Can Private Disaster Relief Work?

In a new paper, Emily Skarbek (King’s College London) presents some evidence:

Using a novel set of comprehensive donation and expenditure data collected from archival records, this paper examines a bottom-up relief effort following one of the most devastating natural disasters of the nineteenth century: the Chicago Fire of 1871. Findings show that while there was no central government relief agency present, individuals, businesses, corporate entities and municipal governments were able to finance the relief effort though donations. The Chicago Relief and Aid Society, a voluntary association of agents with a stake in relief outcomes, leveraged organizational assets and constitutional rules to administer aid.

This contrasts sharply with conventional wisdom and current public policy, which assumes that private agents and local governments will “free ride” on the charitable actions of others, leading to “insufficient” relief activity unless the central government plays a large role.

In fact, private and local government efforts are often substantial, as demonstrated by this example and many others (e.g., the billions given by individuals, foundations, and corporations to help victims of Katrina, Sandy, and the Asian Tsunami).

Local efforts, moreover, are likely more efficient than those directed by a far away central government, as residents of New Orleans can readily attest.

Wal-Mart Swings Back against NYT Columnist

Don’t you wish more companies would do this when attacked? After New York Times columnist Tim Egan took a swipe at Wal-Mart over its wage policies, Wal-Mart swiped right back this weekend in a way that’s effective as well as funny. 

One further point the company could have added: the company’s low prices significantly improve standards of living for low-wage and low-income shoppers across the nation. Here’s one economist’s comment from a few years back: 

Wal-Mart’s low prices help to increase real wages for the 120 million Americans employed in other sectors of the economy. And the company itself does not appear to pay lower wages or benefits than similar companies, or to cause substantially lower wages in the retail sector…

[T]o the degree the anti-Wal-Mart campaign slows or halts the spread of Wal-Mart to new areas, it will lead to higher prices that disproportionately harm lower-income families…

By acting in the interests of its shareholders, Wal-Mart has innovated and expanded competition, resulting in huge benefits for the American middle class and even proportionately larger benefits for moderate-income Americans.

Although the link is via a post by colleague Michael Cannon, it wasn’t any of us at Cato who wrote that: it was Jason Furman, adviser to Democratic candidates and President Obama’s current chairman of the Council of Economic Advisers. More Furman on Wal-Mart here.

U.S. Should End Aid to Egypt’s New But Not Improved Mubarak

Much about the President Barack Obama’s foreign policy has been an embarrassment.  In Egypt the Obama administration incompetently followed in the footsteps of its predecessors.

Three years ago Hosni al-Mubarak’s dictatorship ingloriously collapsed.  The Obama administration constantly followed events, first embracing Mubarak, then calling for a negotiated transition, and finally endorsing his overthrow. 

The Muslim Brotherhood’s electoral success upset the military’s plans to retain power, but the “deep state” persisted.  Mohamed al-Morsi was elected president, but he controlled little of substance—not the military, police, courts, or bureaucracy.

Nearly a year ago Gen. Abdel Fatah al-Sisi ended any possibility of the government slipping outside of military control by staging a coup.  Since then thousands have been killed, hundreds sentenced to death, and tens of thousands detained. 

Through it all the Obama administration took the least principled position possible.  Although U.S. law required a cut-off of financial aid, the president simply refused to characterize the coup as a coup, as if not saying the name made it something else. 

Officials worried about lost leverage, even though Egyptian officials always ignored Washington’s political advice in the past.  Washington eventually held back a portion of planned U.S. assistance, apparently to demonstrate a little, but not too much, disapproval.  Particularly grotesque regime abuses earned complaints from the Obama administration, but then Secretary Kerry would suggest that democracy still was moving forward. 

In April the administration said it would allow distribution of some military aid and deliver ten Apache helicopters to Egypt’s military.  When I visited Egypt a couple months ago I found that virtually everyone believed America was on the wrong side, a notable if not particularly worthy achievement by the administration.

Now Congress can set things right.  Last year Cairo was slated to collect $1.3 billion in military and $250 million in economic assistance.  Although the military money was conceived of as an incentive to convince Cairo to keep the peace with Israel, the Egyptian military, which has not fought a war in more than four decades, has the most to lose from any hostilities. 

The economic payments do little to promote growth.  Instead, government-to-government payments usually underwrite autocracy and statism, and discourage reform by masking the pain of failure. 

House Republicans, apparently enthused with President Sisi’s promise to smite Islamists—along with everyone else who has the temerity to criticize him ever so slightly—proposed a nominal $50 million cut in economic assistance.  That’s barely enough for Cairo to notice, especially since the military would continue collecting its usual payments for use to purchase high-tech weapons which are more for show than use. 

In contrast, the Senate Appropriations Committee proposed to reduce military aid to $1 billion and economic assistance to $150 million.  That’s a $400 million cut.  U.S. aid still violates the law, but at least the reduction is noticeable.

However, even the Senate doesn’t go far enough.  Congress should end all aid.  The administration should shut up about democracy.  The Pentagon should be left to cooperate with the Egyptian military on essential tasks, including access to the Suez Canal—after all, Egypt’s generals will want to continue purchasing newer and better toys, as well as acquiring spare parts for existing weapons.

There is no good answer to Egypt.  No one knows how a Morsi presidency would have turned out, but skepticism of the Brotherhood in power is understandable, given the abuses of Islamists elsewhere. 

Alas, as I point out in my new article on American Spectator online, “we do know how a Sisi presidency is likely to turn out:  a rerun of Mubarak’s authoritarian and corrupt reign.”  Repressive rule isn’t even likely to deliver stability, since the Egyptian people will eventually tire of yet another government which delivers arbitrary arrests, brutal torture, and summary punishment rather than economic growth.

