they have never successfully been scaled-up.

Those few among the advocates of universal government preschool who comtemplate such facts usually point, in their defense, to Georgia and Oklahoma. These two states have long had universal state-funded preschool programs deemed, by their advocates, to be “high quality.” Even if we could magically wave our policy wands and ensure that these programs could be faithfully replicated by the U.S. Congress, we might not want to. Here is why, in pictures:

 

Several things are evident from these charts. First, neither state has seen a very large move in its scores relative to the national average; Second, while Georgia shows improvement Oklahoma shows decline; and Third, Oklahoma’s declines are larger than Georgia’s improvements. These are the results in putatively “high quality” pre-K states. Would anyone without ulterior political motives see them as an argument for borrowing and spending tens of billions of additional federal tax dollars every year?

If taxpayers in certain states around the country think they can improve upon Georgia’s results and avoid falling prey to Oklahoma’s, more power to them. But there is no empirical basis that could justify a federal government role in preK even if the Constitution allowed it one.

America, Inc., Barack Obama, Chairman and CEO

Most of the commentary on President Obama’s Tuesday evening State-of-the-Union Address has focused on the seemingly endless list of policy proposals he put forward – education, green energy, manufacturing hubs, minimum wage, and on and on. And understandably so, because that’s the minutia that Congress, the administration, and Washington more broadly obsess over day in and day out.

But if you step back, as I did yesterday in a piece at Forbes, you see a “national industrial policy” not unlike that of Obama’s mentor, Franklin Roosevelt, that is at once, as with Roosevelt, indifferent to constitutional limits and oblivious to economic principles. It’s really quite striking from that perspective. Have a look.

Osborne Risks a Triple-Dip for the UK

U.K. Chancellor of the Exchequer George Osborne has resumed his saber-rattling over raising capital requirements for British banks. Most recently, Osborne has fixated on alleged problems with banks’ risk-weighting metrics that, according to him, have left banks undercapitalized. Regardless of Osborne’s rationale, this is just the latest wave in a five-year assault on the U.K. banking system – one which has had disastrous effects on the country’s money supply. The initial rounds of capital hikes took their toll on the British economy – in the form of a double-dip recession. Now, Osborne appears poised to light the fuse on a triple-dip recession.

Even before the Conservative, Osborne, took the reins of Her Majesty’s Treasury, hiking capital requirements on banks was in vogue among British regulators. Indeed, it was under Gordon Brown’s Labour government, in late 2007, that this wrong-headed idea took off.

In the aftermath of his government’s bungling of the Northern Rock crisis, Gordon Brown – along with his fellow members of the political chattering classes in the U.K. – turned his crosshairs on the banks, touting “recapitalization” as the only way to make banks “safer” and prevent future bailouts.

It turns out that Mr. Brown attracted many like-minded souls, including the central bankers who endorsed Basel III, which mandates higher capital-asset ratios for banks. In response to Basel III, banks have shrunk their loan books and dramatically increased their cash and government securities positions, which are viewed under Basel as “risk-free,” requiring no capital backing. By contrast, loans, mortgages, etc. are “risk-weighted” – meaning banks are required by law to back them with capital. This makes risk-weighted assets more “expensive” for a bank to hold on its balance sheet, giving banks an incentive to lend less as capital requirements are increased. 

Five years later, Osborne is attempting to ratchet up the weights on these assets. Indeed, he is taking another whack at banks’ balance sheets – and the result will be the same as when the U.K. Financial Services Authority first took aim at the banking system (under Gordon Brown). As the accompanying chart shows, the first round of capital requirement hikes (in 2008) dealt a devastating blow to the U.K. money supply. Indeed, it tightened the noose on the supply of bank money – the portion of the total money supply produced by the banking system, through deposit creation.

Not surprisingly, this sent the British economy spiraling into its first recessionary dip. The second hit to the money supply came shortly after the Bank for International Settlements announced the imposition of capital hikes under the Basel III accords, in October 2010. Despite numerous infusions of state money (reserve money) via the Bank of England’s quantitative easing schemes, these first two squeezes on bank money have put the squeeze on the U.K.’s total money supply.

