What We Have Here Is a Failure to Communicate

There are two parts to securing a country: making the country secure and making the country feel secure.

The head of U.S. Strategic Command, General Kevin Chilton, failed at the latter when he talked about security in a way that produced the following headline: U.S. General Reserves Right to Use Force, Even Nuclear, in Response to Cyber Attack.

As a theoretical matter, every element of military power should be on the table to respond to attacks. But the chance of responding to any “cyber attack” with military force is vanishingly small. To talk about responding with nuclear weapons simply helps spin our country into a security tizzy.

Politicians and military leaders should stop inflating the risk of cyber attack.

Trouble With Your National ID? Change the Name!

L-1 Identity Solutions is a leading biometric technology company, and with its acquisition of Digimarc ID Systems it has become the nation’s number one manufacturer of state identity cards and drivers’ licenses. Such a company would benefit massively from implementation of the REAL ID Act, the nation’s moribund national ID law.

But REAL ID is in trouble. No state was in compliance by the May 2008 deadline, and the Department of Homeland Security had to give deadline extensions even to states that flatly refused to participate in the national ID scheme.

So what does the primary beneficiary of the failing REAL ID Act do? Change the name. On a recent earnings call, L-1’s Chairman, President, and Chief Executive Officer, Robert V. LaPenta, was a little too transparent in expressing his optimism about the government ID card buisiness:

We’re well-positioned in all of these opportunities and we’re seeing increased sell prices for those states that are incorporating and I won’t call it real ID, I’ll call it enhanced or higher security drivers license.

“I won’t call it real ID, I’ll call it enhanced or higher security drivers license.”

Enhanced driver’s licenses are a project at the Department of Homeland Security - with no congressional mandate - to move state driver’s licenses toward serving as national ID cards.

So it is with the “PASS Act,” a bill that would revive REAL ID under a different name.

Senator Daniel Akaka (D-HI), formerly an opponent of having a national ID, has been working with the National Governors Association to round down the sharpest corners of REAL ID and give the national ID law a new name.

A news report says the new bill “explicitly prevents the creation of a national identification card.” It might also prevent things that walk like ducks, quack like ducks, and swim like ducks from being called “ducks.”

The only way to resolve the problems with REAL ID is to repeal REAL ID. Reviving the national ID program under another name is not a solution.

A Dialogue on School Choice, Part 4

A tax credit bill was recently proposed in South Carolina to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would subsidize tuition for low income families (who owe little in taxes and so couldn’t benefit substantially from the direct tax credit). Charleston minister Rev. Joseph Darby opposes such programs, and I support them. We’ve decided to have this dialogue to explain why. Our closing comments appear below, and the previous installments are here and here and here.

Rev. Darby Rev. Joe Darby

Closing Comment

Thanks for the research and references, Andrew, but I don’t live in Milwaukee, Africa or India - I live and grew up in South Carolina, and I remember when my state resisted desegregation. I remember the news reports, white protests and rhetoric about new private schools, where white children would be “safe.” Attorney Tom Turnipseed, a repentant racist in Columbia, SC, fought to create those schools and now willingly admits his prejudiced motivation for doing so. That legacy needs to be acknowledged and those schools need to demonstrate that they’ve changed before many citizens will be comfortable with them.

Many white parents who didn’t send their children to private schools in those days simply couldn’t afford to do so without governmental assistance. An irony of American racism is that poor whites have also suffered, but have been culturally conditioned to not collaborate with or trust those of other colors who have common interests.

Having said that, let me keep my promise from my last installment of our dialogue. You noted that some private school parents of modest means have found ways to augment government funding for things like transportation and uniforms. I said that I wasn’t surprised, because good parents will go to great lengths for their children’s well being - and have done so for years without public funding of private schools. My wife and I did so when we were young, struggling parents.

Our sons attended V.V. Reid Kindergarten and Day Care in Columbia, SC - a 54 year old private facility sponsored by Reid Chapel AME Church. That predominately black school has a reputation for excellence and a long waiting list, and now includes an elementary school. The tuition was - and still is - considerable, but we paid it as a matter of parental choice. They also attended and graduated from public elementary, middle and high schools - now labeled as “failing” - and are now very successful men. They attended V.V. Reid with the children of physicians and attorneys and the children of janitors and cooks, but all of those children had one thing in common - their parents paid - and still pay - the full tuition. V.V. Reid does not accept any government funds and the current pastor, Rev. Norvell Goff, says that they aren’t seeking governmental funding and don’t support tuition tax credits and scholarships. As Rev. Goff said, “Parents who care will pay the price.”

