Criticisms Leveled against U.S. Approach to Counterterrorism

The New York Times reports this morning on criticisms leveled by two high-ranking U.K. counterterrorism officials against the United States’ current approach to counterterrorism.

It’s worth having the insights of people who have prosecuted suspects in all the major terrorist attacks in the U.K. since 2005, achieving a 90 percent conviction rate, so you should read the whole thing.

“You Must Fulfill Your Moral Obligation to Public Radio.”

That’s what a public radio personality told me this morning.  And he didn’t mean that you have a moral obligation to press Congress to defund public radio, so that you can reclaim your money and your dignity.  No, this public radio personality admonishes that if you listen to public radio, you have a moral obligation to give even more than that.

Just the latest outrage from a public-radio membership campaign.


Obama Tax Plan and IRS Data

Senator Obama wants to “restore fairness to our tax code” by raising taxes on those earning more than $250,000. Let’s look at the most recent IRS income tax data for 2006 to see what we can learn about tax fairness.

See line 42 in this IRS table, which shows data for those earning less than $200,000 (the closest income breakpoint). This group paid 9.7 percent of their adjusted gross income in federal income taxes.

Now scroll down to line 58 in the table. Those earning more than $200,000 paid 21.8 percent of their income in income tax, thus paying more than twice the tax rate of the other group.

Is that fair?

Ohio Schools Take a Page from Stalin’s Playbook

The commissar vanishes from Stalin photo

School districts in Ohio systematically exclude the test scores of certain students, with the effect of raising the districts’ overall averages. According to the Columbus Dispatch, districts drop from their test results students who move to other districts before the end of the year (but after they’ve taken the test). Since kids who move around tend to perform worse academically, this practice bumps up district averages and presumably helps them to avoid penalties imposed by the federal No Child Left Behind law. As in a retouched Stalin-era photograph, the offending low-scoring students are simply erased – appearing in no district’s test score average.

One of the key reasons that the free enterprise system works is that producers have incentives to find out what their customers want and to give it to them. Since the customers are spending their own money, they tend to be deeply interested in whether or not they’re getting what they’re paying for. All of this breaks down when the “customer” is a government agency spending other people’s money.

In the public school monopoly, state governments and the NCLB hold districts “accountable” for (manipulable) statistics. In competitive education markets, parents hold schools accountable for the success of their individual children. It’s pretty clear which approach better serves the interests of families.

Preventing Another Great Depression

Pundits are using the financial markets mess to raise fears of another Great Depression in order to justify large-scale federal intervention. But government interventions, not markets, cause great depressions.

What markets do naturally when left alone is grow. Sure, people in markets make mistakes and markets sometimes experience panics, but if prices are allowed to adjust, recessions are short-lived and stability and growth returns.

Why do markets naturally grow when left alone? Because of people’s “propensity to truck, barter, and exchange one thing for another,” as Adam Smith noted. Since voluntary exchange is mutually beneficial, that propensity gives rise to what can be called a surplus, profits, or economic growth. Growth results from simply allowing individuals to seek their economic advantage within the rule of law.

As I note in this summary of the causes of the Great Depression, the U.S. economy experienced a sharp contraction in 1921 with the unemployment rate rising to 12 percent and output falling 9 percent. But the economy bounced back quickly as the government stood aside and let prices adjust and profits recover.

A decade later, the government adopted vastly different policies, which prevented the economy from adjusting and recovering from the monetary contraction that precipated the Great Depression. As I discuss, there were six key reasons for the severity and duration of the Great Depression:

1) Monetary contraction and bank regulations.

2) Tax increases.

3) International trade restrictions.

4) Mandated high prices.

5) Mandated high wages.

6) Harassment and demonizing of businesses.

This 2004 study by UCLA economists provides recent academic support for a number of these points. The Forgotten Man by Amity Shlaes also provides interesting insights into the depression.

Today, policymakers are starting to make some of these same mistakes again. Will they stop before they turn today’s recession into a full-blown depression?

Universal Coverage Kills

Members of the Anti-Universal Coverage Club will be interested in my article published today at National Review Online:

McCain, Obama, and the voters would do well to keep in mind what this month — October 2008 — has to say about the quality of medical care when government is in charge.

Federal bureaucrats have announced that, as of this month, the Medicare program will no longer provide financial rewards to doctors and hospitals who harm patients.

That is not a typo. For more than 40 years, Medicare has provided financial rewards to providers when a patient requires follow-up care following a medical error…

It doesnt have to be this way. More than 60 years ago, markets devised health plans that discourage medical errors by forcing doctors and hospitals to bear the financial costs of all such errors. You know them as plans like Group Health Cooperative and Kaiser Permanente. Doctors and patients who choose those plans tend to like them, and the plans receive high marks for quality, which suggests the financial incentives they use serve patients better.

Why does it take Medicare more than 40 years to take such baby steps? Especially when the market developed a solution to this problem over 60 years ago?

The answer is that Medicare — like all universal-coverage schemes — is operated by the government, and government resists innovation. In this case, resistance to innovation kills.

As for the Church of Universal Coverage … well, they may catch the vapors.