“Why Are You Trying to Give Away the President’s Power?”

Jack “I’m Not a Civil Libertarian” Goldsmith has more on the thirst for power inside the executive branch in excerpts from the book in Slate today.

[Counsel to Vice President Cheney David] Addington once expressed his general attitude toward accommodation when he said, “We’re going to push and push and push until some larger force makes us stop.” He and, I presumed, his boss viewed power as the absence of constraint. These men believed that the president would be best equipped to identify and defeat the uncertain, shifting, and lethal new enemy by eliminating all hurdles to the exercise of his power. They had no sense of trading constraint for power. It seemed never to occur to them that it might be possible to increase the president’s strength and effectiveness by accepting small limits on his prerogatives in order to secure more significant support from Congress, the courts, or allies. They believed cooperation and compromise signaled weakness and emboldened the enemies of America and the executive branch. When it came to terrorism, they viewed every encounter outside the innermost core of most trusted advisers as a zero-sum game that if they didn’t win they would necessarily lose.

More here.

Cato Brief in NYT

One of the big cases the Supreme Court will be hearing in its upcoming term concerns the constitutionality of the Military Commissions Act.  That law sought to revoke the jurisdiction of federal courts over habeas corpus lawsuits arising out of the Guantanamo Bay prison facility.  The case will not be heard by the High Court until November, but the New York Times had an article about it over the weekend quoting from the Cato brief (pdf) that I prepared.  I argue that Congress overstepped its authority by trying to withdraw the jurisdiction of federal courts over habeas corpus claims. 

More background about the case in this NYT article (reg r’d).  For more about the constitutional record of the Bush administration, read this.

Suspicious Standards

The primary belief underlying the No Child Left Behind Act – and much state-driven education reform – is that if governments set academic standards and then test students’ mastery of them, policymakers, parents, and the public will have the information they need to see how schools are doing and act on it. As Andrew Coulson and I explain in a new report on NCLB, however, that’s not how the belief has worked out in practice. Instead, most states have set low standards or used trickery to identify kids as “proficient” in math and reading when they’re really no such thing.

A report in the New York Daily News offers an interesting insight into one way by which such standards sliding can and has occurred, maybe intentionally, maybe not:

When test scores rise, politicians crow that schools are getting better, but a Daily News analysis of recent standardized math exams and a News experiment suggest another reason: The questions might be getting easier.

The News obtained technical details on high-stakes math tests given to fourth-graders across the state over the past six years and found that in every year when scores went up, testmakers had identified the questions as easier during pretest trials.

In years when scores were lower, pretest trials showed the questions were harder.

“That’s pretty strong evidence that something is just not right with the test,” said New York University Prof. Robert Tobias, who ran the Board of Education’s testing department for 13 years.

“If this were a single year’s data or two years’ data, I would say it would be inappropriate to make conclusions,” Tobias said. “But with the pattern over time …that’s prima facie evidence that something’s not right.”

Pretty Bad News in Higher Ed

First, the good news: Yesterday, a congressional conference committee passed legislation that would cut subsidies to lenders participating in federal student loan programs. Terrific! Lenders – especially Sallie Mae, the federally spawned queen of student loans – deserve no taxpayer-furnished profit, and this bill would get us a little closer to that ideal.

Unfortunately, the good news ends there. Only a measly $750 million out of about $22 billion in subsidy cuts would go to the taxpayers who have been forced to enrich lenders for decades – and that will be in the always-questionable from of “deficit reduction” – and the rest will be transferred to the other group on whom taxpayers have long been forced to lavish money through federal aid: students. The bill would cut interest rates on subsidized federal loans, for instance, from 6.8 percent to a minute 3.4 percent over four years; boost Pell Grants from the current maximum of $4,310 to at least $5,400 by 2012; and forgive loans after ten years of making payments for people in “public service” jobs ranging from firemen to prosecutors. And, in the end, the big lenders like Sallie Mae will probably be just fine, because the bill would institute an auction system in which lenders would bid for control over federal loans, giving the big guys huge advantages over little banks and lenders.

