That’s Why They’re Called Beltway Bandits

Federal cost-cutting should be a central focus of the next president. One effort that should be bipartisan is overhauling the government’s out-of-control procurement system. Federal contractors routinely get away with outrageous cost overruns at taxpayer expense. From today’s Wall Street Journal:

Despite billions of dollars in cost overruns and years of delay, Lockheed Martin Corp. and U.S. Navy officials are confident they will hang on to next year’s funding for development of a new presidential helicopter….

The program initially called for about $6.1 billion in spending to develop and build the next generation of so-called Marine One choppers…. [B]ut the expected cost of the program has now ballooned to an estimated $11.2 billion….

This program fits the pattern of Edwards’ Budget Law — when the government claims that a new project will cost $1, the ultimate taxpayer cost will be about $2 or more.

For more evidence on the government’s chronic cost overrun problem, see here and here.

Libertarian Voters and the Libertarian Party

The Libertarian Party is meeting in Denver to nominate a presidential candidate. Vying for the nomination are a former Democratic senator, a former Republican congressman, the author of the book Millionaire Republican, and a number of long-time party activists.

The party’s most successful presidential candidate was Ed Clark, who got 921,000 votes, about 1.1 percent, in 1980. Since then LP candidates have hovered around 400,000 votes.

Ron Paul’s surprising campaign this year and the increasing evidence about libertarian voters have generated more interest in the Libertarian Party nomination than usual, as witness the large and broad field of candidates.

So what’s the relationship between libertarian voters and the Libertarian Party? First, of course, members of the Libertarian Party are much more committed to the libertarian philosophy than are the libertarian-leaning voters David Kirby and I have identified in recent research. Our research indicates that 15 to 20 percent of American voters hold broadly libertarian views, yet the Libertarian Party has only once broken 1 percent in a presidential race. (More people have voted for LP candidates for lesser offices. The LP’s website claims that Libertarian candidates won 5.4 million votes in 1996.)

Libertarian voters have been more willing than other voters to vote for third-party candidates. In Beyond Liberal and Conservative, William S. Maddox and Stuart A. Lilie found that libertarians gave 17 percent of their votes to “other” candidates in 1980, presumably independent John B. Anderson and Libertarian Clark, though Clark and Anderson received only about 8 percent of the national total. In 1992 libertarians gave Ross Perot 33 percent, knocking George H. W. Bush from 74 percent of the libertarian vote in 1988 to 35 percent in 1992. Again in 1996, libertarians voted more heavily for Perot (13 percent) than did the national electorate (8 percent). So libertarian-leaning voters seem open to voting for third-party candidates, and thus they should be fertile ground for the Libertarian Party.

I always wondered if most votes for Libertarian candidates were really just “none of the above” votes, cast not by libertarians or even libertarian leaners but just by disgruntled or flippant voters. Some evidence from our Zogby survey in 2006 suggests otherwise. David Kirby and I discussed some of the results from that survey in Cato Policy Report in January 2007.

We had previously used three questions from the American National Election Studies polls to define “libertarian voters.” The week of the 2006 election we commissioned Zogby International to ask the same three questions to 1,012 actual (reported) voters in the election. Once again, we found that 15 percent of them could be defined as libertarian. But only 9 percent of those voters identified themselves as libertarian; most called themselves moderate or conservative.

In previously unpublished results, Zogby asked the same questions to a much larger Internet sample. In that panel, 17.6 percent of the libertarians identified themselves as such. And 8.6 percent identified themselves as supporters of the Libertarian Party.

My “none of the above hypothesis” seemed to be disproved by results from an over-sample in Arizona. There, 15 percent of our Internet sample gave libertarian answers to our three questions. And of those, 7 percent said they had voted for the Libertarian candidate for U.S. Senate, and 23 percent had voted for the Libertarian candidate for governor. Of the total sample, 57 percent of the votes for the Libertarian Senate candidate came from libertarian voters, and 68 percent of the votes for the Libertarian candidate for governor came from libertarians. So in fact it appears, in the one case for which we have evidence, that most people who vote for Libertarian Party candidates in fact hold libertarian views.

So the challenge for this year’s Libertarian nominee is this: There’s widespread disillusionment with both parties. Ron Paul tapped into some of that in the Republican primaries and demonstrated that a libertarian candidate could raise a lot of money. Some 15 to 20 percent of the voters — 18 million to 24 million voters in 2004 — hold libertarian views. Those libertarian voters have previously demonstrated their willingness to vote for third-party candidates. In 2006, they swung sharply away from Republican candidates, yet the leading Democrats aren’t offering much to libertarian-minded voters. Perhaps most strikingly, 44 percent of voters said yes to Zogby’s question, “Would you describe yourself as fiscally conservative and socially liberal, also known as libertarian?” So there would seem to be a huge potential audience for a Libertarian candidate who could raise money, get media attention, create online buzz, and present a compelling and articulate case for peace, freedom, and limited government.

Financial Privacy Facing Major Assault from High-Tax Nations

An article from Der Spiegel in Germany analyzes the aggressive campaign against nations like Switzerland that have strong human-rights policies on financial privacy. High-tax nations are opposed to privacy, of course, because that makes it more difficult for them to enforce bad tax law.

