Topic: Government and Politics

When Governments Lobby Government, Taxpayers Lose

John Fund has a rather depressing article at the Wall Street Journal’s opinionjounal.com. He explains how governments - including universities and Indian tribes - are exempt from restrictions on lobbying. Yet these are some of the groups that specialize in feeding at the public trough. The real problem, of course, is that government is too big. So long as politicians are confiscating and redistributing about $3 trillion, interest groups will figure out ways of steering other people’s money in their direction:

….lobbyists visiting Capitol Hill are bound by House and Senate ethics rules that cap most individual gifts at $50 per elected official or staffer, with an annual limit of $100 per recipient from any single source. But local governments, public universities and Indian tribes are exempt from the limit, so they are able to shower members and their staffs with such goodies as luxury skybox tickets to basketball games and front-row concert tickets. Having members or their key aides attend such free events in the company of glad-handing university presidents and local government officials winds up costing taxpayers a pretty penny. Much of the explosive growth in earmarks has been directed to local governments and universities. …Universities and colleges spent at least $75 million in 2005 on lobbying according to a study by USA Today. The Chronicle of Higher Education reports that $2 billion in grants flowed into higher education in 2003. …The same lobbying rules that apply to private-sector lobbyists should also apply to taxpayer-funded government lobbyists. …Disgraced lobbyist Jack Abramoff once told me that he built his lobbying business in such a way that all his major clients were Indian tribes and local governments, in part because he knew he could wine and dine power brokers on Capitol Hill without breaking any laws.

So-Called Consumer Protection Law Hurts Consumers

Headline-seeking politicians like to enact laws that ostensibly protect consumers from predatory businesses. Item-pricing laws are a good example. They supposedly exist to protect consumers from being overcharged by unscrupulous grocery stores, even though research shows that stores are just as likely to make mistakes that benefit consumers. Requiring individual price tags, though, is an unambiguous negative for shoppers, raising prices by as much as 10 percent because of added labor costs. A column in the Wall Street Journal explains:

New York and several other states (California, Illinois, Massachusetts, Michigan, New Hampshire, North Dakota, Rhode Island and sometimes in Connecticut) have an “Item Pricing Law” (IPL) requiring that, for most goods in retail stores, each item have its own individual price sticker; in other states a simple price tag on the shelf is considered sufficient. …Prices in IPL stores are 20 cents to 25 cents higher per item than in non-IPL stores. …The maximum estimate of the benefit of avoiding overcharges to consumers through IPLs is less that one cent per item. …The laws are a bad deal for consumers. How significant are these price differences – about a quarter per item? The average price of the items in our sample was about $2.50, so there is a 10% difference. This implies that prices of groceries are almost 10% higher in IPL stores. Food represents about 14% of the average family’s budget. IPLs, therefore, reduce the real incomes of families by more than 1% – a nontrivial amount. In sum, our study shows that IPLs impose net costs on consumers much greater than any potential benefit. Jurisdictions without them should not pass them, and jurisdictions with them should repeal them. In New York City, where costs and so prices are already very high, consumers would greatly benefit from a 10% reduction in grocery prices.

Mandatory HPV Vaccines: Who Benefits?

The lure of government mandates has turned Merck, if it wasn’t already, into an unethical company.  In principle, I have nothing against Merck publicizing its products and their benefits.  But Merck has exaggerated the benefits of its Gardasil vaccine and has shamelessly lobbied lawmakers to make a vaccine of questionable benefit mandatory.

At $360, the Gardasil vaccine against four types of human papillomavirus (HPV) is one of the most expensive vaccines on the market. On June 8th of last year the Food and Drug Administration (FDA) approved Gardasil for use in girls age nine to 26.

It is important to mention that technically “mandatory vaccination laws” are not “mandatory” because they all contain constitutionally required opt-out provisions.  Nevertheless when lawmakers, Merck, the press and everyone else call’s such laws “mandatory,” they in effect become so because the public perception is that they are.

Factual Errors.

Merck has misrepresented the facts, or is at least standing by dumb while others misrepresented them.  It is misleading to say the human papillomavirus (HPV) causes cervical cancer.  Not all HPV viruses cause cervical cancer and, while HPV is prevalent, those types (types 16 and 18) that cause cervical cancer are not nearly as prevalent. There are 37 or more types of genital HPV.  The rate of all 37 types together is high – 34% among women ages 14 to 24, but the rate for the types 16 and 18 that are responsible for 70% of cervical cancer cases in the U.S. – is only 1.5% and 0.8% respectively.  See the Journal Watch article published today.

Parts of the “Patient Product Information” link for Gardasil on the Merck website are vague at best and confusing and misleading at worst.   In light of the information above consider these two paragraphs:

What is Human Papillomavirus (HPV)?