That points to what most puzzles me about the fight to give private schools public money, allegedly to educate needy children. The idea’s most consistently strident uncompensated supporters in South Carolina are not those of modest means or progressive political mind set, but conservative legislators and interest groups who usually tell the needy to pull themselves up by their “bootstraps” and consistently oppose what they call “handouts” or “pork” for struggling communities. From health care to infrastructure to housing, they condemn governmental involvement in the private sector, but they make a remarkable exception for education. Could they have had a miraculous social epiphany on education, or could they possibly see a financial and social benefit for their constituents and neighbors that wouldn’t be rhetorically prudent in “selling” privatization to struggling families?

I’ll conclude our dialogue with that question, with thanksgiving that a bipartisan, biracial majority of our Senators killed South Carolina’s current privatization legislation last week, and with the wise and true words of SC Education Secretary Jim Rex - when businesses consider locating in South Carolina, they never ask, “How are your private schools.” Public education does matter. I’m also sure the issue isn’t entirely dead, so be blessed, take care, and we’ll chat next year.


The Rev. Darby is senior pastor of the AME Morris Brown Church in Charleston, and First Vice President of the Charleston Branch of the NAACP.

Andrew Coulson Andrew Coulson

Closing Comment

You wrote that “dangerous buildings can… be expeditiously made excellent and secure while occupied and before they catch fire…. The chronic inequities in public education can be expeditiously addressed with will and commitment.”

Before they catch fire”? Nearly half of all children in South Carolina drop out before finishing high school. Nearly HALF! Public schooling is burning NOW. It’s been ablaze for decades, reducing countless children’s dreams to ashes. Having another meeting to discuss fire codes would be madness. We need to get a ladder to these kids today.

And “fixed expeditiously with will and commitment”? Spending per pupil has more than doubled in real terms over the past forty years. Two generations of would-be reformers have worked feverishly to improve the system, passing one education bill after another at the state and federal levels, and introducing countless revisions to the curriculum and teacher training policies. Class sizes have been reduced, teachers’ salaries have been raised. Short of ritual sacrifices, there is nothing that has not already been tried, repeatedly, to fix the public schools.
You wrote that “studies on the success of privatization… are a ‘wash’ – each of us can find support for our positions.” This is simply not true. As I’ve noted, the research findings comparing market to monopoly schooling all over the world favor markets by a margin of 15 to 1. That’s based on the most comprehensive literature review to date. Social science, while imperfect, is science. And on this point, it is unambiguous.

As for your statement that South Carolina significantly and systematically underfunds rural black districts along the I-95 corridor, I decided to check it out. Using this year’s data from South Carolina’s General Appropriations spending bill, I calculated the average expenditure per pupil: $11,815. For rural districts along the I-95 corridor, it comes to $11,743 – a difference of $72.

You’ve said that, in the wake of the civil war, some middle-class blacks excluded lower-class blacks from their private schools. If that’s true, I would certainly join you in lamenting their behavior. But who is guilty of this cruelty today? Who is currently trying to keep poor young blacks from getting easier access to private schools? The NAACP supports scholarships for low-income students to attend private colleges, but fiercely opposes the same practice at the elementary and high school levels. Who’s blocking the schoolhouse door now?

Fortunately, school choice is advancing despite such misguided opposition. There are dozens of choice programs around the nation, and the best among them are growing rapidly and with bi-partisan support. Some black leaders of your own generation, such as South Carolina Senator Robert Ford, have gotten on board. Even more of the next generation of black leaders, from Corey Booker in New Jersey to Kevin Johnson in Sacramento, are on board as well. And some of the most eloquent voices in support of educational freedom are beneficiaries of school choice.

Perhaps, if you talk with some of the tens of thousands of families benefitting from school choice around the country, you’ll be convinced to join them aboard the educational freedom train. It’s pulling out of the station regardless.

In closing, I’d like to thank you for participating in this exchange. I hope people on all sides of the debate have found it useful.


Andrew Coulson is director of the Cato Institute’s Center for Educational Freedom, and author of Market Education: The Unknown History.

Bailout Nation

The four top business headlines in the Washington Post the other day were:

More Homeowners Getting Aid, but Demand Keeps Rising

AIG Could Repay U.S. in 3 to 5 Years, Chief Tells Congress

Treasury Clarifying Rules for Bailed-Out Firms

Small Auto Suppliers Seek Help in Wake of Giants’ Woes

It’s certainly true, as BBC and other journalists have noted, that the center of American business and finance is now Washington, not New York.  The headlines above (in the paper edition, but some of them can be found here) indicate that all sorts of businesses and individuals are looking to the Obama administration for bailouts and loans and “capital injections.” And one could find similar stories about federal money for states, cities, big insurance companies, and more. Money and credit were once allocated by owners of capital, who stood to gain or lose on the strength of their decisions. Now capital is being allocated by politicians and bureaucrats, who have none of their own money at risk and who may well see their own power enhanced by an economy that remains slow.

