Archives: 07/2013

Krugman: Detroit’s Bankruptcy “Just One of Those Things”

Paul Krugman in the New York Times on the bankruptcy of my home town:

There are influential people out there who would like you to believe that Detroit’s demise is fundamentally a tale of fiscal irresponsibility and/or greedy public employees. It isn’t. For the most part, it’s just one of those things that happens now and then in an ever-changing economy.

No policy implications in the decline of what was by some measures America’s most prosperous city in 1960. None at all. It was just one of those things.

It was just one of those things…

Michael Barone: “Liberal policies promised to produce something like heaven. Instead they produced something more closely resembling hell. You can get an idea of what happened to Detroit by looking at some numbers. The Census counted 1,849,568 people in Detroit in 1950, including me. It counted 713,777 in 2010.”

Just one of those crazy flings…

Stephen Henderson in the more liberal of the city’s two dailies, the Free Press: Detroiters “pay more kinds of taxes, at higher rates, than any other citizens in Michigan…. The city’s tax structure is, by sheer numbers, among its most glaring problems.” The money goes to a school system that has spent above-average amounts to attain a 47 percent functional illiteracy rate; where “only about a third of the ambulances are running” and “police solve less than 10 percent of the crimes that are committed.”

One of those bells that now and then rings…

Despite grotesque cuts in the level of city services, Detroit in 2011 still had around twice as many municipal employees per capita as cities with comparable populations such as Indianapolis and Columbus. Last year it was revealed that the city water and sewer department employs a “horseshoer”although it keeps no horses. According to Karl Denninger, the city’s promises to unionized employees are part of a wider pattern: “special classes of ‘untouchable’ promises that were negotiated in bad faith by one or both sides and which are then ensconced with special protections under the law.”

It was just one of those things.

Detroit is known for receiving, and misspending, vast sums in federal assistance. The previous mayor, Kwame Kilpatrick, is serving time following a multi-sided scandal in which shakedowns of city contractors played a central role. In 2009 five school district employees were hit with felony counts as “part of an investigation into alleged corruption and the loss of tens of millions of dollars in school funds.” The city administration, while wooing big business and the casino trade, remains indifferent at best and deeply hostile at worst toward small and informal businesses.

Nope, this bankruptcy has no wider policy implications at all, unlike the Wall Street bankruptcies that the Times columnist occasionally writes about. Cole Porter, in best Krugman mode:

If we’d thought a bit about the end of it

When we started painting the town

We’d have been aware that our love affair

Was too hot not to cool down

So good-bye, dear, and amen

Here’s hoping we meet now and then

It was great fun

But it was just one of those things.

Distrust of Justice System also Affects Black Americans’ Views on Public Health Measures

The Washington Post’s Wonkblog “interviews political scientists Jon Hurwitz and Mark Peffley about their book on how blacks and whites perceive the criminal justice system, and what it implies for Trayvon Martin’s death, George Zimmerman’s acquittal, and the aftermath.” An excerpt, quoting Hurwitz/Peffley:

We asked whether it’s a “serious problem” in their community that police “stop and question blacks far more often than whites” or that police “care more about crimes against whites than minorities.” On average, 70 percent of blacks, but only 17 percent of whites, considered these serious problems…[W]hile about 25 percent of whites disagreed with the statement that the “courts give all a fair trial,” more than 60 percent of African Americans disagreed. Repeatedly, using every possible barometer, we found that blacks doubted the fairness of the justice system much more than whites…

Much of the difference comes down to either personal or vicarious experiences that people have with police and the courts. We found that African Americans, especially younger black men, were far more likely than whites to report being treated unfairly by the police because of their race. In fact, a recent Gallup Poll found that one of every four black men under age 35 said that the police have treated them unfairly during the last 30 days.

This excerpt reminded me of a data point I included in the health care chapter I wrote for the Encyclopedia of Libertarianism:

A 2004 survey published in the journal Health Affairs hints at one way [public-health] powers could be abused. Amid widespread concern about bioterrorism, roughly equal shares of white and black Americans expressed support for quarantines to contain a serious contagious disease. When subsequently asked whether they would support a compulsory quarantine, where the authorities would have the power to arrest violators, 25% of whites changed their minds, whereas 51% of blacks did, indicating an awareness that these policies would not necessarily be fairly implemented.

It also reminded me of this John McWhorter speech, reprinted in the Winter 2011 issue of Cato’s Letter, where he argues the war on drugs is behind “the strained relationship between young black men and police forces,” and racial progress requires ending the drug war.

Education Policy, The Use of Evidence, and the Fordham Institute

In recent weeks, the Fordham Institute has repeatedly called for government testing and reporting mandates to be imposed on private schools participating in school choice programs (here and here), on the grounds that such “public accountability” improves private school academic outcomes. In defense of this claim, the Fordham Institute cites a study of Milwaukee’s voucher program in which test scores rose following the introduction of such mandates.

