Tag: welfare

Cato Unbound Update

This month’s issue of Cato Unbound has drawn an extraordinarily hostile response from a couple of mainstream online publications. Writing at Salon, Michael Lind inferred, mistakenly, that our interest in Seasteading and other radical libertarian projects was due to our disappointment that Republicans lost in the 2008 election. Because this issue was my idea, I feel I can speak effectively to the charge.

As I see things, it was basically impossible to cast either John McCain or Barack Obama as a libertarian. Neither of them shared the policy goals of the Cato Institute to any appreciable degree. Speaking as a private individual, I didn’t vote for either of them, and I don’t regret my choice. I found both Democrats and Republicans profoundly unappealing this election cycle.

This issue of Cato Unbound was motivated solely by my desire to see one particularly radical branch of libertarianism publicly confront its critics. I wanted to see how well it could hold up. Whether it stood or fell, the issue would have served its purpose. Electoral politics had nothing to do with it.

As our disclaimer makes clear, Cato Unbound doesn’t necessarily reflect the opinions of the Cato Institute. No endorsement is implied. Instead, we strive to present ideas and arguments that will be interesting to libertarians and also, if possible, to the general public.

Sometimes this means soliciting opinions that are very, very far from the American mainstream, and also far from our own views. It was a proud day for me when a prominent climate change blog suggested that Hell had frozen over – because the Cato Institute had published a piece by Joseph Romm. But that’s just the kind of place that Cato Unbound has always tried to be. We court controversy.

Some of Lind’s harshest barbs were reserved for contributor Peter Thiel, and for his suggestion that, demographically speaking, women have tended to oppose libertarian policies:

According to Thiel, one problem with democracy is that women have the right to vote:

Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women – two constituencies that are notoriously tough for libertarians – have rendered the notion of ‘capitalist democracy’ into an oxymoron.

What could more beautifully illustrate the pubescent male nerd mentality of the libertarian than Thiel’s combination of misogyny with the denial of aging and death? We had a nice John Galt libertarian paradise in this country, until girls came along and messed it up!

Thiel continues:

In our time, the great task for libertarians is to find an escape from politics in all its forms – from the totalitarian and fundamentalist catastrophes to the unthinking demos that guides so-called ‘social democracy.’

After considering the possible mass migration (if that is not a contradiction in terms) of libertarians to cyberspace and outer space, he opts for Fantasy Island:

The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism. For this reason, all of us must wish Patri Friedman the very best in his extraordinary experiment.

Here’s an idea. Thiel could use his leverage as a donor to combine the Seasteading Institute with the Methuselah Foundation and create a make-believe island where girls aren’t allowed to vote and where nobody ever has to grow up. Call it Neverland. It would be easy for libertarian refugees from the United States and the occasional neo-Confederate to find it. Second star to the right, and straight on till morning.

Emphasis added. Owen Thomas at Gawker jumped to about the same conclusion, but with even more ad hominem.

Yet Thiel’s claim is not that women should be denied the vote. He writes only that women have tended to favor policies and candidates he opposes, and which he thinks are bad for the country. This seems – to my mind at least – regrettable, but also generally true. Thiel might have chosen his words more carefully, but it’s still quite a logical leap from what he actually wrote to demanding the end of women’s suffrage. Of course women should be able to vote. It’s ridiculous to suggest otherwise. We libertarians just need to do a better job of convincing them that voting in favor of individual liberty and free markets are the best choices they can make.

Consider that a Democrat might complain that white evangelical Christians don’t support enough Democrats, and that this works out badly for the country. No one would ever conclude that Democrats want to take away the votes of white evangelical Christians. We would all figure that they are just confronting a failure of practical politics, and perhaps trying to do better at realizing their particular vision of the world. That’s what Thiel was doing too, albeit not via electoral politics. Something about libertarians, however, seems to demand that some people read us as uncharitably as possible.

Seasteading proposes to create a demonstration of how a libertarian society might work. Its proponents believe that if it works, everyone will be drawn to it, including women. Will they succeed? I have some serious doubts, to be honest.

That’s why I set up this issue of Cato Unbound, and why I think the discussion has been valuable.

