Nuclear Smuggling Ring Had Advanced Plans - This Relates to Your Privacy

A year ago, in some jest, I announced a new law (as in “of physics”) on the TechLiberationFront blog. “Harper’s Law” states, “The security and privacy risks increase proportionally to the square of the number of users of the data.” This rule generalizes to all information in digital form, and the suspected release of nuclear plans to the A.Q. Khan nuclear smuggling ring illustrates this well.

It is very difficult to control digital information - on any subject and in any context. It’s like a volatile gas: once it escapes whatever container or capsule you may have enclosed it in, you’re not getting it back. (Well, you’ll still have it but you won’t be able to deprive others from having it.) Nuclear plans, bomb-making plans, and the like will be very hard to contain, and relying on control of this kind of information for national or homeland security will be an unreliable protection.

Likewise, a poor way to protect privacy is to rely on rules about how information is used after it has been collected. If you really want privacy, you must never reveal the information you want to keep private. I’ve written a couple of times where various public officials have sought to redefine privacy so that it is consistent with their having access to personal information. Can’t be done.

In close relation are the large, personal-information-intensive programs that the federal government has been trying to develop. For example, our national ID law, the REAL ID Act, would put sensitive personal information and scanned identity documents into nationally accessible databases. Yet identity security requires keeping much of this information from being public. You can’t have both.

E-Verify would use names paired with Social Security Numbers as identifiers in a national immigration background check system, yet it would rely on the inaccessibility of this information to the public for security against fraud. Can’t happen. (DHS is seeking access to Americans’ driver’s license and passport pictures, hoping to shore up this weakness, but watch for all the new problems that emerge when digital copies of the photographs on our identity documents escape into the wild.)

Harper’s Law extends to other issue areas as well, like copyright. It is very hard for copyrights in popular content to be enforced, and it will get harder. Artists and the entertainment industry are in a real bind trying to control access to information that they must also widely distribute. See Cato Unbound’s “Future of Copyright” discussion, going on now, for more interesting thinking in this area.

There you have it: advanced nuclear plans, databases of personal information, and copyright law are all peas in a pod to me.

Sustainable Architecture - A (Real Life) Straw Man?

If you’re free Friday morning, you might want to hop on over to the Russell Senate Office Building to learn about the amazing, inexplicable, short-sighted market bias against straw-bale buildings and the need for the feds to do something about it. The Environmental & Energy Study Institute, the sponsor of this event,

Invites you to learn how the ‘new but old’ method of straw-bale construction can help address some of our most serious national policy challenges, such as record energy prices and unemployment, inadequate supply of affordable housing, the threat of climate change, and pressing needs in transportation and infrastructure funding. The modern building industry places heavy demands on the energy and transportation sectors. Straw is a locally-sourced, widely available, and renewable resource that builders, architects, engineers, and home owners are turning into affordable, safe, durable, and energy-efficient buildings in many climates. The following presenters will discuss the benefits of using this American invention, the regulatory barriers and institutional biases against straw-bale construction, and the role of the federal government in resolving these issues.

And that parable about the three little pigs? A PR smear spun by “Big Brick” no doubt.

WSJ Inadvertently Flaks for DC Schools

A WSJ editorial recently observed that “the $7,500 [DC school] voucher is a bargain for taxpayers because it costs the public schools about 50% more, or $13,000 a year, to educate a child….”

Um, no. As I reported back in April, it is costing taxpayers $24,600 to warehouse a child in DC public schools this year. The WSJ’s reference to $13,000 is a fantasy no doubt attributable to the use of dated Census Bureau figures that exclude capital expenditures, and that capture neither the spending increases nor the rapid enrollment losses of the past few years (let alone inflation).

If an economically savvy paper like the Journal can fall into this trap…. Oy!

Who Is This Crazy Supply-Sider?