Student advocates are, of course, pleased as punch with all this, especially over at the New America Foundation, where for months they’ve been leading the charge against private lenders and for this auction scheme. Ironically, they partly hailed the compromise on the grounds that the auction would use “market forces to set student loan subsidy rates.” This, of course, begs the question: How can you love an auction because it supposedly uses market forces, while simultaneously supporting the gargantuan market distortion that is the overall federal student aid system? Unfortunately, the only possible answers seem to be that (a) you are a politician intent on bribing the college-going population and their parents to vote for you, (b) you are confused about how a real market works, (c) you work in academia and know that the more the government shells out, the better your life will be, or (d) all of the above.

Unfortunately, this legislation seems likely to be signed by president, and if it is, you can ultimately chalk it up to (d) being the answer in Washington.

Arguing Over the Emperor’s New Clothes

According to Alexander Russo at the Ed Week blog, Representative George Miller, chairman of the House education committee, has been going at it with Ed. Sec. Margaret Spellings over his proposed revisions to the No Child Left Behind act. Miller is quoted as saying that Spellings’ criticism that his revisions would “muck up accountability” are ”hokum.” This is very much like two members of the imperial court arguing over whether “the emperor’s new clothes” are fab or fugly. In order for NCLB to be “muck-uppable” it would have to be doing something useful to begin with. It isn’t. As Neal McCluskey and I document in our new study released today, NCLB has failed to fulfill its goals.

Still Conservatives?

For those of us who experienced the revival of Britain during the Thatcher years, the dismal plight of the British Conservative party under a series of post-Thatcher leaders has been startling and increasingly dismaying.

Short-lived Tory leaders have been intent on ditching the classical liberal principles that Thatcher and her inner coterie foisted on the party – principles that gave the Tories their finest years of the 20th century and ones that pulled Britain out of decades of economic failure. David Cameron, the current no-doubt short-lived leader, has been as determined as his recent predecessors to distance himself and the party from the Iron Lady and all that she stood for – from low, or at least lower, taxation, to expanding individual choice and on to a healthy skepticism of government.

Now at last one Tory grandee has had enough of the retreat from Thatcher principles. The former Thatcher cabinet member, Michael Ancram unveiled this week an alternative manifesto [pdf], entitled “Still a Conservative,” to the Cameron agenda, one that calls for a return to the core values that won four successive elections for the Conservatives. He warns that the British public perceives that the party lacks “an overall sense of vision and direction.” And he argues that the party should support lower taxes, leaving people with more of their own money to make their own decisions. By contrast, Cameron wants to match the Labour government’s public spending and has turned his back on lower taxes.

And there is much else in Ancram’s manifesto that would please libertarians and classical liberals, especially his call for the regulatory state to be turned back and his advocating of widening the areas of life left to individual choice rather than government diktat. There are things, though, in the manifesto that are unappealing – from his over-defined Euro-skepticism to his rejection of treating gay civil partnerships equally with marriage when it comes to benefits and taxes. He says there are other long-term relationships outside marriage which should be welcomed for their commitment, but “for Conservatives there can be no fudging the issue of marriage.”

It is a great pity that he overdoes the Euro-skepticism and is prepared to treat gays unequally – for at heart Ancram’s alternative manifesto places classical liberal principles front and center.

And how has Cameron and his supporters responded? Not much of a welcome: they have told him to hold his tongue. A party spokesman said: “This is just a blast from the past. Just as Britain has changed, the Conservative Party has to change along with it.” And a former cabinet colleague of Ancram’s, Michael Portillo, said: “I was a great admirer of Margaret Thatcher but to invoke Thatcherism now, a phenomenon which is 25 years old, just makes the Tory party look old-fashioned and, of course, divided.”

Well, apparently that isn’t the viewpoint of Labour Prime Minister Gordon Brown, who like his predecessor, Tony Blair, realizes that Thatcher is still a name to conjure by. This week he spoke of his admiration for the Iron Lady. “I think Lady Thatcher saw the need for change,” he told a press conference. “Whatever disagreements you have with her about certain policies – there was a large amount of unemployment at the time which perhaps could have been dealt with – we have got to understand that she saw the need for change.”

