Topic: Cato Publications

A Friedman Prize for Courage

The 2016 Milton Friedman Prize for Advancing Liberty has been awarded to Flemming Rose and will be formally presented at a dinner in New York on May 25. (Tickets still available!)

Flemming Rose is a Danish journalist. In the 1980s and 1990s he was the Moscow correspondent for Danish newspapers. He saw the last years of Soviet communism, with all its poverty, dictatorship, and censorship, and the fall of communism, only to be disappointed again with the advance of Russian authoritarianism. After also spending time in the United States, he became an editor at the Danish newspaper Jyllands-Posten. In 2005 he noticed “a series of disturbing instances of self-censorship” in Europe. In particular, “a Danish children’s writer had trouble finding an illustrator for a book about the life of Muhammad. Three people turned down the job for fear of consequences. The person who finally accepted insisted on anonymity, which in my book is a form of self-censorship.”

Rose decided to take a stand for free speech and the open society. He asked 25 Danish cartoonists “to draw Muhammad as you see him.” Later, he explained that 

We [Danes] have a tradition of satire when dealing with the royal family and other public figures, and that was reflected in the cartoons. The cartoonists treated Islam the same way they treat Christianity, Buddhism, Hinduism and other religions. And by treating Muslims in Denmark as equals they made a point: We are integrating you into the Danish tradition of satire because you are part of our society, not strangers. The cartoons are including, rather than excluding, Muslims.

Rose promised to publish all the cartoons he received. He got 12. They were by turns funny, provocative, insightful, and offensive. One implied that the children’s book author was a publicity seeker.  One mocked the anti-immigration Danish People’s Party. One portrayed the editors of Jyllands-Posten as a bunch of reactionary provocateurs. The most notorious depicted the prophet with a bomb in his turban.

A firestorm erupted. Protests were made. Western embassies were attacked in some Muslim countries. As many as 200 people were killed in violent protests. Rose and the turban cartoonist were the subject of death threats. To this day Rose travels with security. 

Is Rose in fact a provocateur or anti-Muslim? No. When we discovered that his book A Tyranny of Silence had not been published in English, that was the first question we asked. From reading the manuscript, and from talking to contacts in Denmark and Europe, we became confident that Rose was a genuine liberal with a strong anti-authoritarian bent, sharpened during his years as a reporter in the Soviet Union. His book, recently reissued with a new afterword, confirms that. Chapter 10, “A Victimless Crime,” traces the history of religious freedom from the Protestant Reformation to the challenges faced today by Muslims of different religious and political views.

Negative Effects of Minimum Wages

California and New York have approved bills to increase their state minimum wages over time to $15 an hour. Presidential candidates Hillary Clinton and Bernie Sanders favor raising the federal minimum wage. But such mandated increases do more harm than good, and they hurt the exact groups of people that policymakers say that they want to help.

Labor economist Joseph Sabia of San Diego State University summarized the academic evidence on minimum wages in this 2014 bulletin for Cato.

Sabia’s own statistical research with economist Richard Burkhauser “found no evidence that minimum wage increases were effective at reducing overall poverty rates or poverty rates among workers.” And a study by economists David Neumark and William Wascher “found that while some poor workers who kept their jobs after minimum wage increases were lifted out of poverty, others lost their jobs and fell into poverty.”

A Libertarian Argument for Bernie Sanders?

Will Wilkinson notes that there is a libertarian argument for Bernie Sanders. I’m not sure I buy the precise point Wilkinson is making. Sanders says he wants to make the United States more like Finland, Sweden, and Denmark. And those countries do indeed rank higher than the United States in the Cato Institute’s Human Freedom Index, compiled by my colleagues Ian Vásquez and Tanja Porčnik. But Sanders wants to emulate those countries in the ways they are less free than the United States (i.e., expanding government transfers), not in the ways they are more free (taxes and regulation). I think this powerful Sanders ad featuring Eric Garner’s daughter Erica is a much better libertarian argument for Sanders.

Taking (Tax) Credit for Education

One of the most promising recent developments in education policy has been the widespread interest in education savings accounts (ESAs). Five states have already enacted ESA laws, and several states are considering ESA legislation this year. Whereas traditional school vouchers empower families to choose among numerous private schools, ESAs give parents the flexibility to customize their child’s education using a variety of educational expenditures, including private school tuition, tutoring, textbooks, online courses, educational therapies, and more.

Today the Cato Institute released a new report, “Taking Credit for Education: How to Fund Education Savings Accounts through Tax Credits.” The report, which I coauthored with Jonathan Butcher of the Goldwater Institute and Clint Bolick (then of Goldwater, now an Arizona Supreme Court justice), draws from the experiences of educational choice policies in three states and offers suggestions to policymakers for how to design a tax-credit-funded ESA. Tax-credit ESAs combine the best aspects of existing ESA policies with the best aspects of scholarship tax credit (STC) policies. Like other ESA policies, tax-credit ESAs empower families to customize their child’s education. And like STC policies, tax-credit ESAs rely on voluntary, private contributions for funding, making them more resistant to legal challenges and expanding liberty for donors.

Here’s how it would work: individuals and corporations would receive tax credits in return for donations to nonprofit scholarship organizations that would set up, fund, and oversee the education savings accounts. There’s already precedent for this sort of arrangement. In Florida, the very same nonprofit organizations that grant scholarships under the state’s STC law also administer the state’s publicly funded ESA. Moreover, New Hampshire’s STC law allows scholarship organizations to help homeschoolers cover a variety of educational expenses, similar to ESA policies in other states. 

