Governor Spitzer Gets It Right

In a Cato TechKnowledge newsletter issued today, I’ve updated the world on the status of the REAL ID Act.

One of the more interesting recent developments is the decision by New York Governor Eliot Spitzer to break the link between driver licensing and immigration status. He and the Department of Motor Vehicles commissioner announced the policy September 21st.

De-linking driver licensing and immigration will reduce unlicensed driving, uninsured driving, hit-and-run driving, insurance costs for legal drivers, and roadway injuries. Linking driving and immigration status is a requirement of REAL ID, and Spitzer’s move is another nail in the coffin of this national ID law.

In my TechKnowledge piece, I laud the governor’s action as follows:

Spitzer is not willing to shed the blood of New Yorkers to “take a stand” on immigration, which is not a problem state governments are supposed to solve anyway.It’s a welcome — and somewhat surprising — move, to see a Democrat and law-and-order-type former attorney general resist mission creep in a state bureau and hold fast to the federal system devised in the constitution. But he’s done the right thing. Thanks most recently to Governor Spitzer, and to state leaders from across the ideological spectrum, REAL ID is in collapse.

The move has subjected Spitzer to withering political attacks from Republicans. The attack most embarassing to witness, though, comes from “relatives of 9/11 victims.”

Creepy Conservatives

Andrew Ferguson at the Weekly Standard provides a pretty accurate portrait of Alan Greenspan, but he seems to have a problem with libertarians.

Ferguson labels Ayn Rand’s philosophy ”creepy” for “placing the self at the center of the moral universe.” Where would such a crazy idea come from?

Well, we do know that all men are “…endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men…”

Ah hah. It was the Creator that put individual lives at the center of the moral universe. That’s why he endowed us with unalienable rights. And because pursuing one’s own life and happiness is moral, Americans build their government around the idea.

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Hong Kong’s Flat Tax May Drop to 15 Percent

Thanks in part to tax competition from Singapore, Hong Kong is on the verge of reducing the flat tax rate on both corporate and labor income to 15 percent. The Wall Street Journal notes  ($) - or at least hopes - that this might open some eyes in the US and UK:

Chief Executive Donald Tsang delivers the first policy speech of his new term on Wednesday and it promises to make instructive reading for lawmakers elsewhere in the world who want to make their economies competitive. Mr. Tsang’s move was mooted earlier this year, when he promised to cut taxes on both salaries and corporate profits to 15% during his next term. The salaries tax currently stands at 16% and the profits tax at 17.5%. On Friday, the South China Morning Post reported he’ll start the ball rolling this week, sooner in his term rather than later. Singapore, Hong Kong’s big competitor in the region, has been steadily cutting corporate taxes over the past few years. Its rate now stands at 18%. …In the race to attract new business, New York and London are competing against a territory that thinks a 17.5% corporate tax is too high.

Krugman Misunderstands Conservatism

Paul Krugman declares that, contrary to those who think the Republican party has lost its way in the Bush years, President Bush is “the very model of a modern movement conservative.”

Maybe he’s talking about me, since I’ve criticized Bush’s policies as ”a far cry from the less-government, ‘leave us alone’ conservatism of Ronald Reagan.” I also wrote a whole book distinguishing libertarianism from both liberalism and conservatism, so I’m no spokesman for movement conservatism. But I can see the weaknesses in Krugman’s case. Krugman has a new book out titled The Conscience of a Liberal, but he doesn’t seem to have read – or at least understood – The Conscience of a Conservative.

Krugman writes:

People claim to be shocked by Mr. Bush’s general fiscal irresponsibility. But conservative intellectuals, by their own account, abandoned fiscal responsibility 30 years ago. Here’s how Irving Kristol, then the editor of The Public Interest, explained his embrace of supply-side economics in the 1970s: He had a “rather cavalier attitude toward the budget deficit and other monetary or fiscal problems” because “the task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority — so political effectiveness was the priority, not the accounting deficiencies of government.”

But Irving Kristol is hardly a conservative standard-bearer. As Ed Crane has been pointing out for years, the neoconservatives brought big-government ideas into the limited-government movement of Barry Goldwater and William F. Buckley Jr., and the supply-siders ducked the issue of government spending to focus strictly on tax cuts. Bush may be the ultimate supply-side neocon, but that doesn’t make him a model conservative.

Krugman also writes:

People claim to be shocked by the Bush administration’s general incompetence. But disinterest in good government has long been a principle of modern conservatism. In “The Conscience of a Conservative,” published in 1960, Barry Goldwater wrote that “I have little interest in streamlining government or making it more efficient, for I mean to reduce its size.”

But Bush didn’t reduce government’s size. He increased it by one trillion dollars in six years. Seems like Bush and Krugman both sort of missed Goldwater’s point.

Krugman writes:

People claim to be shocked at the Bush administration’s attempts — which, for a time, were all too successful — to intimidate the press. But this administration’s media tactics, and to a large extent the people implementing those tactics, come straight out of the Nixon administration.

But Nixon was no movement conservative, much less an advocate of limited government. In 1971 the main leaders of the conservative movement, led by Buckley, announced that they were “suspend[ing] support” for the Nixon administration, and many of them supported the insurgent candidacy of Rep. John Ashbrook in the Republican primaries the next year.

Conservatives have been responsible for many sins and errors of judgment over the years. (Whether any of them were as appalling as the left’s support for Stalin is a question for another day.) But Bush’s centralizing, federalizing, big-spending, imprudent policies hardly reflect the movement conservatism of Goldwater, Buckley, and Reagan.

Which does raise one question, the question I asked in my first blog post 18 months ago: Why do conservatives like Bush? If Krugman had asked that question – why do conservatives rally so firmly behind a president who has jettisoned virtually all of their principles? – he might have had an interesting column. This one, alas, is just one more raising that other interesting question, What happened to the insightful young scholar who used to be Paul Krugman?

Freedom to Unlock

Tim Wu has a great article chronicling his decision to unlock his iPhone (which allows him to use it with carriers other than AT&T and run applications not authorized by Apple). He then considers the legal and ethical implications of his actions:

Did I do anything wrong? When you buy an iPhone, Apple might argue that you’ve made an implicit promise to become an AT&T customer. But I did no such thing. I told the employees at the Apple Store that I wanted to unlock it, and at no stage of the purchasing process did I explicitly agree to be an AT&T customer. There was no sneakiness; I just did something they didn’t like.

Meanwhile, lest we forget, I did just throw down more than $400 for this little toy. I’m no property-rights freak, but that iPhone is now my personal property, and that ought to stand for something. General Motors advises its customers to use “genuine parts,” but it can’t force you to buy gas from Exxon. Honda probably hates it when you put some crazy spoiler on your Civic, but no one says it’s illegal or wrong.

The worst thing that you can say about me is that I’ve messed with Apple’s right to run its business exactly the way it wants. But to my mind, that’s not a right you get in the free market or in our legal system. Instead, Apple is facing trade-offs rightly beyond its control. When people unlock phones, Apple loses revenue it was hoping for, but also gains customers who would have never bought an iPhone in the first place. That’s life.

This is exactly right. Apple, it should be emphasized, was entirely within its rights to sign a contract promising that the iPhone would only be sold in conjunction with AT&T’s wireless service. But that contract binds Apple and AT&T; it doesn’t bind Apple’s customers. Absent any explicit contractual agreement, customers are under no legal or moral obligation to use their iPhones only in the ways Steve Jobs wants them to. Hence, unlocking your iPhone is, as Wu puts it, “legal, ethical, and just plain fun.”

It’s also worth highlighting that part of the reason Wu concludes that unlocking the iPhone is legal is that the Copyright Office included cell phone unlocking as one of its explicit exemptions to the Digital Millennium Copyright Act, the law that I’ve argued is holding back innovation in other parts of the consumer electronics industry. It’s great that the Copyright Office has recognized that using your iPhone with the carrier of your choice has nothing to do with copyright infringement, but it’s still not legal to (for example) build a DVD player that will fast-forward through commercials, or to build an MP3 player that will play songs purchased from iTunes. It would be better if the DMCA’s anti-circumvention provisions were repealed, so that inventors didn’t have to go begging to the bureaucrats at the Copyright Office for permission to engage in this kind of beneficial tinkering.

Shockingly Bad

Cato adjunct scholar Tyler Cowen takes on Naomi Klein’s book Shock Capitalism in the New York Sun:

Rarely are the simplest facts, many of which complicate Ms. Klein’s presentation, given their proper due. First, the reach of government has been growing in virtually every developed nation in the world, including in America, and it hardly seems that a far-reaching free market conspiracy controls much of anything in the wealthy nations. Second, Friedman and most other free market economists have consistently called for limits on state power, including the power to torture. Third, the reach of government has been shrinking in India and China, to the indisputable benefit of billions. Fourth, it is the New Deal — the greatest restriction on capitalism in 20th century America and presumably beloved by Ms. Klein — that was imposed in a time of crisis. Fifth, many of the crises of the 20th century resulted from anti-capitalistic policies, rather than from capitalism: China was falling apart because of the murderous and tyrannical policies of Chairman Mao, which then led to bottom-up demands for capitalistic reforms; New Zealand and Chile abandoned socialistic policies for freer markets because the former weren’t working well and induced economic crises.

My old friend Steve Horwitz asks Klein a couple of pointed questions:

1. You say that crises are opportunities for free market ideologues to force their preferred policies through in violation of democratic processes. However, in the gravest crisis of the 20th century, the Great Depression, it was government that grew enormously, and the free market was restricted, in ways never before seen in the US….How do you reconcile the main thesis of your book with the historical evidence that government has grown and markets have been made less free in almost every crisis of the 20th century? …

2. In the aftermath of the biggest crisis in the US of the 21st century (9/11), government spending has grown enormously, government regulations have expanded, and civil liberties are threatened. Each of these are results that people like Milton Friedman and many other classical liberal free market economists not only oppose, but oppose precisely because they are antithetical to the very free market reforms they would like to make. … What gives? It certainly seems like crises produce a lot more government and a lot less free market reform.

Horwitz is making the same point Justin Logan made recently; as Bruce Porter and Robert Higgs have shown, much of the growth of government throughout American history (and elsewhere) has been a result of crises like wars and depressions. Sometimes, it’s true, an economic crisis may precipitate economic reforms, as in New Zealand in the mid-1980s. But the historical record shows that states usually seek more power, not less, when confronted by a crisis.

Pinochet’s economic reforms in Chile, of course, are a centerpiece of Klein’s argument. Pinochet was a military dictator, the argument goes, and he implemented the policies of Milton Friedman. QED. But there are lots of military dictatorships – Wikipedia counts 34 in Latin America – and Pinochet’s junta seems to have been the only one to pursue free-market policies. It’s an exception, not a rule. Which is hardly surprising: military men tend to be attuned to hierarchy and control, not to the undirected diversity of a market economy.

How Do Americans Really Feel about Trade?

As it turns out, it’s pretty difficult to tell! Much, apparently, depends on how the question is phrased.

Today, the Washington Post reports findings from the latest Pew Global Attitude Project report, which was released yesterday. The Pew study finds that 59% of Americans have a positive view of trade, while 36% have a negative view. The results differ to some extent by demographic characteristics like age, income, and political party affiliation. Pew found that 64% of Republicans believe “the impact of trade on our country is good.”

That figure differs vastly from the result of the WSJ/NBC poll (about which I wrote yesterday), which found that 59% of Republicans believe that foreign trade has been bad. What explains these nearly diametrically opposite conclusions? A very significant factor appears to be the question phraseology.

In the WSJ/NBC poll, the respondent was asked to identify the statement that came closer to his/her point of view.

Statement A: “Foreign trade has been good for the U.S. economy, because demand for U.S. products abroad has resulted in economic growth and jobs for Americans here at home and provided more choices for consumers.” (32% of Republicans agree)

Statement B: “Foreign trade has been bad for the U.S. economy, because imports from abroad have reduced U.S. demand for American-made goods, cost jobs here at home, and produced potentially unsafe products.” (59% of Republicans agree)

In the Pew poll, the respondent was asked the following question:

What do you think about the growing trade and business ties between the
United States and other countries — do you think it is a very good thing, somewhat good, somewhat bad or a very bad thing for our country?

Pew tallied the “very good” and “somewhat good” responses and found they represented 59% of total respondents, and 64% of Republican respondents.

What does this all mean? It means that respondents provide answers to questions as asked, and that it is the data interpreters who give too much meaning to the responses elicited by their questions. Neither the Pew question nor the WSJ/NBC question probes peoples’ comprehensive views about trade (and it is evident to me, as I wrote yesterday, that the phrasing of the WSJ/NBC questions biased the results). Nevertheless, the written summary of the results of each poll would have the reader believe that each poll is dispositive of the issue.

That the question phraseology appears to be a determinant of the answer suggests that a better way to discern Americans’ views about trade would be to ask a multitude of questions — including redundant questions phrased differently.

Two figures that appear to be credible from the Pew report are a bit disconcerting. The same question asked of Americans was also asked of citizens in 46 other countries. Positive views of trade were lowest in the United States. And the 59% holding positive views constitutes a huge drop off from 2002, when the same question from Pew found 78% of Americans holding positive views on trade.

Thus, while it appears that Americans are souring on trade, it is hard to tell how many Americans are how sour.