Archives: May, 2013

Colorado High Court Rejects School-Finance Litigation

By a 4-2 margin, the Colorado Supreme Court has rejected a lawsuit claiming that the state’s method of funding public schools is unconstitutional. It overturned a lower court ruling that had held that the current arrangement of funding fails to meet a requirement in the Colorado constitution that the state operate a “thorough and uniform” system of education. [decision in State v. Lobato via KDVR coverage

For years, pushing their Lobato case in the court of public opinion, school-spending advocates have been decrying Colorado schools as underfunded. The state has been given a series of bad ratings on education scorecards, many of which turn out on inspection to measure quality by how much money is spent—thus ensuring that Colorado, which spends less than many other states, will come off badly. This one, for example, ranks Colorado at “C-minus” for reasons that include low overall spending, low teacher salaries, and the state’s failure to fund “induction, mentoring or reduced workloads for new teachers.” 

When you measure outputs as opposed to inputs, on the other hand, the state comes off looking far better. In this ranking of SAT scores, Colorado scores 15th among the 50 states, the best performance of any Western state. In this ranking based on 4th and 8th grade testing, Colorado comes in 11th among the 50 states, trailing only Washington among Western states. 

But modern school-finance litigation only poses as being about educational quality. Its deeper mission is control—specifically, transferring control over spending from voters and their representatives to litigators whose loyalty is to a mix of ideologues and interest groups sharing a wish for higher spending. As I wrote in a draft chapter on school finance litigation cut for space from my book Schools for Misrule:

In the forty years since the pioneering Serrano v. California (California Supreme Court, 1971) school finance lawsuits have been filed in nearly every state, courts in around half the states have thrown out existing finance systems as unconstitutional, and many of them have ordered states to raise school budgets, not merely change the way in which they are financed. Vast sums have been redistributed as a result. Lawmakers in Kentucky enacted more than a billion dollars in tax hikes. New Jersey adopted its first income tax. Kansas lawmakers levied an additional $755 million in taxes after the state’s high court in peremptory fashion ordered them to double their spending on schools.

While filed on a state-by-state basis, the suits have been very much a coordinated national project. For many years their impetus came from the Ford Foundation and its various grantees, notably the American Civil Liberties Union. Furnishing, presumably, the brains of the operation, law-school-based groups have been instrumental, particularly the Education Law Center at Rutgers Law School in New Jersey. …

The educational establishment had always resented the periodic need to go hat in hand – such a demeaning phrase! – to local electorates for tax and bond measures, as if the voters were somehow the bosses and they the servants. School finance litigation promised a more indulgent master, a jurist or panel of them who (it was hoped) would glance over the rows of costing-out numbers, nod appreciatively and feel good afterward about having done something for the children. … School finance litigation is the ultimate monument to the triumph of governance by litigation at the cost of democracy itself. 

Despite the victory in Colorado, there’s no reason to think this war of forty years’ duration (so far) is drawing to a close. 

Infrastructure Is Not the Problem

The sudden collapse of a 58-year-old bridge across the Skagit River in Washington state has led to renewed calls to spend more money on American infrastructure. But if that spending comes out of tax dollars rather than user fees and is dedicated to replacing bridges, it will be seriously misplaced.

The usual media hysteria followed the collapse. “Thousands of bridges around the U.S. may be one freak accident or mistake away from collapse,” screamed CBS News. “If just one of [New York’s Tappan Zee Bridge’s] structural elements gives way, the whole bridge could fall and send” hundreds of cars “tumbling into the Hudson River,” warned Business Week.

About 18,000 highway bridges (less than 3 percent of the total) built in the 1950s and early 1960s have what is now considered to be a design flaw that makes them “fracture critical.” This means that at least one major element does not have redundent support, so if that element gives way, the entire bridge could collapse. The Skagit River Bridge failed when an oversized truck that should not have been on the bridge hit a cross beam that lacked redundent support. “This does not mean the bridge is inherently unsafe, only that there is a lack of redundancy in its design,” says the American Association of State Highway and Transportation Officials (AASHTO).

To listen to the hype, you would think that bridges are failing on almost a daily basis. But put this into perspective: In 2012, more than 34,000 people died in traffic accidents. Virtually none of them died due to a fracture-critical bridge failure. We can do lots of things to make highways safer and reduce that 34,000. A crash program to replace thousands of bridges isn’t one of them and is likely to divert funds away from programs that are far more important.

Many of the stories about America’s infrastructure focus on the number of “structurally deficient” bridges, which (says AASHTO) doesn’t mean the bridges are unsafe but only that they require “significant maintenance and repair to remain in service.” What the stories rarely mention is that in the last two decades the number of structurally deficient bridges has declined by 44 percent, from more than 118,000 in 1992 to fewer than 67,000 in 2012, even as the total number of highway bridges increased from 572,000 to 607,000. The number of fracture-critical bridges has declined from 22,000 in the last four years alone. In other words, the problem is going away without the help of a giant new federal program.