For more details on how to design tax-credit ESAs, how they would work, and the constitutional issues involved, you can read the full report here. You can also find a summary of the report at Education Next.

Do Non-Profits Criticize Foundations? Or Are They Too Frightened to Do So?

Earlier this year, the National Committee for Responsive Philanthropy (NCRP) issued a report titled “Philamplify Poll Results: Nonprofits Don’t Criticize Foundations Because of Funding Fears.”

The report seeks to explain a phenomenon whose existence it does not bother to establish. Rather than presenting evidence that non-profits are in fact intimidated into silence by grantors, the report instead simply assumes that they are. Its first paragraph declares that “Given the power imbalance between foundations and grantees, grantees are often wary of providing foundations with constructive criticism.”

No evidence is presented to substantiate or quantify this claim. How often? How wary? Says who?

Assumption in hand, the NCRP is off to the races, asking its website visitors to speculate on this hypothetical question “What is the top reason why a nonprofit would choose not to openly criticize a foundation?”

Of course those speculations would be of dubious value even if the report had bothered to establish this phenomenon’s existence. The poll answers would not tell us if even one actual non-profit had held its tongue for the reason alleged, merely that some anonymous website visitor(s) thought it plausible.

Even if we grant that it might be difficult to collect hard evidence on cases of non-profits refusing to criticize prospective donors, it does not excuse publishing a “report” devoid of relevant facts.

Consider, too, that it might be comparatively easy to collect data on non-profits that have criticized foundations. An advantage of this flip-side approach to the question is that the critics themselves can be asked why they published their criticisms. I say this as the author of an empirical study whose findings were deeply unflattering to philanthropies seeking to scale-up charter school networks.

Why did I do it? It’s my job. I study comparative education policy, seeking to understand which policies are most effective in delivering the outcomes that families value. A key question within that field is to determine which policies lead most consistently to the “scaling-up” of educational excellence—which is to say the replication and/or imitation of best practices. Since that has long been a goal of donors to charter school networks I felt it important to determine empirically the extent to which their efforts were proving effective. It being an empirical study based on a large dataset (all the charter networks operating in the state of California) there was no way to predict the outcome prior to crunching the numbers. Nor was there any need for such a prediction.

Contrary to the speculations of NCRP’s website visitors, my highest priority as a think tank researcher is not to avoid antagonizing potential donors, it is maintaining my personal integrity and guarding my reputation and that of my employer for producing reliable, useful empirical research. I am certainly not alone in holding these priorities among think tank scholars. With that observation in mind, dear reader, please contact me if you have another example in which a non-profit published work critical of foundations/potential donors. I will relay the results to NCRP in the hope that they may wish to make amends for their earlier baseless, question-begging speculations.

On Soda Taxes and Purported Health Benefits

This week, the New York Times editorial board wrote in support of greater taxes on sweetened drinks, citing new research from a team Mexican and American researchers. They praise the novel design of the tax, which is levied on drink distributors rather than consumers. This caused the tax to be included in shelf prices, making the increase in total cost clear to consumers. The research found that soda consumption fell 12 percent in a year, and 17 percent among the poorest Mexicans.

The Times admits that we do not know whether any health benefits will actually result from soda taxes.  In this article in Regulation, the University of Pennsylvania’s Jonathan Klick and Claremont McKenna’s Eric Helland examined the effects of soda taxes. They conclude that a one percent increase in soda taxes led to a five percent reduction in soda consumption among young people.  But consumers substituted to other beverages.  A 6-calorie reduction in soda consumption was accompanied by an 8-calorie increase in milk consumption and a 2-calorie increase in juice consumption. Thus, the tax on soda led to an increase in overall calorie consumption, which offset the benefits of falling soda consumption. Moreover, there was “no statistically significant effect of soda taxes on body weight or the likelihood of being obese or overweight”.

Still the Slowest Recovery

Friday’s disappointing jobs report reminds us that we are still in a very slow recovery from the 2007 recession. Not only were far fewer jobs created in September than economists predicted, the estimates for July and August were revised downward. And the size of the total workforce slipped to 62.4 percent of the population, the lowest level since 1977.

The Minneapolis Federal Reserve Bank has a handy tool for monitoring the depressing news, allowing you to compare this recovery to past recoveries since World War II. Output (GDP) is recovering more slowly than in past recoveries, along with employment:

Economic Recoveries

Why is the recovery so slow? John Cochrane of the Hoover Institution examined that question in the Wall Street Journal a year ago. Here’s part of his answer:

Where, instead, are the problems? John Taylor, Stanford’s Nick Bloom and Chicago Booth’s Steve Davis see the uncertainty induced by seat-of-the-pants policy at fault. Who wants to hire, lend or invest when the next stroke of the presidential pen or Justice Department witch hunt can undo all the hard work? Ed Prescott emphasizes large distorting taxes and intrusive regulations. The University of Chicago’s Casey Mulligan deconstructs the unintended disincentives of social programs. And so forth. These problems did not cause the recession. But they are worse now, and they can impede recovery and retard growth.

If you put obstacles in the way of investment and employment, you’ll likely get less investment and employment.

A new e-book edited by Brink Lindsey, Reviving Economic Growth, presents ideas from 51 economists of widely varying perspectives on this crucial question.

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