The best Washington can do is stay out. Subsidize no one, endorse no one. Work privately to advance important interests.  Leave Egyptians to settle their fate. 

Border Patrol Spending

A tragedy is unfolding in Texas as thousands of illegal immigrants are pouring over the southern border. Alex Nowrasteh has examined the immigration statistics here.

But in this blog, let’s take a look at the budget situation. The chart below shows that total Border Patrol (BP) spending has more than tripled since 2000, from $1.1 billion to $3.5 billion, according to this BP website. That spending is within broader Customs and Border Protection (CBP) spending of about $12 billion a year currently. A breakdown of the CBP budget is on page 49 here.

Climate Change, Heat Waves, and Adaptation

Global Science Report is a feature from the Center for the Study of Science, where we highlight one or two important new items in the scientific literature or the popular media. For broader and more technical perspectives, consult our monthly “Current Wisdom.”

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The main idea, as it is portrayed, driving the Obama administration’s pursuit of carbon dioxide regulations is that climate change is leading to all manner of bad things. Pointing to concrete example of bad things that have resulted from human greenhouse gas emissions, however, is much more challenging than just saying it is the case. In fact, for most climate/weather events and their resulting effect, the bulk of the science contradicts the administration’s contentions.

Roger Pielke Jr. makes it a habit to point out how White House proclamations concerning extreme weather events go awry. We have similar habits.

An especially egregious example concerns heat-related mortality. It is true that extreme heat can lead to excess mortality. It is also true that global warming should lead to more heat waves. However, it is NOT true that global warming will lead to more heat-related mortality—the logic forwarded by the administration. Frequent readers of this blog are well aware of this.

However, as not everyone (to his or her detriment) is a frequent reader of this blog, we presented our findings on climate change and heat-related mortality to the audience at a science policy conference held by the American Geophysical Union (AGU) this week. Our conclusions were:

Chinese Investment in Virginia

From the Washington Post:

Gov. Terry McAuliffe scored an economic coup and expanded Virginia’s already substantial business ties with China on Wednesday as he unveiled plans for a major manufacturing facility in the Richmond suburbs.

The announcement caps a string of recent economic development deals involving China and Virginia, highlighting the country’s growing importance in the commonwealth’s economy as both a trading partner and an investor.

Under a deal that state officials called the largest ever between a Chinese investor and Virginia, Shandong Tranlin Paper Co. will create 2,000 jobs with a $2 billion plant that makes paper from corn stalks and other agricultural field waste.

My reaction to almost every announcement of new foreign investment goes like this: First, I’m excited to hear about the new investment, and pleased when people do not respond with a fit of economic nationalism. But then, inevitably, I read on and get frustrated:

McAuliffe (D) approved a $5 million grant from the Governor’s Opportunity Fund to help lure the company, reflecting the former entrepreneur’s push to expand and diversify the state’s defense-heavy economy.

Sigh. It’s great that foreign investors are building new factories. We should welcome that. But there is no reason to subsidize it. Let investors of all national origins go where they want, but offering them subsidies is just a big waste. It doesn’t create more investment, it just shifts it around based on non-market factors.

Kim Strassel and the WSJ on the Lost IRS Emails

Earlier this week Wall Street Journal columnist Kim Strassel won a much deserved Bradley Award for her work in investigative journalism. It’s at times like this, in which revelations about evidence destruction at the Internal Revenue Service almost defy belief, that everyone interested in American governance should follow her column and the Journal editorial page.

Some highlights since the email story broke last Friday: 

* According to Strassel’s column today, the contents of Lois Lerner’s hard drive were wiped out by forces unknown “about 10 days after the Camp letter arrived,” that is to say, a letter from House Ways and Means Chairman Dave Camp inquiring into targeting of conservative groups. (Lerner then replied to Camp denying targeting and subsequently pleaded the Fifth before Congress.) 

* A WSJ editorial this morning points out the remarkable timing of the IRS’s begrudging disclosure last Friday that evidence central to the case has been destroyed: more than a year after the investigation began and only when a deadline was impending in which the IRS commissioner would have to certify personally that the agency had produced to Congress all relevant communications. Were responsible agency officials determined to treat this as a high-priority investigation, to be carried on in good faith and with all deliberate speed? (There was no doubt about the seriousness of the scandal, as President Obama himself admitted—or seemed to be admitting—at the time.) Or did they instead stall and deflect until the very last moment? So un-forthcoming was the agency that, according to today’s Journal editorial, IRS staffers met with Sen. Orrin Hatch (R-Utah) Monday and did not tell him that the external emails of six other IRS employees had gone missing too—he found that out only later in the week when he read a press release from the House side.  

* While some IRS critics focus almost to the exclusion of all else on the possible role of the Obama White House in directing the IRS, Strassel and the WSJ correctly will not let us forget that much of the pressure on the agency was coming from Congress itself. In particular, Sens. Carl Levin (D-Mich.), Dick Durbin (D-Ill.), and Chuck Schumer (D-N.Y.), along with Reps. Chris Van Hollen and Elijah Cummings (both D-Md.), were among many Democrats seeking to enlist the IRS in a crackdown on politically antagonistic nonprofits.

Thank heavens for Kim Strassel and her colleagues at the WSJ, because otherwise it would seem as if few in the press were willing to focus serious investigative attention on this extraordinary scandal. (Many other press outlets have treated it as a dull page-A-18 story, run wire service coverage only, or–as with the New York Times–waited three days even to notice it.) 

People used to ask how Watergate might have turned out if the press had sided with Nixon instead of against him. Thanks to the work of Strassel and her WSJ colleagues, let’s hope we never find out.