Back in September, as the bailout of Fannie Mae and Freddie Mac ushered in a new era of federal help for failing companies, I wrote a blog post titled “Bailout Nation.” I didn’t know the half of it; still to come were the AIG bailout, TARP, federal subsidies to banks and automobile companies, and more. But I warned then:

Capitalism is a system of profit and loss. It works because each person and each company, in seeking its own interest, is led “as if by an invisible hand” to supply goods and services that others want. Companies that satisfy consumers prosper. Companies that can’t produce goods that consumers want–like Chrysler, repeatedly–suffer and sometimes go out of business. The failures are often painful. But as Dwight Lee and Richard McKenzie wrote in their book Failure and Progress (or at least in this column based on the book), “Economic failure is to the economy what physical pain is to the body. No one enjoys pain, but without it the body would lack the information needed to maintain its health.” Government subsidies to prevent business failure simply keep pouring money into businesses that are relatively unsuccessful at satisfying consumer desires. They are, among other things, censorship of vitally needed information. Employees, entrepreneurs, and investors need to know where their money and talent are most valuable. Profits and losses are key indicators of that.

Turns out that David Ignatius had warned of a “Bailout Nation” in a column a few months before that:

As every parent knows, the danger of cutting a special break for one child is that all the other children will demand the same thing. “It’s not fair,” goes the inevitable refrain. “You said Susie could eat ice cream and watch TV until midnight, so why can’t I?” The parents start caving, and family discipline is shot.

We’re now in a comparable cycle of bestowing special economic favors on members of the national family who have been hurt by the credit market crisis. “It’s not fair,” argue the housing interests and consumer advocacy groups. “Bear Stearns got a financial bailout, so why shouldn’t we?” And they’re right, by the simplest schoolyard definition of fairness.

So the line grows of people demanding breaks on financial obligations they can’t afford.

Neither of us is very happy about being so prescient. And what no one seems to discuss is, Where is all this bailout money coming from? Much of it is just being created on the balance sheets of the Federal Reserve, which portends rising inflation. Certainly it’s too much to be paid for in taxes, even in the fondest dreams of Barack Obama and Nancy Pelosi.  Is Bernie Madoff advising the Treasury these days?

How much money is it? CNNMoney estimates that the federal government has now committed $10.5 trillion. Christopher Barker at the Motley Fool concludes that ”the combined total of existing, announced, and potential outlays from the Federal Reserve and U.S. government agencies that are directly attributable to the financial crisis will breach $13 trillion!”

This is nuts. Would Paulson and Bernanke have acted differently last April if they’d known where we would be in a year? They’d have known if they’d read David Ignatius’s column. Or if they’d read some history; when governments start handing out money to troubled institutions, there will be no limit to the number of troubled institutions. And in barely a year, you get small auto parts companies coming to Washington saying that if automakers and large suppliers are getting government help, they should too. President Bush and his Treasury secretary started this process, but Obama and the Democrats own it now. Do they have a plan that doesn’t end in inflation and bankruptcy?

The Closing of the Conservative Mind

If you’re unclear what’s wrong with conservatism these days, I urge you to check out the tragicomic dustup accidentally provoked last week by my colleague Jerry Taylor at National Review Online’s “The Corner” blog.

I don’t want to give a blow-by-blow recount of the fracas, but happily a convenient compendium of the relevant links is provided here. Go read the whole thing; you’ll be entertained, that’s for sure. For present purposes, suffice it to say that Jerry made two basic points: (1) talk radio hosts Rush Limbaugh and Sean Hannity are not popular outside the conservative movement; and (2) the two have a habit of making “dodgy” arguments even when their positions are sound. He might have added that the sky is blue and A comes before Z. For his effrontery Jerry was verbally beaten to a pulp by his fellow Cornerites.

The whole thing seems like an updated version of the Emperor’s New Clothes, except this time the crowd turns on the truth-telling kid and gives him the Rodney King treatment. And that response to Jerry’s innocent and obvious points captures the essence of what has gone wrong with the conservative movement. That the flagship publication of the movement will brook no criticism of demagogic blowhards like Limbaugh and Hannity says it all:  A movement founded on the premise that “ideas have consequences” has suffered a calamitous decline in intellectual standards.

Richard Posner agrees. In a recent blog post, he offered this withering assessment of the state of the conservative mind:

My theme is the intellectual decline of conservatism, and it is notable that the policies of the new conservatism are powered largely by emotion and religion and have for the most part weak intellectual groundings. That the policies are weak in conception, have largely failed in execution, and are political flops is therefore unsurprising. The major blows to conservatism, culminating in the election and programs of Obama, have been fourfold: the failure of military force to achieve U.S. foreign policy objectives; the inanity of trying to substitute will for intellect, as in the denial of global warming, the use of religious criteria in the selection of public officials, the neglect of managment and expertise in government; a continued preoccupation with abortion; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset-price inflation.

