Topic: General

Pakistan: Will the Third Time as Prime Minister be the Charm for Nawaz Sharif?

Pakistan always has been a good example of being careful for what one wishes when it comes to democracy in Third World nations. The Pakistani people theoretically rule the unstable nuclear state. Whether that actually is positive is not so clear.

In the latest election, Nawaz Sharif’s Pakistan Muslim League-Nawaz won a strong plurality, making him the almost certain prime minister. However, that position may be a poisoned chalice. When he was last premier, for the second time, in 1999, he found himself ousted in a coup, imprisoned for months, and eventually bundled into exile.

Despite the relatively free (though violence-laden) vote, Pakistan’s political, economic, and security problems are enormous. And the dangers of a failed state reach well beyond Pakistan’s borders. As I wrote in my latest Forbes online column:

for those who worry about an Islamic Bomb in Tehran, one already exists in Islamabad. Pakistan has between 90 and 120 warheads, and is producing more plutonium than any other nation on earth. The result likely will be an expanded arsenal. Observed Tom Hundley of the Pulitzer Center on Crisis Reporting: “Pakistan could end up in third place, behind Russia and the United States, within a decade.” Yet the contest with India has left Islamabad officials “hobbled by fear, paranoia, and a deep sense of inferiority,” in Hundley’s words. At the same time, Pakistan has increasingly dispersed its warheads to frustrate any U.S. attempt to seize the weapons. The practice increases the possibility of radicals grabbing a warhead or fissile material.

Oh joy.

Although only the Pakistani people can fix their own country, Washington could help. It should wind down the war in Afghanistan, which is a destabilizing force in Pakistan. The U.S. should reduce its use of drones, which have made America hated by Pakistanis. Washington should resist the temptation to dump ever more foreign “aid” into the corrupt and incompetent institution known as the Pakistani government. Finally, Americans should hope—and pray!—that Nawaz Sharif has learned something during his 14 years in the political wilderness.

Accounting for the Industrial Revolution

This is the most important question in economics: Why did the Industrial Revolution happen when and where it did–and not before or elsewhere? Fail to understand that and you may enact policies that will kill the unprecedented human progress it launched: a multiplication in the average worldwide per-capita income of between 16 and 100 times in the span of just 200 years. Compare that to the preceding thousands of years over which worldwide per-capita income was largely unchanged.

In her brilliant 2011 book Bourgeois Dignity, economist and historian Deirdre McCloskey shot down every leading explanation for this “Great Fact,” and then offered a new one: in the Netherlands and then Britain, entrepreneurship was accorded a widespread liberty and respectability it had never before enjoyed in human history. McCloskey will speak at the Cato Institute on this and related topics on June 20th at noon.

This exquisitely elegant explanation packs enormous punch for students of the history of economics. Among other things, it explains why the ancient Greeks–who invented democracy, the core forms of Western literature, joint-stock corporations, commercial insurance, and even steam-powered toys–never enjoyed an industrial revolution of their own. (The ancient Greek elites abhorred the idea of working for a living.)

As yet, though, there is no “implementation detail” for the Liberty and Dignity theory. Bourgeois Dignity is so successful at shooting down earlier explanations for the Great Fact because it describes the mechanisms by which they are proposed to have driven economic growth and then shows that the magnitude of their impact is simply insufficient. So far, it doesn’t seem that anyone has proposed a specific, quantitatively testable mechanism by which the change in popular rhetoric could have precipitated the 16-to-100-times innovation explosion.

To get the ball rolling, below is one proposal for such a mechanism. (Disclaimer 1: this is not my day job. Disclaimer 2: it wouldn’t be that easy to quantify–sorry.)

