Archives: 10/2016

You Ought to Have a Look: Misleading Storylines and False Beliefs Lead to Poor Policy

You Ought to Have a Look is a regular feature from the Center for the Study of Science.  While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic.  Here we post a few of the best in recent days, along with our color commentary. 

We highlight this week a collection of items which have a common thread—poorly informed beliefs lead to poorly formulated policy. And poorly formulated policy is worse than no policy at all.

For starters, consider this article by Cato senior fellow Johan Norberg, in support of his new book, Progress: Ten Reasons to Look Forward to the Future. Writing in CapX, Norberg looks at the reasons “Why are we determined to deny that things are getting better?” He points to how the media, in combination with our own psychological tendencies, lead us to the false assumption that the state of the world is declining, when in fact, trends are overwhelmingly in the other direction. Norberg points out that there is a danger in our misperception, “People led by fear risk curtailing the freedom that progress depends on.”

Here are some expects from his article:

A couple of years ago, I commissioned a study in which 1,000 Swedes were asked eight questions about global development. On average, every age group and every income group was wrong on all eight questions – because they all thought the world was in bad shape and getting worse. Large majorities, for example, thought that hunger and extreme poverty have been increasing, when they have in fact been reduced faster than at any other point in world history. And those who had been through higher education actually had less knowledge than the rest.

It’s not just Sweden. In Britain, only 10 per cent of people thought that world poverty had decreased in the past 30 years. More than half thought it had increased. In the United States, only 5 per cent answered (correctly) that world poverty had been almost halved in the last 20 years: 66 per cent thought it had almost doubled.

Why do we make these false assumptions? Many of them are formed by the media, which reinforces a particular way of looking at the world – a tendency to focus on the dramatic and surprising, which is almost always bad news, like war, murder and natural disasters.

…[P]eople led by fear might curtail the freedom and the openness that progress depends on. When Matt Ridley, author of The Rational Optimist, is asked what he is worried about, he usually responds “superstition and bureaucracy”, because superstition can obstruct the accumulation of knowledge, and bureaucracy can stop us from applying that knowledge in new technologies and businesses.

Johan’s full article, along with his new book, are well worth the taking the time to explore. A good place to start is this Cato book series event, where you can listen to Johan talk about his viewpoint and describe his findings.

Trump Derangement Syndrome

Back in 2003 the psychiatrist and columnist Charles Krauthammer declared a new psychiatric syndrome, “Bush Derangement Syndrome: the acute onset of paranoia in otherwise normal people in reaction to the policies, the presidency – nay – the very existence of George W. Bush.” He had a point. But derangement can be generated by support as well as opposition for a political figure.

What do we say about conservatives – people who believe, variously, in limited government, free markets, Judeo-Christian values, and the importance of character in public life – who have been forced to utter absurdities in defense of Donald Trump? It’s one thing to say that Hillary Clinton and her Supreme Court justices and her 4,000 bureaucrats are on net worse than Trump and whatever menagerie he brings to the White House. But when free-market conservatives find themselves enthusiastically defending the most protectionist presidential candidate since Pat Buchanan, or Christian conservatives are forced to say that personal character isn’t really a big issue for them, I fear that derangement has set in. Take just a few examples in the past few days.

In Thursday’s Wall Street Journal Karl Rove writes that Trump needs “a Republican House to pass his agenda.” But his agenda is trade war, deportation, and banning adherents of the Muslim faith from entering the United States. Is that an agenda a Republican House would pass? Say it ain’t so, Karl (or Paul).

Trump Adviser Peter Navarro: Reagan Critic, Industrial Policy Fan

Donald Trump always sounded just like a Bernie Sanders Democrat when talking about international trade. “We have one issue that’s very similar,” he said, “and that’s trade.”  That Trump-Sanders hostility to trade liberalization, in turn, is identical to that of the AFL-CIO and the Economic Policy Institute, a leftist think tank created and largely financed by labor unions.

It should be no surprise that Donald Trump’s most influential adviser and spokesman on international trade, Peter Navarro, is a former unsuccessful Democrat politician who seems closer to an old-style Bernie Sanders leftist Democrat than to a Bill Clinton “New Democrat.”