This is the case because state money makes up only 16.3% of the U.K.’s total money supply. The remaining 83.7% of the money supply is made up of bank money. In consequence, the Bank of England would have to undertake a massive expansion of state money, via quantitative easing, to offset the U.K.’s bank money squeeze.

It is doubtful, however, that the British pound sterling would be able to withstand such a move. Indeed, there are more storm clouds brewing over Threadneedle Street. The sterling recently touched a 15-month low against the euro, and it has fallen 8% against the euro since late July. For the time being, at least, the pound’s tenuous position will likely put a constraint on any further significant expansion of state money, through quantitative easing. It appears markets simply wouldn’t tolerate it.

Accordingly, the only viable option to jumpstart the faltering U.K. economy is to release the banking system from the grips of the government-imposed bank-money squeeze. Alas, Osborne’s most recent initiative on bank recapitalization goes in exactly the wrong direction.

Senate Judiciary Committee Hears from Cato on Gun Policy

Yesterday, the Senate Judiciary Committee’s Subcommittee on the Constitution, Civil Rights, and Human Rights – the same one where I testified regarding campaign finance post-Citizens United last summer – held a hearing, titled “Proposals to Reduce Gun Violence: Protecting Our Communities While Respecting the Second Amendment.”  In the lead-up to the hearing, the subcommittee’s new ranking member, Sen. Ted Cruz (R-TX), solicited written testimony from Cato on the subject.  He got it in spades.  Here are the Cato-affiliated scholars who submitted materials:

  • Associate policy analyst David Kopel provided an excellent summary of his decades of research on firearms law and policy.
  • Senior fellow Randy Barnett outlined the constitutional considerations that must attend any discussion of gun regulation.
  • Chairman Bob Levy attached a short cover letter to his timely National Law Journal article that critiques the current state of play.
  • I sent in an essay about the right to keep and bear arms generally that incorporates two blogposts and five op-eds by Kopel, Levy, Trevor Burrus, and myself.

If anyone else on Capitol Hill needs a full-court press on an issue ahead of a hearing, you know where to find Cato.

Are We Moving Toward a More Ideological Trade Policy Debate?

With John Kerry leaving the Senate to become Secretary of State, the seat that Kerry held on the Senate Finance Committee will be filled by Senator Bob Casey of Pennsylvania.  This is an interesting committee assignment given that the Finance committee oversees all international trade issues in the Senate and that Senator Casey is one of the most protectionist members of Congress today.  But there is another reason why Casey’s assignment and his voting record are intriguing for the future of trade policy.

The Cato Institute has been keeping track of Congressional votes affecting trade freedom since 1999.  Every member of Congress has a trade vote profile that reveals their support for trade barriers and trade subsidies throughout their career.  The database reveals some interesting facts about members of the Finance Committee, swing states, and ideology.

Pennsylvania and Ohio are both states where neither Republicans nor Democrats hold a stable majority, and indeed there is one Republican senator and one Democratic senator from each.  All four of those senators are now on the Senate Finance Committee.  What’s especially interesting is that the two Democrats—Casey from Pennsylvania and Sherrod Brown from Ohio—are solid Interventionists according to Cato’s trade scoring matrix, while the two Republicans—Pat Toomey from Pennsylvania and Rob Portman from Ohio—can both securely claim the (alas, much-rarer) Free Trader designation. 

The significant disparity in voting records for Senators with the exact same constituents goes against conventional trade-policy wisdom.  Trade barriers often have regional implications so that support for a particular policy will transcend ideology or party affiliation.  Polticians from Maine support shoe tariffs; politicians from Arkansas support catfish restrictions; politicians from Florida support sugar subsidies; politicians from South Dakota support beef restrictions; and so on. 

I find the possibility of a more ideological trade debate refreshing.  Maybe this phenomenon in Ohio and Pennsylvania says more about the electoral peculiarities of swing states than it does about trade policy—all four of these Senators are new comers to their office and were elected in mid-term elections that favored their party.  But if it signals a new trend in how the battle lines of trade policy will be drawn in Congress, the future looks bright.  I’d rather be governed by two principled ideologues with opposing ideas than by two centrists tied to special interests.