Who’s Blogging about Cato

Here’s a round-up of bloggers who are writing about Cato research and commentary:

  • QandO’s Michael Wade offered his own thoughts on the New York Times blogger who said Cato’s voice against bailouts has not met her “expectations of adequate noise.”
  • The Atlantic’s Clive Crook reviewed the new Cato book, The Beautiful Tree, which explains how private education efforts are empowering children in Third World nations.
  • Blogging on Tax Day, Jacob Grier cited Charlotte Twight’s essay in Cato Journal on the history of income tax withholding in the United States.
Topics:

Cato and the Bailouts: A Correction for the NY Times ‘Economix’ Blog

At the New York Times Economix blog, economist Nancy Folbre of the University of Massachusetts writes:

The libertarian Cato Institute often emphasizes the issue of corporate welfare, but it’s remained remarkably quiet so far on the topic of bailouts.

Excuse me?

Since she linked to one of our papers on corporate welfare, we assume she’s visited our site. How, then, could she get such an impression? Cato scholars have been deploring bailouts since last September. (Actually, since the Chrysler bailout of 1979, but we’ll skip forward to the recent avalanche of Bush-Obama bailouts.) Just recently, for instance, in – ahem – the New York Times, senior fellow William Poole implored, “Stop the Bailouts.” I wonder if our commentaries started with my blog post “Bailout Nation?” last September 8? Or maybe with Thomas Humphrey and Richard Timberlake’s “The Imperial Fed,” deploring the Federal Reserve’s help for Bear Stearns, on April 14 of last year?

Cato scholars appeared on more than 90 radio and television programs to criticize the bailouts during the last quarter of 2008. Here’s a video compilation of some of those appearances.

Folbre complains that some people seem more concerned about welfare – TANF, in the latest federal acronym – than about welfare for bankers – TARP. Google says that there are 138 references to TANF over the past 13 years or so on the Cato website, and 231 references to TARP in the past few months.

Now she has a legitimate point. Welfare for the rich is at least as bad as welfare for the poor. And as much as welfare for the poor has cost taxpayers, the new welfare for banks, insurance companies, mortgage companies, and automobile industries is costing us more. Samuel Brittan of the Financial Times has written that “reassignment,” an economic policy that changes individuals’ ranking in the hierarchy of incomes, is far more offensive than a policy of redistribution, which in his idealized vision would merely raise the incomes of the poorest members of society. By that standard, taxing some businesses and individuals to subsidize the high incomes of others is certainly offensive. Of course, Brittan underemphasized the harm done by welfare to people who become trapped in dependency. But there’s good reason to oppose both TANF and TARP, and Cato scholars have done both.

Lest the good work of Cato’s New Media Manager Chris Moody go under-utilized, here’s a probably incomplete guide to Cato scholars’ comments on the bailouts of the past few months. (Note that it doesn’t include blog posts, of which there have been many.) Quiet? I don’t think so:

Articles:

September 9, 2008, “Fannie/Freddie Bailout Baloney,” Gerald P. O’Driscoll Jr., New York Post.

September 18, 2008, “Why Bailouts Scare Stocks,” Alan Reynolds, New York Post.

September 17, 2008, “Bailout-Mania,” Jagadeesh Gokhale and Kent Smetters, Forbes.com.

October 1, 2008, “The Bailout’s Essential Brazenness,” Jay Cochran, Cato.org.

October 3, 2008, “The Big Bailout – What’s Next?” Warren Coats, Cato.org

October 13, 2008, “Should Taxpayers Fund the American Dream?,” Daniel J. Mitchell, Los Angeles Times.

October 20, 2008, “Is the Bailout Constitutional?,” Robert A. Levy, Legal Times.

November 11, 2008, “There’s Nothing Wrong with a “Big Two”,” Daniel J. Ikenson, New York Daily News.

November 21, 2008, “Don’t Bail Out the Big Three,” Daniel J. Ikenson, The American.

November 5, 2008, “Is it Constitutional?,” Richard W. Rahn, Washington Times.

December 14, 2008, “Consequences of the Bailout,” Richard W. Rahn, Washington Times.

December 5, 2008, “Bail Out Car Buyers?,” Daniel J. Ikenson, Los Angeles Times.

December 3, 2008, “Big Three Ask for Money — Again,” Daniel J. Ikenson, Los Angeles Times.

December 10, 2008, “Dissecting the Bailout Plan,” Alan Reynolds, Wall Street Journal.

January 14, 2009, “Bailing out the States,” Michael New, Washington Times.