The only academic among Trump 13 economic advisers, Navarro returned to being an economics professor at U.C. Irvine, after losing San Diego mayoral election to Republican Susan Golding. In 1993 Navarro wrote the book, Bill Clinton’s Agenda for America.

With one caveat, the book was full of glowing praise for everything Clinton promised to do – notably lots more federal spending (which, ironically, fell substantially).

Navarro’s doubts about Clinton concerned NAFTA, which Bush created but Clinton promised to change. “I thought the NAFTA agreement ought to have been more properly called ‘SHAFTA,’” says Navarro.  But he notes that “candidate Clinton later acknowledged the problems of the environment and lost jobs raised by NAFTA, and called for wage safeguards and stricter environmental regulations. It remains to be seen whether this was merely rhetoric, or a serious concern that will have policy follow-through.”

Proposed Spending Cap in Brazil Could Be a Key for Economic Recovery and Renaissance

One of the most remarkable developments in the world of fiscal policy is that even left-leaning international bureaucracies are beginning to embrace spending caps as the only effective and successful rule for fiscal policy.

The International Monetary Fund is infamous because senior officials relentlessly advocate for tax hikes, but the professional economists at the organization have concluded in two separate studies (see here and here) that expenditure limits produce good results.

Likewise, the political appointees at the Organization for Economic Cooperation and Development generally push a pro-tax increase agenda, but professional economists at the Paris-based bureaucracy also have produced studies (see here and here) showing that spending caps are the only approach that leads to good results.

Heck, even the European Central Bank has jumped into the issue with a study that reaches the same conclusion.

This doesn’t mean balanced budget requirements are bad, by the way, but the evidence shows that they aren’t very effective since they allow lots of spending when the economy is expanding (and thus generating tax revenue). But when the economy goes into recession (causing a drop in tax revenue), politicians impose tax hikes in hopes of propping up their previous spending commitments.

With a spending cap, by contrast, fiscal policy is very stable. Politicians know from one year to the next that they can increase spending by some modest amount. They don’t like the fact that they can’t approve big spending increases in the years when the economy is expanding, but that’s offset by the fact that they don’t have to cut spending when there’s a recession and revenues are falling.

From the perspective of taxpayers and the economy, the benefit of a spending cap (assuming it is well designed so that it satisfies Mitchell’s Golden Rule) is that annual budgetary increases are lower than the long-run average growth of the private sector.

And nations that have followed such a policy have achieved very good results. The burden of government spending shrinks as a share of economic output, which naturally also leads to less red ink relative to the size of the private economy.

But it’s difficult to maintain spending discipline for multi-year periods. In most cases, governments that adopt good policy eventually capitulate to pressure from interest groups and start allowing the budget to expand too quickly.

That’s why the ideal policy is to make a spending cap part of a nation’s constitution.

That’s what happened in Switzerland early last decade thanks to a voter referendum. And that’s what has been part of Hong Kong’s Basic Law since it was approved back in 1990.

A Common Core Buyer’s Too Late Remorse

E.D. Hirsch—author of the lightning rod Cultural Literacy: What Every American Needs to Know, and a tireless advocate of content-heavy education—has just spoken truth about the Common Core. An Education Week article heralding his latest book reports that:

He calls the reading standards “empty” and “deeply flawed” because they teach all-purpose reading-comprehension strategies rather than facts and information. An entire chapter of his new book is devoted to what he refers to as “the tribulations of the common core.”

“The people who developed the common core had a choice. Either [the standards] were going to be educationally correct or they were going to be politically viable,” he said. “They chose the second.” Forty-six states agreed to adopt the standards right away, which he argues “could only be accomplished if you didn’t specify the content of the curriculum.”

The Core is indeed very light on content in English language arts, Hirsch’s primary concern. But it hasn’t changed between 2010 and today, yet Hirsch endorsed it—emphatically!—in 2013.

As I have pointed out, Hirsch’s endorsement is one of many pieces of Core support that have sewn major confusion about the Core, befuddlement that supporters have loved to pin on opponents. But the reality is that Core supporters, seemingly obsessed with getting standards nationalized, have tried to make the Core sound like all things to all people: national and comprehensive, locally controlled and minimalist. Couple that with federal coercion, and the Core has thrown schools nationwide into utterly avoidable disarray.

