Tag: Barack Obama

Barack Obama “Fatally Conceited” on Education

The AP reports today that president Obama wants the nation’s school districts to close 5,000 failing schools and re-open them with new principals and teachers. Here is why this won’t work:

  • Typically, public schools only dismiss teachers when they are forced to reduce their workforce for budget reasons, but the president has just infused the system with $100 billion to prevent such dismissals. And when teachers are let go, it is done starting with those with the least seniority, not the lowest performance. So the hundreds of thousands of teachers displaced from failing schools will simply move to other schools rather than being replaced by better teachers. This has been going on for decades. It is called “the parade of the lemons.” Overall, it achieves nothing.
  • The new principals who take over the formerly failing schools have to come from somewhere. So for every school that gets one of the system’s “good” principals, there will be another school that loses one. Public schooling has no incentive structure to ensure that it can identify, hire, and retain competent administrators to strengthen its ranks.

What the president is trying to do in education – as in the auto industry – is to replace the web of market forces that close failing businesses in the private sector with his own personal diktat. This is Hayek’s Fatal Conceit.

The market solves the problem of failing schools by allowing consumers to chose the ones that serve them best, which simultaneously accomplishes two things: it drives failing schools to either improve or go out of business, and it provides incentives for the expansion of successful schools and the hiring of effective teachers and administrators.

As I wrote here, and in expanded and updated form in vol. 3, no. 1, of the Journal of School Choice, the international scientific evidence reveals the overwhelming superiority of market over monopoly schooling. President Obama’s educational dirigism will fail.

Judge Sonia Sotomayor’s Philosophy of Judging

Judge Sonia Sotomayor of the 2nd Circuit Court of Appeals has been mentioned as a possible Supreme Court nominee.  She also has been caught on tape explaining her view of a judge’s role.  Reports the Washington Post:

As White House press secretary Robert Gibbs put it, Obama is looking for “somebody who understands how being a judge affects Americans’ everyday lives.”

Congressional conservatives have reacted anxiously to that qualification, fearing that it means a nominee who is more interested in making the law than in interpreting it.

One possible candidate for the seat, Judge Sonia Sotomayor of the U.S. Court of Appeals for the 2nd Circuit, appeared to walk close to that line in a video that emerged yesterday. Sotomayor would be the first Latino and the third woman to serve on the high court.

Speaking at Duke University in 2005, Sotomayor said, “All of the legal defense funds out there, they’re looking for people with court of appeals experience” because “the court of appeals is where policy is made.”

She then sought to soften the statement, adding lightly, “I know this is on tape and I should never say that, because we don’t make law, I know. Um, okay. I know. I’m not promoting it, I’m not advocating it.” The audience laughed as she brushed off the statement, perhaps sarcastically.

Making policy.  Yes, it is indisputable that that’s what judges often do.  But is that what they are supposed to do? 

President Barack Obama seems to think so, when he talks about the importance of “empathy” in judges.  (With whom do I empathize in this First Amendment case:  the U.S. Attorney General or the New York Times?  I vote for the Times!)  However, the Senate might want to debate this issue before approving someone to fill Justice David Souter’s vacancy, especially if the nominee shares the president’s apparent view that empathy is a substitute for jurisprudence in interpreting the law and Constitution.

Name That Company: Fiasco

NPR asks listeners what the new company created by President Obama out of the remains of the Chrysler corporation, to be controlled by the United Auto Workers, funded by the American taxpayers, and managed by Fiat, should be called.

One listener suggested AutomObama, with the slogan ”You’ll Be Paying on It for Years.” Another offered “FIAT: Fix It Again, Barack.”

Of course, the name Fiat works pretty well for this new company. After all, “fiat” means, according to Webster’s, ” a command or act of will that creates something without or as if without further effort” or ”an authoritative or arbitrary order.” (And note that when you look up “fiat” in Webster’s, you get an ad for the new company.)

But it’s hard to beat the name suggested by most listeners: Fiasco.

Like FDR — In a Really Bad Way

President Barack Obama based his candidacy in part on the promise to set a new tone in Washington.  But we saw a much older tone emerge with his demonization of hedge funds over the Chrysler bankruptcy.  Reports the Washington Post:

President Obama’s harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy yesterday sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker’s debt.

Hedge funds and investment managers were irate at Obama’s description of them as “speculators” who were “refusing to sacrifice like everyone else” and who wanted “to hold out for the prospect of an unjustified taxpayer-funded bailout.”

“Some of the characterizations that were used today to refer to us as speculators or to say we’re looking for a bailout is really unfair,” said one executive who spoke on condition of anonymity because of the sensitivity of the matter. “What we’re looking for is a reasonable payout on the value of the debt … more in line with what unions and Fiat were getting.”

George Schultze, the managing member of the hedge fund Schultze Asset Management, a Chrysler bondholder, said, “We are simply seeking to enforce our bargained-for rights under well-settled law.”

“Hopefully, the bankruptcy process will help refocus on this issue rather than on pointing fingers at lenders,” he said.

I won’t claim any special expertise to parse who is responsible for what in the crash of the U.S.  (meaning Big Three) auto industry.  However, attacking people for exercising their legal rights and trashing those who make their business investing in companies hardly seems like the right way to get the U.S. economy moving again.

During the Depression, FDR’s relentless attacks on business and the rich almost certainly added to a climate of uncertainty that discouraged investment during tough times.  Why put your money at real risk when the president and his cohorts seem determined to treat you like the enemy?  While President Obama need not treat gently those who contributed to the current crisis by acting illegally or unscrupulously, he should not act as if those who simply aren’t willing to turn their economic futures over to the tender mercies of the White House are criminals.

