DHS: Require REAL ID for Prescriptions

C|Net News reports that DHS Assistant Secretary for Policy Stewart Baker called today for national ID checks when Americans buy prescription drugs. This is yet another in a growing list of activities that federal authorities would bring within their control should the national ID system created by the REAL ID Act be implemented.

The eminently savvy Baker was unintentionally ironic when he reportedly said he “doesn’t ‘understand’ the civil liberties objections to the plan.”

A Refreshing Dose of Antidumping Heresy

Arguably the most sacred text in U.S. trade policy scripture is the antidumping law. Over the years, congressional support for a tough antidumping regime has been broad, bipartisan, and nearly absolute. Any member tempted to challenge the sanctity of the antidumping status quo and question whether it wasn’t too rigid, too unfair, too offensive, or too anachronistic would be advised to veil his weakness lest he be emblazoned with a scarlet “H” (for heretic).

That is why a recent letter from ranking Republicans on Ways and Means and its trade subcommittee (Jim McCrery of Louisiana and Wally Herger of California, respectively) to USTR Susan Schwab is more than first meets the eye. It may constitute a welcome schism in the Church of the Holy Trade Remedy Law.

While the letter is generally about the Doha Round, offering the congressmen’s opinions about the vital components of a final Doha agreement (should one ever come to fruition), it breaks new ground in the way it links the U.S. negotiating positions on agriculture, NAMA (non-agricultural market access – or industrial tariff liberalization), services liberalization, and rules (the most prominent topic of which is antidumping). For the first time in public—to my recollection, at least—members of the congressional committee with oversight of trade policy acknowledge that the (strident, unrelenting, congressionally-mandated) U.S. position on antidumping might be too costly.

Since July 2004, U.S. exporters have faced more AD cases abroad than U.S. domestic industries have brought against imports here, so any final result on [the] [R]ules [negotiations] must address the needs of our companies injured by dumping or subsidization but cannot hamstring our vulnerable exporters. A balanced rules outcome would ensure that the United States is not required to sacrifice ambitious market access provisions in agriculture, NAMA, and services.

By “balanced rules outcome,” the congressmen mean one that takes into account the interests of U.S. exporters that are subject or could be subject to foreign antidumping actions, as well as U.S. import-users (55% of U.S. imports in 2006 were “intermediate goods” – inputs used by U.S. manufacturers in their own production processes), who are hurt by antidumping restrictions. And, also, by “balanced rules outcome,” they mean that the cost of a defensive agenda with respect to antidumping reform is necessarily limiting progress on the offensive agenda of opening foreign markets to U.S. exporters.

This is a linkage we have been making for quite some time. It is a positive sign that members of Congress are connecting the same dots. Perhaps this thesis should be nailed to a wall in the Capitol Building.

Stern Shouldn’t Be Taking any Bows…

In an essay to be released later today by the City Journal, Manhattan Institute senior fellow and school voucher supporter Sol Stern argues that recent free market reforms have failed to transform American education, and suggests that choice advocates should refocus on curriculum standards.

The central problem with Stern’s argument is that there have been no recent free market reforms in American education.

As economist John Merrifield, myself, and others have been at pains to point out over the past decade, contemporary U.S. “school choice” reforms lack some or all of the essential characteristics of free markets, and as such cannot be expected to perform like markets. Stern fails to realize this because of a demonstrably poor understanding of what a market is.

Stern’s mistaken notions about markets are starkly revealed when he declares that: “the country’s 1,500 ed schools represent an almost perfect system of choice, markets, and competition.” In reality, ed schools exist to serve the artificial and legally mandated requirement for public school job applicants with state accredited teachers’ college degrees. In the vast majority of states, even states with so-called “alternative certification” programs, anyone who teaches in a public school must have (or be pursuing) a government-approved degree in education. But because the public school system is protected from competition by its monopoly on $13,000 of tax funding per pupil per year, it has no systemic incentive to hire people with skills proven to accelerate learning. Ed school professors know that, and so fill their students’ heads with whatever philosophical, political, and pedagogical views they find most agreeable.

Furthermore, as Marie Gryphon pointed out in Giving Kids the Chaff: How to Find and Keep the Teachers We Need, public school systems often hire less qualified applicants over more qualified applicants. All this is why, as Stern acknowledges, the instruction offered in ed schools is so roundly derided. To mistake this massively distorted, monopoly-driven labor market as “an almost perfect [market] system” reveals a remarkably poor grasp of markets.

Among other things, markets require: prices determined by supply and demand, private ownership of businesses, low or no barriers to the creation of new businesses, few or no barriers to workers entering the profession, minimal regulation, the ability of owners and investors to profit from their efforts, unfettered consumer choice, and payment by consumers rather than a third party. Furthermore, to see any significant market forces, there must be large scale demand – millions of potential customers.

Apple would not have invested millions of dollars developing the first iPod, or dramatically increasing its capacity in recent years, if its customer base had been capped at 22,500 people – as Milwaukee’s voucher program is capped. To expect results such as we see in our vast market economy from tiny and hobbled existing school choice programs is like expecting an electric train set to match the power of a diesel locomotive. And abandoning real market reforms because these toy trains have failed to match some people’s unrealistic expectations is foolish on its face and disastrous public policy.

We will see dramatic progress in the field of education that matches the progress in the rest of our economy only when our school system enjoys all the essential features of that economy. For that to happen, existing school choice programs will have to be dramatically expanded and liberalized, or new programs, such as Cato’s own Public Education Tax Credit plan, will have to be implemented.

As Milton used to say, “there’s no such thing as a free lunch.” Want market results? Make a market.

To Hell With the Facts, We’re Still in This Thing!

Readers will no doubt be relieved that the new US National Intelligence Estimate on Iran has done nothing to dampen literary-critic-cum-Giuliani-foreign-policy-adviser Norman Podhoretz’s enthusiasm for starting another Middle Eastern war.

The Munich analogy and Winston Churchill make prominent appearances. No word, per Podhoretz’s prior comments on what went wrong after Vietnam, on whether gay people are to blame for the NIE.

Will Hungary Join the Flat Tax Club?

Tax-news.com is reporting that Hungary’s governing coalition is considering a flat tax. Tax competition is probably the only reason why this conversation is taking place. The current government, after all, has a dismal fiscal record of higher taxes and higher spending. But four of Hungary’s bordering nations already have flat tax systems, meaning that the competitive pressure for reform must be growing more intense as time passes:

The office of Hungarian Prime Minster Ferenc Gyurcsany has confirmed that the government intends to reduce the tax burden by 0.5% of gross domestic product over the next two years. … Gyurcsany told Euromoney that the convergence plan allowed some room for tax cuts and for the overall tax burden to be cut to 37.6% of GDP by 2010. … [T]he governing coalition has begun to debate a number of tax proposals with the aim of sharpening the country’s tax competitiveness. According to the business daily Vilaggazdasag, four tax packages were under discussion by the governing Socialist Party and its junior coalition partner Free Democrats last Friday: one would cut the ‘tax wedge’ on labour from 29% to about 20%, but increase the top rate of VAT by 2% to 24% and abolish tax allowances; the second would reform the personal income tax system, applying the principle of ‘super grossing’; the third would reduce the tax burden on corporations; and the fourth would introduce a flat tax on personal incomes and/or corporate incomes and VAT.