Topic: General

The Incredible Expanding Farm Program

The Washington Post reports that a federal program to help dairy farmers and ranchers hurt by drought has been expanded to benefit farmers untouched by drought conditions:

In all, the Livestock Compensation Program cost taxpayers $1.2 billion during its two years of existence, 2002 and 2003. Of that, $635 million went to ranchers and dairy farmers in areas where there was moderate drought or none at all, according to an analysis of government records by The Washington Post. None of the ranchers were required to prove they suffered an actual loss. The government simply sent each of them a check based on the number of cattle they owned.

It’s a typical story of government handout programs. Under “pressure from ranchers and politicians in a handful of Western states that were hit hard by drought,” the Bush administration in 2002 created a fund to compensate them. Within days members of Congress were demanding that more counties be included, and they were. But that still wasn’t enough, and in 2003 Congress expanded the program to cover any kind of weather-related disaster. And then President Bush declared that the shuttle explosion over Texas constituted a disaster, so that made more counties eligible. County USDA officials were pressured to find any kind of “disaster” that would qualify local farmers for handouts.

The Post has run other articles in this series, with titles like Farm Program Pays $1.3 Billion to People Who Don’t Farm and Growers Reap Benefits Even in Good Years. Yet even with front-page stories in Congress’s hometown newspaper, the farm program rolls merrily along, handing out more and more subsidies with less and less plausibility.

It’s enough to make you a public choice economist. So the question is, why doesn’t it make Washington Post and other mainstream-media journalists and editorial writers more skeptical about the benefits of government programs? A great deal of what we know about the failures of government, or way that politics really works, comes from mainstream journalists. Yet many journalists continue to assume that every problem in society suggests a government program to fix it.

Paternalism in Arizona

NPR reports:

In a bid to increase voter participation in Arizona, Dr. Mark Osterloh is spearheading a ballot initiative that would automatically make each person who casts a vote eligible to win a million dollars in unclaimed state lottery money.

I would ask two questions about this proposal: Will it work?  Should it be undertaken?  I think “no” should be the answer to both questions. 

Will it work? Many experts argue that it is rational not to vote. The act of voting involves costs and benefits. The costs are getting information about the candidates, going to the polling place, standing in line and so on. The benefits to the voter are the benefits a voter expects his preferred candidate or party to deliver multiplied by the probability that his vote will swing the election to his preferred party or candidate. That probability is very low, which means that the benefits a voter can expect from voting are also quite low. They are much lower, in fact, than the costs of voting. 

The lottery measure proposes to add to these benefits the expected value of a $1 million dollar payoff. However, that value is also quite low.  2,038,069 people voted in Arizona in 2004.  Each would have had an equal chance of winning the payout. Hence, the expected value of the lottery payment in 2004 would have been 49 cents. Would that additional 49 cents attract many more voters to the polls in Arizona? It seems unlikely. Imagine that every voter was promised two quarters to come to the polls and vote. Would that tip their cost-benefit calculations toward voting? 

Of course, we might say that the state of Arizona should exploit the irrationality of voters who lack information about the number of voters or the ability to calculate an expected value. States already exploit such shortcomings with state lotteries. In that regard, the proposal seems unseemly, even immoral. 

Advocates would no doubt argue that the state might exploit voter irrationality for the higher good of getting people to the polls. Is voting such a valuable activity that the state should force taxpayers to subsidize it? 

Clearly voting is not valuable for those who choose not to vote. The justification for subsidizing voting and the lottery must be that voting provides benefits to people other than the voters who choose not to vote. At one time, experts thought non-voters differed substantially in outlook from voters. If so, voters were a skewed sample of the electorate, and elections did not contain all information about the preferences of “the people.” Studies have shown, however, that non-voters do not differ substantially in ideology or in partisanship from those who do not vote. If everyone voted, the outcomes of elections would change little if at all. It is unlikely, therefore, that society would gain much new information from the electorate by subsidizing an election lottery. 

In the end, for all the appearances of incentives and rational calculation, Mark Osterloh is just another paternalist who believes that people would be morally better if they participated in politics. He enlists the greed of the gambler to serve the endless crusade to “improve” the character of other people through state action. The proponents of the lottery inhabit a world where voting has replaced prayer, and politics has taken the place of religion. What is missing from this crusade, like other crusades before, is any sense that people should be left alone to make their own decisions about whether to vote and that whatever decision they make should be respected, even by the busybodies who think politics is next to godliness. 