Liberty and Dignity for entrepreneurs/tinkerers/merchants raised the number of clever, dedicated innovators beyond a threshold that had never before been reached. Below that threshold, would-be innovators would often have hit stumbling blocks that they could not overcome, e.g., needing some as-yet-uninvented process/material/tool/concept to complete/commercialize their own innovation. Without that missing piece, their innovative efforts would have failed. Above that threshold, cross-pollination among innovators would have drastically reduced the number of insurmountable problems–innovators would increasingly have been able to borrow from their predecessors and contemporaries who were working on related problems. This cross-pollination would have required inexpensive information storage and retrieval (i.e., books), but it also would have required a critical mass of innovators simultaneously working on a vast array of problems, a critical mass that the widespread Liberty and Dignity for entrepreneurs created for the first time.

Call it, “James Burke’s Connections meets Deirdre McCloskey’s Dignity.” Just a thought.

Tyranny of the Minority, ObamaCare Edition

This:

A Fox News poll released Wednesday finds that while 26 percent of voters say their health care situation will be better under the new law, twice as many – 53 percent – say it will be worse.  Another 13 percent say it won’t make a difference…

That helps explains why a 56-percent majority wants to go back to the health care system that was in place in 2009.  Some 34 percent would stick with the new law. 

More Firings Needed at the IRS—TSA Precedents

I’ve watched the congressional hearings on the IRS scandal, and like others, have been appalled at the glib performance of former IRS Commissioner, Douglas Shulman. Shulman isn’t taking an ounce of blame for the mess even though he headed the agency from 2008 to 2012. Dana Milbank reviews his slippery and rather arrogant performance in the Washington Post today.

Unfortunately, we can’t fire the Bush-appointee and Democratic-donor Shulman because he’s already escaped to the private sector. But we can fire other misbehaving IRS workers when we unravel the mystery of who ordered the political targeting.

Politico wrote yesterday that “heads won’t roll at the IRS.” The article is right that it is very difficult to fire federal workers, and I’ve written about the extremely low federal firing rate. The article says that 8,755 people were fired last year. But that was out of 2.1 million civilian federal employees, or just 0.4 percent of the total.

Politico notes that strong civil service protections are a big hurdle to firing. But just as  important, I think, has been the unwillingness of federal managers to put the time and effort into removals. It’s much easier for managers to move troublesome employees off to a quiet office to get them out of the way, or to transfer them out of their section.

Also note that it is the firing rate of poor performers that is especially low in the federal government, meaning workers who are lazy or produce poor work. One barrier to their firing is that managers often give these workers good performance reviews because they don’t want to rock the boat.

However, a larger number of federal workers are fired for misconduct—such as willfully ignoring laws and regulations—and that is what we are talking about with the IRS scandal. Recent incidents in the beleaguered Transportation Security Administration (TSA) indicate that federal workers can be fired for misconduct:

Aside from the thefts, the other TSA firings seem to have been for actions no more troublesome than that of IRS employees. IRS employees were apparently not just failing to follow proper protocol, but were proactively inventing new procedures that undermined fundamental rules for nonpartisan, neutral, and fair treatment of taxpayers.

So far President Obama has “fired” acting IRS Commissioner Steven Miller, although Miller had planned to retire in June anyway. But more heads should roll in the IRS scandal, and despite Politco’s cautionary note, I’m guessing that they will roll.

Student Loans: From Completely Disastrous, to Just 99 Percent

the state of higher ed fundingOn Thursday, the U.S. House of Representatives is scheduled to take up The Smarter Solutions for Students Act, which would end the practice of Congress designating interest rates for federal student loans, and instead link rates to the 10-year Treasury note. It would be a miniscule improvement. Basically, this change is like banging out a single dent in a car that’s careened off a cliff, rolled over twenty times, and caught fire.

It seems reasonable that if Washington is going to provide student loans, interest rates should be pegged to broader rates. There is disagreement about how much you add to base rates—Rep. George Miller (D-CA), for instance, is unhappy that the act’s rates could result in profits that would be used for deficit reduction—but letting Congress designate set rates is why we are once again scrambling to keep the subsidized loan rate from suddenly leaping to 6.8 percent from 3.4 percent. 

