Topic: General

School Choice Is Nice, but It’s Freedom That’s Key

By
Neal McCluskey

This is National School Choice Week, and that’s great. Having the ability to choose a school is certainly better than being assigned to a single, government institution. But just being able to choose a school must not be the ultimate goal. That must be total educational freedom, both because freedom is the most basic of human rights, and because freedom best provides education for the whole of society.

Unfortunately, when you’re stuck in day-to-day ed policy grappling – Which studies show what about test scores? How much did New York City spend on rubber rooms? – you can easily lose sight of the major, broad reasons that educational freedom is so crucial. In honor of National School Choice Week, here’s a quick refresher:

Freedom involves choice, but a little choice is hardly freedom

You can have choice without having freedom. You don’t have freedom if you can choose between Wendy’s and McDonald’s for a burger, but are forbidden from having any other food. Or if you can select between the local Methodist and Lutheran churches, but nothing else that might satisfy your beliefs or spiritual needs.

Freedom means being able to choose from any options that others are freely willing to provide and that don’t force harm on others. We’re not particularly close to that, for any meaningful number of people, in any school choice program.

No one is omniscient

People make bad choices all the time. But guess what? That includes the people who presume to know what is “best” for each and every child. It is the inescapable reality of humanity that no person or group is even close to omniscient, which is why the argument so often proffered against choice – we can’t let people make bad choices for their kids – is utterly backwards. Because human beings are so limited, it is far safer that power reside in voluntary agreements between educators and parents than with central authorities. When bad decisions are, inevitably, made in the former, only small numbers are hurt. When in the latter, everyone goes down.

Unintended consequences

There’s been a lot of coverage lately of Rice University student Zack Kopplin’s crusade against voucher programs, which allow people to choose schools that teach creationism. Were Kopplin’s argument fundamentally that taxpayers should not have their money taken against their will to schools with which they might disagree, it would be one thing: vouchers do transfer taxpayer money, though they provide far more overall freedom than does public schooling. But Kopplin’s argument – like the arguments of so many people on numerous education issues – isn’t ultimately about freedom. It’s about prohibiting others from learning something he doesn’t like.

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Topics: 
Education and Child Policy, General

How Firms Will Adapt to Avoid ObamaCare’s Mandates (and Drive up Its Cost)

By
Michael F. Cannon

An oped in today’s Wall Street Journal explains:

How big can a company get with just 50 employees? We’re about to find out.

Thousands of small businesses across the U.S. are desperately looking for a way to escape their own fiscal cliff. That’s because ObamaCare is forcing them to cover their employees’ health care or pay a fine—either of which will cut into profits and stymie future investment and growth…

“Going protean” offers a better strategy for many businesses. Owners of protean companies create a core of strategic employees who manage the big-picture elements of the enterprise—the culture, business model, product mix, vision, strategy, etc. This core then outsources the business tasks to other corporations…

Non-core tasks could include things like accounting, marketing, product development, manufacturing, IT, PR, legal, finance, etc. There is almost nothing that cannot be outsourced…

These new contracts will be a mix of large corporations, small businesses, micro-corporations and even nano-corporations (an individual doing business as a corporation). But to be a protean solution, it must involve a corporation-to-corporation relationship…

In the context of ObamaCare, a small business could go protean by offering current employees contracts for doing their current work as a corporate entity instead of as an employee…

[A]s government continues to impose itself into the marketplace and reduce the freedom of the commercial sector through statist programs like ObamaCare, businesses will have to look for creative solutions to survive. Going protean is only one way, and others will emerge.

Keeping the core company below 50 full-time employees will allow such companies to avoid the employer mandate. But it will also drive up ObamaCare’s cost, because most of the workers in the new corporate entity will be eligible for government subsidies through ObamaCare’s health insurance “exchanges.” This will drive up the cost of ObamaCare wherever those subsidies exist.

Topics: 
General, Health Care, Regulatory Studies

The Good and Bad of the Immigration Reform Blueprint

By
Alex Nowrasteh

Today, the so-called Gang of Eight senators revealed a blueprint for an immigration reform bill. Details in the actual legislation will matter a great deal but these are initial impressions based on the blueprint. The good and the bad.

Good:

  • Earned legalization for non-criminal unauthorized immigrants. After paying fines, back taxes, undergoing a criminal background check, and other firm penalties, unauthorized immigrants will be able to stay in the United States and eventually earn a green card. This will increase their wages over several years much faster than if they remained unauthorized. 
  • DREAMers will not face the same penalties as unauthorized immigrants who intentionally broke U.S. immigration laws, which is a positive step.
  • Legalization for unauthorized immigrant workers in the agricultural industry will be fast-tracked. This is especially important because the majority of farm workers in most states are unauthorized immigrants.
  • Removing some regulatory barriers and increasing quotas for highly skilled immigrants. This will likely include an increase in the number of employment based green cards and removing the per-country quotas that produce wait times for Indian, Chinese, Mexican, and Filipino workers. Currently, numerous firms and immigrants are dissuaded from even trying to obtain employment based green cards because of the enormous wait times.