We’ve just lived through eight years of bitter partisan warfare.  The president shouldn’t replace that with a jihad against businesses that resist increased government direction of the economy.

Love the Cards, Hate the Card Issuers

God hates the sin but loves the sinner, we are told.  Americans have a similar attitude towards credit cards.  They love the cards but hate the card issuers.

Naturally, President Barack Obama has picked up on this sentiment and wants the credit card companies to be “fair.”  Reports the Washington Post:

The Obama administration yesterday called for an end to unfair credit card industry practices such as retroactive interest rate increases for any reason, late-fee traps that penalize borrowers with weekend or middle-of-the-day deadlines and teaser rates that last less than six months.

In a written statement released by the Treasury Department, the administration outlined practices it would like Congress to reform as it considers two bills that would crack down on the industry. One proposal would force card companies to apply payments above the minimum amount to the highest interest rate debt. To crack down on over-limit fees, the administration would also like Congress to require card companies to get customers’ permission to set up accounts so transactions over the limit can still be processed.

There are lots of reasons to criticize the practices of  credit card companies, but many of the rules are simply mechanisms to charge riskier borrowers more.  If you pay off your bill every month, you don’t pay the extra fees and interest.  If you are more disorganized, short on cash, or both, you pay more. 

Higher charges make it possible to provide more credit to more people.  Of course, politicians believe in the latter but not the former.  Banks should provide credit cards, make loans, and issue mortgages to everyone, irrespective of credit standing, at rates akin to those charged Bill Gates.  Anything more is viewed as a variant of “predatory” lending deserving condemnation.

Maybe it would be best for some people not to buy so much on credit, but that isn’t – at least so far – the government’s decision.  However, it would be more honest if government branded people with the Scarlet C and banned them from borrowing than prohibiting companies from charging higher rates and fees to reflect higher credit risks.

The credit card debate is stranger than most in Washington.  Listening to critics you’d think that the card companies were dragooning people off the streets, forcing them at gunpoint to sign up for cards, and demanding that they spend money else their children will be kidnapped and sold into slavery.  Precisely who was forced to accept and use these terrible cards with their terrible terms?  No one.

Instead of posturing as defenders of the body politic, crusading politicians should, as my friend Don Boudreaux of George Mason University suggested,  give up their day jobs and start credit card companies.   These entrepreneurs then could offer consumers better cards with less onerous terms, making everyone better off.

Any takers?

The War in Afghanistan Is about to Turn Nastier

afghanistanWhile Iraq’s security situation has been improving–though the possibility of revived sectarian violence remains all too real–the conflict in Afghanistan has been worsening.  The challenge for allied (which means mostly American) forces is obvious, which is why the Obama Administration is sending more troops.

But the administration risks wrecking the entire enterprise by turning American forces into drug warriors.

Reports the New York Times:

American commanders are planning to cut off the Taliban’s main source of money, the country’s multimillion-dollar opium crop, by pouring thousands of troops into the three provinces that bankroll much of the group’s operations.

The plan to send 20,000 Marines and soldiers into Helmand, Kandahar and Zabul Provinces this summer promises weeks and perhaps months of heavy fighting, since American officers expect the Taliban to vigorously defend what makes up the economic engine for the insurgency. The additional troops, the centerpiece of President Obama’s effort to reverse the course of the seven-year war, will roughly double the number already in southern Afghanistan. The troops already fighting there are universally seen as overwhelmed. In many cases, the Americans will be pushing into areas where few or no troops have been before.

Through extortion and taxation, the Taliban are believed to reap as much as $300 million a year from Afghanistan’s opium trade, which now makes up 90 percent of the world’s total. That is enough, the Americans say, to sustain all of the Taliban’s military operations in southern Afghanistan for an entire year.

“Opium is their financial engine,” said Brig. Gen. John Nicholson, the deputy commander of NATO forces in southern Afghanistan. “That is why we think he will fight for these areas.”

The Americans say that their main goal this summer will be to provide security for the Afghan population, and thereby isolate the insurgents.

But because the opium is tilled in heavily populated areas, and because the Taliban are spread among the people, the Americans say they will have to break the group’s hold on poppy cultivation to be successful.

No one here thinks that is going to be easy.

Indeed.

The basic problem is that opium–and cannabis, of which Afghanistan is also the world’s largest producer–funds not only the Taliban, but also warlords who back the Karzai government and, most important, the Afghan people.  The common estimate is that drugs provide one-third of Afghanistan’s economic output and benefit a comparable proportion of the population.  Making war on opium inevitably means making war on the Afghan people.

As both Ted Galen Carpenter and I have been arguing, most recently in speeches to various World Affairs Councils, diverting military attention to the drug war risks the entire enterprise in Afghanistan.  Already some drug-running warlords have been refusing to give intelligence to allied commanders and are killing government anti-drug officials.  Broader popular sentiments also turn against the allies when they deprive farmers of their most remunerative livelihood.

Washington has no obvious long-term answer to the opium trade–only legalization/decriminalization would take the money out of illicit drug production, but American politicians refuse to admit the obvious.  In any case, the Obama administration should focus on the war against the Taliban and al-Qaeda.  Ultimately, we should emphasize a solution which safeguards America’s fundamental security objectives in Afghanistan, namely, which precludes any terrorist training camps and sanctuary for those who attack Americans.  Once we achieve these goals and bring American military personnel home, we can debate doing more about Afghanistan’s opium fields.