Topic: Government and Politics

Federal Follies 200 Years before Ex-Im

Anyone who thinks that Washington waste is something new should examine the history of the Bureau of Indian Affairs (BIA). This essay discusses the mismanagement, corruption, and failures of the BIA since it was created in 1824.

As early as 1828, Indian expert H. R. Schoolcraft concluded: “The derangements in the fiscal affairs of the Indian department are in the extreme. One would think that appropriations had been handled with a pitchfork … there is a screw loose in the public machinery somewhere.”

By the 1860s and 1870s, New York Times editorials were railing against the “dishonesty which pervades the whole Bureau,” and arguing that “the condition of the Indian service is simply shameful.”

In their recent book, Uncle Sam Can’t Count, Burton and Anita Folsom describe the failure of a major Indian policy even before 1824. Here is the basic story:

• Unhappy that British fur traders were out-competing American traders, Congress appropriated $50,000 in 1795 to create frontier posts stocked with American goods to trade with the Indians for furs.

• These government-run fur “factories” were supposed to earn a return, but they “were so poorly run that many Indians held them in contempt and refused to trade there.” Congress had to heavily subsidize the system to keep it operating.

• Rather than respond to the market demands of the Indians, as private traders did, the official running the government system, Thomas McKenney, tried to push products on the Indians that he thought they ought to have.

• The government set up its trading posts at substantial distances from Indians. By contrast, private fur trader John Jacob Astor had his agents build close relationships with Indians, and he made trading easy for the tribes.

• Astor instituted pay for performance, while the government paid its fur bureaucrats fixed salaries.

• Astor watched international fur markets closely and adjusted his operations and marketing accordingly. The government ignored markets, and simply dumped furs in Washington for auction.

• Thomas McKenney was embarrassed by the government’s falling market share and the huge success of Astor. So, in 1818, McKenney began lobbying Congress to ban private fur traders. When that attempt at monopolization failed, McKenney lobbied to impose large fees on private traders and to boost taxpayer subsidies for the government system.

• Despite a new fee on private traders in 1820, the government system was falling apart because of plunging sales. An official report exposed the huge inefficiencies of the government system, and Congress finally voted to end it in 1822.

Long before Solyndra and the Export-Import Bank, politicians should have learned some basic lessons about why Washington ought to stay out of business. Unfortunately, each new generation of politicians are tempted to believe that enlightened federal planners can run the economy better than businesspeople and markets. Rather than wasting hundreds of thousands of dollars as it did two centuries ago, Congress blows billions of dollars today on new versions of its fur-trading folly.

Convention Center Boondoggles

Every country wants a national airline, and every city wants a glitzy convention center to bring those free-spending conventioneers to town. But the economic analysis doesn’t hold up well in either case. A new book on convention centers should be required reading for any city council thinking of investing the taxpayers’ hard-earned money in another white elephant. This report by Don Bauder in the San Diego Reader is worth quoting at length:

Would you take advice from a gaggle of consultants whose forecasts in the past two decades have been off by 50 percent?

Of course you wouldn’t. But all around the U.S., politicians, civic planners, and particularly business executives have been following the advice of self-professed experts who invariably tell clients to build a convention center or expand an existing one.

A remarkable new book, Convention Center Follies: Politics, Power, and Public Investment in American Cities, published by the University of Pennsylvania Press, tells the amazing story of how one American city after another builds into a massive glut of convention-center space, even though the industry itself warns its centers that the resultant price-slashing will worsen current woes.

The author is Heywood Sanders, the nation’s ranking expert on convention centers, who warned of the billowing glut in a seminal study for the Brookings Institution back in 2005. In this new, heavily footnoted, 514-page book, Sanders, a professor of public administration at the University of Texas/San Antonio, exhaustively examines consultants’ forecasts in more than 50 cities.

Nashville was told its new center would result in 466,950 hotel room nights; it’s getting around 267,000 — “a little better than half [what was projected],” says Sanders in an interview. Philadelphia isn’t garnering even half the business that was promised.

“Getting half the business [that was projected] is about the norm,” says Sanders. “The actual performance is a fraction of what it is supposed to be.”

Yet, in city after city — including San Diego — self-appointed civic leaders listen to and act on these faulty forecasts. In almost all cases, mainstream media and politicians swallow the predictions whole without checking the consultants’ miserable track records….