Highway user fees, including federal and state gas taxes and tolls, fund nearly all construction and maintenance of state highways and bridges. The Skagit River Bridge notwithstanding, these roads and bridges tend to be in better shape than those that are locally owned, which need about $30 billion a year from property, sales, or other local taxes. User fees work better than taxes because the fees give highway managers signals about where to spend the money.

Speaker of the House John Boehner wants to dedicate oil and gas royalties to highway infrastructure. But that’s the wrong source of money and it will almost certainly be spent in the wrong places as as much if not most spending will be on glitzy projects that glorify the elected officials who appropriate the money rather than where it is really needed. For example, one sector hungry for more “infrastructure spending” is the rail transit industry, which since 1982 has automatically received a large share of all new transportation dollars. Yet rail transit does virtually nothing to relieve congestion or make our highways safer. Moreover, transit suffers from its own infrastructure crisis, mainly because it is funded mostly out of tax dollars that get spent on glamorous new rail lines rather than user fees that would be spent on maintenance.

Recent highway safety data reveal a striking 20 percent decline in fatalities between 2007 and 2010. This decline was associated with a mere 2.2 percent decline in driving, suggesting that–in the absence of the recession–a 2.2 percent increase in highway capacity and other congestion relief could have produced a similar decline in fatalities. Of the 41,259 fatalities in 2007, 13 were due to a bridge failure; there have been virtually none since then.

In short, the key to sound infrastructure is funding that infrastructure out of user fees rather than tax dollars. Since that’s true, one way to improve highway safety would be to develop a new system of user fees that local governments can tap into so that local as well as state highway engineers receive sufficient funds and the appropriate signals about where to spend money.

Does Freedom of Speech Conflict with Freedom of Religion?

This is a provocative question, of course, or at least it is seemingly everywhere in the world but the United States. In just the last three years, the Supreme Court has protected highly offensive funeral protests, violent video games, animal “crush” videos, and a host of other types of expression. No law punishing blasphemy or “defamation of religion”—as approved by various UN resolutions and making inroads into the legal codes of even Western countries—could possibly survive First Amendment scrutiny. But that’s not the case elsewhere in the world, as an excellent new video by Danish human rights lawyer Jacob Mchangama shows (courtesy of Free to Choose TV; see press release):

America isn’t immune from increasing demands that free speech be limited to respect religious feelings. Recall the condemnations of the anti-Islamic video that may have caused rioting in Cairo on September 11 of last year (but not in Beghazi, as details of that scandal develop). The outcome of this battle will have profound consequences for the ability of people everywhere to freely express themselves and follow their beliefs. Democratic governments play a dangerous game when appeasing religious sensitivities rather than defending free speech.

Mchangama, not coincidentally, is affiliated with the invaluable Human Rights Foundation—an organization that deals with actual human rights violations rather than simply being a vehicle for pushing a transnational leftist agenda—whose president, Thor Halvorssen (with whom I’ve been acquainted since college), calls himself a “classical liberal” rather than a man of the Right or Left.

Imaginary Squabbles Part 4: Krugman and DeLong on the Top 1 Percent

In End This Depression Now! (pages 77-78) Paul Krugman offers the strangest arguments I have seen.   The story opens with familiar fulminations about the “top 1 percent” (those earning more than $366,623 in 2011).  As he put it in a 2011 column, “income inequality in America really is about oligarchs versus everyone else.”

“Incomes of the rich,” his book claims, “are at the heart of what has been happening to America’s economy and society.”  Yet it apparently requires great bravery to even dare to mention “the rising incomes” of the top 1 percent or top 0.1 percent:

Merely to raise the issue was to enter a political war zone: income distribution at the top is one of those areas where anyone who raises his head above the parapet will encounter fierce attacks from what amount to hired guns protecting the interests of the wealthy.  For example, a few years ago Thomas Piketty and Emmanuel Saez … found themselves under fire from Alan Reynolds of the Cato Institute, who has spent decades arguing that inequality hasn’t really increased; every time one of his arguments is thoroughly debunked, he pops up with another.

To be called a “hired gun” of the wealthy might be insulting if it was not so ridiculous.  First of all, no employer has ever tried to influence what I write.  Second, I have been a very successful investor and live quite comfortably from realized capital gains plus mandatory distributions from IRA, Keogh and 403(b) accounts that President Obama would regard as much too large.  I negotiated a token salary from Cato (smaller than my Social Security check) but return at least 40 percent of it as a charitable donation.  I am usually in the top 1 percent, at least when stocks are up, and thus not easily bribed.  I would be flabbergasted if Krugman is not also a member of that demonized bunch of oligarchs.

Krugman complains that some of my arguments changed (new ones popped up) over decades, but arguments should change after decades of new data.  I must have made a couple of mistakes since 1992, but mistakes (including Krugman’s) are not evidence of deliberate deception or corruption.

Washington Booms during Slowest Recovery

Continuing our ongoing series on the wealth of Washington, we bring you the lead story in Friday’s “Mansion” section of the Wall Street Journal:

WSJ DC Boomtown

The Journal reports:

As other American cities have been buffeted by an uneven economy, Washington’s property market has been buoyed two forces specific to the capital city: a surge of federal contractors and a rising tide of government spending. The result: what real-estate agents and developers are calling an unprecedented real-estate surge.

