Topic: Government and Politics

Are the Baltic Republics Serious about Defense?

News stories in the West contend that Russia’s increasingly aggressive behavior is causing the Baltic states and other NATO members in Eastern Europe to become far more serious about national defense.  There is no doubt that tensions in the region are on the rise, including a surge of  incidents involving NATO intercepts of Russian military aircraft operating over the Baltic Sea.  The new congressional approval of military aid to Ukraine may well increase the already alarming level of animosity between NATO and Russia. 

But the notion that the Baltic republics have embarked on serious programs to boost their defense capabilities in light of Moscow’s menacing behavior is vastly overstated.  The military spending of those three countries has merely moved from minuscule to meager.  Although all NATO members pledged after the Alliance’s summit meeting in 2006 to spend a minimum of two percent of gross domestic product (GDP) on defense, few members have actually done so.  Indeed, eight years later, only the United States, Britain, Greece, and Estonia among the 28 member states fulfill that commitment

And Estonia barely met that standard.

All three Baltic governments are going to great lengths to highlight their alleged seriousness about defense, but the actual data fail to support the propaganda.  Amid much fanfare, Estonia plans to boost its military spending from 2.0 percent of GDP to…. wait for it, 2.05 percent!  Lithuania intends to raise its budget next year from 0.89 percent to 1.01 percent.  And Latvian leaders solemnly pledge that their country will spend no less than 1 percent—up from the current 0.91 percent.

Time to Close Thailand’s Camps for Burmese Refugees?

MAE LA REFUGEE CAMP, THAILAND—Trees give way to primitive wooden homes in the rolling hills approaching Mae La refugee camp on Thailand’s border with Burma.  The largest camp in Thailand, Mae La, holds 50,000 refugees. 

Three years ago Burma’s ruling generals yielded authority to a nominally civilian leadership and initiated a series of ceasefires with various ethnic groups.  The resulting peace is real but imperfect. 

Today there are as many as 150,000 refugees in ten Thai camps.  Overcrowded Mae La was established three decades ago when many assumed that their stay would be short.

Residents are barred from even leaving the camps without official permission.  Education is difficult.  People’s lives, futures, and dreams are all confined by fences and armed guards.

Perhaps worse, sustenance is provided and work prohibited.  This has discouraged independence, enterprise, and entrepreneurship. 

With the changes in Burma serious discussions about closing the camps have begun.  In July Thailand’s military junta declared its objective to repatriate all refugees by 2015.

Mae La refugees I talked to wanted to return, but worried about security.  NGOs observe that a national political settlement has yet to be implemented.   

KGB’s Old Lubyanka Headquarters Glowers at New Russia

MOSCOW—Red Square is one of the world’s most iconic locales. Even during the worst of the U.S.S.R. the square was more symbolic than threatening. 

Very different, however, is Lubyanka, just a short walk away. 

In the late 19th century 15 insurance companies congregated on Great Lubyanka Street.  The Rossia agency, one of Russia’s largest, completed its office building in 1900. 

But in 1917 the Bolsheviks seized power.  They took the Rossia building for the new secret police, known as the All-Russian Extraordinary Commission for Combating Counter-Revolution and Sabotage, or Cheka.

The first Cheka head was Felix Dzerzhinsky.  He conducted the infamous “Red Terror,” what he called a “fight to the finish” against the Bolsheviks’ political opponents. 

After his death in 1926 Grand Lubyanka Street was renamed Dzerzhinsky Street.  A great statue of Dzerzhinsky, weighing 15 tons, was erected in a circle in front of the Cheka headquarters. 

After the KGB was dissolved the building went to the Border Guard Service, later absorbed by the Federal Security Service (FSB), responsible for foreign intelligence. Today Lubyanka looks non-threatening, a yellowish color and architectural style less severe than the harshly grandiose Stalinist architecture seen throughout the city.