How can convention centers get away with such legerdemain? Those in the know shut up, and the press, politicians, and public have neither the time nor the expertise to follow the prestidigitation.

How do the consultants get away with being 50 percent wrong most of the time? In my opinion — not Sanders’s — consultants in many fields are paid to provide answers that the people paying the consultants’ bills want to hear. And the people paying those bills are the business community — using taxpayers’ money, of course.

The worst news: “These expansions will keep happening,” as long as “you have a mayor who says it is free,” says Sanders.

More, much more, in the Reader and of course in the book. Free-market think tanks have been pointing out the bad economics behind convention centers – and publicly funded stadiums – for many years. 

Hobby Lobby Demonstrates That Expansive Government Is Religious Liberty’s Worst Enemy

The federal government has taken over ever larger swaths of American life, most recently health care.  ObamaCare demonstrates that as state dictates expand, religious liberties recede.

The Supreme Court’s ruling in Burwell v. Hobby Lobby was extremely narrow but also extremely important.  Religious liberty is the first freedom and must be protected from government.

The Founders chose not to create a church-based government.  Previous experiments had turned out tragically for both human liberty and religious faith. 

Religion’s relationship to politics has become more important as politics has swallowed more of American life.  In 1789, the new national government was minuscule.  Moreover, in America’s early days, there was a shared Biblical worldview, if not faith, and a common belief in the value of civil religion. 

However, that world has disappeared.  Today there is little government does not do, pushing ever more aspects of life into the public square.  Equally important, Americans have increasingly divergent views of the transcendent. The First Amendment simultaneously guarantees individuals the right to practice and denies government the right to impose.  There may be no more tortured area of federal jurisprudence. 

Libertarian Voters: Still Invisible in New Pew Study

The Pew Research Center recently issued a major study of political ideology in America, based on 10,000 interviews early this year. That’s far bigger than most polls, so it allows more detailed examination of diverse political opinions. Indeed, the study is titled “Beyond Red vs. Blue: The Political Typology.” And yet, disappointingly, it continues to try to place Americans into red and blue boxes: different groups are characterized as “consistently” liberal or conservative, or as groups that “don’t hold consistently liberal or consistently conservative views.” There’s no suggestion that there might be consistent views other than contemporary liberalism and conservatism.

Take the interesting discussion of the “Young Outsiders” group: 

Young Outsiders lean Republican but do not have a strong allegiance to the Republican Party; in fact they tend to dislike both political parties. On many issues, from their support for environmental regulation to their liberal views on social issues, they diverge from traditional GOP orthodoxy. Yet in their support for limited government, Young Outsiders are firmly in the Republicans’ camp….

Young Outsiders share Republicans’ deep opposition to increased government spending on social programs. About three-quarters of Young Outsiders (76%) say the government can’t afford to spend more to help the needy.

However, the Young Outsiders’ generational imprint on issues like homosexuality, diversity and the environment make the Republican Party an uncomfortable fit. In views of societal acceptance of homosexuality, for instance, Young Outsiders have more liberal views than the public overall, and are much more liberal than Republicans….

The Young Outsiders today are very different, as they share the GOP base’s deep skepticism of government programs, but favor a more limited foreign policy, and hold decidedly liberal social views.

As I read this, I keep thinking there’s a word at the tip of my tongue … wait a minute … Oh, I know: The Young Outsiders hold libertarian views. Was that so hard? 

Independence in 1776; Dependence in 2014

Since the 1960s, the Catalog of Federal Domestic Assistance (CFDA) has provided a list of all federal subsidy programs. That includes subsidies to individuals, businesses, nonprofit groups, and state and local governments. The CFDA includes subsidies for farmers, retirees, school lunches, rural utilities, the energy industry, rental housing, public broadcasting, job training, foreign aid, urban transit, and much more.

The chart below shows that the number of federal subsidy programs has almost doubled since 1990, reaching 2,282 today. The genesis of the CFDA was the explosion of hand-out programs under President Lyndon Johnson. Members of Congress needed a handy guide to inform their constituents about all the new freebies.

The growth in subsidies may be good for the politicians, but it is terribly corrosive for American society. Each subsidy program costs money and creates economic distortions. Each program generates a bureaucracy, spawns lobby groups, and encourages more people to demand further benefits from the government.