Patrick Wolf, director of the research team that conducted the study, has now responded, explaining that his team’s results do not necessarily support Fordham’s claim:

[B]y taking the standardized testing seriously in that final year, the schools simply may have produced a truer measure of student’s actual (better) performance all along, not necessarily a signal that they actually learned a lot more in the one year under the new accountability regime….

What about the encouraging trend that lower-performing schools in the MPCP are being closed down?  [Fordham] mentions that as well and attributes it to the stricter accountability regulations on the program.  That phenomenon of Schumpeterian “creative destruction” pre-dated the accountability changes in the choice program, however, and appears to have been caused mainly by low enrollments in low-performing choice schools, as parents “voted with their feet” against such institutional failure. Sure, the new high-stakes testing and public reporting requirements might accelerate the creative destruction of low-performing choice schools in Milwaukee, but that remains to be seen. [emphasis added]

But there is a deeper problem with the Fordham claim, to which Wolf alludes: a single study, no matter how carefully executed, is not a scientific basis for policy. Because a single study is not science. Science is a process of making and testing falsifiable predictions. It is about patterns of evidence. Bodies of evidence. Fordham offers only a toe.

And Fordham’s preferred policy not only lacks a body of supporting evidence, it is undermined by a large body of evidence. When I reviewed the within-country studies comparing outcomes among different types of school systems worldwide in 2009, I sorted the results into two categories: 1) all studies that compared “public” schools to “private” schools, where those terms were loosely defined; and 2) studies that compared “market” schools to “monopoly” schools. “Market” schools were those paid for at least in part directly by parents and only minimally regulated. “Monopoly” schools were public school systems such as those common in the U.S.

The purpose of these separate categorizations was to see if limited regulation and direct parent funding make a real difference, or if private schools that are paid for entirely by the state and subjected to Fordham’s “public accountability” have the same advantages as their more market-like counterparts.

The result of this breakdown of the literature was stark. Studies looking at truly market-like education systems are twice as consistent in finding a private sector advantage as those looking at “private” schools more broadly construed (and thus including state-funded and regulated private schools).

The pattern of evidence thus seems to contradict Fordham’s belief in the merits of “public accountability” in market education systems. What it favors are policies that promote the rise of minimally regulated education markets in which parents pay at least some of the cost of their own children’s education directly themselves, whenever possible.  That’s just the sort of system likely to arise under education tax credit programs.

US-EU Trade Talks: Don’t Forget about the Tariffs

In the context of the recently launced US-EU free trade talks (formally, the “Transatlantic Trade and Investment Partnership,” or TTIP), commentators have noted that tariffs between the US and EU are low, and thus the key part of the talks will deal with so-called regulatory barriers to trade.  An article in Inside U.S. Trade observes: “Overall, the U.S. average tariff rate is 3.5 percent, although the average tariff rate on goods that the EU actually shipped to the U.S. last year was even lower, at 1.2 percent, … .”

But these average figures mask some significant “tariff peaks.”  There are lots of individual tariff rates, so if many are low or zero, that makes the average figure fairly low; nonetheless, there are plenty of high tariffs still out there.  The same article points out some US and EU tariff rates that may come up during the negotiations.  Here is the US:

U.S. light trucks tariff of 25 percent; a tariff on wool sweaters of 16 percent; a tariff on sardines of 20 percent; a tariff on tuna of 35 percent; and a tariff on leather at 20 percent

Here is the EU:

applied tariffs on honey of 17.3 percent; carrots at 13.6 percent; potatoes at 14.4 percent; strawberries at 20.8 percent; lemons at 12.8 percent, beef at 12 percent; and lamb at 12 percent

And all of those tariffs add up:

the U.S. collected about $4.5 billion in tariffs from EU products in 2012. … [Of this amount,] $900 million comes from imported German cars; about $260 million comes from Italian clothes and shoes; and about $72 million comes from cheese imports.” 

These negotiations will be complicated in a number of ways, including how to deal with diverging regulations in the US and EU.  But hopefully negotiators won’t forget the basics of free trade: Lowering or eliminating tariffs is a simple and straightforward way to boost economic growth. 

Selling Big Government

The front page of the Washington Post Metro section has an interesting headline today:

Silver Line may be tough sell in Va.

You have to know that the Silver Line is a new line for Washington’s subway system, intended to run to Reston, Va., and Dulles Airport. But when I saw it, I thought – especially with subheads indicating that Virginians prefer cars to the Metro system – it meant that it’s going to be tough to persuade frugal Virginians to agree to spend tax money on a subway line they’re not eager to use.

