Bye Bye, Budget Witch!

Thanks to all the bailouts and stimuli, higher ed folks are singing “Hail, hail, the witch is dead! Which old witch? The Budget Witch!”

Yesterday, a whole slew of ivory-tower advocacy groups called on Congress to furnish big increases in Pell Grants and work-study as part of any upcoming stimulus package. And that’s probably just the beginning of the rampant Treasury-looting (or is it looting future generations?) in which they intend to partake. 

Explained Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers:

“I think everybody is going to fight for their fair share,” Nassirian says of the current budget climate.

As a result, long-time concerns about deficit spending and limited resources have all but vanished. “The budget always has checkmated many policy ideas we presented in the past,” Nassirian says. Of the abrupt shift in tone in Washington, he says, “It’s extraordinary.”

We’re not in Kansas anymore, Toto.

Predicting Alarmism

Here’s the punchline from the report released last week by the Commission on the Prevention of WMD Proliferation and Terrorism: “It is more likely than not that a weapon of mass destruction will be used in a terrorist attack somewhere in the world by the end of 2013.”* That prediction was the lead in hundreds of news reports that the report generated last week.

The trouble is, in over 100 pages, the report’s authors never justify their alarming claim. It’s not that they do a poor job explaining how they arrived at the “more likely than not” in five years figure. They simply make no attempt to explain how they got there, other than to say that they talked to lots of experts.

They missed some. For a sober assessment of terrorists’ utterly failed efforts to develop biological weapons, see Milton Leitenberg. On nuclear terrorism, see John Mueller or Michael Levi. Note that even Mueller’s critics tend to agree that the odds of nuclear terrorism are generally overstated. See also Brian Jenkins and Michael Krepon.

Readers of the report should know that Commissioner Graham Allison has been making these sorts of predictions for some time, as John Mueller has noted:

[Allison] proclaims his “considered judgment” in his book: “on the current path, a nuclear terrorist attack on America in the decade ahead is more likely than not” (2004, 15). He repeats that judgment in an article published two years later without reducing the terminal interval to compensate — apparently the end date is an ever-receding target (2006, 39). Actually, he had been in the prediction business on this issue at least as early as 1995 when his imagination induced him boldly to pronounce, “In the absence of a determined program of action, we have every reason to anticipate acts of nuclear terrorism against American targets before this decade is out.”

It would have been helpful if the authors offered some analysis of why past dire predictions have not come true before issuing new ones.

For more on this issue, come to Cato’s upcoming counterterrorism conference. On January 12 and 13, a variety of experts will be here discussing the danger of terrorism and the danger of overreacting to it. I’m running a panel on terrorists’ ability to use nuclear and biological weapons with Mueller, Leitenberg, Randy Larsen and a soon-to-be-named fourth expert.

*As I have written before, we should abolish the term, “weapons of mass destruction.” It confuses the lethality of the weapons it subsumes and policy discussion. On the silliness of the phrase, read Owen Cote.

Doherty Book Review

There’s a review of Brian Doherty’s new book, Gun Control on Trial: Inside the Supreme Court Battle over the Second Amendment, over at McClatchy’s Washington Bureau.  “[T]he book is a brisk read, and it has the kind of direct observation and insider detail that can help bring even a well-plumbed case back to life.” 

Heller continues to spur controversy in the legal community.  Judge Harvie Wilkinson III of the Court of Appeals for the Fourth Circuit compared it to Roe v. Wade as judicial intervention in an issue that should have been resolved by the political branches.   Cato Associate Policy Analyst David Kopel responded on the legal blog The Volokh Conspiracy, making the point that, unlike abortion, the right to keep and bear arms is express in the Bill of Rights. The full paper, co-authored with Professor Nelson Lund of George Mason University School of Law, is available here.

When Are “Poor Choices” a Good Thing?

When they are the educational choices made by the world’s poorest people.

By now, most people working in international development and education have heard that some of poorest people on the planet have given up on their failed government schools and started paying for ultra-low-cost private schooling out of their own nearly-empty pockets. But the experts have usually ignored the phenomenon, or deprecated these private schools and the parents choosing them. In the past few years, however, researchers like James Tooley have blow this story wide open, revealing that fee-charging private schools are enrolling the majority of students in many Third World slums and villages, and that they are significantly outperforming the much higher-spending “free” government schools.

In a new Forbes commentary, former U.S. assisitant secretary of education Chester Finn tells how he went from skeptic to convert by seeing these schools for himself in the impoverished Old City of Hyderabad.

Want to visit these schools, too, but are a little apprehensive about the air fare? Just stay tuned until next April when Cato publishes The Beautiful Tree, James Tooley’s first-person narrative account of his research, adventures, and discoveries from the shanty towns of Africa to the remote mountain villages of Gansu, China.

If the free education marketplace can more effectively serve families in some of the most disadvantaged corners of the globe, imagine what it could do in far wealthier nations such as our own.

Investment: Government and Private

There is much excitement about a federal “stimulus” plan focusing on state and local infrastructure spending. At first blush, it seems like a pro-growth idea to get unemployed construction workers off the couch and onto the job site building new government highways, bridges, and the like.

However, national income data from the Bureau of Economic Analysis puts some perspective on such government investment ideas. (See Tables 1.1.5 and 3.17)

The government isn’t the only entity that builds “infrastructure.” New semiconductor plants, refineries, and electricity transmission wires are private infrastructure, which is every bit as important to economic growth as government highways. Indeed, U.S. private infrastructure investment is 4.6 times larger than all federal, state, and local investment combined.

The figure shows that gross private domestic investment was $2.1 trillion in 2007. That compared to $340 billion of gross investment for state and local governments and just $123 billion for the federal government. And note that most ($82 billion) of the federal investment was for military hardware, and thus did nothing for our standard of living in the sense of creating consumable products.

What is the policy upshot? It is far more important for the government to create an environment where private investment can thrive than it is for the government to invest itself. 

The private sector puts new factories and equipment in place when it can earn at least a normal return on the income generated over future years. The government skims off roughly a third of the return in income taxes (and most of that money dissappears down the economic black hole of transfer spending). A reduction in that skim would cause relatively little government revenue loss compared to the huge leverage effect it would have over the gigantic private sector investment budget.

So, let’s cut the corporate income tax, and while we’re at it, privatize as much state and local infrastructure spending as we can.

Blagojevich Rex

Illinois Gov. Rod Blagojevich (D) is innocent until proven guilty.

That said, as I blogged in October, this is a man who thinks he has the power to write the laws:

Gov. Rod Blagojevich’s agenda was dealt a major blow Friday after a state appellate court ruled he doesn’t have the power to expand state-subsidized health care without lawmakers’ approval…

Last year, Blagojevich sought to expand health-care coverage through an “emergency rule” allowing families with higher incomes—up to $83,000 a year for a family of four—to sign up. The move was quickly shot down by a legislative rules-making panel and blocked by Secretary of State Jesse White, but Blagojevich signed up people anyway…

“This is a clear and predictable message to the governor that no matter how laudable the goal is, he is not a one-man legislature and he has to work in conjunction with the General Assembly to pass this kind of program,” said state Rep. John Fritchey (D-Chicago).

So it hardly stretches credulity to believe that a man who fancies himself a monarch might also be guilty of lesser acts of corruption like using his office to enrich himself, which is pretty much what all politicians do.

Automakers Should Learn from Public Schools

The Big Three automakers seem ready to settle for a $15 billion bailout that will probably do very little good and considerable harm.

They’re thinking too small. Much too small.

If they model themselves on the public school system, as I suggest in a new Cato Commentary, they will have a truly risk-free business model in which they will be well protected from the rigors of competition and fickle consumers.

Update: It seems I’m not the only one to see the merits of modeling the auto industry on our famously efficient and successful school monopoly. Jay Greene proposes an NCLB act tailored to the automakers.