Individuals, businesses, and nonprofit groups that become hooked on subsidies essentially become tools of the state. They have less incentive to innovate, and they shy away from criticizing the hand that feeds them. Government subsidies are like an addictive drug, undermining American traditions of individual reliance, voluntary charity, and entrepreneurialism.

The rise in the size and scope of federal subsidies means that Americans are steadily losing their independence. That is something sobering to think about on July 4.

Which subsidies should we cut? We should start with these.

RIP Christian Führer, East German Peace Activist

In the early 1980s a church in Leipzig, East Germany’s ­second-­largest ­city, began holding “peace prayers” on Monday night. Two young pastors, Christian Führer and Christoph Wonneberger, at the Nikolaikirche, or St. Nicholas Church, led the services. As Andrew Curry wrote in the Wilson Quarterly, it was a dangerous undertaking, but the church was the only place where any dissent could be cautiously expressed. “The church was the one space someone could express themselves,” Führer said. “We had a monopoly on freedom, physically and spiritually.”

Through the 1980s, as Curry reported, the Monday meetings grew. Gorbachev’s reforms gave Eastern Europeans hope. But they knew their history.

In 1953, workers in 700 East German cities declared their opposition to the Unified Socialist Party of Germany, or SED, the party that was synonymous with the East German state, and demanded the reunification of the country. Soviet soldiers fired on demonstrators, and more than 100 were killed. In the years since, all opposition movements in the Soviet bloc had met the same fate: “’53 in Germany, ’56 in Hungary, ’68 in Prague, ’89 in ­China—­that’s how communism dealt with critics,” ­Führer says. 

Suddenly in 1989, with a breach in the Iron Curtain between Hungary and Austria, and Solidarity winning an election in Poland, more people started showing up for peace prayers, more than the small church could hold. People started flooding out of the church and marching with candles through Leipzig. Week by week that fall, more people joined the marches – hundreds, then thousands, then 70,000, 150,000, 300,000. And then, unbelievably, the Communist Party fell, the Berlin Wall opened, and East Germans were free after more than 40 years. As a Leipzig politician told me in 2006, “As it says in the Bible, we walked seven times around the inner city, and the wall came down.”

I was saddened to read that Christian Führer died Monday in Leipzig at 71. “Führer” is a German word meaning “leader.” Christian Führer was truly a Christian leader.

I talked about the Monday prayers and the fall of communism in this 2012 speech:

Cato Went 10-1 at Supreme Court This Term

And so another term has come and gone at the marble palace at One First Street NE. Like last year, Cato did swimmingly, compiling a 10–1 record in cases where we filed an amicus brief. Notably, we again vastly outperformed the solicitor general’s office, which went 11–9 on the year. Perhaps the government would be better served following our lead on constitutional interpretation, advocating positions that reinforce our founding document’s role in securing and protecting individual liberty.

Cato was also the only group in the country to file on the winning side of this term’s three highest-profile 5-4 cases: McCutcheon v. FEC (campaign finance), Harris v. Quinn (workers’ rights), and Burwell v. Hobby Lobby (HHS mandate). This again matches our performance last year, when we were the only ones to file on the winning side of Fisher v. UT-Austin (racial preferences), Shelby County v. Holder (voting rights), and United States v. Windsor (DOMA). There’s an obvious reason why it’s become a “best practice” among elite Supreme Court advocates to solicit an amicus brief from Cato; while our denial rate is lower than the Supreme Court’s, it’s been growing steadily given increasing requests without a commensurate growth in manpower.

For the record, here’s a record of cases in which we filed this term (in order of argument):

Winning side (10): McCutcheon v. FEC; Schuette v. Coalition to Defend Affirmative Action; Bond v. United States; Noel Canning v. NLRB; Brandt v. United States; McCullen v. Coakley; Harris v. Quinn; Burwell v. Hobby Lobby; SBA List v. Driehaus; Riley v. California

Losing side (1): Kaley v. United States

To learn more about all these cases and the views of Cato-friendly scholars and practitioners, register for our 13th Annual Constitution Day Symposium, which will be held September 17 to review the term just past and look ahead to the next one. (This year’s conference features P.J. O’Rourke, Miguel Estrada, and Judge Diane Sykes, among others.) That’s also when we’ll be releasing the latest volume of the Cato Supreme Court Review. Speaking of which, I’d better get editing…