But no. Turns out the line is already mostly built (to Reston, though not to Dulles), and planners are worried that nobody will use it. Just like Obamacare, it looks like the planners bulled ahead with an expensive big-government scheme that wasn’t exactly popular and are now working on how to persuade people to use it.

What the Ashcroft ‘Hospital Showdown’ Was About

We’ve known for years that the STELLAR WIND surveillance program authorized by President George W. Bush led to a dramatic “Hospital Showdown” at the bedside of then–attorney general John Ashcroft. Now, documents leaked by Edward Snowden have finally given us a clearer idea of what it was really all about.

The infamous showdown took place in March 2004, while Ashcroft was recovering from illness in a hospital bed. Acting attorney general James Comey—now President Obama’s nominee to head the FBI—was refusing to reauthorize one component of the secret surveillance program, having concluded that it was illegal. This prompted White House counsel Alberto Gonzales to rush to Ashcroft’s hospital room in hopes of getting the ailing AG to countermand Comey, who was tipped off about Gonzales’ plan and sped there as well.

In the confrontation that ensued, Ashcroft supported Comey—both formally (because Comey was legally the attorney general while Ashcroft was incapacitated) and on the legal substance. When Bush reauthorized the program anyway, despite the Justice Department’s conclusion that it was unlawful, Comey threatened to resign—with Ashcroft, FBI director Robert Mueller, and other top officials reportedly ready to join him. Bush ultimately backed down, and the troublesome component was briefly suspended until it could be renewed under a different legal authority.

In 2008, we learned that the central bone of contention wasn’t warrantless wiretapping, but rather some form of data mining. And more recently, via reporting in the Washington Post and a classified NSA report leaked by The Guardian, we learned that the controversy specifically involved Internet, not telephone, metadata. That last document in particular makes it fairly clear what the controversy must have been about—at least if you’re steeped in surveillance law. For those who aren’t, this is what probably happened:

STELLAR WIND had four components, each corresponding to types of information that President Bush had authorized the NSA to collect without a court order:

  • telephone content (i.e., warrantless wiretapping)
  • Internet content
  • telephone metadata (i.e., the massive call records database)
  • Internet metadata

The administration had originally carried out this surveillance on a radical theory of “inherent presidential authority” spelled out by then–Justice Department lawyer John Yoo, which held that during wartime, the president’s surveillance powers could not be constrained by Congress, or even the Fourth Amendment. After he returned to academia in 2003, however, his successors grew uncomfortable with his leaps of legal logic and stopped relying on his questionable opinions on a broad range of counterterrorism issues. To justify Bush’s surveillance programs, DOJ lawyers switched to the theory, spelled out at length in a January 2006 white paper, that Congress’s Authorization for the Use of Military Force (AUMF) against Al Qaeda and their affiliates had created a tacit exception to the Foreign Intelligence Surveillance Act (FISA). Though FISA is supposed to be the “exclusive means” by which intelligence surveillance is conducted, DOJ attorneys argued that the AUMF authority to use “all necessary and appropriate force” against those who the president “determines planned, authorized, committed or aided” the September 11 attacks necessarily included the power to conduct surveillance, superseding FISA’s judicial review requirements.

Bipartisanship at Its Finest

“Bipartisanship” sounds like a good idea in theory, but it usually ends up as broad congressional agreement that the American people have too many liberties or too much money. However, there is one area in which there is a growing bipartisan effort toward increased individual liberty: fighting overcriminalization.

Today, the House Judiciary Committee’s Overcriminalization Task Force held its second hearing, in which members of Congress asked two leading legal experts about the importance of restoring some sanity to federal law. Specifically, this hearing focused on the lack of mens rea—that is, criminal intent—in many federal criminal prosecutions. Put simply, as the law stands, an American can unknowingly and accidentally break federal law yet still be held criminally liable for felonies in federal courts. The conduct that leads to these prosecutions is often not serious, and sometimes nothing more than an administrative mistake. Other times, these offenses are simply the result of overzealous federal prosecutors stretching the limits of broad statutory or regulatory language to pad their conviction totals without much effort or expenditure. Yet these seemingly harmless acts can trigger prosecutions that can cost families their livelihoods or even land innocent people in federal prison.

The abuse of the law is so clear that, throughout the hearing that lasted just over an hour, 10 members of Congress and two witnesses—Norman Reimer of the National Association of Criminal Defense Lawyers and law professor John Baker—found very little about which to disagree. You can watch the very heartening and informative hearing here (action begins at the 19:00 minute mark, just after 9:03AM), via the Library of Congress on USTREAM.

For a primer on overcriminalization, I highly recommend Cato’s new video with Families Against Mandatory Minimums’ Molly Gill:

For more Cato on overcriminalization, see here and here.