Bad:

  • Increases the amount of resources spent on border security. The size of the border patrol is double of what it was in 2004. The number of border patrol agents is seven times greater than what it was in the 1980s with about nine times as many on the southern border. More technology and aerial drones on the border will be wasteful and not produce results.
  • Strong employment verification system like E-Verify. As I wrote here, here, and here, E-Verify is an intrusive big government workplace identification system that does not even root out unauthorized immigrants. In Arizona, which has had mandatory E-Verify since 2008, many unauthorized immigrants have moved deeper into the black market, some industries fire numerous unauthorized workers but don’t hire natives to fill the spots, and the business formation rate dropped because the penalties for intentionally or knowingly hiring unauthorized workers are so draconian.
  • Increases regulations for guest worker visas. Current guest worker visas for agricultural workers are so overregulated that they are barely used. Adding more regulations will only make the visas more unusable and incentivize American farmers and employers to hire unauthorized workers.

A viable guest worker program will increase economic growth in the United States. Guest worker visas are not as good as green cards for lower-skilled workers, but they are the only viable option at this moment. The devil is in the details but this blueprint does not provide for enough future low-skilled immigration.     

Topics: 
General, Trade and Immigration

Crowdfunding Science

By
Paul C. "Chip" Knappenberger and Patrick J. Michaels

File this under “where there’s a will, there’s a way.”

While it seems hard to believe (as attested to by the growing budget for National Science Foundation) federal and state budget decisions are apparently putting the squeeze on some forms of government-funded science, and so some scientists are seeking alternative ways of raising funds for their projects of interest. One such “novel” method is a direct appeal to the masses for support.

Witness this announcement from the American Association for the Advancement of Science (AAAS):

Crowdfunding Science: Appealing to the online community for research money

Event Date: January 29, 2013 12 p.m. Eastern, 9 a.m. Pacific, 5 p.m. GMT, 6 p.m. CEST

With federal and state funding for science on the downward trend, many young scientists are bypassing the grant writing process and appealing directly to the public via the Internet for money to support their research. Crowdfunding, as it is known, holds huge potential for scientists who can effectively capture the imagination of the public and get them to open their wallets in support of science.

In AAAS MemberCentral’s webinar “Appealing to the online community for research money”, we’ll look at #SciFund Challange, a website that helps researchers get their projects funded by the public, and we’ll also hear from two scientists who successfully funded their projects via the crowd. We’ll find out what they learned along the way, share tips on how to reach your funding goal and give you an opportunity to ask the panelists questions.

This seems a step in the right direction towards producing better-justified science projects that will be done for a lot less money with a lot more transparency.

How this fits in to a University setting should be interesting. Almost certainly it will bring the often exorbitant overhead rates for science funding into focus.  Most schools tack on an additional 50% or so which goes from the producer departments (science and engineering) to those that can’t carry their own weight.  Will the “crowd” accept being dunned for work they don’t support?  If this caught on, maybe our schools would better serve the market rather than centrally planning their own.

It’ll be interesting to see how this method of fundraising develops, but from the surface, it seems a positive development.

Topics: 
Energy and Environment, General

James M. Buchanan, RIP

By
David Boaz

James M. Buchanan, Nobel laureate in economics and Distinguished Senior Fellow of the Cato Institute, has died at the age of 93. We join his family, his many students, and scholars around the world in mourning his loss. 

I’m sure my more scholarly colleagues will have more to say about his work. For now, I’m going to post the complete short text of a brilliant little article he wrote in the Cato Institute’s Literature of Liberty in 1982. Don Boudreaux describes it as “Word for word, the most insightful thing I’ve ever read.” Buchanan makes the point, contrary to the way some economists describe the market process, that there is no end-state or perfect order which the market approaches. Rather, ‘the “order’ of the market emerges only from the process of voluntary exchange among the participating individuals. The “order” is, itself, defined as the outcome of the process that generates it.” The market process best serves human needs, but those needs are always changing, and even a perfectly free market would never “reach” some perfect satisfaction of needs.

You can find the article, along with other short essays on spontaneous order, here. But it is presented in its entirety here:

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Topics: 
General, Political Philosophy

Larry Downes’ “A Rational Response to the Privacy ‘Crisis’ ”

By
Jim Harper

We don’t expect news reports to exhibit the tightest legal reasoning, of course, but Sunday’s New York Times story on location privacy made a runny omelet of some important legal issues relating to privacy.

The starting point is United States v. Jones, a case the Supreme Court decided last January. The Court held that government agents violated the Fourth Amendment when they attached a GPS tracking device to a vehicle without a warrant and used it to determine the location of a suspect for four weeks. Location information can be revealing.

“Some advocacy groups view location tracking by mobile apps and ad networks as a parallel, warrantless commercial intrusion,” says the story. A location privacy bill forthcoming from Senator Al Franken (D-MN) “suggests that consumers may eventually gain some rights over their own digital footprints.”