HPV is a common virus. In 2005, the Centers for Disease Control and Prevention (CDC) estimated that 20 million people in the United States had this virus. There are many different types of HPV; some cause no harm. Others can cause diseases of the genital area. For most people the virus goes away on its own. When the virus does not go away it can develop into cervical cancer, precancerous lesions, or genital warts, depending on the HPV type. See “What other key information about GARDASIL should I know?”

Who is at risk for Human Papillomavirus?

In 2005, the CDC estimated that at least 50% of sexually active people catch HPV during their lifetime. A male or female of any age who takes part in any kind of sexual activity that involves genital contact is at risk. The U.S., unlike some other countries, has been very successful at reducing cervical cancer rates.  Both the actual number of cases of cervical cancer and the number of deaths from cervical cancer has been declining steadily for the past ten years.  (seer.cancer.gov/statfacts/html/cervix.html).  Furthermore, the effectiveness of condoms in preventing the spread of both HPV and HIV is well documented, as is the value of routine pap smears in preventing death from cervical cancer.

Policy Errors.

Merck is also clearly taking advantage of some very fallacious policy analysis.  It is very difficult to do a cost benefit analysis in public health because there are so many factors, known and unknown, that come into play, but to have the debate ignore considerations that are blatantly obvious is suspect.  While it is horrible that anyone should die of cervical cancer, it probably does not make sense to advocate mandatory vaccination for approximately 30,000,000 school aged girls with a brand new vaccine in order to prevent fewer than two percent of those girls from getting cervical cancer in the future.

Risk assessment is not easy, particularly when, as is the case with Gardasil, the long term effects of a vaccine are totally unknown.  Women who participated in the drug trials were followed for an average of less than three years.  Consider this totally hypothetical example: what if 90% of all school age girls are vaccinated within the next five years and then ten or twenty years from now it is discovered that the vaccine made them sterile or actually caused them to get a different type of cancer than what they were vaccinated against?  Or worse yet, because of the difference in sample size, once millions of  9 and 10-year olds were vaccinated instead of just a couple of hundred, one percent of the girls had side effects severe enough to cause brain damage or death?

The principle of unintended consequences suggests that, in all but the clearest cases, health risk assessments should be left up to individual families, not only because making such determinations rightly rests with families, but also because it simply does not make sense from a public policy standpoint to experiment on such a large portion of our population all at once.  Let parents choose for their girls, then there will be portions of the population that does and that doesn’t get the vaccine and others that received it later or earlier, or yet others that receive it while younger or older.  Allowing parents to make their own risk assessments is a natural way to protect the population from some negative unintended consequence of the vaccine affecting a whole demographic all at once.

To add insult to injury, not only has Merck left policy makers in the dark as to the myriad of possible downsides to mandatory vaccination for HPV, it has actively lobbied and paid large campaign contributions to politicians willing to support mandatory vaccination policies.  According to documents obtained by The Associated Press last month, Merck donated $5000 to Texas Gov. Rick Perry (R) on the same day Perry’s chief of staff met with the governor’s budget director and others for a “HPV vaccine for Children Briefing.”

Similar scenarios played out in at least seven other states.  This seems quite a bit like bribing politicians to do something for Merck, something that will bring Merck huge profits, very possibly at the expense of the general population – or at least at the expense of little girls.

Unfortunately, 20 states or more are currently considering mandatory HPV vaccination laws.

Let the Sun Shine In

Everyone believes that government would be better if there was more transparency — though people’s ideas of “better” can range quite widely. As I’ve noted before, the Internet and other new technologies have a lot to do with making government information more available.

Apropos of this phenomenon — and the impending advent of spring — next week turns out to be “Sunshine Week,” which includes a wide variety of open government activities. Among other things, the Sunlight Foundation, sponsor of the Sunlight Network, is having a panel discussion called “Sunshine in the First Branch: How Transparent is Congress?

Oh sure, this kind of thing is a little kumbaya, but I’ve been known to hum a few bars of that tune and, again, the benefits of transparency are a matter of (near) pan-ideological agreement. Secrecy is also bad. Let the sun shine in.

Edwards’s 2-to-1 Budget Law

How should government officials decide on whether to fund big projects such as fighter aircraft, highways, bridges, and other types of infrastructure?

First, they should check the Constitution to see whether they are legally allowed to spend on the object in consideration.

Second, they should assume that the item will cost at least twice as much as initial estimates indicate. There should be a 2-to-1 hurdle when the price tag of a project is being considered.

Government purchases of military hardware, highways, energy projects, space equipment, and other items often cost 50% or 100%, or more (see here and here), above what politicians originally promise.