“Supply-side” economics is the simple notion that tax rates affect growth. One of the key observations made by supply-siders is that policy makers should pay close attention to the relationship between tax rates, taxable income, and tax revenue - particularly since higher tax rates can reduce incentives to earn and report taxable income, which therefore means there is not a linear relationship between tax rates and tax revenue. There is even a “Laffer Curve” which shows that excessive tax rates can lead to less revenue, though the main use of the Curve is to show that higher tax rates will collect more money, but not as much as predicted by the simplistic models used by revenue estimators.

The beltway establishment routinely sneers at supply-side analysis, in part because some Republicans overstate the argument by claiming that every tax cut (even useless gimmicks such as rebates and credits) will generate more revenue. Properly understood, however, the Laffer Curve is a very useful tool for steering tax policy in the right direction - i.e., lower tax rates and reductions in the tax bias against saving and investment. Interestingly, there was a prominent Democrat who understood the Laffer Curve, and he gave a speech about it years before Art Laffer came on the scene and popularized the concept. Can you imagine Senator Obama giving this speech?

To be sure, based on a scientific poll of my children, President Kennedy clearly does not have the charisma and charm of the person in this video, but he clearly understands that there is a relationship between tax rates, taxable income, and tax revenue. And while a bit of Keynesianism is detectable (the discredited notion that tax cuts boost the economy by putting money in people’s pockets, which somehow overlooks the fact that government only gets the money to put in people’s pockets by first taking it out of their pockets), it is worth noting that Kennedy’s proposal was a pure supply-side mix of permanent tax-rate reductions.

What Do You Call the Ring in a Bull’s Nose? Perhaps “KST”?

While the country moves forward with increasing confidence in its ability to meet the security challenges posed by terrorism, the administration seems still utterly, utterly spellbound.

Take, for example, National Security Presidential Directive 59/Homeland Security Presidential Directive 24. Issued June 5th, it (take a breath … wait for it …) “establishes a framework to ensure that Federal executive departments and agencies … use mutually compatible methods and procedures in the collection, storage, use, analysis, and sharing of biometric and associated biographic and contextual information of individuals … .”

That means, roughly, “Let’s get our act together on biometrics and biometric surveillance, people!”

The directive uses a set of initials I hadn’t come across before: “KST.” This stands for “known and suspected terrorists.” As in, we’re going to “collect, store, use, analyze, and share biometrics to identify and screen KSTs and other persons who may pose a threat to national security.”

Now, to be clear, there are terrorists, and there may be some in the country - terrorist precursors, perhaps. But I don’t think there are enough of them, or enough danger from them, to merit awarding them their own initials. Even in acronym- and initial-happy Washington, D.C., these things are reserved for things of greater significance.

This reveals the thrall in which the administration is still held by terrorism. “We’re not up against a few small bands of sociopathic ideologues. No, we’re up against a movement with all the power of our ‘FBI’, ‘CIA’, ‘DoD’, and ‘DoJ’.”

I’ve posted here before about terrorism as a strategy, suggesting certain counter-strategic behaviors. Terrorists gain by drawing attention to themselves, wrapping themselves in the romance of rebellion, and being seen as legitimate rivals to their enemies. By dubbing the threat “KST,” the administration grants terrorists that legitimacy. It tells audiences ideologically and physically near terrorists that we’re still scared, which does terrorists a tremendous favor. (I, for one, am not scared; I’m embarrassed.)

On the merits, biometrics are occasionally necessary, but essentially impotent against the well-known technique of using “clean-skin” terrorists (see, e.g., 9/11, Oklahoma City). The NSPD/HSPD doesn’t appear to have a lot of substance other than to promote more ferment and federal spending on biometric surveillance technology.

Political Brouhaha

InBev, a giant Belgian beer conglomerate, has made a bid to purchase Anheuser-Busch, the brewer of popular beers like Budweiser, Bud Light, and Michelob – not to mention lesser-known, though equally-delicious beverages such as Bud Dry, Busch Ice, Hurricane High Gravity, and King Cobra.

Anheuser-Busch is of course, headquartered in St. Louis.  So it should come as no surprise that Missouri politicians have sprung into action to block the deal.

Senator Claire McCaskill is “nervous” and “upset” and plans on contacting the board of director’s at Anheuser-Busch to urge them to stop the deal.  Governor Matt Blunt finds the deal “deeply troubling” and is frantically searching for a state law that would allow him to intervene.

Senator Kit Bond has honed in on a specific set of laws that he believes should be used to block the deal. In a letter to U.S. Attorney General Mukasey and Federal Trade Commission Chairman Kovacic he claims:

The proposed foreign acquisition of Anheuser-Busch is troubling to me because it potentially raises antitrust issues under existing law by putting a significant market share of the U.S. in the hands of fewer competitors.  I urge you to scrutinize closely InBev’s proposed acquisition of Anheuser-Busch to protect the interests of American consumers and the
U.S. economy.

This is yet another case of government officials trying to meddle in the free market to protect parochial interests. Thankfully, early indications suggest that despite the pleadings of Missouri’s elected officials, the federal government will not intervene in the possible deal. 

The political uproar should serve as a reminder of why Congress should repeal antitrust laws altogether. As the Cato Handbook on Policy explains:

More than two centuries ago, in the Wealth of Nations, Adam Smith observed that ‘‘people of the same trade seldom meet together … but the conversation ends in a conspiracy against the public or in some contrivance to raise prices.’’ Coming from the father of laissez faire, that warning has been cited ad nauseam by antitrust proponents to justify all manner of interventionist mischief. Those same proponents, whether carelessly or deviously, rarely mention Smith’s next sentence: ‘‘It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice.’’

Antitrust is bad law, bad economics, and bad public policy. It deserves an ignominious burial—sooner rather than later.

Cheers to that.

Obama Tax Proposals

Candidate Obama has introduced an array of tax proposals, which he discusses in various places on his campaign website. There are four overlapping themes in the Obama tax proposals the way I see it:

  1. Social engineering.
  2. Discrimination.
  3. Economic micromanagement.
  4. Empty populism.

Under social engineering, I would put Obama’s plan to greatly increase the dependent care tax credit. That would further encourage parents to find institutional day care for their children, rather than providing care themselves.

Under discrimination, I would put Obama’s proposed special tax break for the elderly. The federal fiscal system is already heavily tilted in favor of the elderly, thus it is unclear why Obama would want to further discriminate against the young. 

Obama’s “American Opportunity Tax Credit” also creates unfair discrimination. This new tax break for college essentially increases subsidizes for future lawyers, accountants, and other professionals. Why subsidize these folks who will likely have much higher earnings than factory workers, retail clerks, and others who don’t go to college?

Under economic micromanagement, I would put Obama’s Patriot Employer Act, which provides tax breaks to certain businesses that jump through hoops related to hiring, wages, and other items.  Obama wants to cut capital gains taxes on certain investments and increase capital gains taxes on others, and he is proposing various narrow energy tax breaks. 

Under empty populism, I would put Obama’s railings against “tax haven abuse” and “corporate loopholes.” If Mr. Obama really wanted to reduce corporate tax avoidance–rather than just using it as a campaign prop–he would join with John McCain and call for an across-the-board corporate rate cut.

A final category might be “innocuous tax cuts that do nothing for economic growth.” Here I would put Obama’s $500 payroll tax credit called “making work pay.” If Obama had wanted to spur employment, he should have proposed a cut in the payroll tax rate, which would change the marginal incentive to work, unlike the proposed credit.

In sum, Obama’s tax proposals are pretty awful. It is true that many Republicans and Democrats have proposed similarly bad tax ideas over the years. But Obama can be contrasted with candidate McCain, who thus far has avoided narrow favoritism in his tax proposals, and favors broad-based tax reductions designed to spur economic growth.