Jones was about government agents—their freedom of action specifically disabled by the Fourth Amendment—invading a recognized property right (in one’s car) to gather data. There is little analogy to location tracking by mobile devices, apps, and networks, which are privately provided, voluntarily adopted, and which violate no recognized right. Indeed, their tracking provides various consumer benefits. The Times piece equivocates between the government’s failure to get a legally required search warrant in Jones and uses of data that some may feel “unwarranted,” in the sense of being “uncalled for under the circumstances.”

The first line of Larry Downes’ new Cato Policy Analysis, “A Rational Response to the Privacy ‘Crisis’,” could have been written for the Times’ sloppy analogy:

“What passes today as a ‘debate’ over privacy lacks agreed-upon terms of reference, rational arguments, or concrete goals,” Downes says. The paper examines how the “creepy factor” permeates privacy debates rather than crisp thinking and clear-headed examination.

It’s not that location tracking doesn’t generate legitimate privacy concerns. It does. People don’t know how location information is collected and used. They don’t always know how to stop its collection. And the future consequence of location information collected today is unclear. But the capacity of private actors to harm individuals with location data is limited. Their incentive to do so is even smaller. And avoiding location tracking is simply done (at significant costs to convenience).

As Downes’ piece illustrates, we’ve seen this kind of debate before, and we’ll see it again: A particular innovation spurs privacy concerns and a backlash (whipped by legislators and regulators). A negotiation between consumers and industry, facilitated by the news media, advocates, and a variety of other actors, produces the way forward. As often as not, the way forward is a partial or complete embrace of the technology and its benefits. Plenty of times, the threat never materializes (see pervasive RFID).

Downes explores the legal explanation for what happens when consumers adopt new technologies that use personal information to produce custom content and services—this question of “rights over … digital footprints.” He finds that licensing is the best explanation for what is happening. When consumers use the many online services available to them, they license data that they might otherwise control.

The legal framework Downes puts forward sets the stage for iterative, contract-based development of rules for how data may be used in the information economy. It cuts against top-down dictates like Franken’s proposal to regulate future technologies today, knowing so little of how technology or society will develop.

Ultimately, no legislature can resolve the deep and conflicted cultural issues playing out in the privacy debate. Downes characterizes that debate as revealed tension between Americans’ Davey Crockett side—the privacy-protective frontiersmen—and our collective Puritanism. We are participants in and parts of a very watchful society.

It’s worth a read, Larry Downes’s “A Rational Response to the Privacy ‘Crisis’.”

Topics: 
General, Government and Politics, Telecom, Internet & Information Policy

The Obama Administration’s Illegal Health Care Taxes: an Update

By
Michael F. Cannon

There have been several developments with respect to the Obama administration’s attempt to impose the Patient Protection and Affordable Care Act’s employer-mandate penalties and individual-mandate penalties where it has no authority to do so.

My coauthor Jonathan Adler and I have posted an updated and final draft of our forthcoming Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” to the Social Sciences Research Network web site. This draft contains additional evidence that Congress did indeed intend to restrict the Act’s tax credits, cost-sharing subsidies, employer mandate penalties, and (to a certain extent) individual mandate penalties to states that establish their own health insurance Exchanges. It also shows how recent arguments advanced by defenders of the rule cannot be reconciled with the statute or the legislative history. If you’re interested in this issue, you’ll want to read this draft, even if you’ve already read previous versions.

In the Winter issue of Regulation magazine, University of Missouri law professor Thomas Lambert shows how this feature of the Act, combined with the Supreme Court’s ruling in NFIB v. Sebelius and other features, make the law so dangerously unstable that repeal remains a distinct possibility. I plan to blog more about this article soon.

A private employer has petitioned a federal court in Oklahoma to be added as a plaintiff in that state’s lawsuit against the IRS rule.

The December 2012 Harvard Law Review notes that the IRS rule “may provide a useful opportunity for a reviewing court to clarify the major questions exception to Chevron. In several cases since 2000, the Supreme Court has refused to defer to an agency interpretation on politically or economically significant questions.” The rule certainly seems to be economically significant. Given that 32 states accounting for two-thirds of the U.S. population have refused to establish Exchanges, the rule would result in more than a half-trillion dollars in unauthorized tax credits, subsidies, and penalties against employers and individuals. 

On December 6, the Congressional Budget Office issued a letter that devastates the Obama administration’s defense of the IRS rule. Most media outlets misinterpreted the letter’s significance. I clarified the matter in this oped for Reuters.

On December 13, the chairmen of the House committees on Ways & Means and Oversight & Government Reform, who have held hearings on the IRS rule, sent a letter to Treasury Secretary Timothy Geithner requesting unredacted versions of documents relating to the development of the rule. The House Oversight committee has previously threatened to subpoena the documents if the agency is not forthcoming.

Topics: 
General, Government and Politics, Health Care

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