Cato “Neutered” on Electricity Deregulation?

Last week, Peter Van Doren and I had an op-ed in The Wall Street Journal that reflected on the record of electric utility restructuring in light of the recent rate hikes experienced in the “deregulated” states. Libertarian energy consultant Mike Giberson over at The Knowledge Problem, however, was unimpressed.

Giberson offers only two substantive criticisms. First, he takes issue with our claim that the case for vertical integration was scarcely heard during the debate over restructuring:

It isn’t clear from the article where Taylor and Van Doren were during the debates over unbundling, but delving into the voluminous public records of both federal and state regulators of the electric power industry would reveal that vertical integration has been among the matters discussed at length. Earlier in the article they quote MIT economist Paul Joskow, but if they were at all familiar with his work they would not make such “unfortunate” claims.

Vertical integration was in fact a big part of the policy conversation in the state legislatures and regulatory hearing rooms during the course of restructuring. But as Economist Robert Michaels at U. Cal., Fullerton argues, those discussions were superficial, uninformed, and politically charged conversations primarily concerning utility market power and the need to corral it. Paul Joskow’s work on this matter (which we are indeed well acquainted with) along with that of other academics who’ve investigated vertical integration in the electricity sector from an I/O perspective was given little serious attention by policymakers. That was our point.

Second, Giberson seems to take issue with our contention that vertical integration is an efficient means of remedying hold-up problems between generators and power distributors, facilitating efficient investment in transmission, and maintaining system reliability. Giberson finds it “curious that Cato Institute writers are so skeptical about the ability of decentralized arrangements (like prices and contracts) to lead to efficient results.”

Market arrangements indeed have their place, but if they were always preferable to alternative arrangements, then the firm as we know it would not exist – a point well made by Ronald Coase (no enemy of markets he) in his classic essay “The Nature of the Firm” back in 1937. Just because one has great faith in the power of markets does not necessarily mean that one should enter a daily spot market in the search for secretarial help or, alternatively, daily spot markets for electric power. For a longer discussion on why “decentralized arrangements (like prices and contracts)” are problematic in the electricity business, see this Cato study from the aforementioned Robert Michaels.

With the substance now put aside, let’s examine the kicker:

And it dawns on me that through it all, the Cato authors don’t advocate anything at all, not even the “true deregulation” that they describe in the final paragraph. They discuss history, explain some economics, call the loss of vertical integration unfortunate, speculate on preferences for contracts, and suggest that a totally unregulated world might turn out to be like the old regulated world.

We are to some extent guilty as charged. We did indeed spend a lot of our available word count explaining how electricity markets work. But it seemed to us that this was necessary in order to fully explain why the current emphasis on recent price increases in deregulated electricity regimes is misleading. Consumers seem advantaged by regulation during fuel-price upswings and disadvantaged by regulation during fuel-price declines. But over a longer time frame (1990-2006), the average price increases in regulated and deregulated regimes are not statistically different. Thus the differences between the old and new regimes are more apparent than real.

We go on to argue (as we did more robustly in this study published a few years ago) that a totally deregulated world of independent generators, transmitters, and distributors and consumers buying spot would not be efficient or stable because of the hold-up problem. We speculate that the arrangements to which firms and consumers would agree would resemble vertical integration which returns certainty for firms and price limits for consumers. Giberson might not like that argument, but it’s hard to miss.

Often Cato is bold, or insightful, or both, and sometimes it is over-dramatic in asserting the costs of this-or-that government program or the benefits of some tax cut or another, but almost always Cato offers clear advocacy for liberty. Taylor and Van Doren don’t give us that Cato in their rambling Wall Street Journal essay. Instead we get what amounts to an implicit defense of the old status quo.

While we do criticize the regimes produced by “restructuring,” we do not defend the old regime. In fact we do not defend any particular substantive market outcome at all. Instead, we defend an idea – that business owners – not politicians – should decide how market enterprises are organized and operated. If there is a more libertarian argument, then I have not heard it.