Let’s be conservative and say that a 50% cost overrun is typical, such that we can expect a new $1 billion project to actually cost taxpayers $1.5 billion. But as economists often point out, paying for $1.5 billion in government spending will cost taxpayers much more than $1.5 billion because of the “deadweight losses” or inefficiency costs created by extracting taxes from the private sector with a complex and high-rate system.

How much more? Harvard’s Martin Feldstein thinks deadweight losses might be $1 for each added dollar of taxes. But let’s be conservative and say it’s only 50 cents on the dollar. So government projects impose deadweight losses of 50% on costs that are likely to balloon at least 50%. 

The bottom line is that when America’s taxpayers hear that politicians want to spend, say, $10 billion on a new scheme, they should assume that they will face an ultimate financial hit of $22.5 billion. And that’s conservative!

California’s Burgeoning Nanny State

Los Angeles Times reporter Nancy Vogel has a roundup of nanny-state bills pending in the California legislature:

Enjoy fast food? Like to light up while you watch the waves? Forget to sock away money for your kids’ education?

Some California lawmakers want to change your ways. They’ve planted a crop of proposals this year — “nanny” bills, as they’re called — that would:

•  Restrict the use of artery-clogging trans fat, common in fried and baked foods and linked to heart disease, in restaurants and school cafeterias.

•  Bar smoking at state parks and beaches, and in cars carrying children.

•  Open a savings account, seeded with $500, for every newborn Californian to use at 18 for college, a first home purchase or an investment for retirement.

•  Fine dog and cat owners who don’t spay or neuter their pets by 4 months of age.

•  Require chain restaurants to list calorie, saturated fat and sodium content on menus.

•  Phase out the sale of incandescent light bulbs, which are less energy-efficient than compact fluorescent bulbs.

The debate has commenced in the Capitol: How far should government go?
Vogel notes that all these proposals come from Democrats and that

Republicans, who say the sponsors are trying to parent the whole state, are having none of it.

“Could you imagine the founding fathers dealing with — I don’t know — wearing a helmet when you’re in the buggy?” said the Assembly’s Republican leader, Mike Villines of Clovis.

“We all know you can’t mandate behavior; it just does not work,” he said. “It creates criminals of people for things that are not criminal behavior…. You can’t legislate for stupidity.”

Of course, Republicans are no slouches in the nanny-state department. From New York mayor Michael Bloomberg’s jihad against smoking to Arkansas governor Michael Huckabee’s war on obesity to President Bush’s grab-bag of Clintonesque hand-outs and religious-right prohibitions, Republicans have proved themselves equally adept at hectoring, monitoring, nudging, and punishing recalcitrant citizens.

As I wrote last year at Cato Unbound:

Republicans used to accuse Democrats of setting up a nanny state, one that would regulate every nook and cranny of our lives. They took control of Congress in 1994 by declaring that Democrats had given us “government that is too big, too intrusive, and too easy with the public’s money.” After 10 years in power, however, the Republicans have seen the Democrats’ intrusiveness and raised them.

So from the Republicans we get federal money for churches; and congressional investigations into textbook pricing, the college football bowl system, the firing of Terrell Owens, video games, the television rating system, you name it; and huge new fines for indecency on television; and crackdowns on medical marijuana and steroids and ephedra; and federal intervention in the sad case of Terri Schiavo; and the No Child Left Behind Act; and federal subsidies for marriage; and (for less favored constituencies) a constitutional amendment to override the marriage laws of the 50 states.

As far as California’s Democratic nannying goes, let me just say this: Governor Schwarzenegger, only a girlie-man would be afraid to veto these bills that treat adult Californians like children.

NCLB: The Bad, the Worse, and the Ugly

Want to know how the No Child Left Behind Act has actually affected overall student achievement and the gaps between students of different races and socio-economic backgrounds? Want a guided insider tour of the political sausage factory that produced it and the political calculus that allowed it to pass in the first place? Look no further than the podcasts that are available here.

They’re enough to make H.L. Mencken look like a political optimist.

Just one highlight, uttered by former House majority leader Dick Armey, who voted against national education standards under President Clinton but for the NCLB under President Bush: “My NCLB vote, perhaps more than any other one thing, was the reason I left Congress…. If I couldn’t be myself and vote my conscience, why stay?”

According to Armey, opposition to national education standards under Clinton and support for them under Bush were driven overwhelmingly by political considerations that had nothing to do with the evidence of what works. That’s not surprising, of course, but it’s one thing for pundits to opine about it and quite another to have a key player openly acknowledge it.

There are a lot of other interesting bits throughout the podcasts, including an appearance by Rep. Pete Hoekstra (R-Mich.) pre-announcing legislation that he will formally reveal next week that would give control over federal education spending to the states. Perhaps not an ideal solution (the feds should not be involved in the first place, according to the Constitution), but it would be better than any other serious legislative proposal I’ve seen.