Of course, the root problem is that Congress furnishes student loans at all, killing the natural discipline that comes from people paying for something with their own money, or money they get from others voluntarily. Getting major dough from taxpayers has enabled massive overconsumption of higher education punctuated by dismal completion rates and huge underemployment for those who manage to finish. And giving people cheap money largely just enables colleges to raise their prices at breakneck speeds, often to provide frills that heavily subsidized students seem to happily demand.

Congress may inject a milliliter of sanity into a swimming pool of irrationality, but what it really needs to do is drain the whole thing.

Cross-posted at seethruedu.com

The “I-Word” Isn’t a Curse

I’m not convinced that any of the recent scandals roiling the Obama administration constitutes an “impeachable moment,” but, as I argue today in the Washington Examiner, there’s something wrong with a (post-?) constitutional culture where opinion leaders treat the very invocation of the “I-word” as akin to screaming obscenities in a church.

Impeachment talk is “industrial strength insane” says the Daily Beast’s Michael Tomasky; “serial madness,” per Richard Brodsky at the Huffington Post; Rachel Maddow compares it to incontinence; and for the Atlantic’s Philip Bump, it’s like the inevitable idiot in the comments thread invoking Hitler. True, Salon’s recent listicle of 14 “crazy times” right-wingers have called for Obama’s impeachment consists mostly of frivolous, even loopy proposals; but it also includes Bruce Fein’s 2011 call to impeach Obama “over the military intervention in Libya, alleging that it violated the Constitution’s mandate that only Congress can declare war.” Crazy talk!

Also in the Atlantic, “communitarian” godfather Amitai Etzioni moans “I see no way to protect the president and all of us from the second term curse” in a piece titled, “Why It Should Be Harder to Impeach a President.“ 

Harder”? A “reality-based” communitarian Etzioni ain’t. In our 224-year constitutional history, we’ve only managed the feat twice—three times if you count Nixon, who resigned before the full House got to vote. How much harder can it get?

And when did calling for—even musing about—a president’s impeachment become a form of secular blasphemy—the American version of Lèse-majesté

Given what the mid-’70s Church Committee hearings revealed about presidential abuses of power, at a minimum, all three presidents of the ’60s deserved to be impeached and removed from office. Of the seven presidents since Nixon, I can make a case for impeaching at least four.

As Ben Franklin put it at the Philadelphia Convention, the impeachment power is “the best way… to provide in the Constitution for the regular punishment of the Executive when his misconduct should deserve it, and for his honorable acquittal when he should be unjustly accused.”

Our problem isn’t too many impeachments, but too few.   

Never Mind the IRS, You’d Better Be Nice to Kathleen Sebelius

ObamaCare’s Independent Payment Advisory Board is everything its critics say and worse. It is a democracy-skirting, Congress-blocking, powers-unseparating, law-entrenching, tax-hiking, fund-appropriating, price-controlling, health-care-rationing, death-paneling, technocrat-thrilling, authoritarian, anti-constitutional super-legislature. Its very existence is testament to government incompetence. It stands as a milestone on the road to serfdom.

The Congressional Research Service has now confirmed what HHS Secretary Kathleen Sebelius pretends not to know but what Diane Cohen and I explained here

[I]f President Obama fails to appoint any IPAB members, all these powers fall to Secretary of Health and Human Services Kathleen Sebelius.

That’s an awful lot of power to give any one person, particularly someone who has shown as much willingness to abuse her power as Sebelius has. 

I would also like the Congressional Research Service to address a feature of IPAB that Cohen and I first exposed. According to the statute, we write: 

Congress may only stop IPAB from issuing self-executing legislative proposals if three-fifths of all sworn members of Congress pass a joint resolution to dissolve IPAB during a short window in 2017. Even then, IPAB’s enabling statute dictates the terms of its own repeal, and it continues to grant IPAB the power to legislate for six months after Congress repeals it. If Congress fails to repeal IPAB through this process, then Congress can never again alter or reject IPAB’s proposals.

You read that right. For more, read our paper, especially Box 3 on page 9.

CRS, I’m interested to know what you think. Take a close look at the law and get back to me.