And the unclaimed lottery money, of course, should be sent back to the people of Arizona through a tax cut.  

U.K. Gambling CEO Arrested at U.S. Airport

Details are still sketchy, but it looks as if David Carruthers, a U.K. citizen and CEO of the U.K.-incorporated, U.K.-traded public company BetOnSports.com, has been detained at a Fort Worth airport while switching flights between the U.K. and Costa Rica. He will now apparently be charged in the U.S. for running a company that’s legal in just about every Western country except America.  Reuters reports:

The U.S. Department of Justice said on Monday that BetOnSports was among 11 individuals and four corporations facing various charges of racketeering, conspiracy and fraud.

The founder of BetOnSports, Gary Kaplan, 47, was also charged with 20 felony violations, and a warrant has been issued for his arrest, the Department of Justice added.

“BetOnSports.com and other gambling Web sites operated by Gary Kaplan and his co-defendants offered gamblers in the United States illegal wagering on professional and college football and basketball,” said a copy of the indictment seen by Reuters.

It’s probably worth noting that Carruthers is an outspoken advocate for legalizing online gambling in the U.S. He recently debated Rep. Jim Leach on the issue in the Wall Street Journal. If Carruthers is being held solely because U.S. customers illegally do business with his legal, U.K.-based company, that’s disturbing enough.

But things could get even more interesting.

Carruthers was careless enough to have step foot on U.S. soil, even if only to switch planes. But as the Voluntary Trade Council’s Skip Oliva explains, the U.S. and the U.K. have also entered into some curious extradition treaties since September 11, and the U.S. has exploited those treaties to effectively kidnap British citizens who broke no British laws, and extradite them to the U.S. for trial on charges of violating U.S. law.  It’s worth noting that the cases Oliva writes about are iffy white collar crimes that have nothing to do with terrorism.

And let’s not forget the Mark Emery case, in which the DEA’s zealous persecution of medical marijuana users led them to extradite a medical marijuana activist from Canada for charges of marijuana distribution in the U.S..  It was inarguably a purely political arrest. The DEA bullied Canadian and British Columbia law enforcement officials – where marijuana laws are lax, if enforced at all – into doing its bidding.

The jihad against online gambling spilling out from Congress these last few months portends a showdown between the U.S. and the U.K. What’s interesting is that this time, the U.K. is unlikely to back down.  Britain has embraced Internet gambling and gets a substantial amount of tax revenue from the $12 billion U.S. consumers spend gambling online each year, much of it with U.K.-incorporated gaming sites.  You have to think U.K. officials would have an interest in maintaining those revenues, not to mention in protecting their citizens, and in the integrity of the tech sector of their markets, which took a spill after Carruthers’ arrest.

Might the U.S. try to enforce its gambling ban by extraditing gambling executives in other countries? Would those countries comply? What are the implications of either scenario?

If Congress succeeds in pushing through its farcical, ill-considered ban on online gambling, these are just a few of the issues that’ll inevitably pop up down the road. I’ve written before about some possible free trade entanglements the bill presents. But here’s another: One way U.S. consumers may get around the bill’s deputizing U.S. banks to enforce the gambling ban would be to simply open accounts in banks based overseas. Will Congress then attempt to ban wire transfers between U.S. banks and overseas banks that allow transactions with gaming sites? I wouldn’t put it past them.

The heartening side of all of this is that it shows how technology, trade, and commerce can work together to circumvent heavy-handed government meddling. The distressing part is just how far some in the U.S. government will go to impose their values on American citizens.

I guess nobody ever said moral crusading was easy.

No Need for a Mandate

Much of the justification for an individual health insurance mandate, like that pushed by Massachusetts Governor Mitt Romney and the Heritage Foundation, is that people who lack insurance in the current system still receive medical treatment when needed.  The cost of treating these “free riders” is shifted to the insured and the taxpayer.  In particular, it is suggested that these uninsured individuals will end up at hospital emergency rooms.  Advocates of universal single-payer systems often make similar arguments.

But a new study in Health Affairs shows that that there is no significant difference in emergency room use between insured and uninsured populations.  The study concludes that increases in the number of uninsured are not likely to lead to an increase in emergency room visits.  However, the study does show that Medicaid beneficiaries use emergency rooms more than either the insured or the uninsured.  This may result both from the difficulty that Medicaid patients have in finding primary-care physicians willing to treat them at Medicaid’s low reimbursement rates, and from the fact that emergency room visits are essentially free for the Medicaid patient.

One other finding is worth noting as well.  Contrary to public perception, noncitizen immigrants actually use emergency rooms less than citizens.  Emergency rooms are not being overrun by illegal immigrants.

Downside of Disclosure

The Washington Post reports today about the emergence of the Democratic Alliance, a group vetting organizations for wealthy, liberal contributors. The group has an interesting rule:

The alliance has required organizations that receive its endorsement to sign agreements shielding the identity of donors…The group requires nondisclosure agreements because many donors prefer anonymity…Some donors expressed concern about being attacked on the Web or elsewhere for their political stance; others did not want to be targeted by fundraisers.

Of course, the United States has a long tradition of anonymous speech and political activity, including The Federalist Papers. The donors to the Democratic Alliance continue in that tradition. Their desire for anonymity proves that mandatory disclosure of money in politics imposes costs on participation.

Those same costs affect donors to political campaigns who do not have a right to anonymous speech. In fact, a donor who gives to a challenger threatening an incumbent member of Congress faces a greater risk than that confronted by the donors to the Democracy Alliance.

Given their experience with the downside of disclosure, perhaps the donors to the Democratic Alliance (or the organizations they fund) will lead the way toward liberalizing or eliminating mandatory disclosure of campaign contributions.

Entangled in Iraq until 2016?

The Washington Times reports that U.S. military commanders believe American forces will be needed in Iraq until at least 2016.

There often are bad ideas in the arena of foreign policy. Sometimes there are very bad ideas. Occasionally, there are even monumentally bad ideas. Staying in the Iraqi snake pit for another decade belongs in the third category. As Cato scholars explain here, here, here and here, the Bush administration needs to adopt a strategy for a prompt exit from this unnessary and ill-conceived mission.

We need to have our forces out of Iraq in a matter of months, not years. And no reasonable person should want to keep our troops in harm’s way for another decade. Given the casualty rates during the first three years of this war, staying until 2016 would mean another 8,000 dead Americans. At that point, U.S. fatalities in Iraq would exceed the number the Soviet Union suffered during its ill-fated intervention in Afghanistan during the 1980s.

Remaining in Iraq for another decade while the country descends into sectarian civil war is a policy that should appeal only to masochists.

Broadband Bad News Is Good News … but It’s Bad News

Headlines are meant to draw readers in, and this one did me: Broadband’s Double-Digit Growth Coming to an End.

Something’s gone wrong with broadband! Quick! To the BroadbandMobile!

In the next instant, I realized that something had actually gone right. You see, double-digit change in percentage-based figures can’t keep going forever. In fact, it can’t last more than about ten time-periods. (Because then you’d have 110% of something, which only makes sense in rock ‘n’ roll, where the loudest speakers go to 11.)

Adoption of broadband is slowing as people who want it have already got it and people who don’t want it persist in not having it. (Bizarrely to people who live every minute of every day online, some people live no minute of every day online - ever. That is perfectly acceptable.)

There is undoubtedly a tiny margin of poor people who can’t afford broadband. But “can’t afford” is subjective. Many prioritize things other than broadband to buy with their limited resources (which is fine - remember, sans broadband is an acceptable way to live).

But the news report says this is all bad news:

One of the goals of US public policy when it comes to broadband is to ensure all US residents have access to broadband. President Bush said in 2004 that he wanted universal access to broadband in 2007, an achievement that appears unlikely at this point.

But, but … if people who want it are getting it, and people who don’t are not, isn’t that universal access to broadband? Apparently not. Affordability has been added to the metric, moving the goal posts so that federal subsidies for telecommunications seem important once again. Our news report continues:

The Democrats think it’s a great idea too—one plank in their platform for the 2006 mid-term elections is universal access. The telecom law rewrite which may or may not emerge from Congress this year intends to further that goal by funding broadband in areas currently unserved via the Universal Service Fund.

That’s the Universal Service Fund about which Daniel Berninger asks: What have we gotten for our $50 billion dollars?

In the end, this report amounts to an argument that satiation is a basis for subsidy.

Huh.