After fighting Switzerland’s banking secrecy laws for decades, European finance ministers are about to receive support from the United States. Investigations into major Swiss bank UBS and a proposed law against tax havens are ratcheting up pressure against the system.

…[T]he United States is by no means the only place where Swiss high finance and the country’s banking secrecy laws are coming under growing pressure. Foreign authorities around the globe are increasingly taking sharper action against tax evaders. Swiss financial institutions, often in tandem with partners in Liechtenstein, play a central role in helping the ultra-rich avoid paying billions in taxes. An almost unimaginable fortune of more than €3 trillion ($4.7 trillion) is currently sitting in Swiss bank accounts. The discreet Swiss allow vast amounts of money to disappear into trusts, offshore companies and bank accounts, money that is often protected by Switzerland’s banking secrecy laws.

…Political conflict is also on the horizon. An aggressive bill to combat tax evasion, the “Stop Tax Haven Abuse Act,” was introduced in the US Congress last year. The legislation provides for tough measures against 34 tax havens, including Liechtenstein, Luxembourg and Switzerland. The bill has stood little chance of becoming law until now. But that could quickly change after the presidential election in November. Once of the bill’s three sponsors is Senator Barack Obama, who is currently favored to win the White House.

But the campaign against financial privacy extends beyond Europe. As a report from the Wall Street Journal indicates, the United States also is putting pressure on Swtizerland and other jurisdictions with financial privacy laws:

As government officials intensify a multinational crackdown on offshore bank accounts, many wealthy Americans who use them to illegally shield income are facing a difficult decision: whether to turn themselves in — and if so, how. …Tax dodgers are facing these stark choices as major cracks emerge in what once appeared to be an impenetrable wall of secrecy surrounding bank accounts in such well-known havens as Liechtenstein and Switzerland. While officials have launched many similar campaigns in the past, their latest efforts are attracting widespread attention because they are coming from so many different directions.

Supporters of the attack say privacy must be sacrificed to reduce tax evasion, but this sidesteps the more relevant discussion of how best to improve tax compliance. Fundamental tax reform solves the problem since most tax evasion occurs because of high tax rates and double taxation of income that is saved and invested. This means that pro-growth policy not only generates more prosperity, but it eliminates any impulse to attack the sovereigny of other nations.

Abuse of Discretion in Texas

Yesterday a Texas appeals court finally put a stop to the high-handed seizure of 400+ children in Eldorado.  The Court said there was simply no evidence that the boys or the very young kids–infants and toddlers–were in such immediate danger so as to justify their transfer into foster care pending the outcome of on-going legal proceedings.

Eugene Volokh notes that criminal charges remain a possibility.  Yes, let the investigation continue.  But let’s keep the presumption of innocence intact and await some clear evidence.

Related podcast here.  Related article here.

Transatlantic Currents

British Prime Minister Gordon Brown is a serious, wonkish, deeply religious socialist who believes passionately in the power of government to do good for people — much like Hillary Clinton. For a decade or so he subordinated his own ambition for the top job, serving as a partner and adviser to a more charismatic political leader who reached the brass ring first — much like Hillary Clinton.

Finally, Tony Blair’s term ended and Brown got the big job. And he’s tanking. His approval rating (17 percent) is so low, he’s asking Bush for PR tips. The Labour Party not only lost the London mayor’s race, it just lost a seat in Parliament that it had held since World War II.

No wonder Rush Limbaugh was urging Republicans to vote for Hillary Clinton in the Democratic primaries. She delivered Congress to the Republicans once before, in 1994. And if she is indeed a lot like Gordon Brown, she could do it again.

On Following the Money

Thomas Frank writes in the Wall Street Journal,

Consider the poor Washington libertarian. Everywhere else in America his type is an exotic species, a coffee-shop heretic who quotes from “Atlas Shrugged” and steers every conversation toward Ron Paul or gold. Take him or leave him, he doesn’t care. He is his own master.

Not so the Beltway variety. Here, in the very home of the taxing, regulating leviathan, the libertarian is such a commonplace and unremarkable bird that no one gives him a second glance. Here he is a factotum of the establishment, a tiny voice in a vast choir assembled by business and its tax-exempt front groups to sing the virtues of the entrepreneur.

And therein lies his dilemma. Almost by definition, our young libertarian’s job is to celebrate the profit motive from the offices of a not-for-profit organization. He is subsidized, in other words, to hymn the unsubsidized way of life. Rugged individualism may be his creed, but a rugged individual he ain’t.

This is more than just an abstract problem, as I discovered last week at a panel discussion hosted by America’s Future Foundation, one of the lesser libertarian nonprofits in the city. The questions that night were whether nonprofit work constitutes a “real job” and if moving to the private sector was “selling out” — ideas well known to any liberal do-gooder.

No, let’s not consider the beltway libertarian. Or at least, let’s not consider him all alone. Instead, let’s look at a couple of money trails. Here’s the first one:

1. Consumers buy products because they want or need them.

2. An entrepreneur, who has supplied these products, collects the money, which the consumer has given of his own free will.