The KGB faced its greatest challenge in the Gorbachev era.  Demands for reform raced beyond Mikhail Gorbachev’s and the KGB’s control.  In August 1991 KGB head Vladimir Kryuchkov helped plan the coup against Gorbachev. 

After the coup’s collapse a crowd gathered in front of Lubyanka and attempted to pull down the Dzerzhinsky monument.  City officials used a crane to finish the job.

Journalist Yevgenia Albats wrote:  “If either Gorbachev or [Boris] Yeltsin had been bold enough to dismantle the KGB during the autumn of 1991, he would have met little resistance.”  However, these two reformers attempted to fix rather than eliminate the agency.

And the KGB effectively ended up taking over Russia.  Yeltsin named Chekists, or members of the “siloviki” (or power agents), to important government positions, most importantly Vladimir Putin, who headed the FSB and then became prime minister—and Yeltsin’s successor as president when the latter resigned.

Jeb Bush and Lyndon Johnson

Former Florida governor – but Texas native – Jeb Bush told the Wall Street Journal CEO Council:

Republicans need to show they’re not just against things, that they’re for a bunch of things. 

Which reminds me of a quotation from Lyndon B. Johnson that George Will often cites:

We’re in favor of a lot of things and we’re against mighty few.

Let’s hope Bush’s “bunch” is different from Johnson’s “lot.” We can’t afford another such escalation in the size, scope, and power of government.

New Study Finds Minimum Wage Increases Hurt Low-Skilled Workers

A new working paper from the National Bureau of Economic Research finds that significant minimum wage increases can hurt the very people they are intended to help. Authors Jeffrey Clemens and Michael Wither find that significant minimum wage increases can negatively affect employment, average income, and the economic mobility of low-skilled workers. The authors find that significant “minimum wage increases reduced the employment, average income, and income growth of low-skilled workers over short and medium-run time horizons.”  Most troublingly, these low-skilled workers saw “significant declines in economic mobility,” as these workers were 5 percentage points less likely to reach lower middle-class earnings in the medium-term. The authors provide a possible explanation: the minimum wage increases reduced these workers’ “short-run access to opportunities for accumulating experience and developing skills.” Many of the people affected by minimum wage increases are on one of the first rungs of the economic ladder, low on marketable skills and experience. Working in these entry level jobs will eventually allow them to move up the economic ladder. By making it harder for these low-skilled workers to get on the first rung of the ladder, minimum wage increases could actually lower their chances of reaching the middle class.

Most of the debate over a minimum wage increase centers on the effects of an increase on aggregate employment, or the total number of jobs and hours worked that would be lost. A consensus remains elusive, but the Congressional Budget Office recently weighed in, estimating that a three year phase in of a $10.10 federal minimum wage option would reduce total employment by about 500,000 workers by the time it was fully implemented. Taken with the findings of the Clemens and Wither study, not only can minimum wage increases have negative effects for the economy as a whole, they can also harm the economic prospects of  low-skilled workers at the individual level.

Four states approved minimum wage increases through ballot initiatives in the recent midterm, and the Obama administration has proposed a significant increase at the federal level. This study should give them a reason to reconsider.

Recent Cato work on this topic can be found here and here

Early Childhood Summit Don’t Lie?

When I first heard about the White House Summit on Early Education being held today, I worried. “I sure hope this isn’t going to be a PR stunt to cheerlead for government pre-kindergarten programs,” I thought. Then I got the announcement: U.S. Secretary of Education Arne Duncan will be having a Twitter chat with pop sensation Shakira in conjunction with the summit! “Oh, I was just being silly,” I said to myself, relieved that this would be a sober, objective discussion about what we do – and do not – know about the effectiveness of pre-K programs.

Okay, that’s not actually what happened. In fairness to Shakira, she does appear to have a very serious interest in children’s well-being. Unfortunately, the White House does not appear to want to have an objective discussion of early childhood education.