By the fall of 2008, the face of the Republican Party had become Sarah Palin and Joe the Plumber. Conservative intellectuals had no party.

I don’t endorse every detail of Posner’s bill of indictment, but the broad thrust is correct. Movement conservatism has regressed to something like the days before National Review was founded – back when Lionel Trilling could say that conservatism consisted of nothing but “irritable mental gestures which seek to resemble ideas.” And as Jerry’s trip to the woodshed demonstrates, those gestures can be very irritable indeed! Conservatism today has degenerated into a species of especially unattractive populism, pandering to the pro-torture-and-wiretapping, anti-gay-and-Mexican prejudices of a dwindling, increasingly sectarian, increasingly regional “base.”

Some who sympathize with libertarian and free-market causes are cheered by the anti-government rhetoric and Tea Party theatrics now increasingly in evidence on the right. Perhaps, they think, the old Goldwater-Reagan conservatism is making a comeback. Sorry, but I seriously doubt it. On the contrary, I worry that good free-market ideas are going to get tainted by association with an increasingly brutish identity politics for angry white guys and the women who love them.

In order to make gains for the cause of limited government, we need to convince smart people that we are right. We need to win the battle of ideas in the intellectual realm by making better arguments than our opponents, and we need to educate the public so that it is less susceptible over time to “rational irrationality.” None of this can be accomplished by consorting with and apologizing for merchants of intellectual junk food, or by making common cause with some of the ugliest cultural attitudes in contemporary America. Greater economic freedom will not come with pitchforks and torches; it will come, as it has in the past, by reshaping the elite consensus.

Social Security: Debating the Ostriches

Over at Salon, Michael Lind takes me to task for raising the alarm about the latest Social Security Trustees report showing that a) Social Security’s insolvency date is growing closer, and b) the system’s unfunded liabilities have increased dramatically since last year’s report.

Like most of those who resist having an honest debate about Social security’s finances, Lind relies on a combination of economic flim-flam and political sophistry to obscure the true problem. For example, Lind points out that when I quote the Trustee’s assertion that the system’s unfunded liabilities currently top $17.5 trillion, that “assumes there are no changes made between now and eternity.” Well, duh! All estimates of US budget deficits assume that spending won’t be cut or taxes raised enough to eliminate the deficit. In fact, when I get my Visa bill and it shows how much I owe, it doesn’t tell me anything about whether I will or can pay that bill in the future. Obviously, if we raise Social Security taxes, cut Social Security benefits (or create personal accounts), we can reduce or even eliminate the program’s unfunded liabilities.

Lind then returns to the hoary idea of the Trust Fund. He objects to my characterization of the Trust fund “contains no actual assets. Instead, it contains government bonds that are simply IOUs, a measure of how much the government owes the system.” This, he says, is the same as saying “government bonds backed by the full faith and credit of the U.S. government, a government that has never defaulted on its obligations in its entire existence since 1776, are not actual assets?” He points out that millions of Americans invest in government bonds through their retirement programs and consider them assets. “Are U.S. government bonds “actual assets” when they are part of IRAs but not “actual assets” when they are owed to the Social Security system?” he asks.

That’s right. If I write you an IOU, you have an asset and I have a debt. If I write an IOU to myself, the asset and debt cancel each other out. I haven’t gained anything, else it would be a whole lot easier to pay my bills. When Lind invests in a government bond, he has an asset and the government has a liability. But when the government issues a bond to itself (ie. Social Security), the asset and liability cancel each other out. There’s no net increase in assets.

But don’t take my word for it. This is what Bill Clinton’s budget had to say about the Trust Fund in FY2000:

These Trust Fund balances are available to finance future benefit payments…but only in a bookkeeping sense….They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of Trust Fund balances, therefore, does not by itself have any impact on the government’s ability to pay benefits.

Lind then switches course and says, ok, forget about the Trust Fund. Think about Social Security like we do about defense spending. “Why do we never hear of the “unfunded liabilities” of Pentagon spending – the third of the big three spending programs (Social Security, Medicare, defense) that take up most of the federal budget? Defense spending comes out of general revenues, not a dedicated tax.”

Actually, that is a valid comparison. Both defense and Social Security spending for any given year are ultimately paid for out of that year’s tax revenue. The composition of the tax revenue is largely irrelevant. And, when taxes don’t equal expenditures, we get budget deficits. Those deficits will eventually have to be paid for by raising taxes or cutting spending.

Current projections by the Congressional Budget Office suggest that unless we reform entitlements programs, government spending will reach 40 percent of GDP by mid-century. Paying for all that government will be a crushing burden of debt and taxes for our children and grandchildren.

No amount of obfuscation by defenders of the status quo can obscure that fact.