3. The entrepreneur gives some of this money to his investors, some to his employees, and some he keeps for himself as a just reward.

4. The entrepreneur, his investors, or his employees give a portion of that money to a libertarian think tank like the Cato Institute. (Nearly all of Cato’s money comes from individual donors, not corporations or foundations.)

5. I work for the Cato Institute, and it pays me a salary.

There’s something remarkable about this money trail: every step is voluntary. Every step is the product of a private, individual decision. None of them are coerced.

Maybe I don’t live on the shores of Walden Pond. But it’s still hard to see how my individualism has been compromised. I might easily change my career direction; my boss might decide he doesn’t need my services; the donors might get fed up with Cato and stop giving; the entrepreneur might liquidate his business; the consumers might stop buying the products. At every point in the chain, the individual is in charge, and the same would be true if my own place in the chain were at position #3 rather than position #5. Either way, it’s all voluntary, and my libertarian conscience is clean.

Yes, yes, I might make more money elsewhere. But money is just one dimension of personal satisfaction. Although money is important, other values are worthwhile too. There’s nothing wrong about wanting a job that is personally satisfying, or that is intellectually stimulating, or that furthers your vision of the good. A libertarian appreciates the value and purpose of money (possibly more than most), but he’s allowed to have other values, too. It’s only cartoon plutocrats who refuse to care about anything else.

Now let’s look at another money trail. I have a hard time thinking it’s the better one:

1. The government takes your money in taxes. If you don’t pay, you’ll find an unscheduled appointment on your agenda, possibly involving men with guns.

2. The government turns this money over to “nonprofits.” Or perhaps to plain old profit-seeking corporations.

Bit of a difference there, isn’t it?

Cato does not accept any government money, and if it ever does, I suspect that many of us will exercise our voluntary choice and leave the organization. This is the money trail that libertarians should — and do — reject. Once again, my conscience is clean. This is also why Frank gets it wrong when he writes,

Private-sector Washington is one of the wealthiest places in America. Public-service Washington lags considerably behind. The chance of ditching the one for the other is what accounts for everything from the power of K Street to the infamous “revolving door,” by which a public servant takes a cushy corporate job after engineering some extravagant government favor for the corporation in question — or its clients.

The libertarian nonprofits that line the city’s streets often serve merely to rationalize this operation after the fact, giving a pious shine to the policies that are made in this unholy manner.

I don’t deny that it happens. But I do deny that these people are libertarians, whatever they happen to call themselves. One thing that separates the Cato Institute from many other public policy shops is that it has been perhaps the loudest in denouncing exactly these sorts of abuses. Here’s hoping we keep at it.

Headline Writers’ Lacking Literary Knowledge

Twice in two days now, I’ve come across news articles using the term “Big Brother” to refer to private sector information practices that affect privacy. Big Brother is not an appropriate shorthand here. In his book 1984, George Orwell gave the name “Big Brother” to the oppressive government that observed and controlled the lives of the book’s protagonists. The unique oppressive powers of this governmental entity were a central motif of the book.

Yesterday’s Washington Post had an article headlined “FTC Wants to Know What Big Brother Knows About You.” Is the Federal Trade Commision examining warrantless wiretapping, one hopes? Alas, no — they’re looking at “behavioral targeting” on the Web. This is when advertisers collect information about Web surfers with cookies, using it to direct more relevant ads their way.

Consumers who care to can “opt out” of nearly all “behavioral targeting” by setting their browsers not to receive third-party cookies. In both Internet Explorer and Firefox, the “Tools” pull-down has a selection called “Options.” Clicking the “Privacy” tab allows users to set blanket bans on cookies or site-specific preferences.

Behavioral targeting is in no way an exercise of the legal monopoly on coercion, much less an oppressive exercise of that power.

Ars Technica, an otherwise excellent tech publication, mangled the same literary reference in this headline: “Big Brother is Watching: Companies Snoop E-mail to Combat Leaks.” Employers monitoring communications on their systems are neither exercising government power nor oppressing their employees.

The most cogent, if not the kindest, explanation of this came in the comments to a recent blog post by Bruce Shneier (one I disagreed with). There, commenter “ManOnBlog” said:

You check your constitutional rights at the door when you go to work. They can tap your phone, read your email, paw through your computer, open your locker, etc. The list of what they can’t do legally is shorter than what they can do.

Commenter “@ ManOnBlog” replied:

> You check your constitutional rights at the door when you go to work.

No, you don’t.

> They can tap your phone

No, they can’t. They can tap *their* phone, which you use.

> Read your email

No, they can’t. They can read *their* email, which you use in the course of your job (although generally speaking they need to be VERY CAREFUL about this, because although your corporate mail store is indeed company property they have obligations to protect the individual information that is in that mail store if it is your personal info).

> paw through your computer

No, they can’t. They can paw through *their* computer. Again, see the email line above.

> open your locker

Ditto.

The distinction between government and private action is something more people should understand — especially people who write headlines for a living.