Just look at this, from the official White House blog:

For every dollar we invest in early childhood education, we see a rate of return of $7 or more through a reduced need for spending on other services, such as remedial education, grade repetition, and special education, as well as increased productivity and earnings for these kids as adults.

Early education is one of the best investments our country can make. Participation in high-quality early learning programs—like Head Start, public and private pre-K, and childcare—provide children from all backgrounds with a strong start and a solid foundation for success in school.

Let me count the ways that this is deceptive, or just plain wrong, as largely documented in David Armor’s recent Policy Analysis The Evidence on Universal Preschool:

  • The 7-to-1 ROI figure – for which the White House cites no source – almost certainly comes from work done by James Heckman looking at the rate of return for the Perry Preschool program. It may well be accurate, but Perry was a microscopic, hyperintensive program from the 1960s that cannot be generalized to any modern, large-scale program.
  • If you look at the longitudinal, “gold-standard” research results for Head Start, you see that the modest advantages accrued early on essentially disappear by first grade…as if Head Start never happened. And federal studies released by the Obama administration are what report this.
  • It stretches credulity to call Head Start “high quality,” not just based on its results, but on its long history of waste and paralysis. Throughout the 2000s the federal Government Accountability Office and general media reported on huge waste and failure in the program.
  • Most evaluations of state-level pre-K programs do not randomly assign children to pre-K and compare outcomes with those not chosen, the “gold standard” mentioned above. Instead they often use “regression discontinuity design” which suffers from several shortcomings, arguably the biggest of which is that you can’t do longitudinal comparisons. In other words, you can’t detect the “fade out” that seems to plague early childhood education programs and render them essentially worthless. One large-scale state program that was evaluated using random-assignment – Tennessee’s – appears to be ineffective.
  • The White House says early childhood programs can help “children from all backgrounds.” Not only is that not true if benefits fade to nothing, but a federal, random-assignment evaluation of the Early Head Start program found that it had negative effects on the most at-risk children.

I suspect the vast majority of people behind expanding preschool are well intentioned, and I encourage them to leverage as much private and philanthropic funding as they can to explore different approaches to pre-K and see what might work. But a splashy event intended to proclaim something is true for which we just don’t have good evidence doesn’t help anyone.

Let’s not mislead taxpayers…or kids.

Debunking the Debunking of Dynamic Scoring and the Laffer Curve

Many statists are worried that Republicans may install new leadership at the Joint Committee on Taxation (JCT) and Congressional Budget Office (CBO).

This is a big issue because these two score-keeping bureaucracies on Capitol Hill tilt to the left and have a lot of power over fiscal policy.

The JCT produces revenue estimates for tax bills, yet all their numbers are based on the naive assumption that tax policy generally has no impact on overall economic performance. Meanwhile, CBO produces both estimates for spending bills and also fiscal commentary and analysis, much of it based on the Keynesian assumption that government spending boosts economic growth.

I personally have doubts whether congressional Republicans are smart enough to make wise personnel choices, but I hope I’m wrong.

Matt Yglesias of Vox also seems pessimistic, but for the opposite reason.

He has a column criticizing Republicans for wanting to push their policies by using “magic math” and he specifically seeks to debunk the notion - sometimes referred to as dynamic scoring or the Laffer Curve - that changes in tax policy may lead to changes in economic performance that affect economic performance.

He asks nine questions and then provides his version of the right answers. Let’s analyze those answers and see which of his points have merit and which ones fall flat.

But even before we get to his first question, I can’t resist pointing out that he calls dynamic scoring “an accounting gimmick from the 1970s” in his introduction. That is somewhat odd since the JCT and CBO were both completely controlled by Democrats at the time and there was zero effort to do anything other than static scoring.

I suppose Yglesias actually means that dynamic scoring first became an issue in the 1970s as Ronald Reagan (along with Jack Kemp and a few other lawmakers) began to argue that lower marginal tax rates would generate some revenue feedback because of improved incentives to work, save, and invest.

Now let’s look at his nine questions and see if we can debunk his debunking: