Energy Price Controls in China

From our “never thought I’d live to see the day file,” Chinese Prime Minister Wen Jiabao announced yesterday that China would freeze energy prices as a means of combating inflation and appeasing public anger over escalating fuel prices. Well, been there, done that. If past is prologue, don’t expect a happy ending to this story.

Catching Flak for RomneyCare

Over at The Corner, Jonathan Adler is discussing the health care reforms Mitt Romney signed into law while governor of Massachusetts with an advisor to Romney’s presidential campaign. 

The Romney advisor claims: “The fact is that since healthcare reform was passed just over a year ago, the number of uninsured and the price of the average individual market health insurance policy in MA have decreased substantially.”  He may be right about the uninsured, but that’s a terrible measure of success.  Health insurance does not equal access to medicine, and access to medicine does not equal health.  Regarding the second claim, here’s what I wrote in September:

The Boston Globe truth-squads a similar claim and finds the reduction in premiums came from factors like political pressure, restrictions on access to providers, and greater pooling — not deregulation. Moreover, political pressure cannot last, while pooling raises someone else’s premiums to compensate. Overall, premiums under the Massachusetts law came in at more than projected. And premiums in Massachusetts are growing at 8-12 percent per year, compared to 6-8 percent for the rest of the country. Romney may not be responsible for that trend, but does anyone but Romney claim he has done anything to temper it?

Looking back on that, it occurs to me that the restrictions on access to providers part probably was deregulation.  The Romney plan did repeal the Commonwealth’s any-willing-provider law.  On balance, however, the plan increased regulation.  The rest of that paragraph stands.

The Romney advisor writes: “Critics like Mr. Tanner [my Cato colleague] want to condemn the reforms as a failure just three days after the individual mandate has gone into effect.”  Actually, all Tanner has done is make a few predictions about the ill effects of the plan, plus predict that the plan would fail to achieve Romney’s stated goal of universal coverage.  Last time I checked, all of Tanner’s predictions had come true.

Finally, the advisor rather cynically argues: “bear in mind that any implementation hiccups are primarily the responsibility of the current (Patrick) Administration.  If there are cost overruns, inefficiencies, etc., it’s very hard to blame someone who’s not in power to do anything about it anymore.”  And if a bank security guard dynamites the safe, it’s very hard to blame him for the looting that occurs after his shift is over.  

Adler responds ably: ”If a government program is only good when controlled by the ‘right’ people, then it is not a good government program.”

Pot vs. Kettle

As you may know, Tuesday marked the No Child Left Behind Act’s sixth birthday. At best, it was approached with mixed emotions, like a person’s 50th—it’s a nice milestone, but everything is starting to ache and will almost certainly just get worse. So while President Bush headed to sweet home Chicago to cut cake and blow up balloons for his signature domestic achievement, Senator Edward Kennedy—a crucial NCLB proponent in 2001—wrote a somewhat doleful op-ed in the Washington Post about the once promising law’s problems, a judge resurrected a lawsuit challenging NCLB as an unfunded mandate, and people with sense called for the law’s demise.

Yesterday, Secretary of Education Margaret Spellings spoke at the National Press Club in an effort to keep whatever joyful NCLB partying there might have been going. I won’t rehash most of what she said, but want to focus on one part in particular, and encourage you to read her whole speech to see if it doesn’t fully illustrate the point I’m about to make.

Here’s what she said toward the end of her talk:

We are hearing all kinds of rhetoric from the campaign trail: proposals to “scrap” NCLB, to “overhaul” the law, or to “turn around” education in just three years. As a parent, taxpayer, and voter I want more than a sound bite or quick fix. I want someone who recognizes that NCLB has sparked a more sophisticated dialogue that’s driving real improvement for all students. We have to ask, which comes first, politics or kids? No Child Left Behind is not just a catchy phrase. It’s a statement about who we are, and what kind of country we want to be.

Spellings makes a very important point here, one that I have made ad nauseum: Government control of education is almost always driven by political, not educational, concerns, which is why we spend tons of money on education and get almost no positive return on it. But if Spellings truly recognizes and believes this, how can she continue to support NCLB or any other government control of education? After all, as long as government controls schooling, politicians will control it, guaranteeing that politics, not kids, will almost always come first.

The answer, of course, is that Spellings and her boss are politicians; government provides their jobs and their identities, and they are just as interested in quick fixes and whatever works best for them politically as any other of their ilk. Spellings’ speech, with all its lovely, inspirational—but ultimately empty and deceptive—platitudes, illustrates this brilliantly, as does the politically unbeatable name of her beloved law. I mean, if you’re against No Child Left Behind you want to leave kids behind, right?

NCLB, like everything else run by government, is by its very nature politicized. That’s why we need to stop listening to any and all politicians who promise to fix education through more government, and demand the one thing that will actually rip away paralyzing politics: Getting government out of education.