February 28, 2009, “Stop the Bailouts,” William Poole, The New York Times.

Papers:

Bailout or Bankruptcy?,” by Jeffrey A. Miron (Cato Journal, Winter 2009)

Freddie Mac and Fannie Mae: An Exit Strategy for the Taxpayer,” by Arnold Kling (September 8, 2008)

Financial Crisis and Public Policy,” by Jagadeesh Gokhale (March 23, 2009)

Bright Lines and Bailouts: To Bail or Not To Bail, That Is the Question,” by Vern McKinley and Gary Gegenheimer (April 20, 2009)

On Television and Radio:

Dan Ikenson discusses auto bailout

September 30, 2008 Daniel J. Mitchell discusses the failed bailout on NPR Affiliate KPCC’s “The Patt Morrison Show”

September 29, 2008 Peter Van Doren discusses government bailouts on WTTG FOX 5.

September 29, 2008 Daniel J. Mitchell discusses the failed bailout on NPR Affiliate KPCC’s “The Patt Morrison Show”

September 26, 2008 Jagadeesh Gokhale discusses the bailout on BNN (CANADA)

September 26, 2008 Steve H. Hanke discusses the bailout on BBC Radio’s “Have Your Say”

September 25, 2008 Patrick Basham discusses the bailout on Radio America’s “The Michael Reagan Show”

September 24, 2008 William A. Niskanen discusses government bailouts on WUSA 9

September 24, 2008 William Poole discusses government bailouts on NPR DC Affiliate WAMU’s “The Diane Rehm Show”

September 23, 2008 William A. Niskanen discusses government bailouts on CNBC’s “Closing Bell”

September 23, 2008Bert Ely discusses government bailouts on WOR’s “The John Gambling Show”

September 22, 2008 Daniel J. Mitchell discusses government bailouts on the CBS “Early Show”

September 22, 2008 William Poole discusses government bailouts on Bloomberg Live.

September 22, 2008 William A. Niskanen discusses government bailouts of financial institutions on Bloomberg TV

September 22, 2008 Steve H. Hanke discusses government bailouts of financial institutions on Bloomberg Radio’s “On the Money”

September 19, 2008 Daniel J. Mitchell discusses government bailouts on Federal News Radio

September 18, 2008 Daniel J. Mitchell discusses the AIG bailout on KTAR’s “Ankarlo Mornings”

September 17, 2008 Daniel J. Mitchell discusses the AIG bailout on WTTG FOX 5

September 17, 2008 Daniel J. Mitchell discusses the AIG bailout on FOX’s “America’s Election HQ”

September 10, 2008 Daniel J. Mitchell discusses a proposed bailout for the auto industry on Marketplace Radio.

October 24, 2008 Gerald P. O’Driscoll Jr. discusses the fallout of the bailout on FOX Business Network’s “Cavuto”

October 15, 2008 Daniel J. Mitchell discusses the bailout on Federal News Radio

October 14, 2008 Daniel J. Mitchell discusses the financial crisis on CNN’s “American Morning”

October 14, 2008 Daniel J. Mitchell discusses the banking crisis on BBC World

October 14, 2008 Gerald P. O’Driscoll Jr. discusses the banking crisis on WBAL Radio. (Baltimore, MD)

October 13, 2008 Daniel J. Mitchell discusses the financial crisis on the FOX Business Network

October 9, 2008 Jim Powell discusses the economy on FOX Business

October 9, 2008 Daniel J. Mitchell discusses the current treasury plan on Reuters TV.

October 9, 2008 Daniel J. Mitchell discusses the bailout on the WIBA’s “Upfront w/Vicki McKenna” (Madison, WI)

October 2, 2008 Daniel J. Mitchell discusses the bailout bill on WRVA’s “Morning Show” (West Virginia)

October 1, 2008 Daniel J. Mitchell discusses the bailout plan on CNBC’s “On the Money.”

October 1, 2008 Daniel J. Mitchell discusses the bailout plan on CNBC’s “Power Lunch”

October 1, 2008 William Poole discusses the bailout on KMOX’s “The Charlie Brennan Show” (St. Louis, MO)

October 1, 2008 Daniel J. Mitchell discusses the failed bailout on WTOP Radio (Washington, D.C.)