But there is a deeper reality illustrated here: It is very difficult, short of a dictatorship, to impose content both deep and broad on diverse people. Why? Because diverse people will not agree on what that content should be. Just evolution, or also intelligent design? The Bible, or I Am Jazz? Ethnic studies, or commonality? And the list goes on…and on. This is precisely why for the Core to be “politically viable” it had to be largely bereft of what Hirsch has spent decades crusading for: rich content.

If you want deep, robust content, the way to get it is the opposite of nationalization: educational freedom.

Fiscal Choices in the Election

An upcoming Cato event examines whether or not you should vote in the election. If you decide to go ahead with it, National Taxpayers Union (NTU) has resources to you help assess the fiscal issues at stake.

Regarding your choice for president, NTU has tallied the spending promises of Hillary Clinton, Donald Trump, and Gary Johnson. Clinton has proposed dozens of spending increases and a few cuts, which add up to a net $203 billion a year in higher spending. Trump’s promises add up to a net $20 billion a year in higher spending.

By contrast, Johnson is promising to save us money. NTU calculates that his net spending cuts would be $143 billion a year. Such reforms would be a good start, but less than my proposed cuts of $1.2 trillion a year.

If you don’t plan on voting for president, or any politician this year, another useful NTU guide describes other important issues at stake on state ballots. Here are a few highlights:

  • Marijuana legalization (and taxation) for recreational use is on the ballot in five states: Arizona, California, Maine, Massachusetts, and Nevada.
  • Tobacco tax increases are on the ballot in four states. My governor’s report noted that a dozen states have enacted tobacco tax hikes just since 2014. In the minds of some politicians, smokers are “deplorables,” so it is easy to target them.
  • New taxes on sugary drinks are on the ballot in a number of local jurisdictions. Cola drinkers are becoming a new class of deplorables.
  • Voters will decide on bond issues in many places. One statewide California proposition would authorize $9 billion in debt to fund schools and colleges. My governors report explains why state and local debt issuance is bad policy, even for capital improvements. State and local capital projects should be funded pay-as-you-go. It is cheaper, more transparent, and less conducive to corruption.
  • Coloradans will vote on Amendment 69, “which would create a government-run health care scheme (ColoradoCare) aiming to cover all residents. The amendment includes a $25 billion tax increase … This would nearly double the state’s budget.” Wow, that’s big.
  • Corporate welfare choices are on the ballot in a few places. Voters in Arlington, Texas, will decide on new taxes to fund a $1 billion stadium for MLB’s Texas Rangers. Voters in San Diego will decide on new taxes to fund a football stadium for the NFL’s Chargers.

I don’t know whether or not you should vote for president. But you should check out the NTU guide and to see what state and local issues you will be able to weigh in on.

Muslims Rapidly Adopt U.S. Social Values

Concerns about Muslim assimilation made news again this week when Donald Trump erroneously claimed that U.S. Muslim neighbors failed to report the San Bernardino shooters. But this persistent idea that U.S. Muslims are not assimilating could not be more inaccurate. In fact, U.S. Muslims—81 percent of whom are immigrants or children of immigrants—are the most socially liberal and religiously tolerant in the world and becoming more so with each passing year.

U.S. Muslims Are Adopting Americans’ Liberal Social and Religious Views

More than 80 percent of Muslim Americans are immigrants or the children of immigrants, according to the Pew Research Center’s 2014 survey. The large majority of these are immigrants who arrived since 1990. Figure 1 provides the countries of origin for U.S. Muslim immigrants. The fact that Muslim Americans are dominated by immigrants could lead to the conclusion that the views of Muslim Americans will reflect the views of Muslims worldwide. But this is not the case. They are rapidly adopting American social views and liberalizing their religious views to accommodate.

Figure 1: Countries of Origin for Muslim Immigrants (2014)

Source: Pew (2011)

As an example, the vast majority of Muslims around the world are fiercely opposed to homosexuality. Worldwide, the average country-level support across 39 countries is just 5 percent with 80 percent opposed. Yet as Figure 2 shows, in the United States in 2011, 45 percent of U.S. Muslims considered homosexuality morally acceptable—the highest in the world—compared to 47 percent who did not. While lower than the U.S. public generally, opposition to homosexuality fell 14 percentage points from 2007 to 2014, while acceptance gained 18 percentage points—a 32-point swing in less than a decade.