Training Economic Illiterates in France and Germany

A fascinating Foreign Policy article explores the anti-capitalist propaganda that is force-fed to students in France and Germany. Recalling the glorification of the New Deal that I was exposed to during my younger years and the environmental nonsense my kids deal with (even in private schools!) on a frequent basis, I know American students also get some statist misinformation, but the article makes it appear that American textbooks are written by Friedman, Hayek, and Mises compared to what passes for economic education in Europe:

Millions of children are being raised on prejudice and disinformation. Educated in schools that teach a skewed ideology, they are exposed to a dogma that runs counter to core beliefs shared by many other Western countries. …Just as schools teach a historical narrative, they also pass on “truths” about capitalism, the welfare state, and other economic principles that a society considers self-evident. In both France and Germany, for instance, schools have helped ingrain a serious aversion to capitalism. In one 2005 poll, just 36 percent of French citizens said they supported the free-enterprise system, the only one of 22 countries polled that showed minority support for this cornerstone of global commerce. In Germany, meanwhile, support for socialist ideals is running at all-time highs—47 percent in 2007 versus 36 percent in 1991.

Many of these popular attitudes can be traced to state-mandated curricula in schools. It is there that economic lessons are taught that diverge substantially from the market-based principles on which the Western model is based. The phenomenon may hardly be unique to Europe, but in few places is it more obvious than in France and Germany. A biased view of economics feeds into many of the world’s most vexing problems, from the growth of populism to the global rise of anti-American, anti-capitalist attitudes.

The past 20 years have “doubled wealth, doubled unemployment, poverty, and exclusion, whose ill effects constitute the background for a profound social malaise,” the text continues. Because the 21st century begins with “an awareness of the limits to growth and the risks posed to humanity [by economic growth],” any future prosperity “depends on the regulation of capitalism on a planetary scale.” Capitalism itself is described at various points in the text as “brutal,” “savage,” “neoliberal,” and “American.” This agitprop was published in 2005, not in 1972. When French students are not getting this kind of wildly biased commentary on the destruction wreaked by capitalism, they are learning that economic progress is also the root cause of social ills. …Germans teach their young people a similar economic narrative, with a slightly different emphasis. The focus is on instilling the corporatist and collectivist traditions of the German system.

Bosses and company owners show up in caricatures and illustrations as idle, cigar-smoking plutocrats, sometimes linked to child labor, Internet fraud, cell-phone addiction, alcoholism, and, of course, undeserved layoffs. The successful, modern entrepreneur is virtually nowhere to be found. German students will be well-versed in many subjects upon graduation; one topic they will know particularly well is their rights as welfare recipients.

The not-so-subtle subtext? Jobs are a right to be demanded from the government. The same chapter also details various welfare programs.

Like many French and German books, this text suggests students learn more by contacting the antiglobalization group Attac, best known for organizing messy protests at the annual G-8 summits. One might expect Europeans to view the world through a slightly left-of-center, social-democratic lens. The surprise is the intensity and depth of the anti-market bias being taught in Europe’s schools. Students learn that private companies destroy jobs while government policy creates them. Employers exploit while the state protects. Free markets offer chaos while government regulation brings order.

…training the next generation of citizens to be prejudiced against being enterprising and productive is…foolhardy. …If countries like France and Germany hope to get their nations on a new economic track, they might start paying more attention to what their kids are learning in the classroom.

More Statism from Sarkozy

France’s President is supposed to be a conservative, but most of his proposed policies are designed to increase the size and burden of government. The latest example is a proposal for more taxes - including levies on the Internet - to finance France’s government-run television network. Perhaps this is the French version of compassionate conservatism? Tax-News.com reports:

French President Nicolas Sarkozy, in a speech on Tuesday, unveiled new proposals for an internet-based tax, as part of a range of new levies to fund France’s state broadcasters. …Sarkozy outlined plans [for] a tax on internet connections, mobile phone usage and a levy on the advertising revenues of commercial television stations. Sarkozy promised that any tax on internet users would be “infinitesimal”, but his idea is controversial, and some observers see the plan as taxing the new media to help fund the old. France would also stand out as one of the only countries to raise revenues from taxing internet access, something which other governments have so far shied away from.

“Success” = “Not Leaving”

The surge worked. So declare Sens. McCain and Lieberman in today’s Wall Street Journal. They join the chorus of voices, including the Washington Post editorial board, who point to the decline in violence in Iraq that has occurred since the so-called surge went into effect as a sign that the opponents of the surge have been proved wrong.

No one disputes that the security situation in Iraq has improved. Although 2007 was the deadliest year of the war, American casualties declined sharply in the latter half of the year. We can all be thankful for that, and U.S. troops, who have once again proved remarkably adaptable, deserve much of the credit.

But as Air Force Major General Charles J. Dunlap, Jr. noted in yesterday’s New York Times, “two other uncomfortable developments also helped suppress violence. First, the Iraqi population has largely segregated itself into sectarian fiefs. Second, supposedly ‘reformed’ insurgents now dominate Anbar Province.” Dunlap wonders aloud whether these newly-empowered “Sunni partisans” have “bought into the idea of a truly pluralistic and democratic Iraq.” If they have not, and if they remain opposed to reconciliation with the Shiite majority, arming the individuals and groups might prove a short-term strategy that cuts against our medium- to long-term objectives.

In this context, we should also keep in mind that military operations should be conducted in pursuit of a specific objective, and the purpose of the surge was to make a space for political reconciliation among the Iraqi people that would, in the president’s words, “hasten the day our troops begin coming home.”

Note that the advocates of the surge, including most importantly Sens. McCain and Lieberman, don’t want the troops to come home. Certainly not any time soon, and perhaps not ever. Sen. McCain last week said U.S. troops might remain in Iraq for 100 years. President Bush and Secretary of Defense Gates have drawn parallels to Korea, where U.S. troops have been deployed since 1950. (Kudos to Slate’s Fred Kaplan for his take-down of this outrageously inapt analogy.)

In other words, the surge strategy, marketed to the American people as a vehicle for hastening the end of the U.S. military presence in Iraq, is now being used as a justification for keeping U.S. troops there. Success, once synonymous with withdrawal (remember “As the Iraqis stand up, we will stand down?”) now means something very different.

Before his victory in the New Hampshire primary, Sen. McCain crowed that the surge had been successful, allowing him to resurrect his moribund campaign. “Thank God [Iraq]’s off the front pages,” the leading proponent for the war told reporters on board the Straight Talk Express.

But I’m betting that the vast majority of Americans are still thinking about Iraq, even if it is “off the front pages,” and their calculation of costs and benefits is very different from Sen. McCain’s. In poll after poll, a solid majority of Americans believe that we have already spent far too much blood and treasure in Iraq, and they aren’t going to passively accept another 100 years in Iraq, at a cost of $100 billion or more every year. And what of the human costs? The strains on our military from two or three or four combat tours are already plainly visible. How will we maintain, over a period of many decades, an army of citizen-soldiers who spend more time in a foreign country than they do in their own?

Sens. McCain and Lieberman may believe that staying in Iraq indefinitely is synonymous with success. For most Americans, the opposite is true: we will have succeeded when we have brought the troops home safely, and we are no closer to that goal than we were one year ago.

Cooler Heads Prevail, for Now

The hottest video on the Internet today has nothing to do with Paris Hilton or Hillary Clinton’s tears – it is footage from the deck of a U.S. Navy ship of an incident in the Strait of Hormuz.

I transited the Strait exactly once (twice if you count both inbound and outbound), and my memory of the whole affair is pretty murky as it occurred over 16 years ago. Besides, I didn’t exactly get a good visual. I was an engineer aboard the USS TICONDEROGA (CG 47), and spent most of my time staring at gauges in the engineering control room down in the bowels of the ship. I do recall, however, that the whole process took a long time, and that we were on a high state of alert.

My initial reaction on hearing that Iranian small boats had approached three navy ships in a threatening manner was to gather more details. I knew that such incidents have occurred in the past, and I was curious if this was being blown out of proportion. I’ve asked around to some friends and former colleagues who have more recent experience transiting the Strait, and the general take-away was surprise that the ship captains didn’t fire. It is simply imprudent to allow any ship or small boat to come that close, and especially so if you assume hostile intent.

But it is also imprudent to take actions that might escalate into full-blown war, and that is what might have occurred if the U.S. navy had fired on the Iranian small boats.

After all, it is not unreasonable to speculate that some Iranians would like to bait the United States into taking the first shot, an idea first floated by Cato Research Fellow Stanley Kober over two years ago. And there is a pattern in Iranian actions over the past five or six years that reveal the deep divisions within Iran society, even at the highest levels of government. Hints of conciliation (as we heard last week from Iran’s Supreme Leader Ayatollah Ali Khamenei), or periods of relative calm, are often broken by hostile or threatening acts, and recriminations from the opponents of U.S.-Iranian rapprochement.

In this context, the many members of the Iranian Revolutionary Guard Corps (IRGC) who are committed America-haters, and the few who would willingly sacrifice their own life to do harm to the Great Satan, might have been aiming for something more. Driving a small boat headlong into automatic weapons fire is no less suicidal than detonating an explosive vest, but the atmospherics would have looked dramatically different. Even if the U.S. naval personnel were acting in self-defense, and operating strictly in accordance with procedures, it would have been conveyed as an act of American aggression. After all, that is what Iranians have been told happened during the tragic USS VINCENNES incident from 1988 – in which a U.S. Navy cruiser mistook an Iranian passenger jet for a military aircraft, and 290 passengers and crew died. (And, consistent with that pattern, Iranian media is today reporting that the video of the latest incident in the Strait is “fabricated.”)

I have long argued, and still believe, that a war with Iran would not serve U.S. interests. Indeed, I believe it would be catastrophic. I also know that relatively minor incidents during periods of high tension have led to wider wars, and those conditions are in place today in the region. There is plenty of blame to go around.

For now, as the details continue to trickle in, I’m grateful that the Navy COs kept their cool, and held their fire.