Yes, a rising tide of government spending may be bad for the American economy, but it’s great for the Washington area.

Washington is wealthy and getting wealthier, despite history’s slowest recovery in most of the country. As we’ve said here before, this of course reflects partly the high level of federal pay, as Chris Edwards and Tad DeHaven have been detailing. And it also reflects the boom in lobbying as government comes to claim and redistribute more of the wealth produced in all those other metropolitan areas. 

Money spent in Washington is taken from the people who produced it all over America. Washington produces little real value on its own. National defense and courts are essential to our freedom and prosperity, but that’s a small part of what the federal government does these days. Most federal activity involves taking money from some people, giving it to others and keeping a big chunk as a transaction fee.

Every business and interest group in society has an office in Washington devoted to getting some of the $3.6 trillion federal budget for itself: senior citizens, farmers, veterans, teachers, social workers, oil companies, labor unions - you name it. The massive spending increases of the Bush-Obama years have created a lot of well-off people in Washington. New regulatory burdens, notably from Obamacare, are also generating jobs in the lobbying and regulatory compliance business.

Walk down K Street, the heart of Washington’s lobbying industry, and look at the directory in any office building. They’re full of lobbyists and associations that are in Washington, for one reason: because, as Willie Sutton said about why he robbed banks, “That’s where the money is.”

The wonder is why the taxpayers put up with it.

Imaginary Squabbles Part 3: Krugman and DeLong’s Changing Theories and Missing Facts

Responding to a student question after a recent Kansas State debate with Brad DeLong I posed a conceptual puzzle.  I asked students to ponder why textbooks treat Treasury sales of government bonds as a “stimulus” to demand (nominal GDP) in the same sense as Federal Reserve purchases of such bonds.  “Those are very different polices,” I noted; “Why should they have the same effect?”  

The remark was intended to encourage students to probe more deeply into what such metaphors as “stimulating” or “jump starting” really mean, not to accept as dogma that fiscal and monetary policy are equally effective or that economists are certain just how they work.

DeLong’s misinterpretation of my question led him to lecture me that, “if you really do think that monetary expansion undoes fiscal expansion because monetary expansion buys bonds and fiscal expansion sells bonds, you need to educate yourself.” Citing that wholly imaginary rewriting of my question, Paul Krugman wrote, “My heart goes out to Brad DeLong, who debated Alan Reynolds and discovered that his opponent really doesn’t understand at all how either fiscal or monetary policy work.”

Did I really say that “monetary expansion undoes fiscal expansion”?  Of course not.  If that had been my question, I would have answered myself by saying that piling more debt on the backs of taxpayers is unlikely to stimulate private spending (much less encourage more or better labor and capital) unless the added debt is “monetized” by the Fed and regulators allow banks to lend more to private borrowers.  DeLong made much the same point by saying, “Expansionary monetary policy makes it a sure thing that expansionary fiscal policy is effective by removing the channels for interest-rate and tax crowding out.” 

The Fed’s current bond-buying spree is bound to have some effect, if only to facilitate cheap corporate buybacks of shares and speculative day trading of such stocks on margin.   But selling more government bonds per se (if the Fed won’t buy more) would be just as much an added burden for taxpayers as it would be a benefit to whoever receives the resulting government transfers, contracts or subsidies. 

This make-believe squabble about monetary expansion undoing fiscal expansion exists only in DeLong’s imagination, like my non-prediction of mammoth inflation or Krugman’s non-facts about Ireland’s fiscal frugality.

Are You Indian Enough to Be Exempt from Obamacare?

You can’t make this up: Obamacare exempts certain American Indians from the “choice” Americans will face as of January of buying health insurance or paying Chief Justice Roberts’s special tax. But apparently this is a far narrower category of people than those recognized as “Indian” under various state laws:

The problem is so new that the federal government is still seeking to establish how many people might be affected, although Indian health advocacy groups estimate it could be up to 480,000.

In California alone, about 21,000 people who currently receive free health care through Indian clinics are not recognized as Native American by the federal government and would have to pay the penalty, according to the nonprofit California Rural Indian Health Board.

So people who’ve considered themselves American Indian all their lives and have been treated as such by their states–including for health care purposes–suddenly won’t be considered Indian as far as Obamacare is concerned. 

Wow–Indian law is complicated and constitutionally problematic enough without having further regulatory overlays bollix up the works even more. But that’s what happens when government encoraches more and more into civil society. As I wrote in January in an article on, of all things, the contraceptive mandate:

But there’s an even bigger issue here. This is just the latest example of the difficulties in turning health care—or increasing parts of our economy more broadly—over to the government. As my colleague Roger Pilon has written, when health care (or anything) is socialized or treated as a public utility, we’re forced to fight for every “carve-out” of liberty…

The more government controls—whether health care, education, or even marriage—the greater the battles over conflicting values. With certain things, such as national defense, basic infrastructure, clean air and water and other “public goods,” we largely agree, at least inside reasonable margins. But we have vast disagreements about social programs, economic regulation and so much else that government now dominates at the expense of individual liberty.

Obamacare delenda est.