Washington’s Government-Centric View of the World

Too many people in Washington look out upon the beauty and bounty of America and see a vast wasteland, enlivened only by government programs. If government isn’t doing it, they think, then it isn’t being done. When the Republicans threatened to nick the budget of the National Endowment for the Arts, First Lady Hillary Rodham Clinton wailed that the proposal “not only threatens irrevocable damage to our cultural institutions but also to our sense of ourselves and what we stand for as a people.” Seriously, she thought that if the then-$167 million of the NEA were eliminated, the $37 billion that Americans spent on the arts that year would somehow disappear in a puff of smoke?

Sen. Edward M. Kennedy was even more sweeping when he said  in 1992, “The ballot box is the place where all change begins in America” – conveniently forgetting the market process that has brought us such changes as the train, the skyscraper, the automobile, the personal computer, and charitable or self-help endeavors from settlement houses to Alcoholics Anonymous to Comic Relief.

And today the Washington Post weighs in with the chart below. It’s titled “Percent of GDP spent on social/family expenditures,” and it shows the United States at a shockingly low 0.7 percent, while Obama-esque countries like Sweden and France are above 3 percent. But could it really be true that America spends less than 1 percent of its wealth on families and children? Of course not. The proper title for the chart would be “Percent of GDP spent by government on social/family expenditures.” (Indeed, given the federal nature of the United States, it’s possible that the proper title would be “Percent of GDP spent by the central government on social/family expenditures.”) Every American family spends a large portion of its income on children’s needs, and a larger portion on the needs of children and parents.

The point of the article, as the caption above the chart indicates, is to argue that the Japanese government needs to spend more on programs that would encourage women to join the paid workforce. (If the government hired all the mothers in Japan and paid them to care for their neighbors’ children, would that be a better world? It certainly would raise Japan’s position on the Post’s chart!) If that’s what Post reporters believe, they’re certainly free to advocate that position. But they shouldn’t assume or imply that the government is the entire society. Families in Japan and the United States spend most of their income – or at least most of their after-tax income – on child and family needs. The chart ignores that reality and seeks to make Japanese and Americans embarrassed that government taxes and spends less in their countries than in the European welfare states.

 

Demand for Subsidies

My op-ed on National Review Online today provided new information about the increasing number of federal subsidy programs. The federal welfare state is expanding rapidly.

One friendly reader emailed me:

Ever cross your mind that there’s a reason government programs increase over time? I’ll clue you in: Programs increase because of public demand.

It’s not rocket science, people want more services. Period. Somebody’s got to pay for them. Hences taxes. Or perhaps borrowing. Or a combination of both. In any event, there’s no evidence people are willing to get along with fewer services.

The situation seems simple to me; so why can’t you ideologues on the far right understand what’s going on. Instead, you simply go on bemoaning the existence of programs and taxes you don’t like.

There are numerous problems with this reader’s views, including constitutional problems. But one thing that strikes me is the underlying assumption of the “public interest theory of government,” or the idea that democracies and bureaucracies operate to efficiently provide “services.”

In reality, there are structural problems in government that bias policymakers toward fiscal irresponsibility, as our current $1.8 trillion federal deficit indicates. The issue is not ideology, it is scientific: Does the government actually work as the optimists, like this reader, believe? I think the empirical evidence is in on that question.

New Podcast: “Stimulus: The Welfare Un-Reform”

When President Obama signed his massive spending bill into law yesterday, many of the provisions of the 1990s welfare reform were chipped away, says Cato Senior Fellow Michael D. Tanner in today’s Cato Daily Podcast. Parts of the new law actually offer states incentives to add people to their welfare rolls, Tanner says.

They didn’t repealed the ’96 act, but what they have done is chip away at the foundations and the very idea that you’re supposed to hold down your rolls rather than increase them, particularly when you take this into the context of all the other welfare spending….There really is a surprising increase in the welfare state in this bill.

In a New York Post op-ed, Tanner expands on the welfare-friendly provisions of the stimulus plan:

This is radical change. States that succeed in getting people off welfare would lose the opportunity for increased federal funding. And states that make it easier to stay on welfare (by, say, raising the time limit from two years to five) would get rewarded with more taxpayer cash. The bill would even let states with rising welfare rolls still collect their “case-load reduction” bonuses.

In short, the measure will erode all the barriers to long-term welfare dependency that were at the heart of the 1996 reform.